Delhi

North East

CC/339/2015

Shri Parmanand Garg - Complainant(s)

Versus

M/s Magna Through its Director/Authorise Person - Opp.Party(s)

23 Jun 2020

ORDER

 DISTRICT CONSUMER DISPUTES REDRESSAL FORUM: NORTH-EAST

GOVT. OF NCT OF DELHI

D.C. OFFICE COMPLEX, BUNKAR VIHAR, NAND NAGRI, DELHI-93

 

Complaint Case No.  339/15

 

In the matter of:

		Shri Parmanand Garg S/o Late Shri Banarsi Dass R/o:- 172 Gali no. 1, Chanderlok Mandoli Road, Shahdara, Delhi-110093		Complainant
		Versus
		Magma Fincorp Ltd. Regd. Office Magma House,24 Park Street Kolkata-700016,West Bengal Also at: 8, Sant Nagar East of Kailash New Delhi-110065		Opposite Party
			DATE OF INSTITUTION:         JUDGMENT RESERVED ON:               DATE OF DECISION      :		15.09.2015 23.06.2020 23.06.2020

 

N.K. Sharma, President

Ms. Sonica Mehrotra, Member

 

Order passed by Ms. Sonica Mehrotra, Member

 

ORDER

1. The averments contained in the present complaint shorn of unnecessary details as narrated in the present complaint are that the complainant had applied for a Loan Against Property (LAP) / Home Equity Loan (HEL) from GE Money Financial Services Ltd. (GEMFS) in April 2006 which got approval vide letter dated 28.04.2006 and a HEL bearing no. HDLH-00008330 of  Rs. 11,50,000/- was sanctioned by GEMFS in April-May 2006 with rate of interest @ 7.53% payable in 156 monthly installments of  Rs. 14,590/- each payable from 07.05.2006 to 07.03.2009 for which period GEMFS had obtained Post Dated Cheques (PDCs) from the complainant and a welcome letter dated 09.05.2006 was sent by GEMFS to the complainant mentioning details of repayment of loan of HEL including start and end date, loan amount, EMI amount, rate of interest and net tenor. Since the loan was in the nature of LAP, the complainant had mortgaged his property bearing no. 172 Gali no. 9 Chanderlok Colony, Mandoli Road, Shahdara Delhi 110093 (Mortgaged Property) with GEMFS by depositing the title deeds / sale deed of the said property as collateral security for the said loan. The complainant paid the EMIs regularly to GEMFS w.e.f. 07.05.2006 and just before the filing of the present complaint had paid 112 installments out of 156 till 07.08.2015 of Rs. 14,590/- each as per the loan agreement without any default. However, GEMFS, vide letter dated 26.04.2010 increased the number of EMIs and loan repayment period from 07.03.2009 to 07.12.2020. The complainant resisted the increase in the number of EMIs and extension of loan tenor vide legal notices dated 17.05.2010 and 07.06.2016 sent through its counsel to GEMFS showing his readiness to pay only 156 installments instead of increased 176 installments failing which the complainant requested for liberty to fore close the loan by paying the principal amount with immediate effect. But GEMFS did not respond to any of the legal notices and instead vide letters dated 17.08.2010 and 07.12.2010 to the complainant informed him of increased in the tenure of the LAP to 169 months with loan maturity date extended to 07.05.2020 and rate of interest increase to 12.77% requesting the complainant to extend the ECS mandate and submit security cheques for the loan EMI alongwith his KYC documents. Complainant approached Hon’ble Debt Recovery Tribunal -III (DRT-III) vide SA no. 404/2011 against GEMFS but the same was dismissed by DRT-III vide order dated 04.09.2012 as non-maintainable on grounds that GEMFS is neither a bank nor a financial institution within the meaning / ambit of Securitization Act 2002. In the meantime, complainant deposited three cheques of Rs. 14,590/- each to GEMFS towards EMI repayment vide letters dated 30.03.2011 and 09.04.2011. sometime in the beginning of 2013, GEMFS sent a circular intimating transfer / assignment of all debts / loan to the OP in the present complaint and therefore complainant vide legal notice dated 28.02.2013 to GEMFS as well as OP informed that he shall not pay any installments over and above the initially agreed upon 156 installment as per the loan agreement and demanded repayment statement from the notice and also enclosed a cheque of Rs. 14,590/- towards EMI of April 2013 alongwith the said notice. The complainant also filed a Civil Suit for Declaration and Mandatory Injunction against GEMFS and OP before Senior Civil Judge vide CS no. 628/14/13 but the same was returned vide order dated 18.10.2014 due to arbitration Clause in the  agreement with direction to all parties to approach learned arbitrator for relief. Lastly, the complainant vide legal notice dated 29.06.2015 to OP again called upon the OP to honor the original agreement of 156 EMIs @ Rs 14,590/- each for the period defined failing which complainant be granted liberty to pay the principal amount alongwith agreed rate of interest for closing the loan but this legal notice too like several other previous notices was unheeded / un-responded too by OP. Therefore as a last resort, complainant filed the present complaint against OP praying for issuance of direction to OP to accept the balance principal amount as per agreement dated 07.05.2006 in accordance with the number of EMIs / tenure of the loan and rate of interest alongwith the direction to pay a compensation of Rs. 3,00,000/- with interest @ 12% p.a. and  Rs. 25,000/- towards litigation expenses to the complainant.
