Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3001 OF 2022
(Arising out of Petition for Special Leave to Appeal (Civil)
No. 4881 of 2021)
Hyundai Motor India Limited ……...Appellant(s)
Versus
Shailendra Bhatnagar ……Respondent(s)
J U D G M E N T
ANIRUDDHA BOSE, J.
Leave granted.
2. The appellant are manufacturers of vehicles and the present
appeal arises out of a complaint made by the respondent
Signature Not Verified
Digitally signed by
Rachna
Date: 2022.04.21
16:01:51 IST
Reason:
concerning defect in a vehicle, particularly in relation to its safety
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features originating from the appellant, of the model Creta 1.6
VTVT SX+. The vehicle came with two front airbags. Purchase of the
st
vehicle was made on 21 August 2015. It met with an accident on
th
the DelhiPanipat highway on 16 November 2017 resulting in
substantial damage to its RH front pillar, RH front roof, side body
panels, front RH door panels and LH front wheel suspension. The
initials RH and LH appears to be used as short forms of Right Hand
and Left Hand sides of the vehicle. At that point of time, the
complainant (being the respondent herein), his mother and
daughter were in the vehicle. The airbags of the vehicle did not
deploy at the time of collision. The complainant suffered head,
chest as also dental injuries. He attributes such injuries to non
deployment of airbags at the time of accident. The appellant
themselves obtained an investigation report which has been
referred to as SRS report. The remarks and conclusion of the said
SRS Investigation Report, as it appears from pages 53 and 54 of the
paperbook were:
“Remarks:
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Vehicle found with major damage on RH front
pillar, RH Side body panels and LH front wheel
suspension.
Under ride & Angular impact found on the RH
Front Pillar, Roof and Front RH Door panel.
Grazing damages found on the RH side panels
due to the scratch against truck while moving towards
left.
Findings:
No crash info recorded in SRSCM, hence no air
bags deployed.
No impact damage observed on both side chassis
members, damages found away from impact sensors.
Vehicle found completely dismantled and mid
repair condition during inspection.
Conclusion:
The major impact to the vehicle from RH pillar
resulted in under ride and angular condition.
Both front chassis member found unaffected by
the frontal impact, hence no impact sensed by the
front impact sensors and not triggered any signal to
SRSCM (No crash info recorded in SRSCM for frontal
impact).
After thorough study, it is confirmed that the
condition was not met for the air bag deployment,
hence no air bags deployed. The air bag system was
working proper at the time of accident.
Accident description:
As per customer verbatim, while he was driving
at 100 kmph speed on Gannaur highway. A front going
truck applied sudden brake, his car hit to the truck
from the right side to the left rear corner of the Truck.
Further his car scratched against the truck while
moving towards left side of the road and finally hit to
some stones on the left front wheel and vehicle
stopped.”
(quoted verbatim)
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The Delhi State Consumer Redressal Commission, in a
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complaint raised by the respondent, upheld his claim. The main
theme of his complaint was that the main reason for his purchase
decision of the model was because of its safety features including
the airbags and the injury was suffered by him because of non
deployment of the airbags. The State Commission granted relief to
the following effect:
“ 19. Keeping in view of the facts and circumstances
of the present consumer complaint, we direct the
opposite party to:
a. Compensate the complainant an amout of
Rs.2,00,000/ for medical expenses and loss of income.
b. Compensate the complainant an amount of
Rs.50,000/ for mental agony.
c. Pay to the complainant an amount of
Rs.50,000/ as cost of litigation.
20 . The aforesaid payment shall be made by
opposite party within two months from the date of this
order by way of demand draft. Failure of opposite party
in paying the said amount in stipulated period will
attract an interest of 7% per annum from the date of
default. Furthermore, failure in replacing the vehicle of
the appellant will also attract an interest of 7% per
annum of the value of the vehicle from the date of
default.”
