A.  P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION : AT HYDERABAD

FA 834 of 2012   against CC 336 of 2011    on the file of the District Consumer Forum II, Krishna District at Vijayawada.

Between :

01. M/s. Shriram Transport Co. Ltd

Branch office : D No. 76-8-1,

2nd floor, OPp. Swathi Theatre,

Crombay road, Bhavanipuram,

Vijayawada – 520012

Rep. by its authorized Signatory

Mr. K. V N Saibabu….                     Appellant/opposite party no.1

And

01. I. Prasanth Kumar, s/o Devadanam

Yerrapothulavari street, Krishna lanka

Vijayawada,

Presently residing at D.No.61-18-3/2,

Ramalingeswara Nagar, Vijayawada of

Krishna District.

02. Yarlagadda Venkateswara Rao,

S/o Kotilingam, 5 & 6 Police Station road,

Opp. Anjaneyaswamy temple, Autonagar,

Vijayawada , Krishna District… Respondents/complainants 1 & 2

03. The Additional Registering Authority,

Labbipet, Vijayawada – 520 010…. Respondent/Opp. Party no. 2

Counsel for the Appellant              :           M/s. Vakkanti Narasimha Rao

Counsel for the Respondents       :           Mr. A.V.V.S.N.Murthy for R1 and R2.

                                                                        G. P. for Sate for R.3

Coram           ;          

                              Sri R. Lakshminarasimha Rao…      Hon’ble Member

And

                                    Sri T. Ashok Kumar                ..         Hon’ble Member

Thursday, the Eighth Day of August

Two Thousand Thirteen

          Oral Order       :   ( As per Sri T. Ashok Kumar , Hon’ble Member )

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1.This is an appeal preferred by the 1st opposite party    as against the  orders dated 05.09.2012  in CC 336/2011 on the file of the District Consumer Forum II, Krishna District at Vijayawada   . For convenience sake, the parties as arrayed in the complaint are referred to as under :

2.The brief facts of the complaint  are that  the 1st complainant had purchased  a Mahindra Champion vehicle bearing Registration No. AP 16 TU 8150 after taking loan  of Rs.65,000/- under loan cum Hypothecation agreement dated 01.10.2006 repayable in 26 EMIs @ Rs.3,345/- per month and Rs.3,218/- for 27th instalment and he paid Rs.30,445/-.  The 1st opposite party seized the vehicle along with the record but did not give seizure proceedings or endorsement. The 1st opposite party issued a press note on 01.05.2008 for sale of the vehicle and it was sold for a low price of Rs.15,000/- without following the procedure as contemplated under law and authority.  An Arbitration case No. 296 of 2010 was filed by the 1st opposite party before the Sole Arbitrator for Rs.74,782/-.  Non-issuance of demand notice for instalments, illegal seizure  of the vehicle, illegal  operation of the vehicle by 2nd opposite party which, issued  a memo dt. 01.11.2011 for payment of tax , not conducting fair auction  and not accounting the sale proceeds amounts to deficiency in service and thus prayed to pay costs of the vehicle  after deducting the depreciation from the date of purchase till the date of seizure  is at Rs. One lakh, Rs.50,000/- towards compensation and Rs.18,750/- show cause notice amount, direct not to transfer the vehicle to third party and costs of legal demand   Rs.1000/- and costs.

3..OP.1  filed counter  opposing the claim of the complainant and denying the allegations made in the complaint and the brief facts of the counter  are as under :     Complainants are not consumers since the vehicle was used for commercial purpose and the District Forum has got no jurisdiction and that the complaint was barred by time.  The 1st complainant  obtained a loan of rs.65,000/- from Op.1 on financial charges of Rs.25,188/- totaling to Rs.90,188/- was payable in monthly installments and he paid Rs.30,445/-and became chronic defaulter despite several demands and  undertaking on 17.01.2008 and thus he further under took that if he failed to pay arrears of instalments he would voluntarily surrender the vehicle  to the OP 1 and also stated that he was unable to ply the vehicle due to condition of the vehicle.  He did not maintain the vehicle in roadworthy condition.   As the 1st complainant failed to comply with the undertaking, OP.1 repossessed the vehicle on 03.04.2008 as per the wish and voluntarily surrendered it and thereafter got issued  a press note on 01.05.2008 as the 1st complainant expressed his inability to ply the  vehicle and requested to sell the vehicle  and appropriate the sale proceeds to his loan account. The 1st opposite party initiated Arbitration proceedings as per the Loan cum Hypothecation agreement and when the matter was pending before the Arbitration, the complainant filed this complaint and hence there is no deficiency in service on their  part and thus prayed to dismiss the complaint.

