State Consumer Disputes Redressal Commission
Shriram Group Of Companies vs Bidyut Jyoti Chakravorty on 19 November, 2019
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
MAHARASHTRA, MUMBAI
Appeal No.A/15/1277
Shriram Group of Companies
Regional office at 712/713, 7th Floor
Swastik Chambers, Jn of CST & ST Road
Chembur (E), Mumbai 400 071 ..... Appellant
Versus
Bidyut Jyoti Chakravorty
Om Mayur CHS Ltd.
Flat no.3, Ground Floor
Plot no.235, Kansai Section
Ambernath
District Thane 421 501 .......Respondent
BEFORE: Usha S.Thakare, Presiding Judicial Member
A.K.Zade, Member
PRESENT: -Mr.Rajesh Kanojia-Advocate for appellant
None present for respondent
ORDER
Per Hon'ble Usha S.Thakare, Presiding Judicial Member
1. Being aggrieved by the order passed by the Learned Additional District Consumer Disputes Redressal Forum, Mumbai Suburban in consumer complaint no.99/2012, original opponent - Shriram Group of Companies has filed Appeal bearing no.A/15/1277.
2. By the impugned order, the Learned District Forum was pleased to allow the consumer complaint bearing no.99/2012. It was held that original opponent nos.1 & 2 are guilty of unfair trade practice. Original opponents 1 were directed to pay an amount of Rs.1,50,000/- towards compensation to the complainant/respondent with interest @ 10% p.a. from the date of filing of consumer complaint. Opponents were further directed to pay an amount of Rs.5000/- towards costs of litigation.
3. Facts giving rise to present appeal in short are as under:-
Complainant-Bidyut Jyoti Chakravorty is the 'consumer' and original opponents are the 'service providers'. M/s.Shriram Group of Companies is a company registered under the provisions of Companies Act. Said Company is a non banking financial company and is inter-alia engaged in the business of loan. Complainant-Bidyut is a borrower, who had approached to the opponent/ appellant and applied for vehicle loan facility from the opponent. He had submitted an application for purchasing the vehicle. After acceptance of application, the complainant/respondent entered into a Loan-cum- Hypothecation Agreement. In accordance with the application and Loan- cum-Hypothecation Agreement, opponent/appellant had sanctioned and disbursed to the complainant a sum of Rs.7,25,000/- upon terms and conditions as mentioned in the agreement. The loan amount was repayable in Equited Monthly Instalments. Complainant agreed to repay amount in 47 monthly instalments by paying an amount of Rs.23,417/- per month. It is alleged by the complainant that he repaid an amount of Rs.1,77,691/- during the period 10/03/2008 to 26/02/2010. Because of financial difficulty, he was in arrears and some amount was outstanding against him. On 16/04/2010 opponent no.1 had repossessed vehicle of complainant. At that time vehicle was in possession of the driver who was plying it on Panvel Road. The vehicle was in custody of the opponents. There was no letter correspondence from the opponent during 16/04/2010 to 03/03/2012. No notice was issued before seizure of the vehicle. However, on 04/02/2012, opponent/appellant claimed an amount of Rs.5,55,612/- towards arrears of loan from the complainant. Opponents did not furnish any information about seized 2 vehicle. It was not informed when the vehicle was sold, to whom it was sold and for how much amount it was sold. Complainant objected the notice and informed that amount could have been recovered by selling the vehicle. Opponent was not willing to settle the matter with the complainant and, therefore, no information was given to complainant. On 21/05/2012, opponent/appellant informed the complainant by sending the letter that vehicle was auctioned and sold for an amount of Rs.6,11,000/-. However, details of auction were not given to the complainant. It is the grievance of the complainant that the vehicle owned by the complainant was seized and repossessed without giving any notice to the complainant. Said vehicle was sold by auction after period of about two years. In spite of sale of vehicle, an amount of Rs.5,55,612/- was demanded by the appellant/opponent. As such, opponents have adopted unfair trade practice. Therefore, by filing consumer complaint, complainant - Bidyut Jyoti Chakravorty has requested to set aside the illegal demand made by the opponent/appellant. He has also claimed an amount of Rs.1,00,000/- towards compensation for mental pain and agony. He has also claimed an amount of Rs.50,000/- towards costs of litigation.
