Order by:
Sh.Amrinder Singh Sidhu, President
1. The complainant has filed the instant complaint under section 12 of the Consumer Protection Act, 1986 (as amended upto date) on the allegations that the Opposite Party is running its business of finance and used to advance the loan to the needy persons on the basis of hypothecation of vehicle. The Complainant alleges that he borrowed a loan amount of Rs.3,15,000/- from the Opposite Parties against the hypothecation his vehicle bearing No.PB-01-7870 bearing loan agreement No.XSHUMOG00001441778 and said loan was agreed to be repaid alongwith interest in 47 monthly installments amounting to Rs.9720/- each. Further alleges that the Complainant used to pay the said installments to the Opposite Parties on regular basis, but it is to the utter surprise of the Complainant when some employees of Opposite Parties forcibly taken the possession of said vehicle without explaining any thing to the Complainant. Further alleges that on 15.12.2017 the Opposite Parties issued a notice to the Complainant stating that an amount of Rs.1,80,851/- stands outstanding against the Complainant and was directed to deposit the said amount within 7 days, whereas the Complainant used to pay the installments time to time to the Opposite Parties. Moreover, on 13.12.2017, the Complainant deposited Rs.25,000/- to the Opposite Parties vide receipt No.B10142975321 daed 13.12.2017 and as such, the Complainant has repaid more than half of the loan installments. Said vehicle was the only source of livelihood of the Complainant and his family and due to the said wrongful act on the part of the Opposite Parties, the Complainant and his family lost their livelihood. Now the Complainant has surprised to know that the Opposite Party has sold out the vehicle in question without mentioning the sale consideration and without settling any account with the Complainant illegally. Due to the aforesaid act and conduct of the Opposite Parties, there is deficiency in service and Unfair Trade Practice on the part of the Opposite Parties and as such, the Complainant is left with no other alternative but to file the present complaint. Vide instant complaint, the complainant has sought the following reliefs.
a) Opposite Parties may be directed to pay Rs.4 lakhs on account of sale consideration of Tempo Traveler bearing No.PB-01-7870 and also pay rs.50,000/- to the Complainant on account of loss of income and livelihood and also to pay Rs.50,000/- on account of compensation due to mental tension and harassment caused by the complainant or any other relief to which this District Consumer Commission, Moga may deem fit be also granted.
2. Opposite Parties appeared through counsel and contested the complaint by filing the written version taking preliminary objections therein inter alia that the complaint is not maintainable. In fact, the Complainant took two (group) vehicle loans of Rs.3,15,000/- and Rs.4,50,000/- vide loan agreement of XSHUMOG00001441778 and XVFPMOG00001292394 by hypothecating his vehicle No.PB-01-7870 and PB-29U-9978 and both the loans were to be repaid by the Complainant to be repaid by the Complainant in 47 monthly instalments of Rs.9720/- each total amounting to Rs.4,56,840/- and 2nd loan monthly instalment was Rs.12,950/- total amounting to Rs.6,08,650/- and both separate agreements bearing loan agreement of XSHUMOG00001441778 and XVFPMOG00001292394 between the parties were executed. It is further submitted that as per the agreements, the Complainant was bound to repay the loan amounts and as per the clause 11 of the agreement, it was agreed between the parties that in case of default of payment of loan amount, the Opposite Parties are entitled to take repossession of the financed vehicle. The Complainant has failed to pay the entire loan amount to the Opposite Parties and as such, as per the agreement, the vehicle of the Complainant as taken over by the Opposite Party in a legal manner. It is further submitted that said repossessed vehicle bearing No.PB-01-7870 was sold for a sale consideration of Rs.2 lakhs and after deducting the said loan amount, if any amount was due towards the Opposite Parties, the same be adjusted in another loan mentioned above and hence, there is no deficiency in service on the part of the Opposite Parties. On merits, Opposite Parties took almost the same and similar pleas as taken by them in the preliminary objections. Remaining facts mentioned in the complaint are also denied and a prayer for dismissal of the complaint was made.
