BEFORE THE DISTRICT CONSUMER DISPUTES

REDRESSAL FORUM, JALANDHAR.

Complaint No.221 of 2014

Date of Instt. 09.07.2014

Date of Decision :02.09.2015

1. Avninder Singh son of Avtar Singh Nagra, R/o House No.15, Village Mahi Rauli, Ropar through its special power of attorney Faqir Mohammad son of Sadiq Mohammad Village Lasara, Post Office Jaijon Doaba, Tehsil Garshankar, District Hoshiarpur.

2. Faqir Mohammad son of Sadiq Mohammad, Village Lasara, Post Office Jaijon Doaba, Tehsil Garshankar, District Hoshiarpur.

..........Complainants Versus

1. Kotak Mahindra Bank Limited, 4th Floor, Corporate Park, GT Road, Jalandhar through its Branch Manager.

2. Kotak Mahindra Bank Limited, through its Branch Manager, SCO-153-154-155, Sector-9-C, Chandigarh (UT) through its Branch Manager.

.........Opposite parties.

Complaint Under Section 12 of the Consumer Protection Act.

Before: S. Jaspal Singh Bhatia (President)

Ms. Jyotsna Thatai (Member)

Sh.Parminder Sharma (Member)

Present: Sh.Paramjit Singh Adv., counsel for complainants.

Sh.Vikas Sood Adv., counsel for opposite parties.

Order

J.S.Bhatia (President)

1. The complainants have filed the present complaint under section 12 of the Consumer Protection Act, against the opposite parties on the averments that the complainant Faqir Mohammad is the special attorney of Avninder Singh regarding the vehicle (LPT) 2515 Turbo Model 2007 bearing Chasis No.444030ESZ721861 Registration No.PB-23F-9907 hypothecated with Kotak Mahindra Bank Limited from its Chandigarh branch office opposite party No.2 from where the complainant Avninder Singh had taken loan of Rs.6,80,000/- to purchase the above mentioned vehicle vide loan agreement dated 24.12.2012 (Loan Account No.CE-354650) and as per the condition entailed in the special power of attorney, the said Faqir Mohammad was authorized to act on the behalf of Avninder Singh. The complainant Avninder Singh is the registered owner of the aforesaid vehicle but he has sold the said vehicle to the complainant Faqir Mohammad on 3.9.2013. Avninder Singh has executed an affidavit of sale. The said Avninder Singh has received the entire sale consideration but the vehicle in question could not be transferred in the name of the complainant Faqir Mohammad as it was hypothecated with Kotak Mahindra Bank Limited and as it was hypothecated with Kotak Mahindra Bank Limited the complainant Faqir Mohammad used to pay the loan installments. As per the Sales of Goods Act, the complainant Faqir Mohammad is the owner of the vehicle. But to avoid any conflict of ownership both the registered owner as well as the vendee/owner are arrayed as the complainants. In view of special power of attorney dated 3.9.2013 and as owner, Faqir Mohammad complainant continuously paid the balance amount of installments (EMI) to the Kotak Mahindra Bank Limited at their branch office at Jalandhar/opposite party No.1 on account of repayment of loan of Rs.6,80,000/- availed for the purchase the above mentioned vehicle vide loan agreement dated 24.12.2012. After the execution of special power of attorney and the purchase of the vehicle in question the balance installments (EMI) were paid by the complainant Faqir Mohammad regularly till May, 2014 and this fact is evident from account statement issued by the bank. In the month of June 2014, when the installment (EMI) date was approaching, bank officials with an intension to cause wrongful loss to the complainants and without giving any prior notice to the complainants regarding any default on the part of the complainants, through their recovery agents illegally seized the above mentioned vehicle near Ahmadabad (Gujrat) on 18.6.2014 at 7.30 AM and took the vehicle illegally in their possession and from there they had driven the same to undisclosed place and this fact was narrated by the driver of the vehicle namely Kuldeep Kumar telephonically to the complainant Faqir Mohammad. Thereafter the attorney of the complainant tried to contact the bank officials at Jalandhar as well as Chandigarh on 18.6.2014 and the bank officials instead of resolving the issue of the complainants threatened to face dire consequences and the misdeeds of the bank officials came into light when the bank officials refused to accept the balance installment of the said vehicle (EMI), which was due on 20.6.2014 and stated that they have seized the vehicle and there is no requirement to make the further payment and they will adjust the account by selling the vehicle in open market. On account of illegal seizure of the vehicle of the complainant by the bank, the complainant Faqir Mohammad is suffering monetary loss to the tune of Rs.2000/- per day besides it when the vehicle in question was seized illegally by the agents of the bank it was loaded with goods to be delivered at Nakodar (Punjab) and the complainant has to pay a sum of Rs.20,000/- for its transferring to the other vehicle. Thus, the complainant Faqir Mohammad has suffered monetary as well as mental agony due to the misdeeds and illegal acts of the bank. The complainant Faqir Mohammad has offered and is ready to pay the residue entire loan amount outstanding at one instance but the bank is adamant not to receive the same and is illegally and unlawfully trying to sell it off. On such like averments, the complainants have prayed for directing the opposite parties to hand over the possession of the vehicle in question to them. They have further claimed compensation and litigation expenses.

