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  • Section 64-A(1)(a) of the Sale of Goods Act, 1930
  • Section 64-A of the Sale of Goods Act, 1930
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  • Section 64-A(1)(a) of the Sale of Goods Act, 1930
  • Section 64-A of the Sale of Goods Act, 1930
Smart Summary

Factual and Procedural Background

Mr. Ravinder Raj booked a Maruti 800 car in 1985-1986, paying an advance of Rs 10,000. On 15 July 1988 the dealer, Competent Motors Co. (P) Ltd. (Respondent 2), informed him that his allotment had matured and asked for the full sale price. Raj paid Rs 78,351.05 on 16 February 1989, choosing a cream-coloured vehicle.

On 1 March 1989 the Government increased the excise duty on cars, raising the price by Rs 6,710.61. The dealer demanded this extra amount, which Raj deposited under protest. Billing was completed on 5 April 1989, after which the car was delivered.

Raj filed a complaint before the District Consumer Forum seeking a direction that the manufacturer (Maruti Udyog Ltd., Respondent 1) and the dealer bear the increase in price. The District Forum rejected the claim; the State Consumer Disputes Redressal Commission allowed it. On further revision, the National Consumer Disputes Redressal Commission reversed the State Commission and ruled against Raj. He filed two special leave petitions before the Supreme Court challenging those orders.

Legal Issues Presented

  1. Whether the purchaser or the manufacturer/dealer must bear the additional price arising from an excise duty increase that occurred before billing but after the purchaser’s main payment.
  2. Whether any delay attributable to the manufacturer or dealer constituted negligence or deficiency in service, thereby shifting liability for the price increase to them.

Arguments of the Parties

Petitioner’s Arguments (Mr. Ravinder Raj)

  • The delay in delivery was not caused by him; therefore, he should not bear the cost of the increased excise duty.
  • Documents showed that a cream-coloured car was available, indicating no genuine reason for delay.
  • Relied on Supreme Court precedents (Om Prakash and Mohinder Pratap Dass) where sellers were held liable for price increases due to delay.

Respondent 2’s Arguments (Competent Motors Co. (P) Ltd.)

  • The receipt itself stated that the final price would be the one prevailing on the date of invoice; billing occurred on 5 April 1989, after the duty hike.
  • The colour requested by the petitioner was not actually available on the relevant dates; manufacturing charts only indicated potential colours.
  • No negligence was involved because the dealer promptly informed the petitioner once the allotment matured.

Respondent 1’s Arguments (Maruti Udyog Ltd.)

  • Under Section 64-A of the Sale of Goods Act, 1930, any additional tax burden arising before delivery must be borne by the purchaser.
  • No mala fide or negligent delay was proved against the manufacturer.
  • Adopted the dealer’s submissions regarding the price-prevailing clause.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Om Prakash v. Haryana Agro Industries Corpn. Ltd. (1994) 3 SCC 504 Seller liable for price increase where deficiency in service and unexplained delay are proved. Distinguished: Court noted no proven deficiency or negligent delay in the present case.
Mohinder Pratap Dass v. Modern Automobiles (1995) 3 SCC 581 Same principle as above regarding liability for price escalation due to seller’s delay. Distinguished on identical grounds; held inapplicable to current facts.

Court's Reasoning and Analysis

The Supreme Court examined the 15 July 1988 letter and the accompanying pro forma invoice, both of which explicitly stated that the price prevailing at the time of billing would apply. The receipt issued on 16 February 1989 repeated this clause. Billing occurred on 5 April 1989, after the excise duty hike.

The Court found no evidence of a deliberate or negligent delay by either the manufacturer or the dealer. The colour availability documents only reflected production colours, not actual stock on specific dates. Consequently, the petitioner failed to establish any deficiency in service.

Invoking Section 64-A(1)(a) of the Sale of Goods Act, 1930, the Court held that increased tax burdens arising before delivery fall on the buyer. The earlier precedents cited by the petitioner were inapplicable because those cases involved proven deficiencies, unlike the present matter.

Holding and Implications

Holding: The special leave petitions are dismissed; the petitioner must bear the increased price due to the excise duty hike. The connected petition seeking interest also stands dismissed. No order as to costs.

Implications: The decision affirms the enforceability of “price prevailing on the date of invoice” clauses and reiterates that, absent proven negligence or mala fide delay, buyers bear statutory tax increases occurring before delivery. The ruling turns on statutory interpretation rather than creating new precedent.

    Ravinder Raj v. Competent Motors Company Private Limited And Another

    Order

    1. Two special leave petitions, being SLPs (C) Nos. 10364 of 2006 and 9739-40 of 2009, have been filed against the judgment and order dated 19-7-2005, passed by the National Consumer Disputes Redressal Commission at New Delhi in Revision Petition No. 1485 of 2005 and the order dated 7-8-2008 passed by the said Commission in Revision Petition No. 2974 of 2005 filed by Respondent 1, Maruti Udyog Ltd. and also MA No. 599 of 2006 in Revision Petition No. 1533 of 2005 filed by Respondent 2, namely, Competent Motors Co. (P) Ltd., the dealer.