3. In order to prove his case, the complainant has tendered into evidence his affidavit Ex.C1 alongwith copies of documents i.e. copy of statement Ex.2, copy of receipt Ex.C3, copy of letter Ex.C4, copy of legal notice Ex.C5, copies of postal receipts Ex.C6 to Ex.C8, copy of notice Ex.C9, copy of aadhar card Ex.C10 and closed the evidence.
4. On the other hand, to rebut the evidence of the complainant, Opposite Parties tendered into evidence the affidavit of Sh.Sukhwinder Singh Ex.Ops1 alongwith copies of documents i.e. copies of loan agreements Ex.Ops2 and Ex.Ops3, copies of statement of account Ex.Ops4 and Ex.Ops5, copies of repossession letters Ex.Ops6 to Ex.Ops9 and closed their evidence.
5. We have heard the ld.counsel for the parties and gone through the documents placed on record.
6. Ld.counsel for the complainant has mainly contended that the written version filed on behalf of Opposite Parties has not been filed by an authorized person. Therefore, the written version so filed is not maintainable. Opposite Parties is limited Company and written version has been filed on the basis of special power of attorney given to ld.counsel for the Opposite Party. Ld.counsel for the Complainant further contended that he borrowed a loan amount of Rs.3,15,000/- from the Opposite Parties against the hypothecation his vehicle bearing No.PB-01-7870 bearing loan agreement No.XSHUMOG00001441778 and said loan was agreed to be repaid alongwith interest in 47 monthly installments amounting to Rs.9720/- each. Further contended that the Complainant used to pay the said installments to the Opposite Parties on regular basis, but it is to the utter surprise of the Complainant when some employees of Opposite Parties forcibly taken the possession of said vehicle without explaining any thing to the Complainant. Ld.counsel for the Complainant contended that on 15.12.2017 the Opposite Parties issued a notice to the Complainant stating that an amount of Rs.1,80,851/- stands outstanding against the Complainant and was directed to deposit the said amount within 7 days, whereas the Complainant used to pay the installments time to time to the Opposite Parties. Moreover, on 13.12.2017, the Complainant deposited Rs.25,000/- to the Opposite Parties vide receipt No.B10142975321 daed 13.12.2017 and as such, the Complainant has repaid more than half of the loan installments. Said vehicle was the only source of livelihood of the Complainant and his family and due to the said wrongful act on the part of the Opposite Parties, the Complainant and his family lost their livelihood. Now the Complainant has surprised to know that the Opposite Party has sold out the vehicle in question without mentioning the sale consideration and without settling any account with the Complainant illegally. Due to the aforesaid act and conduct of the Opposite Parties, there is deficiency in service and Unfair Trade Practice on the part of the Opposite Parties
7. On the other hand, ld.counsel for the Opposite Parties mainly repelled the aforesaid contention of the ld.counsel for the Complainant on the ground that the Complainant took two (group) vehicle loans of Rs.3,15,000/- and Rs.4,50,000/- vide loan agreement of XSHUMOG00001441778 and XVFPMOG00001292394 by hypothecating his vehicle No.PB-01-7870 and PB-29U-9978 and both the loans were to be repaid by the Complainant to be repaid by the Complainant in 47 monthly instalments of Rs.9720/- each total amounting to Rs.4,56,840/- and 2nd loan monthly instalment was Rs.12,950/- total amounting to Rs.6,08,650/- and both separate agreements bearing loan agreement of XSHUMOG00001441778 and XVFPMOG00001292394 between the parties were executed. It is further submitted that as per the agreements, the Complainant was bound to repay the loan amounts and as per the clause 11 of the agreement, it was agreed between the parties that in case of default of payment of loan amount, the Opposite Parties are entitled to take repossession of the financed vehicle. The Complainant has failed to pay the entire loan amount to the Opposite Parties and as such, as per the agreement, the vehicle of the Complainant as taken over by the Opposite Party in a legal manner. It is further submitted that said repossessed vehicle bearing No.PB-01-7870 was sold for a sale consideration of Rs.2 lakhs and after deducting the said loan amount, if any amount was due towards the Opposite Parties, the same be adjusted in another loan mentioned above and hence, there is no deficiency in service on the part of the Opposite Parties.
