DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-I,

U.T. CHANDIGARH

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Mr.Nirmal Singh s/o Sh.Dev Singh, r/o House No.1270/2, Sector 30-B, Chandigarh.

…..Complainant

                                      V E R S U S

1.       Mahindra & Mahindra Financial Services Ltd., SCO No.2447-2448, 1^st Floor, Sector 22-D, Chandigarh, through Branch Head, Sh.Inderjit Singh.

2.       Mahindra & Mahindra Financial Services Ltd., SCO No.2447-2448, 1^st Floor, Sector 22-D, Chandigarh, through Accounts Officer, Sh.Ramnik Singh.

3.       Mahindra & Mahindra Financial Services Ltd., 4^th floor, Mahindra Tower, Dr.G.M.Bhosale Marg, P.K.Keeme Chownk, Worli, Mumbai-400018, through its Chairman.

……Opposite Parties

QUORUM:   P.L.AHUJA                                                  PRESIDENT

                   RAJINDER SINGH GILL                                MEMBER

ARGUED BY : Sh.Baldev Singh, Counsel for complainant.

                       Sh.S.C.Thatai, Counsel for OPs.

PER P.L.AHUJA, PRESIDENT

1.                Sh.Nirmal Singh, complainant has filed this consumer complaint under Section 12/13 of the Consumer Protection Act, 1986, against Mahindra & Mahindra Financial Services Ltd. & Ors. - Opposite Parties (hereinafter called the OPs), alleging that he purchased one Hyundai Verna Car No.CH-01-AB-0891 for a sum of Rs.8,08,852/- from Ultimate Automobiles Pvt. Ltd., Plot No.155, Phase I, Chandigarh against which he raised a loan of Rs.6,70,000/- from M/s Mahindra and Mahindra Financial Services Ltd., SCO No.3, 1^st Floor, Sector 26, Chandigarh on 9.12.2009. The loan amount was repayable in 60 monthly installments along with interest @ Rs.16,250/-. Unfortunately the said car met with a major accident on 3.9.2010 near Baldev Nagar Camp Main Highway, Ambala City, in which it was totally damaged. The accidental claim of the said car was filed with The New India Insurance Company Limited on 3.9.2010. The complainant gave a letter dated 3.9.2010 – Annexure  C-1 to the Branch Manager, Mahindra & Mahindra Financial Services Ltd., SCO No.3, 1^st floor, Sector 26, Chandigarh requesting him to intimate the full amount towards loan account as and when the claim is received by them and to inform the balance amount outstanding against the loan account. The complainant was neither intimated the receipt of the claim amount nor the fate of the latest position of the loan account immediately on receipt of the claim. When the complainant came to know from independent sources about the insurance claim cheque for Rs.4,09,455/- dated 30.3.2011, he submitted another letter dated 3.5.2011 – Annexure C-2 to the Branch Manager, Mahindra & Mahindra Financial Services Ltd., Sector 26, Chandigarh requesting again to intimate him the exact amount of insurance claim received as also the remaining balance of loan amount after appropriating the insurance claim so that he could deposit the same and adjust the account.  The insurance company issued a cheque of Rs.4,09,455/- dated 30.3.2011 in the name of Mahindra & Mahindra Financial Services Ltd. The complainant had paid an amount of Rs.1,78,750/- against the loan of Rs.6,70,000/-. As such the company had received Rs.5,88,205/- by 31.3.2011. It has been contended that a major accident of the car of the complainant occurred on 3.9.2010, within 9 months of the purchase of the car, therefore, the company should have stopped charging interest on the said loan account w.e.f. 3.9.2010 because the complainant was ready to deposit remaining loan amount after appropriating the amount received from the insurance company on 30.3.2011. The OPs fraudulently kept the said amount of cheque with them in a separate account and continued deducting the EMI regularly from the account. The copy of statement of account is Annexure C-3. The OPs also continued charging interest on full amount of loan i.e. Rs.6,70,000/- till date. It has been contended that the OPs were liable to pay interest on the said amount at the rate at which they have been charging from the complainant. It has been alleged that despite the personal visits of the complainant to the OPs and inspite of assurances given by its officers, the loan account of the complainant has not been adjusted till date, which amounts to deficiency in service on their part. The complainant also served a legal notice dated 6.12.2012 – Annexure C-4  upon the OPs but to no effect. The complainant has made a prayer for a direction to the OPs to adjust the loan account with the amount received by them from the insurance company and to pay a sum of Rs.2 lacs on account of physical and mental agony/harassment, apart from paying litigation expenses.

