Car Manufacturer Liable For Punitive Damages If Airbag System Did Not Meet Safety Standards As Perceived By Consumer Of Reasonable Prudence : Supreme Court

The Supreme Court observed that the failure to provide an airbag system which would meet the safety standards as perceived by a car­buyer of reasonable prudence should be subject to punitive damages which can have deterrent effect.

"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", the bench comprising Justices Vineet Saran and Aniruddha Bose observed.

The court observed thus while dismissing the appeal filed by Hyundai Motor India Limited against the order of National Consumer Disputes Redressal Commission (NCDRC). The NCDRC had upheld the order passed by the Delhi State Consumer Redressal Commission directing Hyundai to pay compensation to a consumer who suffered head, chest as also dental injuries due to non-deployment of airbags of the Hyundai Creta care at the time of accident. 

The owner approached the Delhi State Consumer Commission, which directed Hyundai to replace the vehicle and to compensate the complainant an amout of Rs.2,00,000/­ for medical expenses and loss of income, an amount of Rs.50,000/­ for mental agony and Rs.5000 as cost of litigation. The NCDRC upheld the State Commission's order by rejecting Hyundai's appeal.

Aggrieved, Hyundai approached the Supreme Court in further appeal.

Before the Apex Court, the Hyundai's counsel Senior Advocate Huzefa Ahmadi contended 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, it was contended.

In this regard, the bench observed that 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. The court observed:

"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 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.  

Purchase decision of the respondent­ complainant 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."

The appellant also contended that the limitation would run from the date of purchase of the vehicle and not the date of the accident. Rejecting the said contention also, the bench observed that the the limitation will run from the day the defect surfaces in a case. It said:

"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 ought to be treated to have had surfaced on the date of the accident itself."

In so far as replacement of the vehicle is concerned, the appellant contended that there was no substantive direction and no discussion either and the consumer did not claim it as a relief either. In this regard, while dismissing the appeal, the bench observed:

"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 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."

Case details

Hyundai Motor India Limited vs Shailendra Bhatnagar | 2022 LiveLaw (SC) 399 | CA 3001 OF 2022 | 20 April 2022

Coram: Justices Vineet Saran and Aniruddha Bose

Headnotes

Consumer Protection Act, 1986 ; Section 14(1) - The failure to provide an airbag system which would meet the safety standards as perceived by a car­buyer of reasonable prudence 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 - Such damages 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. (Para 13)

Consumer Protection Act, 1986 - Consumer complaint alleging vehicle defect - The limitation will run from the day the defect surfaces in a case. (Para 7)

Consumer Protection Act, 1986 ; Section 14(1) - 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 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. (Para 15)

Sale of Goods Act, 1930 ; Section 2(7) - 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. (Para 7)

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