2. Complainant has attached copy of approval letter dated 28.04.2006 for his application of LAP, copy of welcome letter dated 09.05.2006 from GEMFS laying details of HEL no. HDLH00008330 with acknowledgment of PDCs received for the period 07.05.2006 till 07.03.2009 for Rs. 14,590/- each drawn on  CBI, copy of interest statement issued by GEMFS dated 15.01.2007 and 11.12.2007 for product financed: Home Equity / Loan against property, copy of letter dated 21.01.2007 from GEMFS to complainant acknowledging receipt of 24 PDCs for the period 07.04.2009 to 07.03.2011 towards Hel COPY OF sale deed dated 17.07.2003 of the mortgaged property submitted wit GEMFS by complainant as collateral security for loan, copy of letter dated 26.04.2010 from GEMFS to complainant increasing tenure of HEL to 07.12.2020, copy of legal notices dated 17.05.2010 and 07.06.2010 alongwith postal receipt from complainant’s counsel to GEMFS, copy of letter dated 17.08.2010 and 07.12.2010 from GEMFS to complainant increasing tenure of loan period and rate of interest, copy of letters date 30.03.2011 and 09.04.2011 from complainant to GEMFS attaching cheques of EMIs for ensuing months, copy of order dated 04.09.2012 passed by DRT-III in SA no. 404/2011, copy of order dated 18.10.2014 Hon’ble Senior Civil Judge in Civil Suit no. 628/14/13 in Suit for Declaration and Mandatory Injunction and copy of legal notice dated 29.06.2015 alongwith postal receipt by complainant’s counsel to OP.
3. Notice was issued to the OP on 29.09.2015. OP entered appearance and filed its written statement vide which OP admitted to the factum of HEL / LAP of Rs. 11,50,000/- having been extended to the complainant in April-May 2006 by GEMFS with first EMI to start from 07.05.2006 and total number of EMIs being 156 with initial rate of interest @ 12% with monthly rests. However, OP urged that complainant was liable to repay the loan to OP as per Ledger dated 24.12.2015 for revised home equity loan account no. HL0031/HDLH00008330 and prayed for dismissal of the complaint. OP has attached copy of loan agreement entered between complainant and GEMFS with terms and conditions and Schedule of date of execution of loan on 10.04.2006 and as per Clause 15 thereof, purpose of loan shown as “Business” and Power of Attorney signed by complainant with description of Immovable Property pledged with GEMFS in Memorandum of entry, copy of ledger of OP as on 24.12.2015 with respect to HEL listing the EMIs received from 07.05.2006 till 09.12.2006 of Rs. 14,950/- from the complainant.
4. Rejoinder and evidence by way of affidavit was filed by the complainant exhibiting the documents relied upon Ex CW1/1 to CW1/21.
5. Evidence by way of affidavit was filed by the OP exhibiting documents relied upon as Ex DW1/A to DW1/D.
6. Written arguments were filed by complainant. The case was reserved for order by the erstwhile bench on 15.02.2017 but order was not passed. On present bench taking charge before which the matter was listed on 03.04.2018, on perusal of order sheets it came to be seen that OP had failed to filed written arguments despite several opportunities granted to it from July 2016 till February 2017 and therefore its right to file the same was closed vide order dated 03.04.2018. During the pendency of proceedings the complainant paid the entire originally agreed upon 156 EMIs of Rs. 14,590/- each to OP by May 2019 and vide application filed u/s 13(3B) of Consumer Protection Act (Act), prayed for interim relief against any further EMI payment / deduction against the HEL. Reply to the application was filed by the OP praying for dismissal of interim application. However, prior to this application and its reply, this Forum in hearing held on 10.10.2018 had directed both parties to file affidavit pertaining to the purpose and nature of the subject loan but the order was not complied with by either of the parties and therefore vide order dated 22.01.2020, this Forum had framed the preliminary issue of maintainability for the purpose of adjudication of the present complaint since as per the as per the settled law of the Hon'ble Supreme Court in Hewlett Packard India Ltd. Vs Shri Ramachander Gehlot in CA No. 7107/2003 decided on 16.02.2004 the Hon'ble Supreme Court held that issue of maintainability has to be decided before admitting or hearing the matter on merit and in judgment of Hon’ble NCDRC in Koshy Varghese Vs HDFC Bank Ltd III (2017) CPJ 52 (NC) wherein Hon’ble National Commission held that question in which law point is involved can be decided at any stage of the proceedings. Therefore, without going into the merits of the case, we shall adjudicate the admissibility / non-admissibility of the present complaint.
7. We have heard the rival contentions of both parties and have carefully perused the documents placed on record / relied upon by both sides.
8. The key issue for consideration before us is whether the complainant is a consumer within the meaning of Section 2(1)(d)(ii) of the Act, 1986 which is the crux of the issue in the present complaint and which alone shall decide whether complainant would be entitled to raise a consumer dispute u/s 2(1)(e) of the Act.

