Maruti not liable for dealer default, says SC

The Supreme Court (SC) has stayed the order of the National Consumer Commission making Maruti Udyog liable for the fault of its dealer.

Several persons who booked Zen with the dealer did not get either the car or the money back.

They moved the consumer forum, which asked the dealer as well as Maruti to refund the money with interest and cost of litigation. Maruti went in for an appeal to the state and national commissions without success.

Maruti counsel F S Nariman argued before a bench comprising Justice B P Singh and Justice Altamas Kabir that the manufactuer had no liability under the Consumer Protection Act to a consumer who booked a car with a dealer and paid a deposit amount.

The consumer commissions erred while holding that the manufacturer was responsible for the acts of the dealer. The dealer was not an agent of the manufacturer as shown in the dealership agreement.

Moreover, the commission's view was contrary to the law laid down by the Supreme Court that if the relationship between the manufacturer and the dealer was that of 'principal to principal', the manufacturer cannot be held liable for the illegal acts of the dealer.

There was no agreement between the customers of the agent and the manufacturer. Counsel cited the judgment of the Supreme Court delivered in 1994 in the case of Indian Oil Company's agents. The court also issued notices to persons who booked the care and claimed Rs 3 lakh as refund.