The Supreme Court dismissed a petition while observing that failure to provide an airbag system that would meet safety standards perceived by a reasonably prudent car buyer should be subject to punitive damages that may have a chilling effect .
The Divisional Bench of Judges Vineet Saran and Judge Aniruddha Bose adopted this order while hearing a motion filed by Hyundai Motor India Limited.
The appellants are vehicle manufacturers and the appeal arises from a complaint filed by the respondent concerning defects in a vehicle, in particular with respect to its safety features, originating from the appellant, from the Creta 1.6 MTB SX+ .
The vehicle came with dual front airbags and was purchased on August 21, 2015. It encountered an accident on the Delhi-Panipat highway on November 16, 2017, resulting in major damage to the right front pillar, right front roof, side body. panels, right front door panels and left front wheel suspension.
At that time, the complainant, his mother and his daughter were in the vehicle. The vehicle’s airbags did not deploy at the time of the collision. The plaintiff sustained injuries to the head, chest and teeth. He attributes these injuries to the non-deployment of the airbags at the time of the accident. The callers themselves obtained an investigation report which was called an SRS report.
The Court noted,
The Delhi State Consumer Relief Commission, in a complaint filed by the defendant, upheld his claim. The main theme of his complaint was that the primary reason for his decision to purchase the model was because of its safety features, including airbags, and the injury he suffered due to the airbags not deploying.
The appellant preferred to seize the National Commission for the Redress of Consumer Disputes (“National Commission”). The National Commission rejected the appeal in favor of the compensation awarded by the State Commission. The order of the National Commission, which was issued on January 5, 2021, is on appeal before us. Neither the State Commission nor the National Commission accepted the justification sought by the applicant referring to the said investigation report, with regard to the fact that the airbags were not deployed.
One of the arguments advanced on behalf of the appellant by lead counsel Huzefa Ahmadi is that the vehicle replacement order should not have been passed. The respondent had not requested the replacement of the vehicle as part of the repairs claimed before the State Commission. He also questioned the legality of the decisions of the two authorities citing certain clauses of the owner’s manual. His argument on this is that if the force generated by the collision is less than a certain degree, the airbags will not be deployed. Thus, there was no fault in the security system according to him. He also pointed out that the impact of the crash was from the side and not a frontal blow.
According to the caller, airbag deployment depends on a number of factors, including vehicle speed, angle of impact, density and stiffness of the vehicles or objects the vehicle hits in the crash. . The vehicle is designed to deploy the front airbags only when an impact is severe enough and when the angle of impact is less than 30 degrees from the front longitudinal centerline of the vehicle.
Lead Counsel submitted that the front airbags are not intended to deploy in a side impact or in a rear impact or rollover.
Before the Commission, a point of prescription was also taken and the appellant wanted the prescription to run from the date of purchase of the vehicle and not from the date of the accident. This maintainability objection was rightly rejected by both the State Commission and the National Commission. The Court found no error in the opinion of the respective Commissions on this point. The vehicles are goods within the meaning of section 2(7) of the Sale of Goods Act 1930 and are subject to implied conditions as to their fitness.
The Court said that this is a statutory mandate and that this mandate also applies to goods whose defect is the subject of proceedings in the context of a consumer complaint under the Act of 1986 on consumer protection.
In the complaint, it was alleged that the respondent relied on the manufacturer’s projected vehicle safety features. In such a situation, the prescription runs from the day the defect surfaces in a file. There is no way by which the nature of the defect complained of could be identified under normal circumstances at an earlier date, before the collision took place. In this case, the safety feature of the vehicle did not match the quality of physical fitness as implicitly represented by the manufacturer. The point of view of the National Commission is largely based on the principle enshrined in Article 16 of the 1930 law. The defect in this case should have appeared on the date of the accident itself.
