BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION AT BANGALORE (URBAN)

DATED 19^TH DAY OF JULY 2024

ORDER

SMT.M.SHOBHA, PRESIDENT

1. The complaint has been filed under Section 35 of C.P.Act (hereinafter referred as an Act) against the OP for the following reliefs against the OP:-

1. Reimbursement of amount of advance rental payment of Rs.89,995/-.
2. Security deposit of Rs.2,69,985/-.
3. Lease rental from 31.03.2017 till 27.11.2019 Rs.33,00,894/- - This is including arrears as claimed kby the company along with lease rentals.
4. Interest calculated at 18% i.e., Rs.9,90,000/- to be paid by the OPs.
5. Litigation cost of Rs.1,00,000/-.
6. Compensation due to deficiency of service of Rs.51,00,000/-.
7. Compensated for the harassment, discomfort mental anguish Rs.15,00,000/-.
8. Total damages and compensation as stated above until disposal of this complaint from the date of filing of this complaint.

2. The case set up by the complainant in brief is as under:-

The OP3 sales executive on and around November 2016 has approached the complainant proposing great offer on their Mercedes Benz A class car by offering various benefits. The complainant impressed by the offer made by the OP entered into a lease agreement with OP2 through TVS motors Mangalore for Mercedes Benz and he has paid the amount of Rs.35,74,933/-  in 48 installments. As per the terms of the agreement the rent starts date was 31.03.2017 till 28.02.2021.  The complainant ahs deposited Rs.2,69,985/-.

3. It is further case of the complainant that the OP3 sales executive had coerced the complainant into invoicing the car before the delivery on the pretext that if the car was not invoiced by 31^st March 2017, it would be difficult for them to deliver the car and fraudulently withheld the information that once the car was invoiced, the monthly lease rental would have to be paid from the date of invoicing in complete contradiction of the fact that, the car had not been delivered till 28^th April 2017.  Due to the fraudulent practice adopted by OP3, the complainant was compelled to pay monthly lease rent from 31.03.2017.
4. It is further case of the complainant that he has expressly informed the OP3 that he would take delivery of the car in Bangalore and not in Mangalore.  It was really shock to the complainant when the car was delivered in Bangalore on 28.04.2017 the odometer on the car was displayed that the car had already been driven for approximately 400 kms. After enquiry to the disappointment of the complainant the OP3 sale executive had the audacity to perversely inform to the complainant that the car was shipped via flatbed truck from Mangalore to Bangalore.  The OP has suppressed the fact that the car was not used.  Even though it was already driven approximately 400 kms.
5. It is the specific grievance of the complainant that within three months of taking delivery of the car in the month of June 2017 when the car was used less than 3000 km, the tires of the car burst which clearly establishes that the car suffered from latent manufacturing defects.  Initially the OP3 refused to replace the tires alleging that the tires neither covered under the warranty nor under the insurance. The service representatives of OP3 have also informed that the tires were damaged due to extraneous factors and also due to poor quality of the Indian roads seeks the car was not meant for Indian roads.  With great difficulty the complainant got replaced the tires of the car at free of cost. The OP3 has replaced the tires after discussion with the manufacturer i.e., OP2 and the OP1.  At that time the complainant has realized the fraud of delivering the defective car in his favour by the OPs.
6. It is further case of the complainant that in September 2019 a front two tires were replaced at the cost of this complainant. On 19.01.2020 while driving the car the front LHS tire of the car was severely damaged and the complainant was extremely lucky to avoid any major accident and survived miraculously.  These repeated incidents of the tires shocked and traumatized the entire family of the complainant.  The OP3 instead of assisting the complainant in replacing the defective car has illegally extorted Rs.21,834/- from the complainant.  After that the complainant had informed the OP3 and OP1 that they do not intend to continue with lease/rental agreement under the agreement with this defective car and would like to return the car immediately. 
7. Even after all these instances and personal assurance of OP3 sales persons there was no change in the response time of satisfactory closure of the genuine grievance of the complainant. Despite assurance made by the OP that they would compensate this complainant all the trouble and trauma which the complainant had undergone they backtracked.  After continuous follow ups with OP1 to 3 the complainants was informed that as per the technical analysis allegedly conducted by the Continental India on 12.06.2017 the damage to the tire was due to external damage.  After verification of the report it is evident that it is completely false and fabricated and it was prepared by the Continental Indian in connivance and conspiracy and under the guidance and instruction of OP1 to 3 in order to frequently suppressed the latest manufacturing defect in the car.  The technical analysis report submitted by the Continental India is not relating to the complainant’s vehicle and they have mentioned the car number as KA 03 NA 0088 whereas the vehicle number of the car leased out to the complainant is KA 20 MB 4883.  Even the date of registration of the car in the report is wrong.
8. It is further case of the complainant that the OP2 has recalled the vehicles due to similar issues in China also wherein the process of driving, the defective tires would bulge due to external forces causing safety risks identical to the ordeals faced by the complainant, which only proves that the car leased to the complainant suffered from inherent latent manufacturing defect.
9. In addition to the above deficiency in the car there were multiple issues in the car where on one instance the ABS and ESP started malfunctioning, putting the lives of the occupants of the car in jeopardy. On another instance, sun roof of the car got stuck, the poor service with the oil problems were not rectified in the first instance of the complaint and were rectified after repetitive complaints.
10. It is further case of the complainant that there is an implied warranty or condition as to the quality and fitness of any particular purpose for the goods sold in situations where the buyers relies on seller’s judgement.  If a car purchased is not motorablee the buyer has the right to resend the contract along with the right to claim damages from the seller.
11. It is established principle of law that when the deficiency began to manifest themselves it is the duty of the seller or attend to such deficiencies immediately and if the seller is unable to attend to the deficiencies and malfunctioning soon it would amount to deficiency of service.  In this case the deficiency in the car continued to persist during the warranty period. Hence the OPs are liable for deficiency of service. Despite having paid Rs.33,00,894/- and including the security deposit of Rs.26,09,985/- the total amount paid is Rs.35,70,879/- till date towards lease rentals. The car was lying idle from 20.01.2020 and infact the complainant has informed that the car was handed over to OP3 on 27.02.2020 which is very essential means of transport to the complainant due to non roadworthiness of car. The complainant has to incur huge expenditure for arranging another car being aggrieved by the OP not replacing the defective car.  
12. The OPs in collusion with each other has deceitfully sold the defective car to the complainant even though they are well aware about the goods quality. They have suppressed the latent manufacturing defect in the car lease to the complainant. This complainant also got issued legal notice on 11.08.2020 and the OP have also replied to the notice through their counsel on 03.10.2020 and 02.12.2020 but failed to perform the same by delaying allegations on flimsy grounds. Hence this complaint.
13. In response to the notice, OP1 to 3 appears and files version.  OP4 remained absent and placed exparte.

