State Consumer Disputes Redressal Commission
Gurwinder Singh Son Of S.Bharpur Singh vs Icici Bank Ltd. on 12 July, 2013
1st Additional Bench
STATE CONSUMER DISPUTES REDRESSAL COMMISSION, PUNJAB,
DAKSHIN MARG, SECTOR 37-A, CHANDIGARH.
First Appeal No.504 of 2010
Date of institution :29.03.2010
Date of Decision :12.07.2013
Gurwinder Singh son of S.Bharpur Singh partner M/s Sunrex Healthcare,
Mehlan Road, Near ESI Dispensary, Sangrur, Kothi No.64, Green City, Dhuri.
........Appellant.
Versus
1. ICICI Bank Ltd. Corporate Office ICICI Bank Towers, Bandra Kurla
Complex, Mumbai-400051 through its Managing Director.
2. The Manager, ICICI Bank Limited, Main Branch, Leela Bhawan,
Patiala.
3. The Branch Manager, ICICI Bank Limited, Kaula Park, Sangrur.
.....Respondents.
First Appeal against the order dated 23.02.2010
of the District Consumer Disputes Redressal
Forum, Sangrur.
Before:-
SH.INDERJIT KAUSHIK, PRESIDING JUDICIAL MEMBER
SH.VINOD KUMAR GUPTA, MEMBER Present:-
Sh.G.S.Sidhu, Advocate, Counsel for the appellant Sh.Sandeep Suri, Counsel for the respondent. VINOD KUMAR GUPTA, MEMBER:
This appeal was filed by the appellant/complainant (hereinafter called as 'appellant') under Section 15 of Consumer Protection Act, 1986 (hereinafter called as "Act") against the impugned order dated 23.02.2010 passed by the District Consumer Disputes Redressal Forum, Sangrur (in short 'District Forum') vide which the complaint was dismissed.
2. Brief facts of the case are that the appellant got financed Mohindra Bolero Compur vehicle bearing registration First Appeal No.504 of 2010 2 No.PB-13Q-4413 (referred to as 'vehicle' in short) from respondent No.3 (i.e. ICICI Bank Limited, Kaula Park, Sangrur) under loan agreement No.LVSAN00004067971 and borrowed a sum of Rs.3,60,000/- which was payable in 46 equal monthly installments of Rs.8922/- starting from 22.7.2005. It was submitted that the appellant was depositing the installments regularly but all of sudden the appellant due to some urgency went abroad. It was further stated that during this period respondent No.3 without issuing any prior notice to the appellant repossessed the vehicle forcibly in his absence. Appellant was directed to deposit the entire outstanding amount which was deposited but the vehicle in question was not released. Respondent No.3 played fraud and cheated the appellant by fabricating an affidavit of one Hardial Singh showing him as a partner and this amounts deficiency in service on the part of the respondent No.3. The appellant filed the present complaint seeking directions to the respondents to handover the possession of the vehicle in question or in the alternative pay a sum of Rs.5,25,000/- as present price of new vehicle, Rs.5,00,000/- as compensation and to pay Rs.1,00,000/- on account of deficiency in service and Rs.11,000/- as litigation expenses.
3. Upon notice the respondents filed the reply taking preliminary objections that the complaint is not maintainable in the present form as such the complaint is liable to be dismissed. Appellant has no cause of action to file the present First Appeal No.504 of 2010 3 complaint. Appellant has not come to the Forum with clean hands and has suppressed the true facts form the Hon'ble Forum. So the complaint was liable to be dismissed with special costs. Money matter was involved in this case and elaborated evidence was required to be produced and the same cannot be decided in summary proceedings. Appellant used the vehicle for commercial purpose and loan is also a commercial loan. On merit, it was admitted that the appellant was sanctioned and disbursed a loan of Rs.3,60,000/- under loan head No.LVSAN00004067971 for purchase of Bullero Campur which was repayable in 46 equal monthly installments of Rs.8922/-. It was further pleaded that the appellant deposited only 13 installments after that the partner of the firm Sh.Hardial Singh surrendered the vehicle in question to the respondents under surrender letter 02.08.2007 which was signed by him. It was further stated that the respondents gave information of surrender before and after possession to SHO, P.S. City Dhuri and the driver of the vehicle in question also signed the letter. It was stated that the respondent issued pre-sale notice dated 03.8.2007 but the appellant failed to deposit the outstanding amount within the stipulated period. It was admitted that the respondents sold the vehicle in question to Kulwant Singh for a sum of Rs.1,90,000/- after which post sale notice was issued to appellant. It was alleged that a sum of Rs.1,25,000/- is still outstanding in the loan account as on 6.11.2009 with future interest which the appellant failed to deposit. Other allegations were denied. First Appeal No.504 of 2010 4 There was no deficiency on the part of the respondents and prayed for dismissal of the complaint.
