State Consumer Disputes Redressal Commission
Mahindra & Mahindra vs Dharam Pal Yadav on 28 July, 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: 28.07.2008 Appeal No.08/522 (Arising from the order dated 31.03.2008 passed by District Forum(Central), Kashmere Gate, Delhi in Complaint Case No.763/2006) M/s. Mahindra & Mahindra Appellant Financial Services Limited, through Mr.Sanjeev Narula, 226-228, Second Floor, advocate. Ansal Chamber -2, Plot No.6, Bhikaji Cama Place, New Delhi. Versus Sh. Dharam Pal Yadav .. Respondent R/o RZ-480, Brahmpuri, Pankha Road, New Delhi. 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. This is a case of taking forcible possession of the vehicle by using muscleman for the recovery of unpaid instalments.
2. Vide impugned order dated 31.03.2008, the District Forum has given following directions to the appellant: -
(i) to pay a sum of Rs.80,000/- which is assessed margin money in the present case.
(ii) To refund a sum of Rs.40,872/- (after total amount paid Rs.64,872/- minus assessed depreciation of use of vehicle for a period of less than one year).
(iii) To pay a sum of Rs.10,000/- as compensation.
(iv) To also pay a sum of Rs.3,000/- as cost of litigation to the complainant.
3. Feeling aggrieved the appellant has preferred this appeal.
4. In identical case we have taken a view which has been upheld by the National Commission in Revision Petition No.737/2005 titled Citicorp Maruti Finance Ltd. Vs S. Vijayalaxmi and subsequently by the Honble Supreme Court in ICICI Bank Vs Prakash Kaur that no financer, bank has authority to forcibly take possession of the vehicle as the loan agreement or the hypothecation agreement are civil contract and therefore have to be executed through civil remedy i.e. through intervention of the court. Unless the bank is equipped with the order from the court for repossessing the vehicle it has no authority to go to the house of the borrowers to take away the vehicle forcibly.
5. Whenever any bank resorts to such a method it is liable to compensate the consumer as to the mental agony, harassment and humiliation suffered by him and return the post dated cheques as with the possession of the vehicle contract of loan stands terminated. At the most bank can charge the unpaid instalments and refund the margin money contributed by the consumer.
6. In this regard the observation of the National Commission in Citicorp Maruti Finance Ltd. Vs S. Vijaylaxmi in Revision Petition No.737/2005 are quote worthy 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.
7. Allegations of the respondent leading to the impugned order in brief were that the respondent was the owner of Tata Spacio while colour vehicle bearing No.HR 31B-4459. It was purchased by the respondent in the year 2001 from Auto Links Enterprises India Pvt. Ltd., The respondent obtained loan from M/s. GMAC TCFC Finance Ltd., The respondent paid the amount of loan to the said financer and the financer issued NOC against the loan account. Due to personal need the respondent took a loan from the appellant to the tune of Rs.1,60,000/-. This loan amount was to be paid in 24 EMI of Rs.8,243/-. The first EMI was payable on 28.01.2004. The respondent paid total sum of Rs.60,972/- from 28.01.2004 to 31.12.2004. The respondent also promised appellant to clear the balance amount but ignoring all assurance appellant lifted the vehicle of the respondent forcibly on 31.12.2004. The respondent immediately approached the appellant to settle the matter but appellant did not settle the matter inspite of repeated representations and visits. Later on the respondent came to know that the appellant has sold the vehicle without prior intimation consent or authorization of the respondent. Respondent pleaded that the value of the vehicle as on date of forcible lifting was Rs.2,60,000/-. The respondent termed the act of the appellant i.e. forcible possession of the vehicle and then selling it, as deficiency in service against the appellant.
8. While justifying the action of forcible possession of the vehicle and auction of the vehicle the appellant pleaded that the respondent paid a sum of Rs.60,972/- from 28.01.2004 to 31.12.2004. Appellant further pleaded that vehicle was sold for a sum of Rs.1,43,460/- and even after adjustment of the sale price a sum of Rs.4,888/- is still due against the respondent. The appellant further pleaded that the appellant lifted the vehicle in accordance with the agreement and as per the terms and conditions of the policy.
9. In the instant case, the learned counsel for the appellant has tried to distinguish the instant case in as much as that it was case of purchase of second hand vehicle, therefore the question of paying the margin money of Rs.80,000/- did not arise nor was there any amount contributed by the respondent towards sale price of the vehicle over and above the loan amount.
10. We have perused the impugned order and find that there is no mention in the order that the vehicle was second hand. However, even if it was a second hand, the appellant bank paid the entire cost of the vehicle by way of loan. The loan amount is always lesser than the actual cost of the vehicle be it brand new vehicle or second hand or third hand.
11. However in the instant case the respondent had filed an affidavit that he has purchased the vehicle for Rs.2,40,000/- and this fact is supported by the insurance policy where the insurance value of the vehicle was declared as Rs.2,40,000/- as on 26.03.2004. Respondent had raised loan of Rs.1,60,000/- for the purchase of the vehicle. At the most the appellant bank was liable to pay the margin money or extra money paid by the respondent by way of depreciated value i.e. 5% per year in case of passenger vehicle and @10% in case of commercial vehicle, if not the entire margin money as the vehicle was used for sometime.
12. Proceeding on the aforesaid premise we partly allow the appeal by modifying the direction No.1 to the extent that the appellant shall pay sum of Rs.80,000/- less 10% as the vehicle was a commercial vehicle and maintain rest of the order. The impugned order shall be complied with within one month from the date of receipt of this order.
13. Bank Guarantee/FDR, if any, furnished by the appellant be returned forthwith.
14. A copy of this 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.
15. It appears that the copy of our earlier order has not been in the knowledge of the District Forum, therefore Registrar of this Commission directed to forward copy of this order to the President of all the District Forum for future guidance.
Announced today on 28th day of July 2008.
(Justice J.D. Kapoor) President (Rumnita Mittal) Member Tri