In Tata Motors Limited v. Antonio Paulo Vaz, the Supreme Court held that a car manufacturer could not be held liable for the sale of a used car by the dealer when the relationship between the dealer and the manufacturer is on a principal-to-principal basis. The decision was rendered in an appeal against the order of the National Consumer Dispute Redressal Commission (NCDRC), holding the car manufacturer, Tata Motors, and the car dealer jointly and severally liable for the sale of a defective car to Vaz. Vaz was delivered a defective car, and when he claimed a full refund, the same was denied. He then filed a complaint before the District Forum. The forum observed that the car's undercarriage was "fully corrugated and had scratch marks on the body. The alloy wheels were also corrugated inside, and the car had travelled almost 622 kilometres. Also, some parts, such as the music system, were not provided, although agreed." Accordingly, it held both the manufacturer and the dealer liable to pay compensation to Vaz. An appeal was preferred by the manufacturer before the State Commission and then the NCDRC however, both the fora upheld the District Commission's decision. Subsequently, an appeal was filed before the Supreme Court by Tata Motors.
The Court held the findings against the dealer as correct and justified, but the findings against the manufacturer were erroneous and set aside the order for compensation against the manufacturer. The Court stated that:
"It is difficult to expect the appellant, a manufacturer, to be aware of the physical condition of the car two years after its delivery to the dealer. During that period, several eventualities could have occurred; the dealer may have allowed people to use the car for the distance it is alleged to have covered. Also, the car and prolonged idleness without proper upkeep could have resulted in the undercarriage being corrugated. All these are real possibilities."
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