IN THE STATE COMMISSION: DELHI

(Constituted under section 9 of the Consumer Protection Act, 1986)

Date of Hearing: 28.09.2020 

Date of Decision:24.11.2020

Complaint No. 289/2011

IN THE MATTER OF

M/S RAHEJA DEVELOPERS LTD.

215-216, Rectangle-one

D-4, District Centre, Saket

New Delhi-110017….Complainant

VERSUS

1. M/S BMW INDIA PVT. LTD.

(BMW Group Companies)

With its Registered Office at:

DLF Cyber City, Phase-II

And also at:

Shivam House, 14F,

Connaught Place,

New Delhi-110001

2. ANDREAS THOMAS SCHAAF

Managing Director)

A-28 3^rd Floor,

West End Colony,

New Delhi-110021

3. M/S BIRD AUTOMOBILES PVT. LTD.

E-9, Connaught House, Connaught Place

New Delhi

4. MS. RADHA BHATIA (DIRECTOR)

B-6/5, Vasant Vihar,

New Delhi-110057....Opposite Parties

HON’BLE  SH. ANIL SRIVASTAVA, MEMBER 

1.   Whether reporters of local newspaper be allowed to see the judgment? Yes     

 2.   To be referred to the reporter or not?                                                        Yes

Present:       Sh. Kuljeet Rawal, Counsel for the complainant

                   Sh. Aditya V. Singh, Counsel for the OPs

PER: ANIL SRIVASTAVA, MEMBER

JUDGEMENT

1.           This complaint under Section 17 of the Consumer Protection Act 1986, the Act, has been filed by M/s Raheja Developers Ltd., for short complainant, against M/s BMW India Pvt. Ltd. and ors, hereinafter referred to as OPs alleging unfair trade practice on the part of OPs they having sold to the complainant a defective vehicle and praying for the relief as under:-

1. Respondents be directed specially respondent no. 1,6 to 8 to replace the subject vehicle HR-02W-0004 being BMW Car-650(i) (convertible) with fresh latest brand new vehicle likewise being a BMW Car-650 (i) (convertible) or in alternate this ld. Court be pleased to direct respondents to refund an amount of Rs. 79 lac with interest @ 18% p.a. from the date of payment till payment of same to complainant being the cost of the vehicle paid to them in view of unfair trade practice adopted by them as detailed above apart from other especially of supplying a defective vehicle and that too of an old model in garb of new latest model and being not fit to be even called a vehicle much less for worth as paid by the complainant through its nose;
2. Respondents be directed specially respondent no. 1,6 to 8 to refund amount of Rs. 1,14,520/- charged on various account with interest @ 18% per annum w.e.f. date of payment; and
3. The respondents to be directed to pay compensation to the complainant for harassment, mental agony, physical causing severe delay and incontinence losses and unnecessary expenditures which complainant quantify it in all as Rs. 10 lakhs;
4. Pendalite and future interest be also awarded at the rate of 18% per annum till payments of all the amounts by the respondents;
5. Total amount claimed is Rs. 90,04,520/-.

