State Consumer Disputes Redressal Commission
Deepak Chadha, vs Standard Chartered Bank, on 5 May, 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: 05-05-2008 Complaint No.C-282/2000 Shri Deepak Chadha, -Complainant S/o Shri Vijay Chadha, R/o H. No. 30/6, Old Rajinder Nagar, New Delhi. Versus 1. Standard Chartered Bank, -Opposite Party No.1 17, Sansad Marg, New Delhi. 2. Mr. Sandeep Jain, -Opposite Party No.2 Manager Collection, 17, Sansad Marg, New Delhi. 3. Bhandari Automobiles, -Opposite Party No.3. 134/4, Lala Lajpat Rai Road, Zamrudpur, 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) On account of having suffered loss and harassment due to the forcible and illegal possession of the car by the OPs for recovery of a few instalments against loan amount raised by the complainant from the OP, the complainant has through this complaint sought the following reliefs:-
(i) That Rs. 75,408/- may be awarded against Margin money, two instalments and insurance charges for the above said car, as refund with interest @ 24% per annum till the date of realization.
(ii) That Rs. 5,27,100/- may be awarded against taxi fare and legal notice, mental torture, harassment and loss of time and social reputation with interest @ 24% per annum till the date of realization.
(ii) Cost of the application may be awarded in favour of the complainant against OP No.1 and 2.
2. Case of the complainant, in brief, is that he had purchased a Maruti Zen car NO. DL 3CM-5747, white colour on hire purchase basis and it was financed to the tune of 90% of the cost of the car by the OP No.1. As per the directions of the OP No.1 the complainant has paid margin money of Rs. 44,300/- to OP No.3 and balance cost of the car was paid by OP NO.1 to OP No.3. The above said car was financed by OP No.1 on 06-07-2000.
the insurance charges of Rs. 12,087/- were paid separately to the New India Assurance Co. Ltd., Delhi by the complainant.
3. That the OP No.1 had approved loan of Rs.2,95,902/- vide loan No. 01397052, against the above said car and financed it on 06-07-2000 and a formal letter was delivered to the complainant on 18-07-2000.
OP No.1 further fixed a monthly instalment of Rs. 10,098/- each from the complainant. The complainant purchased the above said car for personal use, financed by OP No.1. The complainant is an income tax payee and partner in BASIC 4 Company, New Delhi.
4. The OP No.1 and 2 came to the house of the complainant at 5.40 P.M. on 31-08-2000 and took away above said car forcibly with the help of 15 goonda type persons from the possession of the complainant without giving any notice. They also took away one brief-case of the complainant, containing Rs. 10,000/-, though the complainant had paid all the due instalments of car in time i.e. for August 2000 of Rs. 10,098/- by way of post dated cheques.
5. That after taking forcible possession of the abovesaid car, OP No.1 and 2 started negotiating to pay another instalment of September 2000 and it was also paid through post dated cheque. The OP No.1 and 2 again put a condition and demanded from the complainant a F.D. of Rs. 1,50,000/- and then only above said car would be restored to the complainant, which was illegal, and against the terms and conditions of the agreement. The OP No.1 and 2 kept on promising to restore the above said car to the complainant but never fulfilled the promise.
6. That after waiting for six days a legal notice was sent to OP No.1 by Regd. A.D. on 06-09-2000 which OP No.1 did not reply till date. Since 31-08-2000 the complainant had been using private taxi for his house to his office in South Extension and other places of business in Delhi and paying Rs. 500/- per day as taxi charges he was also entitled to compensation on that account.
7. The OPs had neither cared to appear nor had cared to file any reply and therefore were proceeded ex-parte.
8. In support of his allegations the complainant has produced and proved the following documents:-
(i) Ex. CW-1/A, CW-1/B and Ex. CW-1/C are copies of cash receipt NO. 12886 dated 10-07-2000 and delivery note of OP NO.3 and policy issued by New India Assurance Company respectively.
(ii) Ex. CW-1/D is copy of approval letter of loan dated 18-07-2000.
(iii) Ex. CW-1/E is Certificate of registration of above said car.
(iv) Annexure A is Income Tax Return of the complainant.
(v) Ex. CW-1/F is the statement issued by the Bank for the payment of monthly instalments of August 2000 to February 2001.
(vI) Ex. CW-1/G is letter dated 09-04-2001 sent by the OP No.1 informing the sale of the car.
9. 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 perse. In the case of Citicorp. Maruti Finance Ltd. Vs. Smt. Vijaylaxmi and in Magma Leasing Ltd. Vs. Bharat Singh in appeal No. 954/2006 decided on 08-12-2006 which was confirmed by the National Commission in Appeal No. 65/2004 dated 10-03-2005, our view taken in Citicorp Finance Ltd. case was upheld, which was later on also endorsed by the Supreme Court also. 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.
10. 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.
11. 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.
12. Complaint is allowed in the following terms:-
(i) OP shall refund the amount contributed by the complainant and balance amount after assessing the sale price of the vehicle by way of depreciated value @ 10% p.a.
(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.
13. Payment shall be made within one month from the date of receipt of this order.
14. Complaint is allowed and disposed of in foresaid terms.
15. 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.
16. Announced on the 5th May, 2008.
(Justice J.D. Kapoor) President (Rumnita Mittal) Member jj