BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM

VAZHUTHACAUD, THIRUVANANTHAPURAM.

PRESENT

SRI. G. SIVAPRASAD : PRESIDENT

SMT. BEENAKUMARI. A : MEMBER

SMT. S.K.SREELA : MEMBER

C.C. No. 256/2006 Filed on 20.09.2006

Dated : 17.01.2011

Complainant:

Santosh Nair, T.C 23/641, Pangappara Veedu, Valiasalai, Chalai, Thiruvananthapuram.

(By adv. Vazhuthacaud R. Narendran Nair)

Opposite parties:

1. GMAC Financial Services, represented by its Managing Director, Padma Complex, Second Floor, 467 Anna Salai, Nandanam, Chennai.

    

2. GMAC Financial Services represented by its Branch Manager, S.S. Kovil Road, Thampanoor, Thiruvananthapuram.

(By adv. Pallichal S.K. Pramod)

This O.P having been taken as heard on 30.11.2010, the Forum on 17.01.2011 delivered the following:

ORDER

SRI. G. SIVAPRASAD: PRESIDENT

The facts leading to the filing of the complaint are that complainant purchased a Maruti 800 STD car from Popular Automobiles, on 15.01.2005, that for purchasing the said car complainant availed a loan of Rs. 1,70,000/- from the 2^nd opposite party, that 2^nd opposite party is the branch office of the 1^st opposite party, that an agreement was entered into between the complainant and opposite parties and loan was sanctioned on 13.01.2005 and this was disbursed on the same day itself, that as per the agreement the 1^st installment due date was 13.01.2005 and last installment due date was 13.12.2007, that complainant remitted 13 installments, thereafter complainant approached the 2^nd opposite party to remit the entire remaining installment and closed the loan account once and for all, that opposite party was not willing to take the entire amount due by waiving the interest to be paid on the remaining installments. Opposite parties tried to extract more money from him in the form of interest. Hence this complaint to direct opposite parties to collect the entire loan amount with interest upto 13.12.2005 and close the loan account and pay compensation and costs.

Opposite parties entered appearance and filed version contending interalia that complainant has no locus standi to file this complaint during the existence of a loan cum hypothecation agreement, that complainant opted for 36 monthly installments for repayment, that complainant defaulted payment commencing from 10.02.2006 (i.e; 14^th installment), that as on 30.10.2006 total 9 installments were pending and an amount of Rs.51,480/- towards EMI, late payment charges and cheque bounce charges were due, that complainant insisted for closure according to his whims and fancy and not according to the agreement signed by him, that agreement conditions stipulates the premature closure by collecting 4% additional outstanding principal amount as per clause 12.1 and 14 of the agreement, that opposite parties never demanded any future interest on premature closure. Complainant is liable to remit the overdue amount. Opposite parties are bound to issue NOC after clearing the loan amount. Hence opposite party prayed for dismissal of the complaint.

The points that arise for consideration are:-

1. Whether there is deficiency in service on the part of opposite parties?

2. Whether the complainant is entitled to any reliefs?

In support of the complaint, complainant has filed proof affidavit and has marked Exts. P1 to P5. In rebuttal, opposite party has not filed proof affidavit.