8. Perusal of the further contention of the ld.counsel for the shows that the written version filed on behalf of the Opposite Parties has not been filed by an authorized person. Therefore, the written version so filed is not maintainable. The Opposite Party is limited Company and written version has been filed on the basis of special power of attorney given to ld.counsel for the Opposite Party. In this regard, Hon’ble Supreme Court of India in a judgment (2011)II Supreme Court Cases 524 titled as “State Bank of Travancore Vs. Kingston Computers India Pvt. Ltd.” and in para no.11 of the judgment, has held that
“the plaint was not instituted by an authorized person. On the plea that one authority letter dated 02.01.2003 was issued by Sh. R.K.Shukla in favour of Sh. A.K.Shukla. Further plaint failed to place on record its memorandum/articles to show that Sh. R.k.Shukla has been vested with the powers or had been given a general power of attorney on behalf of the Company to sign, verify and institute the suit on behalf of the Company.”
Similar proposition came before the Hon’ble Delhi High Court in “Nibro Ltd. Vs. National Insurance Co. Ltd.”, 2 (2005) 5SCC 30 that the
“bear authority is not recognized under law and ultimately, it was held that the plaint was not instituted by an authorized person. Here also appellant has not placed on record any resolution passed by any Board of Director in favour of Mr. Soonwon Kwon and that he was further authorised to delegate his power in favour of any other person. Further there is no memorandum/articles of the Company to show that Mr. Soonwon Kwon is one of the Director of the Company. In the absence of that evidence on record we cannot say that the special power of attorney given by Director Soonwon Kwon is a competent power of attorney issued in favour of Sh. Bhupinder Singh. In the absence of any resolution of the Company or any memorandum/articles of the Company to show that Sh. Soonwon Kwon is Director and that he was further authorised to issue power of attorney in favour of Sh. Bhupinder Singh.”
Recently our own Hon’ble State Commission, Punjab Chandigarh in FAO No.1235 of 2015 decided on 25.01.2017 in case titled as L.G.Electronics India Private Limited Vs. Sita Ram Chaudhary also held that the plaint instituted by an unauthorized person has no legal effect.
9. For the sake of arguments, for the time being, if the written reply filed by Opposite Parties is presumed to be correct, the next plea raised by Opposite Parties is that admittedly, the Complainant has raised two (group) vehicle loans of Rs.3,15,000/- and Rs.4,50,000/- vide loan agreement of XSHUMOG00001441778 and XVFPMOG00001292394 by hypothecating his vehicle No.PB-01-7870 and PB-29U-9978 and both the loans were to be repaid by the Complainant to be repaid by the Complainant in 47 monthly instalments of Rs.9720/- each total amounting to Rs.4,56,840/- and 2nd loan monthly instalment was Rs.12,950/- total amounting to Rs.6,08,650/- and both separate agreements bearing loan agreement of XSHUMOG00001441778 and XVFPMOG00001292394 between the parties were executed.
