State Consumer Disputes Redressal Commission
Cholamandalam Dbs Finance Ltd & Others. vs Jai Prakash Sharma & Anr. on 16 July, 2012
CHHATTISGARH STATE
CONSUMER DISPUTES REDRESSAL COMMISSION
PANDRI, RAIPUR
(A/11/2769)
Appeal No.488/2011
Instituted on 03.09.2011
1. Cholamandalam DBS Finance Ltd.,
Through: Manager, Dare House, 1st Floor,
Old No.234, New No.2, N.S.C.Bose Road,
CHENNAI 600 001
2. Cholamandalam DBS Finance Ltd.,
Branch Office, Shankar Nagar Chowk, G.E. Road,
RAIPUR (C.G.)
3. Cholamandalam DBS Finance Ltd.,
Branch Office, Shop No.105, Rama Trade Center,
Near Bus Stand, Bilaspur
BILASPUR (C.G.) ... Appellants.
Vs.
1. Jai Prakash Sharma, S/o: Late Shri Shyam Bihari Sharma,
44, Tulsi Awas, Rajkishore Nagar, Phase I, Bilaspur,
Dist. BILASPUR (C.G.)
2. Royal Finance Consultancy,
Opposite Govt. P.G. College,
Jarhabhata Raipur Road, Bilaspur,
Dist. BILASPUR (C.G.) ... Respondents.
PRESENT: -
HON'BLE JUSTICE SHRI S.C. VYAS, PRESIDENT
HON'BLE SHRI V.K. PATIL, MEMBER
COUNSEL FOR THE PARTIES: -
Shri Mukesh Sharma, for appellants.
Shri R.R.Sinha, for respondent no.1.
Respondent no.2, proceeded ex-parte.
ORDER
Dated: 16/07/2012 PER: - HON'BLE SHRI V.K.PATIL, MEMBER This appeal is directed against order dated 29.07.2011 of District Consumer Disputes Redressal Forum, Bilaspur (C.G.) (hereinafter called for short as "District Forum") passed in Complaint Case // 2 // No.240/2004 whereby the complaint was allowed and the appellants herein, who were OP Nos. 2 to 4 before the District Forum have been directed to pay compensation to the complainant (Respondent no.1 herein) as per directions in the impugned order.
2. Briefly stated facts of the case are that the complainant had purchased a vehicle 407 Turbo having chassis no.357124 BWZ 803003 Engine No.497 S.T.O.B.W Z 8 59911 from dealer Shivam Motors, Bilaspur for Rs.4,44,608/- out of which Rs.1,00,000/- was deposited towards down payment and balance amount was financed by financer OP.Nos.2 to 4, which was repayable in 36 monthly installments @ Rs.11,741/- and for that purpose post dated blank cheques were handed over to the OPs financer which are still in its possession. Complainant further averred that OPs had been encashing said cheques from his account and whenever any of the said cheques bounced, installment amount along with bounce charges Rs.500/- was collected by O.Ps. in cash and receipts were issued. Complainant further averred that installments were regularly paid and thereafter the complainant requested OPs. to deposit the cheque of June 2004 installment in bank bit late and he was assured also verbally by O.Ps. that June 2004 cheque would be deposited on 27.07.2004 but prior to that the questioned vehicle was repossessed forcibly by persons of OPs. on 20.04.004 without prior intimation and uttering that neither // 3 // the vehicle would be returned nor any amount would be refunded and also told that if he was desirous to get back the amount then he should clear off loan dues. Complainant alleged that aforesaid act of OPs. amounted to deficiency in service and thus prayed before the District Forum seeking direction to OPs. to return the vehicle and to pay compensation towards loss of income @ Rs.500/- for 130 days amounting Rs.65,000/-, Rs.50,000/- towards other financial loss and also cost Rs.1,000/-.