Points (i) & (ii):- Admittedly, complainant availed a loan of Rs. 1,70,000/- from the 2^nd opposite party for purchasing a Maruti car on executing an agreement No. 1041948 dated 13.01.2005. It has been the case of the complainant that he has remitted 13 installment, thereafter he preferred to close the loan account once and for all, but 2^nd opposite party was not willing to take the entire amount due by waiving the interest to be paid by the remaining installments. It has been asserted by the complainant that opposite party's executives assured him that if he remits the entire amount in one installment, then interest for subsequent installments will be waived. Submission urged by the complainant is that the action of the opposite parties to bounce back from the promise will amount to unfair trade practice and deficiency in service. Further, it is averred by the complainant in his affidavit that after filing the complaint when it was posted for return of notice, the vehicle (which was parked in front of the St. Mary's School, Patton on 17.10. 2006) was found missing, later it was revealed by the Circle Inspector of Police, Medical College Police Station that the vehicle in dispute was taken by the goondas of the opposite parties. On the part of complainant Exts. P1 to P5 were marked. Ext. P1 is the copy of the Registration Certificate. On perusal of Ext. P1 it is seen that the date of registration of the vehicle in dispute is 15.01.2005. A hypothecation/hire purchase/Lease Agreement with GMAC Financial Services India Ltd., Thampanoor, Thiruvananthapuram with effect from 15.01.2005 is seen endorsed in Ext. P1. Ext. P2 is the letter with repayment schedule and terms and conditions sent by the opposite party to complainant. On perusal of the terms and conditions it is seen that Date of disbursement : 13.01.2005, Agreement No. 1041948, Amount Financed Rs. 1,70,000/-, Tenure : 36 months, Installment frequency : monthly, First installment : 13.01.2005, last installment : 13.12.2007. It is further stated in Ext. P2 that cheque bounce charges : Rs. 500/- per cheque, Loan preclosure charges: 4% of principal amount outstanding at the time of preclosure, delayed payment charges : 3% per month (compounded on monthly basis) that is 36% per annum. Ext. P3 is the copy of the advocate notice dated 10.06.2006 sent by the complainant to opposite parties. Ext. P4 series are bills. Ext. P5 is the copy of the complaint dated 17.10.2006 lodged before the Medical College police station alleging the theft of the vehicle in dispute. Ext. P6 is the Inventory Catalogue. Complainant has been cross examined by opposite parties. In his cross examination by the opposite parties, complainant as PW1 has admitted the execution of the hypothecation agreement. PW1 denied the suggestion that Exts. P4 (1), P4(2 ) and P4(3) are fraudulently created. PW1 has not furnished any materials to show that company executive agreed to reduce the amount. In his cross examination by the opposite parties, PW1 has admitted that he had remitted 13 EMIs. Further PW1 denied the suggestion put forth by the opposite party that complainant never approached the opposite party at any time with arrear amount. Opposite parties resisted the complainant by submitting that complainant defaulted payment commencing from 10.02.2006 (that is 14^th installment), that as on 30.10.2006 total 9 installments were pending and an amount of Rs. 51,480/- towards EMI, late payment charges [clause 2.6(e)], cheque bounce charges [clause 2.5(e)] were due on that account. It is averred in the version that the agreement condition stipulates the premature closure by collecting 4% additional on outstanding principal amount as per clause 12.1 and 14 of the agreement. Opposite party has furnished the original agreement which is in the records. There is no point in dispute that complainant has remitted 13 installments out of 36 installments. It is to be noted that as on 13^th installment the balance principal outstanding was Rs. 1,15,133/-. That means he has remitted an amount of Rs. 54,867/- (i.e; Rs. 1,70,000/- - Rs. 1,15,133/-). It is further to be noted that the vehicle was repossessed by the opposite party on October 2006, the due date of 13^th installment was on 13.01.2006. Thereafter admittedly complainant never remitted EMIs upto the date of repossession of the vehicle. The vehicle was repossessed after the due date of 22^nd installment, that means complainant committed default in payment of 9 EMIs which are against the provisions of the hypothecation agreement executed by the parties. In this regard we have to highlight the guidelines issued by various courts. As regards the repossession of the vehicle we need to highlight the guidelines to be strictly followed by the finance company before it exercises its power to repossess the vehicle which have been reiterated time and again by various courts. If the amount is not paid by the borrower, the finance company can exercise its power in the finance agreement to recall the loan. If it exercises its power a notice should be given to the borrower intimating that the loan has been recalled, the borrower should be called upon to pay the amount within 7 days of the receipt of the notice. This notice should be sent by registered post at the address given by the borrower. If the amount is not paid within the stipulated period as per the notice, the finance company would be authorized to repossess the vehicle, but this power of repossession would not entitle the finance company to take the vehicle while plying on the road. In case the borrower refused to sign papers when the vehicle is repossessed, on repossession of the vehicle immediate information should be provided by the finance company to local police intimating the time and place when the vehicle was repossessed. In the case in hand nowhere in the complaint is it seen mentioned that vehicle was repossessed while plying on the road. It is stated in the affidavit in lieu of chief examination that after filing the complaint, the case was posted to 17.10.2006, on that day his vehicle parked in front of St. Mary's school was found missing along with articles therein and a complaint was lodged to Medical College police, that on enquiry by Medical College Police it was found that the vehicle had been taken by the goondas of the opposite parties. Complainant has been cross examined by opposite party. In his cross examination complainant denied the suggestion that the vehicle was repossessed by opposite party as law/guidelines. Opposite party has not furnished any material to show that repossession was on observing the guidelines, thereby we infer that repossession was unilateral and without observing the guidelines. Herein it is pertinent to note that complainant had used the vehicle for more than 1 year and 10 months, he had remitted Rs. 54,867/- towards principal outstanding. The vehicle may depreciate by its use. We fix depreciation at 15% by its use in the said period. That means the capital consumption would come to Rs. 25,500/- (15/100 x 1,70,000/-). He had remitted Rs. 54,867/- towards principal outstanding. Though complainant has not mentioned the price of the vehicle in dispute in the complaint or affidavit, he has mentioned it in his objection to version to the effect that the price of the said car on road was Rs. 2,40,000/- and out of which Rs. 1,70,000/- was financed by the opposite parties. To substantiate the same, no document furnished by the complainant. It remains the fact that the price of the vehicle would definitely exceed the loan amount of Rs. 1,70,000/-. Further the market value of the vehicle in dispute may vary from time to time. It may fall with passage of time. It remains uncertain as to whether the vehicle in dispute repossessed from the complainant has been sold or not. If it is sold at what rate is it sold out? Further if it is not sold what is the benefit of attaining the said vehicle after a lapse of 4 years? No purpose will be served if complainant gets it after a lapse of 4 years. Further there is no evidence to show that complainant has approached the opposite parties with a view to close the loan account. Undisputedly, complainant had not remitted 9 EMIs till repossession of the vehicle by opposite parties from which it appears that complainant has violated the provisions of the hypothecation agreement, opposite parties are left with no other alternative than to repossess the vehicle, but it must be in lawful way, that is after serving notice to the borrower informing him of the arrear EMIs due to opposite party and calling upon him to pay the said arrears within a time period, failing which opposite party would be authorized to repossess the vehicle. No such legal steps are seen taken by opposite parties in this case. Thereby we deem that repossession was unilateral and against the guidelines. The repossession of the vehicle by forcible way or illegal way would amount to deficiency in service on the part of opposite parties. In view of the foregoing discussions and evidence available on records we are of the considered opinion that a lumpsum payment of Rs. 50,000/- to complainant would meet the ends of justice.