2.           Facts of the case necessary for the adjudication of the complaint are these.
3.           The complainant had purchased a BMW Car-650(i) (convertible) on 12^th July 2010, vide performa invoice for a sum of Rs. 76,50,000/- for its own use. Insurance charges of Rs. 1,24,036/- and registration charges of Rs. 1,26,000/- were also paid. The vehicle was registered against registration no. HR02W-0004. According to the complainant the vehicle was purchased for the senior officials of the complainant company and not for any commercial activity. It was claimed and boosted of the safety of user of the said vehicle beside road usage being one of the key element of the product of the OPs. It was further claimed that it is their aim to prevent accident by pursuing integrated vehicle safety concept comprising of both passive and otherwise, the measure to assure safety of user. It was likewise also claimed that they are one of the leading seller of the car besides providing one of the best and steady vehicles on road in India and other part of the world for their customers. The complainant has alleged that the tall claims, representations etc. fell flat in the short span of purchase of the subject vehicle when it suffered tyre burst three/four time within a span of four months from July 2010. The tyre burst of vehicle according to the complainant can lead to a serious accident resulting in the loss of life which cannot be compensated. Hence complainant was subjected to continuous severe safely hazards and to their life. In these circumstances OPs were called upon to carry out necessary investigation, requisite repairs, replacements putting things upright besides specifically pointed out that vehicle is suffering from serious malfunctioning and is a easy victim to severe accidental hazards. The tyre blast were allegedly due to the malfunctioning, default, defects, quality problems and thus the complainant is entitled to replacement of the tyres free of charge more so when the complainant due to tyre blast had to shell out a sum of Rs. 30467/- in the month of August 2010; again Rs.58160/- in the month of November 2010 and again on 21.05.2011 being a sum of Rs. 25893/- for no fault of theirs.
4.           The complainant took up the matter with the OPs and in response thereto the OPs in order to escape the consequence and liability took the plea that tyre blast was owing to excessive impact force. The situation got worsened when later the vehicle engine started making abnormal noise. The Ops had assured of setting things at rest but despite the check up by BMW experts the problem persisted. Finally while vehicle was in service station there was theft and a few parts of the car were replaced by inferior parts. Later the complainant had probed into the matter and carried out investigation when they found that they have been sold an old defective car in the garb of so called brand new car manipulating the paper of sale of cars by showing it to be a fresh vehicle.
5.           A lot of correspondence was done between the complainant and the OPs but the OPs did not respond to the complainant’s call leading to filing of this complaint for the redressal of their grievances.
6.           The manufacturer, OP-1 and 2 and the dealer, OP-3 and 4 were noticed and in response thereto they have filed the reply resisting the complaint both on technical ground and on merit.

Reply filed on behalf of OP-1 and 2

The complaint is not a consumer within the definition of ‘Consumer’ under Section 2(1)(d) of the Consumer Protection Act, 1986 as the vehicle was purchased for commercial purpose. Secondly, this Commission lacks territorial jurisdiction to decide the present complaint as neither any cause of action has arisen nor the OP no. 1 has its registered or branch office within the territorial jurisdiction of this Commission. Thirdly, the complainant has not approached this Hon’ble Commission with clean hands as it has deliberately suppressed material facts and made false and misleading statements. Fourth, there was no manufacturing defect in the tyres and/or the car, and whatever damage occurred, that was owing to the negligence of the complainant. Thus the damage done to the vehicle is not covered under the warranty terms. It is submitted that on the very first occasion when the complainant took the car to the workshop of the OP-3 with a complaint of tyre burst, it was examined by the technical team of the Op-3 when it was noticed that the tyre was damaged due to external impact and consequently, the rim of the tyre was also bent and it needed replacement. Fifth, the BMW cars carries with it two year unlimited mileage warranty in order to address defects which may arise, which meant that faulty parts on the car would be replaced when required. BMW’s liability is to reimburse the customers the damages sustained in the car due to regular wear and tear. The relevant extracts of the warranty terms laying down circumstances not covered under the warranty are as indicated below:

“This warranty does not apply to:.......-Damage which results from negligence, improper operation of the vehicle, improper repair, lack of or improper maintenance, environmental influences, flood, accident or fire damage or use of improper or contaminated fuel.” (Emphasis supplied)

Submissions filed on behalf of OP-3 and 4

Their submissions are that the complainant since not consumer within the meaning of Section 2(1)(d) of the Act is not entitled to raise a consumer dispute. Secondly this Commission lacks the territorial jurisdiction. Thirdly, this Commission according to them has no jurisdiction to decide the present complaint case as in para no. 13 of the complaint, the complainant has stated inter alia that... It is a clear case of misrepresentation, breach of trust and cheating on part of respondents.”

