Vasireddy S.V. Prasad Vs. Mercedes Benz India Pvt Ltd. - Court Judgment

R. Lakshminarsimha Rao, Incharge President

1. The complainant filed the complaint under Section 17 of the Consumer Protection Act, complaining deficiency in service against the opposite parties seeking direction to the opposite parties to carry out repairs to the damaged vehicle at the cost and consequences of the opposite parties no.3 and 4, pay an amount of Rs.30 lakhs together with costs of the complaint.

2. The averments of the complainant are that on 10.11.2010 the complainant purchased Mercedes Benz Mode No.350 Couple BSIV from the show room of the opposite party no.2 the authorized dealer of the opposite party no.1 for on road price of Rs.71,15,701/- which includes the insurance amount of Rs.2,37,634/-. The vehicle was insured with the opposite parties no.3 and 4 vide policy No.1801702311003916 valid for the period from 01.11.2010 to 31.10.2011. On 20.8.2011 the vehicle was logged with rain water and was shifted to the workshop of the opposite party no.2 for repairs. The opposite party no.2 after one month of keeping the vehicle with them sent email dated 26.9.2011 and informed that the cylinder block of the car was found broken and the damage cannot be covered under warranty. The opposite parties no.3 and 4 appointed a surveyor who after inspection disapproved the estimate for replacement of engine.

3. The opposite party no.2 kept the vehicle with them for one month without informing the third and fourth opposite parties regarding the reasons for disapproval of the estimate for replacement of engine until the second opposite party informed the complainant through email dated 26.09.2011. The damage found in the vehicle is clearly covered by the warranty and the liability of the first opposite party is limited to the value of the parts replaced. The damage caused to the cylinder is due to defect in the cylinder and it required replacement of total engine. As per the relevant warranty conditions the complainant had not driven the vehicle under severe conditions such as unpliable or water logged roads in races or rallies and as such the damage caused was due to manufacturing defect. Since the opposite parties no.3 and 4 insured the vehicle though are liable to indemnify the complainant since the policy coverage being wide and encompasses many aspects such as damage to the vehicle due to accident, fire, lightening self-ignition, explosion, theft, riot and strike, malicious act, terrorism, earthquake, flood, cyclone and inundation rejecting the estimate forwarded by the second opposite party is unjust and unfair.

4. The opposite parties no.1 and 2 gave reply dated 2.11.2011 to the notice of the complainant stating that on inspection it was observed that the air intake line and air filter were completely soaked in water resulting in engine cylinder block was broken at V angle. According to the opposite party no.2 water is sucked into the combustion chambers while the engine is running. The opposite parties no.1 and 2 in their reply have reiterated their stand that there are no manufacturing defects and that the repair to be undertaken does not fall within the ambit of warranty clause. The opposite parties no.1 and 3 also stated they are ready to repair the vehicle if the complainant is ready to pay the amount mentioned in preliminary and supplementary estimate amounting to Rs.27,85,775/-.

5. The opposite party no.1 filed written version contending that obligation of the manufacturer is limited to terms of warranty according to which in the event vehicle suffers from manufacturing defect, the company is liable to repair the vehicle free of charge during the warranty period of 2 years from the date of purchase or first registration whichever happens earlier. Further even during warranty period damage caused by flood waters (water entry into the engine due to vehicle going through water logged area) and damage caused to the vehicle due to accident and other external factors are excluded.

6. The opposite party no.1 submitted that water entered into the engine of complainants vehicle when vehicle was passing through water logged area inundated due to heavy torrential rain and was picked up by the opposite party no.2. The opposite party no.2 after thorough examination found that repeated cranking of the engine resulted in hydrostatic lock. Thus, the engine was damaged due to hydrostatic lock (engine sizure). However, the repair of the car was delayed since complainant did not approve the cost estimates provided by opposite party no.2. The opposite parties no.3 and 4 rejected the claim. The records show that opposite party no.2 attended to the matter promptly and therefore the complaint is not justified as against the opposite parties no.1 and 2. It is a matter between the complainant and opposite parties no.2, 3 and 4 and opposite party no.1 is no way involved. The vehicle was designed and manufactured by a well-known company of world repute. The manufacturer has taken all necessary precautions to cope with situation passing of vehicle through low lever water.

7. The complainant submitted that the owners manual advises the owner not to drive through shallow water to avoid any damage and it also cautioned the driver not to drive the vehicle when the water level is above 25 cm. The driver has to be more cautious when the vehicle is entering into waterlogged area with a depth beyond the permissible limited of 25 cm. The owners manual available with all customers including the complainant gives driving tips while driving on flooded roads. There was no deficiency of service on the part of the opposite party no.1 and prayed for dismissal of the complaint.