4. Parties led evidence in support of their respective contentions by way of affidavits and documents.
5. After going through the documents and material placed on file and after hearing the learned counsel for the parties, the learned District Forum dismissed the complaint.
6. Aggrieved by the impugned order dated 23.02.2010, the appellant - Gurwinder Singh has come up in appeal.
7. Aggrieved by the impugned order dated 23.02.2010, the present appeal was filed by the appellant on the ground that the order passed by the District Forum is against the law and facts and evidence of the case. District Forum failed to consider the fact that Hardial Singh was not a partner at the time of surrender of the vehicle when letter dated 2.8.2007 Ex.R-4 was signed as he has already withdrawn as a partner as per the partnership deed Ex.C-
11. The duplicate RC has been got issued by furnishing a fake affidavit by said Hardial Singh ex-partner of M/s Sunrex Healthcare. It was further contended that the learned District Forum failed to appreciate the fact that the respondent bank has committed fraud with the appellant i.e. legally and forcibly repossessed the vehicle and thereafter sold the vehicle. It was further contended that it was Hire Purchase Agreement and it is a settled preposition of the law that the consumer court do not have the jurisdiction and such disputes sorted out in the Civil Court by way of a civil suit not by way of summary proceedings. It was further contended that the respondent had illegally repossessed and resold the vehicle even when outstanding amount of installments have been paid as is evident from the statement of account Ex.C-8 which clearly shows First Appeal No.504 of 2010 5 deficiency on the part of the respondent and prayed that appeal may be accepted and the order of the District Forum may be set- aside.
8. On the other hand, respondent contended that appellant has failed to pay installment in time after that Hardev Singh partner of the firm voluntarily surrendered the vehicle in question to the respondent vide surrender letter dated 2.8.2007 vide Ex.R-4. Pre-sale notice dated 03.08.2007 was also sent to M/s Sunrex Healthcare, Sangrur as Ex.R-8. Information before possession and after possession was sent to Police Station, Dhuri as Ex.R-5 and Ex.R-6 respectively. The vehicle was sold on 06.11.2007 to Kulwant Singh resident of Amritsar for Rs.1,90,000.00. An amount of Rs.1,25,951/- is still outstanding against the appellant with future interest Ex.R-12 and contended that there is no merit in the appeal and the appeal may be dismissed.
9. We have gone through the pleadings of the parties, perused the record of the learned District Forum and heard the arguments of the learned counsel for the parties.
10. There is no dispute that the appellant got financed Mahindra Bolero from respondent No.3 under the loan agreement No.LVSAN00004067971 for the amount of Rs.3,60,000/-. It is also not disputed that the same was repayable in 46 equal monthly installments of Rs.8922/- starting from 22.7.2005.
11. Perusal of the record shows that vehicle in question was financed by the respondent No.3 under Hire Purchase Agreement Ex.R-15 which is duly signed by one of the partner.
12. As Annexure C-8 is the statement of account which shows that nothing is due against the appellant. Partnership Deed First Appeal No.504 of 2010 6 is excluded on 20.10.2005 in which it has been stated that Hardev Singh has withdrawn his share from the firm on 19.10.2005 Ex.C- 11 whereas the respondent has stated that Hardev Singh partner of the firm has voluntarily surrendered the vehicle in question vide surrender letter dated 02.08.2007 so the version of the respondent is not correct.