The complainant further in para no. 32 of its complaint has stated; “....it has been able to lay hands on BMW decoder which amply demonstrate that the subject vehicle of model 2008 manufacture and sale documents have been manipulated to show it as model of July 2010. This amounts to cheating apart from breach of trust.

They have further submitted that the proceedings before the Consumer Courts are the proceedings of summary jurisdiction; whereas in this complaint, the complainant wants an order from this Commission in its favour on the basis of alleged allegations of misrepresentations, breach of trust and cheating and other offences which requires a great deal of evidence both oral and documentary to prove its case, which may not be possible for this Commission to decide, the subject involving complicated question of law.

7.           The complainant has filed rejoinder rebutting the contentions raised in the written statement and reiterating the averments contained in the complaint. Evidence by way of affidavit are also on record.
8.           This matter was listed before this Commission for final hearing on 28.09.2020 when the counsel for both sides appeared and advanced their arguments in support of their pleadings, the complainant alleging deficiency of service for the replacement of the car or the refund of the amount in lieu thereof and the OPs raising technical objection regarding maintainability of the complaint and arguing that there is no deficiency on their part, for the dismissal of the complaint.
9.           Short question for adjudication in this complaint is whether the complainant has been able to establish deficiency of service on the part of the OPs and if so, whether they are entitled for the relief claimed when the OPs have resisted the complaint both on merit and on technical ground. Secondly, whether the purchase of a car by the company for the use/personal use of its Director amounts to purchase for a commercial purpose, in which case they would not be consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act. In the case of Controls and Switchgear Company Ltd. versus Daimler Chrysler India Pvt. Limited and T and T Motors Limited –IV [2007] CPJ 1 (NC) a complaint alleging defects in two Mercedes Benz, cars purchased by the complainant company for the use of its directors, was filed before this Commission. The complaint was resisted inter-alia on the ground that the cars were purchased for a commercial purpose. Rejecting the contention, this Commission inter-alia held as under:

In our view, there is no substance in the aforesaid contention, because:

Company is a legal entity and is entitled to file complaint.

The cars are purchased for the use of the Directors and are not to be used for any activity directly connected with commercial purpose of earning profit. Cars are not used for hire but are for the personal use of the Directors. Hence, it cannot be said that the complainant company has purchased the cars for commercial purpose.

10. In General Motors Pvt. Ltd. (supra), a complaint alleging defect in a car purchased by the complainant company for use of its Managing Director was filed before the concerned State Commission. The complaint was resisted inter-alia on the ground that purchase of the vehicle for the use of the Managing Director of the company amounted to purchase for a commercial purpose. Accepting the said contention, this Commission inter-alia held as under:

"We note that in his complaint before the State Commission the Respondent-Complainant had clearly stated that the vehicle was purchased for the use of its Managing Director.  We agree with Appellants' contention that this clearly amounts to its purchase for a 'commercial purpose' since the Managing Director of a private limited company would obviously not use this vehicle for self-employment to earn his livelihood but for 'commercial purposes' as a perk of his office. Counsel for the Respondent-Complainant has sought to challenge this contention by pointing out that since the present case pertains to 1999 and the amendment referred to was made only in 2002, it was not applicable in the instant case.  We are unable to agree with this contention as well because the 2002 Amendment to the Act pertains to Section 2(1)(d)(ii) of the Act relating to hiring or availing of  services for a consideration and not to Section 2(1)(d)(i) of the Act which relates to purchase of  goods.  In fact, the interpretation of Section 2(1)(d)(i) of the Act relating inter alia to purchase of goods has been well settled by the Hon'ble Supreme Court as far back as in 1995 in its judgment in Laxmi Engineering Works v. P.S.G. Industrial Institute [1995 (3) SCC 583], wherein the Hon'ble Apex Court has ruled as follows:

