State Consumer Disputes Redressal Commission
Shriram City Union Fin. Ltd vs Amarjeet Singh Bajaj on 23 April, 2008
IN THE STATE COMMISSION:DELHI IN THE STATE COMMISSION: DELHI (Constituted under Section 9 of The Consumer Protection Act, 1986) Date of Decision: 23.04.2008 Appeal No. A-08/236 (Arising out of Order dated 05.02.2008 passed by the District Consumer Forum, Central, Maharana Partap Bus Terminal, Mezzanine Floor, Kashmere Gate, Delhi in Complaint Case No. 303/07) M/s. Shriram City Union Fin. Ltd. Appellant 18/5, 2nd Floor, Amar Chamber, through Arya Samaj Road, Karol Bagh, Mr. Sourabh Leekha, New Delhi 110005. Advocate Through Its Authorized Representative Sh. Shyam Narayan Chaudhary Versus Mr. Amarjeet Singh Bajaj Respondent S/o Sh. NiranjanSingh, R/o 12/4, Punjabi Bagh Extension, New 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, President (Oral)
1. This is a case of taking forcible possession of the vehicle by the appellant for the purpose of recovering two unpaid instalments or the dishonored cheque of Rs.
52,000/-. On account of illegal act as well as selling at much lower value than its actual value, the appellant has been vide impugned order dated 5.02.2008 passed by the District Forum, directed to pay a sum of Rs. 1,00,000/- as compensation on the basis of assessment of value of truck by the proposed buyer for Rs. 1,90,000/- minus outstanding amount of Rs. 68,360/- as on date 01.12.2002 and also to pay a sum of Rs. 3,000/- as cost of litigation. The limited grievance of the appellant through this appeal is against the value assessed by the buyer.
2. The allegations of the respondent leading to the impugned order, in brief, were that he obtained loan facility from appellant on 17.07.98 to the tune of Rs. 2,75,000/- in respect of second hand truck No. HR-38-1886. The respondent paid instalment regularly and as per the statement of appellant dated 17.09.2000 only a sum of Rs. 68,360/- remained unpaid. However, after September 2000 due to certain constraints, respondent could not pay the amount. In November 2002, appellant took possession of the truck forcibly. The respondent asked appellant to resell the vehicle so that respondent could pay the outstanding amount as one Mr. Mittal was willing to purchase the vehicle for Rs. 1,90,000/- but appellant sold it for Rs.
1,30,000/-. Inspite of lifting the vehicle forcibly appellant demanded a sum of Rs. 52,000/- more. In order to harass and blackmail the respondent, appellant filled a sum of Rs. 52,000/- in one of the blank cheques and got it dishonoured. Appellant filed criminal complaint in the Court of Criminal jurisdiction under Section 138 Negotiable Instrument Act. Respondent termed the act of appellant i.e. lifting of vehicle forcibly as deficiency in service on the part of appellant. The respondent prayed for appropriate direction against the appellant.
3. In its defence the appellant took the plea that at the time of repossession of the vehicle, total outstanding of the balance amount was Rs. 1,83,697/- and not Rs. 68,360/- as pleaded by the respondent.
The market value of the vehicle was Rs. 1,30,000/-. Appellant further pleaded that respondent issued a cheque for Rs.
52,000/- in his favour in discharge of his liability towards full and final settlement which was dishonored on presentation. Appellant sold it at Rs. 1,30,000/- available best price.
4. In identical cases we have taken a view which has been upheld by the National Commission in Citi Corp. Finance Vs S. Vijayalaxmi and subsequently confirmed by the Honble Supreme Court in ICICI Bank Vs Prakash Kaur (Arising out of SLP(Crl.) 15/2007 SCC that for recovery of dues either through a loan agreement or hypothecation or hire purchase agreement taking the possession of the object or the articles against which the loan agreement is made, is illegal and is not permissible by law and the consumer has to be compensated adequately for the mental agony, harassment, public humiliation, emotional suffering, physical discomfort and financial loss.
5. Observations of the National Commission in Revision Petition No. 737/2005 titled Citicorp Maruti Finance Ltd. Vs. S. Vijaylaxmi are relevant, pithy and are as under:-
When a vehicle is purchased by a person (consumer) by borrowing money from the money lender/financier/banker, the consumer is the owner of the vehicle and not the money/lender/financier/ banker, unless the ownership is transferred.
In a democratic country having well established independent Judiciary and having various laws it is impermissible for the money lender/financier/banker to take possession of the vehicle for which loan is advanced, by use of force.
Legal or judicial process may be slow but it is no excuse for employing musclemen to repossess the vehicle for which loan is given. Such type of instant justice cannot be permitted in a civilized society where there is effective rule of law. Otherwise, it would result in anarchy, that too, when the borrower retorts and uses the force.
A hire-purchase agreement is a normal one under which owner hires goods to another party called the hirer and further agrees that the hirer shall have an option to purchase the chattel when he has paid a certain sum, or when the hire-rental payments have reached the hire-purchase price stipulated in the agreement.
As against this, when a person desires to purchase vehicle/goods and not having sufficient money on hand, borrows the amount needed from a money lender/financier/banker and pays it over to the vender of the vehicle, the transaction between the consumer and the money lender will unquestionably be a loan transaction. In such a case the vehicle purchased by the consumer is registered in the name of the consumer and remains at all material times so registered in his name. The consumer remains qua the world at large the owner and remains in possession of the vehicle. BY an agreement the vehicle can be given as security for the loan advanced. IN such a case, the right to seize the vehicle is merely a licence to ensure compliance with the terms of the so called hire purchase agreement. (Re. AIR 1966 SC 1178).
