C.N.Anantharam vs M/S Fiat India Ltd.& Ors.Etc.Etc

C.N. ANANTHARAM ... PETITIONER

VERSUS

M/S FIAT INDIA LTD. & ORS. ETC. ETC. ... RESPONDENTS

J U D G M E N T

ALTAMAS KABIR, J.

1. On 31st October, 2002, the Petitioner herein

purchased a Fiat Siena Weekender diesel vehicle

from M/s Sundaram Automobiles, Bangalore, the

common Respondent in all these three Special Leave

Petitions and agent of M/s Fiat India Ltd., the

manufacturer of the said vehicle. The Petitioner 2

paid a sum of Rs.7,69,187/- towards the Ex-showroom

price of the vehicle, together with a sum of

Rs.56,537/- towards lifetime road tax and

Rs.28,964/- as insurance. The vehicle was duly

registered in the name of the Petitioner on 25th

November, 2002, when the vehicle was delivered.

2. According to the Petitioner, immediately after

registration of the vehicle, it was taken out for a

drive when certain defects, particularly in the

engine, began to manifest themselves. The same

day, the Petitioner left the vehicle with the

dealer for removing the defects. On the very same

day, the Respondent No.2, M/s Sundaram Automobiles,

wrote back to the Petitioner stating that the

vehicle was in good condition and the noise was on

account of the operational characteristics of the

engine. Thereafter, on several occasions, the

Petitioner left the vehicle with the agent and

various parts, including the engine itself, were 3

completely replaced. The Petitioner, however, was

not satisfied with the performance of the vehicle

and came to the conclusion that the vehicle had

inherent defects and could not be repaired. He,

accordingly, insisted that the vehicle be replaced

with a new vehicle or the amount paid by him as

sale price be refunded, together with expenses

incurred in trying to rectify the defects in the

vehicle.

3. Not getting any response, the Petitioner filed

Complaint No.474 of 2003 before the IVth Additional

District Consumer Disputes Redressal Forum,

Bangalore Urban, on 17th April, 2003. The complaint

was heard by the District Forum, which allowed the

same by its order dated 20th February, 2004, and

directed the Respondents 1 and 2 to refund a sum of

Rs.9,15,536/-, as claimed by the Petitioner,

together with interest at the rate of 12% per annum

and a further sum of Rs.5,000/- towards cost of the 4

legal proceedings. The claim against Respondent

No.3, M/s Fiat Sundaram Auto Finance Ltd. was

rejected.

4. Aggrieved by the said order, the Respondents 1

and 2 herein filed two separate appeals, being

Nos.513 of 2004 and 397 of 2004, respectively,

before the Karnataka State Consumer Disputes

Redressal Commission, Bangalore. On 15th June,

2006, the State Commission disposed of the said

Appeals modifying the order of the District Forum

by directing the Appellants (Respondents 1 and 2

herein) to replace the Petitioner's vehicle with a

brand new vehicle or on their failure to do so to

refund Rs.7,69,187/-, along with life time tax paid

and the monthly instalments which had been paid by

the Petitioner, to M/s Sundaram Automobiles,

together with interest @ 12% per annum from the

date of the order and also the cost of Rs.5,000/-. 5

5. The matter was, thereafter, taken to the

National Consumer Disputes Redressal Commission,

New Delhi, hereinafter referred to as "the National

Commission", by the Respondent No.1 in Revision

Petition No.2431 of 2006. The Respondent No.2

(agent) filed Revision Petition No.1585 of 2006.

The Petitioner, in his turn, filed Revision

Petition No.1713 of 2006, before the National

Commission. The National Commission, while

admitting the Revision Petition No.1585 of 2006 on

25th July, 2006, only on the point of the monthly

instalments (EMI) paid and the quantum of interest,

directed the Revision Petitioner to deposit its

share with interest at the rate of 9%. Aggrieved

by the said order, the Respondent No.2 filed

Special Leave Petition (Civil) No.13201 of 2006

before this Court on 4th August, 2006, and the same

was dismissed on 22nd February, 2008. Revision

Petition Nos. 2431 of 2006, 1585 of 2006 and 1713

of 2006 were finally disposed of by the National 6

Commission through a common order dated 17th April,

2009. In the said order, the National Commission

held as follows:

