National Consumer Disputes Redressal
Muthoot Leasing & Finance Ltd. vs Karnail Singh on 7 March, 2013
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 588 OF 2007 (Against the order dated 24.07.2007 in Complaint No. C-359/98 of the Delhi State Consumer Disputes Redressal Commission) Muthoot Leasing & Finance Ltd. A6, First Floor, Above Post Office Connaught Place New Delhi-110001 Appellant Versus Karnail Singh S/o Shri Makhan Singh R/o CB-75/19, Naraina Indra Market, Ring Road New Delhi Respondent BEFORE: HON'BLE MR. JUSTICE ASHOK BHAN, PRESIDENT HON'BLE MRS. VINEETA RAI, MEMBER HONBLE DR. S.M. KANTIKAR, MEMBER For Appellant : Mr. S.S. Sobti, Advocate with Ms. Aarti Batra, Advocate For Respondent : Mr. S.N. Bhardwaj, Advocate Pronounced on 7th March, 2013 ORDER
PER VINEETA RAI, MEMBER
1. This first appeal has been filed by Muthoot Leasing & Finance Ltd., Appellant herein and Opposite Party before the Delhi State Consumer Disputes Redressal Commission (hereinafter referred to as the State Commission) being aggrieved by the order of that Commission which had allowed the complaint of Karnail Singh, Respondent herein and Complainant before the State Commission.
2. In his complaint before the State Commission, Respondent had contended that in order to enable him to purchase Tata LPT Truck he had taken a loan of Rs.4,25,000/-
from the Appellant, which was engaged in the business of financing. He spent approximately Rs.1,00,000/- towards fabrication charges for the body of the vehicle as per the Appellant. The loan amount was to be repaid by him in 36 Equated Monthly Installments (EMIs) of Rs.17,295/- each. Respondent paid 14 EMIs out of 20 that had become due till October, 1998 and he could not repay the remaining EMIs in time as he had suffered some major financial losses due to the vehicle meeting with an accident in July, 1997 and thereafter getting stuck in floodwater for a period of about two months.
Since Appellant had threatened that they would forcibly repossess the truck, Respondent himself handed it over to them on 25.08.1998 on the assurance from the Appellant that they would release it after receiving the arrears of EMIs. Respondent, therefore, made arrangements for payment of the remaining amounts but when he approached the Appellant to make the payment with a request to release the truck, Appellant refused to do so, because of which the Respondent was constrained to file a civil suit for injunction. Appellant informed the Civil Court that the truck had already been sold by them on 29.09.2008 for a meager amount of Rs.3,20,000/- whereas the vehicle was in very good condition and could have been sold in the open market for Rs.5,50,000/-. Being aggrieved by the action of the Appellant in selling the truck in this illegal, unjustified and arbitrary manner and without waiting for the Respondent to pay the arrears within the time granted, Respondent filed a complaint before the State Commission and requested that Appellant be directed to pay him a sum of Rs.5,80,000/- as compensation with interest @ 18% per annum as also costs and other reliefs as deemed proper.
3. Appellant on being served filed a written rejoinder denying that there was any deficiency in service and unfair trade practice on its part. It was admitted that Respondent had taken a loan of Rs.4,25,000/- for purchase of a Truck and another sum of Rs.1,97,620/- was payable towards financial charges, making the total loan amount Rs.6,22,620/-, which was agreed to be repaid by Respondent in 36 EMIs of Rs.17,295/- commencing from 25.02.1997.
However, Respondent failed to keep sufficient balance in his account and some of the cheques were dishonoured right from the beginning. Further, after paying 14 EMIs, Respondent defaulted in paying the remaining EMIs despite written letters and reminders. Therefore, Appellant was well within its right to repossess the vehicle after issuing written letters and reminders informing the Respondent of their intent in terms of Clause-9 of the Hire Purchase Agreement dated 25.02.1997 entered into between the parties. After receiving these letters, Respondent himself, as admitted by him, surrendered the vehicle to the Appellant. Since Respondent still was not ready to pay the arrears, Appellant was constrained to sell the vehicle in open market after informing the Respondent about the intention to do so and giving him another opportunity to settle the claim by paying the full and final amount due. However, after he failed to do so, vehicle was sold for Rs.3,20,000/- . It was denied that there was under-valuation of the vehicle as contended by Respondent and this was the price offered in the market taking into account the depreciation as also the fact that the vehicle had been involved in a major accident.
4. State Commission after hearing the parties allowed the complaint by concluding that the Appellant had taken the law in its own hands by sending musclemen to the house of the Respondent, who took forcible possession of the vehicle. The State Commission observed that the Appellant could have sought mandatory injunction from the Civil Court for taking possession of the vehicle and also recovery of unpaid EMIs. The State Commission concluded that since the entire action of the Appellant was illegal, arbitrary and criminal in nature and the vehicle was also sold at less than its market price after taking unauthorized and illegal possession of the same, deficiency in service and unfair trade practice was clearly established. The State Commission, therefore, directed the Appellant as follows :-
(i) The OP shall pay to the complainant compensation and cost of litigation of Rs.50,000/- for mental agony, emotional sufferings, insult and humiliation and physical harassment as the term compensation under the Consumer Protection Act, 1986 encompasses all these factors in its fold.