13. Allegation by the appellant is that he was out of India, the respondent feasible or unlawfully in his absence without issuing any prior notice forcibly repossess the vehicle. Hon'ble National Commission in case "Citicorp Maruti Finance Ltd. Vs. S. Vijayalaxmi III (2007) CPJ 161" has held that where a vehicle is purchased by person (consumer) by borrowing money from money lender/financier/banker, the consumer is the owner of the vehicle and not the money lender/financier/banker unless the ownership is transferred. The mere execution of a hire purchase agreement therefore cannot clothe the appellant to claim ownership of the vehicle because the respondents never moved an application to the registering authority as required under section 50 of the Motor Vehicles Act 1988 to get the vehicle transferred in its favour. Otherwise the person who has purchased the vehicle i.e. complainant/appellant, after obtaining loan from the respondents would remain its owner.
14. Next contention of learned counsel for the respondent is that in fact they never took forcibly possession of the vehicle but its possession was delivered by one of the partner Hardev Singh regarding which sent letter Ex.R-4. This contention is also not believable because he was not a partner. Hon'ble National Commission in case of Citicorp Maruti Finance Ltd. Vs. S.Vijayalaxmi (Supra) condemned the use of musclemen by the First Appeal No.504 of 2010 7 finance company to take the law into their hands and to snatch the vehicle. Even the Hon'ble Supreme Court of India in case "ICICI Bank Vs. Parkash Kaur and others 2007 (II) SCC 711" deprecated the practice of hiring of recovery agents who are musclemen. In case "Magma Fincorp Ltd. Vs. Ashok Kumar Gupta III 2010 CPJ 384", the Hon'ble National Commission while deprecating the practice of using musclemen to take forcible possession of the vehicle referred to the guidelines of the Reserve Bank of India which should be followed in case of default instead of taking resort to strong arm tactics. In that case the contention of the respondents that a notice was sufficient to repossess the vehicle was not accepted and the financial agencies were required to adopt procedure recognized by law to take possession of vehicles where borrower may have committed default in payment.
15. The Governor, Reserve Bank of India on 01.07.2006 issued the policy known as "The Code of Bank's Commitments to Customers", and the said Code is applicable to the banks and financial companies. In the said Code, the procedure for the recovery of loan is mentioned as follows:-
"3. Giving notice to borrowers:-
While written communications, telephonic reminders or visits by the bank's representatives to your place or residence will be used as loan follow up measures, the bank will not initiate any legal or other recovery measures including repossession of the security without giving due notice in writing. Minimum 60 days time will be given to you to pay the debt failing which the bank will proceed to take possession of the asset. The notice shall be given by Registered Post with Acknowledgement Due. However, where the Bank has reasons to believe that you are avoiding acknowledgement, it will follow all such First Appeal No.504 of 2010 8 procedures as required under law for recovery / repossession of security.
4. Repossession of Security:-
Repossession of security is aimed at recovery of dues and not to deprive you of the property. The recovery process through repossession of security will involve repossession, valuation of security and realization of security through appropriate means. All these would be carried out in a fair and transparent manner. Repossession will be done only after issuing the notice as detailed above. Due process of law will be followed while taking repossession of the property. The bank will take all reasonable care for ensuring the safety and security of the property after taking custody, in the ordinary course of the business.
5. Valuation and sale of Property:-
Valuation and sale of property repossessed by the bank will be carried out as per law and in a fair and transparent manner. Before effecting sale (save and except in case of moveable property subject to speedy or natural decay or expenses for custody exceeds its value), you shall be given 30 days' notice for the intended sale. If sale is to be effected either by inviting tenders from the public or by holding public auction, copy of public notice shall also be sent to you. The bank will have right to recovery from you the balance due if any, after sale of property. Excess amount if any, obtained on sale of property will be returned to you after meeting all the related expenses provided the bank is not having any other claims against you.First Appeal No.504 of 2010 9
6. Opportunity for the borrower to take back the security:
As indicated earlier in the policy document, the bank will resort to repossession of security only for purpose of realization of its dues as the last resort and not with intention of depriving you of the property. Accordingly the bank will be willing to consider handing over possession of property to you any time after repossession and before concluding sale transaction of the property, provided the bank dues are cleared in full. If satisfied with the genuineness of your inability to pay the loan instalments as per the schedule which resulted in the repossession of security, the bank may consider handing over the property after receiving the installments in arrears. However, this would be subject to the bank being convinced of the arrangement made by you to ensure timely repayment of remaining installments in future. In such cases possession of asset will be returned to you/person concerned immediately maximum within 10 days, on payment of defaulted amount and/or execution of supplementary agreement/consent and confirmation of guarantors as the case may be."