04. The second opposite filed version resisting the complaint and contended that the first complainant in whose name the vehicle stands in the record did not lodge any complaint with OP. 2 soon after seizure of the vehicle and the first complainant himself had submitted an application dt. 11.7.2008 requesting the office of second OP to terminate the existing hypothecation agreement along with form certificate and to issue clearance of Registering  authority, Chittoor and that after verifying the said request office of Op. 2 issued certificate in the form of B register and thereafter title of the vehicle was transferred in the name of Nagaraju,  son of Laxmana, Chittor on 20.3.2009 and that records of more than one year old will be destroyed and the file relating to transaction of HPT and issuance of clearance certificate dt.7.11.2008 was destroyed on 02.10.2010 and thus prayed to dismiss the complaint.

4.Both sides  filed  evidence affidavit reiterating their respective pleadings  and  Ex. A-1 to A-18  were marked on behalf of the complainant and Ex. B -1 to B5  were  marked for the OP.

5.         Having heard both sides and considering the evidence on record, the District Forum allowed the complaint in part directing OP. 1 to pay Rs.50,000/- towards compensation to the first complainant and also Rs.2,000/- costs to the complainants and that awarded amounts carry interest @ 9% PA from the date of order giving one month time for compliance. The second opposite party is directed to take necessary steps to inform the licensing officer cum Regional  transport officer about the transfer of the vehicle No. AP 16 TU 8150 and registration of the vehicle in another’s name and transfer of the vehicle to chitoor district and the remaining reliefs were dismissed.

6.         Feeling aggrieved with the said order the OP.1   filed this appeal on several grounds and mainly contended that   the order of the District Forum is illegal and that the complaint is barred by limitation and that when arbitration proceedings were initiated prior to the filing of the complaint the complaint is liable to be dismissed as the matter became sub judice in Arbitration case No. 296/2010 and that the complainant is not a consumer and thus prayed to allow the appeal and set aside the impugned order.

7.         written arguments on behalf of OP. 1 filed, heard the counsel for OP.2, GP and there was no representation on behalf of the complainants..

8.            Now the point for consideration is whether the order of the District

Forum is vitiated either in law or on facts?

9.            There is no dispute that the  1st complainant had purchased  a Mahindra Champion vehicle bearing Registration No. AP 16 TU 8150 after taking loan  of Rs.65,000/- under loan cum Hypothecation agreement dated 01.10.2006 repayable in 26 EMIs @ Rs.3,345/- per month and Rs.3,218/- for 27th installment and he paid Rs.30,445/- and that Op. 1 seized the vehicle on the ground that 1st complainant  became defaulter. Very specifically the OP pleaded that there is an arbitration clause in the hypothecation agreement for settlement of the disputes pertaining to loan transaction by way of arbitration proceedings and that a notice under Ex. A2 was issued to refer the matter for adjudication before the sole arbitrator on adjustment of sale proceeds and therefore the complaint is not maintainable when proceedings in Arbitration case No. 296/2010 is pending before the Arbitrator for adjudication. The complainants did not controvert the said plea by rejoinder or in the evidence affidavit. Therefore, it is believed that in hypothecation agreement there is such a clause ie 10.14 for appointment of arbitrator.  Ex B2 claim petition before arbitrator discloses that arbitration OP No. 296/2010 is filed by OP. 1 against the first complainant regarding the same subject matter on or about 20.11.2010  and  the present complaint was filed on 14.11.2011. Thus, it is clear that the present consumer complaint was filed very much subsequent to the said arbitration proceedings.

10. In a  decision between National Seeds Corporation Limited Vs. M. Madhusudhan Reddy reported (2012) 2 SCC 506, the Hon’ble Supreme Court of India held  :

“ The remedy of arbitration is not only remedy available to a grower. Rather, it is an optional remedy.  He can either seek reference to an arbitrator or file a complaint under the Consumer Act. If the grower opts for the remedy of arbitration, then it may be possible to say that he cannot, subsequently, file complaint under the Consumer Act. However, if he chooses to file a complaint in the first instance before the competent Consumer Forum, then he cannot be denied relief by invoking Section 8  of the Arbitration and conciliation Act, 1996 Act. 

In view of the said decision and as the matter is in sub judice before the Arbitrator the consumer complaint is not maintainable and the complainants can pursue their remedies in the said proceedings. Since the consumer complaint is not maintainable and  is liable to be dismissed on that score  it is not desirable to go into the merits of the case.  Hence, the appeal is liable to be allowed setting aside the impugned order with a direction to the complainants to pursue their remedies in the arbitration proceedings.

11.  In the result, the appeal is allowed and the order of the District Forum is set aside with a direction to the complainants to pursue their remedies in the arbitration proceedings.  There shall be no order as to costs in the appeal.

                                                                                    MEMBER

                                                                                    MEMBER

                                                                                    DATED : 08.08.2013.