ASHOK LEYLAND LTD vs Bharat Smelting Company

IN this appeal, there is challenge to order dated 20.10.2006, passed by Delhi State Consumer Disputes Redressal Commission. New Delhi (for short as ''State Commission '').

BRIEF facts are that respondent no.1/complainant for the business of manufacturing zipper sliders, purchased a brand new Generator Engine from respondent no.2/O.P. No.1, manufactured by appellant/ O.P.No.2. The engine was installed/mounted alongwith other necessary equipments like alternator etc. at the workplace of respondent no.1 and was put to use. Respondent no.2 also gave/undertook the warranty of 90 days i.e. three months from the day of commissioning of the said engine after every service or routine maintenance. In November, 1994 the above said engine was carried away by the respondent no.2 for service/repairs and overhauling. A bill of Rs.48,401 was raised by respondent no.2. Respondent no.1 promptly made the said payment. After the above mentioned repair/service and overhauling, respondent no.1 was assured of a trouble free and totally smooth functioning/running of the said engine. Within the warranty period the said engine developed snags/defects and was carried away by respondent no.2 for repairs and service. The next service/repairs and overhauling was done by respondent no.2 on 14/15-04-1995. But the engine again developed some major snags/defects. Within an hour of its commissioning, the said engine stopped functioning/running and lay dead. The engine was dismounted and was carried away by respondent no.2. Respondent no.1 was informed that the Crank Shaft of the engine had broken down and needed replacement. The total cost of repairs was assessed at Rs.1 lac. Engine was sent to appellant at Madras, by respondent no.2 without any authority, consent or knowledge of respondent no.1.

DUE to the illegal, wrong and unprofessional acts/deeds of the appellant and respondent no.2, respondent no.1 was deprived of the services of the said generator and it was constrained to hire a generator from the market. The hiring of the generator had been costing Rs.2,000/- per day. Hence, a complaint was filed before the State Commission.

IN its defence respondent no.2, raised the preliminary objection that there was no privity of contract between it and respondent no.1 and if at all there was any privity of contract it was between the purchaser and the manufacturer i.e. appellant. On factual aspects the stand of the respondent no.2 is that three free services were to be provided by the authorized dealer which were duly provided by it on 22.11.1991, 04.02.1992 and 02.04.1992 and during these services lot of installation defects were pointed out to respondent no.1.

HOWEVER , those defects were never rectified by respondent no.1, yet respondent no.1 called respondent no.2 again only on 07-10-1994 i.e. 2 years after the last service was done and by that time the warranty period was over. This showed that respondent no.2 was called only when respondent no.1 had spoiled the engine by its continuous and deliberate negligence and mishandling including overuse thereof. Other defects recorded on 07-10-1994 were ''choked radiator '' and defective water pump. These were the two vital factors which had led to the breakdown of the generator engine and thus overhaul of the same was recommended and undertaken by respondent no.2. Respondent no.1 got the intermittent services done from unauthorized dealers. Respondent no.1 was informed of crank breakage before removing engine from his premises. The crank was sent to Madras with permission of respondent no.1. Since, respondent no.1 had been continuously mishandling the engine, major damage could have occurred at any time.

IN nutshell defence of respondent no.2 is, that respondent no.1 did not suffer any major loss or damage during the warranty period, whereafter he had been getting the generator repaired from unauthorized dealer. However, appellant had not undertaken any warranty upto 90 days after every routine service. Respondent no.2 referred to service reports dated 12.1.1994, 24.1.1994, 3.2.1994, 30.3.1995 and 01.4.1995 which clearly mentioned that RPM cable was broken and there appears to be a deliberate attempt on the part of respondent no.1 to hide the actual hours clocked by the generator engine.

ON behalf of appellant, preliminary objection has been taken that respondent no.1- company is engaged in manufacturing business looking for commercial gains and is therefore not a consumer. In respect of the allegations of respondent no.1, appellant has taken the stand that the said engine under complaint was commissioned in November, 1991 and had worked well upto November, 1994 for three years, well beyond the stipulated warranty period of 1 years, hence no deficiency in service has occurred.

FURTHER respondent no.1 had got the regular maintenance service done from unauthorized sources after the free services despite the fact that appellant had advised it to get the services done through dealers. That during the commissioning of engine certain flaws were observed but the same were not corrected for three years and despite this the engine had worked well. The engine was overhauled in November, 1994 by the appellant and despite regular feedback being given, respondent no.1 failed to maintain the engine. The engine had tendency of getting overheated due to careless/negligent handling by respondent no.1 and also due to overloading of engine. The engine was attended again on 14.4.1995, 3rd time after overhaul for overheating and piston and liners were changed. The subsequent breakage of crankshaft has nothing to do with service on 14.04.2001, as crankshaft was neither changed nor repaired during the said service. The crankshaft was broken due to mishandling and the breakage occurred after 3 years of misuse, overloading and negligence. That as a special case, the crankshaft was replaced under warranty after 4 years as a goodwill gesture but respondent no.1 did not collect the engine for the reasons best known to him despite respondent no.2 informing him about the same. The question of deficiency in service does not arise as no service has been hired or purchased from appellant at any point of time.