4. Opponent nos.1 & 2 have resisted the claim by filing written statement and denied all adverse allegations. It is specifically denied that opponents have adopted unfair trade practice. It is submitted that consumer complaint is filed to grab amount from the opponent. It is submitted that transaction of loan was between complainant and Shriram Transport Finance Co.Ltd. and said finance company was necessary party to be added in the consumer complaint. Consumer complaint is bad for non joinder of necessary party. Complainant had borrowed sum of Rs.10,87,899/- as loan and agreed to repay in 47 monthly instalments. He agreed to repay amount of loan regularly. Complainant had consented to repossess the vehicle on his failure to pay loan amount. Vehicle was mortgaged with Shriram Transport Finance Co. Ltd. Complainant avoided to repay the outstanding loan amount. He is 3 liable to pay instalments of loan as loan amount was outstanding against the complainant. The vehicle was seized legally. It is further alleged that relationship between complainant and opponent is not of 'consumer' and 'service provider' but the relationship between them is of 'borrower' and 'creditor'. This Commission has no jurisdiction to try the consumer complaint. As per agreement matter was referred to the Arbitrator. Complainant failed to appear before the Arbitrator. Therefore, arbitration proceedings were proceeded ex-parte against complainant and award was passed against him. Complainant was engaged in commercial business, as such complainant does not fall with the definition of 'consumer'. Opponents have requested to dismiss the consumer complaint with costs.
5. After considering affidavits of evidence and documents filed on record by both the parties, in view of arguments advanced on behalf of both the parties, Learned District Forum was pleased to allow consumer complaint. Being dissatisfied with this order, original opponent is before us in this appeal.
6. We have heard learned counsel Mr.Rajesh Kanojia for the appellant. No one appeared on behalf of respondent. It is vehemently urged on behalf of the appellant that the respondent is 'borrower'. In accordance with the application and Loan-cum-Hypothecation Agreement, appellant had sanctioned and disbursed to the respondent sum of Rs.7,25,000/- upon terms and conditions as mentioned in the agreement. Respondent agreed to pay Equited Monthly Instalments on time. However, respondent committed default and he was irregular in payment of EMI. Respondent became habitual defaulter. Respondent was called upon to pay the outstanding amount but the respondent did not pay any heed. As a result of continuous default in payment, penal provisions were attracted. Even after issuance of notice, respondent did not pay money towards satisfaction of the outstanding 4 dues. Ultimately, appellant was constrained to take possession of the vehicle and sell the same by public auction. Consumer complaint was filed just to avoid the liability and to harass the appellant/opponent. Order passed by the Learned District Forum is illegal and incorrect. It is against the facts and merits of the case. Learned District Forum failed to consider that the complainant/ respondent is not a 'consumer'. He was engaged in commercial transport business. He was not plying the vehicle for earning his livelihood by 'self-employment'. Appellant was allowed to repossess and sell the hypothecated vehicle in order to recover legitimate dues as per conditions of the agreement. There was no forceful repossession of the vehicle. Respondent never filed FIR against repossession of vehicle. Order passed by the Learned District Forum sets bad precedent. Learned District Forum failed to consider the rulings filed by the appellant in support of its contention. Learned counsel Mr.Kanojia vehemently urged to set aside the impugned order by allowing this appeal to avoid injustice.
7. It is admitted fact that the respondent had obtained loan of Rs.7,25,000/- from the appellant for purchase of vehicle. He admitted to repay the loan amount by monthly instalment of Rs.23,417/-. Due to financial difficulty, he could not repay the loan amount and he was in arrears of loan. On 16/04/2010, hypothecated vehicle was repossessed by the appellant from the possession of the driver of the respondent. At the relevant time, vehicle was plying on Panvel National Highway. Said vehicle was with the appellant after repossession. It was auctioned on 04/02/2012. It is alleged that even after auction of the vehicle amount of Rs.5,55,612/- was due towards the respondent. Therefore, respondent was called upon to pay the balance amount.
