BEFORE THE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION: HYDERABAD
C.C.NO. 29 OF 2007
Between:
B.S.N.Joshi & Sons Ltd.,
Joshi Chambers, P.B.No.2045,
G.K Towers, 3rd Floor,
Dwarakanagar,
Visakhapatnam.
Rep.by Mr.K.A.Swamy,
Branch Manager.
Complainant
AND
1. M/s Kotak Mahendra Bank Ltd.,
Rep.by Branch Manager,
38-8-17, M.G.Road, Opp.AIR,
Vijayawada-520 010.
2. M/s Kotak Mahendra Bank Ltd.,
Regd.Office 36-38A, Chairman Bhavan,
227, Nariman Point,
Mumbai-400 021.
Opposite parties
Counsel for the Complainant : Mr.D.Venkata Reddy
Counsel for the Opp.parties : Mr.Sivananda Kumar
CORAM: THE HON’BLE MR.JUSTICE D. APPA RAO, PRESIDENT
SRI SYED ABDULLAH, HON’BLE MEMBER,
AND
SRI R.LAXMINARASIMHA RAO, HON’BLE MEMBER
WEDNESDAY, THE THIRTIETH DAY OF DECEMBER,
TWO THOUSAND NINE.
Oral Order: (Per Sri R.Laxminarasimha Rao, Hon’ble Member)
The complaint is filed u/Sec 17 (a)(i) of the C.P Act against M/s Kotak Mahendra Bank Ltd., praying for a direction for payment of Rs.26,18,604/- towards the cost of four vehicles along with interest at the rate of 12% p.a , Rs.2,500/- per vehicle per day from 20th September, 2006 towards damages and Rs.5,00,000/- towards compensation for loss of reputation and costs.
The averments of the complaint are that the complainant is a Company registered under the Companies Act and carrying on its business on imports, exports, transportation etc., In the course of their business the complainant entered into a loan agreement with the opposite party Bank for purchase of four vehicles under hire purchase scheme as mentioned in para 3 of the complaint. The loan amount was repayable in 47 installments of Rs.1,20,000/- commencing from 10.12.2004 to 10.10.2008. The complainant executed the loan agreement along with blank dated cheques and submitted to the opposite party bank who presented the cheques for collection through HDFC Bank by presenting the first cheque No.147252 dt. 10.12.2004 which was encashed on 11.12.2004. The opposite party bank presented the cheques till the cheque bearing No.147267 dt.25.1.2006 which was honoured on 22.3.2006.
The cheque bearing No.147268 dt.25.2.2006 intended for collection was presented which was also honoured on 13.3.2006. The opposite party bank has not presented the cheque as per the schedule during the period from 10th August, 2006 till 10th September, 2006. The opposite party bank committed irregularity in presenting the cheque and the same was noticed by the complainant as the cheque dates were different. The cheques schedule issued by the bank shows that the cheque bearing No.147263 was presented in the month of November, 2005 and it was honoured on 21.10.2005. The cheque No.147264 was honoured on 29.11.2005. The transactions were made by the opposite party bank without intimation and even without adopting the procedure.
On 20.9.2006 the opposite party bank seized the vehicles along with the registration documents and transportation material, as a result of which the complainant suffered an amount of Rs.2500/- per day per vehicle from 20.9.2006 and the same was intimated to the opposite party bank on 16.10.2006 in reply to the lawyer notice issued on 10.8.2006. The complainant requested the opposite party bank for its willingness to continue the loan scheme provided the vehicles are released and all incidental penalties are recalled. The complainant approached the R.B.I which forwarded the complaint to the Banking Ombudsman who inturn closed the matter on the premises that the complaint could not be taken up for consideration in view of Clause 1 (A) 2 (V) of the BO Scheme, 2006.
The opposite party sold the vehicles and got clearance from the R.T.A without intimating about the sale proceeds of the vehicles to the complainant. The complainant got issued a notice to the opposite parties under Sec.10 of Hire Purchase Act, 1972 to terminate the agreement in terms of Secs. 13 to 15 of the said Act and refund the amount along with damages at the rate of Rs.10 lakhs. The opposite party Bank had issued letter dt.19.1.2007 whereby it was informed that the agreement was terminated and also the Bank had claimed refund in terms of Sec.18 of the Hire Purchase Act, an amount of Rs.30,18,560/- for four vehicles along with interest at the rate of 12% p.a. The complainant requested the opposite party Bank to hold Arbitration within Visakhapatnam jurisdiction, in reply to which the Opposite Party Bank issued a letter dt.3.2.2007 that in case Arbitration is to be held, the matter has to be dealt with in Mumbai and the expenses to be incurred has to be borne by the complainant.