STATE Commission, in the totality of facts and circumstances of the case, nature of allegation and deficiency in service against OP No.1 and against OP No.2 as to the manufacture or sale of defective goods, allowed the complaint in the following terms:- "(i) OP No.1 shall pay Rs. 25,000/- as compensation because of not rectifying some of the defects properly particularly the warranty of 500 hours or three months from the commissioning of the engine. (ii) OP No.2 shall refund Rs. 3,00,000/- towards cost of the generator as it is lying with it since 1995. We are awarding this as depreciated value of the engine as well as the complainant having also used the same for a year or so. "

NOTICE of this appeal was issued to both the respondents. Respondent no.2 was duly served by Regd. AD and since respondent no.2 was not present, vide order dated 3.1.2012, respondent no.2 was proceeded ex parte. Learned counsels for appellant and respondent no.1 have advanced oral arguments and have also placed on record their written submissions.

IT is an admitted fact that respondent no.1, had purchased a new generator engine from OP-2, manufactured by the appellant.

IT is also not in dispute that in November, 1994, the generator in question, was carried away by respondent no.2 for service/repairs and overhauling for which a bill of Rs.48,401/- was raised which was duly paid by respondent no.1. However, after service/repairs and overhauling, the said generator developed certain defects and again it was carried away by respondent no.2 for repairs and service. The service/repairs and overhauling was done by respondent no.2 in April, 1995, but the engine again developed some major snags/defects. Thus, engine was dismounted and was carried away by respondent no.2 and respondent no.1 was informed that the Crank Shaft of the engine was broken and needed replacement and the total costs of repairs at Rs.1 lac. It is the case of respondent no.1/complainant that engine was sent to appellant at madras by respondent no.2, without any authority/consent or knowledge of respondent no.1 and due to illegal acts on the part of the appellant and respondent no.2, respondent no.1 had to hire another generator from the market. The defence of the appellant is that the engine was overhauled in November, 1994 by them and despite regular feedback, respondent no.1 failed to maintain the engine. The engine had a tendency of getting overheated. Due to careless/negligent handling of respondent no.1, crank shaft was broken out. The mishandling and breakage occurred after 3 years of misuse and overheating. As a special case the crank shaft was replaced under warranty after 4 years as a goodwill gesture, but respondent no.1 did not collect the engine for reasons best known to him, as such there was no deficiency in service on the part of the appellant.

STATE Commission in its impugned order has observed; "15. After according careful consideration to the rival contentions of the parties and also scanning the documents produced by the complainant we find that OP No.1 was deficient in service in not rectifying the defects properly as within one month or two months of the rectification, the generator was brought to OP No.1 and when last it was taken to OP No.1 in 1995 it gave warranty of 500 hours or three months. There is no document produced by OP No.1 showing that the machine was used for 500 hours . 16. In the warranty it was nowhere mentioned that the warranty is either for 500 hours or for three months whichever is earlier. Thus the effect of such a warranty was three month period unless it was shown by OP No.1 that the engine had been actually used for 500 hours. 17. The deficiency in such kind of service means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service. 18. In our view the liability of OP No.1 is limited to the extent of not carrying out the repairs in perfect manner after charging reasonable consideration. There is no dispute that the engine was manufactured by OP No.2 and was a brand new generator. There is also no dispute that OP No.1 provided three free services but the last service during the warranty period of three months was not upto the standard as the generator became non-functional before the expiry of three months or its running for 500 hours. 19. However, the circumstance of generator having been sent by OP No.1 to its manufacturer OP No.2 shows that it was having such defect which was difficult to be removed and causing mental agony and harassment and loss of business to the consumer. 20. Whenever a consumer purchases brand new goods the minimum expectation of the consumer is that at least the goods will be trouble free for few years and particularly during warranty period. But when it starts giving trouble in a year or two the natural inference to be drawn is that the goods were defective which means any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard which is required to be maintained by or under any law for the time being in force or under any contract, express or implied or as is claimed by the trader in any manner whatsoever in relation to any goods. 21. Thus the OP No.1 at the most can be held guilty for partial deficiency in service in not removing the defect in satisfactory manner as the complainant had to take the generator after two days or so. As regards OP No.2 the liability is that of having manufactured and supplied a defective engine. However, the factum that the complainant used the machine for more than 1 years and availed the services cannot be lost sight of. Similarly the fact that the generator is lying with OP No.2 since 1995 and by now it has been reduced to junk also cannot be lost sight of. "

THERE is nothing on record to prove this defence of the appellant as well as respondent no.2, that respondent no.1 had mishandled the generator or got the same repaired from unauthorized dealer. Since after repair of the generator in 1995, again defects have occurred, under these circumstances, it stands clearly established that there was deficiency on the part of the appellant as well as respondent no.2 and we find no reason to disagree with the reasoning given by the State Commission.

NOW the question to be seen is as to whether refund of Rs.3 lacs towards cost of generator as awarded to respondent no.1, is excessive or not. In this regard, we may point out that generator was purchased in 1991 at the cost of Rs.4.25 lacs and till April, 1995 it gave satisfactory service to respondent no.1. So, keeping in view the depreciated value of the engine and considering the fact that respondent no.1 had used the same for about four years, it would suffice if we award a sum of Rs.2 lacs towards the cost of the generator.

ACCORDINGLY , we partly allow this appeal and direct the appellant to refund Rs.2 lacs towards cost of the generator, instead of Rs.3 lacs as ordered by the State Commission. Other directions passed by the State Commission shall remain as it is.

WITH this modification, appeal stands partly allowed.

PARTIES shall bear their own costs.