C.N. ANANTHARAMversusM/S. FIAT INDIA LTD. AND ORS. ETC. ETC.

                [2010] 15 (ADDL.) S.C.R. 619


                     C.N. ANANTHARAM                             A
                               v.
       MIS. FIAT INDIA LTD. AND ORS. ETC. ETC.
   (Special Leave Petition (C) Nos.21178-21180. of 2009)

                    NOVEMBER 24, 2010
                                                                  B
      [ALTAMAS KABIR AND CYRIAC JOSEPH, JJ.]

        Consumer Protection Act, 1986: Deficiency in service
  - Purchaser of diesel vehicle complained to the dealer about
  defect in the performance of the vehicle and in its engine -    c.
. He alleged that the diesel vehicle made rattling noise -
  Dealer replaced the engine and few other parts - Purchaser
  insisted on replacement of the vehicle with a new vehicle -
  Filed complaint before Consumer Forum seeking
  replacement of vehicle and in the alternative refund of the D
  purchase price along with expenses - Dissatisfied with the
  orders of District Forum and State Commission, the purchaser
  approached National Commission - National Commission
  directed the dealer and the manufacturer to remove the defect
  and deliver it to the purchaser after certification of an
                                                                   E
  independent technical expert that the vehicle was free from
  any defect - Held: An engine operating on diesel makes a
  rattling noise which does not occur in petrol driven engines
  and in view of that there was really no manufacturing defect
  in the vehicle as complained of by the purchaser - In such
                                                                   F
  circumstances, the order passed by the National Commission
  was not unreasonable - 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 -
  Directions given by the National Commission upheld with G
  further direction that if the expert opines that the vehicle has
  inherent manufacturing defects, the purchaser would be
  entitled to refund of the price of the vehicle and the lifetime

                              619                                 H
    620   SUPREME COURT RF.PORTS [2010] 15 (ADDL) S.C.R


A tax and EM/ along with in:2rest @ 12% p.a. and costs.

       The complainant-p~!titioner purchased a diesel
  vehicle from a dealer, the second respondent and got it
  registered in his name. After the registration, he took the
  vehicle on a drive and found certain defects in the
8 VEihicle particularly in the engine. On the same day, he left
  the vehicle with the dealer for removing the defects. The
  engine and few other parts were replaced. The petitioner
  was still not satisfied with the performance of the vehicle
  and informed the dealer that the vehicle had inherent
C defects which could not be repaired and insisted on
  replacement of vehicle with a new one or for refund of
  purchase price together with the expenses incurred by
  him in trying to rectify the defects in the vehicle. On not
  receiving any response, the petitioner filed a complaint
D before the District Forum. The District Forum allowed the
  complaint and directed the first and second respondents
  to refund the claimed amount, together with interest @
  12% P.A. and a sum of Rs.5000 towards cost of legal
  proceedings. The State Commission modified the order
E of the District Forum and directed the first and second
  respondents to replace the vehicle with a brand new one
  and on failure to do so to refund the purchase price of
  the vehicle along with road tax and the monthly
  instalments paid by the petitioner along with the interest
F @ 12% P.A. from the date of order. Aggrieved, the
  respondents filed revision before the National
  Commission. The National Commission held that the
  petitioner could not prove any manufacturing defect, but
  directed the dealer and the manufacturer to remove the
G defects, if any, in the vehicle and make it roadworthy, if
  necessary by reconditioning the vehicle and deliver it to
  the petitioner in the presence of an independent technical
  expert who would certify that the vehicle was free from
  any defect and the same would be final for all purposes.
H
  C.N. ANANTHARAM v. M/S. FIAT INDIA LTD. AND          621
               ORS. ETC. ETC.

The petitioner filed the instant special leave petitions     ~
challenging the order of the National Commission.

    Disposing of the special leave petitions, the Court

     HELD: 1. The question which emerged after
considering the submissions made on behalf of
                                                             B•I
respective parties was whether the manufacturing
company and by extension the dealer/agent was under
anv compulsion to replace the vehicle itself when the
engine of the vehicle from which certain noises were
allegedly emanating had been replaced. It was explained . C
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. In such circumstances,
the order passed by the National Commission was not D
unreasonable. For whatever reason, except for a mere
800 kilometers the petitioner had not used the vehicle after
it was delivered and had, on the other hand, made several
complaints in an attempt to prove that there were
manufacturing defects in the vehicle. The National E
Commission took 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. F
[Paras 15, 16) ( (628-H; 629-A-D]

    2. 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 . G
one. However, in addition to the directions given by the
National Commission, it is directed that if the independent
technical expert is of the opinion that there are inherent

                                                              H
    622    SUPREME COURT REPORTS (2010] 15 (ADDL) S.C.R.


