This revision petition has been filed by the petitioner M/s. Ashok Leyland Finance Ltd. against the order dated 31.05.2017 of the State Consumer Disputes Redressal Commission, Delhi, (in short ‘the State Commission’) passed in FA No.1148 of 2012.

2.      Brief facts of the case are that the petitioner had financed the vehicle of the respondent/complainant by sanctioning loan of Rs.8,50,000/-.  The vehicle was repossessed as the respondent did not pay the instalments regularly and the vehicle was sold by the petitioner for a sum of Rs.6,50,000/-.  There was still some outstanding against the complainant and the petitioner used the security cheque given by the complainant for recovery of amount Rs.3,62,000/-, but the cheque got bounced and the petitioner filed a complaint before the competent court under Section 138 of  Negotiable Instruments Act 1881.  As the notice was received by the complainant, the complainant filed a consumer complaint against the petitioner before the District Forum. District Forum dismissed the complaint No.776 of 2006 vide its order dated 23.11.2012.

3.      Aggrieved by the order of the District Forum, the complainant preferred appeal No.1148 of 2012 before the State Commission.  The State Commission vide its order dated 31.05.2017 allowed the appeal and passed the following order:-

“23.  To sum up the abovesaid reliefs, the OP is directed to pay the complainant an amount of Rs.5,10,001/- along with interest @ 12% p.a. w.e.f. 26.04.2006 till the date of its realization.  Let this amount be paid by the OP to the complainant within a period of thirty days from today failing which it shall carry interest @18% p.a. OP is also directed to deposit an amount of Rs.50,00,000/- (Rs. fifty lakhs) in the Consumer Welfare Fund of the State maintained by this Commission within a period of sixty days from today failing which it shall carry interest @ 12% p.a. Complaint is accordingly allowed.  Appeal is disposed of.”

4.      Hence the present revision petition.

5.      Heard the learned counsel for the parties and perused the record.  Learned counsel for the petitioner stated that the State Commission has ordered penal damages of Rs.50,00,000/- on the ground that the petitioner has filed two complaint cases against the complainant/respondent under the Negotiable Instruments Act, 1881.  Learned counsel argued that this can be no reason for ordering penal damages against the petitioner.  As the cheques were bounced, the complaint under Section 138 of the Negotiable Instruments Act, was filed.  The State Commission has taken a view that the cheque of Rs.3,62,000/- was not the cheque actually given by the complainant rather it was a security cheque that was filled up by the petitioner and was sent to the bank, which was dishonoured due to lack of fund in the account.  It is true that the cheque was given by the complainant as security cheque when the loan was sanctioned, however, the cheque was duly signed by the complainant, though undated, with no amounts mentioned in the cheque.  Even if the cheque was filled by the petitioner, it was perfectly valid and it would not be treated as manipulated. It was not illegally modified. Thus, the contention of the State Commission is totally wrong and the filing of the complaint under Section 138 of the Negotiable Instruments Act, was perfectly according to law and no deficiency can be attributed to the petitioner on account of filing of the complaint under Section 138 of Negotiable Instruments Act.  Moreover, there was no prayer in the complaint for punitive damages and therefore, the State Commission was not justified in ordering punitive damages of Rs.50,00,000/- to be deposited with the Consumer Welfare Fund.

6.      Coming to the question of award of Rs.5,10,001/- as compensation to the complainant, learned counsel for the petitioner submitted that there should be no question of awarding any money to the complainant as even after sale of the vehicle, there was outstanding amount against the complainant to the tune of Rs.3,62,000/- and that is why the security cheque was used to recover Rs.3,62,000/- from the complainant.  An arbitration case was also filed by the petitioner wherein the complainant did not participate and the arbitrator has passed an award dated 23.11.2009 for Rs.6,46,897/- against the complainant.  It was further submitted by the learned counsel for the petitioner that another cheque of Rs.2,00,000/- was issued by the complainant by way of settlement,  however, as that cheque was also one of the security cheques and it got dishonoured and the petitioner filed another complaint under Section 138 of the Negotiable Instruments Act.  The State Commission has also treated this as an illegal act of the petitioner.  It is clear that the loan amount was of Rs.8,50,000/- and the complainant stopped payment of instalments and that is why the vehicle was repossessed and sold for Rs.6,50,000/-.  Obviously there was outstanding against the complainant.  The State Commission has wrongly observed that the financier does not have any right to recover any amount from the borrower after repossession and sale of the vehicle.  The State Commission has not given any authority to justify its observations.  This observation of the State Commission is totally against the law.  The borrowed loan has to be fully repaid by the complainant and till then the financier remains the owner of the vehicle.  The process of repossession and sale of the repossessed vehicle is only to facilitate the process of recovery.  However, it does not debar the financier to recover the outstanding amount from the complainant.  The State Commission has accepted the total demands made in the complaint for refund of the deposited instalments along with all the expenses incurred by the complainant on registration etc. of the vehicle along with Rs.1,50,000/-as compensation.  The learned counsel argued that the amount paid has to be considered as payment against hiring charges as the financier remains the owner of the hypothecated vehicle until the loan is fully recovered and then ownership passes on to the borrower.  As the vehicle has been used by the complainant till the time of repossession, the amounts of instalments paid before the date of repossession are only the hiring charges and there should have been no question of ordering the refund of the same. 

