Abstract: A system and method are provided for managing faults in position sensing device and shift device. The faults in the sensing device are the unwarranted code change, power loss fault, and the channel fault. The faults considered in the shifting device correspond to those that either turn it on without a command from the controller or those that don't allow it to turn on despite of a command from the controller. The limited operation actions under these fault condition constitute disabling shifting, enabling shifting until a main-stop is reached, railing on two-wheel side, or a combination of these. Moreover, there are several alternatives in reset mechanism, namely, maintaining the limited operation mode until service, reset upon ignition key going from OFF to RUN, key going from START to RUN, or a simple change in Mode Select Switch after the limited operation action of the controller, etc. Auto-reset in the conditions of auto-fault recovery as in the transient fault conditions are also included.