Hyundai Motor India Ltd. vs Er. Gopal K. Sahi And Anr.

BOTH these revisions arise out of the same order passed by the State Commission. Revision Petition No. 1244/08 has been filed by M/s. Hyundai Motor India Ltd., the manufacturer (hereinafter referred as manufacturer'') and R.P. No. 1341/08 has been filed by M/s. Deep Hyundai, dealer (hereinafter referred as dealer''). Delay of 8 days condoned.

THE complainant''s case is that he had purchased a Santro car DL 4CJ 0837 in the year 1999. The said car had met with an accident and due to high degree of corrosion resulting body weakness, the car was unable to bear the impact of accident but fortunately the complainant''s life was saved in the accident. In January, 2001, the dealer agreed to sell a transit damaged repaired Santro car to the complainant on payment of Rs. 50,000 in cash on "as is where is basis". At that time, the ex -showroom price of Hyundai Santro LE -Euro car was Rs. 3,43,495 . It was agreed that the damaged car which was valued at Rs. 1.45 lakh would be kept by the dealer as also the amount of Rs. 1,05,000, which was to be received by the complainant from insurance. The number of the exchanged Santro car was DL 4C M 6282. After about 16 months of purchase of the transit damaged car, the complainant reported that it had developed corrosion on some parts of the car. The respondent inspected the car and asked the complainant to send the same for necessary repairs but complainant continued to ask the respondent to send the inspection report and the respondent repeatedly asked the complainant to send the car for removal of defects of rusting/corrosion, if any, but the complainant did not agree to send the transit damaged car for necessary repairs and approached the District Forum.

THE dealer denied the liability on the ground that for any manufacturing defect, he was not responsible; that the complainant had never reported any problem or manufacturing defect in the previous car, which was purchased in the year 1999 till it met with an accident; that the transit damaged car was brought to the workshop for 3 services during the years 2001 and 2002 and that no complaint was made by the complainant for the said car for almost 16 months. It was only on 29.4.2002, when the car had run 13019 kms., then it was brought for repairs and the complainant reported rusting of under hood assembly, but, on inspection, no such problem was noticed. However, the dealer had asked the complainant to bring the car to the workshop repeatedly but the complainant did not agree for the same. On 18.8.2003, the car was brought for check up when it had run 19247 kms, and even at that time, the complainant did not report any corrosion or rusting of the car. According to the dealer, the rusting of the car was not on account of any manufacturing defect. The manufacturer adopted the version taken by Respondent No. 1 and it was stated that the complainant had negotiated with the dealer for the purchase of transit damaged repaired car on "as is where is basis" and the said deal/transaction was only between the complainant and the dealer and the manufacturer had nothing to do with the same, nor the manufacturer had played any role in the said deal. Accordingly, the manufacturer also denied its liability.

THE complainant approached the District and the District Forum asked Indian Institute of Technology, Delhi for inspection of the car. The inspection was carried out by Prof. R.R. Gaur, Automobile Engineer and Prof. Sunil Pandey, Material and Manufacturing working in the Mechanical Engineering Department of IIT, Delhi. In the report dated 2.12.2005, it was stated that in their considered opinion, the defect in the car referring to corrosion had become manifest because of the poor quality of the sheet surface before painting and it was clearly a manufacturing defect. Interrogatories were sent to both of them, which were replied.

THE District Forum on the basis of material on record came to the conclusion that the purchase of the transit damaged car was on "as is where is basis" and, therefore, the complainant was not entitled for replacement of a new car. Disagreeing with the report of the IIT, Delhi, it was held that there was no deficiency on the part of the opposite parties, the complaint was accordingly dismissed. The District Forum also took into consideration that inspection by IIT was done after about 5 years of purchase of car; there was no complaint regarding first car and complaint regarding the second car was after 16 months. It was also observed that there was overwhelming evidence on record that the opposite parties continued to request the complainant repeatedly to send the car for doing the needful but the complainant was adamant and did not send the car.