7.  Learned counsel for the petitioner further argued that it has been wrongly alleged by the complainant that the vehicle was repossessed by using force.  No FIR has been lodged by the complainant in the matter and therefore, the use of force is only an afterthought.  The medical certificate filed by the complainant does not mention any specific event or reason or name of any party and therefore, it cannot be read against the petitioner.

8.      It was prayed by the learned counsel for the petitioner that the complaint be dismissed as he is not entitled to get any relief as he himself was a defaulter and the petitioner has an outstanding against the complainant.

9.      On the other hand, learned counsel for the respondent/complainant stated that it is the stand of the petitioner that the cheques were given by the complainant to the petitioner in pursuance of some settlement.  The fact is that there was no settlement between the parties and these cheques were taken by the petitioner as security cheques at the time of sanctioning of the loan.  These cheques have been unauthorisedly used by the petitioner without the consent of the complainant and therefore, the State Commission has rightly considered this act of the petitioner as illegal act and that is why punitive damages of Rs.50,00,000/- has been ordered to be paid by the petitioner.When the complainant has not issued these cheques, the petitioner was not authorised to file the complaint against the complainant under Section 138 of Negotiable Instruments Act.  The State Commission has rightly observed that the petitioner, being a financier must have harassed other borrowers by filing similar cases against them under Section 138 of the Negotiable Instruments Act.  Thus, the award of punitive damages of Rs.50,00,000/- is fully justified.

10.    Learned counsel for the respondent/complainant further stated that the vehicle was repossessed by using force as it is proved from the medical certificate filed,  though it does not bear name of the party or any other details, it is true that this certificate establishes the use of force in respect of repossession of the vehicle.

11.    It was argued by the learned counsel for the respondent that the petitioner was adopting unfair trade practice by not entering all the payments made by the complainant in their register and statement of accounts.  The State Commission has clearly observed that cheque No.5536136 for Rs.28,375/- was not accounted for.  Further, the State Commission has clearly observed that cheques for which the complaints under Section 138 of Negotiable Instruments Act were filed, are only the security cheques given by the complainant at the time of sanctioning of the loan.

12.    Learned counsel for the respondent/complainant further justified award of Rs.5,10,001/- as compensation to the complainant as it included the refund of the instalments paid by the complainant and Rs. 1,50,000/-demanded for mental agony and harassment.  It was stated that there was loss of business to support the livelihood of the complainant and therefore, the award of compensation by the State Commission is totally justified.

13.    I have given a thoughtful consideration to the arguments of learned counsel for the parties and have examined the material on record.  First of all the observations of the State Commission that “once the repossession of the vehicle took place, law did not permit the OP to seek any outstanding amount”.In this regard the State Commission has not quoted any law or judgment of Hon’ble Supreme Court or of this Commission.  In my view, this observation cannot be sustained.  As the financier has every right to recover the total amount given on the loan to the borrower, it can definitely be seen by the consumer fora whether the repossession was as per law as laid down by the Hon’ble Supreme Court and as per the guidelines issued by the Reserve Bank of India.  Even the process of sale and the amount can also be looked into.  The Consumer fora can also pass the order for adjustment of the outstanding from the compensation to be paid if any to the complainant.  As no FIR has been lodged in the matter by the complainant alleging use of force during repossession of vehicle, the use of force is not established with certainty. The petitioner was entitled to repossess the vehicle, however the process of repossession should have been in accordance with the guidelines given by the Reserve Bank of India, which have also been approved by the Hon’ble Supreme Court in Citicorp. Maruti Finance Ltd. Vs. S. Vijayalaxmi, AIR 2012 SC 509, wherein the Hon’ble Supreme Court has observed the following:

“21. Since during the pendency of the Special Leave Petitions before this Court, the Appellant had complied with the orders of the District Forum and the National Commission had already set aside the punitive damages imposed by the State Commission, the reliefs prayed for on behalf of the Appellant had been rendered ineffective and the submissions were, therefore, channeled towards the question of whether the fora below were right in holding that the vehicles had been illegally and/or wrongfully recovered by use of force from the loanees.  The aforesaid question has since been settled by several decisions of this Court and in particular in the decision rendered in ICICI Bank Ltd. Vs. Prakash Kaur (supra).  It is, not, therefore, necessary for us to go into the said question all over again and we reiterate the earlier view taken that even in case of mortgaged goods subject to Hire- Purchase Agreements, the recovery process has to be in accordance with law and the recovery process referred to in the Agreements also contemplates such recovery to be effected in due process of law and not by use of force.  Till such time as the ownership is not transferred to the purchaser, the hirer normally continues to be the owner of the goods, but that does not entitled him on the strength of the agreement to take back possession of the vehicle by use of force.  The guidelines which had been laid down by the Reserve Bank of India as well as the Appellant Bank itself, in fact, support and make a virtue of such conduct.  In any action is taken for recovery in violation of such guidelines or the principles as laid down by this court, such an action cannot but be struck down.”