The word ‘consumer’ is the fulcrum of the Consumer Protection Act (the Act) and is defined in Section 2 (1)(d) of the Act meaning any person who

1. buys and 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 that 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
2. 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 purpose.

 

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 purpose of earning his livelihood by means of self-employment.

The term ‘consumer’ has, thus, been defined to mean, a person who is-

1. a buyer, or
2. with the approval of the buyer, the user of the goods in question, or    
3. a hirer or person otherwise availing, or
4. with the approval of such aforesaid persons, the beneficiary, of the service(s) in question

with the condition super added that such buying of the goods or hiring or availing of any such service, is for a consideration, -

1. paid, or
2. promised, or
3. partly paid or promised, or
4. covered by any system of deferred payment

 

9. On bare reading of the above, it is clear that consumer is a person who buys goods or hires/avails of services for consideration but excludes a person who does the same for commercial purpose. The term consumer used in Section 2(1)(d) of the Consumer Protection Act came up for consideration of a Three-Members Bench of this Commission in Revision Petition No. 2833 of 2018 decided on 06.01.2020 and after considering several decisions on this issue, including Synco Textiles Pvt. Ltd.  Vs Greaves Cotton & company Ltd., I (1991) CPJ 499 (NC), Cheema Engineering Services Vs Rajan Singh, VI (1988) SLT 20=1996 (SLT Soft) 817 =(1997)1 SCC 131; Madan Kumar Singh (Dead) through L.R. Vs District Magistrate, Sultanpur & Ors., VI (2009) SLT 269=IV(2009) CPJ 3 (SC)=(2009)  9 SCC 79 and Paramount Digital Colour Lab & Ors Vs Agfa India Pvt. Ltd. & Or. III (2018) 14 SCC 81, the Larger Bench inter alia held as under:

