Maruti Udyog Limited v. Nagender Prasad Sinha & Another

Ashok Bhan J., President:— Maruti Udyog Limited-petitioner herein, which was the Opposite Party before the State Consumer Disputes Redressal Commission, Jharkhand (hereinafter referred to as ‘the State Commission’ for short), has filed the present Revision Petition.

Admitted facts between the parties are:—

Mr. Nagender Prasad Sinha, respondent no. 1 herein, booked a Maruti 800 Standard car on 12.01.1999 and deposited a sum of Rs. 1,70,154.89 with Ashish Automobiles, a division of Somani Swiss Industries Limited-respondent no. 2 herein, who was the dealer of the petitioner. The money was deposited by way of a demand draft drawn in favour of the petitioner/manufacturer. The said demand draft was transmitted to the petitioner by respondent no. 2 and the amount thereof was duly credited in the account of the petitioner. However, no car was delivered to the respondent no. 1 either by the dealer or by the petitioner within the stipulated time of 4-6 weeks.

Respondent no. 1, being aggrieved, filed a complaint before the District Consumer Disputes Redressal Forum, Ranchi (hereinafter referred to as ‘the District Forum’ for short) on 08.06.1999 and the District Forum, by its Order dated 20.10.1999, directed both the petitioner and respondent no. 2 to deliver the car with 18% interest on the deposited money from the date of deposit till the actual date of delivery or refund the deposited money with 18% interest till the date of refund and pay a compensation of Rs. 5,000/- for harassment to respondent no. 1.

The petitioner, being aggrieved, filed an Appeal before the State Commission against the Order of the District Forum dated 18.04.2000 During the pendency of the said Appeal, petitioner entered into an agreement dated 12.05.2000 with respondent no. 2 and, thereafter, the petitioner organized the delivery of the vehicle through its other dealer, viz., Pebco Motors Limited. While taking the delivery of the car, respondent no. 1 entered into MoU with respondent no. 2-dealer wherein respondent no. 2 agreed to pay interest @ 18% along with amount of compensation to the complainant/respondent no. 1 on the booking amount as per Consumer Court Order. The car was delivered to respondent no. 1 on 09.07.2000 after 1-½ years from the date of booking. All this happened during the pendency of the Appeal before the State Commission. The State Commission, by its Order dated 15.10.2003, directed the petitioner to pay the interest in terms of the Orders of the District Forum for the delayed delivery of the vehicle within three weeks from the date of receipt of the Order failing which the petitioner was made liable to pay further interest @ 18% from the date of the Order till the date of payment by holding respondent no. 2 authorized dealer and agent of the petitioner.

Learned Counsel appearing for the petitioner submits that relationship between the petitioner and Ashish Automobiles-respondent no. 2 was of principal-to-principal basis. The said dealer was not an agent and had no authority to bind the company by any contract. The petitioner was not responsible for any deposits received by the said authorized dealer from the purchaser of its products. The customer was required to deposit the price of the vehicle to the authorized dealer by way of demand draft payable to the company. The authorized dealer also has to issue invoice and sale certificate to the purchaser and charge local sales tax and deposit the same in the State Government treasury. The said transaction between the dealer and the purchaser concludes on the delivery of the vehicle to the purchaser. The petitioner's invoices of the vehicles in favour of its authorized dealer against the C-Form under the Central Sales Tax against the dealer's fund available in the Vehicle Purchase Account. The petitioner does not earmark any vehicle in favour of any particular customer at the time of invoicing to the dealer from its works at Gurgaon and the sale of the vehicle between the authorized dealer and the company stands concluded as soon as the vehicle is handed over to the transporter for dealer's destination. The company does not receive the FOR price from any individual customer. After receiving the demand draft in favour of the company, the dealer deposits the same in the designated account and the proceeds of the demand draft are transferred in the Vehicle Purchase Account of the said dealer.

