Delhi District Court
Smt.Anita Rastogi Wife Of Sh. Sunil ... vs M/S Icici Bank Limited on 23 May, 2013
IN THE COURT OF SH. REETESH SINGH
ADDITIONAL DISTRICT JUDGE-01 (NORTH-EAST)
KARKARDOOMA COURTS, DELHI
RCA 127/2011
Date of Institution of Appeal : 19.05.2011
Date on which Reserved for Judgment : 06.04.2013
Date of Judgment/Order : 31.05.2013
Case I.D. Number : 02402C0151732011
IN THE MATTER OF:-
SMT.ANITA RASTOGI WIFE OF SH. SUNIL RASTOGI
A-2/3, AZAD GALI, MAUJPUR DELHI 110 053 ....APPELLANT
VERSUS
M/s ICICI BANK LIMITED
HAVING ITS BRANCH OFFICE AT S.D. TOWER,
COMMERCIAL COMPLEX, 5th FLOOR, SECTOR VIII,
ROHINI, DELHI 110 085 ....RESPONDENT
JUDGMENT
1. This appeal has been filed by the defendant / appellant against the impugned judgment dated 26.2.2011 by which the learned Trial Court decreed the suit of the plaintiff / respondent in the sum of Rs.69,672/- along with simple interest at the rate of 10% per annum pendentelite with costs of the suit.
2. Brief facts leading to filing of this appeal are that the plaintiff filed a suit before the Trial Court in which it was averred that the defendant approached it for grant of a loan for purchase of a motor vehicle "Maruti Wagon R". It was averred that request of the defendant was accepted and the plaintiff sanctioned a loan of Rs.1,50,000/- to the defendant for purchase of the said vehicle which was repayable by her by way of 35 equated monthly installments of Rs.4,678/- . It was averred that the defendant agreed to hypothecate the purchased vehicle to secure repayment of the loan amount. It was averred that on 3.12.2006, the defendant executed the following security documents in favour of the plaintiff :-
"(i) Credit Facility application form along with terms and conditions of the RCA 127 of 2011 1/10 loan
(ii) Deed of hypothecation,
(iii) irrevocable General Power of Attorney and several other documents"
3. Upon disbursal of the loan amount, the defendant purchased the motor vehicle Maruti Wagon R bearing registration No.DL-6CH 4143. In terms of the agreement executed between the parties, the said vehicle was hypothecated with the plaintiff and the defendant executed irrevocable General Power of Attorney authorizing the plaintiff to take possession of the purchased vehicle with right to sell the same to recover outstanding loan amounts. It was averred in the plaint that the defendant did not pay the installments as per terms of the agreement between the parties and the plaintiff took possession of the financed vehicle. The plaintiff thereafter sent pre-sale notice dated 23.8.2007 to the defendant but despite the same, the defendant did not make payment of the outstanding amounts. It was averred that the defendant was liable to pay Rs.1,76,388/- and since she failed to do so, the plaintiff sold the financed vehicle on 12.11.2007 for Rs.85,000/- which was the best possible price available in the market. Upon adjustment of the sale proceeds, Rs.91,388/- was still due and payable by the defendant. It is averred that the plaintiff sent demand notice dated 25.1.2008 to the defendant calling upon her to make payment of the outstanding amount but she failed to do so. In these circumstances, the plaintiff filed a summary suit under the provisions of Order XXXVII CPC for recovery of Rs.91,388/- along with interest at the rate of 16.13 % per annum.
4. The learned Trial Court vide order dated 3.3.2008 treated the plaint as an ordinary suit and summons were issued to the defendant. The defendant filed written statement raising preliminary objections to the effect that the plaintiff had concealed that payment of Rs.54,280/- has been made by the defendant vide several receipts which the plaintiff had not accounted for. It was averred that the plaintiff had adopted a practice of collecting installments from the residence of the defendant through collecting agents namely Sh.Ashok Kumar and Sh.Neeraj Kumar. The plaintiff used to make payment of installments in cash to the said Sh.Ashok Kumar and Sh.Neeraj Kumar in the presence of her son. It was RCA 127 of 2011 2/10 contended that since the defendant had already paid Rs.54,280/- to the plaintiff, there was no cause for the plaintiff to have filed the present suit. It was contended that despite having sold the financed vehicle, the plaintiff bank has not filed on record any document to show the price at which it sold the vehicle. The defendant has claimed that she had purchased the vehicle for Rs.3,00,000/- but the plaintiff arbitrarily valued the financed vehicle at Rs.85,000/- and sold the same at that price causing substantial loss to her. On merits, the defendant has not denied execution of the documents but claimed that the same were blank when she signed the same. She has denied that she was liable to pay the amount as prayed for in the suit.
