BEFORE THE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD.
FA 871 of 2011 against C.C. 166/2010, Dist. Forum, Ranga Reddy
Between:
1) M/s. TVS Finance & Services Ltd.
1st Floor, Vyshnavi Plaza
Opp. Delhi Public School
Sikh Road, Bowenpally
Secunderabad.
2) The Director
M/s. TVS Finance & Services Ltd.
Jayalakshmi Estates
8, Haddaws Road
Chennai-600 006. *** Appellants/
O.Ps
. And
Mohd. Yaseen, S/o. Mohd. Amen
Pvt. Employee
H.No. 17-1-211/A/B
Banunagar, Santhoshnagar
Hyderabad. *** Respondent/
Complainant
Counsel for the Appellant: M/s. Amba Shanker
Counsel for the Respondent: P.I.P.
CORAM:
HON’BLE SRI JUSTICE D.APPA RAO, PRESIDENT.
&
SMT. M. SHREESHA, MEMBER
TUESDAY, THIRTY FIRST DAY OF JANUARY TWO THOUSAND TWELVE
ORAL ORDER: (Per Hon’ble Sri Justice D. Appa Rao, President)
***
1) This is an appeal preferred by the opposite parties TVS Finance against the order of the Dist. Forum directing it to pay Rs. 45,730/- together compensation of Rs. 10,000/- and costs of Rs. 3,000/-.
2) The case of the complainant in brief is that he obtained a loan of Rs. 38,000/- from Op1 finance company for purchase of a two wheeler agreeing to repay the same in 24 instalments @ Rs. 1,900/- per month. Accordingly he paid Rs 7,730/- towards down payment and Rs. 47,775/- towards instalments excluding penalty of Rs. 2,175/-. However, as he became sick, he could not pay the last two instalments in time, and requested them to give some more time to pay the same. Without issuing any notice or heeding to his representation they have seized the vehicle. Immediately he visited the office on which he was informed that he had to pay Rs. 6,000/-. Later he learnt that his vehicle was sold away in auction without even informing him by keeping him in dark for a period of three months. This amounts to deficiency in service, and therefore prayed for refund of amount paid by him with interest @ 18% p.a., together with compensation of Rs. 35,000/- towards mental agony and Rs. 3,000/- towards costs.
3) The appellant finance company resisted the case. While admitting that a loan of Rs. 38,000/- was sanctioned with a condition to repay within 24 months by keeping the vehicle hypothecated to it by executing loan agreement dt. 20.4.2007, demand promissory note, post dated cheques to ensure payment in terms of loan agreement, it had also furnished copies of these documents. The complainant did not pay the instalments regularly and failed to honour the terms of loan agreement. He had paid only 22 instalments. Despite several requests, and in view of failure to adhere to the terms it had seized the vehicle as per Clause-8 of the agreement informing the same to the complainant by notice dt. 18.12.2009 directing him to pay Rs. 13,971/- within seven days failing which seized vehicle will be sold. The complainant having received the same did neither pay nor give reply. On that it had sold the vehicle for Rs. 20,000/- and informed to take balance of Rs. 6,029/-. There was no deficiency in service on its part and prayed for dismissal of the complaint with costs.
4) The complainant in proof of his case filed his affidavit evidence and got Exs. A1 to A19 marked while the appellants filed the affidavit evidence of its Legal Executive and got Exs. B1 to B3 marked.
5) The Dist. Forum after considering the evidence placed on record opined that the appellants did not file any documents to show that they had followed the due procedure while seizing the vehicle from the complainant, and finally held that the complainant was entitled for refund of value of the two wheeler together with compensation and costs as stated above.