8. The opposite party no.2 filed written version contending that the complainant is not a consumer and this Commission has no territorial jurisdiction. The complaint is barred by limitation. The opposite party no.2 has no knowledge about the vehicle stalled in the rain water on 20.8.2011. As per the procedure the opposite party no.2 informed the opposite party n.4 to inspect the car and to do the survey of the damage. Accordingly the opposite party no.4 has deputed their surveyor to inspect the damage after assessing the damage the surveyor had taken photographs of the damaged cylinder block and accordingly estimation was given to the opposite party no.4. The damage caused to the vehicle is outside the purview of the warranty. The damage occurs only due to the driver not taking precautionary measures while driving the car in flood waters which includes stalling of the car in rain water resulting in the locking of the engine œhydro statically resulting in the breakage of 7 cylinder block. The complainant did not follow instructions stipulated in the manual. The job cards dated 22.8.2011 indicates the vehicle covered 5656 kms from the date of its purchase and at no point of time the complainant complained of any defect in the engine. The opposite party submitted that engine cylinder of the vehicle are crucial parts of the engine without which the engine cannot run for a kilometer.

9. The opposite party submitted that the opposite party no.2 informed opposite party no.4 and requested to inspect the car and do the survey. The opposite party no.4 deputed surveyor to inspect the damage and after assessing the damage the surveyor has taken the photographs of the damaged cylinder block and estimated the loss. There was no deficiency in service on the part of the opposite party no.2 and therefore prayed for dismissal of the complaint against it.

10. The opposite parties no.3 and 4 field written version contending that on the claim lodged on 20.8.2011 the opposite party no.4 appointed an IRDA surveyor who confirmed that the insured vehicle was inspected and found that water entered into the engine through air cleaner and there was hydrostatic lock of the engine. The complainant had not taken precautionary measures and drove the car in rain water resulting consequential loss due to hydrostatic locking of the engine. After dismantling engine the surveyor had taken the photographs of the damaged cylinder block and the loss was assessed for Rs.75,441.37. As per the clause 4(i) the company has no liability for the consequential loss and as per condition no.4 it is the duty of the insured to take all reasonable steps to safe guard the vehicle from the loss. Any further damage to the vehicle shall be entirely at the risk of the insured. The company has no liability as demanded by the complainant. As per the owner manual-11()f) the insured is supposed to take all precautionary measures mentioned there in.

11. The complainant filed his affidavit and the documents, Exs.A1 to A19. On behalf of the opposite parties, The General Manager, Legal Affairs and Company Secretary of opposite party no.1, Head (After Sales) of the opposite party no.2 and the Assistant Manager of the opposite parties no.3 and 4 filed their respective affidavits and the documents, Exs.B1 to B9

12. The counsel for the complainant filed written arguments.

13. The points for consideration are:

i) Whether the complainant is entitled to reimbursement of the amount incurred for repairing of the car?

ii) To what relief?14. POINT NO.1:   The complainant purchased Mercedes Benz-E 350 COUPE BSIV on 10.11.2010 from the opposite party no.2 and the car was manufactured by the opposite party no.1.It is not disputed that the second opposite party is the authorized dealer of the first opposite party in Andhra Pradesh. There is no disputing the fact that the opposite party no.1 would manufacture and sell the cars to its dealers in bulk and liability of the opposite party no.1 is limited to terms of warranty according to which the opposite party no.1 would be liable to repair the vehicle in case it suffers from manufacturing defect within two years from the date of purchase or first registration whichever happens earlier.

15. The learned counsel for the opposite party no.1-company submitted that the terms of warranty do not cover damage caused to the vehicle due to flood water(water entry into the engine due to vehicle proceeding through waterlogged area), damage caused to the vehicle due to accident and other external factors. The terms of warranty which do not cover the damage caused to the vehicle read as follows:

What is not covered:

1. Under this vehicle warranty, MB Indias liability is limited to the value fo the service, repairs/replacement of parts found to be defective within the warranty period. Beyond servicing and/or repairing defective parts in the vehicle, MB India does not undertake to replace the vehicle and/or reimburse the purchaser by payment of any money towards any consequential lsos or damages in respect of the vehicle purchased by them.

2. MB India shall not be liable for any damage or loss caused to any property, article, disability or death caused to any human life arising out of electric fault, short circuit, fire, negligent use of the vehicle or accidental handling. The maximum liability in monetary terms shall be restricted to the value of the defective parts and/or workmanship only.

3. Batteries, music system and tyres have their respective warranties provided directly by the respective manufacturers/supplies (please contact MB India authorized workshop for further details).

4. Services by a service workshop which is not authorized by MB India.

5. Any damages if the vehicle is not handled or driven in accordance with the instructions in the Owners Manual supplied with the vehicle and if the defined regular service/maintenance work is not performed.