(ii) OP shall, while adjusting the sale price of the re-possessed vehicle, calculate the market value at the depreciated value i.e. @ 10% per annum and refund the balance amount including the amount contributed by the consumer towards the price of the vehicle after adjusting the loan amount.
(iii) Over and above they shall return the post-dated cheques bearing the date, after the date of the seizure of the vehicle.
5. Being aggrieved by the order of State Commission, the present first appeal has been filed.
6. Learned counsel for both parties made oral submissions.
7. Counsel for the Appellant contended that the State Commission had passed the impugned order against the Appellant in a totally mechanical manner without appreciating the specific facts and circumstances of the case and under the totally wrong presumption not borne out by any facts or evidence on record that the vehicle in question was seized by musclemen, and goons and with the use of all force. On the contrary, the Respondent himself in his complaint before the State Commission had not made any allegation whatsoever that the vehicle in question was repossessed with the use of force by the musclemen of the Appellant. He admitted that following the receipt of notice for delay in payment of the EMIs within the stipulated time, he himself handed over the vehicle to the Appellant.
Therefore, the question of use of musclemen and forcible possession of the vehicle as stated by the State Commission was factually incorrect. Further, the State Commission failed to appreciate that the vehicle was sold in the market after giving due notice to the Respondent in this connection. It is also not correct that the vehicle was sold for a price far below its market value because admittedly the Respondent himself has stated in his affidavit that the vehicle had met with an accident because of which it was immobilized for two months and further it was stuck in floodwaters for another two months. Taking into account all these facts as also the depreciation of about 30% during the first year as is routinely calculated by the income tax and other competent authorities while assessing the market value of the vehicle, the vehicle was sold for a justified and reasonable price. The Appellant acted in accordance with the terms and conditions of the Hire Purchase Agreement and the State Commissions order, therefore, cannot be sustained.
8. Counsel for the Respondent on the other hand while reiterating the facts as stated in his complaint before the State Commission contends that the Respondent had been forced to hand over the vehicle because of the repossession threats through letters that he had been receiving from the Appellant giving him no option to take any other course of action. Further, when he received notice from the Appellant of their intention to sell the vehicle unless he made payment in respect of defaulting EMIs within 10 days, he had agreed to make the payment within the stipulated time but Appellant without waiting for the 10 days time sold the vehicle within 7 days.
It was stated that the Honble Supreme Court as well as this Commission in a number of judgments/orders have come down very heavily on leasing and finance companies, which act in an arbitrary manner in such cases. The State Commission after carefully considering all the facts has, therefore, rightly concluded that Appellant was guilty of deficiency in service and unfair trade practice and, therefore, the present first appeal having no merit should be dismissed.
9. We have heard learned counsel for both parties and have also carefully gone through the evidence on record. It is an admitted fact that the Respondent had taken a loan of Rs.6,22,620/- for purchase of a vehicle which was to be repaid in 36 EMIs of Rs. 17,295/- each and that out of these EMIs, Respondent had paid 14 EMIs amounting to Rs.2,42,130/- and, therefore, payment of Rs.3,80,490/- through 22 EMIs was still pending. It is also an admitted fact that because of non-adherence to the EMI schedule of payment, to which the Respondent was bound in terms of the Hire Purchase Agreement, Appellant issued notice for repossession of the vehicle and in response to this, Respondent himself surrendered the vehicle to the Appellant. Further, prior to sale of the vehicle, two notices were issued to the Responding giving him time to make the payment after which the vehicle was sold. In view of these facts, we are unable to comprehend on what basis the State Commission concluded that the vehicle was forcibly taken possession of by Appellants musclemen and without giving due notice. In fact, this was not even the contention of the Respondent either in his complaint or in his evidence before the State Commission. Further, we are also not in agreement with the State Commission that the Appellant sold the vehicle for far less than its actual value at the time of its sale. Admittedly, the cost of the vehicle was Rs.5,50,000/-. As per the Respondents own submission it had an accident because of which it was not mobilized but immobilized for two months and further it got stuck in the floods in Assam and Gauhati for another two months. This no doubt would have taken a toll on the condition of the vehicle and sharply reduced its market value. Apart from this, a depreciation of 30% in the first year in respect of private vehicles is routinely done while assessing its value; depreciation for vehicles used for commercial purposes may be even more.
10. Keeping in view the above facts, we are of the view that the Appellant Company acted well within the terms and conditions of the Hire Purchase Agreement and there is no evidence that they used musclemen or any other unwarranted coercive measure against the Respondent in violation of RBI guidelines and the orders of the Honble Apex Court in this respect. Admittedly, the Respondent had failed to pay most of the EMIs and, therefore, the vehicle was justifiably repossessed and sold after notifying the Respondent and in terms of the Agreement entered into between the two parties.
11. Under the circumstances, we are unable to uphold the order of the State Commission and set aside the same in toto. The first appeal stands allowed. Counsel for the Appellant states that the Respondent still owes the Appellant Rs.1,19,000/- which, as a matter of grace, it will not seek to recover from the Respondent. We take note of this gesture and permit the same.
Sd/-
(ASHOK BHAN, J.) PRESIDENT Sd/-
(VINEETA RAI) MEMBER Sd/-
(DR. S.M. KANTIKAR) MEMBER Mukesh