The amount of compensation capable of being prayed for in an appeal before the Debt Recovery Tribunal as per the arbitration clause was barred and as such the complainant has filed the present complaint. The opposite party Bank has not served a clear and specific notice of sale before exercising the right of sale as per Sec.176 of the Indian Contract Act which amounts to deficiency in service. The opposite party Bank has misused the cheques without following any seriatim by putting dates on cheques and tried to encash intermittently of its choice. Hence, prayed to allow the complaint.
The opposite party has filed counter contending that the complainant has utilized the finance provided by them for Commercial Purpose. The transactions which formed the basis of the complaint are commercial in nature and as such they are not covered by the provisions of the C.P Act. The hire purchase Act 1972 mentioned by the complainant is a still born child as it has not come into effect by an effective notification. The loan agreement entered into by the complainant defines the word “due date” means the date on which the installment of the principal amount of the loan and/or interest and/or any amount payable under the agreement and the word “margin money indebtedness of business, borrower, assets, credit information etc.,” are also defined in the loan agreement. The complainant has attempted to give a different meaning to these words to that what was mentioned in the agreement.
The vehicle is a principal security for realization of the amounts due and payable and since the indebtedness of the borrower means any indebtedness of the borrower or the co-borrower or guarantor
to the Bank at any time far and in respect of monies borrowed, contacted or raised towards the Bank. The vehicle is deemed to include all accessories, additions are replacements whenever made including by way of body building engine upgrades and the line. The hypothecation is registered as required under the Motor Vehicle Act creating an interest in the opposite parties and hypothecated vehicle for recovery of the dues from the hirer as defined by the Motor Vehicle Act by following due process. Ample opportunity was given to the complainant and then only vehicles were sold for due realization of the debt.
Three different notices were given calling the complainant to discharge the debt. The letters dated 22.9.2006, 5.10.2006 and 7.10.2006 inspite of being received by the complainant calling upon him to pay the dues and with a caution that on his failure to do so the vehicles would be sold to the better quote and sale proceeds would be adjusted into the account of the complainant. The complainant has not paid the total dues as mentioned in the letters. Therefore the opposite party was left with no option other than terminating the loan agreement and selling the vehicles to the highest quote. The cheques issued by the complainant were bounced for want of funds in the account of the complainant. There was exchange of various notices by the Officers’ of the opposite party bank with the complainant. An alternative remedy was provided by way of a procedure to approach Debts Recovery Tribunal. .
The opposite party Bank had agreed to the offer of the complainant to approach arbitration procedure. The complainant failed to take any steps for appointment of an Arbitrator and to circumvent the clause, the complainant has filed the complaint before this Commission. There was no deficiency in service on the part of the opposite party Bank.
In support of the case the Branch Manager of the Complainant Company has filed his affidavit and marked Exs.A-1 to A-27 were marked, On behalf of the opposite party Bank its Manager (Legal) has filed his affidavit and marked Exs.B-1 to B-20 are marked.
The points for consideration are:
1) Whether the complainant is a consumer within the meaning of Sec.2 (1)(d) of the C.P Act ?
2) Whether the opposite party has committed deficient service in effecting seizure and sale of the four vehicles?
3) To what relief?
POINT NO.1:
The nature of the transaction as stated in the third para of the complaint is in relation to the purchase of four vehicles by the complainant for use of the same in its business of imports, exports, transportation. The opposite parties have raised objection as to the styling of the complainant Company itself as the complainant within the meaning of the provisions of the C.P Act on the ground that the finance provided by them to the complainant Company was for commercial purpose.
Sec.2(1)(d) of the C.P Act provides for filing of complaint by the person who does not purchase goods for the purpose of re-sale and also those who avail service not for any commercial purpose. Admittedly the vehicles in question were purchased by the complainant company for the purpose of enabling itself to promote its business activity. Thus, Sec. 2(1)(d) of the C.P Act reads as follows:
(d) "consumer" means any person who—
(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or
(ii) 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 and includes any beneficiary of such services other than the person who 'hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person but does not include a person who avails of such services for any commercial purposes;
Explanation.— For the purposes of this clause, “commercial purpose” does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment;
Even otherwise the contention of the complainant is that the opposite parties have misused the cheques dt.10.10.2005, 11.2.2006, 10.11.2005, 21.10.2005, 29.11.2005 by getting them presented for collection earlier to the dates mentioned therein. A perusal of the record does not show submission of bank statement of the complainant Company that the cheques were presented for collection earlier to their respective dates.