"....Therefore, while we hold that the complainant has not been able to prove any manufacturing defect, all the same, the dealer and the manufacturer are directed to remove the defect, if any, in the vehicle make it roadworthy, if necessary by reconditioning the vehicle and deliver it to the complainant in the presence of an independent technical expert mutually agreed upon by the complainant and opposite parties and for this purpose any of the party may apply to the District Forum for appointing such expert if it is not mutually agreed upon by the parties. The expert shall certify that the vehicle is free from any defect which shall be final for all purposes. This should be done within a period of three months. The Ops, thereafter, to provide a warranty for one year from the date of delivery. The revision petitions are accordingly disposed of in these terms. Under the peculiar 7

facts of the case, there would be no order as to costs."

Thereafter, the Petitioner filed the instant

Special Leave Petitions challenging the order of

the National Commission.

6. The issues which fall for decision in these

Petitions are :-

(i) Whether it can be said that the

manufacturing defect of the vehicle was

such that it warranted replacement, and

whether the refund of Rs.7,69,186/- and 12%

interest as ordered by the State Commission

was justified?; and

(ii) Whether both the dealer and the

manufacturer are jointly and severally

liable in regard to deficiency of service?

7. Appearing for the Petitioner in all the three

Special Leave Petitions, Ms. Kiran Suri, learned 8

Advocate, urged that from the very day on which the

vehicle was delivered to the Petitioner, it was

obvious that there were several manufacturing

defects in the vehicle, which could not be removed.

The said position was duly appreciated both by the

District Forum as well as the State Commission

which directed the Respondents to replace the

vehicle or to refund the amounts which had been

expended by the Petitioner for purchase and to make

the vehicle operational and roadworthy. The

National Commission struck a different note upon

holding that there was no worthwhile evidence to

indicate that the vehicle had suffered from any

serious manufacturing defect and that in any case

the allegation of noise emanating from the engine

even after its replacement with a new engine, could

not be believed. Ms. Suri also questioned the view

of the National Commission that the obligation of

the manufacturer/dealer is only to repair/replace

any part of the vehicle found to be defective, even 9

during the warranty period, free of charge, but

that the question of replacing the vehicle with a

new vehicle was not justified.

8. Ms. Suri lastly submitted that the finding of

the National Commission that the Complainant/

Petitioner had not been able to prove any

manufacturing defect, was perverse and contrary to

the evidence adduced by the parties and the

materials on record. Ms. Suri also questioned the

finding that the refund of the cost of the vehicle

would also not be justified, since the Petitioner

had not taken the vehicle from the dealer despite

their letter certifying that the vehicle had no

defect. Ms. Suri submitted that further direction

given by the National Commission to remove any

defects and to make the vehicle roadworthy, if

necessary, by reconditioning the vehicle and to

deliver the same to the Petitioner in the presence

of an independent technical expert mutually agreed 10

upon, was wholly misconceived and could not be

sustained.

9. In support of her submissions, Ms. Suri

referred to a decision of this Court in Indochem

Electronic vs. Addl. Collector of Customs [(2006) 3

SCC 721], wherein while considering the provisions

of Sections 3 and 14 of the Consumer Protection

Act, 1986, this Court was of the view that when the

deficiency began to manifest themselves it was the

duty of the suppliers to attend to such

deficiencies immediately and if the supplier was

unable to attend to the deficiencies and

malfunctioning of the system soon after

installation, it would amount to "deficiency of

service". Furthermore, when the deficiencies in

the system continued to persist during the warranty

period, including the extended period, the

suppliers were rightly held to be liable for

deficiency in service by the State and National 11

Commission. It was also held that in the light of

the specific power conferred under Section 14(1)(c)

of the aforesaid Act, damages equivalent to price

of goods could be awarded, despite the provisions

of Section 12(3) of the Sale of Goods Act, 1930, as

the provisions of the 1986 Act are in addition to

and not in derogation of any other provision of

law.

