Satheesh Kumar vs ASSTT. MANAGER, SERVICEMARKETING DEPARTMENT

THE complainant in O.P. No. 569 of 1995 of the District Forum, Ernakulam, has filed this appeal questioning the legality of the order of the Forum dated 24.7.1996 dismissing his complaint.

THE complainant''s case is that he purchased a Matador Diesel Engine manufactured by the first opposite party from the second opposite party who is the authorised dealer. He fitted the engine in his Ambassador car and was using the vehicle. By the end of April, 1997, the complainant noticed that the radiator water was leaking into crank case and on examination it was found that the water percolates through a small hole in the engine block. THE Works Manager of the second opposite party found that it was a manufacturing defect and the engine block was replaced for which the complainant had to pay Rs. 16,654.35 as cost of the replaced materials and labour charges. THE matter was reported to the first opposite party. Several months later the first opposite party informed that the engine was not fitted in any authorised garage and that the complainant has not availed of the free services and as the defect is not one which developed at the time of manufacture and complained of after the warranty period they are not liable to compensate. On this, the complainant approached the District Forum praying that the opposite parties may be directed to pay the amount with compensation and costs. The first opposite party did not enter appearance even though notice was served on him. The second opposite party filed version contending that the warranty is only for a period of 180 days or upto the running of 15,000 kms. whichever is earlier and the said period is over when the defect developed. He also contended that the engine was fitted to the vehicle in a workshop not approved by the opposite parties. The alleged defect can occur due to the negligent use of the vehicle and other various reasons and hence the opposite parties cannot be made liable in any event after the warranty period. They prayed for the dismissal of the complaint.

On the application of the complainant an expert Commissioner was appointed. He examined the engine and filed Ext. Cl-report. The report shows that there was a small hole in the engine block between the No. 4 cylinder parent bore and the adjacent block wall which leads to the crank case. According to him the damage to the engine is not due to any negligence in maintenance because the hole is on the casting in an area where there is no maintenance required or any accessories fitted. The Commissioner is also of the opinion that a similar engine can cover more than 2 lakhs kms. Without over hauling and it can be put to use for at least 20 years.

THE District Forum found that the defect is a manufacturing defect but the period of warranty having expired the claim is not sustainable. THE Forum relied on the decision of the Haryana State Commission in Shinghara Singli and Others v. Mahindra and Mahindra Ltd., reported in 1994 (1) CPR 218, in support of its view. THE Forum opined that manufacturers or traders cannot be saddled with liability for their goods ad infinitum and irrespective of the period of time or the mode or the manner of the use of the goods. It also found when there is an express warranty there was no implied warranty or condition as to the quality or fitness for any particular purpose beyond the express warranty and in the result dismissed the complaint. Aggrieved by the above order this appeal is preferred.

APPEAL is filed with an application to condone the delay of five days. We accept the reasons stated in the affidavit in support of the I.A. No. 1284/1996 for condonation of delay. The delay is condoned and the appeal is admitted. We perused the documents and heard the Counsel. There does not seem to be much of a difference on the facts of the case. Admittedly the defect was noticed and reported after the warranty period. The engine was fitted in a workshop which is not an authorised workshop of the opposite parties. But it is in evidence that the workshop is one approved by the Government. Ext. C1-report of the expert Commissioner shows that the defect is a manufacturing defect and is not one which developed due to any negligence in use of the vehicle. The Works Manager of the second opposite party has also found that the defect is a manufacturing defect. It is in evidence that the engine block has to be replaced for which the complainant had spent Rs. 16,654.35 towards cost of replaced materials and labour charges. In the face of the above evidence we are in agreement with the finding of the District Forum that the hole cannot occur due to any lack of maintenance and it has to be considered as a manufacturing defect. The Counsel for the appellant urged before us that the Consumer Protection Act is a beneficial legislation and should be liberally interpreted in favour of the consumer. The defect is beyond doubt a manufacturing defect. It is a latent defect which could not be easily detected unless the engine block is dismantled. It is common knowledge that an engine of this nature normally works for about 20 years if fitted in an Ambassador Car as is spoken to by the expert Commissioner. No circumstance was brought to our attention by the defence for discarding the view expressed in Ext. C1-report.