2.                OPs in their written reply have pleaded that the complainant had approached them with the request for providing of financial assistance/loan for purchase of vehicle Hyundai Verna and also secured the said loan against the security of the said vehicle itself by hypothecating the said vehicle and by creating charge over the said vehicle. The copy of the loan agreement dated 9.12.2009 is Exhibit R-2. The financed amount for vehicle was Rs.6,70,000/- for the period of 5 years by way of equal monthly installments including principal amount as well as interest and other charges.  The total amount repayable was Rs.9,75,000/- and the complainant till date has paid 11 installments amounting to Rs.1,78,750/-.  It has been averred that the complainant started defaulting the installments payments on the ground that the vehicle met with an accident and he stopped making payment of further installments. It has been averred that the payment of installments could not be stopped once the vehicle was financed.  As per the loan agreement, it was specifically agreed about continuance of repayment installments every month in all cases whether the vehicle was operative or not.  It has been further stated that the OPs had the first right over the insured amount and they lawfully received the insured claim amount from the insurance company and the total claim amount received from the insurance company was Rs.4,09,455/-.  The said amount was duly adjusted against the installments of the complainant and even after giving the complete adjustment of the said amount only 25 EMIs could be adjusted and the complainant is still liable to pay the balance amount of Rs.3,86,795/-, as per statement of accounts Exhibit R-3.  It has been stated that as on date the complainant has paid Rs.5,88,205/- only whereas he was supposed to pay Rs.6,50,000/-.  He has not paid even the principal finance amount of Rs.6,70,000/- till date. The complainant is now in default of 6 EMIs.  It has been averred that as per loan agreement, finance company is also liable for all charges and future interest in case of default in payment of loan installments.  It has been contended that complainant never gave any request to the OPs for knowing balance outstanding loan amount and showing his willingness to settle the outstanding loan amount.

3.                The parties led evidence in support of their contentions.

4.                We have gone through the entire evidence and heard the arguments of the learned Counsel for the parties.

5.                It is the admitted case of the parties that the complainant Sh.Nirmal Singh took a loan of Rs.6,70,000/- for the purchase of car from the OPs on 9.12.2009 and the amount was to be repaid in 60 monthly installments of Rs.16,250/- each. It is also admitted that the car of the complainant met with an accident on 3.9.2010 and he filed an accidental claim with The New India Insurance Company Limited, which was settled on 30.3.2011 for an amount of Rs.4,09,455/- by declaring total car loss. The insurance company issued a cheque of Rs.4,09,455/- dated 30.3.2011 in the name of the OPs and that amount was received by the OPs on 30.3.2011, as per copy of statement of account – Annexure C-3.

6.                As far as the grievance of the complainant that company should have stopped charging interest in the said loan account w.e.f. 3.9.2010, the date of accident, since he was ready to deposit the residual loan amount after appropriating the amount received from the insurance company is concerned, the same cannot be accepted. Condition No.3 (n) of the loan agreement – Exhibit R-2 reads as under :-

“(n)   The Borrower is obliged to pay installments every month during the contracted period regardless of whether the Product requires repairs or is otherwise not operatable or working and the Lender shall not be liable or responsible in any manner for non-performance, if any, of the Product and further the Borrower shall look solely to the manufacturer/supplier/or dealer as the case may for the performance of all guarantees and warranties with respect to the Product.”

So, in view of the above condition in the loan agreement,  the action of the complainant in stopping the payment of installments on the ground that his vehicle met with an accident was not justified. It has been held in General Assurance Society Ltd. Vs. Chandmull Jain and another 1966 AIR (SC) 1644 that court should interpret the words of an insurance deed in which the contract is expressed by parties. It is not for the court to make a new contract if the parties have not made it themselves. It has been further held in M/s Suraj Mal Ram Niwas Oil Mills (P) Ltd. Vs. United India Insurance Co. Ltd. and another 2010(10) SCC 567 that in a contract of insurance, rights and obligations are strictly governed by the terms of the policy and no exception of relaxation can be given on the ground of equity.

7.                In the instant case, even if the car of the complainant met with an accident and it was a total loss and the insurance company took sometime for making payment of the claim, nevertheless the complainant was bound to make payment of the installments as per terms and conditions of the loan agreement irrespective of the fact that the vehicle of the complainant was not in operative condition.  The contention of the complainant that OPs should have stopped charging interest from the date of accident is also not tenable.  

8.                The next grievance of the complainant is that inspite of his requests to the OPs for intimating him the receipt of claim and appropriating the full amount towards loan account, no intimation was given to him and when the claim amount was received, the OPs continued deducting the EMI regularly from that account and kept the said amount in a separate account and they are liable to pay interest on the said amount at the rate at which they have been charging from him. The learned Counsel for the complainant has urged that the OPs were required to adjust the claim amount received from the insurance company towards the loan amount and could have taken 3% of principal outstanding as foreclosure charges as per schedule – 1 of the loan agreement.