"... On this interpretation of the definition clause, persons buying goods either for resale or for use in large scale profit-making activity will not be 'consumers' entitled to protection under the Act.  It seems to us clear that the intention of Parliament as can be gathered from the definition section is to deny the benefits of the Act to persons purchasing goods either for purpose of resale or for the purpose of being used in profit-making activity engaged on a large scale.  It would thus follow that cases of purchase of goods for consumption or use in the manufacture of goods or commodities on a large scale with a view to make profit will all fall outside the scope of the definition. It is obvious that Parliament intended to restrict the benefits of the Act to ordinary consumers purchasing goods either for their own consumption or even for use in some small venture which they may have embarked upon in order to make a living as distinct from large-scale manufacturing or processing activity carried on for profit.  In order that exclusion clause should apply it is however necessary that there should be a close nexus between the transaction of purchase of goods and the large-scale activity carried on for earning profit."

Since the instant case pertains to the purchase of goods admittedly for 'commercial purposes' since the vehicle was purchased by a private limited company for its Managing Director, this case is squarely covered by the above judgment of the Hon'ble Apex Court.  The State Commission erred in not taking note of this important fact while deciding the complaint." 

Since the instant case pertains to the purchase of goods admittedly for 'commercial purposes' since the vehicle was purchased by a private limited company for its Managing Director, this case is squarely covered by the above judgment of the Hon'ble Apex Court.  The State Commission erred in not taking note of this important fact while deciding the complaint." 

Section 2(1)(d) of the Consumer Protection Act which defines the term 'consumer', to the extent it is relevant, reads as under:-

"consumer" means any person who—

1. buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or
2. hires or avails of any services for a consideration which has been paid or promised or partly paid and partly prom­ised, or under any system of deferred payment and includes any beneficiary of such services other than the person who 'hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person but does not include a person who avails of such services for any commercial purposes;

It would thus be seen that the emphasis is on the purpose for which the goods are obtained, though the use to which the goods are actually put would be helpful in deciding the purpose for which they were obtained.

The term 'commercial purpose' has not been defined in the Consumer Protection Act and as held in Laxmi Engineering Works v. P.S.G. Industrial Institute [(1995) 3 SCC 583], in the absence of a statutory definition, we have to go by its ordinary meaning. 'Commercial' denotes 'pertaining to commerce' (Chamber's Twentieth Century Dictionary); it means "connected with, or engaged in commerce; mercantile, having profit as the main aim" (Collin's English Dictionary) and the word 'commerce' means "financial transactions, especially buying and selling of merchandise on a large scale" (Concise Oxford Dictionary)"

Going by the dictionary meaning, a car or for that matter any goods obtained and the services hired or availed by a company can be said to have been obtained or  hired or availed for a commercial purpose, only if the said goods or services are intrinsically connected with, or related to the business or commerce in which the company is engaged. The acquisition of the goods or the hiring or availing of services, in order to bring the transaction within the purview of section 2 (1) (d) of the Consumer Protection Act, therefore, should be aimed at generating profits for the company or should otherwise be connected or interwoven with the business activities of the company. The purpose behind such acquisition should be to promote, advance or augment the business activities of the company, by the use of such goods or services. As observed by the Hon'ble Supreme Court in Laxmi Engineering Works (supra),  it is not the value of the goods but the purpose for which the goods are brought or put to use, which is relevant to decide whether the goods were obtained for a commercial purpose or not. The same would be the position, where services are hired or availed by a company. If the business activities of a company cannot be conveniently undertaken without the goods purchased or the services hired or availed by a company, such purchase or hiring/availing as the case may be, would be for a commercial purpose, because the objective behind such purchase of goods or hiring or availing of the services would be to enable the company to earn profits by undertaking and advancing its business activities.

The goods and services made available by a company to its directors or employees can be classified into the following three broad categories:-

(a) The goods and services which are obtained for and made available to the directors or employees of the company and are used by them only for their personal purposes, unconnected with the business of the company. For instance, the cars used by the directors and employees of the company for their shopping, outings, recreations, etc. or for commuting to and from the office of the company. Another example can be the air conditioners and furniture provided at the residence of the directors and employees of the company or the telephone or broadband got installed by the company at their residence.