THE only question is whether in a case of this nature the manufacturer and dealer can be held liable for the defect beyond the expressed warranty period. THE Counsel for the opposite parties repeatedly stressed before us that in the face of the decisions reported in 1994 (1)CPR218 of the Haryana State Commission and of this Commission reported in I (1992) CPJ 177 (M/s. Solidaire India Ltd. v. Mohan Kumar), the appeal has to be dismissed. I (1992) CPJ 177 is a case in which the picture tube of a television purchased in April, 1987 deteriorated and failed in June, 1990. THE warranty period of the television set was only one year. This Commission held that after the expiry of the said one year the appellant was not in any way bound to rectify the defects to the television set free of cost and the purchaser has no right to claim replacement of the picture tube free of cost two years after the warranty period.

AS against the above argument the Counsel for the appellant urged that the picture tube in a television set is an electronic gadjet which can get damaged due to many reasons often because of overflow of electric current. It was also brought to our notice that the picture tube failed only after 3 years and even then the manufacturers offered 30% discount on the cost of a new picture tube. The Counsel placed stress on Section 16 of the Sale of Goods Act and brought to our attention Sub-clauses 2,3 and 4 of Section 16. Sub-section (2) says that where goods are brought by description from a seller who deals in goods of that description there is an implied condition that the goods shall be of merchantable quality provided that if the buyer has examined the goods there shall be no implied condition as regards defects which such examination ought to have revealed. Sub-section (3) says that an implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade and Sub-section (4) says that an express warranty or condition does not negative a warranty or condition implied by the Act, unless inconsistent therewith. On behalf of the complainant it was argued that the defect in this case is one which could be detected only on a detailed examination by an expert after dismantling the engine block. In the normal course no one does this or is expected to do this. The doctrine of caveat emptor has been much eroded and there is shift of the burden of proof on the manufacturer to establish that the goods are defect free. Each case has to be decided on its facts. We feel that it will be an injustice to the purchaser if we follow the decisions of the Haryana State Commission mentioned earlier. On the facts and evidence of this case we hold that the manufacturer is liable for the defect and they are liable to compensate for the direct loss caused thereby to the complainant. We are supported in our view by a decision of Court of Appeal in England reported in 1966 (2) All England Reports 901 (Hancock and Others v. B.W. Brazier (Anerley) Ltd., wherein Lord Denning M.R., Danckwerts and Salmond, LJJ held that the purchaser was entitled to damages for breach of implied warranty by the builder even if it occurred beyond the warranty period. In that case a building under construction was sold by the purchaser with a warranty clause that if the purchaser shall discover any structural defects in the house and works within six months from the date of completion and shall notify the builder thereof in writing, the builder shall forthwith make good such structural defects without expense to the purchaser. The sale was also subject to the natural conditions of sale under which the "purchaser is deemed to buy with full notice in all respects of the actual state and condition of the property and shall take the property as it is". More than two years after the sale the Sodium Sulphate used by the builder under the foundation by absorbing moisture and swelling caused the floors to crack, causing substantial damage. The purchaser brought an action for damages. The defence was that the warranty period was over and the builder is not liable. The Court held that the purchaser was entitled to damages for breach by the builder of implied warranty. When a purchaser buys a house from a builder a three-fold warranty was implied. (1) that the builder would do his work in a good and workman-like manner; (2) that he would supply good and proper materials and; that (3) the house would be reasonably fit for human inhabitation and the express warranty cannot take away these fundamentals.

We hold that the same principles should apply when an engine is purchased and the engine has fundamental latent defects which could not be found out in the usual course of inspection, the express warranty should not limit the buyer''s right for damages for the latent manufacturing defect.

It is not disputed that the complainant had to spend Rs. 16,654.35 towards replacement of the engine parts. The opposite parties have no case that the amount spent was on the high side and the defect could have been rectified by spending a lesser amount. Hence we hold that the manufacturer, namely, the first opposite party, is liable to make good the said loss. We allow the appeal, set aside the order of the District Forum and direct the first opposite party to pay the said amount of Rs. 16,654.35 with interest at the rate of 18% from the date of this order. The complainant is also entitled to his cost which we fix at Rs. 1,000/-. Time for payment 2 months. Appeal allowed.