10. It is not disputed that with regard to the second loan agreement bearing No.XVFPMOG00001292394 of vehicle No.PB-01-7870, there was no dispute with the Complainant. The only dispute arises between the Complainant and Opposite Parties is with regard to loan agreement bearing No. XSHUMOG00001441778 against which the vehicle No.PB-01-7870 is hypothecated. In this loan agreement, the Complainant raised a sum of Rs.3,15,000/- from the Opposite Parties which was to be repaid in 47 monthly instalments of Rs.9720/- each total amounting to Rs.4,56,840/- and it is not disputed that this loan agreement was executed on 30.06.2015 with first instalment date 01.8.2015 and last instalment date was 01.06.2019. Moreover, as per the statement of account duly furnished by the Opposite Parties themselves Ex.OP5, there was outstanding balance of Rs.1,70,672/- towards the Complainant as on 13.07.2018 and as such, more than half of the loan amount was already repaid by the Complainant to the Opposite Parties and before the last date of instalments i.e. 01.06.2019, the Opposite Parties forcibly and illegally repossessed the vehicle of the Complainant whereas the loan date was to be exhausted as on 01.06.2019. On the other hand, ld.counsel for the Opposite Parties has contended that said repossessed vehicle bearing No.PB-01-7870 was sold for a sale consideration of Rs.2 lakhs and after deducting the said loan amount, if any amount was due towards the Opposite Parties, the same be adjusted in another loan mentioned above, but we do not agree with the aforesaid contention of the ld.counsel for the Opposite Parties. First of all, before the due date of the last repayment of the instalments i.e. 01.06.2019 the Opposite Parties can not repossess the hypothecated vehicle of the Complainant. Moreover, the perusal of the documents Ex.Ops6 to Ex.OP7 shows that these documents are allegedly for authorisation of letter of repossess the vehicle. The bare perusal of these documents shows that these are undated and printed documents and it appears that these documents are printed proforma which are taken by the Opposite Parties from the Complainant duly signed at the time of sanction the loan to the Complainant and now after repossession of the vehicle in question, the Opposite Parties have used the same which is not correct and legal one. The second contention of the Opposite Parties is that they have repossessed vehicle bearing No.PB-01-7870 was sold for a sale consideration of Rs.2 lakhs and after deducting the said loan amount, if any amount was due towards the Opposite Parties, the same be adjusted in another loan mentioned above, whereas there are two separate loan agreements of two separate vehicle and the Opposite Parties at their sweet will can not club these two loan agreement with each other. Moreover, the Opposite Parties has nowhere alleged that the Complainant ever remained defaulter of second loan and as such, the Opposite Parties can not adjust the remaining sale price of the first vehicle/ agreement with second loan agreement.
11. Undoubtedly, the complainant got the vehicle financed from Opposite Parties and in this regard, loan agreement was executed between the parties recording the terms and conditions thereof. Clause 11 of the loan agreement which deals with repossession, termination and company's other rights, which is reproduced as under :-
REPOSSESSION, TERMINATION AND COMPANY'S OTHER RIGHTS:
a) On the occurrence of any of the aforesaid Events of Default contained in Article 10, the rights of the Borrower over the Asset shall stand determined void ipso facto without any notice and the Borrower shall be bound to deliver forthwith the Asset to the Company in the same condition in which it was originally received by him with all accessories/modifications done by Borrower whatsoever (in the case of vehicle), ordinary wear and tear excepted. Failure or refusal of the Borrower to surrender the Asset shall constitute unlawful retention for which the Company shall be entitled to initiate criminal action, without prejudice to other rights/ legal remedies available to the Company.
i) Notice: In case of any default in repayment including an occurrence of any of the aforesaid Events of Default and/or failure to surrender the Asset as mentioned herein above, the Company shall cause a 7 day notice to be issued to the borrower at his address as registered with the Company. The notice shall be deemed to be served on the Borrower within 24 hours of posting the notice by the Company even if the notice so served returns unserved for whatever reason and the confirmation from any authorized officer of the Company for having posted the notice to the Borrower shall be final and binding in this regard.