2. Upon notice, opposite parties appeared and filed a written reply, inter-alia, raising preliminary objection that earlier one Avninder Singh got the financial assistance from the opposite parties against the vehicle. A loan agreement was duly executed between the parties and Avninder Singh assured to make the payment in time. Thereafter, he has committed the intentional default and the vehicle was repossessed as per law. It is pertinent to mention here that even the opposite parties have initiated the arbitration proceedings as per law and got the sale permission from the Arbitral Tribunal. The opposite parties are having the right to sell the vehicle as per law. Hence, the present complaint is to be dismissed. On merits, they pleaded that Avninder Singh was having no right to sell the vehicle and documents are forged and fabricated. Vehicle was repossessed as per law. Arbitration proceedings have been initiated. The opposite parties are having every right to deal with the vehicle as per agreement and as per provisions of the Arbitration Act and further arbitration proceedings are pending before the Arbitral Tribunal. They denied other material averments of the complainant.

3. In support of their complaint, learned counsel for the complainants has tendered into evidence affidavit Ex.CW1/A alongwith copies of documents Ex.C1 to Ex.C14 and closed evidence.

4. On the other hand, learned counsel for the opposite parties has tendered copies of documents Ex.O1 and Ex.O16 and closed evidence.

5. We have carefully gone through the record and also heard the learned counsels for both the parties and also gone through the written arguments of opposite parties.

6. Counsel for the complainants contended that the arbitration clause can not oust the jurisdiction of the Consumer Fora and arbitration proceedings can not preclude the parties to have recourse to remedy under the provisions of Consumer Protection Act. In support of this contention he has relied upon Chaman Lal Vs. Shine Blue Hire Purchase Pvt Ltd, II(2008) CPJ 431 and DLF Limited Vs. Mridul Estate 9Pvt Ltd and another III(2013) CPJ 439(NC). On the other hand, it has been contended by learned counsel for the opposite parties that in the loan agreement Ex.O10, there is specific clause No.11.16 regarding resolving of matter by way of arbitration in case of any dispute arising out or in connection with the agreement or its performance. He contended that parties are bound by the arbitration clause in the agreement and parties are to settle their dispute by way of arbitration in accordance with the above clause in the loan agreement. We have carefully considered the contentions advanced by learned counsels for both the parties. The above cited authorities relied upon by learned counsel for the complainant support his contentions. In DLF Limited's case (Supra), it has been held by Hon'ble National Commission as under:-

"33. Faced with this, learned counsel appearing for the opposite parties contended that in this case, the Hon'ble Supreme Court did not take into consideration the decision of the Seven Judges Bench in the SBP & Co.'s case. We do not find substance in this submission as well. In Madhusudhan Reddy's Case (Supra), Surperme Court after taking into consideration the background, objectives and reasons behind the enactment of C.P.Act, juxtapositioning the provisions of the C.P.Act and the Arbitration Act of 1996 (Section 3 of the C.P.Act and Section 8 of the Arbitration Act of 1996) held that the complaint filed by a consumer under the C.P.Act would be maintainable and the relief can not be denied by invoking the jurisdiction of Section 8 of the Arbitration Act of 1996. We are bound to follow the law laid down by the Supreme Court. The judgment is binding precedent.

By establishing the Consumer Disputes Redressal Forums, the legislature has provided special remedy for the redressal of the grievances of "small consumers" who buy the goods or avail of services for their personal purpose. Persons who have bought the goods or availed of services for commercial purposes have been specifically excluded from the definition of 'consumer' except where the goods have been bought or services availed of by a small consumer for earning his livelihood by way of self-employment. Remedy provided under the C.P.Act is a special remedy with the objective of redressal of the grievances of the affected consumers in an expeditious and non-expensive manner. If the small consumers are relegated to the Alternative Dispute Resolution (ADR) mechanism of arbitration, the remedy provided under the C.P.Act would become illusionary. It would be neither expeditious nor in-expensive. It would defeat the very purpose of enactment of the C.P.Act".

7. The ratio of above cited authority is applicable on the facts of the present case. So the arbitration clause in the loan agreement in no way oust the jurisdiction of the Consumer Fora.

