BEFORE THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CHENNAI
BEFORE : Hon’ble Mr. Justice R. SUBBIAH PRESIDENT
Tmt Dr. S.M. LATHA MAHESWARI MEMBER
F.A.NO.102/2013
(Against order in CC.NO.384/2010 on the file of the DCDRC, Coimbatore)
DATED THIS THE 16th DAY OF SEPTEMBER 2021
Tata Motors and Finance Ltd.,
Rep. by Director M/s. Shivakumar & Suresh
42/15, Thiruvenkatasamy Road Counsel for
R.S.Puram, Coimbatore – 002 Appellant / 1st Opposite party
Vs.
1. K. Nagaraj
S/o. Kandappan
No.2/518, Teachers Colony M/s. V. Balaji
NGGO Colony Counsel for
Coimbatore – 641 002 1st Respondent/ Complainant
2. M/s. Amman Motors
Rep. by General Manager
No.8/169, Annur Main Road Served and called absent
Mettupalayam – 641 301 2nd Respondent/ 2nd Opposite party
The 1st Respondent as complainant filed a complaint before the District Commission against the opposite parties praying for certain direction. The District Commission had allowed the complaint. Against the said order, this appeal is preferred by the 1ST opposite party praying to set aside the order of the District Commission dt.19.9.2011 in CC.No.384/2010.
This appeal coming before us for hearing finally today, upon hearing the arguments of the counsel appearing for appellant and 1st Respondent and on perusing the documents, lower court records, and the order passed by the District Commission, this commission made the following order:
ORDER
JUSTICE R. SUBBIAH, PRESIDENT
1. This appeal has been filed as against the order passed by the District Commission, Coimbatore, directing the opposite parties jointly and severally to pay a sum of Rs.4,00,000/- alongwith compensation of Rs.25000/- and cost of Rs.3000/-, on the ground that there is negligence on the part of the opposite parties.
2. The appellant is the 1st opposite party, and 1st Respondent is the complainant and 2nd Respondent is the 2nd opposite party before the District Commission. For the sake of convenience the parties are ranked as stated before the District Commission.
3. The case of the complainant before the District Commission in brief is as follows:
The complainant had purchased a TATA truck model 207 D-1 on 30.9.2008 bearing Regn.No.TN38 AV3946, by availing finance from the 1st opposite party. After taking delivery of the vehicle he has paid 4 instalments of Rs.12,300/- each and the last instalment was paid on 16.2.2009. The vehicle was also insured with the M/s. New India Insurance Company Ltd.,
While so, said vehicle met with an accident on 14.3.2009, when the driver was driving the vehicle from Coimbatore to Bangalore and nearing Krishnagiri-Hosur Road, in between Odaiyur Samalapallam at 4.30 am and sustained damages. The complainant left the vehicle to the 2nd opposite party, who is the authorized service provider for TATA Truck vehicles on 18.3.2009 for repair. The Service Provider had estimated the charges @ Rs.192150/- for rectification of damages. Since the vehicle was insured, on intimation by the complainant, a surveyor deputed by the insurance company had inspected the vehicle and estimated the damage at a lower value than the amount quoted by the 2nd opposite party. Since the 2nd opposite party was reluctant to repair the vehicle at the cost as estimated by the surveyor, the complainant was negotiating with the insurance company. He left the vehicle under the custody of the 2nd opposite party. Atlast the complainant had instructed the 2nd opposite party to carryout the repair work stating that he would claim the amount from the insurance company. The complainant was having the registration certificate in his custody. In the meanwhile, the complainant learnt that the second opposite party instead of repairing the vehicle, had entrusted the vehicle to the 1st opposite party and the 1st opposite party had sold the vehicle to the third parties, without the consent of the complainant unauthorisedly. The 1st opposite party had sold the vehicle and realized the entire balance amount due to them and the 2nd opposite party had given access to the said sale of the vehicle. Hence the complainant caused legal notice to the opposite parties. Though the legal notice was received, the opposite parties have not replied. Thus alleging negligence on the part of the opposite parties, the complainant had filed a complaint before the District Commission, claiming refund of the value of the vehicle @ Rs.400,000/- alongwith compensation and cost.
