DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION ERNAKULAM
Dated this the 23rd day of May 2023
Filed on: 07/11/2015
PRESENT
Shri.D.B.Binu President
Shri.V.Ramachandran Member
Smt.Sreevidhia.T.N Member
C.C. No. 738/2015
COMPLAINANT
EM. Hussain S/o Hydrose aged 51 years Ettukattil House, Edathala North Village, Aluva, pin-683561
(By Adv.Renny Augustine, KHCAA Chamber Building, Near High court of Kerala, Ernakulam-31)
VS
OPPOSITE PARTY
Kotak Mahindra Prime Limited, 4th Floor, Thadikaran Centre, Palarivattom, Kochi- 682025 rep. by its manager
(o.p rep. by Adv.Nagaraj Narayanan, Nagaraj Associates, 4th Floor, Empire Building, East of High Court, Kochi-682 018)
F I N A L O R D E R
D.B.Binu, President
- A brief statement of facts of this complaint is as stated below:
The complaint was filed under Section 12 (1) of the Consumer Protection Act, 1986. The complainant took a loan of Rs. 9,12,000/- from the opposite party to purchase a car for earning his livelihood. The loan was to be repaid in 48 monthly installments, and the complainant had been making regular payments until July 2015 when three installments were defaulted due to financial difficulties. As a result, the complainant owed 12 installments totalling Rs. 2,95,500/- to the opposite party. The complainant decided to foreclose the loan by repaying the remaining balance as lump sum. However, the opposite party demanded excessive interest and compound interest, which goes against the guidelines of the Reserve Bank of India. The complainant informed the opposite party of their intention to close the loan account through a lawyer’s notice but received no reply. The opposite party then threatened to repossess the vehicle with the help of unauthorized individuals. This situation has caused great hardship and mental agony for the complainant, as they fear the illegal seizure of the vehicle at any time. Despite the complainant's willingness to settle the liabilities, the opposite party has refused to cooperate and intends to extract more money. Due to the refusal of the opposite party to accept the amount owed and allow foreclosure, the complainant has been unable to close the transaction. The complainant alleges that the opposite party's actions constitute unfair practice and deficiency in service. They seek a directive from the appropriate authority to compel the opposite party to comply with their legal demand for foreclosure. The complainants had approached the commission seeking an order directing the opposite party to close the loan account by receiving a pending EMI of Rs. 2,95,000/-without insisting any interest, compound interest, or any other incidental charges, to pay Rs 10000/- being the damages caused to complainant by a deficiency in services rendered by the opposite party and compensation for mental agony suffered by the complainant by the illegal action of the opposite party and the costs of the proceedings.
2). Notice
Notice was issued from the Commission to the opposite party. The opposite party received the notice and filed the version.
3). VERSION OF THE OPPOSITE PARTY
The complainant approached this opposite party for a loan to purchase a Toyota Innova GX 7-Seater. The opposite party approved a loan of Rs. 9,12,000/-, and the complainant and Mrs. Fathima H. (co-borrower) entered into a loan agreement with the opposite party. The complainant took the loan amount and signed an arbitration clause in the loan agreement. An arbitration award was subsequently passed, which the complainant should have challenged in the appellant court. The opposite party argues that the complaint is not maintainable as the matter should be resolved through arbitration, based on the arbitration clause in the loan agreement. The complainant was required to repay the loan in 48 installments, with additional charges for delayed payment and other service charges. The opposite party is a Non-Banking Financial Institution under the Non-Banking Financial Institutions Act. The Complainant approached the opposite party with a request to extend the loan facility for the purchase of a vehicle namely TOYOTA INNOVA GX 7-SEATER and submitted a loan application with the opposite party. The opposite party has sanctioned a loan of Rs.9,12,000/- and the Complainant availed the said loan amount of Rs. 9,12,000/- from the opposite party vide loan agreement No CF - 7980760 dated 08.05.2012 executed between the opposite party on one side and the Complainant as the borrower and Mrs.Fathima H. as its Co-borrower. The Complainant is the borrower and Mrs. Fathima H. is Co-borrower in the Loan agreement No. CF-7980760 with the opposite party ie. Kotak Mahindra Prime Ltd. herein. The Complaint and the IA No. 519/2015 filed along with the Complaint are only for taking the abuse of the powers of the Commission. An arbitration award is passed in the above matter and a legally executable award is passed on 16.08.2014 which is prior to the filing of the above complaint. It is pertinent to note that the remedy of the complainant was to contest the case before the appellant court against the arbitration award passed by the Sole Arbitrator. Hence in the larger interest of justice, this Commission may be pleased to