THE order of the District Forum was challenged before the State Commission by the Complainant. The State Commission concurred with the report of the IIT Engineers and held that the vehicle had manufacturing defect on account of poor quality of sheet surface before painting, which resulted into corrosion. The State Commission held that for manufacturing defect, the manufacturer alone was liable and as such, directions were given to the complainant to return the car to the manufacturer and the manufacturer shall refund amount of Rs. 3,55,663, which was originally paid by him as also Rs. 25,000 as compensation for mental agony and cost of litigation. Besides this, directions were given ordering the dealer to refund Rs. 50,000 charged over and above the exchange of the car and also to refund the insurance amount of Rs. 1,05,000.

BEFORE we proceed ahead, it is necessary to mention that the ex -showroom price of the earlier Santro car was Rs. 2,99,000 at the time of purchase on 7.2.1999. Admittedly, the complainant had used the first car from February, 1999 to December, 2000 and the transit damaged car from January, 2001 to August, 2003, which means that the complainant had used the said car for a period of about 4 years. The State Commission has directed the manufacturer to refund amount of Rs. 3,55,663 and has directed the dealer to refund Rs. 50,000 as also the amount of Rs. 1,05,000, which was received by the dealer from the Insurance Company in connection with the accident of the first car. Thus, the complainant has been awarded a total sum of Rs. 3,55,663 plus Rs. 1,05,000 plus Rs. 50,000 plus Rs. 25,000 as compensation, totalling Rs. 5,35,663. Thus, after using the two cars for 4 years, the petitioner has been awarded a sum of Rs. 5,35,663 when the total price paid by him was Rs. 2,99,000 plus Rs. 50,000.

LEARNED Counsel appearing on behalf of the manufacturer has submitted before us that the State Commission has awarded much more than the amount that was claimed by the complainant; that even in respect of the first car, the complainant had barely alleged without any material that due to the heavy rusting, the body of the vehicle had become weak and was unable to bear the impact of the accident even though no complaint whatsoever was made in respect of first car. It is further contended that the complainant had entered into the deal with the dealer and exchanged the first car with the second car on "as is where is basis" to which, the manufacturer was not a party. It was contended that the complainant never complained of rusting when the car was brought for 3 services in 2001 and 2002 and it was only in October, 2002 when the complainant complained of rusting. The Engineer of the manufacturer had inspected the car and found minor spotting near tail gate hinge and under the bonnet. The complainant was asked to send the car for doing the needful but the complainant continued to insist on inspection report. It was also urged that the complainant had brought the car to the garage on 18.8.2003 and even on this occasion he had not reported any corrosion or rusting of the car. In respect of the inspection report by IIT, Delhi, it was stated that the inspection was carried out after 5 years of purchase of the car and the District Forum had rightly not placed any reliance on the said report. It was further pointed out that no tests were carried out by the Engineers in support of the findings given by them in the report and as such, the report cannot be relied upon. According to the manufacturer, the complainant did not take any steps to arrest corrosion and that because of corrosion/rusting the car was unable to bear the impact of accident. Learned Counsel for the petitioner stated that it is a case of unjust and enrichment since even after use of 2 cars for 4 years, the State Commission has awarded a total sum of Rs. 5,35,663 as against the original price paid by the complainant to the tune of Rs. 2,99,000 plus Rs. 50,000. It is further submitted that even if the report of I IT, Delhi is accepted even then refund could not be ordered and in the facts and circumstances of the case only directions to remove the defects could be given. In support of his submissions, learned Counsel for the petitioner had relied upon the cases of Mahindra and Mahindra Ltd. v. B.G. Thakurdesai and Anr., II (1993) CPJ 225 (NC); Dr. Hema Vasantial Dakoria v. Bajaj Auto Ltd. and Ors., II (2005) CPJ 102 (NC); and Maruti Udyog Ltd. v. Susheel Kumar Gabgotra and Anr., II (2006) CPJ 3 (SC).