3. O.P.No.1 (Respondent no.2, herein) in its reply has averred that it only provides advice and financial support to common man through N.B.F.C. institutions. O.P.No.1 has further averred that after production of papers on behalf of the applicants, sanction or refusal of loan rests with the officers/representatives of the financial institutions and after sanction of loan if default occurs in repayment of loan then also the right to recover loan amount rests with them only. O.P.No.1 averred that it had no information about any agreement in respect of sanction of loan & also about its repayment installments still it had been unnecessarily made a party in the case. O.P.No.1 prayed for dismissal of the complaint, and for award of compensation of Rs.10,000/- for baseless complaint against it.
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4. O.P. Nos.2 to 4 in its reply averred that the complaint did not come in the category of consumer dispute so it was liable to be dismissed. OPs averred that the averments made by the complainant regarding cost of the questioned vehicle and its installments are about facts so required documentary evidence. OPs have further averred that post dated cheques were collected by it from the complainant under a set process as security towards loan and those cheques remain valid for a period of six months which are presented before bank on due dates. OPs further averred that as per averments of the complainant in its complaint, cheques dated 27.02.2003 to 27.01.2006 had expired on 27.06.2006 as to its validity whereas OPs have been impleaded as party to the complaint in the year 2008. OPs further averred that due to defaults committed by the complainant, the vehicle was repossessed and the post dated cheques were not utilized. OPs further averred that four years after occurrence of default it had been impleaded as party when all loan related documents had been destroyed as per procedure so it was not in a position to produce any document. OPs averred that it had not committed any deficiency in service, so prayed for dismissal of the complaint being baseless & false.
5. The complaint was filed on 2.12.2004 impleading initially managers of OPs as party and the case was decided on 28.10.2005 against O.P.No.1 financer whereby O.P.Nos.2 & O.P.No.3 remained // 5 // Ex-parte. Thereafter O.P.No.1 financer filed appeal whereby this Commission vide order dated 06.07.2007 passed in appeal No.472/2005 remanded the case to the District Forum at the request of parties present, with a direction to reconsider the complaint on filing of documents and amending of pleadings by the parties.
6. Subsequently learned District Forum provided opportunities to the parties. Initially since concerning managers of O.P.Nos.2 to 4 were made the parties in the complaint so on realizing technical flaw, amendments in the cause title of the complaint were made thereby the finance company i.e. O.P.Nos.2 to 4 were impleaded as party through their managers. Learned District Forum allowed the complaint awarding compensation payable by O.P.nos.2 to 4 vide order dated 21.01.2009 against which O.P.Nos.2 to 4 filed appeal, wherein they raised plea that the complaint was hopelessly time barred having been filed 4 years late. This Commission vide order dated 22.01.2010 again remanded the case to the District Forum with a direction to decide the application filed by OP 2 to OP 4 under section 24 (A) read with section 21 of Limitation Act.
7. Finally Learned District Forum having perused the documents produced before it and having heard arguments of parties allowed the complaint partly giving directions as per the impugned order.
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8. We have perused the documents on record minutely and heard argument advanced by parties.
9. Contention of the appellant is that the respondent no.1/complainant had hired services of the appellant financer for commercial purpose and the same was not covered by the provisions of Consumer Protection Act 1986 after the amendment in the year 2003. Appellant has not produced evidence to the effect that the respondent no-1/complainant had been utilizing the questioned vehicle foe commercial purpose or to the effect that he had any income through a source other than the questioned vehicle, therefore the plea is not tenable.
10. Another contention of the appellant is that learned District Forum had erred in interpretation of directions given by this State Commission in the revision preferred by it against condonation of delay while impleading appellants as party to the complaint. We find that the complaint was filed before the District Forum on 02.12.2004, whereby managers of the appellant Finance Company were made the parties in the complaint and subsequently on realizing technical flaw to the effect that managers had no legal entity, amendment in the complaint was incorporated on 25.07.2008. Addresses of the parties, in both the situations prior and after amendment of the complaint, were // 7 // the same. Managers being the employees of the appellant were given due notice within the period of limitation i.e. two years as per provisions of the Consumer Protection Act, 1986, as such notice served on the manager being the agent of the appellant / employer implied to have been served on the appellant, so it cannot take this objection that the complaint has been filed late against the financer and the delay occurred in impleading the finance company at the place of its Manager was fatal. The same company was Opposite Party from the date of filing of the complaint. Merely the description has been changed. We thus hold that the complaint was maintained well within the prescribed period of limitation i.e. 2 years.