The other contention of the complainant is that the opposite party has repossessed the vehicles without issuing any notice to it and sold the vehicles without issuing any pre-sale notice to the complainant. This contention of the complainant is belied by the letter dt.5.1.2007 marked as Ex.A-5 wherein it is categorically mentioned that as per the terms and
conditions of the agreement entered into between the complainant and the opposite parties, the opposite parties could repossess the vehicles on account of any default in payment of the installments by the complainant Company. Ex.A-5 shows that the complainant had committed default and after due intimation the opposite parties repossessed the vehicles and also even after the opposite parties repossessed the vehicles, they had issued letters dt.22.9.2006, 5.10.2006 and 7.10.2006 requesting the complainant to pay the dues and settle the account. Subsequently to the issuing of the letters as mentioned in Ex.A-5 the opposite parties sold the vehicles and adjusted the sale proceeds to the account of the complainant Company. The complainant approached the Reserved Bank of India which forwarded the complaint of the complainant to Banking Ombudsman who through letter dt.21.12.2006 had closed the case in view of clause 8(1)(a) to (u) of the BO scheme 2006 regarding hypothecation/clearing of cheques .
The learned counsel for the complainant has submitted that prior to approaching the Reserve Bank of India, the complainant Company requested the opposite parties to hold arbitration within Visakhapatnam jurisdiction. The opposite parties had, by letter dt.3.2.2007 marked as Ex.A-2, expressed their readiness in initiating arbitration proceedings which were to be held at Mumbai as per the terms and conditions of the agreement in terms of which the costs and consequences were to be borne by the complainant Company. Thereafter, the complainant Company instead of proceeding with initiation of arbitration proceedings, has approached the Reserve Bank of India, Banking Ombudsman and ultimately this Commission which is not permissible in view of the Arbitration clause and its invocation by the complainant Company. The complainant has not established any deficiency in service on the part of the opposite parties. In the circumstances, after taking into consideration of all the facts embodied in A-1 and A-18 and Exs.B-1 to B-20, we are of the considered opinion that there are no merits in the complaint. The complaint is liable to be dismissed.
In the result, the complaint is dismissed with costs of Rs.5,000/-.
Sd/-
PRESIDENT
Sd/-
MEMBER
Sd/-
MEMBER
DT.30.12.2009
SS*
APPENDIX OF EVIDENCE
WITNESSES EXAMINED FOR
Complainant: Opposite party
Affidavit evidence of complainant Affidavit evidence of Manager
Filed. (Legal) of OP filed.
Exhibits marked for complainant
Ex.A-1 Authorization letter dt.24.3.2007 issued by complainant.
Ex.A-2 Letter dt.3.2.2007 addressed by the opposite party Bank to
the complainant.
Ex.A-3 Letter dt.19.1.2007 addressed by the complainant to the
opposite parties.
Ex.A-4 Letter dt.21.12.2006 addressed by the office of the Banking
Ombudsman to the complainant.
Ex.A-5 Letter addressed dt.5.1.2007 by the opposite party bank to
the complainant.
Ex.A-6 Letter addressed by the complainant to the opposite
parties dt.8.12.2006.
Ex.A-7 Letter dt.13.11.2006 addressed by the RBI to the
Secretary, Banking Ombudsman marking copy to the complainant.
Ex.A-8 Copy of cheque and bank memo .
Ex.A-9 Reply notice dt.16.10.2006 issued by the complainant to
the opposite party counsel .
Ex.A10 Copy of cheque and bank memo.
Ex.A11 Letter addressed by the complainant to the opposite party
dt.26.9.2006.
Ex.A12 Letter dt.22.9.2006 addressed by the opposite party to the
complainant.
Ex.A13 Letter dt.31.8.2006 addressed by the complainant to Sri
L.Vetri Chelvan, Advocate.
Ex.A14 Reply dt.10.8.2006 from L.Vetri Chelvan advocate to the
complainant.
Ex.A15 Letter addressed by the complainant dt.6.6.2009 to the
opposite party bank.
Ex.A16 Bank statement.
Ex.A-17 Letter addressed by the opposite party bank to the
complainant dt.3.12.2004.
Ex.A-18 List of post dated cheques dt.3.12.2004.
Exhibits marked for opposite parties:
Ex.B-1 Loan agreement.
Ex.B-2 Speed post receipts.
Ex.B3 to B5 Letters dt.5.10.2006 addressed by the opposite party
to the complainant.
Ex.B6 to B9 Foreclosure Accounts relating to the complainant
dt.9.10.2006.
Ex.B10 to B13 Valuation reports dt.23.10.2006.
Ex.B-14 Legal notice issued by L.Vetri Chelvan, Advocate for
the opposite parties to the complainant dt.10.8.2006.
Ex.B-15 Reply notice issued by the complainants to Sri L.Vetri
Chelvan Advocate dt.16.10.2006.
Ex.B-16 Letter dt.8.12.2006 addressed by the complainant to
the opposite parties.
Ex.B-17 Letter dt.26.12.2006 addressed by the complainant to the opposite party bank.
Ex.B18 Letter dt.18.1.2007 addressed by the opposite party
to the complainant.
Ex.B19 Letter dt.19.1.2007 addressed by the complainant to
the opposite parties.
Ex.B20 Letter dt.3.2.2007 addressed by the opposite party
bank to the complainant.
Sd/-
PRESIDENT
Sd/-
MEMBER
Sd/-
MEMBER