5. No replication to the written statement of the defendant was filed. Vide order dated 4.2.2009 the learned Trial Court framed the following issues:-
1. Whether the plaintiff is entitled for recovery of Rs.91,388/- as prayed for?OPP
2. Whether the plaintiff is entitled to the interest on the aforesaid amount, if so, at what rate and for which period?OPP
3.Relief.
6. To prove its case, the plaintiff examined its Authorized Representative Mr.Mohit Grover as PW-1 and closed evidence. The defendant examined herself a DW-1 and closed evidence.
7. Although the plaintiff had prayed for recovery of Rs.91,388/-, the learned Court decreed the same in the sum of Rs.69,672/- with interest at the rate of 10% per annum as it found that the defendant DW-1 during her evidence proved on record two payment receipts - one for Rs.10,860/- dated 25.4.2007 and the other for Rs.10,856/- dated 2.7.2007. The plaintiff did not deny these payments and receipts. After granting credit of these two payments, the learned Trial Court decreed the suit in the sum of Rs.69,672/- along with interest.
8. Learned Counsel for the appellant has argued before this court that the learned Trial Court failed to appreciate that there was no default committed by the RCA 127 of 2011 3/10 defendant in repayment of installments of the loan. He submitted that the plaintiff admitted having received payment of Rs.10,860/- on 25.4.2007 and another payment of Rs.10,856/- on 2.7.2007 but did not account for the same in its statement of account. He submitted that if these two amounts had been accounted for, it would be clear that all the installments were paid as per the schedule mentioned in the agreement. He submitted that there was no cause of action on the part of the plaintiff to have taken possession of the financed vehicle. It is also submitted that it was the plaintiff who has breached the terms of the loan agreement and therefore was not entitled to recover any amount from the defendant.
9. Learned counsel for the respondent, on the other hand submitted that the impugned judgment did not call for any interference as the learned Trial Court has looked into the evidence and found that the defendant defaulted in making payment of installments. He submitted that the Trial Court granted credit for adjustment of the amounts not accounted for by the plaintiff and granted decree for the balance amount.
10. I have heard counsel for the parties and have perused the record. My findings are as under:-
ISSUE NO.1 AND 211. Issue no.1 was the entitled of the plaintiff for recovery of Rs.91,388/- and issue no.2 was whether the plaintiff was entitled to any interest on the said amount. The plaintiff examined its authorized representative Mohit Grover as PW-1. He deposed by way of affidavit Ex.PW-1/A. Ex.PW-1/6 is a document of the plaintiff which contains details of the amount payable by the defendant with a detailed statement of account. The statement of account reveals that the amount financed to the defendant was Rs.1,50,000/- and the date of disbursal of the loan was 3.12.2006. The said amount was to be repaid in 35 equal monthly installments from 10.1.2007 to 10.11.2009. The statement of account Ex.PW-1/6 is between 10.1.2007 to 13.8.2007 i.e. for a period of 8 months only. The due RCA 127 of 2011 4/10 dates for payment of installments as per this statement are the 10 th day of each English calendar month i.e. 10.1.2007, 10.2.2007 and so on. Statement of account reveals that the plaintiff has received two payments Rs.5428/- each from the defendant on 10.1.2007 and 10.2.2007. Thus the first two installments stood paid to the plaintiff on the date on which they fell due.
12. With respect to the third installment falling due on 10.3.2007 it is mentioned that the plaintiff has received Rs.5428/- by way of cheque No.EMAC 1675237. As per the entry dated 13.3.2007, the said cheque was returned dishonoured. Against entry dated 28.3.2007 payment of Rs.5428/- is shown to have been received vide cheque No.126670 but the same is shown to have been returned dishonoured vide entry dated 31.3.2007. Against entry dated 11.4.2007 payment of Rs.5428/- is shown to have been received against cheque No.EAPR 1863464 but against entry dated 13.4.2007 the said cheque is shown to have been returned dishonoured. Against entry dated 10.5.2007 payment of Rs.5428/- is shown to have been received against cheque No.EMAY 1687316 but against entry dated 14.5.2007 the same is shown to have been returned dishonoured. Against entry dated 11.6.2007 payment of Rs.5428/- is shown to have been received against cheque No.E 04671898845 but against entry dated 13.6.2007 the same is shown to have been returned dishonoured. Against entry dated 10.7.2007 payment of Rs.5428/- is shown to have been received vide cheque No.E 0771901490 but against entry dated 12.7.2007 the same is shown to have been returned dishonoured. Against entry dated 10.8.2007 payment of Rs.5428/- is shown to have been received vide cheque No.E 0871932237 but against entry dated 13.8.2007 the same is shown to have been returned dishonoured.