4. The said complaint was resisted by the 1st opposite party by filing version stating that as per the terms and conditions, the claim can be adjudicated upon by the civil court or by arbitration. Hence the consumer fora have no jurisdiction. The complainant had availed loan under Hire Purchase Scheme from the 1st opposite party for purchase of TATA truck four wheeler vehicle for a sum of Rs.5,77,550/-. The loan is repayable in 47 monthly instalments and the first instalment is for Rs.11750/- starting from 6.10.2008, and from 2nd to 47th instalments Rs.12300/- per month. The maturity date is 11.8.2012. The monthly repayments are to be paid on or before 11th of every month without any delay or default and in the event of delay or default, the complainant is liable to pay overdue charges and interest. The complainant had paid only four instalments, and the last instalment being on 16.2.2009, after which he did not pay further and overdue as on 16.11.2010 was Rs.3,19,250/-. Hence the 1st opposite party took possession of the vehicle for the overdue liability on 23.3.2010 with the consent of the complainant. There is no deficiency in service on the part of the 1st opposite party.
5. The 2nd opposite party had filed their version mainly stating that only on the request of the complainant by his letter dt.23.3.2010 the vehicle was handed over to M/s. TATA Motors Ltd.,/ 1st opposite party. This opposite party is in no way connected with the alleged sale of the vehicle and there is neither deficiency in service nor unfair trade practice on their part.
6. In order to prove their respective case, the complainant as well as the opposite parties have filed their respective proof affidavits and on the side of the complainant 14 documents were marked as Ex.A1 to A14, and on the side of 1st opposite party 3 documents were marked as Ex.B1 to B3 and on the side of the 2nd opposite party 1 document was marked as Ex.B4.
7. On evaluating the submissions made on bothsides, perusing documents filed in support of the case, the District Commission had passed an order by holding that the 1st opposite party had taken delivery of the vehicle from the 2nd opposite party by colluding with eachother, and sold the vehicle unauthorisedly without any notice to the complainant. Thus the District Commission has come to the conclusion that there is deficiency in service on the part of the opposite parties, passed an order, directing the opposite parties jointly and severally to refund the cost of the vehicle @ Rs.4,00,000/- alongwith compensation and cost. Aggrieved over the said order, the 1st opposite party is before us now as an appellant.
8. The appellant before this commission would submit that the complainant had entered into a loan cum hypothecation cum guarantee agreement dt.6.10.2008, the complainant being the borrower and one Subramani.K as a guarantor for availing a financial assistance of Rs.4,15,000/-. As per the terms of the agreement the 1st Respondent had agreed to pay finance charges of Rs.162550/-, and the 1st Respondent had undertaken to pay periodical instalments of Rs.11750/- for 1st month’s instalment and thereafter Rs.12300/- per month for the remaining 46 instalments from 6.10.2008 to 11.8.2012. The complainant had paid only 4 instalments. The said vehicle met with an accident and the total extent of the damage to the hypothecated vehicle is Rs.192150/- towards labour charges and cost of parts in the original estimate. Since the complainant defaulted in paying instalments, pre-possession notice was issued on 14.7.2009. Since the complainant continued being a defaulter, left with no other option the vehicle was repossessed on 16.2.2010 after following the due process of law. Appellant subsequently issued pre sale notice dt.18.2.2010 requesting to make payment of Rs.147600/- apart from the future principal and interest and additional interest & other charges as per the terms of the agreement. The said presale notice also called upon the Respondent to settle the amount alongwith the additional interest and other charges within 48 hours from the date of receipt of the notice, failing which the appellant/1st opposite party will be constrained to sell the vehicle on “as is where is” condition. The complainant failed to abide by the request of the appellant in the pre-sale notice and did not take any steps for release of the vehicle after making outstanding payment. Since the value of the re-possessed vehicle was depreciating the appellants sold the vehicle on 25.2.2010 for a sum of R.45000/- as per clause 18(a) of the Agreement. After sale of the said vehicle there was a shortfall of Rs.3,98,465.58/- as per the sale details dt.21.2.2012. The District Commission without considering all these aspects, had allowed the complaint filed by the complainant and directed the opposite parties to pay the value of the vehicle at Rs.4,00,000/- alongwith compensation and cost.
