Holding

The warranty clause limits the manufacturer's liability to repair or replace the defective part, not to replace the whole vehicle.

Summary

The consumer purchased a Maruti car that developed a clutch defect within the warranty period. Despite multiple attempts, the company and its authorized dealer failed to rectify the defect. The consumer filed a complaint under Section 17 of the J&K Consumer Protection Act, 1988 seeking a refund of the purchase price and compensation. The State Consumer Redressal Commission and the J&K High Court ordered the replacement of the entire vehicle, interpreting the warranty as covering a full replacement. On appeal, the Supreme Court held that the warranty expressly limited the company's liability to repair or replace the defective part only, not the whole car. Accordingly, the Court directed the replacement of the clutch assembly at no cost to the consumer and awarded Rs 50,000 for inconvenience and litigation costs. The appeal was allowed, modifying the relief granted by the lower courts.

Issues considered

Whether the warranty clause obliges the manufacturer to replace the entire vehicle or only the defective part.
Whether there was an admission of a manufacturing defect by the manufacturer.
Whether the consumer is entitled to a refund of the purchase price with interest under Section 17 of the J&K Consumer Protection Act.
Whether compensation for inconvenience and litigation costs is warranted.

Subjects

Consumer protectionWarrantyDefective vehicleReplacement of partRefundCompensationJ&K Consumer Protection ActAutomobile

Judgment

MARUTI UDYOG LTD. A
v.
SUSHEEI.;KUMAR GABGOTRA AND ANR.

MARCH 29, 2006

[ARIJIT PASA YAT AND TARUN CHATTERJEE, JJ.] B

Consumer Protection:

J & K Consumer Protection Act, 1988-Section 17-Deficie11cy in
I
service-Defect found in car within warranty period-Company and its C
authorised dealer/ailed to get the defect removed-Direction of High Court
to Company to get the car replaced-Propriety of-Held, not proper-Warranty
condition relied upon by Customer provided for repair or replacement of the
defective part and not replacement of the car itself-Customer permitted to
get the defective part replaced ji"ee of cost ji-om authorised service centre of D
Companv-Also awarded consolidated sum of R5. 50. 000 tawards cost incurred
due to wrong advise by Company and towards inconvenience and cost of
Iit igat ion.

Respondent No. I had purchased a Maruti Car from Appellant through its
authorired dealer. He found defect in the car (clutch of the car was not functioning E
properly) within warranty period. Appellant and its authorised dealer failed to
get the defect removed.

Consequently, Respondent No.I filed complaint before the State Consumer
Redressal Commission seeking a direction to Appellant to take back the car and
refund the sale price received along with interest He also sought compensation. F
The Commission held that the Appellant had agreed to replace the vehicle and
had admitted that there was manufacturing defect in the concerned part Appeal
thereagainst was dismissed by the High Court which held that the warranty
condition relied upon by Appellant did not warrant interpretation that only the
defective part was to be replaced and not the car itself. Therefore, the Appellant G
was directed to replace the car or repay the amount received by it as sale price
with interest@ 18% p.a. w.e.f. the date of purchase.

In appeal to this Court, it was submitted that both the Commission and the
High Court erred in holding that there was an admission to replace the car and/
603 H
604 SCPREME COURT' REPORTS 12006] 3 S.C.R.

A or admission of any manufacturing defect and that at the most the Commission
and the High Court could have asked for replacement of the defective part or to
pay the cost thereof.

Allowing the appea~ the Court
.
B HELD: l. In various documents, more particularly the letter written by
Respondent no. I to the Appellant, it is clearly stated that Appellant had indicated
......
that downing of the engine was necessary to trace the problem. There was no
agreement to replace the engine system. Additionally, it is not disputed by
Respondent No.I that when Appellant had asked the vehicle to be brought for the
C aforesaid purpose the Respondent No.I had not done so. To infer that there was
any manufacturing defect in the said background is without any foundation.
1608-A, Bl

Tata Engineering & locomotive Co. ltd. v. <Jajanan Y. Mandrekar. 119971
5 sec 507, referred to.
D 2. In the case at hand the warranty conditions were specially stated. This is
not a case of silence of a contract of sale as to warranty. Therefore, the High
Court was not justified in directing replacement of the vehicle. 1608-D, El

Corpus Juris Secund111111, Volume 77, page 1198, referred to.
E 3. But on the peculiar facts of the case relief to the Respondent no.I has to
be moulded. Accordingly it is directed as follows:-

(I) On Respondent no. I taking the vehicle in question to the authorized
service centre of the Appellant at Jam mu within three weeks, the defective part
F that is clutches assembly shall be replaced. Respondent No. I shall not be required
to pay any charge for the replacement.

