State Consumer Disputes Redressal Commission
Ashok Leyland Finance Ltd vs Santosh Kumar Jha on 25 August, 2008
IN THE STATE COMMISSION : DELHI IN THE STATE COMMISSION : DELHI (Constituted under Section 9 clause (b) of the Consumer Protection Act, 1986 ) Date of Decision: 25-08-2008 Appeal No. FA-966/2006 (Arising from the order dated 23-08-2006 passed by District Forum(North), Tis Hazari, Delhi in complaint case No. 657/2005) Ashok Leyland Finance Ltd., -Appellant 43, Bhagheria House, Community Centre, New Friends Colony, New Delhi. Versus 1. Santosh Kumar Jha -Respondent No.1 S/o Late Sh. Jai Kishan Jha, Through C-7/54, Sector 15,Rohini, Mr. Manoj Singh, New Delhi. Advpcate 2. M/s Shri Ganpati Motors Ltd, -Respondent No.2 137, Main Road, Sant Nagar, Burari, Delhi. 3. M/s ARC Motors -Respondent No.3 Okhla Industrial Area, Phase II, New Delhi. CORAM: Mr. Justice J.D.Kapoor President Ms. Rumnita Mittal Member
1. Whether reporters of local newspapers be allowed to see the judgment?
2. To be referred to the Reporter or not?
JUSTICE J.D. KAPOOR, PRESIDENT (ORAL) This is a case of re-possession of motor cycle by the appellant on account of non-payment of few unpaid instalments against loan raised by the respondent No.1 for purchasing the motor cycle.
2. Vide impugned order dated 23rd August 2006, passed by the District Forum the appellant has been directed to refund the amount of instalments of Rs. 29,232/- received by it from the respondent No.1 and also return all the post dated cheques and Rs. 30,000/- as compensation and Rs. 5,000/- as cost of litigation.
3. The impugned order has been assailed mainly on the ground that respondent No.1 has failed to repay the amount financed by the appellant in spite of having been sent notices after notices and it was constrained to repossess the vehicle to recover the loan.
4. As against this the allegations of the respondent No.1 were that he approached the appellant on 15-07-2004 and expressed his desire for purchase of a motorbike on hire purchase basis. The representative of respondent No.2 informed about the requisite documents and other formalities. Thereafter, he gave Xerox copies of all the documents viz. Bank account documents, cheques and identity card etc. along with cash of Rs. 15,800/- and 20 post dated cheques. Respondent No.2 deducted Rs. 800/- on account of file processing charges and the remaining amount was taken as advance money for purchase of the vehicle. Thereafter, the loan was sanctioned for motorbike and the respondent No.1 was asked to accompany them to the showroom of respondent No.2 for delivery of the motorbike and he was delivered the motorbike with registration number and insurance papers only. The respondent No.1 was regularly making the payment of instalments from August 2004 but after 4 months the respondent No.1 was apprehended by the traffic department of Delhi Police and he was not able to produce the registration certificate of the motorbike as the same was not given by respondent No.2 despite several requests. The respondent No.1 contacted representative of appellant and also requested them to handover the registration certificate. Respondent No.1 filed a complaint to the police station Mukherjee Nagar on 16-03-2005 and he also issued stop payment instructions to his banker. The said motorbike was repossessed by appellant without any information to the respondent No.1 when he went to Patna.
When he approached appellant, he was assured by Shri Kapil, representative of appellant that his motorbike will be released if he will make the payment of Rs. 28,000/- on account of dishonoured cheques and other penalty charges. He expressed his willingness to pay the same and sought one week for making the payment. When he approached after one week to appellant he was informed that the said motorbike was resold by them. He sent a legal notice to the appellant and respondent No. 2 and 3 on 02-09-2005 and they refused to make any payment to him. Complaining deficiency in services on their part he prayed before the District Forum for payment of Rs. 81,232/-..
5. In identical cases we have taken a view that the seizure of the vehicle for the purpose of recovering dues by harassment, force, musclemen or goondas is not permissible by law. Our view taken in Citicorp. Finance Ltd. case was upheld by the Supreme Court and the National Commission Observations of National Commission in Revision Petition No. 737/2005 titled Citicorp Maruti Finance Ltd. Vs. S. Vijaylaxmi are relevant, pithy and are as under:-
When a vehicle is purchased by a person (consumer) by borrowing money from the money lender/financier/banker, the consumer is the owner of the vehicle and not the money/lender/financier/ banker, unless the ownership is transferred.
In a democratic country having well established independent Judiciary and having various laws it is impermissible for the money lender/financier/banker to take possession of the vehicle for which loan is advanced, by use of force.
Legal or judicial process may be slow but it is no excuse for employing musclemen to repossess the vehicle for which loan is given. Such type of instant justice cannot be permitted in a civilized society where there is effective rule of law. Otherwise, it would result in anarchy, that too, when the borrower retorts and uses the force.
A hire-purchase agreement is a normal one under which owner hires goods to another party called the hirer and further agrees that the hirer shall have an option to purchase the chattel when he has paid a certain sum, or when the hire-rental payments have reached the hire-purchase price stipulated in the agreement.
As against this, when a person desires to purchase vehicle/goods and not having sufficient money on hand, borrows the amount needed from a money lender/financier/banker and pays it over to the vender of the vehicle, the transaction between the consumer and the money lender will unquestionably be a loan transaction. In such a case the vehicle purchased by the consumer is registered in the name of the consumer and remains at all material times so registered in his name. The consumer remains qua the world at large the owner and remains in possession of the vehicle. BY an agreement the vehicle can be given as security for the loan advanced. IN such a case, the right to seize the vehicle is merely a licence to ensure compliance with the terms of the so called hire purchase agreement. (Re. AIR 1966 SC 1178).