6) Aggrieved by the said decision, the appellants TVS finance preferred the appeal contending that the Dist. Forum did not appreciate either facts or law in correct perspective. It ought to have seen that the very complainant having committed default in payment of amount it could take re-possession of the vehicle by virtue of decision of Hon’ble Supreme Court in Managing Director, Orix Auto Finance (India) Ltd. Vs. Shri Jagmandar Singh reported in (2006) I SCC 708. There was no pleading that it had re-posseed the vehicle forcibly. It had every right to seize the vehicle, and proceed according to law, according to terms of the agreement. As per the terms of the agreement, after issuing notice the vehicle was sold. They were ready to pay balance remained after adjusting the entire loan amount.
7) The point that arises for consideration is whether the order of the Dist. Forum is vitiated by mis-appreciation of fact or law?
8) It is an undisputed fact that the complainant has purchased a two wheeler worth Rs. 38,000/- + Rs. 7,730/- = Rs. 45,730/- after borrowing the said amount from the appellant financier commencing from 10.4.2007 repayable in 24 instalments @ Rs. 1900/- per month. It is also not in dispute that the complainant had paid 22 instalments including Rs. 2,175/- collected towards penalty. It is also not in dispute that when he could not pay two instalments for whatever reason, the financier had seized the vehicle. The complainant alleges that though he asked the appellant as to why it was seizing the vehicle even after payment of 22 instalments and without heeding to his request it was seized and kept the same in its custody. Later the vehicle was sold away without giving any notice contrary to the guidelines issued by RBI.
9) The appellant though mentioned that the complainant had executed a loan agreement dt. 20.4.2007, demand promissory note etc., it did not file those documents. The appellant asserts that by invoking clause-8 of the loan agreement after informing the complainant by notice dt. 18.12.2009 that if an amount of Rs. 13,971/- was not paid, the vehicle will be sold, it has sold on failure to pay the same. As we have earlier pointed out, unfortunately, terms of loan agreement are not known. In the light of the fact that only two instalments were due, and we do not have any evidence to show that notice was issued before taking re-possession of the vehicle as was desired by the Hon’ble Supreme Court in Citi Corp Maruthi Finance Ltd. Vs. S. Vijaya Laxmi in Civil Appeal No. 9711 of 2011 decided on 14.11.2011. We have to hold that it was contrary to law. Their Lordships’ opined that
17. Appearing for the Finance Industry Development Council (FIDC), Ms. Haripriya Padmanabhan, learned Advocate, submitted that the Council is a self- regulatory organization registered with the Reserve Bank of India and is governed by the guidelines issued by the Reserve Bank of India from time to time. Ms. Padmanabhan submitted that on 26th October, 2007, this Court had in the present proceedings expressed concern over the manner in which loans by financial institutions were being recovered. Learned counsel submitted that this Court was particularly concerned with the procedure adopted for recovery of such loan amounts by financial institutions by alleged use of force, despite the directions given by this Court in ICICI Bank Ltd. Vs. Prakash Kaur [(2007) 2 SCC 711]. It was submitted that the Reserve Bank of India had formulated operational guidelines for adoption by all commercial banks. Pursuant to the guidelines of July, 2009, relating to Debt Collections Standards in India, the Citibank had updated its Code for collection of dues and re-possession of security. It was submitted that the said guidelines were detailed and expansive and attempted to cover all the shortcomings in the earlier guidelines in order to ensure that no force was used for the purpose of effecting recovery of the dues.
Finally their Lordships’ opined :
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 entitle 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. If 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.
10) The learned counsel for the appellants contends that there was no pleading that the vehicle was re-possessed by using force. The complainant mentioned in his complaint that he protested when the vehicle was seized and even he pleaded that he would pay that amount. Since the loan agreement was not filed, it is not known what are the terms and conditions that were formulated before taking re-possession of the vehicle or the conditions stipulated for sale of the vehicle. Pre-sale notice was issued to the complainant under Ex. B2 dt. 18.12.2009 stating that “you are hereby called upon to pay Rs. 13,971/- within seven days of this notice, for taking possession/re-delivery of the said vehicle failing which, we shall proceed with the sale of seized vehicle, without any further information, and if there remains any balance payable by you, after adjusting the sale proceeds, the same shall be recovered by initiating legal action, and it is needless to reiterate, that the cost and consequences arising there from, shall be added upon you.” It may be stated herein that in the very same notice they have mentioned that “ we have thus exercised our rights in consonance with the said loan agreement and re-possessed the vehicle on 18.12.2009 and had also intimated the same to you vide our telegram dt. 18.12.2009.
