Thursday, June 8, 2023

Supreme Court dismisses Hyundai appeal in case of airbags not deploying in Creta

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The Supreme Court has dismissed a petition while observing 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.

The Division Bench of Justices Vineet Saran and  Justice Aniruddha Bose passed this order while hearing a petition filed by Hyundai  Motor  India Limited.

The appellant are manufacturers of vehicles and the appeal arises  out of a complaint made by the respondent concerning defects in a vehicle, particularly in relation to its safety features originating from  the appellant, of the model Creta 1.6 VTVT SX+ .

The vehicle came with two front airbags and was purchased on August 21, 2015. It met with an accident on the Delhi-Panipat highway on November 16, 2017 resulting in substantial damage to its right hand front pillar, right hand front roof, side body panels, front right hand door panels and left hand front wheel suspension.

At that point of time, the complainant, his mother and daughter were in the vehicle. The airbags of the vehicle did not deploy at the time of  collision. The complainant suffered head, chest as well as dental injuries. He attributes such injuries to non-deployment of airbags at the time of accident. The appellant themselves obtained an investigation report which has been referred to as SRS report.

The Court noted,

The Delhi State Consumer Redressal Commission, in a complaint raised by the respondent, upheld his claim. The main theme of his complaint was that the main reason for his purchase decision of the model was because of its safety features including the airbags and the injury was suffered by him because of non-deployment of airbags.

The appellant preferred appeal before the National Consumer Dispute   Redressal Commission (“National Commission”). The National   Commission dismissed the appeal l sustaining the compensation awarded by the State Commission. The Order of the National Commission, which was passed on January 5, 2021, is under appeal  before us. Neither the  State Commission nor the National Commission accepted the justification sought to be made by the appellant referring to the said investigation report, having regard to the fact of non-deployment of the airbags.

One of the points argued on behalf of the appellant by Senior Advocate Huzefa  Ahmadi is that the order for replacement of the vehicle ought not to have been passed. The respondent had not asked for replacement of the vehicle as part of the reliefs claimed before the State Commission. He has otherwise questioned legality of the decisions of the two forums citing certain clauses from the owner’s manual. His argument on this count has been that if force generated by the collision is lesser than a certain degree, the airbags will not be deployed. Thus, there was no defect in the security system according to him. He also highlighted that the impact of the accident was from the side and it was not a frontal hit.

It is the case of the appellant 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.

The senior advocate submitted that the front airbags are not intended to deploy if the impact is from the side or in cases of rear impact or roll over crashes.

Before the Commission, a point of limitation was also taken and the   appellant wanted the limitation to run from the date of purchase of the vehicle and not the date of the accident. This objection on maintainability has been rightly rejected by both the State Commission and the National Commission. The Court did not find any error in the view of the respective Commissions on this point. 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.  

The Court said 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 have surfaced on the date of the accident itself.

The Court held that there are findings of the two fora about the defect in the product sold, in this case being a vehicle. This was sold with front airbags and there was frontal damage. The airbags did not deploy. The accident caused   injuries   to   the   respondent.  The appellant referred to various portions from the owner’s manual to contend that the impact of the collision was not sufficient to activate the sensor which in turn would have resulted in deployment of the airbags. We would not like to revisit the facts on which findings have been returned by the two fora against the appellant. The State Commission relied on the principle of  Res  Ipsa  Loquitur  to affix the liability of the manufacturer as regards defect in the airbag system, having regard to the nature of the collision. The National Commission affirmed this finding referring to certain photographs of the damaged vehicle, which showed substantial frontal damage. In such circumstances, both the aforesaid fora took the view that expert evidence was not necessary in the subject case. Such a view cannot be faulted as being unreasonable, in the given facts. 

The Court did not find any reason to interfere with the finding of the National Commission. The Court would like to add here that 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. In such circumstances, we do not find that there is any error in the findings of the two for as regards there being defects in the vehicle.  

We shall now turn to the reliefs granted by the State Commission and upheld by the National Commission. The first point argued in this regard is that there was no prayer in the petition for replacement of the vehicle. This is a case where the 1986 Act was applicable and Section 14 of the said statute lays down the reliefs which may be granted. The directions as per the statute, could be for replacement of defective goods as also punitive damages. The appellant has also  taken a point that so far as replacement of the vehicle is concerned, there was no substantive direction and no discussion either. The operative part of the order suffers from a shortcoming on this count, but that is not fatal, the Court said.

Considering the fact that the dispute is pending for a reasonably long period of time, we have ourselves applied our mind on this issue and our view is that a direction for replacement of the vehicle is justified in the facts of the case. The direction for replacement of the vehicle would not be treated as non-est having regard to the State Commission’s Order. The fact that the consumer has got the car repaired on insurance money would not impact the quantum of damages, which is partly punitive in nature in the case, the Court observed.

The Court held,

We are dealing with a case where in a collision, the airbags did not deploy. The complainant, driving the vehicle, suffered substantial injuries as a result thereof. The impact of the collision was such that it would have been reasonable for the respondent to assume that there would have been deployment of the airbags. The safety description of the goods fell short of its expected quality. 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. 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 claims of damages of this nature. Even if there were such a clause, legality thereof could be open to legal scrutiny. But there is no reason for dilating on that aspect in this case.

The Court further held that, 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.

“We do not find the reasoning of the Commission or the operative part of the order awarding damages to be perverse. We do not need the aid of the ratio of the three authorities cited before us pertaining to the motor accident claim to sustain the decision under appeal. We are also of the view that the directions issued against the appellant by the State Commission and upheld by the National  Commission  cannot  be said to have failed the test of proportionality. We hold so as we find the subject-defect to be of such nature that the provisions relating to punitive damages ought to be attracted against the appellant. 

We accordingly dismissed the appeal. Interim order passed in this matter shall stand dissolved,” the order reads. 


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