9. The Respondent /complainant would submit that it is incorrect to say that there is no deficiency in service on the part of the Appellant/1st opposite party. The learned counsel also had invited our attention to Ex.B3 letter dt.18.2.2010, wherein the 1st opposite party had stated that they have repossessed the vehicle on 16.2.2010 itself. Whereas the 2nd opposite party would contend that they had handed over the vehicle to the 1st opposite party on 23.3.2010 only on the basis of Ex.B4, said to have been issued by the complainant to the 2nd opposite party to handover the vehicle to the 1st opposite party. When Ex.B3 dt.18.2.2010 had clearly shows that the vehicle was repossessed as early as on 16.2.2010 itself, the question of issuing the letter under Ex.B4 to the 2nd opposite party to handover the vehicle to the 1st opposite party on 23.3.2010 does not arise . Therefore it is clear that Ex.B4 is absolutely a created document. It is also further submitted that the agreement is only a loan agreement, and not a hire purchase agreement. Therefore, the complainant alone is the owner. Accordingly, the auction sale conducted by the 1st opposite party without the consent of the complainant is totally illegal.
10. Before this commission the 1st opposite party and the complainant only had appeared as appellant and 1st Respondent. The 2nd Respondent/ 2nd opposite party though served remained absent before this commission. Hence we have heard the learned counsel for appellant and the 1st Respondent, keeping in mind the submissions made on either side, and carefully considered the same. Since we have discussed the facts in detail above, we refrain from reiterating the same any further and only the facts which are germane are discussed hereunder.
11. The fact that the complainant had purchased the truck bearing Regn.No.TN38 AV3546 by availing financial assistance from the Appellant/1st opposite party. The complainant had paid only four instalments thereafter. He stopped repaying the loan amount after the vehicle met with an accident on 14.3.2009. When the vehicle was given to 2nd opposite party for repair, the same was handed over to the appellant/1st opposite party by the 2nd opposite party, thereafter that the Appellant/1st opposite party had sold the vehicle are not in dispute.
12. The contention of the learned counsel for Respondent/ complainant is that he had availed loan only under the Loan cum Hypothecation cum Guarantee Agreement dt.6.10.2008 and not under the Hire Purchase Agreement. In Hire Purchase Agreement only the Financier is the owner. But in the Hypothecation Agreement, the financier is not the owner. Therefore, he is not entitled to take possession of the vehicle, and sell the same without the consent of the complainant.
In view of the above, learned counsel for the appellant had drawn our attention to the recent judgement of the Hon’ble Supreme Court in Civil Appeal No.5622/2019 dt.1.10.2020 in M/s. Magma Fincorp Ltd., Vs. Rajesh Kumar Tiwari, wherein it was held that “whether the transaction between a financer and a purchaser/ hirer is a hire purchase transaction, or a loan transaction, might be determined from the terms of the agreement, considered in the light of surrounding circumstances. However, even a loan transaction, secured by right of seizure of a financed vehicle, confers licence to the financier to seize the vehicle.
13. In this connection a perusal of the clauses laid down in the agreement is necessary.
As per Ex.B1, it is seen that an irrevocable Power of Attorney had been executed by the complainant in favor of the financier.
