State Consumer Disputes Redressal Commission
Surender Chauhan vs Bank Of America on 3 March, 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: 03.03.2008 COMPLAINT NO.C-376/99 Mr. Surender Chauhan Complainant S/o Sh. Daulat Ram Chauhan, Through R/o 1654, Officers Flats, Mr. P.K. Srivastava, Gulabi Bagh, Advocate Delhi-110007. Versus Bank of America, NTSA Opposite Party Hansalya 15, Barakhamba Road, New Delhi-110001. Now known as ABN AMRO Bank Hansalya 15, Barakhamba Road, New Delhi-110001. CORAM 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)
1. Complainant is an advocate by profession. Vide his application No.62365 and auto loan No.008666236500, he took an auto loan under the Easy Drive Loan Programme from the OP bank, now merged with ABN AMRO Bank, for purchase of a Maruti Esteem car subsequently registered as DL 6CA 0021. OP disbursed the loan of Rs.3,45,500/- on 12.9.1995 which was repayable in monthly installments of Rs.9252/- starting from October, 1995. The complainant paid the installments regularly till January, 1998 totalling Rs.2,59,056/-. However, on 27.3.1998 the OP forcibly seized the car through its goons in the absence of the complainant from outside his home.
Complainant lodged a complaint with police station, Pratap Nagar on 28.3.1998.
At the time of seizure the car contained cell phone of the complainant as well as the stereo system. Complainant is claiming a total sum of Rs.6,29,556/- on various counts including Rs.
One lac for mental agony.
2. OP did not appear despite notice and was proceeded against exparte vide order dated 10.4.2001. Complainant has filed his evidence by way of affidavit.
3. 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 illegal per se in the case Citicorp. Maruti Finance Ltd. Vs. Smt. Vijaylaxmi which was upheld by the National Commission by way of Appeal No. 65/2004 dated 10-03-2005. Our view taken in Citicorp. Finance Ltd. case was upheld by the Supreme Court in ICICI Bank Vs Prakash Kaur (Arising out of SLP(Crl.) 15/2007). Supreme Court held as under :-
Before we part with this matter, we wish to make it clear that we do not appreciate the procedure adopted by the Bank in removing the vehicle from the possession of the writ petitioner. The practice of hiring recovery agents, who are musclemen, is deprecated and needs to be discouraged. The Bank should resort to procedure recognized by law to take possession of vehicles in cases where the borrower may have committed default in payment of the instalments instead of taking resort to strong arm tactics.
4. 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.
5. 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 sells or auctions 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.
6. Foregoing reasons persuade us to hold the OP 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 and encashment of subsequent post-dated cheques being impermissible 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.
7. In the given facts and circumstance, we allow the complaint in the following terms:-
(i) OP shall refund an amount of Rs, 2,59,056/- towards the margin money contributed by the complainant.
(ii) OP shall pay lump sum compensation of 50,000/- which shall include cost of litigation towards mental agony, trauma, emotional sufferings, physical discomfort and great injustice done to him on account of forcible repossession of the vehicle.
(iii) OP shall further return all the post-dated cheques from the date of seizure and if any of them has been encashed shall refund the amount thereof.
8. Payment shall be made within one month from the date of receipt of this order.
9. Complaint is allowed and disposed of in foresaid terms.
10. A copy of the order as per the statutory requirements be forwarded to the parties free of charge and thereafter the file be consigned to Record Room.
11. Announced on the 3rd March, 2008.
(Justice J.D. Kapoor) President (Rumnita Mittal) Member ysc