State Consumer Disputes Redressal Commission
Tata Motors Finanace Ltd. vs Sonalben S Bhatt on 25 March, 2021
Details DD MM YY
Date of Judgment 25 03 2021
Date of filing 01 11 2013
Duration 24 4 7
IN THE CONSUMER DISPUTES REDRESSAL COMMISSION
GUJARAT STATE, AHMEDABAD.
Appeal No. 517 of 2014
[Virtual Hearing]
Court No. 1
TATA Motor Finance Ltd.
Registered Office at Nanavati Mahalaya,
3rd Floor, 18 Homi Modi Street,
Mumbai-400001. ...Appellant
Vs
Sonal ben Sashikantbhai bhatt,
1279, Vinobha Bhave Nagar,
Nr. Khodiyar Temple, Vichhol,
Tehsil- Daskoi,
Dist. Ahmedabad. ...Respondent
Coram: Justice V. P. Patel, President
Dr. J. G. Mevwan, Member
APPEARANCE: Mr. S. A. Thakore, advocate for the appellant.
Ms. Bindu J. Gajjar, advocate for the respondent.
ORDER:By Justice V. P. Patel, President
1. Appellant has filed this appeal under section 15 of the Consumer Protection Act, 1986 (herein referred to as 'the Act'), being aggrieved and dissatisfied with the judgment and order dated 24.7.2013 passed by the CDRF, Ahmedabad (Rural) in Consumer case no. 308 of 2012.
2. Heard ld. Advocate Mr. S. A. Thakore, for the appellant and Ld. Advocate Ms. Bindu J. Gajjar, for the respondent. Perused the record of the case and judgment and order passed by the District Commission.
2.1. The appellant is the original opponent and respondent is the original complainant in this appeal. Hereinafter the appellant and respondent will be referred as per their original status.
M. B. Desai A-14-517 Page 1 of 123. Facts of the case of the complainant: The complainant has obtained the finance from the opponent to purchase the vehicle TATA Nano CX. The complainant has only paid an amount of Rs. 30,771/- therefore, opponent has forcefully repossessed the vehicle and the same has been sold even without informing to the complainant and has also not given him chance of clearing the dues. Hence, the complainant has filed this complaint before the District Forum for getting compensation of Rs.30,710/- as paid amount by the complainant, Rs. 50,000/- as loss suffered by the complainant and Rs. 30,000/- for mental harassment and agony with Rs. 20,000/- as cost.
4. Defense of the opponents: The District Forum has issued the notice to the opponents which was duly served to the opponents. Opponent was appeared through advocate and filed a detail reply on 14.2.12 Opponent has denied all the allegations of the complainant. It is further stated by the opponent that as per the agreement signed between the parties, opponent is entitled to get repossession of the vehicle as well as sold the vehicle. Opponent has also mentioned in its reply that even after sold the vehicle to adjust the outstanding loan amount of the complainant, there is still outstanding amount of Rs. 1,17,709/- from the complainant. Opponent has also raised an objection of territorial jurisdiction as complaint should be filed in Mumbai Consumer Court as opponent is having its office in the city of Mumbai. Opponent has also stated that there were relationship money lender and debtor between the complainant and opponent and not a service provider and consumer. Opponent stated that there was default on the part of complainant as well as service of legal notice, opponent has informed the local police station and thenafter opponent has no other alternative except to repossess the vehicle and sold the vehicle for fulfilled the outstanding loan amount of the complainant.
5. Order under challenge: The District Forum has partly allowed the said complaint on 24.7.13 and ordered the opponents to pay Rs. 30,771/- (Rupees Thirty Thousand Seven Hundred Seventy One Only) with Rs. 5,000/- for mental torture and shock and Rs. 2,000/- as cost to the complainant with 9% interest with effect from date of filing of the complaint.
6. Argument of the appellant:
6.1 Learned advocate for the appellant has argued that the order passed by the ld. District Commission is per-se is illegal and is M. B. Desai A-14-517 Page 2 of 12 not sustainable in eye of law. The impugned order is non speaking order and the same has been passed without application of mind upon the documents and averments placed on record by the appellant. That the impugned order is based mainly on surmise and conjecture and therefore, it requires to be set-aside. That the complainant has not paid the installment and therefore, under the agreement, the appellant has power to reposes the vehicle.