6. Any changes in the original technical characteristics of the vehicle or the components. For example, usage of wheels/tyres not recommended by MB India, additional electrical fitment, spoilers, changing engine specifications to increase its power or any other modification in the vehicle that may have an effect on the performance of the vehicle. Wear and tear of parts, required periodic maintenance, adjustments, cleaning.

7. Wear and tear of parts, required periodic maintenance, adjustments, cleaning.

8. Damage caused by common abvrasion (for instance brake-pad, etc.) or impact of the elements such as discoloring or deformation of any interior, leather, plastic, chrome or painted surface.

9. Damages which became serious since unattended because during the normal usage the vehicle owner failed to detect the defect and/or failed to claim and having certified the defect when the same was apparent during vehicle delivery or immediately after delivery or at a later date.

10. Any damage to the fuel system due to water, adulteration or foreign objects in the fuel.

11. Damages due to any of the causes listed below:

a) Misuse, improper operation/storage/transportation/ maintenance or repairs not in accordance with MB India specifications.

b) Accidents and general damages caused by external forces, fire, collision, theft or secondary damages based on any of these occurrences

c) Use of non genuine/counterfeit parts

d) Use of lubricants or accessories other than those approved by MB India

e) Exceeding permissible capacities such as axle loads/overloading, passenger, speed and rpm limitations.

f) Driving the vehicle under severe conditions such as un-pliance or water logged roads, in races or rallies

g) Natural disasters including but not restricted to earthquakes, storms, floods, fire and accidents.

h) Use as commercial vehicle or use other than the intended purposes.

i) Use of adulterated/improper service products such as fuel, oils, brake fluids, coolants, washing and polishing products and the like.

j) Damage caused by the installation of non-recommended equipment such as radio, car telephone, CD/DVD set or other parts.

k) Glass damages like breakage and scratches.

l) Soot and smoke, chemicals, bird droppings, sea water, sea breeze, salt, stone chipping, scratches, iron dust acid rain or any other chemical influences (regarding paint or body damage, specifically stone throw, airborne rust, industrial fall out), damage to catalytic converter due to use of wrong/bad quality fuel used in the vehicle.

16. Thus, the damage caused to the vehicle while it was driven in water logged roads is not covered by the terms of warranty. The complainant has stated that his vehicle was stalled in rain water on the road logged with water and the vehicle was taken to the workshop of the second opposite party on 21.08.2011 where after inspection of the vehicle the technicians of the second opposite party came to the conclusion that the cylinder block (crank case) of the vehicle was broken and the second opposite party informed the complainant that the damage as such is not covered by the terms of warranty. The complainant has stated:

œwhile the matter stood thus, on 20^th August 2011, my car got stalled in rain water on the main road of Srinagar Colony, Hyderabad, logged with rain water and was shifted to the workshop of second opposite party for repair through their breakdown recovery services on 21^st August 2011 and to my consternation, second opposite party personnel have informed me, after one long month, vide email dated 26^th Sept2011, that, the cylinder block (crankcase) of the car was found broken and that the said damage cannot be covered under warranty, since the damage according to the second opposite party being not a manufacturing one and was only due to extraneous facts leading to the locking of the engine hydrostatically resulting in the breakage of 7 cylinder block. ?

17. The damage caused to the vehicle was on account of it being driven on water logged road is not covered by the terms of warranty. Once warranty and its applicability is held not to govern the circumstances causing damage to the vehicle, the first opposite party as also the second opposite party will not be liable to repair the vehicle free of cost even when the damage was caused within the warranty period. As the liability of the opposite parties no.1 and 2 is excluded, it is to be seen whether the opposite parties no.3 and 4 which are the insurer of the vehicle are liable to reimburse the amount the complainant incurred for repairing of the vehicle.

18. The learned counsel for the third opposite party and fourth opposite party has contended that their liability is as per the terms of the insurance policy and the surveyor observed that water entered into air cleaner as a result of which the engine was damaged and according to him, consequential loss is not covered by Clause 4 of the terms of insurance policy. Clause 4 of the insurance policy reads as under:

4. The insured shall take all reasonable steps to safeguard the vehicle from loss or damage and to maintain it in efficient condition and the Company shall have at all times free and full access to examine the vehicle or nay part thereof or any driver or employee of the insured. IN the event of any accident or breakdown , the vehicle shall not be left unattended without proper precautions being taken to prevent further damage or loss and if the vehicle be driven before the necessary repairs are effected any extension of the damage or any further damage to the vehicle shall be entirely at the insureds own risk.

19. Clause 4 of the Insurance Policy does not cover consequential loss. Whether the loss sustained by the complainant is consequential loss is the question to be addressed. The complainant deputed a surveyor and the opposite party no.3 and 4 deputed anther surveyor. Both surveyors inspected the vehicle at the spot known as spot survey. The surveyor deputed by the complainant has noted that damage to the engine block assembly including crank shaft, connecting rods, pistons and other accessories was caused and the head assembly was intact.