8. The opposite parties have sold the vehicle in question for Rs.3,70,000/-. Vide order dated 9.7.2014, the opposite parties were restrained from selling the vehicle in question and transferring the same in any manner. This interim stay order was never specifically vacated. So the sale is in violation of the of the above said stay order is void on this score alone. Even otherwise, the opposite parties have not sold the vehicle at market price. The complainant never participated in the arbitration proceedings. So the arbitration proceedings and sale held in pursuance thereof and in violation of the interim stay order passed by this Forum is not valid. From the perusal of Ex.O5 it is evident that vide agreement dated 24.4.2012 the amount financed by the opposite party bank was Rs.6,80,000/-. It is matter of common knowledge that banks or financial companies generally finance the vehicle at a lesser price then the market value of the vehicle. The original purchase invoice is not on file. So the market value of the financed vehicle is taken as Rs.8 Lacs on the date of financing the same i.e April 2012. As per averments contained in para 3 of the complaint, the vehicle was repossessed on 18.6.2014. The order regarding sale was obtained from arbitrator on 18.10.2014. The quotation regarding sale of vehicle are on record. The quotation Ex.o6 given by Gurlal Singh for Rs.3,70,000/- for which it was sold bears date of 10.11.2014. So it means that vehicle was sold in November 2014. Vehicle was financed in April 2012 as is evident from document Ex.O5 and Ex.O6 wherein agreement date is mentioned as 24.4.2012. So it means that vehicle was sold after about 2-1/2 years. A vehicle having market value of about Rs.8 Lacs in April 2012 can not be said to have a fair market value of just Rs.3,70,000/- in November 2014 i.e after about 2-1/2 years. In Deep Hire Purchase Ltd. Versus Khem Singh & Co. 2012(3) CLT page 198, it has been held by Hon'ble State Commission, of H.P. as under:-

"In the present case this fact had also come on record that as per admitted case of the opposite parties that the value of the vehicle at the time of its purchase was Rs.3,96,000/- on the date of executing hire purchase agreement between the parties which was executed on 9.10.2003 and the vehicle was repossessed by the opposite parties on 7.2.2007 and it was sold at Rs.3,70,000/- on 9.1.2008 and as such at the time of sale the age of vehicle in question existed 4 years but it did not exceed 5 years from the date of its purchase by the complainant and this vehicle was a commercial vehicle. As such, Forum below has rightly placed reliance upon the judgment of the Delhi State Commission given in the case of Magma Leasing Ltd. vs. Bharat Slngh, I (2007) CPJ 200, wherein it was held that in such cases cost of the vehicle shall be adjusted by depreciating the value at the rate of 5% per year in case of passengers vehicle and @ 10% per year in a case of commercial vehicle. Hence, by applying the aforesaid judgment, the Forum below had rightly concluded that cost of the vehicle at the time of sale has to be adjusted by calculating its market value by depreciating the amount at the rate of 40% (i.e. 10% per year) from Rs.3,96,000/- i.e. the actual purchase price of the vehicle by the complainant and as such the opposite parties have been rightly directed to adjust the sale of-the vehicle towards satisfaction of dues by calculating its market value by deducting 40% of the amount from Rs.3,96,000/- i.e. the purchase price of the vehicle by the complainant instead of Rs.37 000/."

9. So as per above authority in the present case depreciation @ 10 % per year is quite reasonable. So taking depreciation for first two years @ 10% and 5% for the six months, the total depreciation amount comes to Rs.1,84,000/-. After deducting this amount, the fair market value of the financed vehicle on the date of sale comes to Rs.8,00,000 - Rs.1,84,400 = Rs.6,15,600/-.

10. Now, we are to see what was the amount due to the opposite parties on the date of repossessing the vehicle. Ex.O4 is claim petition filed by the opposite party bank before the arbitrator. Ex.O13 is order passed by the arbitrator regarding sale of vehicle. In this order, the arbitrator has observed that it is clear that amount of Rs.2,61,824/- is still due and outstanding against the respondents as the respondents have not clear the same till date. This order is dated 18.10.2014. This amount is taken to be correct as outstanding against the complainants. So according to the above document produced by the opposite parties Rs.2,61,824/- were due against the complainant but the vehicle was having a market value of Rs.6,15,600/- on the date of sale as already discussed above. So opposite parties have not sold the vehicle at a fair market price. It was having fair market value of Rs.6,15,600/- but it was sold for Rs.3,70,000/- and only an amount of Rs.2,61,824/- was due from the complainant. So after deducting the due amount from the fair market value of the sold vehicle, the remaining amount comes to Rs.3,53,776/-. So complainant is entitled to this amount from the opposite parties.

11. Counsel for the opposite parties contended that complainant Avninder Singh took the loan and he has sold the vehicle to Faqir Mohammad and as such they have no right to file the present complaint. In the present complaint Avninder Singh original borrower as well as Faqir Mohammad are complainants. Avninder Singh had also given power of attorney to Faqir Mohammad complainant No.2 wherein power has been given to him to sell and dispose of the vehicle on his own name. Moreover, the original borrower is also complainant in the present complaint. So the contention of the learned counsel for the opposite parties in this regard is without any merit. Counsel for the complainant contended that the awarded amount may be given to any of the complainants.

12. In view of above discussion, the present complaint is accepted and opposite parties are directed to pay Rs.3,53,776/- to either of the complainant alongwith Rs.25000/- as compensation and Rs.3000/- as litigation expenses within one month from the date of receipt of copy of this order failing which the opposite parties shall be liable to pay interest @ 9% per annum on the entire awarded amount after the expiry period of said one month till the date of payment. Copies of the order be sent to the parties free of costs under rules. File be consigned to the record room.

Dated Parminder Sharma Jyotsna Thatai Jaspal Singh Bhatia

02.09.2015 Member Member President