(b) The goods and services made available to the directors or employees of the company and used by them primarily for their personal purposes but incidentally, also for the purposes of the company. For instance, a car used mainly for outings, recreations, personal commuting etc. of the directors and employees or their families, but also for visiting the factory and offices of the company or attending the business meetings.

(c) The goods and services made available by a company to its directors and employees primarily for the purposes of the company and used by them mainly for the purposes of the company but incidentally also for their personal purposes. For instance, a vehicle purchased for being used as a staff car or a delivery van, but sometimes also used for the personal purposes of the directors or employees, unrelated to the business of the company.

As far as the goods and services falling in category (a) are concerned, there can be no dispute that since such goods were purchased or the services were hired or availed by the company and made available to its directors and employees for the purposes wholly unrelated to the business activities of the company, such an acquisition cannot be said to be for a commercial purpose. No commercial purpose of the company is achieved by purchasing such goods or hiring or availing such services and then making them available to its directors and employees.

In our opinion even if such goods or services are incidentally used by the directors or employees of the company for the purposes of the company, that would not lead to the conclusion that the acquisition of such goods or services was for a commercial purpose. The dominant purpose behind such acquisition being to provide an amenity to the directors or the employees as the case may be, it cannot be said that the company was seeking to make a profit or advance its business by such an acquisition.  The use for the purposes of the company being subsidiary and incidental in nature, cannot override the dominant purpose for which they were acquired and made available to the director or the employee of the company. Therefore, the acquisition of goods and services, even if they fall under category (b) above, cannot be said to be for a commercial purpose.

As far as the goods or services falling in category (c) are concerned, since the dominant purpose behind such acquisition is to advance and sustain the business activities of the company and the use for the personal purposes of the directors or the employees being incidental, it can be safely said that such an acquisition was for the commercial purposes of the company.

In Laxmi Engineering Works (supra),  the Hon'ble Supreme Court inter-alia observed as under:-

"...On this interpretation of the definition clause, persons buying goods either for resale or for use in large scale profit-activity will not be 'consumers' entitled to protection under the Act. It seems to us clear that the intention of Parliament as can be gathered from the definition section is to deny 446 the benefits of the Act to persons purchasing goods either for purpose of resale or for the purpose of being used in profit making activity engaged on a large scale. It would thus follow that cases of purchase of goods for consumption or use in the manufacture of goods or commodities on a large scale with a view to make profit %ill all fall outside the scope of the definition. It is obvious that Parliament intended to restrict the benefits of the Act to ordinary consumers purchasing goods either for their own consumption or even for use in some small venture which they may have embarked upon in order to make a living as distinct from large scale manufacturing or processing activity carried on for profit. In order that exclusion clause should apply it is however necessary that there should be a close nexus between the transaction of purchase of goods and the large scale activity carried on for earning profit. "

Relying upon the above-referred observations, it was contended by the learned counsel for the opposite party that the purpose behind enactment of Consumer Protection Act was to provide a speedy remedy to the small consumers and the Act is not intended for the benefit of large business entities such as corporates.  We, however, find nothing in the judgment which would indicate that a company will not be a consumer within the meaning of the Act even if the goods are obtained or the services are hired or availed by it, for a purpose which by no means, can be said to be a commercial purpose. The Apex Court itself emphasised that for the exclusion to apply, there has to be a close nexus between the transaction of purchase of goods and the large scale activity, carried for earning profit. Therefore, if a transaction of purchase of goods or hiring or availing of services is not aimed at earning profits or advancing the business activities of the purchaser, such a transaction will not be out of the purview of the Consumer Protection Act.