13. Thereafter account of the defendant stood closed. In other words, the plaintiff has recalled the loan after August 2007. As per the statement of account, only first two installments of Rs.5,428/- had been received by the plaintiff for the months of January and February 2007 and payments cheques towards installments from March to August 2007 for 6 months have returned dishonoured. As per the statement of account the defendant ought to have paid 8 installments RCA 127 of 2011 5/10 from 10.1.2007 to 10.8.2007 but she has made payment of only two installments and has defaulted in payment of six installments.
14. In her evidence the defendant proved two payment receipts as DW-1/2 (collectively). The first payment receipt is bearing No.6343527 dated 25.4.2007 in the sum of Rs.10,860/-. The second receipt is bearing No.6343543 dated 2.7.2007 in the sum of Rs.10,858/-. The plaintiff did not deny that these payments had been made by the defendant. These payments are not reflected in the statement of account of the plaintiff Ex.PW-1/6. Each installment amount of the defendant was fixed at Rs.5428/-. The first receipt dated 25.4.2007 is for Rs. 10,860/- which is double the amount of installment. Since this receipt was issued on 25.4.2007, inference which can be drawn is that the payment vide this receipt was made to the plaintiff against installments due for the months of March and April 2007.
15. The second receipt dated 2.7.2007 is for Rs.10,858/- which is a exactly double the amount of a single installment. Since this receipt was issued on 2.7.2007, inference which can be drawn is that the payment vide this receipt was made to the plaintiff against installments due for the months of May and June 2007. Thus in all, the defendant has made payment of installments up to June 2007. There is no further record of any other payment made by the defendant to the plaintiff.
16. Ex.PW-1/4 is a pre-sale notice dated 23.8.2007 by which the plaintiff has informed the defendant that it has taken the financed vehicle into its custody due to non-payment of dues. Defendant was informed that the loan agreement stood terminated as on 23.8.2007 and Rs.1,76,388/- remained due and outstanding against the defendant. The plaintiff has sold the repossessed vehicle for Rs. 85,000/-.
17. The question which arises is whether the plaintiff could have repossessed the financed vehicle from the defendant even though she has paid six RCA 127 of 2011 6/10 installments up to June 2007. Admittedly, no notice was issued to the defendant the plaintiff prior to repossessing the financed vehicle. Ex.PW-1/3 (collectively) is the Credit Facility Application form along with terms and conditions of the loan agreement. Clause 46 of the terms lists "event of default on account of borrower for the purpose of loan" which includes default of any installment. Clause 48 lists "Rights and Remedies of ICICI Bank" which reads as under:-
"48. On the happening of any of the Events of Default, ICICI Bank may, by a notice in writing to the Borrower/s and without prejudice to the rights and remedies available to ICICI Bank under the Loan Terms or any other Transaction Document or otherwise :
(a) call upon the Borrower/s to pay all the Borrower/s Dues in respect of the Facility and otherwise, and/or
(b) declare the security, if any, created in terms of/pursuant to the Loan Terms and/or the other Transaction Documents to be enforceable, and ICICI Bank, its representatives and/or such other person in favour of whom such security or any part thereof is created shall have interest in the following rights(notwithstanding anything to the contrary in the Loan Terms or other Transaction Documents and irrespective of whether the entire Facility or Borrower/s Dues has/have been recalled) namely :
i. To enter upon and take possession of the Asset (s) in accordance with the provisions of the Loan Terms; and/or ii. To transfer or deal with the Asset (s) by way of leave, lease and licence, sale or otherwise in accordance with the provisions of the Loan Terms."
