Delivering Used & Defective Car Against Booking For New Car Is Unfair Trade Practice, Dishonest & Unethical : Supreme Court

The Supreme Court has held that delivering a defective and old model car against a booking for a new car made by a customer who has paid full sale consideration is an "unfair trade practice". The Court added that such a practice amounts to "dishonesty on the part of the dealer" and "against morality and ethics".Holding so, the Court affirmed the direction passed by a District Consumer Forum...

Holding so, the Court affirmed the direction passed by a District Consumer Forum to replace the car model and imposed a cost of Rupees one lakh on the car dealer.

The bench comprising of Justice M. R. Shah and Justice Krishna Murari while passing the judgment observed that, "Non delivery of a new car can be said to be an unfair trade practice and even it can be said to be dishonesty on the part of the dealer and against the morality and ethics. As observed hereinabove, once the new car was booked and the full sale consideration was paid, a duty was cast upon the dealer to deliver a new car which is not defective therefore the District Forum as well as the State Commission were justified in directing the dealer to give delivery of a new car."

The bench was hearing an appeal arising out of a judgment passed by the NCDRC where while exercising its revisional jurisdiction it had set aside the concurrent findings of the District Forum and the State Commission.

The original complainant i.e., the Appellant in the Court had bought a Tata Victa GX TC Car in 2006 for which he deposited the booking amount with the Respondent M/s. Gold Rush Sales and Services Ltd. The appellant had further deposited an amount of Rs. 5,30,000 but the delivery of the car was not given to him for a period of one year of the deposit of the total amount. When the delivery was done, it was found that the car was an older model (2005 model) and was a used one and had various defects. It was found out that it was Demo Test Drive Model and had already clocked 10,000 kms.

The Complainant filed an FIR but the matter was not settled. He then approached the District Forum where the complaint was allowed and the Respondent was asked to replace the delivered car with a new car and to deposit a sum of Rs. 5,000 for the mental agony of the Complainant in addition to Rs. 2,500 as the litigation cost. This order of the District Forum was upheld by the State Commission. District Forum had specifically given a finding that the car delivered was a Demo Test Drive Model

The NCDRC however exercising the revisional jurisdiction set aside the finding and judgment of the District Forum and the State Commission that a used car was delivered. The NCDRC however recorded that the car delivered to the Complainant was defective and modified the orders of the District Forum and directed the Respondent to pay the Complainant a sum of Rs. 1,00,000. The Complainant then approached the Supreme Court assailing the order of the NCDRC.

The Bench after hearing the matter observed that, "to deliver the defective car against the new car was also not permissible. Not to deliver the new car despite the full sale consideration paid and/or to deliver the defective car can be said to be unfair trade practice. Therefore, as such the District Forum and the State Commission were absolutely justified in directing the respondent no.1 – dealer to replace the delivered car and to deliver a new car."

The Court also observed that the National Commission had over stepped the scope and ambit of the revisional jurisdiction conferred under Section 21(b) of the Consumer Protection Act as, "In exercising of revisional jurisdiction the National Commission has no jurisdiction to interfere with the concurrent findings recorded by the District Forum and the State Commission which are on appreciation of evidence on record".

Out of the Rupees one lakh cost imposed on the dealer, the Court directed Rs.50,000 to be given to the appellant and the remaining to be deposited before the he Mediation and Conciliation Project Committee (MCPC), Supreme Court.

Case Title Rajiv Shukla Vs Gold Rush Sales and Services Ltd and Anr. – CA 5928/2022

Citation : 2022 LiveLaw (SC) 750

Consumer Protection Act 1986- Delivering a defective and old model car against a booking for a new car made by a customer who has paid full sale consideration is an "unfair trade practice"-Non delivery of a new car can be said to be an unfair trade practice and even it can be said to be dishonesty on the part of the dealer and against the morality and ethics. As observed hereinabove, once the new car was booked and the full sale consideration was paid, a duty was cast upon the dealer to deliver a new car which is not defective - Para 7.2

Consumer Protection Act 1986 - In exercising of revisional jurisdiction the National Commission has no jurisdiction to interfere with the concurrent findings recorded by the District Forum and the State Commission which are on appreciation of evidence on record - Para 7.1

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Delivering Used & Defective Car Against Booking For New Car Is Unfair Trade Practice, Dishonest & Unethical : Supreme Court

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