Booked Mahindra XUV500 in 2013, but never received it: Consumer Commission orders nearly Rs 11 lakh in refund and compensation

The Puducherry State Consumer Disputes Redressal Commission has held Mahindra & Mahindra responsible for failing to deliver a car booked and fully paid for by a customer in 2013, as per a report by TOI. In its order dated June 24, the commission directed the automaker to refund the amount paid along with interest, compensation and litigation costs. The dealer, Rajarajan & Sons, was also held partly responsible for the delay and ordered to pay separate compensation.

Customer booked and paid for vehicle in 2013

According to the commission's order, complainant C Unnikrishnan booked a Mahindra XUV500 W6 with Rajarajan & Sons in October 2013 after paying an advance of Rs 40,000.

His bank transferred the remaining Rs 8,96,200 directly to the dealer on October 28, 2013. The dealer assured delivery within a week, citing a shortage of stock. However, the vehicle was never delivered.


In 2015, Unnikrishnan approached the district consumer commission. The forum held the dealer liable and ordered it to refund Rs 8,71,200 with 6 percent interest, pay Rs 50,000 as compensation and Rs 10,000 towards litigation costs. Mahindra was not held liable at that stage because there was no direct contractual relationship between the manufacturer and the buyer.

Dissatisfied with the decision, Unnikrishnan challenged the order before the state commission, seeking a refund of the full Rs 9,36,200 he had paid, 24 percent interest and Rs 2 lakh as compensation. He argued that the earlier order lacked proper reasoning and did not consider the nearly Rs 2 lakh he had spent defending a separate case initiated by his bank over the unpaid loan.

Dealer and Mahindra defended their positions

The dealer argued that Unnikrishnan did not qualify as a consumer because the vehicle was intended for business use. It also claimed that Mahindra alone was responsible since the dealer had merely forwarded the payment and had no control over either the funds or the vehicle's delivery.

Mahindra, meanwhile, contended that the complainant had failed to establish any deficiency in service or manufacturing defect. The company maintained that, as the manufacturer, it did not deal directly with retail customers.

Commission finds both manufacturer and dealer accountable

The bench comprising Presiding Member S Sundaravadivelu and Member S Oumasanguery rejected the dealer's argument, observing that the determining factor was whether the vehicle had been intended to generate profit. Since the car was never delivered, it could not have been used for commercial purposes, making the complainant a consumer under the law.

The commission observed that buyers generally select a vehicle based on its manufacturer, model and variant, while dealers act as the manufacturer's representative because customers cannot purchase vehicles directly from the company.

It also noted that the bank manager confirmed the dealer could not recover the transferred funds from the complainant's account. The loan agreement stated that the money would be paid directly to the manufacturer on behalf of the borrower. In addition, an email sent by the dealer to Mahindra and a purchase order dated June 16, 2014 showed that Mahindra was aware of the pending vehicle requirement but did not supply the car.

Referring to a Supreme Court ruling, the commission observed that once the principal company is clearly identified, its agent cannot be held responsible for the company's actions. On that basis, it held Mahindra responsible for the vehicle's non-delivery. At the same time, it found the dealer partly liable because the purchase order had been placed nearly eight months late.

Commission orders refund, compensation and costs

The commission directed Mahindra to refund Rs 8,71,200 along with 12 percent annual interest from April 2, 2015 until payment is made. It also ordered the company to pay Rs 1,50,000 as compensation and Rs 10,000 towards litigation costs.

The dealer was directed to pay an additional Rs 50,000 as compensation. The commission ordered that all payments other than the refund and interest be made within 30 days, failing which an additional 8 percent interest would become payable.

(With inputs from TOI)