Supreme Court directs luxury car maker BMW India Private Limited to pay compensation of Rs. 50 Lakhs for defective car

In a recent order, the Supreme Court (SC) of India put an end to the protracted legal battle since 2009, where luxury car maker BMW India Private Limited supplied a defective car to a customer. The three-judge bench of the SC constituting Chief Justice of India DY Chandrachud, Justice JB Pardiwala, and Justice Manoj Misra directed BMW to pay compensation of Rs. 50 Lakhs to the customer. The order reads, “Bearing in mind the facts and circumstances of this case, we are of the considered view that the manufacturer, BMW India Private Limited, should be directed to pay a consolidated amount of Rs 50 lakhs in full and final settlement of all claims in dispute. The manufacturer shall pay this amount to the complainant on or before 10 August 2024 by electronic transfer of funds.” The case was instituted by GVR Infra Projects. In this case, the appeals originated from a March 22, 2012, order of the Telangana High Court by which a criminal proceeding arising out of FIR has been quashed. The facts of the case include that on September 25, 2009, the complainant purchased a BMW 7 series vehicle. While driving the vehicle on September 29, 2009, a serious defect was noticed and the car was taken to the workshop. Further, similar issues were faced on November 13, 2009, and a complaint was lodged for offences under Section 418 and Section 420 of the Indian Penal Code (IPC) which led to the registration of the FIR. The manufacturer, Managing Director, and other directors were named as the accused.

On 22 March 2012, the Telangana HC quashed the proceedings against BMW and directed “the manufacturer to deliver a brand new BMW Series vehicle to the complainant in place of the defective one.” The complainant, through his advocate (Mr. Sowri Dev), informed the manufacturer on July 25, 2012, that he was not interested in taking a new BMW car, but instead was interested in taking an amount equivalent to the value of the car, together with interest. The decision of the HC was challenged and the matter was mentioned before the Supreme Court. The SC bench observed, “The High Court came to the conclusion that the ingredients of the offence of cheating were not established on the basis of the contents of the FIR. Having come to this conclusion, there was no justification for the High Court thereafter to direct the manufacturer to replace a brand new BMW 7 Series vehicle. The High Court had been moved by the manufacturer for quashing of the complaint under Section 482 of the Code of Criminal Procedure 1973. The High Court was required to address itself to whether a case for quashing was made out.”

Furthermore, the SC opined, “Bearing in mind the nature of the dispute, which was confined only to a defective vehicle, we are of the view that allowing the prosecution to continue, at this stage, nearly fifteen years after the dispute arose, would not subserve the ends of justice. Instead, by exercising the jurisdiction of this Court under Article 142 of the Constitution, substantial justice can be done by directing the payment of compensation to the complainant, while sustaining the order quashing the complaint.” Therefore, the top court directed BMW to pay a compensation of Rs. 50 lakhs in full and final settlement of all claims in dispute. While directing this, the SC also mentioned, “Conditional on the aforesaid payment being made by the manufacturer to the complainant, the order of the High Court quashing the complaint shall stand and the direction for the replacement of the old vehicle with a brand new vehicle shall stand set aside.” The appeals were disposed of by the three-judge bench of the top court.