16. From the above, it is clear that the procedure as prescribed for repossessing the vehicle was not followed by the respondents. Hon'ble Supreme Court in case "Manager, ICICI Bank Ltd. v. Prakash Kaur and Ors.", AIR 2007 SC 1349 observed in para No. 18 as follows:-
"18. 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 First Appeal No.504 of 2010 10 committed default in payment of the instalments instead of taking resort to strong arm tactics."
17. The Central Government also made the rules in exercise of the powers conferred by sub-Section (1) and clause (b) of sub- section (2) of Section 38 read with sub-section (4), (10), (12) and Section 13 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest known as "The Security Interest (Enforcement) Rules, 2002".
18. As per Section 13(2), 60 days notice is mandatory to the borrower in writing to discharge in full his liabilities to the secured creditor failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-Section 4. But no notice of 60 days for repossession of the vehicle was served by the respondent upon the appellant and against the law, repossessed the vehicle from the legal possession of the appellant.
19. The price of new vehicle in question was Rs.5,25,000/- (Mohindra Bolero) Model 2005. The depreciation by fixing IDV value of the vehicle are mentioned below :-
The schedule for depreciation for fixing IDV of the vehicle AGE OF THE VEHICLE % OF DEPRECIATION FOR FIXING IDV Not exceeding 6 months 5% Exceeding 6 months but not 15% exceeding 1 year Exceeding 1 year but not exceeding 20% 2 years Exceeding 2 years but not 30% exceeding 3 years Exceeding 3 years but not 40% exceeding 4 years Exceeding 4 years but not 50% exceeding 5 years IDV Value of Mahindra Bolero Model 2005 is = Rs.3,67,500/-.
i.e.525000-157500 = Rs.3,67,500/-
First Appeal No.504 of 2010 11
20. From the above discussions, it is clear that the respondents repossessed the vehicle in question illegally and forcibly and without following the proper procedure. The respondents even sold the said vehicle without following the proper procedure and adjusted the sale proceeds of Rs.1,90,000/- on 06.11.2007 as per the statement of accounts Ex.C-8 but instead of closing the account on 06.11.2007 continued with the account and on 10.11.2007 an amount of Rs.3,30,063/- was adjusted without receiving any payment from the appellant which shows that the total accounts were hanky panky and were not maintained in due course of law. A huge amount of Rs.3,30,063/- was adjusted of their own by the respondents that further casts doubt on the act and conduct of the officials of the respondents. There is deficiency in service and unfair trade practice on the part of the respondents.
21. Since the vehicle has already been sold as such the same cannot be ordered to be returned to the appellant but definitely, the respondents are liable to pay the IDV of the vehicle as calculated above as well as compensation and litigation expenses.
22. Accordingly, the appeal filed by the appellant is accepted and the order passed by the District Forum dated 23.2.2010 is set-aside. Consequently, the complaint filed by the appellant is allowed and respondents are directed to pay Rs.3,67,500/- to the appellant, Rs.20,000/- as compensation for harassment, deficiency in service and unfair trade practice and Rs.5500/- as litigation expenses. The above said amount shall be paid by the respondents to the appellant within 45 days from the date of receipt of the copy of the order failing which the respondent First Appeal No.504 of 2010 12 shall be liable to pay interest @ 7.5% per annum on the above amounts from the date of filing of the complaint till realization.
23. The arguments in this appeal were heard on 01.07.2013 and the order was reserved. Now the order be communicated to the parties.
24. The appeal could not be decided within the statutory period due to heavy pendency of Court cases.
(Inderjit Kaushik)
Presiding Judicial Member
July 12, 2013. (Vinod Kumar Gupta)
Lb/- Member