11. Another contention of the appellant is that there was no contract of service, as such there was no deficiency in service. It is a settled law that finance contracts as in the instant case, are contracts of services where under matters have been or being decided in respect of deficiency in service as per provisions of the Consumer Protection Act, 1986. The plea of the appellant is not sustainable.
12. Another plea of the appellant is that learned District Forum allegedly admitted the fact of filing of documents in appeal No.472/2005 by the then party, though represented by the same counsel in both the cases i.e. in appeal No.472/2005 and also in the // 8 // amended complaint. Here again the same principle applies that the act of the manager of the appellant being its agent would be the act of its principal / appellant. As such the plea is not sustainable.
13. Another contention of the appellant is that the respondent-1 / complainant had moved an application under Order 1 Rule 10 of CPC for impleading new parties in the complaint in which nothing had been stated about the status of existing parties to the complaint and the need of impleading new parties to the complaint. Such plea carries no weight in view of aforesaid findings that the appellant and its manager being employer and the employee are governed by the relationship of principal and agent. Otherwise also it is a summery proceeding in terms of The Consumer Protection Act, 1986, so we need not have to apply much hyper-technicality on such issues.
14. Another contention of the appellant is that it had moved an application for discovery of documents but learned district Forum ignored it and allegedly relied on the version of the respondent-1 /complainant on the basis of statement of account submitted by the appellant, which was not a party in the initial complaint and also when the appeal No.472/2005 was finally decided. Such agreement carries no weight in the light of aforesaid discussion and findings.
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15. Another argument of the appellant is that the complaint was finally heard by complete bench of the District Forum and the order was passed by members only where as the previous order dated 21.01.2009 in the same complaint was recorded by the President of the District Forum but he has abstained himself without any reason in disposal of the amended complaint. We find that as per order sheets of proceedings of the District Forum, during last two concluding hearings dated 30.06.2011 & 29.07.2011, the president was absent so the matter was heard by members only and as such the complaint was decided by them which had no legal impediment. Therefore the argument of the appellant is not tenable.
16. Another contention of the appellant is that the complaint was filed when the questioned vehicle was not registered even for a period of 18 months, it was violation of the provisions of law. This argument carries no meaning since it is a wholly irrelevant consideration at this stage of appeal. No such plea was taken before the District Forum. More over the dispute was not regarding settlement of any claim warranting compliance of provisions of Motor vehicle Act rather it was about unauthorized repossession of the vehicle. The plea is thus not sustainable.
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17. Another plea of the appellant is that learned District Forum relied on the version of the respondent-1/complainant and held the appellant liable for alleged deficiency in service allowing his claim which was not sought in the complaint, moreover the questioned vehicle was sold in consequence of settlement of his loan account.
18. We find substance in the contention of the appellant since learned District Forum erred in para (A) of the impugned order directing the appellant to return the repossessed vehicle to the respondent no.1/complainant on clearance of outstanding loan dues, which was not possible since the vehicle was already reported to have been sold by the appellant in order to recover outstanding loan dues. More over it was also directed in the impugned order that in case of failure to return the repossessed vehicle, appellant had direction to refund amount of Rs.1,77,228/- deposited towards loan installments and Rs.7000/- deposited towards cheque bouncing charges . We find that as per statement of Accounts (document no.Q/A-8) the respondent-1/complainant had paid total amount Rs.1,77,228/- towards 14 loan installments covering period march 2003 to April 2004 and every month Rs.500/- was also debited towards cheque bouncing charges in all total Rs.7,000/-. Respondent no.1/complainant did not deposit installments from the month May 2004 to January 2006 as such he did not deposit even 50% of total 35 installments payable thus // 11 // committed default of grave nature in repayment of loan. Further in all the 14 cases of repayment installment cheques had dishonored as a result cheque bouncing charges were deposited by the respondent 1/complainant which fact reflects his regular defaulting conduct. The relevant provision in case of default, as per clause 19 of the loan agreement (document no B-8 to B-12) is as under;
19. Determination of the agreement:
"In case the Borrower shall during the continuance of this agreement do or suffer any of the following acts or things, viz. either A. fail to pay any of the installments or additional finance charges or other amounts within the stipulated time under this agreement whether demanded or not; B. allows any cheque issued in discharge of a liability under the agreement to be dishonored; C. become insolvent or compound, with its creditors; D. the Borrower shall pass a resolution for voluntary winding up or shall have a petition for Winding up presented against it or if a Receiver shall be appointed for its undertaking; E. pledge or mortgage or hypothecate or sell or attempt to sell or part with possession of or otherwise alternate or transfer the vehicles; F. do or suffer any act or thing whereby or in consequence of which the vehicles may be distrained or taken in execution under legal process or by any public authority; G. fail to keep the first scheduled property comprehensively insured during the period of the agreement; H. failed to pay the Government or any public authority any taxes or charges or dues in respect of the vehicles. I. breaks or failed to perform or observe any conditio0ns on its part herein contained including unauthorized removal or secretion of the vehicles in any manner.
