Tata Motors Ltd. held vicariously liable for the omissions and commissions of its dealers

National Consumer Disputes Redressal Commission (NCDRC): In a recent case, NCDRC has observed that Tata Motors Ltd. is vicariously liable for the omissions and commissions of its dealers and the dealers must not be permitted to indulge in unfair activities like fraudulently selling used car to a customer as new. The case relates to the complainant who purchased a Tata Indigo car from the dealer, Cargo Motors Pvt. Ltd. on 19-10-2006. In year 2008, as the car was not starting, complainant took the same to a local mechanic who inspected the vehicle and found number of defects in the vehicle. The mechanic also informed the complainant that the vehicle was a second hand one. When the complainant approached District Forum, it was contended by Cargo Motors Pvt. Ltd. that the said vehicle had run upto 14,173 kms within two months and they were not liable for the defects in the vehicle. It was also submitted that during the warranty period the engine was replaced by the manufacturer. District Forum, held both Tata Motors and Cargo Motors Pvt. Ltd., jointly and severally liable for defective car to the extent of 50% each and were directed to pay the entire price of the car to the complainant. Separate appeals were filed by both Tata Motors Ltd. and Cargo Motors Pvt. Ltd. in the matter but State Commission dismissed the appeals with costs of Rs.5,000 each. In revision before NCDRC, Tata Motors Ltd. submitted that their relationship between dealer is on the basis of principal to principal and they have got no privity of contract with the customer i.e. consumer/complainant. It was also submitted that the company is not aware whether the vehicle is being sold for first time or for second time and only the dealer and not the Tata Motors Ltd. is liable in the matter. After hearing the parties, Commission observed, “It is strange that on the one hand the company is changing the engine and it does not know to which vehicle the engine is being replaced. All the documents must be in their possession. They did not make an inquiry from the dealer why the dealer sold the vehicle for the second time. They did not take any action against the dealer. His agency was never cancelled. It is, thus, clear that the dealer and Tata Motors Ltd. were working in cahoots with each other.” NCDRC also noted that it is the bounden duty of Tata Motors Ltd. to check the names of the customers particularly when it is called to change the most significant part like engine. “However, the liability upon the Tata Motors Ltd. is on the lower/nominal side. The entire amount of the car as well as compensation and interest as ordered by the fora below would be paid by the Cargo Motors Pvt. Ltd. the dealer. However, watching the inaction, negligence and passivity on the part of the Tata Motors Ltd. we impose costs of Rs.1,00,000/- upon Tata Motors Ltd,” noted NCDRC while disposing of the revision petition filed by Tata Motors Ltd. [Tata Motors Ltd. v. Prashantbhai Premshankar Vyas, 2016 SCC OnLine NCDRC 221, decided on April 18, 2016]