State Consumer Disputes Redressal Commission
Icici Bank Limited vs Jagmohan Singh Baweja on 19 December, 2007
IN THE STATE COMMISSION:DELHI IN THE STATE COMMISSION: DELHI (Constituted under Section 9 of The Consumer Protection Act, 1986) Date of Decision: 19.12.2007 Appeal No. A-07/786 (Arising out of Order dated 09.07.2007 passed by the District Consumer Forum(Central), Maharana Partap Bus Terminal, Mezzanine Floor, Kashmere Gate, Delhi in Case No.524/04) M/s. ICICI Bank Limited Appellant Having Its Registered Office at Through Landmark, Race Course Circle, Mr. S.C.Bhalla, Vadodara 390007. Advocate Having Its Branch Office at: E-Block, Videocon tower, Jhandewalan Extension, New Delhi-110055. Through Its Authorized Rep. Mr. Sanjeev Bakshi. Versus Mr. Jagmohan Singh Baweja Respondent 9/7114, Guru Nanak Gali, Gandhi Nagar, Delhi - 110031. 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. Vide impugned order dated 09.07.2007 passed by the District Forum, the appellant-Bank who had taken forcible possession of the vehicle against which loan was raised by the respondent and subsequently stolen, has been given the following directions :-
(i) The car was purchased in June 2003 for Rs. 3,80,000/- which was sold by respondent on 31.07.04. At the time of the sale after depreciation of 10% the price of the car was Rs. 3,42,000/-
minus balance Rs. 1,44,800/- which comes to Rs. 1,97,200/-. The appellant is, therefore, liable to refund Rs. 1,97,200/- to the respondent, as this was the excess sale price received by the appellant of the sale of car by the appellant.
(ii) The appellant was deficient in service and has indulged unfair trade practice for which appellant will pay a compensation of Rs. 50,000/- to the respondent.
(iii) Appellant will also pay a sum of Rs. 5,000/- to the respondent as cost of litigation.
Feeling aggrieved the appellant has preferred this appeal.
2. The case of the respondent, in brief, was that he purchased Indica car from Him Motors Pvt. Ltd., and the same was financed by the appellant and was given 58 post dated cheques of Rs. 6,850/-. The appellant got signed some blank papers and the terms and conditions which were not known to the respondent and was not allowed to read nor it was explained to him. All the instalments had been paid and three instalments remained to be paid. One Mr. Sanjay Singh was sent to the respondent for recovery of payment to whom the payment was made and asked for the receipt which was refused. He asked the respondent to come to the Bank and then the respondent visited the appellant on 30.07.04. Official of the appellant Mr. Rajinish Kaul came out of the respondent saying he wanted to see the car and want to check the Chasis number and Engine number.
The respondent did not hand over the key and himself opened the bonnet of the car but the said officer snatched the key from the respondent and the respondent was told that the car was under
hypothecation and the car was seized. A notice dated 31.07.04 was received by the respondent from the appellant. It has been alleged that appellant has indulged in malpractice and cheated the respondent and a report was made to the Police on 31.07.04 when the respondent visited the appellant-Bank, the respondent came to know that his car has already been disposed of by the appellant and communication to this effect was received on 11.08.04. There was a brief case in the car when it was seized by the appellant. It had diamond ring worth Rs. 45,000/- of the brother of the respondent which had been kept by the appellant.
3. As against this, the version of the appellant was that Notice was issued to it who appeared and contested the claim of the respondent on the ground that it was admitted by the respondent that he was granted loan by the appellant-Bank as per the terms and conditions of the loan Agreement, the respondent was disbursed a loan of Rs. 3,10,000/-. The vehicle was got hypothecated in the name of the appellant-Bank. The loan amount was to be repaid in 58 EMI of Rs. 6,850/- each for which PDCs were issued. It was alleged by the appellant that many of the cheques had been bounced. The loan facility was recalled and the appellant was forced to take over the possession of the said vehicle. It was denied that the official of the appellant has snatched the key of the car. It was admitted that the appellant on 23.08.05 sold the vehicle.
4. In identical cases, our view is that if the financer chooses to repossess the vehicle without being equipped with order from the Civil Court such financer has to compensate the consumer on account of illegal act, mental agony, harassment, emotional suffering and injury suffered by the consumer and insult he and his family members suffer.
However, National Commission has upheld our view in Revision Petition No. 737/05 entitled Citicorp Maruti Finance Ltd. Vs S. Vijayalaxmi. Thus to take forcibly possession is illegal and against rule of law. Some of the observations of the National Commission are as under :-
When a vehicle is purchased by a person(consumer) by borrowing money from the money lender/financer/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.
5. Whenever the financer chooses to take possession of the vehicle, it has to refund the contribution made by the person concerned after adjusting the unpaid instalment 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 contract stands terminated on the seizure of the vehicle as consumer is no more in possession of the goods against which he had raised the loan.
6. In such a situation financer has to adjust the value of vehicle by way of depreciated value and not the value at which it has auctioned or sold the vehicle. The value 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 at half of its cost or little more. That is why we have a taken view that cost of the vehicle shall be assessed by depreciated value @5% per year in case of passenger vehicle and @10% in case of commercial vehicle.
6. The impugned order is based on the view taken by us as well as by the National Commission in the above referred case with the direction to return all the post-dated cheques issued beyond the date of seizure of vehicle.
7. Appeal is dismissed as there is no merit in it.
8. The order shall be complied with within one month from the date of receipt of this order.
9. Copy of order be sent to Presidents of all District Forums.
10. Bank Guarantee/FDR, if any furnished by the appellant, be returned forthwith.
11. 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.
12. Announced on 19th day of December, 2007.
(Justice J.D. Kapoor) President (Rumnita Mittal) Member ysc