The Court held that there are findings from both instances regarding the defect of the product sold, in this case a vehicle. This one was sold with front airbags and there was frontal damage. The airbags did not deploy. The accident caused injuries to the respondent. The caller referred to various parts of the owner’s manual to argue that the impact of the collision was not sufficient to activate the sensor, which would have caused the airbags to deploy. We would not like to revert to the facts on which the findings were made by the two authorities against the appellant. The State Commission relied on the principle of Res Ipsa Loquitur to hold the manufacturer liable for the defect in the airbag system, taking into account the nature of the collision. The National Commission confirmed this observation by referring to certain photographs of the accident vehicle, which showed significant frontal damage. In these circumstances, the two aforementioned courts considered that expert evidence was not necessary in this case. Such an opinion cannot be faulted as being unreasonable, in the given facts.
The Court found no reason to interfere with the conclusion of the National Commission. The Court would like to add here that usually, when buying a vehicle fitted with airbags, a consumer would assume that these would deploy each time there was a collision from the front part of the vehicle (in this concerning the front airbags). Both courts, in their decisions, pointed to the fact that there was significant damage to the front part of the vehicle. The deployment of the airbags should have prevented injuries to people traveling in the vehicle, particularly in the front seat. A consumer is not meant to be a physics expert calculating the impact of a collision on speed and force based theories. In such circumstances, we do not conclude that there is an error in the conclusions of the two with regard to the existence of defects in the vehicle.
Let us now move on to the reductions granted by the Commission d’Etat and confirmed by the Commission Nationale. The first point made in this regard is that there was no prayer in the petition for the replacement of the vehicle. This is a case where the law of 1986 was applicable and article 14 of the said law sets the reductions which may be granted. Instructions, as required by law, could relate to replacement of defective goods as well as punitive damages. The Appellant also submitted that with respect to the replacement of the vehicle, there was no substantive direction and no discussion either. The operative part of the order suffers from a shortcoming in this respect, but it is not fatal, the Court specified.
In view of the fact that the litigation has been ongoing for a reasonably long period of time, we have applied our own mind to this matter and our opinion is that a vehicle replacement instruction is warranted on the facts of the case. The instruction to replace the vehicle would not be considered non-ess with respect to the order of the State Commission. The fact that the consumer had the car repaired with the insurance money would not affect the amount of damages, which is partly punitive in nature in the case, the Court observed.
The Court ruled,
We are dealing with a case where during a collision, the airbags did not deploy. The Complainant, who was driving the vehicle, suffered serious injuries as a result. The impact of the collision was such that it would have been reasonable for the respondent to assume that the airbags would have deployed. The security description of the goods was not up to the expected quality. The contents of the owner’s manual do not include any document from which the owner of a vehicle could be warned that during a collision of this nature, the airbags would not deploy. The Respondent-Complainant’s purchase decision was made largely on the basis of the depiction of the vehicle’s safety features. Failure to provide an airbag system that would meet safety standards as perceived by a reasonably prudent car buyer, in our view, should be subject to punitive damages which may act as a deterrent. . And in calculating these punitive damages, the capacity of the manufacturing company should also be a factor. There was no specific exclusion clause to protect the manufacturer against damage claims of this nature. Even if such a clause existed, its legality could be subject to legal scrutiny. But there is no reason to dwell on this aspect in the present case.
The Court further held that, if the relief granted in a consumer complaint falls within one of the legislative provisions contained in subparagraph (1) of section 14 of the Act, it would be well within the power and jurisdiction of the Forum to issue directions regardless of whether or not specifically certain remedies have been sought, provided that the facts support the granting of such remedies. In any event, it is within the jurisdiction of that forum to fashion the remedies sought to deliver effective justice, provided that the remedy falls within the stipulation of section 14(1) of the Act. We conclude that the remedy granted to the respondent is within the statutory framework. We therefore do not want to interfere with the decision of the National Commission.
“We do not find the Board’s reasoning or the operative part of the order awarding damages to be perverse. We do not need the assistance of the report of the three authorities cited before us on the automobile accident claim to support the impugned decision. We are also of the view that the instructions issued against the appellant by the Commission d’Etat and confirmed by the Commission Nationale cannot be considered to have failed the test of proportionality. We will take this into account as we conclude that the defect of purpose is of such a nature that the punitive damages provisions must be held against the appellant.
Accordingly, we dismissed the appeal. The interim order passed in this matter will remain dissolved,” the order reads.