4. The appellant preferred appeal before the National Consumer
Dispute Redressal Commission (“National Commission”). The
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National Commission dismissed the appeal sustaining the
compensation awarded by the State Commission. The Order of the
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National Commission, which was passed on 5 January 2021, is
under appeal before us. Neither the State Commission nor the
National Commission accepted the justification sought to be made
by the appellant referring to the said investigation report, having
regard to the fact of nondeployment of the airbags. It has been,
interalia, held by the National Commission:
“11.... Learned Counsel for the Appellant/Opposite
Party submitted that the airbags deploy only when
there is severe impact of force and airbags may not
deploy if the vehicle collides with objects like poles and
trees, when full force of the impact is not delivered to
the sensors. Learned Counsel for the Appellant argued
that the SRS Investigation report dated 01.12.2017
clearly stated that the impact of the accident was such
that the minimum threshold force required for the
deployment of the airbags was not delivered to the
front sensors installed in the engine compartment and
hence, the airbags did not deploy. No expert evidence
was produced by the Respondent to substantiate any
manufacturing defect. The Complainant contended
that he purchased the car for its safety features
highlighted by the Manufacturer, but the airbags did
not function when required, due to which he sustained
serious injuries as can be seen from the medical
prescriptions and bills furnished by the Complainant.
The impact/force required for triggering the front
airbags was not made known to the Complainant.
Nowhere has the minimum threshold force been
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quantified and this defence can never be refuted.
Highlighting safety features including airbags while
selling the car and not elaborating and disclosing the
threshold limits for their opening is by itself an unfair
trade practice. Complainant, however, had filed
photographs of the accidental car. Major damage to RH
front pillar, RH front roof, side body panels front RH
door panels and LH front wheel suspension is seen in
the photographs of the car. Without forceful impact,
the car would not have been so badly damaged. The
accident was a major accident in which the entire
deriver side of the car, the side part and even the front
mirror of the car got smashed and broken. The impact
of the accident was so intense that the front bumper
grill, dash board and the radiator got totally damaged.
The State Commission rightly observed “that expert
evidence need not be relied upon where the facts speak
for themselves. This is a case of Res Ipsa Loquitur
where the photographs of the damaged vehicle placed
on record clearly show the impact of the accident on
the vehicle.”
5. One of the points argued on behalf of the appellant by Mr.
Huzefa Ahmadi, learned Senior advocate, is that the order for
replacement of the vehicle ought not to have been passed. The
respondent had not asked for replacement of the vehicle as part of
the reliefs claimed before the State Commission. He has otherwise
questioned legality of the decisions of the two fora citing certain
clauses from the owner’s manual. His argument on this count has
been that if force generated by the collision is lesser than a certain
degree, there would not be deployment of the airbags. Thus, there
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was no defect in the security system according to him. He also
highlighted that impact of the accident was from the side and it was
not a frontal hit.
6. It is the case of the appellant that the airbag deployment
depends on a number of factors including vehicle speed, angle of
impact, density and stiffness of vehicles or objects which the
vehicle hits in the collision. The vehicle is designed to deploy the
front airbags only when an impact is sufficiently severe and when
the impact angle is less than 30 degrees from the forward
longitudinal axis of the vehicle. Mr. Ahmadi has submitted that the
front airbags are not intended to deploy if the impact is from the
side or in cases of rear impact or roll over crashes. He has referred
to a variety of circumstances in a collision which may not result in
deployment of the airbags. He has cited the investigation report to
which we have already referred to.
7. Before the Commission, point of limitation was also taken and
the appellant wanted the limitation to run from the date of
purchase of the vehicle and not the date of the accident. This
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objection on maintainability has been rightly rejected by both the
State Commission and the National Commission. We do not find
any error in the view of the respective Commissions on this point.
Vehicles are goods within the meaning of Section 2(7) of The Sale of
Goods Act, 1930 and they carry implied conditions as to their
fitness. That is a statutory mandate and that mandate also
operates in respect of goods, whose defect is subject of proceeding
in a consumer complaint under the Consumer Protection Act,
1986. In the complaint, it has been pleaded that the respondent
had relied on the safety features of the vehicle projected by the
manufacturer. In such a situation, the limitation will run from the
day the defect surfaces in a case. There is no way by which the
nature of defect complained against could be identified in normal
circumstances at an earlier date, before the collision took place. In
this case, the safety feature of the vehicle fell short of the quality of
fitness as was represented by the manufacturer by implication. The
National Commission’s view is broadly based on the principle
incorporated in Section 16 of the 1930 Act. The defect in this case
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ought to be treated to have had surfaced on the date of the accident
itself. We quote below the provisions of Section 16 of The Sale of
Goods Act, 1930:
| “16. Implied conditions as to quality or fitness.— | |
|---|---|
| Subject to the provisions of this Act and of any other | |
| law for the time being in force, there is no implied | |
| warranty or condition as to the quality or fitness for | |
| any particular purpose of goods supplied under a | |
| contract of sale, except as follows:— |
(1)Where the buyer, expressly or by implication, makes
known to the seller the particular purpose for which
the goods are required, so as to show that the buyer
relies on the seller’s skill or judgment, and the goods
are of a description which it is in the course of the
seller’s business to supply (whether he is the
manufacturer or producer or not), there is an implied
condition that the goods shall be reasonably fit for
such purpose:
Provided that, in the case of a contract for the sale of a
specified article under its patent or other trade name,
there is no implied condition as to its fitness for any
particular purpose.