6.2 Learned advocate for the appellant has further submitted that the ld. District Commission has illegal and arbitrarily came to the conclusion that the repossession of the said vehicle is illegal even though without ignoring agreed terms and conditions of the agreement. That the ld. District Commission has not considered the clause no. 17 of the agreement which empower the appellant to take possession of the vehicle in case of default.
It is also argued that the ld. District Commission has not considered clause no. 23 of the agreement executed between the parties which provide the arbitration clause. That the clause no. 24 as regards to the jurisdiction is also not considered by the ld. District Commission. He has relying upon the certain judgments which will be discussed hereinafter.
6.3 That the order passed by the District Forum is patently illegal, in violation of the principles of natural justice, contrary to the documentary evidence on record, against the settled principles, de hors the provision of the Act. That the impugned judgment and order are illegal and unlawful hence liable to be quashed and set aside. He has requested to allow the appeal and quash and set aside the judgment and order passed by the District Commission with cost.
7. Arguments of the respondent:
7.1 Ld. Advocate for the respondent has argued that complainant has defaulted for only one installment. That the opponent finance company has not issued notice about the seizure of vehicle and they have threatened to file police case.
That the office of the finance company has called the complainant at the service station and told to give all the installment at a instance. That the complainant was unable to pay the installment at a time. It is also argued that the vehicle was sold to another person without informing to the M. B. Desai A-14-517 Page 3 of 12 complainant. That the car taken by the opponent are illegal and arbitrary.
7.2 ld. District Commission has appreciated the evidence on record in proper perspective and come to the right conclusion and allowed the complaint. Learned advocate for the respondent has argued that the judgment and order passed by the ld. District Commission are legal, proper and correct in eye of law. It is further submitted that there is no requirement of interference in the judgment and order passed by the ld. District Commission. Hence, requested to dismiss the appeal with cost.
Merits of the case:
8. That the no documentary evidence as well as no paper book is produced before this Commission by the appellant. On perusing the impugned order para 4, it is stated by the ld. District Commission that no documentary evidence etc are produced. No notice was issued before seize the vehicle. It is also stated that no notice was issued to give opportunity to the complainant to take part in auction of the vehicle. On perusing the whole impugned order, it appears that the opponent finance company has not provided any documentary evidence as stated in the written statement.
9. Appellant has relying upon following judgment.
(A) Judgment of Karntaka State Financial Corpoation V/S Sheela S. Kotech R.P. No. 488 Of 2015 Decided On 16.09.2009.
(B) Judgment of the National Commission in Surendra Kumar Sahoo V/S Indusind Bank R.P. No. 3319 Of 2012 decided on 01.10.2012 (C) Judgment of the SCDRC Gujarat In ICICI Bank Ltd Versus Ranchod Bhura Changa Appeal No. 1260 Of 2011 Decided On 14.06.2019.
9.1 The above cited judgment are not applicable to the present case as the judgments cited by the respondent are latest and of the Supreme Court.
Precedent for repossession/seizing of vehicle:
10. It will be beneficial to refer judgment reported in IV (2019) CPJ 570 (NC) : Upendrakumar Singh vs. Shree Ram Equipment Finance Co. Ltd. wherein, Hon'ble National Commission has held as under:
M. B. Desai A-14-517 Page 4 of 12"6. Even if the petitioner/complainant had defaulted in timely payment of the installments, payable to the respondent, the vehicle could not have been seized in the manner it was forcibly seized on 09.01.2013 after abusing the driver, pushing him out of the vehicle and snatching its key from him. The vehicle could have been re-possessed by the respondent only after following the due process of law required for this purpose. Forcible seizure of the vehicle in the aforesaid manner particularly when no prior notice is given to the petitioner/complainant before seizing the vehicle nor any notice is given to him giving an opportunity to him to pay the dues before selling the vehicle, constitutes grave deficiency on the part of the respondent in rendering services to the petitioner/complainant.
