Karnataka

Chamrajnagar

CC/24/2012

Gaviyappa - Complainant(s)

Versus

M/s Sriram Transport Finance Ltd. & another - Opp.Party(s)

Mr.H.N.L.

17 Jul 2012

ORDER

 

ORDER

1. The complainant has filed the complaint against the O.P. alleging deficiency of service for seizing and selling of the vehicle hypothecated by him to the O.P.

 

1. The complainant’s case in brief are  that he is the owner of the vehicle bearing No.KA-10-3267. He purchased the said vehicle on 15/11/2007 by borrowing loan from the O.P. The complainant  has stated that when he borrowed loan from the 3^rd O.P., he was not informed about the rules and signatures were taken to the blank sheets and also to  blank cheques.

 

1. The complainant has paid Rs.1,00,000/- and also Rs.35,000/- to the O.P. The complainant has paid in all of Rs.91,900/-.

 

1. The complainant fell  ill and therefore he could not pay the remaining instalments. The O.P. without giving notice  nor time to the complainant to repay the loan seized the vehicle on 13/05/2010 by falsely showing that he was  due of Rs.1,31,600/-.

 

1. The O.P. has sold the vehicle without informing the complainant and also without giving any notice to him. The O.P. has also filed PCR No.170/2011 against the complainant for not honouring the cheques given by him for Rs.50,000/-.

 

1. The complainant gave notice to O.P. on 18/02/2012 about deficiency of service made by it and O.P. has not replied to the same.

 

1. The O.P. has admitted that it had advanced the loan to the complainant. The O.P. has stated that the complainant is not a consumer and  therefore the complaint is not maintainable. The O.P. has stated the complainant has used the vehicle for commercial purpose and therefore he is not a consumer.

 

1. The complainant has availed the financial assistance from the O.P. for the purpose of purchasing consumer goods vehicle by executing loan come hypothecation agreement which  contains arbitratory  clause and therefore the complaint is liable to be dismissed. The complaint is barred by limitation.

 

1. The vehicle was seized on 11/12/2009 and the complaint has been filed in April 2012, after lapse of 03 years from the date of seizure  of the vehicle and therefore it is barred by  limitation.

 

1. The O.P. has denied the allegations made by the complainant against it.

 

1. The complainant has availed loan of Rs.1,00,000/- from the O.P. for purchasing the vehicle agreeing to repay the same along with finance charges of Rs.45,510/- by executing  loan cum hypothecation agreement for agreed value of Rs.1,50,510/- to be paid in 36 monthly instalments.

 

1. The complainant was regular in payment of instalments. The O.P. has repossessed the vehicle in excising all its rights available in clause 6(b) of loan cum hypothecation agreement on 11/12/2009.

 

1. The O.P. has issued notice on 20/01/2010 to the complainant as well as guarantor  calling upon to pay Rs.86,980/-, failing which  vehicle will be sold in public auction without giving further notice. After service of the said notice  the complainant approached the O.P.  and requested  for fresh loan of  Rs.80,000/- in order to avoid immediate sale of vehicle and also discharge of old account and requested to adjust fresh loan account towards said account. The O.P. after considering the request of the complainant  sanctioned fresh loan of Rs.80,000/-. The fresh loan amount was adjusted towards old loan account under consent letter executed in its favour. After executing the loan agreement the complainant did not get released the vehicle  inspite of the requests by the officials of the O.P. and failed to perform the terms and conditions of the agreement. The O.P. has waited till December 2010, the complainant did not utilized the opportunity to release the vehicle by paying monthly instalments and on the otherhand he went seeking time to release the vehicle and ultimately the O.P. sold the vehicle for Rs.30,000/-. Even after adjusting the said amount the complainant is still due of Rs.78,136/-. The complainant apart from availing the loan on the subject matter the vehicle in question borrowed loan for purchase of another vehicle and is a  defaulter of the said loan.

 

1. The following points arises for consideration.
   1. Whether the complaint filed by the complainant before this Forum is not maintainable?
   2. Whether there is deficiency of service by the O.Ps.?
   3. To what order the parties are entitled?

 

1.  The finding on the above points are that

        1.Point No.1: Negative.

        2.Point No.2: Partly affirmative.

        3.Point No.3: As per order.

                                                                    REASONS

1. POINT NO.1: The O.Ps. have questioned the maintainability of the complaint by alleging that the vehicle was purchased for commercial purpose and therefore the complainant is not a consumer. The complaint as brought is not maintainable  as the complainant is not the consumer. The O.Ps. further stated that there is an arbitration clause in the  agreement  and as such the remedy of the complainant is by way of arbitration and not before the Consumer Forum.