It is to be stated that many financiers/banks are in race for giving loan for purchase of vehicles or various articles. After giving loan and taking interest in advance, the polite behaviour changes because of the documents which are signed on the dotted lines by the borrower. On occasions, borrower suffers harassment, torture, or abuses at the hands of the musclemen of the money lender. Such a behaviour is required to be prohibited and the process of repossession is required to be streamlined so as to fit in cultural civilized society. Let the rule of law prevail and not that of jungle where might is right.
In such cases even the police does not register the FIR or help the aggrieved consumer. In the present case, nothing has been done by the Police for years despite the complaint. IN any case, taking of pound of flesh is required to be discouraged.
In case when the vehicle was repossessed by use of force, and thereafter, sold without informing the complainant, in our view, it would be unjust to direct the consumer to pay the balance amount, as alleged by the financer to be outstanding. If such a relief is given to the money lender/financer, it would be unjust enrichment to the money lender and against equity. The question may arise for consideration only if the Complainant willingly surrenders the vehicle for sale and for recovery of the outstanding amount.
Then, in such cases, consumer dispute would not arise.
Where the vehicle is forcefully seized and sold by the money lender/financer/banker it would be just and proper to award reasonable compensation to the Complainant. Reasonable compensation would depend upon facts of each case.
6. Some of our conclusions in such like cases are as under:-
(i) Hire-Purchase agreement or loan agreement or even hypothecation contract are contracts of civil nature and any right to any of the parties to the contract arising from breach of the term of the contract has to be enforced through legal process i.e. with the intervention of the Court and not through use of force, coercion. Such a methodology of enforcing ones right hits at the foundation of rule of law and civilized society. No society governed by rule of law can allow an individual to take law in his hands.
(ii) Use of force through musclemen and goons for seizing the goods or recovering the dues by publically humiliating, including physically beating and causing injuries in the public or at residence or at official or public place is serious violation of human rights as every human being has a right to be treated in the dignity and respect. That is why every civilized society is governed by rule of law.
(iii) Merely a person has, in terms of contract or by virtue of any law or Hire-Purchase Act or a Hypothecatee right to seize or repossess the goods like vehicles does not mean that he can arrogate the powers of the Court and be a Judge and pass the decree and execute the same. He has to enforce his right through civil, legal process and not through any other method and such an act amounts to deficiency in service.
(iv) Whenever the financer chooses to take possession of the vehicle and sell it, it has to refund the contribution and payment made by the person concerned after adjusting the unpaid instalment in the sale proceeds that too till the date of seizure of the vehicle and not beyond that as no person can be deprived of the amount contributed towards the purchase price of the vehicle and financer or Bank cannot be allowed encashment of post dated cheques as the vehicle or for that purpose any goods against which loan was advanced had been seized and the consumer inspite of being owner of the vehicle is no more in possession of the goods for which he had raised the loan nor is he in a position to enjoy the fruits. With seizure and sale of the vehicle or goods the contract stands terminated and the loan amount stands recovered.
(v) In such a situation financer recovers the dues accruing from the unpaid instalments and the principal by seizing and selling the vehicle. Hence all the post dated cheques have to be returned. In case it intends to return the vehicle, it can do so on payment of unpaid instalments due by that date.
(vi) Further the sale price of such a vehicle cannot be fixed by the financer at its whims or caprice. Experience shows that one or two year old vehicles are sold off at throwaway or at half or little more value to the known people or friends or by way of an auction. That is why we have taken the view that cost i.e. sale price of the vehicle shall be assessed and adjusted by way of depreciated value @ 5% per year in case of passenger vehicle and @10% in case of commercial vehicle.
(vii) Further whenever financer or Bank chooses to repossess the vehicle by employing musclemen or goons as recovery agents and without being equipped with the order from the Civil Court such financer has to compensate the consumer on account of mental agony, harassment, humiliation, emotional suffering and injury suffered by the consumer and insult he and his family members suffer.
7. Foregoing reasons persuade us to hold the appellant guilty for grossest kind of deficiency in service and unfair trade practice for breach of terms of contract of hire-purchase/loan agreement by seizing the vehicle illegally and selling it at throwaway price and recovering the dues in respect of goods i.e. vehicle which had ceased to be in his possession and rendered the contract extinct as with the possession and sale of vehicle the entire liability not only stood discharged but also entitled the consumer to claim the margin money contributed by him towards the price of the vehicle or goods.
8. However, in our view, the amount of compensation awarded by the District Forum is on much higher side as the appellant has been directed to refund the amount of instalments of Rs. 29,232/- received by it in spite of respondent having enjoyed the motorbike for some time.
9. In the result we partly allow the appeal by reducing the amount of compensation to Rs. 10,000/- and maintain rest of the order.
10. Payment shall be made within one month from the date of receipt of this order.
11. Appeal is partly allowed and disposed of in aforesaid terms.
12. FDR/Bank Guarantee, if any, furnished by the appellant be returned to the appellant forthwith after completion of due formalities.
13. A copy of the order as per the statutory requirements be forwarded to the parties free of charge and also to the concerned District Forum and thereafter the file be consigned to Record Room.
14. Announced on 25th August, 2008.
(Justice J.D. Kapoor) President (Rumnita Mittal) Member jj