LEARNED Counsel appearing on behalf of the dealer submitted that the dealer had provided necessary service and had even exchanged the car on "as is where is basis" on account of which, no liability can be imposed against the dealer. According to him, the State Commission erred in issuing directions against the dealer even though the exchanged vehicle was accepted by the complainant on "as is where is basis". He also pointed out that the dealer had repeatedly asked the complainant to bring the vehicle for doing the needful but the complainant continued to insist on the inspection report, in spite of the fact that the complainant was asked by letter dated 28th October, 2002, that the car will be attended to the entire satisfaction of the complainant and special under body treatment would be carried out on the car on complimentary basis as a special gesture. According to the learned Counsel for the dealer, letter dated 28th October, 2002, which is at page 61, shows that the car was inspected by Puneet Anand who noticed some spotting in the area near tail gate hinge and under the bonnet. Therefore, there was no question of supplying any inspection report since the said letter dated 28th Octobere, 2002 at page 61 itself is an inspection report. Learned Counsel for the dealer concluded by saying that the order of the State Commission is required to be set aside.

THE complainant appeared in person and argued that the record shows that the manufacturer and the dealer are hand in glove with each other in order to deny the just claim and that it is wrong to call the exchanged car as transit damaged car. According to him, it was a new vehicle and the policy was issued to him for a new vehicle. He also urged that the report of the IIT, Delhi was crystal clear inasmuch as it has been categorically stated in the report that the defect has become manifest because of poor quality of sheet surface before painting which is a manufacturing defect. He also submitted that he had to undergo considerable mental agony and harassment on account of the defective vehicle manufactured by M/s. Hyundai Motor India Ltd. and exchange of the first car with second car by the dealer on account of which the State Commission has rightly granted adequate compensation to him which does not call for any interference.

WE have gone through the records in the light of the submissions made by the parties and the rulings upon which reliance has been placed. The first Santro car, DL 4CJ 0837 was purchased by the complainant on 7.2.1999 for Rs. 2,99,000 and the said car was used by him for a period of about 2 years when it met with an accident in which the car was damaged. It appears that till then no complaint whatsoever was made by the complainant regarding rusting/corrosion of the said car except that when it met which an accident, it was stated by the complainant that due to high degree of corrosion, the body of the car had become weak and was unable to bear the impact of the accident. The dealer had agreed to sell transit damaged car, DL 4C M 6282 to the complainant upon the complainant paying cash of Rs. 50,000 plus the amount of Rs. 1,05,000 which was payable by the Insurance Company and the salvage of the damaged car valued at Rs. 1,45,000. From the invoice dated 11.1.2001, issued by the dealer, it is crystal clear that the vehicle which was sold to the complainant was transit damaged repaired car, which fact is specifically mentioned in the said invoice. The price of the vehicle was taken as 3,00,000. For this transaction, the manufacturer was not involved but the second vehicle, which was sold by dealer pursuant to the deal, was manufactured by M/s. Hyundai Motor India Ltd. It is no doubt true that the vehicle was sold on "as is where is basis" but that does not mean in the peculiar facts and circumstances under which the said sale took place in exchange of the earlier car that the manufacturer and the dealer can run away from their liability in relation to defects, if any, noted in the said car. Even though, the manufacturer was not the party to the said deal, the subsequent correspondence shows that the manufacturer was involved in the whole affair and had asked the complainant to bring the vehicle for doing the needful. The same request was also made by the dealer.

WE have to bear in mind that the transit damaged car had not reported any problem whatsoever for almost about 16 months from the date of its purchase. No complaint was made regarding rusting/corrosion during the first 3 services, which were done in 2001 and 2002. The complainant had reported rusting under hood assembly on 29.4.2002 when the vehicle had already run 13019 kms., but on inspection it was found that there was no such problem. On 18.8.2003 also when the car was brought to the workshop, the complainant did not report any corrosion/rusting. The manufacturer and the dealer got the vehicle inspected through Mr. Puneet Anand who found some spotting near the tail gate hinge and under the bonnet and the complainant was asked to bring the vehicle for doing the needful vide letter dated 28.10.2002 of the manufacturer and the dealer. The complainant was, however, adamant and repeatedly insisted for the inspection report and did not take the vehicle for necessary repairs.