14.    As the notice was not issued before the repossession and even before the sale of the vehicle, the repossession cannot be said to be in accordance with law.

15.    Coming to the question of punitive damages of Rs.50,00,000/-, it is seen that the State Commission has basically ordered this punitive damage on the reasoning that the petitioner has harassed the complainant and other borrowers by filing complaints under Section 138 of Negotiable Instruments Act.  In the present case, though it is true that the security cheque was used by the petitioner, the cheque cannot be said to be an illegal cheque though it will definitely be treated as highhandedness of the petitioner.  Availing legal remedy cannot be a reason for awarding punitive damages, particularly, when there was no averment in the complaint for awarding punitive damages.  Hon’ble Supreme Court in General Motors (India) Private Limited Vs. Ashok Ramnik Lal Tolat&Anr., Civil Appeal No.8072-8073 of 2009, decided on October 9, 2014 (SC), has observed the following:-

“20. We have already set out the relief sought in the complaint. Neither there is any averment in the complaint about the suffering of punitive damages by the other consumers nor the appellant was aware that any such claim is to be met by it. Normally, punitive damages are awarded against a conscious wrong doing unrelated to the actual loss suffered. Such a claim has to be specially pleaded. The respondent complainant was satisfied with the order of the District Forum and did not approach the State Commission. He only approached the National Commission after the State Commission set aside the relief granted by the District Forum. The National Commission in exercise of revisional jurisdiction was only concerned about the correctness or otherwise of the order of the State Commission setting aside the relief given by the District Forum and to pass such order as the State Commission ought to have passed. However, the National Commission has gone much beyond its jurisdiction in awarding the relief which was neither sought in the complaint nor before the State Commission. We are thus, of the view that to this extent the order of the National Commission cannot be sustained. We make it clear that we have not gone into the merits of the direction but the aspect that in absence of such a claim being before the National Commission and the appellant having no notice of such a claim, the said order is contrary to principles of fair procedure and natural justice. We also make it clear that this order will not stand in the way of any aggrieved party raising a claim before an appropriate forum in accordance with law.”

16.    Relying on the above judgment of the Hon’ble Supreme Court the order of the State Commission in respect of the award of punitive damages of Rs.50,00,000/- cannot be sustained and accordingly, the same is liable to be set aside.

17.    Coming to the question of award of Rs.5,10,001/- as compensation to the complainant the petitioner has asserted that there was still an outstanding of Rs.3,62,000/- which was paid by the complainant. Later on in the year 2009 the petitioner again sent a cheque of Rs.2,00,000/- for encashment, however the same was also dishonored.  It was the case of the petitioner that second time the settlement was Rs.2,00,000/- though the arbitration award was for Rs.6,46,897/- .  Thought it has been proved that there was no settlement between the parties, it was the petitioner who utilising the cheque as given security cheque given by the complainant at the time of sanctioning of the loan.  Be that as it may, complaint has reduced outstanding from Rs.3,62,000/- to Rs.2,00,000/- only on which he was ready to settle as the amount of compensation includes an amount of Rs.1,50,000/- asked by the complainant as compensation, keeping in view that there was some outstanding against the complainant and that the State Commission has given order for refund of all paid by the complainant along with compensation of Rs.1,50,000/- and some other amounts, in the facts and circumstances of the case.  I deem it appropriate to allow the compensation of Rs.50,000/- instead of Rs.1,50,000/- to be paid to the complainant.  Thus, the total amount of compensation required to be paid to the complainant will be Rs.4,10,001/- (rupees four lakh ten thousand one only). 

18.    Based on the above discussion, revision petition is partly allowed and the order dated 31.05.2017 of the State Commission in respect of award of penal damages of Rs.50,00,000/- is set aside.  The compensation awarded to the complaint by the State Commission is also reduced from Rs.1,50,000/- to Rs.50,000/- only in the facts and circumstances and accordingly the petitioner will have to pay Rs.4,10,001/-  (rupees four lakh ten thousand one only) instead of Rs.Rs.5,10,001/- as ordered by the State Commission.  With these modifications, the order of the State Commission ordering compensation is upheld.  The order be complied within a period of 30 days from the date of this order.  It is also clarified that there should be no outstanding amount due against the complainant from the date of this order.