11. Having regard to these facts the objection of the OPs that the complainant is not a consumer within the meaning of Section 2 (1) (d) of the Act is overruled since not sustainable. Now the next question is whether to prayer made by the complainant for the replacement of the vehicle, the vehicle being defective, can be considered. I may now advert to the law laid down on. The subject by the Hon’ble NCDRC or Hon’ble Apex Court.
12. The Rajasthan State Consumer Disputes Redressal Commission in the matter of Alfa Automobiles versus Gopinath Trading co. And anr. as reported in II [2006] CPJ 524 has held as under:-

The appellants shall get the repair done to the defects in the roof panel and second cylinder of the engine of the car in question as pointed out by the complainant at no cost to the owner for parts or labour within a week from the date of presentation of the car by the complainant in the workshop of the appellants. In case, however, the above defects cannot be repaired, the appellants shall replace the parts shown to be defective with a new parts or the equivalent free of cost. In the facts and circumstances of the case, there is no order as to costs.

13. The Hon’ble NCDRC in the matter of Ess Pee Automobiles Limited Hindustan Motors Limited versus SPN Singh and ors as reported in I [2015] CPJ 192 (NC) is pleased to direct the OPs to return the vehicle in roadworthy position to the complainant.
14. The Hon’ble NCDRC in yet another matter, in the matter of Hyundai Motors India Limited versus Affiliated East West Press Pvt. Ltd. I [2008] CPJ 19 (NC)- held that in the event defects in the brand new luxury car requiring repeated repairs could not be rectified, deficiency on the part of the manufacturer and in that case the OP was directed to refund the entire cost of vehicle.
15. From the above discussion it is manifestly clear that OPs are under an obligation to ensure roadworthy vehicle to the owner by doing the repair as detected in the vehicle or else refund the cost of the vehicle.
16. I may now advert to the next point regarding selling the complainant a 2008 model car in the year 2010. For this purpose the OP-1 and OP-2 have drawn my attention to Form 20 filed by the complainant indicating the year of manufacture of the vehicle as 2008. If that be the case, this factum goes to establish that on this account the OPs cannot be faulted with.
17. The OPs have also raised a point that the expert opinion has not been filed and thus the entire edifice built of the complainant falls to the ground. However this proposition is not acceptable keeping in view the judgement of this Commission in the matter of Tata Motors Limited versus Sh. Ashwani Setia and anr. FA-751/2007 decided on 20.05.2019 holding as under:-

The complainant/respondent number has made an endeavour to establish that the vehicle developed serious defects on three occasions within the warranty period. This indisputed factum does not require to be established by or through expert opinion. This assertion gains force from the verdict of the Hon’ble NCDRC.

The Hon’ble NCDRC in the matter of Tata Motors Ltd. and anr. Versus Ravikant Garg as reported in III [2013] CPJ 85 (NC) is pleased to hold that once the manufacturing defects are there in the vehicle, there is no need for any expert opinion. Admitted facts need not be proved further.

The Hon’ble NCDRC in yet another matter, in the matter of Sas Motors Ltd. versus Anant Haridas Chaudhari as reported in III [2013] CPJ 520 (NC) is pleased to hold that no expert advice is required in the event facts speaks for themselves. In that case the vehicle purchased n 05.02.2005 was sent for repairing on 07.02.2005 where the vehicle remained for 38 days. Job Card for this purpose is sufficient to establish the fact.

18. Finally the objection of the OPs that this Commission lacks the territorial jurisdiction to hear and to dispose of this case cannot be accepted relying on Section 17 of the Consumer Protection Act 1986 which says that the place where the OPs are working for gain is the place determining the territorial jurisdiction which in the given case happens to be Delhi and thus there appears to be no cloud on the territorial jurisdiction of this Commission to entertain the complaint.  
19. Having regard to the discussion done and the legal position explained I am of the considered view that the complainant is entitled to the relief to the extent that OPs shall have the vehicle repaired and make it roadworthy. This be done within three weeks. However if the repairing is not done or not possible the OPs shall refund the amount spent for the purchase of the car.
20. Ordered accordingly, leaving the parties to bear the cost.
21. A copy of this order be forwarded to the parties to the case free of cost as is statutorily required. File be consigned to records.

(ANIL SRIVASTAVA)

MEMBER

PRONOUNCED ON

24.11.2020

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