14. It is the case of the OP1 that the present complaint pertains to the vehicle manufactured by OP2 and it was taken on lease from OP3 and the same was financed by this OP1 for an amount of Rs.35,74,933/- by a master rental agreement with the complainant.  This OP1 is a lender and has no role with either of the OPs or with the functioning of the vehicle in question.  The complainant has not made any allegation against this OP1 and he has been unable to demonstrate any deficiency of service on behalf of OP1.
15. It is further case of the OP1 that the complainant suffers from misjoinder of parties as this OP1 is neither a necessary party nor a proper party in the present complaint.  It is a settled law that the financier is within its right to take possession of the hypothecated vehicle and the same cannot be termed as a bad in law. This OP1 has followed the due procedure in taking possession of the vehicle as per the terms and conditions of the agreement dated 31.03.2017 the complainant has deliberately not paid the agreed installment as per the master rental agreement.  This OP1 gave sufficient opportunity to the complainant to make due payment and regularize the account and even after closing and recalling the agreement more opportunities provided to pay the amount due.  This OP1 has suffered huge financial loss due to the misconduct and deliberate default on the part of the complainant.
16. It is further case of the OP1 that as per the rental agreement initiated arbitration between the complainant and the complainant appeared for the arbitration proceedings. The complainant did not appeared on 27.07.2021 and further on 06.08.2021, hence the arbitral award dated 19.11.2021 was passed in favour of the OP1. The present status of the vehicle in question is that it has been sold to the third party for an amount of Rs.8,47,000/- and the sale proceeds has been adjusted to the outstanding amount. This OP1 has incurred a heavy loss as the vehicle in question was a depreciating asset.  The complainant has no cause of action against this OP1 and this commission has no jurisdiction to adjudicate on the consequential loss. Hence the OP1 prays for dismissal of the complaint against him.
17. It is the case of the OP2 that it is a company registered under the companies act and involved in manufacturing of vehicles under the brand name Mercedes Benz. The vehicl3s manufactured by OP2 have a worldwide reputation and they are world-class cars in India.  The cars manufactured by OP2 undergo stringent quality checks at every stage. The OP2 denies all the allegations made by the complainant.