(2)Where goods are bought by description from a seller
who deals in goods of that description (whether he is
the manufacturer or producer or not), there is an
implied condition that the goods shall be of
merchantable quality:
Provided that, if the buyer has examined the goods,
there shall be no implied condition as regards defects
which such examination ought to have revealed.
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(3)An implied warranty or condition as to quality or
fitness for a particular purpose may be annexed by the
usage of trade.
(4)An express warranty or condition does not negative
a warranty or condition implied by this Act unless
inconsistent therewith.”
The question on privity of contract was also raised before the
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State as also the National Commission and from the decision under
appeal we find that this point was raised on the ground that the
dealer was not impleaded as a party and there was no contract
between the appellant and the respondent consumer. This issue
was rejected by both the consumer fora. No argument has been
advanced before us on this point and we do not find any error in
the reasoning of the National Commission on this point.
9. There are findings of the two fora about the defect in the
product sold, in this case being a vehicle. This was sold with front
airbags and there was frontal damage. The airbags did not deploy.
The accident caused injuries to the respondent. The appellant
referred to various portions from the owner’s manual to contend
that the impact of the collision was not sufficient to activate the
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sensor which in turn would have resulted in deployment of the
airbags. We would not like to revisit the facts on which findings
have been returned by the two fora against the appellant. The State
Commission relied on the principle of Res Ipsa Loquitur to affix
the liability of the manufacturer as regards defect in the airbag
system, having regard to the nature of the collision. The National
Commission affirmed this finding referring to certain photographs
of the damaged vehicle, which showed substantial frontal damage.
In such circumstances, both the aforesaid fora took the view that
expert evidence was not necessary in the subject case. Such view
cannot be faulted as being unreasonable, in the given facts.
10. We do not find any reason to interfere with the finding of the
National Commission. We would like to add here that ordinarily a
consumer while purchasing a vehicle with airbags would assume
that the same would be deployed whenever there is a collision from
the front portion of the vehicle (in respect of front airbags). Both the
fora, in their decisions, have highlighted the fact that there was
significant damage to the front portion of the vehicle. Deployment of
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the airbags ought to have prevented injuries being caused to those
travelling in the vehicle, particularly in the front seat. A consumer
is not meant to be an expert in physics calculating the impact of a
collision on the theories based on velocity and force. In such
circumstances, we do not find that there is any error in the findings
of the two fora as regards there being defect in the vehicle.
11. We shall now turn to the reliefs granted by the State
Commission and upheld by the National Commission. The first
point argued in this regard is that there was no prayer in the
petition for replacement of the vehicle. This is a case where the
1986 Act was applicable and Section 14 of the said statute lays
down the reliefs which may be granted. The directions as per the
statute, could be for replacement of defective goods as also punitive
damages. The appellant have also taken a point that so far as
replacement of the vehicle is concerned, there was no substantive
direction and no discussion either. The operative part of the order
suffers from a shortcoming on this count, but that is not fatal. On a
composite reading of the directions, we find from paragraph 20 of the
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Order of the State Commission that such a direction was made. The
confusion, if any, arises because of construction defect in the Order of
the State Commission. Considering the fact that the dispute is pending
for a reasonably long period of time, we have ourselves applied our
mind on this issue and our view is that a direction for replacement of
the vehicle is justified in the facts of this case. The direction for
replacement of the vehicle would not be treated as nonest having
regard to paragraph 20 of the State Commission’s Order. The fact that
the consumer has got the car repaired on insurance money would not
impact the quantum of damages, which is partly punitive in nature in
this case.