7. In ICICI Bank Ltd. Vs. Prakash Kaur & Ors. (2007) 2 SCC 711, the petitioner purchased a truck getting it financed from ICICI Bank. He having defaulted in payment of the instalments, the possession of the truck was taken by the Bank by use of force. The truck having not been returned to him, a Writ Petition was filed by him, seeking registration of an FIR. Disapproving the course of action adopted by the Bank, the Hon'ble Supreme Court directed the Bank to forthwith release the truck to the petitioner. The Hon'ble Supreme Court was of the view that instead of taking resort to strong arm tactics, the bank should resort to procedure recognized by law to take possession of vehicle in cases where borrower itself defaulted in payment of instalments. During the course of a separate judgment, Hon'ble Dr. Justice A.R. Laxmanan noted that the recovery/collection agents who are contractors hired by the banks, physically and mentally torture them and force them into paying the dues and the self-respect of a man and his stature in society is immaterial to such agents. His Lordship also observed that many a times even notice is not given to the borrowers who purchased the vehicles on hire-purchase basis and the vehicle is seized in public places deliberately in order to cause embarrassment to the borrower. In a subsequent decision CITICORPN. Maruti Finance Ltd. Vs. S. Vijalaxmi IV (2011) CPJ 67 (SC), a Three Judges-Bench of the Hon'ble Supreme Court reiterated as under:
"We reiterate the earlier view taken that even in case of mortgaged goods subject to Hire Purchase Agreements, the recovery process has to be in accordance with law and the recovery process referred to in the Agreements also contemplates such recovery to be effected in due process of law and not by use of force. Till such time as the ownership is not transferred to the purchaser, the hirer normally continues to be the owner of the goods, but that does not entitle him on the strength of the agreement to take back possession of the vehicle by use of force".
8. Relying upon the aforesaid decisions, this Commission vide its order dated 13.03.2015 in R.P. No.3054 of 2014 (Manager, Shri Ram M. B. Desai A-14-517 Page 5 of 12 Transport Finance Co. Ltd. vs. R. Suresh & Ors.) inter-alia held as under:-
"8. In our view, when a transporter finance company such as the petitioner before us, finances a vehicle and there is a default on the part of the borrower in servicing the loan taken by him, it must necessarily issue a notice to him expressing its intention to repossess the vehicle in exercise of the power conferred upon it under the loan agreement before the vehicle is actually repossessed by it. The purpose behind insisting upon such a notice being given to the borrower is to give him an opportunity to approach the financer and either bring the payment if already made by him to the knowledge of the financer or to convince the finance that it was on account of reasons beyond his control that he could not service the loan and, therefore, the default committed by him may be condoned. It is quite possible that the financer may get convinced from the circumstances so explained by the borrower and may not insist upon repossessing the vehicle, his primary objective being to recovery of loan given to the borrower and not to repossess the vehicle financed by it. If a vehicle is repossessed, without giving such a notice to the borrower, not only it has the potential to disrupt the business or profession in which the borrower is engaged using the vehicle, it may also result in his image and reputation in the society being lowered on account of the abrupt, sudden and forcible seizure of the vehicle by the financer. If a notice expressing intention to repossess the vehicle on the default of the borrower is given to him, he gets ample opportunity to prevent the proposed seizure by approaching the financer and either paying the amount which he was unable to pay alongwith appropriate interest and/or penalty on that amount or to dispose of the vehicle at his own level and repay the loan taken by him. Therefore, in all fairness, the financer must give a reasonable notice to the borrower before repossessing the vehicle financed by it and in no case the vehicle should be possessed by use of force.
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11. ... In our opinion, the seizure of the vehicle in such circumstances constitutes deficiency in service causing tremendous mental torture and stress to the borrower who all of a sudden finds himself without the vehicle which he had purchased albit with the financial assistance taken from the lender. The borrower in such circumstances does not get an opportunity to arrange the requisite finances to repay the amount which he defaulted in paying to the lender before the vehicle comes to be repossessed by the lender. The mental torture and agony would be greater when the vehicle is repossessed in his absence."
For the reasons stated hereinabove, the complainant/petitioner is entitled to appropriate compensation from the respondent for the aforesaid deficiency in the service."
M. B. Desai A-14-517 Page 6 of 12(This view reinterated in RP NO. 1790 of 2013 Shri Ram Transport Finance Co. Ltd. and Ors. Vs. Pannalal Baghel Order dated 1.7.2020.) Precedents for selling of vehicles:
11. Ld. Advocate for the appellant has relying upon following judgments.
(A) Revision Petition No. 2679/2014 (NC) in the matter of Mahindra and Mahindra Financial Services Ltd. vs. M. Nagaraja, delivered on 27.8.14 wherein, Hon'ble National Commission has held as under:
"6. In our opinion, the petitioner-company, before selling the vehicle in question should have given a public notice in a newspaper, widely circulated in the locality where the vehicle was to be sold. The mode of sale could have been either by open auction or by inviting bids after inspecting the vehicle. But, a fare opportunity was required to be given to the members of the public including the complainant to participate in the process of the sale of the vehicle. That obviously did not happen in this case since no public notice was given before selling the vehicle in question. Consequently, neither the complainant, nor the members of public at large got an opportunity to participate in the sale process. As a result, it cannot be said that the vehicle sold by the petitioner-company fetched an optimum price, in the process adopted by the petitioner-company for its sale."