In the result, complaint is allowed. Opposite parties shall pay the complainant a sum of Rs. 50,000/- along with a cost of Rs. 2,000/- within two months from the receipt of this order, failing which Rs. 50,000/- will carry interest at the rate of 9% per annum.

A copy of this order as per the statutory requirements be forwarded to the parties free of charge and thereafter the file be consigned to the record room.

Dictated to the Confidential Assistant, transcribed by her, corrected by me and pronounced in the Open Forum, this the 17^th day of January 2011.

Sd/-

G. SIVAPRASAD : PRESIDENT

Sd/-

BEENAKUMARI. A : MEMBER

Sd/-

S.K. SREELA : MEMBER

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C.C. No. 256/2006

APPENDIX

I COMPLAINANT'S WITNESS :

PW1 - Santhosh Nair

II COMPLAINANT'S DOCUMENTS :

P1 - Copy of R.C Book

P2 - Letter with repayment schedule and terms and conditions sent

by the opposite party to complainant.

P3 - Copy of advocate notice sent by complainant to opposite party

dated 10.06.2006

P4 - Bills

P5 - Copy of the complaint dated 17.10.2006

P6 - Catalogue

III OPPOSITE PARTY'S WITNESS :

NIL

IV OPPOSITE PARTY'S DOCUMENTS :

NIL

Sd/-

PRESIDENT