We drained the dif fluid and there were no shavings Can it be something else. My warranty was 120,000KM If the differential is defective is there a recourse
Recourse depends on where you are. In Australia for instance you may have recourse due to consumer legislation.
The fact there was no metal in the diff oil indicates it may be some other problem. I would take it to another shop, a trans specialist or someone knowledgable about Hyundais if you can find one, for a second opinion.
If you belong to a motoring organisation you may be able to get a tech inspection from them too. In the US the AAA can direct you to a good mechanic in some areas eg
http://www.aaa.com/autorepair/
.
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