(B) III (2016) CPJ 325 (NC) : A U Finance India Pvt. Ltd. vs. Ramdas Raghunath Patil, wherein, Hon'ble National Commission held as under:
9. Again, there is no evidence which may go to show that notice of sale was issued in favour of the complainant. The complainant was deprived of the participation in the sale proceedings. He lost an opportunity of getting the vehicle on the above said price. Therefore, the petitioner has acted arbitrarily and high-handedly. In the result, we allow the revision petition, set aside the orders of the fora below and award a compensation in the sum of Rs.1,00,000/- only, which be paid to the complainant, within 30 days' from the receipt of copy of this order, otherwise, it will carry interest @ 9% p.a., till realization."
Precedents for agreement for arbitration:
M. B. Desai A-14-517 Page 7 of 1212. We have considered judgment reported in (2018) 11 SCC 337: Rosedale Developers Private Limited v. Aghore Bhattacharya and Ors. wherein, it is held by Hon'ble Supreme Court as under:
"6. In our opinion, there is no merit in the submission of the learned Counsel. The question whether the existence of an arbitration clause contained in the agreement executed between the parties excludes the jurisdiction of the consumer forum and on an application made by either party, the consumer forum is duty bound to make a reference to the arbitrator was extensively considered in National Seeds Corporation Limited v. M. Madhusudhan Reddy and Anr. (supra) and it was observed:
The remedy of arbitration is not the only remedy available to a grower. Rather, it is an optional remedy. He can either seek reference to an arbitrator or file a complaint under the Consumer Protection Act. If the grower opts for the remedy of arbitration, then it may be possible to say that he cannot, subsequently, file complaint under the Consumer Protection Act. However, if he chooses to file a complaint in the first instance before the competent Consumer Forum, then he cannot be denied relief by invoking Section 8 of the Arbitration and Conciliation Act, 1996. Moreover, the plain language of Section 3 of the Consumer Protection Act makes it clear that the remedy available in that Act is in addition to and not in derogation of the provisions of any other law for the time being in force."
8. In the case of Fair Air Engineers (P) Ltd., this Court considered the provisions of the 1986 Act, the Arbitration Act, 1940 and held:
"It would, therefore, be clear that the legislature intended to provide a remedy in addition to the consentient arbitration which could be enforced under the Arbitration Act or the civil action in a suit under the provisions of the Code of Civil Procedure. Thereby, as seen, Section 34 of the Act does not confer an automatic right nor create an automatic embargo on the exercise of the power by the judicial authority under the Act. It is a matter of discretion. Considered from this perspective, we hold that though the District Forum, State Commission and National Commission are judicial authorities, for the purpose of Section 34 of the Arbitration Act, in view of M. B. Desai A-14-517 Page 8 of 12 the object of the Act and by operation of Section 3 thereof, we are of the considered view that it would be appropriate that these forums created under the Act are at liberty to proceed with the matters in accordance with the provisions of the Act rather than relegating the parties to an arbitration proceedings pursuant to a contract entered into between the parties. The reason is that the Act intends to relieve the consumers of the cumbersome arbitration proceedings or civil action unless the forums on their own and on the peculiar facts and circumstances of a particular case, come to the conclusion that the appropriate forum for adjudication of the disputes would be otherwise those given in the Act."
9. The judgments relied upon by Shri Ghose do not have any bearing on the issue raised in this appeal. In neither of those cases, this Court has interpreted the provisions of the 1996 act in the light of the provisions contained in the 1986 Act. Therefore, the propositions laid down in those judgments that Section 8 of the 1996 Act is mandatory cannot lead to an inference that the consumer forum is bound to make a reference to the Arbitral Tribunal.
10. In view of the above stated legal position, the National Commission did not commit any error by holding that the remedy of arbitration available to the complainant does not bar the jurisdiction of the consumer forums and the consumer forums are not under an obligation to refer the matter to the Arbitral Tribunal."
