State Consumer Disputes Redressal Commission
Magma Leasing Ltd. vs Bharat Singh on 8 December, 2006
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 : 08.12.2006 Appeal No.A-954/2006 (Arising from impugned order dated 14.08.2006 passed by District Forum-II, Mehrauli, New Delhi Complaint Case No.964/2005) M/s Magma Leasing Ltd. Appellant. 8, Sant Nagar, East of Kailash, through Mr.Sanjeev advocate Versus Mr.Bharat Singh Respondent. BJ-1569, Harijan Basti, Bijwasan, N 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 (Oral)
1. Respondent raised a loan of Rs.3,90,000/- from the appellant for purchasing a vehicle of the value of Rs.5.89 lacs. The balance amount was paid by him. The loan was payable in 35 equated monthly instalment of Rs.13,637/-. Till 15.12.2004, the respondent paid Rs.2,18,142/- towards 20 instalments. On 12.01.2005, the appellant seized the vehicle forcibly presumably on the ground of default in making the payment of instalments. The vehicle was sold by the appellant immediately and sale price was adjusted towards the laon. For recovery of amount contributed by the respondent as well as return of post-dated cheques and compensation as to the mental agony, the respondent filed the instant complaint before the District Forum.
2. While allowing the compliant, the District Forum, vide its order dated 14.8.2006 directed the appellant to refund Rs.1,40,000/- and also to pay compensation of Rs.25,000/- for the inconvenience and harassment and Rs.5,000/- towards cost of litigation after assessing the sale price of the vehicle in question at Rs. 4 lacs as against Rs.5,51,670/-.
3. The main grievance of the appellant against the impugned order is as to the assessment of the cost of the vehicle by the District Forum which according to the counsel for the appellant is without any basis. The broad facts more or less are not in dispute.
4. As on 31.12.2004, the respondent had paid a sum of Rs.2,18,192/- against the total amount of 20 instalments amounting to Rs.2,72,740/-. Thus, the respondent was in arrears of Rs.54,548/- in respect of which demand was made vide letter dated 15.1.2005. The balance amount of the remaining 15 instalments was Rs.13,637/-X 15=Rs.2,04,555/- Thus the total amount due from the respondent in Jan.2005 including arrears of Rs.54,548/- was Rs.2,59,103/- which is rounded off to Rs.2,60,000/-. The post-dated cheques of remaining 15 instalments included the interest also.
5. While justifying the repossession of the vehicle by employing its musclemen the counsel for the appellant has relied upon the judgment of Supreme Court in the case of Managing Director, Orix Auto Finance(India) Ltd. Vs Shri Jagmander Singh & Anr (1996)7 SCC 212 wherein the Honble Supreme Court has held that a financer has a right to repossess the vehicle on account of default made by the hirer in payment of instalments in terms of agreement and, therefore, there is no legal impediment to take the possession of the vehicle.
6. As is apparent the Supreme Court has nowhere given a licence to a financer to take the law into his own hands and forcibly take the possession of vehicle causing insult and humiliation to the hirer by employing musclemen. At the same time Supreme Court has observed that financer can take the possession of the vehicle by way of statutory remedy. Rightly so as the legal right has to be enforced legally. No person can be allowed to arrogate the powers of the Court. If a person is allowed to enforce his legal right in such a manner then every landlord can employ musclemen to take possession of the rental premises after expiry of the lease. But it is not so. He has no other option that to enforce it through process of law and not otherwise.
7. Hire-purchase agreement is a civil contract and dispute arising from it has to be settled by way of civil remedy and not through musclemen. Merely because the appellant as per terms of the contract was entitled to terminate the agreement and re-possess the vehicle in case of non-payment of instalment does not mean that such a clause empowers the financer to take the law into his own hands by sending musclemen to the house of the consumer and taking forcible possession of the vehicle. We cannot permit the financial institutions and Banks to execute the terms of agreement in unlawful manner. These are disputes of civil nature and can be settled through process of law. They could have sought mandatory injunction from the Civil Court for taking the possession of the vehicle and also for recovery of unpaid instalments.
8. Being the protector of the interests of the consumers, this Commission cannot be a silent spectator of the high handedness on the part of the appellant. No civilized society can brook such a method of enforcing a legal right.
9. The appellant sold the vehicle at less than its market value to the detriment of the respondent after taking unauthorized or illegal possession. This again projects the appellant in poor light and bares the dubious design in extracting more than what was due to it from the respondent. Such a conduct is not only against the interest of consumers at large but counter productive for the service agencies or financing companies and banks. The entire action of the appellant was illegal, arbitrary and criminal in nature as the respondent suffered before his neighbours, friends and relatives at the hands of such an unscrupulous and uncouth provider of service.
10. 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. By giving loan amount of Rs.3,90,000/- against the cost of Rs.5.89 lacs, financer cannot be allowed recovery of the post dated cheques as the vehicle against which loan was advanced had been seized and the consumer is no more in possession of the goods for which he had raised the loan.
11. In such a situation financer has to adjust the value of vehicle by way of depreciated value and 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 or little more value to the known people or friends or for any other consideration. That is why we have a taken view that cost of the vehicle shall be adjusted by depreciated value @5% per year in case of passenger vehicle and @10% in case of commercial vehicle.
12. The vehicle in question was purchased in the year 2003 and sold in the year 2005. Thus the market value of the vehicle has to be assessed by depreciating 10% but in this case, the District Forum has assessed the vehicle at lower cost. Otherwise first right to arrange sale of vehicle should be that of the consumer as the consumer cannot be allowed to suffer double jeopardy, that is to be deprived of the vehicle by way of forcible repossession and suffer the loss as to its market value.
13. Further whenever financer chooses to repossess the vehicle without being equipped itself with order from the Civil Court such financer has to compensate the consumer on account of mental agony, harassment, emotional suffering and injury suffered by the consumer and insult he and his family members suffer. In this case, the District Forum has taken a conservative view by awarding Rs.25,000/- only. Foregoing reasons persuade us to dismiss the appeal being devoid of merit.
14. Through this order we give the following directions to the financers and law abiding authorities:
(i) They shall not take the possession of the vehicle forcibly by employing musclemen and enforce this right through process of law and if they do so they shall not only be proceeded against for criminal offence by the Police which shall be registered against the C.E.O. of the company but shall also be liable to pay to the consumer compensation of Rs.25,000/- in case of two wheeler and Rs.50,000/- in case of a car or any other vehicle for mental agony, emotional sufferings, insult and humiliation and physical harassment as the term compensation under the Consumer Protection Act, 1986 encompasses all these factors in its fold.
(ii) Financer shall, while adjusting the sale price of the re-possessed vehicle, shall calculate the market value at the depreciated value i.e. @5% per annum in case of passenger vehicle and refund the balance amount including the amount contributed by the consumer towards the price of the vehicle after adjusting the loan amount. Over and above they shall return the post dated cheques bearing date after the date of the seizure of the vehicle.
Any violation of these directions shall invite action u/s 27 of the Consumer Protection Act, 1986.
15. Bank Guarantee/FDR, if any, deposited by the appellant be returned to the appellant forthwith under proper receipt.
16. 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 the Record Room.
17. A copy of this order be sent to all National Dailies for the general information to the public and also to the information of financers.
(Justice J.D.Kapoor) President (Rumnita Mittal) Member slc