(Emphasis supplied)
18. Clause 48 obliges the plaintiff to issue a notice to the defendant before taking any step towards repossessing the financed vehicle. There is nothing on record to show that any such notice was issued by the plaintiff to the defendant. The Counsel for the appellant had relied upon the judgment of Hon'ble Supreme Court in the case of Manager ICICI Bank versus Prakash Kaur reported as 2007 RLR 198 (SC). The said judgment was followed by the Hon'ble High Court of Delhi in the case of Krishan Lal v. Meet Finance Company reported in (2009) 159 DLT 507, in which it was pleased to hold as under:-
"16. But the admitted position that emerges is that petitioner/plaintiff was dispossessed by force of the said vehicle by respondent/defendant company and that too, without any prior notice. This action of respondent/defendant is clearly impermissible and amounts to RCA 127 of 2011 7/10 taking law in its own hand. In fact, Hon'ble Supreme Court in case of ICICI Bank Ltd. v. Prakash Kaur, (2007) 2 SCC 711, has deprecated the practice adopted by banks of taking forcible possession of vehicles by hiring recovery agents. The relevant observations of the Apex Court in above case are reproduced below:
"16. Before we part with this matter, we wish to make it clear that we do not appreciate the procedure adopted by the Bank in removing the vehicle from the possession of the writ petitioner. The practice of hiring recovery agents, who are musclemen, is deprecated and needs to be discouraged. The Bank should resort to procedure recognized by law to take possession of vehicles in cases where the borrower may have committed default in payment of the installments instead of taking resort to strong arm tactics. xxxxxxxxxxxxxxxxxxxxxxx
28. In conclusion, we say that we are governed by a rule of law in the country. The recovery of loans or seizure of vehicles could be done only through legal means. The Banks cannot employ Goondas to take possession by force.""
19. The Hon'ble High Court was pleased to hold that without issuance of notice to the borrower, the financer could not take steps to take repossession of the financed vehicle. In the present matter, there is a specific clause in the agreement entered into between the parties that the bank is to issue a notice to the borrower prior to taking steps to repossess the financed vehicle. Although the word used in the clause is "may", in view of the authoritative pronouncements of the Hon'ble Supreme Court and of the Hon'ble High Court, it was mandatory on the part of the bank to issue notice to the borrower of its intention to repossess the financed vehicle.
20. The respondent bank has repossessed the financed vehicle from the defendant / appellant without issuance of any notice to her. The bank has therefore committed breach of an essential term of the contract between the parties. Apart from this breach, the agents of the respondent bank were recovering installments from the appellant directly on bi-monthly basis. Even though the cheques issued by the defendant to the plaintiff had returned dishonoured, the bank itself had adopted a practice of recovering installments in cash on bi-monthly basis from the appellant. Payments of these amounts had been concealed by the plaintiff in its suit. No replication to the written statement RCA 127 of 2011 8/10 was filed by the plaintiff. From the evidence on record it stood established that the defendant had made payments of installments up to June 2007. The defaults of the installments upto June 2007 stood waived by the plaintiff. The consistent behaviour on the part of the agents of the bank of receiving payments on bi- monthly basis would have given rise to a legitimate expectation on the part of the defendant that the installments for the months of July and August 2007 would be received in August 2007. However, the plaintiff did not do so and repossessed the financed vehicle from the defendant without issuance of notice and sold the same for Rs.85,000/-.
21. The question which arises is whether in these circumstances, it could be held that the plaintiff / respondent was entitled to recovery of the balance loan amount after sale of the financed vehicle? The basis of the suit is default in payment of installments leading to the repossession of the vehicle, sale of the same and action for recovery of the balance loan amount. The act on the part of the plaintiff for repossession of the financed vehicle without issuance of prior notice was illegal. The plaintiff has committed breach of the terms of the contract. Thus it would not be entitled to recovery of any amount from the defendant.
22. It also stood established that plaintiff had adopted the practice of recovering the installments in cash on bi-monthly basis. Section 55 of the Indian Contract Act, 1872 lays down the effect of performance at a time other than that agreed upon. It reads as under:-
"If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non performance of the promise at the time agreed, unless, at the time of such acceptance, he gives notice to the promisor of his intention to do so".
23. The plaintiff bank had come to the Court with a case that the defendant had not paid any installment after February 2007 and it had recalled the loan in August 2007. However, from the evidence led before the Trial Court, it stood RCA 127 of 2011 9/10 proved that the bank had accepted the installments on bi-monthly basis till June 2006. It had accepted the payments of four installments for the months of March to June 2007 beyond the prescribed monthly dates of payment of each installment. Thus in view of section 55 of the Indian Contract Act, 1872, it was not open for the plaintiff to have claimed any compensation or loss due to non- payment of installments on time.
24. For the reasons recorded above I am unable to sustain the findings of the learned trial Court on this issue. The same are reversed and it is held that the plaintiff was not entitled to recovery of any amount from the appellant / plaintiff. The plaintiff was not entitled to any relief.
25. Appeal of the appellant is thus allowed. Impugned order is set aside and the suit of the respondent / plaintiff is dismissed with costs. Decree sheet be prepared accordingly. Trial Court Record be sent back with a copy of this judgment and appeal file be consigned to the record room.
Announced and dictated to the steno in open Court today i.e. 31.5.2013 (REETESH SINGH) Addl. Distt. Judge-01 (NE) Karkardooma Courts, Delhi RCA 127 of 2011 10/10