A   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 int~rest@ 12% per annum and
    costs, as directed by the State Commission. [Para 17]
    [629-E, F]
B
        lndochem Electronic v. Addi. Collector of Customs (2006)
    3 SCC 721; Maruti Udyog Ltd. v. Susheel Kumar Gabgotra
    (2006) 4 SCC 644; Hindustan Motors Ltd. v. N. Siva Kumar
    (2000) 10 sec 654 - referred to.
c                        Case Law Reference:
          (2006) 3 sec 121        referred to           Para 9
          (2006) 4 sec 644        referred to           Para 13

D         (2000) 1o sec 654       referred to           Para 14

         CIVIL APPELLATE JURISDICTION: SLP (Civil) No. 9896
    of 2010.

         From the Judgment & Order dated 17.4.2009 of the ·
E   National Consumers Disputes Redressal Commission, New
    Delhi in RP No. 1585, 1713 and 2431 of 2006.

         Kiran Suri, Vijay Verma, Rishi Jain and S.J. Smith for the
    Petitioner.

F       Vijay Kumar, Thomas Qammen, Viswajit Singh, G.
    Umapathy, M.M. Manivel, Sangita Chahan and Rakesh K.
    Sharma for the Respondent.

          The Judgment of the Court was delivered by
G
         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 Resi:;ondent in all these three Special Leave Petitions
    and agent of M/s Fiat India Ltd., the manufacturer of the said
H
   C.N. ANANTHARAM v. M/S. FIAT INDIA LTD. AND                 623
        ORS. ETC. ETC. [ALTAMAS KABIR, J.]
 vehicle. The Petitioner paid a sum of Rs.7,69,187/- towards the       A
 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.                                                            B

        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       C
  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   D
  itself, were completely replaced. The Petitioner, however, was
  not satisfied with the performance of the vehicle and came to
  the conclusion that the vehicle had inhe~ent 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        E
  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           F
 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           G
 interest at the rate of 12% per annum and a further sum of
 Rs.5,000/- towards cost of the legal proceedings. The claim
 against Respondent No.3, M/s Fiat Sundaram Auto Finance
 Ltd. was rejected.
                                                                       H
    624     SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R


A       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
B Appeals modifying the order of the District Forur!1 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
c 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. The matter was, thereafter, taken to the National
    Consumer Disputes Redressal Commission, New Delhi,
D   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
E   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
F   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 Commission through a common order dated 17th
G   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
H
 C.N. ANANTHARAM v. M/S. FIAT INDIA LTD. AND                  625
      "ORS. ETC. ETC. [ALTAMAS KABIR, J.]

    the defect, if any, in the vehicle make it roadworthy, if          A
    necessary by reconditioning the vehicle and deliver it to
    the··complainant
           I
                          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         B
    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             c
    revision petitions are accordingly disposed of in these
    terms. Under the peculiar 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.            D

    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          E
             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          F
             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 Advocate, urged that          G
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 b~ the District Forum as
well.as the State Commission which directed the Respondents            H
    626    SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.


A   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
B   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 or:ily to repair/replace
c   any part of the vehicle found to be defective, even 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
D   to prove any manufacturing defect, was perverse and contrary        1


    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
E   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
F   expert mutually agreed 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 lndochem Electronic vs. Addi.
G   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
H
  C.N. ANANTHARAM v. M/S. FIAT INDIA LTD. AND               627
       ORS. ETC. ETC. [ALTAMAS KABIR, J.]
malfunctioning of the system soon after installation, it would      A
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 Commission. It was also held that in the light   B
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.    c
      10. Mr. Vijay Kumar, learned Ad :ocate, 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 D
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 justification for
the Petitioner to d~mand that the vehicle be replaced or that E
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 F
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 G
                              , even involved the replacement
  made by the Petitioner, which
  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 manufacturing company when the
- vehicle was delivered to the Petitioner.                       H
    628    SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R


A        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.

8         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
c   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 manufacturer had indicated that it was necessary to
    download the engine to trace the problem which has been
D   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
E   without any foundation. However, the relief If/as 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
F   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 model, this
G   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
H dealer/agent was under any compulsion to replace the vehicle
       C.N. ANANTHARAM v. MIS. FIAT INDIA LTD. AND                629
            ORS. ETC. EJ,C. [ALTAMAS KABIR, J.]
     itself when the engine of the vehicle from which certain noises      A
     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.                                      B

           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 mere 800 kilometers the Petitioner has
     not used the vehicle after it was delivered and has, on the other    C
     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
     ta the Petitioner after having the same properly checked by an       D
     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 geal         E
     box, there was no other major.defect which made the vehicle
II   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 of the opinion that there are        F
     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      G1
     disposed of with the above directions.

     D.G.                     Special Leave Petitions disposed of.
                                                           '
                                                           ''