THE complainant thereafter ap -proached the District Forum where directions were given to the IIT, Delhi for inspection of the car. The transit damaged repaired car in question was inspected by the Engineer of IIT, Delhi on 16.11.2005 i.e. to say after about 5 years of the purchase of the said car. One Professor of Mechanical Engineering Department and one Automobile Engineer from the Material and Manufacturing unit inspected the car. In the report dated 2.12.2005, it is stated that the main issue for investigation was to find out whether the corrosion occurring at various places of vehicle within 4 years of its purchase was because of the manufacturing defect or not. The report of the Engineers is as under. "(a) There is severe corrosion at the hinges of the tail -gate, at the inner sheet of both the front doors and also at the crevices of engine compartment and the bonnet inside. (b) In the front door sheets, the corrosion was so heavy that the sheet gave way to the finger pressure itself resulting in sizeable holes. (c) None of the corroded surfaces were such that water gets accumulated on them. (d) It looks that the corrosion has first manifested at surfaces with significant stress concentration and will spread to more surfaces in future. This cannot be attributed to poor maintenance."

Interrogatories were sent to both of them. The interrogatories and the replies sent by them are as under: "Reply to interrogatories to Prof. R.R. Gaur 1. What are your professional qualifications? (R1) Ph.D. in Mech. Engg. with specialization in Automotive Engineering.

Do you hold some formal/technical qualifications in the field of Automobile Engineering especially related to the problem under investigation? (R2) My qualification and experience are closely related to the field of Automotive Engineering.

Before conducting inspection of the car did you go through the past history of the car? Yes or No. (R3) Yes, the past history of the vehicle as available in the case file was perused and also information was found out from the representatives of Hyundai as well as Shri Gopal Sahi who were present at the time of inspection.

The report states that case history was "perused"? Can you briefly name the documents which were perused for the purpose of the case history? (R4) Please see the answer to query No. 3. No particular documents can be named. We had perused all the papers in the file.

At the time of inspection of the car, were you informed that the car in question was a "transit accident repaired car"? (R5) Yes.

It is correct to say that problem of corrosion, if not arrested immediately in any metal will spread to more areas? Yes or No. (R6) No, Not in all metals. Moreover, in the present case multiple independent incidence of corrosion only indicates a manufacturing defect in the surface or the paint coating.

From the appearance of the Car or in your observation has the complainant ever taken any steps for arresting the spread of corrosion? If yes, please specify the steps taken by the complainant for arresting the spread of corrosion? (R7) The complainant informed that he had reported the matter to the company but no corrective measure was taken. As mentioned above, the theory of spreading of corrosion'' to other areas as proposed in these questions is untenable and in my opinion, it is being suggested shift attention from the real cause. There is no evidence of any neglect on the part of the complainant. (R8) No, technical/Mech. Tests were NOT needed to ascertain the point under investigation. (R9) No.

Response to the interrogatories sent to Professor Sunil Pandey Ref: Case No. 654/03 Gopal K. Sahi v. Deep Hundai & Others regarding inspection report of the Vehicle DL 4C M6268. 1. What are your professional qualifications? Response: B.E. (Mech); M.Tech. (Prod. Engg.); Ph.D. (Welding) FIIW; MIWS; MISME; MISTE; MISNT; MASM (USA)

Do you hold some formal / technical qualifications in the field of Automobile Engineering especially related to the problem under investigation? Response: The problem under investigation is purely in the domain of Material Since and Production Engineering, which my specialization. However, formal education of Automobile Engineering is part of every Mechanical Engineering degree in the country.

Before conducting inspection of the car did you go through the past history of the car? Yes or No. Response: Yes.