10. Mr. Vijay Kumar, learned Advocate, who appeared

for M/s Fiat India Ltd., urged that the complaint

made by the Petitioner herein was without any basis

as the vehicle was fully roadworthy and it was the

Petitioner who made continuous complaints which,

the Respondent attended to for the sake of

maintaining good business relations. It was

submitted that the manufacturer company went to the

extent of even replacing the engine and parts of

the gear box to give the Petitioner complete

satisfaction. However, there was absolutely no 12

justification for the Petitioner to demand that the

vehicle be replaced or that the value thereof,

together with the expenses incurred be refunded.

It was also urged that the vehicle had been duly

certified to be completely roadworthy and it was

the Petitioner who was at fault for not having

taken delivery of the same, despite the same being

ready. It was submitted that the decision of the

National Commission did not call for any

interference and the Petition was liable to be

dismissed.

11. On behalf of the Respondents it was contended

that everything possible was done to meet the

repeated complaints made by the Petitioner, which

even involved the replacement of the engine and

other parts. However, instead of taking delivery

of the vehicle, the Petitioner continued to insist

on replacement of the vehicle which was not

contemplated under the warranty given by the 13

manufacturing company when the vehicle was

delivered to the Petitioner.

12. It was also submitted that, in any event, the

agent of a vehicle manufacturer would not be made

liable for the defects, if any, in the vehicle and

the relief prayed for against Respondent No.2 was

entirely misconceived.

13. In support of the aforesaid submissions,

reference was made to the decision of this Court in

Maruti Udyog Ltd. vs. Susheel Kumar Gabgotra

[(2006) 4 SCC 644], in which it was, inter alia,

held that if the manufacturing defect was

established, then replacement of the entire item or

the replacement of the defective parts, is only

called for. In fact, reference was made to the

warranty condition which referred only to

replacement of only the defective parts and not the

car itself. This Court held that from the various

documents exhibited it would appear that the 14

manufacturer had indicated that it was necessary to

download the engine to trace the problem which has

been complained of, but there was no agreement to

replace the engine. Moreover, when the manufacturer

asked for the vehicle to be brought in for the

purpose of downloading the engine, the Respondent

did not do so and, accordingly, to infer that there

was any manufacturing defect in the said background

was without any foundation. However, the relief was

moulded so that the defective part could be

replaced without requiring the purchaser to pay any

charge.

14. Reference was then made to the decision of this

Court in Hindustan Motors Ltd. vs. N. Siva Kumar

[(2000) 10 SCC 654], in which it was held that when

it became impossible to comply with the National

Commission's order directing replacement of the

Respondent's defective vehicle, since the

manufacturer had stopped manufacturing the said 15

model, this Court directed that the money along

with interest, compensation and costs were to be

paid to the purchaser.

15. Having considered the various submissions made

on behalf of respective parties, what emerges is

the question as to whether the manufacturing

company and by extension the dealer/agent was under

any compulsion to replace the vehicle itself when

the engine of the vehicle from which certain noises

were allegedly emanating had been replaced. It has

been explained that an engine operating on diesel

makes a rattling noise which does not occur in

petrol driven engines and that there was really no

manufacturing defect in the vehicle as complained

of by the purchaser.

16. In such circumstances, the order passed by the

National Commission, impugned in these Special

Leave Petitions, does not appear to be

unreasonable. For whatever reason, except for a 16

mere 800 kilometers the Petitioner has not used the

vehicle after it was delivered and has, on the

other hand, made several complaints in an attempt

to prove that there were manufacturing defects in

the vehicle. The National Commission has taken all

these matters into consideration in giving the

impugned directions regarding delivery of the

vehicle to the Petitioner after having the same

properly checked by an independent technical expert

who would have to certify that the vehicle was free

from any defect when it is delivered.

17. From the facts as disclosed, it appears that

apart from the complaint relating to noise from the

engine and the gear box, there was no other major

defect which made the vehicle incapable of

operation, particularly when the engine was

replaced with a new one. However, in addition to

the directions given by the National Commission, we

direct that if the independent technical expert is 17

of the opinion that there are inherent

manufacturing defects in the vehicle, the

petitioner will be entitled to refund of the price

of the vehicle and the lifetime tax and EMI along

with interest @ 12% per annum and costs, as

directed by the State Commission.

18. In such circumstances, the Special Leave

Petitions are disposed of with the above

directions.

................................................J. (ALTAMAS KABIR)

................................................J. (CYRIAC JOSEPH) New Delhi Dated: 24.11.2010.