State Consumer Disputes Redressal Commission
Branch Manager vs Sunil Sahu on 7 September, 2012
CHHATTISGARH STATE
CONSUMER DISPUTES REDRESSAL COMMISSION
PANDRI, RAIPUR
Appeal No. FA/12/99
Instituted on 27.02.12
Branch Manager, Shriram Transport Finance Co. Ltd.,
Branch Kawardha, Opp. Central Bank,
Raipur Road, Ward No.20,
Dist.KABIRDHAM (C.G.) ... Appellant.
Vs.
Sunil Sahu, S/o: Shri Lakhan Sahu,
R/o: Village - Lenjakhar, Thana & Tah. Bodla,
Dist. KABIRDHAM (C.G.) ... Respondent.
PRESENT: -
HON'BLE JUSTICE SHRI S.C. VYAS, PRESIDENT
HON'BLE SHRI V.K. PATIL, MEMBER
COUNSEL FOR THE PARTIES: -
Shri Rajesh Pandey, for appellant.
Shri R.K. Bhawnani, for respondent.
ORDER
Dated: 07/09/2012 PER: - HON'BLE SHRI V.K.PATIL, MEMBER This appeal is directed against order dated 03.02.2012 of District Consumer Disputes Redressal Forum, Kabirdham / Kawardha (hereinafter referred "District Forum" for short) in Complaint Case No.17/2011, whereby the complaint was allowed with the direction to OP finance company to deliver the vehicle to the complainant within two months from the date of order in the same condition in which it was repossessed and also to pay compensation @ Rs.10,000/- per month from the date 12.06.2011 till the date of payment along with Rs.5,000/- towards mental agony and cost of proceedings Rs.2,000/-. It was also directed that the awarded amount would carry interest @ // 2 // Rs.9% p.a. from 01.07.2011 and payable within a period of two months from the date of order. OP finance company in this appeal has prayed for setting aside the impugned order.
2. Briefly stated facts of the case, as averred in the complaint, are that the complainant had purchased a truck of value Rs.10,00,000/- bearing Regn. no.CG-10 C- 1660 after having been financed for Rs.7,00,000/- by OP finance company in the month of July 2009 under a hypothecation agreement at interest rate of 12% p.a. The financed amount was repayable by way of equated monthly instalments within a period of 4 years. By June 2011 total amount Rs.5,18,000/- was to be repaid but the complainant could deposit only Rs.4,22,000/- thus Rs.95,200/- was in arrears. Complainant alleged that OP, instead of initiating recovery proceedings for the arrears amount, repossessed the vehicle forcibly from the custody of his driver without any notice and kept in its possession unauthorizedly. Complainant averred that he used to earn Rs.3,000/- per day through the financed truck by transporting material from Bauxite mines as such he was put to loss @ Rs.3,000/- per day due to repossession of the vehicle. He had sent notice dated 16.06.2011 through his advocate to OP which was not replied, so that necessitated him to file consumer complaint. Complainant prayed before the District Forum seeking direction to OP to deliver the repossessed truck in running condition and to pay // 3 // compensation @ Rs.3,000/- per day from 12.06.2011 till delivery of possession and Rs.20,000/- towards mental agony with interest on the awarded amount and also cost.
3. OP finance company in its reply while refuting other averments of the complainant admitted that it had financed an amount of Rs.7,00,000/- to the complainant for purchase of the truck under hypothecation agreement. OP averred that the complainant defaulted in regular repayment of loan installments and did not deposit the arrears amount despite giving due intimation to him, so in terms of the loan agreement, the financed truck was repossessed. OP prayed for dismissal of the complaint.
4. Learned District Forum having perused the documents produced before it and heard arguments of parties, allowed the complaint as per the impugned order.
5. We have perused the documents on record minutely and heard arguments advanced by parties.
6. It is not in dispute that the respondent / complainant had purchased the questioned truck after having been financed by the appellant finance company under hypothecation agreement and also // 4 // that the respondent / complainant after payment of some installments defaulted in repayment of loan installments due to which the appellant finance company repossessed the truck. The only question to be considered is whether the appellant insurance company had committed deficiency in service by resorting to any unlawful action in repossession of the questioned truck?
7. Contention of the appellant finance company is that though there were outstanding loan dues on the part of the respondent / complainant still leaned District Forum did not consider it properly and allowed relief & compensation which was contrary to the provisions of the loan agreement.
8. Admittedly the respondent/complainant defaulted in repayment of loan installments in terms of clause no.5 and schedule III of the hypothecation agreement (document no.OP-2) and in the event of any such default the right of the appellant finance company has been provided in clause no.6 of the aforesaid agreement which reads as under;
6. SHRIRAM'S RIGHT ON DEFAULT:
In the event of the borrower committing any act of default, as aforesaid, then, not with standing anything to the contrary herein contained, Shriram shall be entitled at its absolute discretion to interalia:
// 5 //
(a) Call upon the Borrower to pay forthwith the outstanding balance of the said credit facilities together with interest and all sums payable by the borrower under this agreement.