18. It is further case of the OP2 that the complainant is not a consumer as defined under the C.P.Act 1986. The complaint is bad for misjoinder of parties and there is no cause of action to file this complaint.  The complainant has filed this vexatious and malicious complaint only to malign the reputation of this OP2.  This commission has no jurisdiction to entertain this complaint. Hence OP2 prayed for dismissal of the complaint.
19. It is the case of the OP3 that the complaint is not maintainable either in law or on facts. There is no specific primafacie allegations against this OP3.  The car in question bearing reg. No.KA 20 MB 4883 is not in possession of the complainant. The OP1 having initiated the arbitral proceedings against the complainant for default in payment of rentals in CP.No:/CDN/DFS/417/2020 before the sole arbitrator C.Deepa Nandhini Advocate, Chennai and the said car is taken over by the OP1 in pursuance of the order passed on IA1 dated 14.08.2021.  
20. The complainants are not the owners of the car. It is a leasehold property leased to them by OP1 under the lease agreement.  The OP1 is the owner of the car. The OP1 is not aggrieved. The complainant has no locus-standi to file the complaint and hence the complaint is liable to be dismissed. There are no allegations made against this OP3 which would come within the purview of the C.P.Act so as to maintain the complaint.  Hence the complaint is liable to be dismissed against this OP3.
21. The OP3 has denied all the allegations made in the complaint. It is the case of the OP3 that the car manufactured by Mercedes Benz is one of the best cars in the world known for safety, luxury and highest standards of technology. On 09.07.2017 the car of the complainant was brought to the service centre of OP3 for tire damage and tire side wall bulge. Even though the tires are not covered under the warranty as a matter of goodwill this OP3 with the consent of OP2 replaced all four tires free of cost.  After that it was only on 12.09.2019 the car reported for tire issue. By that time it had covered 44791 kms.  The tires had outlived their lives which are generally about 20000 kms. They were replaced after taking consent and charged for the tires and replacing labour charges. The car does not suffer from any latent manufacturing defects as claimed.
22. The complainants used the car for over 50000 kms., without any issue in performance of the car except the tire issue. When there is an expressed warranty provided by the manufacturer implied warranty does not apply. When the car has covered over 50000 kms., is enough to infer that the car is perfectly motorable and the contrary is false.  There is no deficiency of service as there is no malfunctioning of the car.  The complainants have not undergone any mental harassment or agony or torture. There is no unresolved problem in the car amounting to manufacturing defect and deficiency in service and gross negligence. The complaint is barred by time. This OP3 has suitably replied to the notice issued by the complainant. The complainant himself has committed default in payment of rentals to the OP1 and became liable to pay OP1 huge sums of money to prevent any action and confiscation of the car. The complainant has created a fictitious problem in the car and left it in the service centre of OP3 and never took back.  The OP1 issued a notice to the complainant rescinding the car lease agreements and demanded for payment of outstanding dues and to surrender the car to OP1. The notice was duly served on the complainant but they did not reply. Hence OP1 initiated the arbitral proceedings and secured an interim order and took possession of the car and the car is presently in the custody of the OP1.  Hence the complainants are not entitled for any relief. The complaint is liable to be dismissed with exemplary cost against this OP3.
23. The complainant has filed his affidavit evidence and relies on 10 documents.  Affidavit evidence of official of OP2 has been filed and OP relies on 05 documents and marked as Ex.R1 to R5. OP3 has filed affidavit evidence and relied on one document and marked as Ex.R6.  OP1 has filed affidavit evidence and relied on 09 documents and marked as Ex.R7 to R15.  
24. Heard the arguments of advocate for the both parties.  Both parties have filed their written arguments.