 

1. Sri P.K. Mujumdhar in his Law of Consumer Protection in India, 5^th edition at page 216 has stated as follows:

Goods for re-sale or to use in profit-making activity:- The plain dictionary meaning of the word “used” in the definition section, the intention of parliament must be understood to be to exclude from the scope of the expression “Consumer” any person who buys goods for the purpose of their being used in any activity engaged on a large scale for the purpose of making profit. Since re-sale of the goods has been separately and specifically mentioned in the earlier portion of the definition clause, the words “for any commercial purpose”  must be understood as covering cases other than those of re-sale of the goods. Therefore, the parliament wanted to exclude from the scope of the definition not merely persons who obtain goods for re-sale, but also those who  also purchase goods with a view to using such goods for carrying on any activity on a large scale for the purpose of earning profit. On this  interpretion of the definition clause, persons buying goods for resale or for use in large scale profit making activity would not be “consumer” entitled to protection under the Act.

The parliament intended to restrict the benefits of the  Act to ordinary consumers purchasing goods either for their own consumption or even for use in some small venture which they may have embarked upon in order to make a living as distinct from large scale manufacturing or processing activity carried on  for profit. In  order that the  exclusion clause should apply it was, however, necessary that there would be a close nexus between the transaction of purchase of goods and the large scale activity carried on for earning profit.

 

1. The same   learned author at page 223  has further stated that

   in cases of purchase of goods by a person for use in some small venture-such as for self-employment etc. which he might embark upon in order to make a living, as distinct from a large scale manufacturing, processing or trading activity carried on for profit. Thus, cases of persons who purchase goods or even  machinery for self-employment purpose without engaging in any trading or manufacturing business on a large scale for purpose of profit making, will not fall within the scope of the exclusion caluse in the statutory  definition in section 2(1)(d)(i) of the Act and hence such persons are “consumer” entitled to protection under the Act.

 

1.   It becomes clear from the above any person who purchased goods with an intention to earn livelihood  does not becomes a consumer within the meaning of the section 2(d) of the Consumer Protection Act. In the present case the complainant has purchased the vehicle for the purpose of his livelihood and not for making large scale profits which can be considered as commercial activity. This shows that the complainant has purchased the vehicle with intention to earn his livelihood and therefore is a consumer within the meaning of section 2(d) of Act and hence the complaint is maintainable under law.

 

1.  The other ground on which the learned counsel for the O.P. has stated that there is an arbitration clause and hence   the remedy of the complaint is before the arbitration and not before this Forum.

 

1. The learned author P.K.Mujumdhar in Law of Consumer Protection in India  5^th edition, page 562 has stated as follows:

Agreement containing arbitration clause: It was not necessary for the complainant to seek redress through  arbitration by the collector. It cannot be contended  by appellant that water was being supplied for a commercial purpose.

 

1.  The same author has stated that even though there is arbitration clause, the proceedings before the Consumer Forum  need not be stayed under section 34 of the Arbitration Act. He has further  stated that the existence of remedy by way of arbitration even  assuming for the purpose of discussion with section 7(b) of the Arbitration Act covers this case  which is extremely doubtful does not preclude  an aggrieved consumer from seeking redressal before the Forums constituted under Consumer Protection Act which is a special statute enacted by parliament  for the specific purpose of providing a speedy, cheap and efficacious remedy to consumers before the special Forums created for that purpose.

 

1. The next arguments of the learned counsel is that the relationship between the complainant and O.P. is of  creditor and borrower relationship and therefore the complaint is not maintainable under law. The above arguments of the learned counsel for O.P. cannot be accepted   in view of the decisions 2006 CTJ (209)(SC) (CP), 1992(1) CPR 456,1995(3) CPR 293, 2006(2) CPR 440, C.R.P.3199/96 and 2004(2) CPR 584 relied by the O.P. This shows the complaint against O.p. under hire purchase agreement is maintainable before the Consumer Forum. In view of this the arguments of learned counsel for O.Ps. cannot be accepted.

 

1. In view of the above it can be said that the complaint brought before this Forum is maintainable under law.

 

1. POINT NO.2:- The complainant has alleged the deficiency of service by the O.P. by stating that he has paid Rs.91,900/-. He has further stated that his vehicle has been seized without giving  notice to him and the vehicle has been sold without giving any notice  and therefore there is deficiency of service by the O.P. to him.