reject/dismiss the above complaint as not maintainable. The complainant herein at the time of taking the loan, had entered into a loan hypothecation agreement with the company/ opposite party in which the Complainant/borrower had agreed to Arbitration and put his signature in the loan agreement with the arbitration clause in front of the opposite party. It is submitted that Clause 31 of the loan agreement No. CF - 7980760 dated 08.05.2012 is an arbitration clause that reads as follows: - "All disputes, differences and/or claim arising out of these presents or in any way touching or concerning the same or as to constructions, meaning or effect hereof or as to the right and liabilities of the parties hereunder shall be settled by the arbitrator to be held in accordance with the provisions of the Arbitration and Conciliation Act 1996 or any statutory amendments thereof and shall be referred to the sole arbitration of a sole arbitrator to be nominated by the lender". In the event of that, refusal, neglect, or inability of a person so appointed to act as an arbitrator, the lender may appoint a new arbitrator. The award of the arbitrator shall be final and binding on all parties concerned. The arbitration proceedings shall be conducted in English language and held at the place more particularly mentioned in schedule II of the present agreement hereunder". Thus, in the view of the Arbitration clause it is clear that the civil court has no jurisdiction as such the Complaint is not maintainable and the matter has to be resolved through Arbitration. The opposite party claims that they have valid documents and that the complainant's allegations are baseless. They argue that the complaint should be dismissed, and the opposite party should be awarded costs.
4) . Evidence
The complainant had produced a proof affidavit and 1 document that was marked as Exhibit-A-1 on 29.08.19. The office copy of the Lawyer Notice dated 30.7.2015 produced by the complainant
The complainant produced 1 document on 06.09.16. (True copy of the Order in IA. No:6179/2016 in Q (2) No.803/2016 of 1 Additional District Judge, Emakulam dated 25.3.2018.)
The opposite party does not choose to cross-examine the complainant.
The opposite party had produced 1 document which is not seen marked. (Arbitration Award passed in Arbitration Case No. 141 of 2014 by the sole arbitration dated 16.08.2014).
5) The main points to be analysed in this case are as follows:
i) Whether the complaint is maintainable or not?
ii) Whether there is any deficiency in service or unfair trade practice from the side of the opposite party to the complainant?
iii) If so, whether the complainant is entitled to get any relief from the side of the opposite party?
iv) Costs of the proceedings if any?
6) The issues mentioned above are considered together and are answered as follows:
As per Section 2 (1) (d) of the Consumer Protection Act,1986, a consumer is a person who buys any goods or hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment. As per the version submitted by the opposite party, it is admitted that the complainant is a consumer of the opposite party. Hence, the Complainant herein is a consumer within the meaning of Section 2(1) (d) of the Consumer Protection Act, 1986.
Therefore, we are only to hold that the complainant is a consumer as defined under the Consumer Protection Act, 1986 (Point No. i) goes against the opposite party.
The complainant approached a Non-Banking Financial Institution, known as the opposite party, to request a loan for purchasing a Toyota Innova GX 7-seater vehicle. The opposite party approved a loan of Rs. 9,12,000/-, which the complainant availed through a loan agreement. The loan agreement included an arbitration clause, stating that any disputes or claims would be settled through arbitration. An arbitration award was already passed before the complainant filed a complaint, and the appropriate course of action for the complainant would have been to contest the arbitration award in the appellate court. The loan agreement also specified the repayment terms and additional charges for delayed payment and other services. The opposite party asserts that the complaint has no merit and that the civil court lacks jurisdiction, emphasizing that the matter should be resolved through arbitration. They argue that they have valid documents to support their case and request the dismissal of the complaint with costs.
The learned counsel for the complainant submitted that the complainant took a loan of Rs. 9,12,000 from the opposite party to buy a car in April 2012. The loan was supposed to be repaid in 48 monthly installments of Rs. 24,625 each, ending on April 1, 2016. The complainant regularly made the monthly payments but defaulted on three installments in July 2015 due to financial difficulties. This resulted in a total of 12 missed installments, amounting to Rs. 2,95,500 due to the opposite party. The complainant decided to foreclose the loan by paying the remaining balance in a lump sum of Rs. 2,95,500 because the vehicle was not profitable for his livelihood. The complainant notified the opposite party of their intention to close the loan account but received no response.