25. The following points arise for our consideration as are:-

1. Whether the complainant proves deficiency of service on the part of OP?
2. Whether the complainant is entitled to relief mentioned in the complaint?
3. What order?

26. Our answers to the above points are as under:

Point No.1:  In the Negative

Point No.2: In the Negative

Point No.3: As per final orders

REASONS

27. Point No.1 AND 2: These two points are inter related and hence they have taken for common discussion.  We have perused the allegations made in the complaint, version, affidavit evidence of both the parties, written arguments and documents.
28. It is undisputed fact that in November 2016 the OP3 have approached the complainant proposing a great offer on their Mercedes Benz A class car. The complainant impressed by the offer made by the OP2 and 3 has entered into lease master Rental Agreement with the OP2 through OP3 and the complainant had to pay a lease amount of Rs.35,74,933/- in 48 installments. As per the terms of the agreement the rental starts date was 31.03.2017 till 28.02.2021.  The complainants have deposited Rs.2,69,985/-.
29. The main grievance of the complainant is that even though the car was delivered to the complainants on 28.04.2017 the OP3 have made the complainant to invoice the car before delivery on 31.03.2017.  when the complainant has received the car the odometer of the car have displayed that the car have already driven approximately 400 kms., even though the OP3 have informed the complainant that they will shift the car in a flatted truck from Mangalore to Bangalore.  The complainant even though has informed the same to the OP3 they have not at all taken any action.  
30. The another grievance of the complainant is that the car delivered to them is a defective car. Within three months of taking the delivery of car and when the car was used less than 3000 kms., the car tyre was burst which clearly establishes that the car suffered from latent manufacturing defect. Even though the OP3 refused to replace the tyre have later accepted and they have replaced the damaged tyres. 
31. Again the complainant has suffered the same problem in September 2019 and the front two tyres were replaced at the cost of the complainant. Again on 19.01.2020 while driving the car the front LHS tyre of the car was severely damaged and the complainant was extremely lucky to avert the major accident and he was survived miraculously.  Again the tyres were replaced at the cost of the complainant Rs.21,834/- in September 2019.  The complainant has also faced multiple problems with the vehicle and even though he has informed to the OP3 and OP1 they have not at all taken any action.  Even after personal assurance given by the OP3 and also the OP2 that the issue would be personally looked into by them, there was no change in their response at the time of closure of the complaint.  The OP3 and 2 have also obtained technical analysis report conducted on 12.06.2017 and the damage to the tyre was due to external damage.  The alleged technical analysis report submitted by the Continental India was provided to the complainant and the report discloses that the report was in respect of the vehicle bearing No.KA03 NA 0088 whereas the complainant’s vehicle is KA 20 MB 4883 even the date of registration of the car in the report was wrong. All the OPs have colluded and they have got prepared the fabricated report and they have all played fraud on the complainant.
32. The complainant has also faced multiple issues with the car apart from the tyre problem.  On one instance the ABS and ESP started malfunctioning putting the life of the occupants of the car in jeopardy.  On another instant sun roof of the car got stuck and also the complainant has faced the oil problems and they were not being rectified by the OPs and later rectified only after repetitive complaints. Under these circumstances the complainant has filed this complaint alleging that the OP1 to 3 have delivered a defective car to the complainant and thereby they have committed deficiency of service and also gross negligence.  
