Compensation for giving wrong year of manufacture

The company argued that since Forstees was selling pre-owned cars, it was not covered by the Consumer Act

Frostees Export wanted to buy a vehicle for its directors. It purchased a pre-owned Audi car from Landmark Cars for Rs 61.5 lakh. At the time of purchase, it was represented that the vehicle had been manufactured in 2016.

After purchase, when a valuation was obtained through Vision Squad Service, it was found that the vehicle was manufactured in 2015 and assessed to be worth Rs 44 lakh. Aggrieved that they had been overcharged Rs 17.5 lakh by misrepresenting the year of manufacture, the company filed a complaint before the District Forum.

Landmark Cars did not even care to contest the case. So the Forum allowed the complaint and ordered it to refund the excess amount collected by misrepresenting the year of manufacture. Landmark Cars challenged the order before the West Bengal State Commission, which dismissed its appeal, and upheld the order directing a refund of the price difference of Rs 17.5 lakh along with 9 per cent interest and costs of Rs 20,000.

Landmark Cars filed a revision petition. It questioned the maintainability of the complaint on various technical grounds. It contended that since Frostees Export was also involved in the business of purchasing and selling pre-owned cars, the transaction was a commercial one, and did not come under the scope of the Consumer Protection Act. It also pointed out that the car had been sold by Landmark Pre-owned Cars, but the complaint filed against Landmark Cars – a different entity.

In its judgement of June 30, 2020, delivered by Justice V K Jain, the National Commission observed that the Audi car was purchased for the personal use of company's directors, and was not bought with the motive of generating profit through resale. Several precedents were considered on the point of purchase of goods or services by a commercial organisation as perquisites for its directors, such as accommodation and flats for the personal use of the directors. A similar view had also been taken in Crompton Greaves versus Daimler Chrysler, regarding the purchase of cars as a perquisite for company directors. So the Commission concluded that the Audi vehicle purchased for the personal use of the directors could not be construed as a commercial transaction, and the purchaser would be a consumer entitled to file a complaint under the Consumer Protection Act.

As regards the objection about the complaint being filed against Landmark Cars instead of Landmark Pre-owned cars, the National Commission observed that even though technically they may be different entities, the shareholders of both were the same. More importantly, the case was not contested before the District Forum and no objection had been raised, so such an objection could not be raised subsequently.

On merits, the National Commission observed that the company had obtained a higher price by misrepresenting the vehicle to have been manufactured in 2016 when it was actually a year older. So selling a vehicle manufactured in 2015 at the price of a 2016 make was unfair. Accordingly, the revision petition was dismissed and the order for a refund of the price difference along with interest and compensation was upheld.

The author is a consumer activist