The question, which arises for consideration, in this case is “as to whether the agreement entered into by the petitioner with respondent no. 2 was that of a principal-to-principal basis or that of principal-to-agent?”. In other words, was respondent no. 2 an agent of the petitioner? And if respondent no. 2 was not the agent of the petitioner, then what is the liability of the petitioner vis-à-vis purchaser? Clause 5 of the Dealership Agreement reads as under:—

“LIMITS OF AUTHORITY

Nothing in this agreement shall make or be deemed to make the dealer the agent or representative of the company for any purpose and the dealership shall no describe or represent itself as such. The dealer has no right or authority to bind the company by any contract or representation whatsoever with or to any third party or to assume any obligation of any third party on behalf of the company. The company shall not be responsible or shall the dealer have any authority to render the company responsible for any deposits received by the dealer from purchaser of products.”

Hon'ble Supreme Court of India in Indian Oil Corporation v. Consumer Protection Council, Kerala, reported in [II (1994) CPJ 21 (SC)], has held that in view of Clause 17 of the Dealership Agreement, which is similar to Clause 5 of MUL's Dealership agreement, the relationship between the dealer and the Indian Oil Corporation is one of the principal-to-principal basis and not as a principal-to-agent. It was held that since the relationship was of principal-to-principal basis, there was no privity of contract between Indian Oil Corporation and the consumer. It was observed as under:—

“17. In so far there is no privity of contract between the appellant and the consumer no “deficiency” as defined under Sec. 2(g) (quoted above) arises. Therefore, the action itself is not maintainable before the Consumer Forum. For all these reasons, we set aside the judgments of the authorities below. Civil Appeal will stand allowed. However, in the circumstances of the case there shall be no orders as to costs.”

To the similar effect, is the Judgment of Hon'ble Supreme Court of India in Vijay Traders v. Baja Auto, reported in [(1995) 6 SCC 566].

In a recent Order of this Commission in Maruti Udyog Limited v. Arjun Singh in Revision Petition No. 2636 of 2006, in which an identical question arose, this Commission held as under:—

“Keeping in view the said limits of authority, the relationship between the Maruti Udyog Ltd. and the dealer is on the basis of principal to principal and as such the Maruti Udyog Ltd. would not be liable for the acts of the dealer. It may also be pointed out at this stage that the State Commission in identical matters in the First Appeals referred to above had come to the conclusion that there was no privity of contract between the Maruti Udyog Ltd. and the customers who had booked the vehicle with the dealer. The State Commission has pointed out that it is settled that in case of relationship between manufacturer and its distributor on principal to principal basis the manufacturer was not liable for acts and its distributor. The State Commission had relied upon the judgment of the Apex Court in Indian Oil Corporation v. Consumer Protection Council, Kerala II (1994) CPJ 21 (SC) (supra) wherein it is held that once delivery of vehicle is given to the dealer after realizing the price from dealer, the relationship between the manufacturer and dealer was not of principal and agent, but of vendor and purchaser. The State Commission ultimately held in the said cases that the company was not liable to either deliver the vehicle or to refund the deposit amounts or to pay compensation to the complainant. It was further held that the authorized dealer Ashish Automobiles (A division of Somani Swiss Ind. Ltd.) headed by Mr. M.L Somani was alone liable to comply with the impugned orders.

In view of the above position, the impugned order of the State Commission dated 14.6.2006 cannot be sustained wherein it is stated that Maruti Udyog Ltd. is liable to pay 18% interest and it may realize the same from authorized dealer. The liability to pay interest and compensation would, therefore, under the circumstances, be that of respondent No. 2 alone. The revision is, accordingly, allowed in aforesaid terms with no order as to cost.”

In the aforesaid case, the point involved was the same, the facts were similar, the petitioner was Maruti Udyog Limited, i.e, the petitioner herein and respondent no. 2 herein was the same, i.e, Ashish Automobiles. The only difference is that the consumer's name in the present case is ‘Nagender Prasad Sinha’ whereas in that case, the name of the consumer was ‘Arjun Singh’. The aforesaid Judgment is on all fours on the point involved in the present case.

In the aforesaid circumstances, this Revision Petition is accepted and the impugned Order of the State Commission, holding the petitioner liable to pay interest @ 18%, cannot be upheld. However, respondent no. 1, consumer herein, shall be at liberty to realize the sum from the authorized dealer, i.e, respondent no. 2. The liability to pay interest and compensation, under the circumstances, would be that of respondent no. 2 alone.

The Revision Petition is allowed in the above terms. There shall be no order as to costs.