It is to be stated that many financiers/banks are in race for giving loan for purchase of vehicles or various articles. After giving loan and taking interest in advance, the polite behaviour changes because of the documents which are signed on the dotted lines by the borrower. On occasions, borrower suffers harassment, torture, or abuses at the hands of the musclemen of the money lender. Such a behaviour is required to be prohibited and the process of repossession is required to be streamlined so as to fit in cultural civilized society. Let the rule of law prevail and not that of jungle where might is right.
In such cases even the police does not register the FIR or help the aggrieved consumer. In the present case, nothing has been done by the Police for years despite the complaint.
IN any case, taking of pound of flesh is required to be discouraged.
In case when the vehicle was repossessed by use of force, and thereafter, sold without informing the complainant, in our view, it would be unjust to direct the consumer to pay the balance amount, as alleged by the financer to be outstanding. If such a relief is given to the money lender/financer, it would be unjust enrichment to the money lender and against equity. The question may arise for consideration only if the Complainant willingly surrenders the vehicle for sale and for recovery of the outstanding amount. Then, in such cases, consumer dispute would not arise.
Where the vehicle is forcefully seized and sold by the money lender/financer/banker it would be just and proper to award reasonable compensation to the Complainant. Reasonable compensation would depend upon facts of each case.
6. Some of our conclusions in such like cases are as under:-
(i) Hire-Purchase agreement or loan agreement or even hypothecation contract are contracts of civil nature and any right to any of the parties to the contract arising from breach of the term of the contract has to be enforced through legal process i.e. with the intervention of the Court and not through use of force, coercion.
Such a methodology of enforcing ones right hits at the foundation of rule of law and civilized society. No society governed by rule of law can allow an individual to take law in his hands.
(ii) Use of force through musclemen and goons for seizing the goods or recovering the dues by publically humiliating, including physically beating and causing injuries in the public or at residence or at official or public place is serious violation of human rights as every human being has a right to be treated with dignity and respect. That is why every civilized society is governed by rule of law.
(iii) Merely because a person has, in terms of contract or by virtue of any law or Hire-Purchase Act or being a Hypothecatee, right to seize or repossess the goods like vehicles, does not mean that he can arrogate the powers of the Court and be a Judge and pass the decree and execute the same. He has to enforce his right through civil, legal process and not through any other method and such an act amounts to deficiency in service.
(iv) Whenever the financer chooses to take possession of the vehicle and sells or auctions it, it has to refund the contribution and payment made by the person concerned after adjusting the unpaid instalment in the sale proceeds that too 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 and financer or Bank cannot be allowed encashment of post dated cheques as the vehicle or for that purpose any goods against which loan was advanced had been seized and the consumer inspite of being owner of the vehicle is no more in possession of the goods for which he had raised the loan nor is he in a position to enjoy the fruits. With seizure and sale of the vehicle or goods the contract stands terminated and the loan amount stands recovered.
(v) In such a situation financer recovers the dues accruing from the unpaid instalments and the principal by seizing and selling the vehicle. Hence all the post dated cheques have to be returned. In case it intends to return the vehicle, it can do so on payment of unpaid instalments due by that date.
(vi) Further the sale price 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 off at throwaway or at half or little more value to the known people or friends or by way of an auction. That is why we have taken the view that cost i.e. sale price of the vehicle shall be assessed and adjusted by way of depreciated value @ 5% per year in case of passenger vehicle and @10% in case of commercial vehicle.
(vii) Further whenever financer or Bank chooses to repossess the vehicle by employing musclemen or goons as recovery agents and without being equipped with the order from the Civil Court such financer has to compensate the consumer on account of mental agony, harassment, humiliation, emotional suffering and injury suffered by the consumer and insult he and his family members suffer.
7. We have also taken a view that whenever a financier or a bank chooses to take the possession of the vehicle against which the loan was advanced, the contract stands terminated and it is not entitled not only to encash the post-dated cheques but is also liable to repay the margin money paid by the consumer towards the cost of the vehicle as the consumer enjoys the fruits of the objects or the articles against which he has taken the loan. Particularly it is the person who has received the loan, is the owner of the vehicle and not the company who has financed. In such kinds of cases we have been awarding compensation of Rs. 50,000/, over and above the amount of the margin money.
8. The preliminary objection of the counsel for the appellant that the complaint was time barred inasmuch as that the complaint was filed after four years of recovery of possession of the vehicle is devoid of substance as such type of grievance is of subsisting and continuing nature and unless and until the grievance of the consumer is redressed either through written communications or approaching the service provider or the financier by the visits, the cause of action continues. Wherever there is a communication between the parties, the cause of action is available from the last date of communication between the parties including the legal notice.
9. Since the very act of the appellant was illegal, such a plea even otherwise was not available as illegality cannot be allowed to be perpetuated.
10. In view of the foregoing reasons, we do not find any merit in the appeal and dismiss the same.
11. The impugned order shall be complied with within one month from the date of receipt of this order.
12. Bank Guarantee/FDR, if any furnished by the appellant, be returned forthwith.
13. 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 Record room.
14. Announced on 23rd day of April, 2008.
(Justice J.D. Kapoor) President (Rumnita Mittal) Member ysc