REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

SPECIAL LEAVE PETITION (C) NOS.21178-21180 OF 2009

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

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  

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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  

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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/-.

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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  

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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  

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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  

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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  

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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  

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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  

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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  

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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  

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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  

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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  

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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  

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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  

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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.   

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