Company, not dealer, liable for defects in LPG cylinder

Lakshmi had two gas cylinders of Hindustan Petroluem (HP), supplied by Vinaynagar Gas Agencies, the local dealer. While one was in use, the extra cylinder (delivered on January 3, 2002) lay sealed. She unsealed are installed the extra cylinder when the gas in the cylinder in use ran out on February 8, 2002. The new cylinder started leaking after a few minutes due to failure of the ‘O’ ring washer in the cylinder neck. As a result, gas began to accumulate under the platform of the gas stove. Within a few minutes, fire broke out and Lakshmi sustained burn injuries on the abdomen, chest, neck, palms and legs. She was admitted to Yashoda Super Speciality Hospital, where she succumbed after fighting for life for 10 days. The hospitalisation cost her family over Rs 1 lakh.

The police registered a complaint and HP officials visited Lakshmi’s house. Her husband and children got a legal notice issued, demanding Rs 20 lakh as compensation but HP denied its liability and claimed the dealer was liable to pay the compensation.

Her heirs then filed a complaint before the Andhra Pradesh State Commission and HP, its dealer and the New India Assurance (as the insurer of the petroleum company) were made respondents.

HP claimed that as cylinders were supplied to the dealer on a principal-to-principal basis, the latter was responsible for any defect in the cylinder supplied by him. It contended the ‘O’ right washer was found in good condition and the reason for leakage was minor cracks in the rubber tube, which was not a manufacturing defect in the cylinder. On the other hand, the dealer claimed it was an agent of HP and not involved either in the manufacture, packing or filling of the cylinders, and could not be held liable.

After considering the rival contentions, the State Commission held that HP and its insurer were jointly liable to pay the compensation. However, no order was passed against the dealer, since he was merely an agent. The commission awarded Rs 10 lakh as compensation, considering Lakshmi was only 35 years old, and her husband and two minor children were deprived of her love and affection.

HP challenged this order in appeal. Lakshmi’s heirs also appealed for enhancement of compensation. The National Commission concurred with the view of the State Commission that the LPG dealer was only an agent of HP. The contention there was no defect in the cylinder and that the fire had occurred due to cracks in the rubber tube was also rejected, since the report obtained by HP about the cause of fire did not disclose the name of the person who had prepared it, nor was his affidavit filed. The Commission held that since the report had not been proved, it could not be accepted. The National Commission also concurred with the State Commission’s observation that HP would be liable for the defective regulator supplied by it.

The National Commission noted Lakshmi was 35 years old and working as a director at Shrirama Pharma Chemicals Pvt Ltd. Her income was Rs 1,20,000 during the year 2000-01. If a third of this amount was deducted towards her personal expenses, her contribution to the household income would be Rs 80,000 a year. Considering her age, and applying a multiplier of 16, the loss to the family would work out to Rs 12,80,000. In view of this calculation, the National Commission enhanced the compensation to Rs 12.80 lakh.

Since the liability of the insurer under the policy was restricted to Rs 10 lakh, the National Commission directed the insurance company to pay this amount and HP was directed to pay the balance Rs 2.8 lakh. The Commission directed this amount be paid within two months, and interest be paid at nine per cent in case of delay.

[Judgement dated September 28, 2012, delivered by Judge Ashok Bhan on behalf of the bench comprising himself and Vineeta Rai].

The author is a consumer activist