 

1. The learned counsel for the complainant has relied on the decisions reported in  2007 CTJ 1145 (CP) (NCDRC), 2008 CTJ 979 (CP)(NCDRC), 2007 CTJ  859 (CP) (SCDRC) in support of its above arguments.

 

1. The O.P. has stated that the complainant had borrowed  Rs.1,00,000/- from it and purchased the vehicle KA-3267. The complainant was regular in  repayment  of loan.  The O.P. seized  the vehicle  as per  clause 6(b) of the loan cum hypothecation agreement  and issued  notice on 20/01/2012 calling upon the complainant to repay the loan, failing which the vehicle will be sold in public auction, to which the complainant approached the O.P. and executed a fresh loan agreement by borrowing Rs.80,000/- and the said Rs.80,000/- was adjusted towards the earlier loan  as per consent letter given by the complainant.

 

1. The O.P. has further stated that the complainant did not get the vehicle released nor repaid the loan borrowed again by him and  as a result of which the O.P. sold the vehicle in public auction on 14/12/2010.

 

1. The O.P. in support of the above arguments has relied upon the decisions 2010(2) CPJ  page 163 (NC),  2006 (2) CPJ page 335, 2010(2) CPJ page 45, 2009 CPJ page 430 (UP),  2006(3) CPJ page 247, 2007 (2) 325 (NC), 2004(2) CPJ 543.

 

1. The Hon’ble National Commission  in II(2010) CPJ 45 (NC) between  Parameswari V/s V.S.T. Service Station and others  has stated that repossessing the vehicle without issuing notice to the complainant is not bad as the rights of the parties are governed strictly by  terms and conditions of the hire purchase agreement. In the present case the O.P. has not been able to show that the notice has been issued to the complainant before repossessing the vehicle, but in view of the law laid down by the Hon’ble  National Commission it can be said that repossessing of the vehicle is not bad in law  and therefore there is no deficiency of service as alleged by the complainant.

 

1. In the present case the complainant has stated the vehicle  has repossessed by force as laid down 2011 CTJ 1145 (CP)(NCDRC)  wherein  it has been stated that the vehicle was seized by using muscle power.  In the present case such a contention  has not been taken and further it is not the case of the complainant that the vehicle has been forcibly  seized by the O.P.

 

1. The complainant has stated that  his signatures was taken on blank form and on  some of the blank cheques. The complainant has not been able to probablise the same from any of the materials placed before the Forum.

 

1. The materials placed by the O.P. shows that it had advanced loan again for Rs.80,000/- and said loan has been adjusted towards earlier loan. The O.P. has stated that after repayment of the earlier loan the complainant never came and took the vehicle from it. The said contention  can never be accepted, as the borrower will take back the vehicle immediately  after repayment of the loan as the vehicle was purchased for earning of his livelihood. In the present case non returning  of the vehicle by the O.P. has resulted in deficiency of service.  The materials on record  shows that the complainant has not repaid  loan  which has resulted for selling of the vehicle. The materials  placed before the Forum by the O.P. does not  disclose that there were wide publicity before selling the vehicle.  The wide publicity is a  requisite condition before selling  any vehicle by auction in order to see that  it fetches maximum value. The O.P. has failed in this aspect and therefore there is deficiency of service by the O.P. in not properly publishing and conducting the auction of the vehicle.

 

1. It can be said from the above there is deficiency of service by O.P. in non returning the vehicle after repayment of 1^st loan and also in not auctioning the vehicle after giving wide publicity.

 

1. POINT NO.3: The O.P. has stated that the complaint is barred by time and therefore the complaint is liable to be dismissed. In support of the said contention the O.P. has relied upon  III (2002) CPJ 404 (NC) between J.Parthasaarathy V/s Home finders housing promoters ltd. and also I(2001) CPJ 35 between Sukhwinder Singh V/s  The Land Acquisition Collector & another. In the  present case the vehicle has been sold in the year 2010 and the complaint filed within two years from the date of sale and therefore the complaint is not barred by limitation and it is maintainable under law.

 

1. In point no.2, it has been held that there is deficiency of service  in not returning the vehicle after repayment of 1^st loan and also there was no wide publicity before auction of the vehicle  and to that  extent  the complainant has to be compensated. Considering this the compensation of Rs.50,000/- is awarded to the complainant.

 

1. In view of the above findings following

 

ORDER

The complaint is allowed in part.

1.The complainant is entitled for compensation of Rs.50,000/- from the O.Ps.

2.The complainant is also entitled for Rs.2,500/- being the cost of the proceedings.