33. In support of their contention the complainant has filed his affidavit evidence and relied on 10 documents.  Ex.P1 is the Copy of lease agreement and amount transaction statement, Ex.P2 is the Illegally extorted money the same bills, Ex.P3 is the Continental India Report, Ex.P4 is the Service report card, Ex.P5 is the Copy of mail transaction, Ex.P6 is the Email correspondence, Ex.P7 is the Copy of the legal notice, Ex.P8 is the Reply to the legal notice,  Ex.P9 is the Copy of the order passed by the Hon’ble NCDRC in CC No.51/2006.
34. On the other hand the OP2 has filed his affidavit evidence and relied on Ex.R1 is the Copy of the letter of authorization, Ex.R2 is the Copy of the certification from International Agencies, Ex.R3 is the Copy of the certification under ARAI, Ex.R4 is the Copy of the relevant extract of dealer agreement dated 27.08.2015, Ex.R5 is the Extract of the warranty terms and conditions.
35. OP3 has filed his affidavit evidence and relied on Ex.R6 is the Authorisation letter.
36. OP1 has also filed his affidavit evidence and relied on Ex.R7 is the Copy of certificate dated 13.10.2022, Ex.R8 is the Copy of letter of authority dated 16.10.2022 and Board resolution dated 20.10.2021, Ex.R9 is the Copy of loan hypothecation agreement dated 31.03.2017, Ex.R10 is the Copy of loan recall notice dated 22.08.2019, Ex.R11 is the Copy of authorization letter to third party dated 29.09.2021, pre-repossession intimation to the police station dated 01.10.2021, post repossession notice dated 04.10.2021, Ex.R12 is the Copy of the presale notice dated 27.10.2021, Ex.R13 is the Copy of the award dated 19.11.2021 passed in favour of OP1, Ex.R.14 is the Copy of the invoice dated 30.05.2022 for selling the vehicle in question to the third party.
37. The OP2 has taken the contention that the complainant is not a consumer and there is no manufacturing defect in the car leased by the complainant and the complainant ahs no cause of action against this OP2 and the complaint is bad for misjoinder of parties and the complainant has failed to prove the alleged fraud, collusion and malpractice against the OPs.
38. The main contention of the OP2 is that the complainant is not a consumer and they have also relied on the decision of the Hon’ble State commission of Panjab in Mahindra and Mahindra limited vs Parmpal Singh and others.  It is clearly held in this decision that “the complainant has to adduce evidence to show that the vehicle purchased by a business entity was for personal use when it is held that in the absence of a resolution passed by the company it cannot be accepted that the vehicle was purchased for the personal use of Director who was the father of the complainant”.
39. On the other hand the complainant has also relied on the decision of the Hon’ble NCDRC in CC No.51/2006 dated 08.07.2016.  It is clearly held by the Hon’ble NCDRC that “if any vehicle are obtained or any services are hired or availed by a company for use/personal use of its Directors or employees, such a transaction does not amount to purchase of goods or hiring or availing of services for a commercial purposes. Irrespective of whether the goods or services are used solely for the personal purposes of directors or employees of the company or they are used primarily for the use of the director or employees of the company and incidentally for the purposes of the company”.
40. Hence it is clear that the vehicle in this complaint was purchased by the complainant company for the use of the directors and it is not for commercial purpose. Hence the complaint is maintainable.
41. It is the specific issue raised by the complainant that there is a manufacturing defect in the car leased in their favour. The contention taken by the complainant is that the tires of the car burst when the car was used for less than 3000 kms., and therefore the car suffered from latent manufacturing defect.  It is the case of the OP2 that the damage caused to the tyres is due to extraneous factors or normal ware and tare cannot be attributed as manufacturing defects and are not covered under the warranty terms. Inspite of that this OP3 as a goodwill gesture have changed the tyres and they have attended the repairs.