    2. The petitioner, Mr Ravinder Raj, who is appearing in person, applied to Maruti Udyog Ltd. in 1985-1986 for booking a Maruti Car 800 and deposited a sum of Rs 10,000 as initial/advance booking payment. On 15-7-1988, Respondent 2 informed the petitioner by letter of even date that his Maruti Car Allotment No. 0802-N-04051 had matured for delivery and requested the petitioner to make payment of the full amount of the price of the car for delivery of the vehicle after completing the necessary formalities. Pursuant to the above letter, the petitioner on 16-2-1989, paid a total amount of Rs 78,351.05 which covered the price of the vehicle, insurance charges and other minor charges, including registration charges. There is no denial that the petitioner had opted for a cream colour vehicle.

    3. On 1-3-1989, there was an increase in the excise duty payable, causing a price hike of about Rs 6710.61 On 18-3-1989, the petitioner received a letter from Respondent 2 to deposit the excess amount payable as excise duty, and, accordingly, the petitioner did so under protest on 16-2-1989. The official billing in respect of the car was done on 5-4-1989.

    4. The petitioner has contended that the delay in delivery of the vehicle to him by the respondents was not occasioned by any failure or negligence on his part and the liability to pay the increased amount on account of increase in excise duty, was not that of the petitioner, but of the respondents concerned. The petitioner, therefore, applied to the District Consumer Forum for a direction upon the respondents to bear the increase in excise duty resulting in increase in the price. Such a prayer was rejected by the District Consumer Forum. The petitioner then went to the State Forum which allowed the petitioner's claim. Against the said order, the respondents went before the National Commission, which reversed the order passed by the State Forum. It is against the said order that the petitioner has come to this Court by way of this special leave petition.

    5. As indicated hereinabove, the main ground urged by the petitioner is that since he was not responsible for the delay in the delivery of the vehicle, he should not be made to bear the increase in the price, particularly, when from the documents, as indicated by him, the vehicle of the colour chosen by him was available with the respondents. He, therefore, submitted that the order of the National Commission was erroneous and was liable to be set aside.

    6. Appearing for the dealer, M/s Competent Motors Co. (P) Ltd., Ms Sapna Sinha, learned advocate pointed out that even from the receipt of the amount paid by the petitioner on 16-2-1989, it will be clear that the amount paid was subject to the price prevailing on the date of the invoice. According to the learned counsel, since the bill was dated 5-4-1989, it was the petitioner who was required to bear the increase in price on account of the increase in excise duty. Furthermore, she reiterated that the colour which the petitioner had wanted was not available at that point of time, although, from the documents it would appear that the same was available. According to her, the said documents only indicated that these were the colours in which the cars were being manufactured and did not really indicate the fact that such a colour was available on a particular date.

    7. According to Ms Sinha, there was no negligence on the part of the dealer since having received intimation about the readiness of the vehicle, Respondent 2 had immediately informed the petitioner, but unfortunately, in the meantime, the price had risen. According to the learned counsel, Respondent 2 could not, therefore, be made liable for the increase in the price.

    8*. Mr Dayal, appearing for Maruti Udyog Ltd., while adopting the submissions made by Ms Sinha, also added that having regard to Section 64-A of the Sale of Goods Act, 1930, the burden of any increase in the price by way of additional taxes would have to be borne by the customer and not by the manufacturer. He also reiterated that since there was no negligence on the part of the manufacturer in making the vehicle available to the petitioner and since no mala fide intention had been proved, the petitioner would have to bear the increase in the prices.

    9. Having considered the submissions made, we may refer to the letter of 15-7-1988, which had been written on behalf of Respondent 2 to the petitioner indicating that the petitioner's allotment number had matured for delivery. In the second paragraph of the letter, Respondent 2 requested the petitioner to complete the modalities for effecting delivery of the car against the allotment number. It was categorically indicated that on receiving payment, delivery would be effected in the sequence of priority. Coupled with the above is the pro forma invoice dated 15-7-1988, where it was further indicated that the price prevailing at the time of billing would be applicable, despite the fact that the details of the price of the vehicle were set out in the said invoice.

    10*. As indicated hereinabove, even in the receipt given to the petitioner for payment of the amount in the pro forma invoice, it had been indicated that the prices prevailing on the date of billing would apply. In this case, the billing was done on 5-4-1989. In the absence of any evidence of any deliberate intention on the part of the respondents to delay delivery of the vehicle, we are unable to agree with the petitioner that the increase in price has to be borne by the respondents.

    11. The petitioner had relied on two decisions of this Court in Om Prakash v. Haryana Agro Industries Corpn. Ltd. (1994) 3 SCC 504 and Mohinder Pratap Dass v. Modern Automobiles (1995) 3 SCC 581, on the same issue. The said two decisions in our view are not applicable to the facts of this case, on account of the fact that in the said two matters patent deficiency in the service had been found by the Court and it was also pointed out that there was no satisfactory explanation for the delay in delivery of the goods to the consumers, which is not the case as far as this particular matter is concerned.

    12**. Furthermore, having regard to the provisions of Section 64-A(1)(a) of the Sale of Goods Act, 1930, it is the liability of the petitioner to pay the extra price when the excise duty had been enhanced prior to the delivery of the vehicle.

    13. In such circumstances, the special leave petition fails and is dismissed.

    14. Consequently, in view of this order, the other special leave petition in which interest on the amount claimed has been prayed for, does not survive and is also dismissed.

    15. There will, however, be no orders as to costs in both the matters.

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    Comments

    Ravinder Raj v. Competent Motors Company Private Limited And Another
    (Feb 10, 2011)