NEW DELHI: The National Consumer Disputes Redressal Commission (NCDRC) has held that Tata Motors, as the manufacturer, cannot be held liable for a dealer selling a test-drive vehicle to a customer as a brand-new car, setting aside a state commission order that had made the manufacturer jointly liable along with the dealer, in its order dated July 15.Why did the buyer claim he was sold a demo car?According to the court order, the complainant had purchased a Tata Manza Elan from the dealer, M/s Hind Motors India, in October 2011 for around Rs 7 lakh. Soon after delivery, he found several defects in the car, which the dealer failed to fix despite repeated visits to the workshop. later it revealed that the car had actually been used by the dealer as a demo or test-drive vehicle for about 8 months, covering 3,248 km, before being sold to him — without this being disclosed.

Neither the retail invoice nor the sale certificate mentioned that the car was pre-owned or a test-drive vehicle.The complainant approached the district consumer commission, Mohali, seeking replacement of the car and compensation. In 2012, the district commission ruled only against the dealer — not the manufacturer — directing Hind Motors to refund the full amount with interest, take back the car, and pay Rs 2 lakh as compensation along with Rs 20,000 in litigation costs.

The dealer appealed to the state consumer commission, Punjab, which in 2014 held that since the dealer had given a discount on the manufacturer's instructions, Tata Motors was also jointly liable as the "principal" of the dealer. However, the state commission also reduced the compensation from Rs 2 lakh to Rs 1 lakh.Because of this, three separate petitions were filed before the NCDRC — one by Tata Motors, challenging the finding that it was liable; one by the complainant, Sadhu Singh, asking for the higher compensation to be restored; and one by the dealer.Why did the NCDRC rule in Tata Motors favour?Tata Motors' counsel argued that the vehicle had been sold to the dealer on a separate invoice as a demo unit, that the dealer and manufacturer operated on a "principal-to-principal basis," and that there was no manufacturing defect that could make Tata Motors liable.The complainant's side argued that no trade certificate had been produced to prove how the vehicle moved from manufacturer to dealer, and that the defects should still be treated as the manufacturer's responsibility.The bench of Justice A.P. Sahi (President) and Bharatkumar Pandya (Member) said that the state commission was wrong to hold the manufacturer liable when there was no evidence of any proven manufacturing defect. It said that to hold a manufacturer responsible for a manufacturing defect, the manufacturing process itself, or evidence related to it, needs to be examined first."The state commission has erroneously, without there being any evidence of a proven manufacturing defect, went on to hold the manufacturer to be liable.

In order to hold the manufacturer to be liable for any manufacturing defect, the examination of the process of manufacturing or any evidence relating thereto to infer a manufacturing defect has to be examined," the commission said.The bench also noted that the district commission itself had never held the manufacturer responsible:"The district commission did not hold the manufacturer to be liable of any deficiency.

The state commission to the contrary on an erroneous inference that the principal would also be liable has proceeded to caste a liability on the manufacturer which in our opinion is not justified," the commission further added.Accordingly, the NCDRC allowed Tata Motors' petition and restored the district commission's original order absolving the manufacturer. At the same time, the commission found no reason for the state commission to have cut the dealer's compensation from Rs 2 lakh to Rs 1 lakh."We find no justification for the reduction of the compensation of Rs.1 lakh that had been awarded against the dealer. In the absence of any fault or cogent reasoning the said reduction is also not justified," the bench noted.It therefore partly allowed the complainant's petition and restored the full Rs 2 lakh compensation against the dealer, while declining to enhance it further. The dealer Hind Motors' own petition was dismissed for non-prosecution, as neither the company nor its liquidator appeared to pursue it.