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

The Supreme Court observed that a contract is void if prohibited by a statute under a penalty, even without express declaration that the contract is void

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

Joshua Joseph
Hi! My name is Joshua Joseph and I aim to help you understand the legal arguments of each case in a simpler language. I am currently pursuing my Bachelor of Arts and Law [B.A. LL. B (Hons.)] from O P Jindal University, Sonipat. The laws that govern us have influenced many aspects of our daily lives and it affects each of us differently. Law is a noble profession that helps people in many ways and I hope that I can help out as much as I can by mastering it!