20. The surveyor has opined that though damage was caused to engine block assembly, it was required to replace cylinder head assembly as cylinder block assembly as a component is not serviceable. The surveyor has opined that the damage is covered by the terms of the policy in the following words:

8. It is our opinion this damages are covered by the insurance companies under motor package policy on the standard peril called œAccidental External mean?. It is to explain further in this case that drawing the water content into the engine assembly is an accidental and by external mean and damaged the engine assembly which is payable under this policy.

9. We find, this type of engine damages on the account of flood/rain water œby accidental external mean? are many particularly at the latest vehicles supplied by the Mercedes Benz, with the reason that the inlet venture tube is exposed to outside at the front grill area and the compression ratio operated by the Mercedes Benz is considerably on higher side when compared to the other market vehicles. Therefore, the vehicles from Mercedes Benz are prone to such damages called as engine hydrostatic lock. This occurrence will take place in a couple of seconds importantly without the knowledge of the driver. Further we would like to inform, this damage can also take place with a lump fo water that is possible on the account of flash created by the other vehicles intersecting even at safe water level on the road.

21. The surveyor appointed by the third and fourth opposite parties has concluded that on 20.8.2011 the insured vehicle was driven at Srinagar Colony road in Hyderabad and there was heavy rain and the rain water stagnated on the road and while crossing the stagnated water suddenly the water entered into the engine causing the damage.

22. The learned counsel for the complainant has relied upon the following decisions:

1. M/s Garg Industries Ltd., Vs M/s Bajaj Allianz General INsurnace Co.Ltd., of Chandigarh State Commission, in F.A.No.130 of 2012 decided on 7.1.2013

2. TATA AIG General Insurance Company Limited vs M/s Ayushveda Informatics (India) Pvt Ltd., and three others of Chandigarh State Commission, in F.A.No.34 of 2012 decided on 9.2.2013

23.  The surveyor deputed by the opposite parties no.3 and 4 had reported that water entered into the engine through air cleaner and he found hydrostatic lock of the engine. The surveyor had not said anything about cranking of the engine. Thus, no fault can be attributed to the complainant in attempting to drive the vehicle on the water logged road. Chandigarh State Commission referring to its earlier decision, in Tata AIG General Insurance Company (supra) held that damage caused to the engine of insured car cannot be termed as consequential damage when the vehicle was stopped due to splash of water on account of another vehicle. It held :

œThe facts of the case show that the complainant was going back from BMW workshop after some minor repairs. It was raining; the driver had been told not to crank the self if the engine stops on the way; he followed those instructions when the car stopped due to splash of water given by another vehicle coming from the opposite side. There was, therefore, no negligence on the part of the driver of the vehicle and the damage to the engine cannot be said to be a consequential damage due to the negligence of the driver of the driver of the vehicle. In fact, all the precautions appear to have been taken by the driver while driving the vehicle and, therefore, the claim could not be denied by the OP/appellant. Our view in this respect is supported by the order passed by this Commission in Kanta Dhir Vs. M/s The Manager, ICICI Lombard and Anr., Appeal case No. 830 of 2007 decided on 24.10.2008, wherein it was held that if a person is going in the car and all of sudden rain starts and the water accumulates in the intersection and enters the engine or engine is seized then it is not fault of the insured and the insurer is liable to reimburse the claim. This order was followed in another case titled as New India Assurance Co. Ltd. Vs. V.K. Bawa, Appeal case No.428 of 2009 decided by this Commission on 11.11.2009.?

24. The opposite parties have not disputed the finding of the surveyor appointed by the complainant that the damage to the engine of Benz car can be caused due to accident caused by external means on account of flood/rain water as the inlet venture tube is exposed to outside at the front grill area and the compression ration operated by Mercedes Benz compared to other vehicles is on higher side and Mercedes Benz vehicle is prone to damage, hydrostatic lock which occurs in a couple of seconds without the knowledge of the driver.

25. The surveyor opined that such damage could occur with a lump of water splashed on account of rushing of other vehicle in rainy time even at the time the other vehicle ran at safe water level on the road. Thus, it can be said that the damage caused to the vehicle is not consequential and it occurred as a result of an accident occurred by external means which is covered by the terms of the insurance policy.

26. For the foregoing reasons, we are of the opinion that repudiation of the claim made by the opposite parties no.3 and 4 is bad and arbitrary. The complainant is entitled for the amount required for repairing of the vehicle.

27. In the result the complaint is allowed directing the opposite parties no.3 and 4 to pay the repair charges to the complainant together with costs of Rs.5,000/-. Time for compliance four weeks. The complaint is dismissed against the opposite parties no.1 and 2. No costs.