The Report states that case history was "perused"? Can you briefly name the documents which were perused for the purpose of the case history? Response: The file provided by the company representatives for investigation was PERUSED 100% by us. The study of problem didn''t warrant keeping details of the documents.

At the time of inspection of the car, were you informed that the Car in question was a "transit accident repaired car"? Response: Yes

It is correct to say that problem of corrosion, if not arrested immediately in any metal will spread to more areas? Yes or No. Response: Not in all metals. Further it is important to mention here that there were number of corrosion initiation spots observed on the surface of the car and this will accelerate the corrosion.

From the appearance of the car or in your observation has the Complainant ever taken any steps for arresting the spread of corrosion? If yes, please specify the steps by the complainant for arresting the spread of corrosion? Response: The complainant informed that he had reported the matter to the company and no corrective measure was taken by the company". This wasn''t countered by the company officials.

Whether any technical/mechanical tests were carried out on the metal sheet of the car during the inspection? If yes, what were the instruments used and what were the observations? Response: No. mechanical/technical tests were needed to ascertain the problem under present investigation.

Were any photographs of the corroded areas of the car were taken? Response: No, it wasn''t required."

Prof. Gaur has replied in affirmative that at the time of inspection, he was informed that the car in question was transit accident repaired car. In reply to the next question, he has stated that in the present case multiple independent incidence of corrosion only indicates a manufacturing defect in the surface or the paint coating. According to him, the theory of spreading of corrosion to other areas was untenable and there was no evidence of any neglect on the part of the complainant, which might have resulted in this defect. He admitted that no technical or mechanical tests were needed to ascertain the point under investigation. Likewise, Prof. Pande also stated that he was informed at the time of inspection that the car in question was transit accident repaired car. He further stated that there were number of corrosion spots observed on the surface of the car which will accelerate the corrosion. According to him, no mechanical/technical tests were needed to ascertain the problem under present investigation. These enquiries of the two experts are sufficient to reject the submission of the learned Counsel for manufacturer and dealer that in the absence of any test, the investigation report cannot be relied upon.

FROM the above discussion, it is crystal clear that the car had developed corrosion and the same was reported after a period of about 20 months of the purchase of the exchanged car. The question, therefore, to be decided is as to whether the complainant would be entitled to the total value of the car even after use of the car after 4 years and even more than the price paid by him as has been awarded by the State Commission.

ON the question of replacement of the vehicle, it is now settled that the manufacturer need not replace the car and only those parts, which are found to be defective, are required to be replaced. This position emerges from the rulings upon which reliance has been placed and which have already been referred to above. If the defect is found in any part of the vehicle, the said part can be replaced and the manufacturer cannot be asked to replace the entire car or to pay its total value. In the case under consideration, we have to bear in mind that even though the dealer and manufacturer were willing to attend to the defects yet the complainant did not send the vehicle for the said purpose. We have already pointed out that he had used the two cars for 4 years. There is no doubt that as per reports of the IIT, Delhi, it was stated that the corrosion was due to defect of poor quality of sheet surface before painting. The manufacturing defect could be rectified if the vehicle had been sent by the complainant as repeatedly requested by the dealer as also the manufacturer. The State Commission was not at all justified in ordering return of vehicle and awarding huge uncalled for amount. At the most, the complainant can be compensated for replacement of the defective sheet of the car. In the peculiar facts and circumstances of this case, while holding both the dealer and the manufacturer liable, we are of the opinion that the ends of justice would be met by awarding lump sum compensation of Rs. 1,00,000, since at this point of time, it would be futile to order return of the car, as the complainant himself was also responsible for not sending the vehicle for removal of the defects of corrosion/rusting pointed by him. The order of the State Commission is certainly in the nature of unjust enrichment of the complainant since in respect of the excessive relief granted by the State Commission, there was absolutely no justification. We, therefore, direct that the petitioner shall pay in equal proportion the sum of Rs. 1,00,000 awarded under this order to the complainant within a period of 45 days, failing which, the said amount shall carry interest @ 10% p.a. from the date of order till the same is paid. R.P. disposed of.