Manufacturer Not Liable for Dealer’s Fault Unless Manufacturer’s Knowledge Is Proved in Cases: SC

Manufacturer Not Liable for Dealer's Fault Unless Manufacturer's Knowledge Is Proved in Cases: SC

The Supreme Court had recently observed, that unless it is proven that the manufacturer was aware of the dealer’s deficiency, the manufacturer would not be responsible for the dealer’s liability in situations where the relationship between them is on a “principle-to-principle” basis. A three-judge bench of Justices UU Lalit, Hemant Gupta, and Ravindra Bhat was hearing a case where Tata Motors Limited and one of its Goa-based dealers called Vistar Goa(P) Ltd. was charged with liability arising out of unfair trade practices.

The dealer, Vistar Goa was said to have sold a 2009 model car to a customer under the pretext that it was a 2011 model car. When the customer complained about it, he also added Tata Motors Limited into the complaint. Tata Motors Limited then approached the Supreme Court, since the National Consumer Disputes Redressal Commission, State Commission, and the District Forum did not remove them from the complaint.

After going through the dealership agreement, the Supreme Court stated that the relationship was on a “principle-to-principle” basis. The court also noted that the manufacturer did not know of the deficiencies of the dealer. The court then absolved Tata Motors Limited from the complaint.

Case:  Tata Motors Ltd v Anonio Paulo Vaz and Another 

Citation: LL 2021 SC 105

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