ii) Repossession: In case the Borrower fails to make payment of the dues or surrender the asset to the Company and/or rectify the breach of the terms of the contract in compliance with the notice mentioned above, to the satisfaction of the Company, without prejudice to its other rights available under the Agreement, the Company may be entitled to take possession of the Asset (referred to as" repossession") and for the said purpose, enter any place or places where the Asset may then be or is likely to be, remove or take possession of the same. The Borrower agrees and undertakes not to prevent or obstruct the Company from exercising its right of repossession of the Asset in the event of default by the Borrower. It shall be the sole responsibility of the Borrower to remove any goods (perishable, non-perishable) available in the Asset at the time of its repossession by the Company and the Borrower shall make his/their own arrangements to transfer such goods from the said Asset to and transport it back at his own cost and expenses and the Company shall not be liable to the Borrower for any damage, depreciation value, loss in transit etc. or for any damages arising on account of non-delivery of the same to anyone during or after such repossession. The Company shall not be responsible for any loss or destruction and damage to the hypothecated Asset, whether by theft, fire, rain, flood, earthquake, lightening, accident or other case whatsoever to the repossessed Asset, notwithstanding anything to the contrary contained in Section 151 of the Indian Contract Act.
iii) Post Repossession: Upon taking possession of the vehicle, as a final chance to rectify the default, a 7 days notice shall be caused upon by the Company to the Borrower to repay the termination price (which includes the charges and expenses incurred for taking possession of the vehicle including the legal expenses). The notice shall be deemed to be served on the Borrower within 24 hours of posting the notice by the Company even if the notice so served returns unserved for whatever reason and the confirmation from any authorized officer of the Company for having posted the notice to the Borrower shall be final and binding in this regard.
iv) Waiver of Notice: The said notice(before and after taking possession of the Asset) mentioned here in above can be waived at the discretion of the Company, in case the Company is of opinion that such action is likely to jeopardize the Asset or the interest of the Company.
v) On payment of the termination price within the time and manner stipulated in the notice mentioned above, the Company shall return the repossessed Asset to the Borrower or his authorized representative to be specified in writing by the Borrower. In case of failure on the part of the Borrower to make payment of the termination price within the time and manner stipulated in the notice mentioned above, the Company shall sell, dispose of the asset in the manner it may deem fit without any further notice to the Borrower notwithstanding exercising any other legal remedy or right against the Borrower available to it. The Borrower hereby irrevocably authorizes the Company to sell/transfer/assign the Asset without the intervention of Court either by private treaty or public auction or in such other manner as the Company may deem fit. The Borrower shall not be entitled to raise any objection regarding the regularity of the sale and/or actions taken by the Company nor shall the company be liable/responsible for any loss that may occasion by the exercise of such power and/or may arise from any act or default on the part of any broker or auctioneer or other person or body engaged by the Company for the said purpose.
vi)The Borrower shall forthwith deliver to the Company all original certificates and policies of insurance including certificate of Registration (where the Asset is a vehicle), keys and all other documents relating to the Asset. In the event of the failure of the Borrower to do so, the Company shall be entitled to immediately apply to the concerned authorities and obtain the documents afresh, expenses for which shall be charged to the account of the Borrower and shall form part of the amount payable on the determination of this Agreement. The Borrower agrees and undertakes that he shall not raise any objection for such application by the Company.
vii) Upon sale of the Asset and adjustment of the sale proceeds towards the Loan dues (which includes the expenses/charges incurred for parking, sale of vehicle, in addition to the termination price) there is any shortfall amount due and payable, the same shall be made good by the borrower and/or the Guarantor.
Clause 11 of the loan agreement deals with re-possession, termination company's other rights defines re-possession as Clause 11(iii) lays down that upon taking possession of the vehicle, as a final chance to rectify the default, a 7 days notice shall be caused upon by the company to the borrower to repay the termination price (which includes the charges and expenses incurred for taking possession of the vehicle including the legal expenses). The notice shall be deemed to be served on the borrower within 24 hours of posting the notice by the company even if the notice so served returns un-served for whatever reason and confirmation from any authorized officer of the company for having posted the notice to the borrower shall be final and binding in this regard.