42. It is also clear from the documents and evidence led by the complainant that even though the complainant has made several allegations against the OPs relating to the manufacturing defect have not adduced any evidence to prove the same. The complainant has to produce any expert opinion in order to establish the manufacturing defect. Without such an examination the commission cannot come to the conclusion that there were inherent manufacturing defect in the vehicle. It is also clearly held that the Hon’ble NCDRC in Maruti Udyog Ltd., -vs- Casino Dias and others, 2009(3) CPC 641. It is clearly held in this decision that

“24. The respondent No.1 also alleged regarding the replacement of tyres. Because the tyres were defective, respondent No.1 concluded that there is a manufacturing defect in the vehicle, this is totally contrary to the record, and replacement of two tyres do not reflect that there is a manufacturing defect in the vehicle, and further tyres warranty conditions are different from those of the vehicle.”

43. It is clear from the above decision that the replacement of the tyres do not reflect that there is manufacturing defect in the vehicle.  
44. It is also the contention taken by the OP2 that the liability of this OP No.2 is only limited to the warranty obligations under the warranty terms during the warranty period only.  The vehicle was leased by the complainant the authorized dealers were responsible for retail sale of the vehicles to the end customer as for after sales services. The authorized dealers are not the agents of this OP2.  Whenever the complainant raised issue the same was duly attended by OP3.  When the complainant has raised issue relating to lease rental agreement and deficiency of service which is nothing to do with OP2.
45. The lease agreement entered between the complainant and OP1. The complainant has also not shown any cause of action against this OP2 and hence the complaint is bad for misjoinder of parties.  This OP2 was made as party without any basis. Except the say of the complainant there is nothing on record to show that the OPs have played fraud in collusion with each other and they have practiced malpractice.
46. On the other hand the contention taken by the OP3 that the complaint is barred by limitation. The car in question bearing reg. No.KA 20 MB 4883 is not in possession of the complainant. The OP1 having initiated arbitral proceedings against the complainants for default in payment of rentals in C.P. No.CDN/DFS/417/2020 before the sole arbitrator and as per the order passed by the arbitrator the car is taken over by the OP1.  The complainants are not the owners of the car. It is a lease hold property lease to them by OP1 under the lease agreement dated 31.03.2017.  OP1 is the owner of the car. Hence the complainant has no locus-standi to file and maintain the complaint.
47. The complainants committed default in payment of rentals to OP1 and became liable to pay huge sums of money to OP1.  In order to prevent the OP1 from taking any action and confiscation of the car the complainants have created this factious problem in the car and left it in the service centre of OP3 and they never took it back. The OP1 got issued the notice on 22.08.2019 to the complainants demanded payment of outstanding dues or to surrender the car to them within seven days after receipt of the notice. Inspite of service of notice the complainants did not reply. Hence the OP1 initiated arbitral proceedings and obtained the interim order and taken possession of the vehicle on 04.10.2021 and the car now is in the custody of OP1.  Hence the complaint is not at all maintainable against this OP3.  
48. On the other hand, the OP1 has also taken the contention that he has taken possession of the vehicle after following due procedure as per the terms and conditions of the master rental agreement and as per the procedural law.  The complainant was called upon to clear the dues of this OP1 and get the vehicle released, but the complainant has not even raised any objection or reply to the notice issued by this OP1 on 27.10.2021.  The present status of the vehicle in question is that it has been sold to a third party for an amount of Rs.8,47,000/- and the sale proceeds has been adjusted to the outstanding amount. In view of this the OP1 has incurred heavy loss as the vehicle in question was a depreciating asset.
49. It is clear from the evidence and the documents placed by both the parties that the complainant is not at all in possession of the vehicle taken by them on lease from the OP1 under the lease agreement.  When the complainant has committed default in payment of lease agreement amount the OP1 has initiated the arbitral proceedings and taken possession of the vehicle when it was left at OP3 service station by the complainant. The OP1 has already sold the vehicle to a third party and the sale proceeds has been adjusted to the outstanding amount.
50. In addition to this it is also clear from the decision of the Hon’ble apex court that the bursting of the tyres or the replacement of the tyres does not amount to any manufacturing defect. Except the issues regarding the tyres the complainants have not at all faced any other manufacturing defect in the vehicle. Under these circumstances the complainant has also failed to establish that the vehicle is suffering from any manufacturing defect and the OP2 and 3 have delivered the defective car in their favour.  The complainant has also failed to place any expert report regarding the defect in the vehicle in order to prove that the vehicle is suffering from manufacturing defect. Under these circumstances, the complainants have failed to establish the deficiency of service and negligence on the part of the OPs. Therefore the complainant is not entitled for any reliefs and the complaint is liable to be dismissed.  Hence we answer point No.1 and point No.2 in the Negative.
51. Point No.3:- In view the discussion referred above we proceed to pass the following;

O R D E R

1. The complaint is Dismissed. No costs.
2. Furnish the copy of this order and return the extra pleadings and documents to the parties.

(Dictated to the Stenographer, got it transcribed and corrected, pronounced in the Open Commission on this 19^TH day of JULY 2024)

Documents produced by the Complainant-P.W.1 are as follows:

Documents produced by the representative of opposite party2 – R.W.1;

Documents produced by the representative of opposite party3 – R.W.2;

Documents produced by the representative of opposite party1 – R.W.3;