H.P. State Commission Holds Ashok Leyland Dealer Personally Liable For Failure To Return Down Payment

Brief Facts:

Mr Lok Ram (“Complainant”) purchased an Ashok Leyland Partner Tipper from Simla Autozone Parel (“Dealer”) for Rs. 11,43,000/-. The Tipper, however, exhibited inherent manufacturing defects, failing to operate properly even with a load of 2.5 tonnes, contrary to the assurance given by the Dealer that it could carry up to 4.5 tonnes. Despite the defect being within the warranty period, the Dealer failed to replace the Tipper. The vehicle was kept for repair at the Dealer's workshop in Parel, Chamba. When the defect persisted, the Dealer proposed returning the tipper, promising to refund the standing loan amount and the remaining down payment, along with an additional amount of Rs. 34,021/- and the insurance expenses. Despite settling the standing loan amount with Shri Ram Transport Finance Company, the Dealer failed to refund the down payment and insurance expenses totalling Rs. 2,49,021/-. The Complainant made several communications with the Ashok Leyland Company (“Ashok Leyland”) and the Dealer but didn't receive a satisfactory response from them. Feeling aggrieved, the Complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission, Chamba, Himachal Pradesh (“District Commission”) and filed a consumer complaint against Ashok Leyland and its Dealer.

In response, Ashok Leyland contested the complaint, arguing that the District Commission lacked jurisdiction for the recovery claim. It asserted that there was an absence of expert reports to prove manufacturing defects and claimed that the Complainant overloaded the vehicle, surpassing its permissible capacity. It contended that the Dealer returned Rs. 9,53,000 to the finance company and deducted Rs. 1,10,000/- for vehicle usage as per the settlement. Therefore, Ashok Leyland prayed for the dismissal of the complaint. The Dealer denied any manufacturing defect and asserted that the vehicle was sold in perfect condition. It reiterated the settlement terms, which required returning Rs. 9,53,000/- to the finance company and a deduction of Rs. 1,10,000/- for vehicle usage from the purchase date.

After hearing both parties, the District Commission ruled in favour of the Complainant. Displeased with this decision, the Dealer and Ashok Leyland filed an appeal before the State Consumer Disputes Redressal Commission, Himachal Pradesh (“State Commission”).

Observations by the Commission:

Referring to the argument of Ashok Leyland that the Complainant agreed to pay user charges of Rs. 1,10,000/- for the vehicle's usage, the State Commission observed that it failed to provide conclusive proof of the Complainant's vehicle usage. Given that the vehicle was returned to the Dealer, the State Commission emphasized there was a legal obligation of the Dealer to refund the down payment of Rs. 2,15,000/- to the Complainant. Further, the State Commission held that the relationship between Ashok Leyland and the Dealer was on a principal-to-principal basis, with the Dealer responsible for the down payment and possession of the Tipper.

The State Commission held that the Dealer, and not Ashok Leyland, was under the legal obligation to return/refund the down payment to the Complainant. Further, the Dealer's liability was reinforced based on a lack of evidence indicating Ashok Leyland's involvement in receiving the down payment. Consequently, the appeal of the Ashok Leyland was allowed. Therefore, it directed the Dealer to refund Rs. 2,15,000/- to the Complainant.