a) On the occurrence of any such event, the rights of the Borrower under this agreement shall forthwith stand determined ipso facto without any notice to the borrower and all installments previously paid by the borrower shall be reckoned to the credit of the Borrower. The Company shall, thereupon, immediately on the // 12 // occurrence of the event giving rise to the determination of this agreement, be entitled to enter any place or places where the articles may then be, remove or retake possession of the same. The Company shall also be entitled to sell the articles without the intervention of Court either through private sale or through public auction or in such other manner as the Company may deem fit. In the event that the Company may deem fit."
In terms of aforesaid provision, due to continuous defaults committed by the respondent 1/complainant in repayment of monthly installments from the month of May 2004 onward, the appellant had the right to repossess the questioned vehicle even without giving any notice to the borrower. The respondent 1/complainant had entered into the loan agreement with the appellant finance company after duly understanding its terms & conditions, and since there was no evidence contrary to the said fact, as such he was bound by it and he was also aware about its consequential & anticipated event of default i.e. repossession of the questioned vehicle. Respondent-1/complainant had the opportunity to clear off outstanding dues in a reasonable period after the defaulted installment due on 15th May 2004 but he continued in default thereafter. Under such situation if the appellant finance company repossessed the questioned vehicle on 20.07.2004 two months after the defaulted installment i.e. 15th may2004 and sold the same in order to recover its outstanding loan dues, then it could not be held to have committed deficiency in service, as alleged by the respondent-1/complainant The respondent-1/complainant can not // 13 // derive benefit out of his own defaulting act. Learned District Forum arrived at an erroneous conclusion in awarding compensation to the defaulting respondent-1/complainant, therefore the impugned order is not sustainable.
19. Appellant relied upon case of Shrinivas vs. Mahindra Finance [2011] 3 CPR 113 (NC) 113. Whereby Hon'ble National had held that seizure of vehicle under agreement for default in payment of installment can not be considered as deficiency in service. In the facts of that case the complainant repeatedly defaulted in payment of installments and despite giving reasonable opportunity to discharge his loan liability but he failed so the vehicle was seized, In the instant case though facts are bit different but underlying principle is squarely applicable.
20. Appellant also relied upon pronouncement of Hon'ble Supreme court in the case of The Managing Director, Orix Auto Finance (India) Ltd. vs. Shri Jagminder Singh and Anr.2006 (1) Supreme 708 wherein the matter related to repossession of a financed vehicle in terms of hire purchase agreement. The hirer became defaulter in repayment of installments after some period and did not pay the due amount despite reminders by the financer so the vehicle was repossessed in terms of hire purchase agreement and such act of // 14 // financer was held justified. In the instant case, the finance was not under hire purchase agreement but other facts about finance and repossession of the vehicle in case of default in repayment of the financed amount are similar.
21. Under the foregoing discussion and facts of the case, the appeal succeeds and is allowed. The impugned order is set aside and the complaint of the complainant is also dismissed. No order as to cost of this appeal.
(Justice S.C.Vyas) (V.K. Patil)
President Member
/07/2012 /07/2012