As per clause 6.9 it is stated as follows:
In this regard the Borrower hereby also irrevocably nominates, constitutes and appoints the Lender acting through any of its officers, agents as their true and lawful attorney for the lender on their behalf and their cost and risk to do execute and perform all or any of the following acts, deeds, matters and things that is to say:
(d) These irrevocable grant of powers by the Borrower to the Lender are for consideration coupled with interest and for that purpose and extent shall be governed by Sec.202 of Indian Contract Act.
The agreement terms also would clearly states under the Default clause as follows:
Consequences of Event of Default:
If one or more of the events specified in clause 17 above occurs (Event of Default) “the Lender by notice in writing to the obligors, declare the Loan to be immediately due and payable (whereupon the same shall become due and payable together) and forthwith recall the loan together with all interests and other monies payable by the obligors pursuant to this loan agreement, ad in default of such payment enforce the charge created in terms of this Loan Agreement. Further, the Lender shall be entitled to, at all times to, take possession, seize, recover, appoint a receiver/ manager, remove the asset from its place of standing, and also be entitled, on such terms as may be deemed fit by the Lender, without intervention of court or authority to sell the Asset by public auction or by private contract at the best available prices according to the prevailing market condition including as regards repossessed vehicle/assets, realize its claim in respect of loan, without being bound or being liable for any loss/ losses that the obligors may suffer due to such action and without prejudice to the lender’s other rights and remedies as stated herein or otherwise in law entitled to”.
Therefore as stated above, the statement of the complainant that the agreement is only a hypothecation agreement, and the lender is not entitled to take possession of the vehicle cannot be considered. Since as per the clauses in the agreement as stated above, the act of the 1st opposite party as a lender cannot be found fault, when the complainant being a chronic defaulter.
14. As per judgement of the Hon’ble Apex Court stated supra, it is also held that “When the agreement between the Financier and the hirer permits the financier to take possession of a vehicle financed by the financier, there is no legal impediment to the financier taking possession of the vehicle.”
15. The learned counsel for the 1st Respondent/ Complainant also had drawn our attention to a number of judgements of the Hon’ble National Commission and the Apex court. A perusal of those judgements shows that they were all dealt with the seizure of the vehicle by using force by the financier. Therefore, observations laid down in those judgment does not match the facts dealt in the case on our hand.
16. Therefore, looking at from any angle, the repossession of the vehicle by the 1st opposite party, and also since the complainant being admittedly a defaulter in paying the due, selling the vehicle in public auction after giving notice to the complainant, are all in accordance with law. Therefore, we are of the considered opinion that there is no deficiency in service on the part of the appellant/1st opposite party. Accordingly, the order of the District Commission needs interference.
17. As far as the 2nd Respondent/2nd opposite party is concerned, there is a finding by the District Commission that the letter they have produced as an evidence under Ex.B4 said to have been issued by the complainant to 2nd opposite party dt.23.3.2010 is a created one for the purpose of this case. The letter also seems to have been issued after the repossession of the vehicle by the 1st opposite party. The 2nd Respondent/ 2nd Opposite party remained absent before this commission to elucidate their case. It is not the case of the 2nd opposite party before the District Commission that the 2nd opposite party has the right to handover the vehicle to the 1st opposite party without the consent of the complainant. Therefore, when there is a finding against the 2nd opposite party and there is no representation or effort made by the 2nd opposite party to prove contra, we cannot pass any order in respect of the 2nd Respondent/2nd opposite party. Moreover when the appellant is having a legal right to repossess the vehicle due to default in payment of instalment under the Hire Purchase Agreement, the question of giving intimation to the complainant before repossessing the vehicle is not necessary. Therefore, no significance could be attached to the E.B4 in this case.
18. In the result, the appeal is allowed by setting aside the directions of the District Commission, Coimbatore in CC.No.384/2010 dt.19.9.2011 as against the appellant/1st opposite party alone, and the complaint as against the 1st opposite party is dismissed. There is no order as to cost in the appeal.
S.M.LATHAMAHESWARI R. SUBBIAH
MEMBER PRESIDENT