(2) In addition, Respondent no. I shall be entitled to receive a consolidated
sum of Rs. 50,000 (Rupees fifty thousand only) from the Appellant for cost of
travel to Karna! which admittedly was wrongly advised by the Appellant, for the
G inconvenience caused to Respondent no. I on account of the acts of the Appellant
and Respondent no.2 and the cost of litigation. 1608-E-HI .....
Jose Phillip Mumpi/lil v. Premier Automobiles Ltd., 120041 2 SCC 278,
relied on.
..-
H
MAR UT! UDYOG LTD. r.SUSHEEL KUMAR GABGOTRA [PASA YAT • .1 ] 605
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3734/2000. A

From the Final Judgment and Order dated 3.12.1999 of the High Court
of Jammu and Kashmir at Jammu in CIMA No. 250/1998.

Raju Ramachandran and Pramod Dayal for the Appellant.
B
T.S. Doabia, Manpreet Singh Manjula Gupta and N. Ganpathy for the
Respondents.

The Judgment of the Court was de! ivered by

ARIJIT PASA YAT, J. Challenge in this appeal is to the judgment renpered C
by a Division Bench of the J & K High Court at Jammu dismissing the appeal
filed by the appellant under Section 17 of the J&K Consumers Protection Ac1,
1988 (in short the 'Act'). Challenge in the said appeal was to the order dated
9.11.1998 passed by the J&K State Consumer Redressal Commission (in short
the 'Commission') on a complaint filed by respondent no.1. In the complaint
appellant and respondent no.2 were impleaded as the opposite parties. D
The factual background in a nutshell is as follows:

Respondent-complainant filed a complaint before the Commission seeking
a dire\:tion to the appellant herein to take back the Maruti car back and repay
an amount of Rs. 1,97,460.37 being the cost of the car supplied to him, along E
with interest at the rate of 18 per cent with effect from 27.1 l.l996, as the car
was defective. He also sought compensation for the loss at his place of work
and coaching charges approximately Rs. 60,000; Rs.1,00,000 towards mental
agony, physical deterioration and emotional stress, Rs.15,000 for his trip to
Karna! on the mistaken direction of the appellant and also Rs.2,500 towards
F
the costs of litigation and legal consultation.

Respondent No. I complainant had purchased a Maruti Car on 27.11.1996
from the appellant through its authorized dealer, respondent No.2 herein, on
payment of Rs.1,97,460.3 7 as sale price. After delivery of the car, the complainant
noticed that the clutch of the car was not functioning properly as it developed G
unusual noise/jerks on running of the engine. The defect was brought to the
notice of respondent No.2, whose engineer after examinfog the defect told the
complainant that the clutch is behaving erratically because of the new engine
and it will automatically adjust/become defect-free after covering some mileage.
But it did not happen that way and on the other hand problem increased. He
again reported to respondent No.2 whereupon he was assured that the defect H
606 SUPREME COURT REPORTS [2006] 3 S. C.R.

A will disappear after the first service which was done on 19.12.1996. But the
defect continued. The complainant again approached respondent No.2 and
was told that the engine will have to be brought down to locate the trouble
which the engineers failed to pin point. The complainant objected to it as the
defect had developed within the warranty period and approached the Head
B Office (Marketing) of the appellant at Gurgaon. He wrote letter dated 19.2.1997
bringing to the appellant's notice about the inherent manufacturing defect in
the car and requested for its replacement. The appellant vide its letter dated
5.3.1997, advised the complainant to take the car to Modern Automobiles,
Karna!, for getting the needful done. He took the car to Kamal on I0.3.1997.
But the said concern did not test the vehicle on the ground that the same
C had been delivered by respondent No.2 who was responsible and can repair
the vehicle. The complainant came back to Jammu. On 13.3.1997 the appellant
conceded to have wrongly advised the complainant to take the car to Kamal
and asked him to again approach respondent No.2 at Jammu. On 21.3.1997 Mr.
H.S. Chahal, Senior Engineer, Regional Office, Chandigarh, examined the car
D but the defect could not be removed which continued to give trouble. The
matter was again reported to the appellant and the complainant again visited
respondent No.2 on 17.4.1997 but had to return with persisting defrct. On
21.4.1997 the complainant addressed a letter to the Chairman-cum-Managing
Director of the appellant-company about the manufacturing defect in the car
sold to him and requested for its replacement. No reply to the said letter was
E received. The complainant suffered financial loss not only because of the
callous and careless attitude of the appellant but also on account of the
appellant having sold defective car to the complainant, defects whereof could
not be removed thereby leaving him to face emotional stress, mental agony
and to drive the defective car posing a risk to his life. With these grievances
F complainant approached the Commission.
Respondents filed their replies before the Commission stating therein
that their obligation under the warranty was only to repair or replace any part
found to be detective. The appellant and its authorized dealer (Respondent
No.2) have attended to the vehicle during the warranty period free of charges
G and had carried out necessary repairs and replacement of the components on
21.3.1997 to the satisfaction of the complainant. The vehicle was again
inspected on 29.5.1997 and the complainant was advised to leave the vehicle
at the workshop of the dealer of the appellant at Jammu for inspection and
carrying out necessary repairs to which the complainant did not agree. The
correspondence between the parties has not been denied by the appellant
H and their dealer (Respondent No.2). The appellant has claimed that it is not
MARUTI UDYOG LTD. v.SUSHEEL KUMAR GABGOTRA [PASAYAT,J] 607

under any obligation to take back the Maruti car or repay the sale price to A
the complainant.