Three cases arising out of motor accident claims were cited
12.
| Nagappa v. Gurudayal Singh & Others. | [( |
|---|
274], it was held that there is no restriction that the Tribunal or
Court cannot award compensation amount exceeding the claimed
amount. Two other authorities were cited before us, by Ms. Tamta,
learned counsel for the respondent, being the cases of Sangita Arya
and Others v. Oriental Insurance Company Limited and Others
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[(2020) 5 SCC 327] and
Jitendra Khimshankar Trivedi and Others
v. Kasam Daud Kumbhar and Others [(2015) 4 SCC 237]. These two
cases lay down the principle of just and reasonable compensation
that may be paid. The ratio of these authorities, however, do not
directly apply in the facts of this case.
13. The damages awarded against the appellant may have gone
beyond the actual loss suffered by the respondent and may not
represent the actual loss suffered by him in monetary terms. But
the provision of Section 14 of the 1986 Act permits awarding
punitive damages. Such damages, in our view, can be awarded in
the event the defect is found to have the potential to cause serious
injury or major loss to the consumer, particularly in respect of
safety features of a vehicle. For instance, defective safety feature in
a vehicle has to be distinguished from a dysfunctional “courtesy
light”. The manufacturer should be under strict and absolute
liability in respect of the latter. Compensation in the form of
punitive damages ought to have a deterrent effect. We also refer to
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the principles detailing the factors guiding quantification of liability
laid down by a Constitution Bench of this Court in the case of M.C.
[(1987) 1 SCC
Mehta and Another v. Union of India and Others
395]. In this case it has been opined:
“32. We would also like to point out that the measure
of compensation in the kind of cases referred to in the
preceding paragraph must be corelated to the
magnitude and capacity of the enterprise because such
compensation must have a deterrent effect. The larger
and more prosperous the enterprise, the greater must
be the amount of compensation payable by it for the
harm caused on account of an accident in the carrying
on of the hazardous or inherently dangerous activity by
the enterprise.”
14. The aforesaid decision arose out of a case involving the death
of an individual and injuries to several others in an industrial
accident. But in our opinion, in the subject dispute also the same
principle can be extended. We are dealing with a case where in a
collision, the airbags did not deploy. The complainant, driving the
vehicle, suffered substantial injuries as a result thereof. The impact
of the collision was such that it would have been reasonable for the
respondent to assume that there would have been deployment of
the airbags. The safety description of the goods fell short of its
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expected quality. The content of the owners’ manual does not carry
any material from which the owner of a vehicle could be alerted
that in a collision of this nature, the airbags would not deploy.
Purchase decision of the respondentcomplainant was largely made
on the basis of representation of the safety features of the vehicle.
The failure to provide an airbag system which would meet the
safety standards as perceived by a carbuyer of reasonable
prudence, in our view, should be subject to punitive damages
which can have deterrent effect. And in computing such punitive
damages, the capacity of the manufacturing enterprise should also
be a factor. There was no specific exclusion clause to insulate the
manufacturer from claim of damages of this nature. Even if there
were such a clause, legality thereof could be open to legal scrutiny.
But there is no reason for dilating on that aspect in this case. That
question doesn’t arise here.
15. If the reliefs granted in a consumer complaint fits any of the
statutory provision contained in sub clause (1) of Section 14 of the
Act, it would be well within the power and jurisdiction of the Forum
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to pass directions irrespective of the fact as to whether specifically
certain reliefs have been claimed or not, provided that facts make
out foundations for granting such reliefs. In any event, it is within
the jurisdiction of the said forum to mould the reliefs claimed to do
effective justice, provided the relief comes within the stipulation of
Section 14(1) of the Act. We find that the relief granted to the
respondent comes within the statutory framework. We accordingly
do not want to interfere with the decision of the National
Commission. We do not find the reasoning of the Commission or
the operative part of the order awarding damages to be perverse.
We do not need the aid of the ratio of the three authorities cited
before us pertaining to motor accident claim to sustain the decision
under appeal. We are also of the view that the directions issued
against the appellant by the State Commission and upheld by the
National Commission cannot be said to have failed the test of
proportionality. We hold so as we find the subjectdefect to be of
such nature that the provisions relating to punitive damages ought
to be attracted against the appellant.
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We accordingly dismiss the appeal. Interim order passed in
16.
this matter shall stand dissolved.
17. Pending application(s), if any, shall stand disposed of.
18. There shall be no order as to costs.
………………………J.
(VINEET SARAN)
……………………….J.
(ANIRUDDHA BOSE)
NEW DELHI;
APRIL 20, 2022.
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