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If consumer received faulty product from company, he must raise a grievance with the company.
Product return/Replacement policy depend on the company terms and conditions.
No, it is not mandatory - It depends on the consumer. Extended warranties protect the consumer from high expense in case an expensive part needs to be replaced. Consumer must go through the terms and conditions of extended warranties for the benefits.
If a product is under warranty, the company has to honour it as per the terms of the warranty. If consumer is not satisfied with the services provided, he can file a complaint in the consumer commission.