Expert Report Mandatory To Prove Inherent Defect Under Section 13(1)(C): NCDRC

Brief Facts of the Case

The complainant purchased a “Backhoe Loader” excavator machine for Rs. 17,00,796 from the Bharath Earth Movers/ dealer. The purchase was financed through a loan from L&T Financial Limited. The machine was installed at the complainant's site, but soon after, defects such as oil leakage in the hydraulic cylinder and transmission issues were noticed. The dealer attended to these complaints, agreed to change the cylinder seal kit assembly, and issued a job card. Despite this, additional defects were reported on various dates, including starting problems, peeling paint, further oil leaks, and cracks in the welding area. The complainant argued that frequent breakdowns due to manufacturing defects prevented him from using the machine effectively, impacting his ability to earn a livelihood and pay the EMIs of ₹41,054. The machine ended up lying idle in the dealer's yard, and a legal notice was issued to the dealer demanding a refund and compensation of Rs. 10 Lakhs, but it went unanswered. Consequently, the complainant filed a case before the State Commission, which partly allowed the complaint, finding a deficiency in service on the dealer's part. Aggrieved by the State Commission's order, the dealer appealed to the National Commission.

Contentions of the Dealer

The dealer contended that the machine was constantly in operation and never stopped functioning due to any dysfunction. According to the dealer, the seizure of the machine by L&T Financial Limited was through a High Court order due to non-payment of EMIs by the complainant owing to lack of financial discipline, and not due to lack of usage. The dealer submitted that the Backhoe Loader was a sophisticated machine requiring adherence to operational and maintenance guidelines prescribed in the handbook, which the complainant failed to follow, resulting in repeated oil leakage and machinery damage. The dealer denied the complainant's contention of not being provided a warranty card, stating it was given along with the machinery and documents, corroborated by the complainant availing warranty benefits multiple times.

Observations by the National Commission

The National Commission observed that the issue was whether the equipment/machine, i.e., Backhoe Loader, suffered from a manufacturing defect. It highlighted that as per Section 13(1)(c) of the Act, an expert's report is mandated to establish if there is an inherent defect. The commission emphasized the Supreme Court's ruling in Ranveer Singh Bagga vs. KLM Royal Dutch Airlines that the burden of proving deficiency in service is upon the person alleging it, and in the absence of a deficiency, the aggrieved may have a remedy under common law, but cannot insist on relief under the Consumer Protection Act. The commission referred to the ruling in Maruti Udyog Ltd. Vs. Atul Bhardwaj, which held that the vehicle requiring repairs multiple times cannot be the basis for inferring an inherent manufacturing defect. The commission highlighted that in the instant case, the State Commission found an inherent manufacturing defect without following Section 13(1)(c) of the Act and without specifying if the machine suffered from defects alleged in the complaint or if any manufacturing defect allegations were proved. The commission emphasized that the State Commission awarded relief for deficiency without satisfying the procedure under Section 13(1)(c) of the Act. Accordingly, the conclusion that the complainant was entitled to relief for deficiency and unfair trade practice could not be accepted. The commission observed that the State Commission's order was liable to be set aside as it was based on a fallacious appreciation of facts to conclude the machine suffered an inherent manufacturing defect in the absence of any expert opinion.

Hence, the National Commission allowed the dealer's appeal and set aside the State Commission's order.

Case Title: M/S. Bharath Earth Movers Limited Vs. Thiru R Sekar & Anr.

Case Number: F.A. No. 157/2019