Daimler Chrysler India Vs Controls & Switchgear Company Ltd.(Supreme Court of India)
SC order on maintainability of Consumer Protection Act on Car Purchase by company for Directors Personal use
In a recent judgment, the Supreme Court of India clarified the legal distinction between personal and commercial use of company cars within the context of consumer protection laws. The case involved Controls and Switchgear Company Ltd. (the company) and Mercedes Benz India Pvt. Ltd. (formerly Daimler Chrysler India Pvt. Ltd.). Controls and Switchgear had purchased two luxury cars for their directors’ personal use. When issues arose with the vehicles, they sought recourse under consumer protection laws. Mercedes Benz argued that the purchase did not qualify for consumer protection because the cars were intended for “commercial purpose.” The court rejected this argument, emphasizing that merely purchasing a vehicle for a company employee does not automatically classify it as having a “commercial purpose.” The key factor is whether the car purchase has a “close and direct nexus with a profit-generating activity.” Since the directors used the cars for personal reasons, and there was no evidence linking the purchase to any profit-making activity of Controls and Switchgear, the court held Mercedes Benz liable under consumer protection regulations. This ruling has significant implications for both employers and employees, highlighting the importance of clear distinctions between personal and commercial use of company property.