The High Court held that the warranty condition relied upon by the
appellant did not warrant interpretation that only the defective part was to be".
replaced and not the car itself. Reference was made to ce1tain observations B
in the Corpus Juris Secundrum Volume 77 page 1198. It was held that the
booklet containing warranty clearly indicates promise of service and
replacement with certain conditions. It was observed that the Commission
was justified in its conclusion that the appellant had agreed to replace the
vehicle and had admitted that there was manufacturing defect in the concerned
pa1t. Reliance was also placed on a decision of this Court in Tata Engineering C
& locomotive Co. ltd v. Gajanan Y Mandrekar, [1997] 5 SCC 507. Therefore,
the appellant was directed to replace the car or repay the amount received by
it as sale price with interest @ 18% p.a. w.e.f. 27.11.1996 with costs awarded
by the Commission.

ln support of the appeal, learned counsel for the appellant submitted D
that both the Commission and the High Court erred in holding that there was
an admission to replace the car and/or admission of any manufacturing defect.
The warranty condition clearly refers to the replacement of the defective part
and not of the car. Observations nwde in the Corpus Juris Secundrum had
been read out of context. It was stated that at the most the Commission and E
the High Court could have asked for the replacement of the defective part or
to pay the cost thereof.

Learned counsel for the respondent no. I supported the orders of the
Commission and the High Court.
F
The obligation under clause (3) of the Manual reads as under:

"(3) Maruti's Warranty Obligation:

If any defect(s) should be found in a Maruti Vehicle within the term
stipulated above, Maruti's only obligation is to repair or replace at its G
sole discretion any part shown to be defective with a new pa1t of the
equivalent at no cost to the owner for parts or labour, when Marnti
acknowledges that such a defect is attributable to faculty material or
workmanship at the time of manufacture. The owner is responsible for
any repair or replacement which are not covered by this warranty.''
H
608 ~t:PRlc~lE l'Ol'Rr REPORTS [2006J ·' S.l'.R.

A The Commission and the High Court have relied on so called admission
of the appellant in para 3 of the objections filed before the Commission. In
various documents. more particularly letter dated 19.~.1997 written by
respondent no. I to the appellant. it is clearly stated that appellant had indicated
that downing of the engine was necessary to trace the problem. There was
B no agreement to replace the engine system. Additionally. it is not disputed
by learned counsel for the respondent no. I that when appt!llant had asked
the vehicle to be brought for the aforesaiJ purpose the respondent no. I had
not done so. To infer that there was any manufacturing defect in the said
background is witheut any foundation.

C In Corpus Juris Sccundrum the observations to which reference was
made by the High Court read as follows:

"On a sale of a motor vehicle by a manufacturer to dealer there may
be an implied warranty that it is reasonably fit for. or adapted to. the
uses for which it is made and sold: and such a warranty is not
D excluded by the silence of the contract of sale as to warranties."

The principles stated above can never be doubted. But what is relevant
in the case at hand is that the warranty conditions were ;pecially stated. This
is not a case of silence of a contrnct of sale as to warranty. Therefore. the
High Court was not justified in directing replacement of the vehicle.
E
But on the peculiar fact of the case relief to the respondent no. I has
to be moulded. In almost a similar case certain directions were given in Jose
Phillip Mumpillil v. Premier Automobiles fol.. [2004] 2 SCC 278.

In line with what has been stated in the aforesaid case, we direct as
F follows:-

(I) On respondent no. I taking the vehicle in question to the authorized
service centre of the appellant at Ja111111u within three weeks. the
defrctive part that is clutches assembly shall be replaced.
Respondent no. I shall not be required to pay any charge for the
G replacement.
In addition. respondent no. I shall be entitled to receive a
consolidated sum of Rs. 50,000/- (rupees fitly thousand only) from
the appellant for cost of travel to Kamal which admittedly was
wrongly advised by the appellant. for the inconvenience caused
H
MARUTI UDYOG LTD. v.SUSHEEL KUMAR GABGOTRA [PASAYAT, J.] 609
to respondent no. I on account of the acts of the appellant and A
the respondent no.2 and the cost of litigation.

The appeal is allowed to the aforesaid extent. There shall be no order
as to costs.

B.B.B. Appeal allowed. B

..