(b)       There should be a direct nexus between the large scale commercial activities in which a person is engaged and the goods purchased or the services hired or availed by him before he can be excluded from the purview of the term ‘consumer’. Therefore any goods purchased or the services hired or availed even by a person carrying on business activities on a large scale for the purpose of making profit will not take him out of the definition of the term ‘consumer’, if the transaction of purchases of goods or hiring or availing of services is not intended to generate profit through the large scale commercial activity undertaken by him and does not contribute to or form an essential part of his large scale commercial activities.

(c)        What is crucial for the purpose of determining whether a person is a ‘consumer’ or not is the purpose for which the goods were purchased or the services were hired or availed and not the scale of his commercial activities.

In the instant case, on the basis of documentary evidence placed on record by the complainant as well as OP, the approval application dated 28.04.2006 is for LAP and the welcome letter dated 09.05.2006 is with respect to HEL. The interest statement issued by GEMFS for January 2007 and December 2007 also reflects the product financed as HEL / LAP. The complainant has admitted to having mortgaged the property with GEMFS for securing the HEL. Even the letters dated 17.08.2010 and 07.12.2010 from the OP to complainant for revised terms and conditions are also with respect to the HEL and in all the legal notices sent by complainant’s counsel to OP dated 17.05.2010, 07.06.2010, 28.02.2013 and 29.06.2015, complainant has acknowledged the loan in the nature of HEL. Clause 15 of the HEL dated 10.04.2006 entered into between complainant and GEMFS show that the purpose of the loan was for Business. Home Equity Loan is a loan in which the borrower uses equity of his home as collateral or a second mortgage. LAP is commercial in nature and therefore outside the purview of this Forum. The complainant had created a collateral mortgage of premises bearing No. 172 Gali no. 9 Chanderlok Colony, Mandoli Road, Shahdara Delhi 110093 with OP pledging the said property for securing Business loan.The Hon'ble National Commission in Shiv Shankar Lal Gupta Vs Kotak Mahindra Bank Ltd. II (2013) CPJ 56 (NC) held that loan against collateral security of immovable property is a commercial transaction which means the person entering such a transaction is not a consumer. (emphasis supplied).

The Hon’ble National Commission in the judgment of Union Bank of India and Anr. Vs Learning Spiral Pvt. Ltd. III (2018) CPJ 514 (NC) in which the Hon’ble National Commission was faced with a complaint of illegal encashment of cheque from current account for business purpose and after considering the key question whether the complainant maintaining a current account with the bank can be said to be a consumer within the meaning of CPA, the Hon’ble National Commission following the view taken by itself in its previous decisions of Sutlej Industries Vs PNB I (2018) CPJ 593 (NC), Subhash Motilal Shah Vs Malegaon Merchants Co-op Bank Ltd in RP No. 2571/2012 decided on 12.02.2013, M/s Sam Fine O Chem Ltd Vs UBI in CC No. 39/13 decided on 12.04.2013 and Samkit Art and Craft Pvt. Ltd. Vs SBI and Ors in CC No. 11/2007 decided on 14.10.2014, held that the complainant cannot be said to be a consumer within the meaning of Consumer Protection Act as it had hired / availed of service of the bank for commercial purpose i.e. for running a current account for business purposes. Therefore, the Hon’ble National Commission had dismissed the complaint with liberty to the complainant to approach the appropriate Civil Court for redressal.