11) It gives an internal clue that on the very same day when it had taken re-possession of the vehicle it had also issued a notice that it would sell away the same. No material whatsoever was filed when the auction was conducted, and who purchased the vehicle and at what amount. In other words pre-possession notice or pre-sale notice mentioning the date of sale
were not mentioned. The appellant under the law is bound to disclose the proceedings in order to verify whether the sale was just. As we could see for the vehicle worth Rs. 45,730/- it was sold for Rs. 20,000/-. He was due only two instalments viz., Rs. 3,800/- + whatever penal charges liable to be paid. The fact that they have issued telegram on 18.12.2009 on the very same day was not even pleaded in the written version. The appellant, financier ought to have mentioned the date on which auction was to be conducted in order to enable the complainant to participate in the auction, if for any reason the amount due was not paid. It is not as though the financier had sold the vehicle within 7 days of notice under Ex. B2. It sold the vehicle subsequently. Deliberately the date was not mentioned. Had this date been mentioned it could be known as to when it was sold, and whether the complainant was aware of said auction. No opportunity was given to the complainant either to pay back the amount or participate in the auction. All this discussion is un-necessary in view of the fact that the appellant did not want to prove that it has followed the entire due process by filing agreement entered into in between them. The suppression could not be an innocent act. In fact Ex. B2 notice is a proforma notice wherein it was mentioned “ In spite of repeated requests and demands, you had failed to make payments regularly, thereby always leaving arrears to be taken to the next month.” It is obviously incorrect as far as complainant is concerned. He has been paying the instalments. Only two instalments could not be paid as he himself alleges that he fell sick. The appellant did not find out nor had given any opportunity nor informed the date of auction in order to enable the complainant to repay or participate in the action. All this amounted to deficiency in service. We are fortified in this regard by the decision of Hon’ble Supreme Court in Citi Corp Maruthi Finance Ltd. Vs. S. Vijaya Laxmi
12) Coming to the quantum of amount, the appellant contended that when the Dist. Forum was refunding the amount it ought to have considered that the complainant had used the vehicle around two years, necessary depreciation has to be given. The complainant having availed the loan amount for a period of two years it did not award any interest for the amount lent by it. It may be stated herein that as against an amount of Rs. 38,000/- borrowed by the complainant from the appellant he had repaid Rs. 47,775/-+ Rs. 7,730/- towards re-payment viz., an amount Rs. 55,505/-. Obviously when they fixed the EMI, interest and other components were also included. Therefore it cannot be contended that it was denied interest over the amount lent by it. According to the appellant the vehicle was sold for Rs. 20,000/-. Since the complainant has been using the vehicle, it could not be sold away at Rs. 20,000/- not even half of the amount, admitting that there could be some depreciation of the vehicle. Since the complainant admits that he had committed default, while directing the appellant to refund Rs. 45,730/-, we are of the opinion that compensation of Rs. 10,000/- that was awarded by the Dist. Forum could be denied when the complainant was also equally fault in discharging the loan. In view of high handed attitude of the appellant in selling away the vehicle without notice, the complainant has no other go than to purchase a new vehicle by spending some more amount, may be the cost of vehicles have gone up in the meantime. This aspect would cover if the amount is directed to be refunded, in view of the fact that he did not pay two instalments.
13) In the result the appeal is dismissed except for modification of the order of the Dist. Forum deleting compensation of Rs. 10,000/- awarded. Rest of the order is confirmed. There shall be no order as to costs in the appeal. Time for compliance four weeks.
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
31/01/2012
*pnr
UP LOAD – O.K.
