State Consumer Disputes Redressal Commission
Citi Corp. Finance(I) Limited vs Janu @ Jan Mohd. on 10 April, 2008
IN THE STATE COMMISSION:DELHI IN THE STATE COMMISSION: DELHI (Constituted under Section 9 of The Consumer Protection Act, 1986) Date of Decision: 10.04.2008 Appeal No. A-08/143 (Arising out of Order dated 22.01.2008 passed by the District Consumer Forum, Maharana Partap Bus Terminal, Mezzanine Floor, Kashmere Gate, Delhi in Complaint Case No. 377/06) M/s Citi Corp. Finance(I) Limited Appellant Himalaya House, Through Upper Ground Floor, Mr. K. Ahuja, 23, Kasturba Gandhi Marg, Advocate New Delhi 110001. Versus 1. Mr. Janu @ Jan Mohd. Respondent-1 S/o Sh. Subhan Khan, R/o Village Chandan Hola, Mehrauli, New Delhi 110030. 2. M/s. Shriram Investment Ltd. Respondent-2 Amar Chambers, First Floor, 18/5, WEA, Arya Samaj Road, Karol Bagh, 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 of forcible possession of the vehicle by the appellant for recovery of few unpaid instalments against the loan raised by the respondent. Vide impugned order dated 22.01.2008 passed by the District Forum, the appellant has been given the following directions :
(i) To refund the down payment which was paid by respondent to the dealer at the time of purchase(both parties were unaware of the figure of down payment).
(ii) To refund a sum of Rs.
2,57,552/- (Rs. 4,07,552/-) till 30.04.05 minus approximate assessed amount of Rs. 1,50,000/-(use of vehicle for only 25 months).
(iii) To pay a sum of Rs.
10,000/- as compensation.
(iv) To pay a sum of Rs.
3,000/- as cost of litigation.
Feeling aggrieved the appellant has filed this appeal.
2. Relevant facts leading to impugned order were that the respondent purchased one HTV vehicle through Hire Purchase Agreement with appellant on 30.06.2003. Appellant sanctioned a loan of Rs. 6,56,186/- which was repayable in 37 EMIs of Rs. 20,346/-
each. The respondent paid admittedly amount of Rs. 4,07,552/- till 30.04.2005 and inspite of this the appellant forcibly lifted the vehicle on 21.07.05 without any notice or intimation. Respondent approached the appellant. Instead of settling the matter, appellant called upon the respondent to pay foreclosure amount. The respondent termed the act of appellant i.e. taking the forcible possession of the vehicle, unlawful, for recovery of dues, if any.
3. In view of our decision rendered in the appeal filed by the present appellant way back in the year 2005 which was challenged before the Honble National Commission but our decision was 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 (Arising out of SLP(Crl.) 15/2007 SCC that no financer, bank has authority to forcibly take possession of the vehicle as the loan agreement or the hypothecation agreement or Higher Purchase Agreements are civil contract and therefore have to be enforced through civil remedy i.e. through intervention of the court. Unless the bank or financer 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. This view was taken on the premise that the recovery has to be made through legal method. Such contracts are of civil nature and no criminal force can be allowed to use such practice.
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. The aforesaid view taken by this Commission has been affirmed by the National Commission and 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:
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 financier to be outstanding. If such a relief is given to the money lender/financier, it would be unjust enrichment to the money lender and against the equity. That 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.
7. Almost in every identical case we have been awarding Rs. 50,000/-
compensation for the mental agony, humiliation and injustice suffered by the consumers by applying the guidelines given by the Honble Supreme Court in Ghaziabad Development Authority Vs Balbir Singh (2004) 5 SCC 65 laying down that the consumer is entitled for compensation for each and every element of suffering as referred above. The observations of the Supreme Court are pithy and need to be reproduced and are as under :
The word compensation is of a very wide connotation. It may constitute actual loss or expected loss and may extend to compensation for physical, mental or even emotional suffering, insult or injury or loss. The provisions of the Consumer Protection Act enable a consumer to claim and empower the Commission to redress any injustice done. The Commission or the Forum is entitled to award not only value of goods or services but also to compensate a consumer for injustice suffered by him. The Commission/ Forum must determine that such sufferance is due to malafide or capricious or oppressive act. It can then determine amount for which the authority is liable to compensate the consumer for his sufferance due to misfeasance in public office by the officers. Such compensation is for vindicating the strength of law.
8. Proceeding on the aforesaid premise, we do not find any merit in the appeal and dismiss it in limini being devoid of merit.
9. Bank Guarantee/FDR, if any furnished by the appellant, be returned forthwith.
10. 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.
11. Announced on 10th day of April, 2008.
(Justice J.D. Kapoor) President (Rumnita Mittal) Member ysc