(b) REPOSSESSION OF ASSET: To take possession of the hypothecated assets from whosesoever it may be and remove the hypothecated asset including all accessories, bodywork and fittings and for the said purpose, it shall be lawful for Shriram or Shriram authorized representatives, servants, officers and agents forthwith or at any time and without notice to the Borrower(s) to enter upon the premises, or garage or godown where the hypothecated assets shall be lying or kept and to take possession or recover or receive the same and if necessary to break open such place of storage; Shriram will be within its rights to use a tow-van to carry away the assets. Any damage to the land or building caused by removal or the asset shall be the sole responsibility of the Borrower(s).
(c) To take all necessary steps as fully and effectively as the Borrower could take to dispose off the said hypothecated assets of the risk and cost of the Borrower in all respects and it shall be lawful for Shriram forthwith or at any time thereafter and without notice to the Borrower to enter upon the premises or garage where the hypothecated assets shall be lying or kept and to take possession or recover and receive the same and if necessary to break open any such place of storage and shriram shall be entitled to appoint any officer or officers of Shriram or any other person authorized in this behalf of receiver of the said hypothecated assets or any part therof with power to do all things as fully and effectively as the Borrower could do and / or to sell the said hypothecated assets by public auction or private contact or otherwise dispose off the said hypothecated assets including any material thereon at the risk and costs of the Borrower in all respects with power to rescind or vary any contract for sale without being bound or answerable for any loss or diminution in value and without being bound to exercise any of the powers hereby conferred or being liable for any loss occasioned by the exercise of any such power and to give effectual receipts and discharge for the purchase money and to do all such other acts and things for completing the sale as Shriram or the receiver, shall think proper. The Borrower shall not raise any object to the regularity of any sale or other disposition made by Shriram nor shall Shriram be responsible for any loss that may arise from any act or default on the part of any broker or auctioneer or other person or body employed by Shriram or the receiver for the purpose of the sale or // 6 // disposition. Provided that the Borrower expressly agreed that Shriram in reselling the assets shall only be obliged to offer the same to persons whose business is that of dealing in assets of the same type and description as that of the asset being resold and that in the event that such asset has no resale value, a certificate to that effect from such dealer will be binding on the Borrower.
(d) In the event of there being as surplus available of the net proceeds of such sale after payment in full of the balance due to Shriram, it shall be lawful for Shriram to retain and apply the said surplus together with any money or monies belonging to the Borrower or the time being in the hands of Shriram in or under whatever accounts as far as the same shall extend against in or towards liquidation of all monies that shall be or may become due from the Borrower or from and of its group companies / associates / directors / promoters to Shriram or any of Shriram subsidiarires or group entities of Shriram Group whether solely or jointly with any other persons, firm or company by way of loans, discounted bills, letter of credit, Guarantees, charges or any other debts or liability including bill, notes, credits and other obligations current though not then due and payable or other demands legal or equitable which Shriram Group Companies may have against the Borrower or which the by law of set off or mutual credit would in any case admit along with interest thereon from the date on which any and all advance/s in respect thereof shall have been made at the rate of respective rates at which the same have been so advanced."
9. We find that in terms of clause 6(i) of the loan agreement the appellant called upon the respondent/complainant to deposit arrears amount Rs.85,839/- and Rs.1,06,957/- by way of registered letters dated 01.06.2010 and 11.01.2011 respectively and had also intimated that in case of failure to deposit the outstanding dues within 7 days, repossession of the truck would be done but still the respondent / complainant failed to clear off the aforesaid outstanding loan dues, so the appellant had very well a right to repossess the questioned tractor // 7 // in terms of clause no.6 (ii) of the agreement in a lawful manner but not by use of force in which case it would be unlawful in view of settled law position.
10. We find that the respondent/complainant has submitted a copy of the written complaint dated 14.06.2011 which was filed by his driver Devanand Jangde with the police station Kawardha wherein he stated to have been driving the questioned truck for the purpose of transporting 'Bauxite'. The driver in pursuit of his duties had taken the truck to Kawardha on 11.06.2011, where 6 persons came by a car to him & stated themselves as belonging to the appellant Sriram Finance Company. Out of those persons 3 persons allegedly snatched away his mobile phone & also Rs.4,000/-, boarded the truck, and pressurized him to take it to Bemetara. They got the truck weighed without unloading 'Bauxite' and asked him to further carry them to Charoda where they got some papers signed , dropped him there only and went away. The incident was intimated by the said driver to the owner / respondent. The truck as such was repossessed by the appellant through some unknown persons, who had not even shown any document to the respondent / complainant or his driver / representative to establish that they were the authorized agents / representatives of the appellant to repossess the vehicle which was essentially required in terms of clause 6 (b) of the loan agreement.