The Hon'ble National Commission in Primus Chemicals Ltd Vs IFCI Ltd I (2017) CPJ 615 (NC) held that availing services of a financial institution for loan which was for commercial purpose was availing services for commercial use and held complainant was not a consumer. The Hon'ble National Commission in Miracle Coro Plast Pvt. Ltd. Vs United Bank of India II (2018) CPJ 29 (NC) held that the term loan and credit limit availed from the bank was taken for business and therefore was a case of hiring / availing of services of bank for commercial purpose and therefore the complainant had no locus standi to file the consumer complaint as he was not a consumer.The Hon’ble NCDRC in the recent judgment of Parikshit Das Vs Allahabad Bank I (2020) CPJ 360 (NC) decided on 08.01.2020 held in a case of complainant availing overdraft facility from the bank and mortgaging immovable property as collateral security there against that the services of the bank were hired by the complainant for commercial purpose he having taken a business loan by way of overdraft from the bank and therefore was not a consumer as defined in the Act.

In the present case, it is evident from a bare perusal of the complaint and documents annexed thereto by complainant himself as well as by OP that the complainant is trying to camouflage a business loan under the garb of a housing loan whereas it is actually a Home Equity Loan or Loan Against Property which is purely commercial in nature.It is an admitted position that it is in respect of this Loan Agreement and interest rate levied by OP on the loan amount that the present complaint has been filed alleging negligence and deficiency of service. Since the account itself was connected and related to the commercial transaction of the complainant, service hired for that purpose would fall within the category of hiring services for commercial purpose. Therefore, it is clear that the services of OP were hired by the complainant for commercial purpose in course of enhancement of income by virtue of having availed business loan against property with OP for the purpose of carrying out his business activities, the purpose behind availing of such loan was to serve the commercial interest of his business for which the alleged loan was probably applied for. And therefore is not a subject matter to be decided on merits by this Forum. Requirements of restricted meaning of “Commercial Purpose” are that the complainant ought to have availed the services of OP exclusively for purpose of earning livelihood by way of self-employment. The Hon’ble SCDRC Delhi in the recent judgment of Indo Arab Air Services Vs ICICI Home Finance Co. Ltd. I (2020) CPJ 220 (Del.) decided on 20.12.2019 held that a loan against property is a transaction done for commercial purpose and therefore outside the scope and ambit of provision of the Act and had dismissed the complaint.

10. We are guided by the above settled principle of law as laid down by Hon’ble NCDRC in catena of judgments cited in forgoing paras and can be safely applied in the present case specially after appreciating the nature of transaction entered into between complainant and OP and the perusal of Loan agreement, Statement Of Account and Repayment Schedule placed on record by complainant himself.

The case of complainant relates to allegation of increase in the number of EMIs with enhanced rate of interest and extended tenure of payment by OP in respect of loan taken by him from OP but clearly since it was availed for his commercial activity, he was availing the services of OP for commercial purpose. Therefore, in view of inbuilt exception in the definition of consumer, complainant cannot be termed as a consumer as envisaged under Section 2 (1)(d)(ii) of the Act. That being the case, the complainant has no locus standito raise a consumer dispute as contemplated u/s 2(1)(e) of the Act, and therefore we have no hesitation in concluding inescapably that the complainant is not a consumer and on this count alone, dismiss the present complaint. Accordingly the interim application filed u/s 13(3B) of the Act by the complainant is also rendered infructuous. It is however made clear that dismissal of the complaint shall not come in the way of the complainant availing alternate remedy by way of approaching Civil Court in which event he may also seek benefit of provision of Section 14 of Limitation Act for condonation of delay for time spent before this Forum as provided under Laxmi Engineering Works Vs RSG Industrial Institute (1995) 3 SCC 583 passed by Hon’ble Supreme Court.

11. Let the copy of this order be sent to both parties free of cost as per Regulation 21 (1) of Consumer Protection Regulation 2005.
12.   File be consigned to record room.
13.   Announced on  23.06.2020

 

(N.K. Sharma)     President

(Sonica Mehrotra)  Member