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Liability of Vehicle Manufacturers-Deficiency in Service by Dealer/Authorized Service Centre

January 21, 2022
Vehicle pollution

By Manmeet Singh Marwah and Devika Mehra

Manufacturers, service providers, or sellers, as the case may be are liable to compensate consumers for defects in goods or deficiency in services. Vehicle manufacturers usually enter into agreements with dealers or service centres on a principle-to-principle basis, which implies that there are no intermediaries or agents involved in the transaction. This ensures that manufacturers are not liable for any deficiencies in service arising from the dealer’s/service centre’s dealings with consumers, and restricts their liability to harm caused due to manufacturing defects. In Honda Cars India Ltd v Sudesh Berry[1], the Supreme Court reiterated that vehicle manufacturers cannot be held liable for deficiencies in service by their dealers or authorized service centres.

Brief Facts

In the year 1999, Respondents no. 1 to 3 purchased a Honda City car manufactured by Honda Cars India, the Appellant. In 2010, the car was involved in an accident in New Delhi, and had to be taken to a Honda authorized service centre for repairs. The cost of the repairs was originally estimated at Rs. 1,50,000. The cost was repeatedly increased by the service centre and dealer. Therefore, Respondents 1 to 3 filed a complaint for deficiency in service against the service centre, the dealer, and the Appellant with the Consumer Disputes Redressal Forum-VII, Government of NCT of Delhi (Hereinafter, “District Forum”).

The District Forum found misconduct only on part of the dealer and service centre, and directed them to deliver the repaired car to Respondents no. 1 to 3, and pay them Rs. 50,000 as compensation for mental agony as well as Rs. 10,000 as costs. The Forum found nothing on record which warranted holding the Appellant liable.

The District Forum’s order was appealed by the service centre and the dealer, as well as Respondents no. 1 to 3, before the State Consumer Disputes Redressal Commission, Delhi (Hereinafter, “State Commission”). The State Commission agreed with the District Forum on both counts. It confirmed the compensation to be paid by the service centre and dealer, and held that as no manufacturing defects could be seen in the vehicle, no liability could be fastened on the Appellant.

Subsequently, Respondents no. 1 to 3 filed a revision petition before the National Consumer Disputes Redressal Commission (Hereinafter, “National Commission”). The National Commission modified the relief granted by the District Forum and confirmed by the State Commission. The National Commission directed the Appellant to provide a new Honda City car to Respondents no. 1 to 3 at the cost of Rs. 2,50,000 as a goodwill gesture. The Appellant then filed a special leave petition before the Supreme Court.

Vehicle manufacturer can’t be held for deficiency in service by dealer

The Court observed that Respondents no. 1 to 3 had been using their car for 10 years when the accident took place, and there was no material put forth by them which could attribute the accident to any manufacturing defects. The Court while passing it’s order also relied on Supreme Court’s recent order in the case of TATA Motors ltd. v Antonio Paulo Vaz[2], to hold that the manufacturer of a vehicle could not be held liable for any deficiency in service by the dealer or service centre while rendering assistance for repairs of the vehicle. The Court allowed the appeal, setting aside the National Commission’s order and restoring the order of the District Forum as affirmed by the State Commission.

Conclusion

The facts of this case are very similar to those in TATA Motor Ltd., where a consumer had alleged deficiency of service by a vehicle manufacturer without placing any material on record which showed the manufacturer’s involvement. In the absence of any manufacturing defects or the Appellant’s involvement in the repair process, this was an open and shut case. The judgement correctly insulates manufacturers from being liable for acts beyond their control, and is a cautionary tale for consumer complainants alleging deficiencies by manufacturers in transactions that solely involve dealers and service centres.

[1] Civil Appeal No. 6802 of 2021, Supreme Court of India.

[2] 2021 SCC OnLine SC 125.

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