// 8 // Respondent / Complainant in his complaint supported by his affidavit dated 22.10.2011 has stated the fact about the aforesaid incident of repossessing the questioned truck forcibly by the appellant which was not contradicted by the appellant by any of its affidavit so in such situation, version of the respondent / complaint prevails which was also held by learned District Forum in para no.8 of the impugned order. The act of the appellant of repossessing the vehicle forcibly that too by persons without proper authority was an unlawful act and to that extent it amounted to unfair trade practice / deficiency in service. Unknown persons without any lawful authority can not be allowed to take away the mortgaged vehicle without consent and proper understanding of the owner / respondent. Though the respondent / complainant was in default in repayment of loan installments as per loan agreement and the appellant had very well right to repossess the financed vehicle but it did not entitle to adopt unlawful way. At the same time, the respondent / complainant also cannot derive benefit out of his own default.
11. Learned counsel for the appellant relied upon the case of the same appellant Shriram Transport Finance Co. Ltd Vs. Bhanupratap Singh decided by this Commission in Appeal no.12/03 and also cited case of Manager, ST. Marys Hire Purchase (P) LTD. Vs. N.A.Jose [1995]3 CPR(NC) 293, decided by Hon'ble National Commission, wherein both the // 9 // citations, though the vehicle was repossessed by the finance company due to default in repayment of loan installments but there was no case of unlawful repossession of the vehicle forcibly, whereas in the instant case the vehicle was repossessed forcibly by unknown persons without lawful authority, so the facts of the instant case being different are not applicable. Learned counsel for the appellant also cited case of Managing Director, Orix Auto Finance (India) LTD. Vs. Jagminder Singh & Anr. [2006] 2 SCC 598 whereby it was held by Hon,ble Apex court that if hire purchase agreement permits the financer to take possession of financed vehicle, there is no legal impediment on such possession being taken, of course, hirer could avail such statutory remedy as may be available. Same underlying principle is also applicable in the instant case also.
12. Learned counsel for the respondent/complainant relied upon case of M/S Tata Engineering & Locomotive co.Ltd. Vs. Shri Nathu 2011 (2) CPR 263 (NC) where under in para no.13, Hon,ble National Commission held that Banks / financing agencies should resort to procedure recognized by law to take possession of vehicles in cases where borrower may have committed default in payment of installments in stead of taking resort to strong arm tactics. In the instant case the appellant too had also resorted to unlawful tactics so the allegation made by the respondent / complainant finds weight of the cited case law.
// 10 //
13. Learned counsel for the respondent/complainant also cited case of Citicorp. Maruti Finance Ltd. Vs. Vijaylaxmi AIR 2012 Supreme Court
509. whereunder facts of the case were that due to defaults committed by the respondent/complainant in repayment of loan installments the financed vehicle was repossessed by the appellant finance company so consumer complaint was filed and learned District Forum had allowed the complaint giving relief to the complainant against which Hon,ble State Commission in the appeal preferred by the finance company, affirmed the order of learned District Forum and further allowed punitive damages Rs.50,000/-. The finance company filed Revision petition before Hon,ble National Commission which dismissed it and modified the order of state commission by setting aside additional punitive damages of Rs.50,000/- allowed by it and instead allowed Rs.10,000/- by way of cost. Finance company then approached Hon,ble Supreme Court for remedy which though was convinced with the submissions of the appellant finance company but had not granted any relief since the finance company had already accepted the decision of District Forum and had paid amounts as directed therein. However Hon,ble Apex court in para no.21 relied upon its decision in the case of ICICI Bank Ltd. Vs. Prakash Kaur (AIR 2007 SC 1349 : 2007 AIR SCW 1667) to decide the question whether the Fora below were right in holding that the vehicles had been illegally and / or wrongfully recovered by use of force from the loanees. Hon'ble Apex Court reiterated the // 11 // earlier principle that the finance company although continues to be owner of goods until ownership is not transferred to the purchaser hirer (hire purchase agreement ) but that does not entitle it to repossess the financed vehicle by use of force. Though facts of the instant case are different but the underlying principle is squarely applicable, as such the respondent / complainant does find weight in its contention to the extent that his vehicle was repossessed unlawfully by the appellant.
14. In the entirety of the case, we find that on one hand the respondent / complainant was in default in repayment of loan installments as per loan agreement and on the other hand the appellant committed deficiency in service by repossession of the financed vehicle in an unlawful way.
15. In the facts of the case and foregoing discussion, we find it just and proper to modify the impugned order suitably. The appeal succeeds in part and is therefore partly allowed. Para no 11.2 of the impugned order to the extent of allowing compensation is set aside, however cost of the proceedings as awarded by learned District Forum Rs.2,000/- will remain unaltered. Appellant will however be at liberty to recover its loan dues in terms of loan agreement in a lawful way. No order as to the cost of this appeal.
(Justice S.C.Vyas) (V.K. Patil)
President Member
/09/2012 /09/2012