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Supreme Court Orders Mercedes Benz to Refund ₹36 Lakh for Defective Car

On Tuesday, the Supreme Court directed Mercedes Benz India Private Limited to refund ₹36 lakh to M/s Controls and Switchgear Company Limited for defects in a car purchased by the latter

The respondent-company argued that one of the two cars they purchased from Mercedes had an issue where the central hump on the floor over the drive shaft overheated excessively. Despite multiple attempts by Mercedes to fix the problem, the defect persisted.

A Division Bench comprising Justices Bela M Trivedi and Pankaj Mithal ruled that such overheating constituted a fault or imperfection in the quality expected under the contract with the respondent-company.

“People do not purchase high-end luxurious cars to suffer discomfort, particularly when they buy the vehicle with utmost faith in the supplier who promotes such cars as the finest and safest automobiles in the world,” the Court remarked.

Due to the discomfort and inconvenience suffered by the respondent-company, the Court upheld the National Consumer Disputes Redressal Commission’s (NCDRC) decision, which held Mercedes liable to refund the purchase price and take back the car.

“The respondent-complainant having suffered great inconvenience, discomfort, and waste of time and energy in pursuing the litigation, we find that the NCDRC’s order directing the appellants to refund the purchase price of approximately ₹58 lakhs and take back the car does not warrant any interference,” the Court stated.

However, considering the car was purchased in 2006 and used for about seventeen years, the Court decided to reduce the refund amount to ₹36 lakh, allowing the respondent to keep the car.

During the hearing, Mercedes argued that the respondent-company was not a ‘consumer’ under Section 2(1)(d) of the Consumer Protection Act, 2019 (CPA), contending that the purchase was for commercial purposes and thus outside the purview of the CPA.

The Court noted it was Mercedes’ responsibility to prove the car was purchased for commercial purposes. However, it found no evidence to support this claim.

“Even if the respondent-complainant company benefited from tax deductions, in the absence of any material linking the car purchase to profit-generating activities, it cannot be said the car was bought for commercial purposes,” the Court observed.

Consequently, the Court classified the respondent-company as a ‘consumer’ under the CPA and ruled the overheating issue constituted a ‘defect’ as per Section 2(1)(f) of the CPA, holding Mercedes liable.

“We have no hesitation in holding that the overheating of the surface of the hump and the overall high temperature in the car was a fault, imperfection, or shortcoming in quality or standard expected under the contract, thus qualifying as a ‘defect’ under Section 2(1)(f) of the Act,” the Court concluded while dismissing Mercedes’ appeal against the NCDRC order.

Senior Advocate Meenakshi Arora and several other advocates represented the appellant, while advocates Arun Khosla, MA Chinnasamy, and others appeared for the respondents.

[M/S Daimler Chrysler India Private Limited v. M/S Controls and Switchgear Company Limited and Another]

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