8. It is to be noted here that repossessed vehicle was in custody of the appellant for near about two years. The vehicle was repossessed on 5 16/04/2010 and it was auctioned on 04/02/2012. Appellant was duty bound to issue notice to the respondent prior to auction of the vehicle. Evidence adduced on behalf of appellant/opponent does not show that notice was issued to the respondent prior to auction of the vehicle. Seized vehicle was sold in auction without giving any intimation or information to the respondent.
9. Hon'ble National Commission while deciding Revision Petition no.3054/2014 in the case of Manager, Shriram Transport Finance Co. Ltd. v/s. Mr.R.Suresh and others reported in 2007 (2) SCC(II) observed in para 8 as under:-
"8. In our view, when a transporter finance company such as the petitioner before us, finances a vehicle and there is a default on the part of the borrower in servicing the loan taken by him, it must necessarily issue a notice to him expressing its intention to repossess the vehicle in exercise of the power conferred upon it under the loan agreement before the vehicle is actually repossessed by it. The purpose behind insisting upon such a notice being given to the borrower is to give him an opportunity to approach the financer and either bring the payment if already made by him to the knowledge of the financer or to convince the finance that it was on account of reasons beyond his control that he could not service the loan and, therefore, the default committed by him may be condoned. It is quite possible that the financer may get convinced from the circumstances so explained by the borrower and may not insist upon repossessing the vehicle, his primary objective being to recovery of loan given to the borrower and not to repossess the vehicle financed by it. If a vehicle is repossessed, without giving such a notice to the 6 borrower, not only it has the potential to disrupt the business or profession in which the borrower is engaged using the vehicle, it may also result in his image and reputation in the society being lowered on account of the abrupt, sudden and forcible seizure of the vehicle by the financer. If a notice expressing intention to repossess the vehicle on the default of the borrower is given to him, he gets ample opportunity to prevent the proposed seizure by approaching the financer and either paying the amount which he was unable to pay alongwith appropriate interest and/or penalty on that amount or to dispose of the vehicle at his own level and repay the loan taken by him. Therefore, in all fairness, the financer must give a reasonable notice to the borrower before repossessing the vehicle financed by it and in no case the vehicle should be possessed by use of force."
10. Vehicle of the respondent was repossessed by the appellant in his absence. No prior notice was given to the respondent prior to repossession of vehicle. In our opinion, possession of the vehicle in such circumstances constitutes deficiency in service causing tremendous mental torture and stress to the borrower, who all of a sudden finds himself without the vehicle which he had purchased albeit with the financial assistance taken from the lender. The Borrower in such circumstances does not get an opportunity to arrange the requisite finance to repay the amount, which he defaulted in paying to the lender before the vehicle comes to be repossessed by the lender. The mental torture and agony would be greater when the vehicle is repossessed in his absence.
11. When the vehicle was sold it was two years old. It was seized by the appellant and sold for consideration of Rs.6,11,000/-. When the vehicle was 7 purchased, its value was Rs.10,87,899/-. The market value of the vehicle could not have deprecated to such an extent within a short period. Details of the auction and statement were not sent to the respondent by the appellant. It is doubtful whether the seized vehicle was maintained in proper condition by the appellant during the period of two years.
12. Learned District Forum rightly held that seizure of vehicle and sale of vehicle in auction amount to unfair trade practice. Appellant failed to consider the guidelines issued by Reserve Bank of India, which prescribes that a provision regarding final chance given to the borrower and the procedure for sale and auction of the property should find clear mention in the terms and conditions of the agreement. In the case in hand, appellants did not give any opportunity to the respondent/ complainant prior to auction of the vehicle.