It is, thus, plain from perusal of Clause 11 of loan agreement that in case of default in making payment by borrower, the lender-company could repossess the vehicle after giving notice in that regard. Clause 11(iv) deals with waiver of notice that notice can be waived at the discretion of the company , in case the company is of opinion that such action is likely to jeopardize the asset or the interest of the company. Undoubtedly, OP has right to re-possess the vehicle by giving notice. In this regard, even Apex Court has held in "ICICI Bank Ltd versus Prakash Kaur & Ors", reported in 2007 AIR (SC) 1349 that bank cannot take possession of vehicle by hiring musclemen. The recovery of loan or seizure of vehicle could be done only through legal means. Bank cannot employ musclemen to take possession by force - guidelines for advance and recovery of loan have been given by Apex Court in the cited authority. The Apex Court gave suggestions that chronic defaulters should mean a default of a maximum of three months, if intermittent payments have been made.
12. Perusal of the record shows that no such three months notice has ever been served by the Opposite Parties upon the to take the possession of the hypothecated vehicle. No opportunity of being heard has been given to complainant before seizing the vehicle in this case, when it was in its way near to Phagwara (Punjab). The vehicle was seized from the drive of the vehicle by Opposite Parties. How could representative of complainant surrender the vehicle without knowledge of the complainant is not understandable. Since the due date was still exists till 01.06.2019, but before this date, the muscle men of the Opposite Parties repossessed the vehicle of the Complainant forcibly and illegally and sold at throw away price of Rs.2 lakhs without the knowledge of the Complainant, hence even issuance of pre-sale letter by Opposite Parties is uncalled for and opportunity should have been given to complainant to deposit the amount and in case of his chronic default only as per direction of Apex Court, this pre-sale notice of the vehicle should have been issued to him. OP is entitled to take repossession of hypothecated vehicle in a legal course only and not with use of force as held by Apex Court in the above authority. In addition to that, we further find that Opposite Parties sold the vehicle in the absence of the complainant. There is no procedure placed on record with regard to auction of the vehicle by Opposite Parties. There is no public notice on the file issued for auction of this vehicle for inviting the maximum number of bidders to earn maximum bid thereof at the instance of Opposite Parties. The auction has been done in surreptitious manner by Opposite Parties, which is also deficient act on behalf of Opposite Parties. The presence of complainant should have been sought at the time of auction of the vehicle and everything should have been done in his presence in a transparent manner. This has not been done in this case by Opposite Parties and Opposite Parties single handedly sold the vehicle without any public notice in a hushed up manner. There is no publication of auction in any document on the file. The vehicle was sold by Opposite Parties in an unauthorized manner in this case. Opposite Parties have revealed sale of vehicle for Rs.2 lakhs. The remaining sale amount has been credited to the other account of the complainant by Opposite Parties. No auction proceeding brought on the file by Opposite Parties and even name of the auction purchaser is not indicated anywhere on the record by Opposite Parties. Hence, we can safely infer that Opposite Parties indulged in unfair trade practice in an arbitrary manner just to cause loss to the complainant only.
13. Keeping in view the aforesaid facts and circumstances of the case, the complaint filed by the complainant is allowed partly and the Opposite Parties are directed to refund the sale price of the hypothecated vehicle amounting to Rs.2 lakhs (Rupees Two lakhs only) to the Complainant alongwith interest @ 8% per annum from the date of filing the present complaint i.e. 20.03.2018 till its actual realization. However, the Opposite Parties are liberty to recover the outstanding loan amount from the Complainant by adopting proper procedure as per law. Keeping in view the peculiar circumstances of the case, the parties are left to bear their own costs. The compliance of this order be made by Opposite Parties within 45 days from the date of receipt of this order, failing which the complainant shall be at liberty to get the order enforced through the indulgence of this District Commission. Copies of the order be furnished to the parties free of cost. File be consigned to record room after compliance.
14. Reason for delay in deciding the complaint.
This complaint could not be decided within the prescribed period because the government has not appointed any of the Whole Time Members in this Commission for about 3 years i.e. w.e.f. 15.09.2018 till 27.08.2021 as well as due to pandemic of COVID-19.
Announced in Open Commission.
Dated: 26.10.2021.
(Aparana Kundi) (Mohinder Singh Brar) (Amrinder Singh Sidhu)
Member Member President