9.                On the other hand, the learned Counsel for the OPs has argued that as per terms and conditions of the loan agreement, the amount was to be paid by the complainant in 60 equal EMIs of Rs.16,250/- and the total amount repayable was Rs.9,75,000/- and the complainant simply paid an amount of Rs.1,78,750/- towards installments and an amount of Rs.4,09,455/- was received from the insurance company and he has not even paid the principal finance amount of Rs.6,70,000/- and further he has committed default in payment of EMIs. He has further contended that the complainant could take the amount from the insurance company and pay the monthly installments. He has argued that as held by the Hon’ble Apex Court in the rulings cited above, the rights and obligations are strictly governed by the terms of the loan agreement. He has argued that there is no such term or condition of making payment in lumpsum by the complainant as per loan agreement, whereas, as per Clause 12.1 of the loan agreement upon the occurrence of any event of default the lender was entitled to declare all sums due and to become due hereunder for the full term of agreement as immediately due and payable including that the borrower shall be liable to pay the lender foreclosure charges calculated as the percentage of the balance principal outstanding along with other dues including unpaid installments etc. The learned Counsel for the OPs has strenuously argued that the complainant has to make the payment of the balance installments but instead of it he has started making false case and excuses.

10.              We have carefully considered the rival contentions. A perusal of the evidence reveals that the complainant sent a letter dated 3.9.2010 – Annexure C-1 to the Branch Manager of Mahindra & Mahindra Financial Services Pvt. Ltd., SCO No.3, First Floor, Sector 26, Chandigarh, wherein, he asked the Branch Manager that as and when the claim is received the amount of insurance claim be appropriated in his loan account and the fate of the account be intimated to him immediately towards adjustment of the account. The said letter was received by an official of the OPs and the copy of the letter also bears the stamp of the OPs. Thereafter, the complainant again sent a letter on 3.5.2011, copy of which is Annexure C-2 to the Branch Manager, Mahindra & Mahindra Financial Services Pvt. Ltd., SCO No.3, First Floor, Sector 26, Chandigarh, wherein, a reference was made to the previous letter dated 3.9.2010 intimating that he had come to know that the insurance claim has been received from The New India Insurance Company by him on 30.3.2011 but he was not informed. The Branch Manager of the OPs was again requested to intimate the complainant about the amount of the insurance claim received and adjust the full claim amount in his car loan account, so that he could deposit the balance, if any to close the account in full and final. This letter was also received by an official of the OPs. However, the OPs did not bother to give any reply to the letters dated 3.9.2010 and 3.5.2011 of the complainant.  We agree with the contention of the learned Counsel for the OPs that there is no clause in the loan agreement about the lump sum payment and foreclosure charges @3% of principal outstanding by the borrower. The foreclosure charges mentioned in schedule – 1 to the agreement relate to the right of the lender in the event of default of making payment.       We are of the opinion that as per terms and conditions of the loan agreement the complainant was bound to pay monthly installments @Rs.16250/-. However, when the OPs had received an amount of Rs.4,09,455/- on 30.3.2011 from the insurance company in respect of the car loss of the complainant, the OPs could have adjusted the 16 monthly installments which were due upto 10.3.2011. The OPs should have either refunded the balance claim amount to the complainant or paid interest on that amount on the rate being paid by the complainant to them. However, the OPs even did not bother to give a reply to the letters dated 3.9.2010 and 3.5.2011 sent by the complainant to them. We are of the view that had the OPs paid the balance claim amount to the complainant, the complainant could have utilized that amount and paid monthly installments to the OPs but the OPs kept that amount in a separate account and continued deducting monthly installments. Such an action on the part of OPs amounts to deficiency in service.

11.              For the reasons recorded above, the OPs cannot be directed to adjust the loan account with the amount received by them from the insurance company. However, the action of the OPs in keeping the balance amount of the claim received from the insurance company with them has definitely resulted into physical and mental agony and harassment to the complainant.

12.              Consequently, the complaint is partly allowed. OPs are directed to make payment of an amount of Rs.50,000/- to the complainant for deficiency in service and causing mental and physical harassment. They are also directed to make payment of an amount of Rs.7500/- to the complainant towards litigation expenses.

13.              This order shall be complied with by the OPs within one month from the date of receipt of its certified copy, failing which, OPs shall be liable to refund the above said awarded amount to the complainant along with interest @9% p.a. from the date of filing of the complaint, till its realization, besides litigation expenses, as mentioned above.

14.              The certified copies of this order be sent to the parties free of charge. The file be consigned.