13. Ld. advocate for the complainant has relied upon the circular No. VSF/32-2005/Court/51 dated 3.8.2005 issued by Home Department of Government of Gujarat on the subject of Crime complaints of defaulting Hirers about seizure of Vehicles by Financiers concerned by Hire Purchase Agreement Registration of cases and disposal. In the said circular following guidelines are issued.
(A) The finance company/bank shall give at least 15 days prior notice through registered A. D. Post calling upon the loanee to make the payment of outstanding amount.
(B) Finance Company/bank shall have the option of terminating the contract and to call upon the loanee to make the payment of total outstanding of the loan amount. After such option is exercised, 15 days clear notice by Regd. A. D. Post shall be given by the finance company/bank to the loanee giving opportunity to M. B. Desai A-14-517 Page 9 of 12 the loanee to make the full payment of the outstanding of the loan amount.
(C) The notice also contain a clause to the effect that upon failure to make the payment by the loanee to the finance company/bank, the finance company may exercise the right of repossession of the vehicle.
(D) That the finance company/bank shall intimate the names and other details of the seizing agent who are engaged or who may be engaged by the finance company/bank for seizing of the vehicles to the Police Commissioner/DSP to verify the criminal antecedents of such seizing agent.
(E) Before the repossession of the vehicle the company/bank shall intimate to the concerned police station where the loanee is residing about exercise of right of repossession of the vehicle and minimum one paid employee of the finance company/bank who authorized will remain present. The finance company shall report to the concerned police station that the vehicle is repossess. The Finance company shall intimate to the police about the place at which the vehicle is kept.
(F) Finance company/bank may sell the vehicle by holding public auction or by private negotiation. Opportunity be given in writing to the loanee for purchase of vehicle.
(G) The concerned RTO before transferring the vehicle on the name of purchaser shall verify about the directions of selling of vehicle and if same is found as complied, then it may be proceeded.
13.1 On perusing the pleadings of both the parties, documentary evidence produced on record we found that above mentioned conditions are not complied with in true spirit.
14. Considering the reason stated in memo of appeal, reasons in impugned judgment and order passed by the ld. District Commission, documentary evidence and written submission made by the parties following facts are emerged.
(A) No notice was issued for the calling complainant to make the payment of outstanding dues.
(B) No notice was issued by the appellant before taking repossession of the vehicle.
M. B. Desai A-14-517 Page 10 of 12(C) That no notice was issued to the complainant by the opponent before public auction of the vehicle.
(D) No public notice in a newspaper was issued for selling the vehicle.
15. In view of the above discussion, we are of the view that the appellant has acted arbitrarily and without issuing the notice to the complainant the vehicle was get repossessed. We have also noted that the vehicle was sold by the appellant without giving the opportunity to the complainant to take part in the auction of vehicle. Therefore, this can be said to be deficiency of service on part of appellant. The judgment and order passed by the District Commission is proper, legal and correct on factual aspects as well as law point. We are of the opinion that the appeal is required to be dismissed with cost. Hence, we pass following order.
ORDER A) The Appeal No. 517 of 2014 is hereby dismissed.
B) The order passed by the Consumer Disputes Redressal Forum, Ahmedabad Rural in Consumer Complaint no. 308/2012 dated 24.7.2013 is hereby confirmed.
C) Interim stay granted earlier if any, is hereby vacated.
D) The Insurance company shall also pay Rs. 25,000/-(Rupees Twenty Five Thousand Only) to the complainant towards the cost of the present appeal.
E) The insurance company shall pay the amount of compensation with interest and cost within 60 days from today. In absence of any stay granted by higher forum, if the amount is not paid within the stipulated time, the complainant is entitled to extra cost of 5,000/- from the appellant.
F) Office is directed to verify the amount deposited by the appellant in Appeal No.517 of 2014/CMA No.1023 of 2013 and if found deposited, refund the same with interest, if any, accrued on the deposit to the appellant by issuing A/c. payee cheque in the name of the appellant. The A/c. payee cheque may be handed over to the attending advocate after following due procedure and verification.
M. B. Desai A-14-517 Page 11 of 12G) Registry is directed to send a copy this order to the parties as well as intimate through E-mail in PDF format to the ld. District Commission Ahmedabad (Rural).
Pronounced in the open Court on this 25th March, 2021.
[Mr. V. P. Patel] President [Dr. J. G. Mecwan] Member M. B. Desai A-14-517 Page 12 of 12