The complainant alleges that the opposite party is demanding excessive interest and compound interest, which is illegal. They issued a lawyer's notice on July 30, 2015, but the opposite party has not replied. The opposite party has threatened to repossess the vehicle, causing hardship and mental agony to the complainant. The complainant fears illegal seizure of the vehicle by "goondas" (hooligans) and recovery agents acting on behalf of the opposite party.
The opposite party filed their version of events but did not choose to cross-examine the complainant. Their only contention is that an arbitrator's award was passed against the complainant, but it was stayed by the Additional District Judge. The opposite party also filed a complaint under section 138 of the Negotiable Instruments Act against the complainant, but the complainant was acquitted. Currently, there are no pending proceedings against the complainant.
The complainant is willing to settle the liabilities, but the opposite party refuses to do so, intending to extract more money. The complainant argues that the opposite party has no right to demand interest from July 30, 2015. The failure of the opposite party to allow foreclosure and accept the offered amount is considered unfair practice and a deficiency in service. Due to this, the complainant has suffered losses, and if the opposite party continues to refuse, they request that the opposite party be directed to comply with the complainant's legal demand and allow the foreclosure of the loan.
The opposing counsel argued that the complainant failed to make regular monthly installments and that an arbitration award has already been issued against them. Therefore, they claim that the complaint against the enforceable arbitration award is unlawful and should be dismissed. They emphasize that the subject matter of the complaint has already been properly adjudicated and resolved on its merits. As a result, filing a complaint about the payment of monthly installments is not valid. The learned counsel for the opposite party submitted in the version that the complainant was irregular in remitting the monthly installments and the Arbitrator already pronounced Award. Now an arbitration award is pending against the complainant in the above matter. The above complaint against a legally enforceable arbitration award is highly illegal and liable to be dismissed. It is pertinent to note that the subject matter in the above complaint is adjudicated properly and the case is disposed on merits. Therefore, filing a complaint regarding the payment of monthly installments is not maintainable.
In Navneet Jha vs Magma Shrachi Finance Limited on 1 March 2021 National Consumer Disputes Redressal Commission, New Delhi (REVISION PETITION NO. 1780 OF 2014 (Against the Order dated 20/01/2014 in Appeal No. 441/2012 ) Held that :
“8. Both the Fora below observed that once the matter had been decided in an Arbitration, the Complaint in the Consumer Forum was not maintainable. This Commission in Instalment Supply Ltd. vs. Kangra Ex-Serviceman Transport I (2007) CPJ 34 (NC) observed that "the issue involved in this case is whether a complaint can be decided by the Consumer Fora after an arbitration award is already passed. The simple answer to this question is No." This Commission in T. Srinivas & Anr. Vs. M/s Srija Construction, R.P. 3419/2013 decided on 19.11.2015 observed that "the words 'in addition' appearing in Section 3 of the Consumer Protection Act enables the complainant to file a complaint before the Consumer Forum and also not file any other Forum. We feel till the award passed in this case is in existence, or unless it is set aside by the competent authority under the relevant Act, this consumer complaint is not maintainable." Once the arbitration award has been passed, the Petitioner/Complainant cannot not file Complaint in a Consumer Forum. In case the Petitioner had any objection against the award passed by the Arbitrator, he should have challenged the award before the Competent Court as per law. Had the arbitration award been set aside by the Competent Court, the matter would have been different and in that case, the Consumer Complaint could be maintainable. As the arbitration award had not been challenged by the Petitioner and still exists, the same is binding on the Petitioner.”
The Hon'ble Supreme Court in M/S. National Seeds Corpn. Ltd V. M.Madhusudhan Reddy & Anr on 16 January 2012 has laid down this legal principle in the following words:
“29. The remedy of arbitration is not the 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.”
ORDER
In this light of the above circumstances, the points Nos. (ii), (iii), and (iv) are found against the complainant.
In the result, the complaint is dismissed with no cost.
Pronounced in the Open Commission this 23rd day of May 2023.
Sd/-
D.B.Binu President
Sd/-
V.Ramachandran Member
Sd/-
Sreevidhia TN., Member
Forwarded by Order
Assistant Registrar
Senior Superintendent
APPENDIX
Complainant’s Exhibits
Exhibit A-1: True office copy of the Lawyer Notice dated 30.7.2015.
A true copy of the Order in I A. No:6179/2016 in Q (2) No.803/2016 of 1 Additional District Judge, Emakulam dated 25.3.2018.
Opposite party’s Exhibits
The opposite party had produced 1 document. (Arbitration Award passed in Arbitration Case No. 141 of 2014 by the sole arbitration dated 16.08.2014)