13. It is true that the appellant had every right to seize and repossess the vehicle as per agreement as the respondent was in arrears of loan amount and some amount of loan was outstanding against him. However, the vehicle was to be seized and auctioned after following due procedure of law. Appellant cannot ignore the principles of natural justice. Learned District Forum rightly placed reliance on the ruling laid down by the Hon'ble Apex Court in the matter of CITICORP. Maruti Finance Ltd. V/s. S.Vijayalaxmi reported in Volume IV (2011) CPJ 67 (SC), in which Hon'ble Apex Court held as under:-
"We reiterate the earlier view taken that even in case of mortgaged goods subject to Hire-Purchase Agreements, the recovery process has to be in accordance with law and the recovery process referred to in the Agreements also contemplates such recovery to be effected in due process of law 8 and not by use of force. Till such time as the ownership is not transferred to the purchaser, the hirer normally continues to be the owner of the goods, but that does not entitle him on the strength of the agreement to take back possession of the vehicle by use of force."
14. As per guidelines, it was necessary to give notice to the borrower prior to sale of vehicle or prior to seizure of vehicle. Appellant failed to substantiate that copy of the agreement was given to the respondent. Copy of agreement is not filed on record to enlight that in agreement there is whisper about waiver of provisions of notice/intimation.
15. It appears that the vehicle was sold in contravention of the guidelines given by Reserve Bank of India. It is not the case of appellant/opponent that vehicle was seized only after giving notice. There is no proof of issuance of notice. Even there is no public notice. It is settled principle of law that seizure of the vehicle could be only after following due process of law.
16. In our view, when Transport Finance Co. such as appellant herein, finances a vehicle and there is a default on the part of the borrower in servicing the loan taken by him, it must necessarily issue a notice to him expressing its intention to repossess the vehicle in exercise of the power conferred upon it under the loan agreement before the vehicle is actually repossessed or sold by it.
17. Appellant failed to follow the guidelines of Reserve Bank of India before selling the vehicle in auction and seizure of the vehicle. Respondent did not get an opportunity to make an arrangement of loan as vehicle was in possession of the appellant. Certainly, appellant is guilty of deficiency in service.
918. Learned counsel Mr.Kanojia urged that in agreement there is clause of arbitration and urged that the arbitrator has passed an award. Therefore Consumer Fora was debarred from passing any further award. This contention of the learned counsel has to be rejected for the simple reason that the respondent/complainant had a choice either to go in for arbitration for resort to consumer complaint. This remedy was available to him as per section 3 of Consumer Protection Act, 1986, which provides that section 3 of the Act is not in derogation of any other law. Provision of this Act shall be in addition to and not in derogation of any other provisions of law for the time being in force. Further, it is noticed that the Learned District Forum has decided the consumer complaint on 07/07/2015. Arbitrator has passed an impugned award on 01/03/2013. Present respondent did not participate in arbitration proceedings. Consumer complaint was filed on 29/08/2012 i.e. prior to award passed by the Arbitrator. Complainant/respondent had chosen to file complaint before the Learned District Forum. Learned District Forum rightly held on the basis of sound reasoning that complainant/ respondent is a 'consumer' and his consumer complaint is tenable, although there is an arbitration clause in the agreement.
19. Learned District Forum is perfectly correct in arriving at the conclusion that the appellant/opponent has adopted unfair trade practice while selling the vehicle of the respondent in auction. All objections are considered by the Learned District Forum by keeping in mind the legal provisions and by keeping in mind the guidelines in view of the law laid down by Hon'ble National Commission and Hon'ble Apex Court while deciding the consumer complaint. Certainly, respondent has suffered mental pain and agony due to sale of vehicle by the appellant without due process of law. Order passed by the Learned District Forum is just, legal and correct. It requires no interference. As a result, appeal deserves to be dismissed. Hence, we pass the 10 following order:-
ORDER Appeal stands dismissed.
No order as to costs.
Pronounced on 19th November, 2019.
[Usha S.Thakare] Presiding Judicial Member [A.K.Zade] Member Ms 11