2. The Managing Director,
Sundaram Finance Limited,
21 Patullas Road, Chennai. …opposite parties
This Complaint coming up before us for hearing on 17-10-11 in the presence of Sri Ch. Divakar Babu, advocate for the complainant and of Sri Y. Tulasi Ram, advocate for opposite parties 1 and 2, upon perusing the material on record after hearing both sides and having stood over till this day for consideration this Forum made the following:-
O R D E R
Per Sri A. Hazarath Rao, President:-
The complainant filed this complaint under section 12 of the Consumer Protection Act seeking refund of Rs.3,50,000/- plus interest (margin money paid by him); Rs.1,50,000/- being the loss incurred in the form of route permits together with interest; Rs.2,00,000/- towards mental agony; Rs.2,00,000/- towards incidental expenses; Rs.7,00,000/- being loss in sale of bus; Rs.2,00,000/- being loss in business and for costs.
- In brief the averments of the complaint are these:
The complainant is in hire bus contract with APSRTC. The opposite party finances for purchase of vehicles and machinery. The opposite party came forward with a proposal to finance the complainant in a sum of Rs.12,00,000/- i.e., Rs.8,50,000/- for chassis, plus Rs.3,50,000/- for body building. The remaining amount of Rs.3,50,000/- was required to be paid by the complainant as margin money. The opposite party financed the complainant for purchase of chassis (AP16TX 1797) in a sum of Rs.8,50,000/-. The opposite parties directly ordered for body building with AP Coach Body builders. The opposite party never cared to pay the remaining amount of Rs.3,50,000/- to body builders even after the margin money of the complainant was exhausted. Due to that the body building came to a halt which resulted in the loss of contract. With a malafide intention the opposite party released the remaining loan amount instead of paying to body builders so as to coincide with the date of installments of the loan and utilized it for payment of installments. The body building work was incomplete and as such the complainant lost his bread. The complainant also sustained heavy loss. The opposite party started collecting repayment installments through the post dated cheques already obtained from the complainant even before the release of entire loan. The complainant does the business only as hirer and earns money. The complainant can pay his installments by running the bus. In the absence of release of the bus the complainant lost the route and income. The opposite party never reminded the body builders either to hasten up the work or expedite the delivery. The delay in the release of the loan caused additional expenses and charges besides putting the complainant to severe mental agony. The opposite party seized the bus without prior notice and also sold it for a lesser amount. Not releasing the money in lumpsum or installments for body building, starting collection of installments even before release of entire loan, not reminding the AP body builders to expedite the work, seizure of the vehicle without notice and selling the bus without notice amounted to deficiency of service. The complaint therefore be allowed.
3. The contention of the opposite party in brief is hereunder:
This Forum has no jurisdiction to entertain the complaint as the complainant did not come under the purview of the consumer and also in view of arbitration clause. As per loan agreement the opposite party initially disbursed Rs.8,50,000/- under each agreement to the dealer for chassis at the request of the complainant. As per agreement the remaining loan amount has to be disbursed directly to the account of the complainant depending upon the progress of the work of the body building. The complainant is solely responsible for delivery of the vehicle from the dealer or manufacturer and the opposite party has nothing to do with it. The complainant has hypothecated the vehicles in favour of the opposite party. The complainant cannot avoid repayment of loan on the pretext of non delivery of vehicles to him. The complainant committed default in repayment of 3rd installment for the vehicle bearing No.AP 16TX 1798, in repayment of 2nd installment for the vehicle bearing No.AP16TX 1797 and in repayment of the 3rd installment for the vehicle bearing No.AP16TX 1796. The opposite party filed CC 783 of 2008 against the complainant under section 138 of NI Act and it ended in acquittal. The opposite party preferred criminal appeal 1184 of 2010 and the same is pending. The notice dated 28-02-08 sent to the complainant to the last known address returned with an endorsement as ‘no such person’. As per agreement the opposite party possessed the vehicles and intimated to the complainant. The opposite party on 17-10-08 sold the vehicle bearing No.AP 16TX 1796 for Rs.10,00,000/- being the best price in its condition on “as is where is condition”, AP16 TX 1797 and AP 16 TX 1798 for Rs.7,60,000/- each on 28-03-09. The opposite party after the above sales intimated regarding sale of vehicles on 19-05-09 in writing. The opposite party appointed Sri A. Santhanakrishnan, District & Sessions Judge (Rtd.,) Chennai as sole arbitrator for the short fall amount and the same is pending. Even before that the opposite party filed AOP 239 of 2008 on the file of IV Addl. District Judge, Guntur against wife of the complainant being a guarantor and got an interim injunction against the guarantor from alienating the mortgaged property. Complainant’s wife filed CMA and obtained stay in CMA 1070 of 2009. The complainant received the entire loan amount without any objection with regard to the disbursement. The complainant misappropriated the loan amount disbursed for body building and as such indebted to the body builder. The complainant paid Rs.4,20,000/- to the body builder when the opposite party took possession of the vehicles. The complainant being a defaulter from the beginning cannot be permitted to plead deficiency of service against the opposite party. The complainant filed this complaint as an off shoot to AOP 239 of 2008. Rest of the allegations contra mentioned in the complaint are all false and are intended to suit his claim.
4. Exs. A-1 to A-27 and Exs.B-1 to B-6 on behalf of the complainant and the opposite parties were marked.
5. Now the points that arose for consideration in this complaint are:
- Whether the complainant is a consumer under the provisions of CP Act?
- Whether the opposite parties committed deficiency of service in not releasing the installments amounts for body building?
- Whether the opposite party committed deficiency of service in realizing installments amounts even without disbursing the entire loan amount?
- Whether the opposite party committed deficiency of service in seizing the vehicle without prior notice?
- Whether the opposite party committing deficiency of service in selling the vehicle without prior notice?
- Whether the complainant is entitled to compensation and if so to what amount?
- To what relief?
6. Admitted facts in this case are these:
- The complainant entered into hire contract with APSRTC to run buses and in furtherance of that the complainant entered into an agreement with the opposite party for finance towards purchase of chassis in a sum of Rs.8,50,000/- from out of total amount of Rs.12,00,000/-.
2. The opposite party released Rs.8,50,000/- for each bus bearing No. AP16TX 1797 (subject matter of the case), AP16TX 1796 covered by (subject matter of CC.273/2010) and AP16TX 1798 (subject matter of CC.199/2010).
3. The opposite party filed AOP 239 of 2008 on the file of IV Addl. District Judge, Guntur against wife of the complainant being a guarantor and obtained an injunction.
4. Wife of the complainant filed CMA 1070 of 2009 before the Hon’ble High Court and obtained stay.
5. The opposite party filed CC 783 of 2008 against the complainant under section 138 of NI Act and it ended in acquittal (Ex.A-21).
6. There was exchange of notices between the complainant and the opposite parties.
7. POINT No.1:- The main contention of the opposite party is that the complainant did not come under the purview of consumer and in order to substantiate it relied on the averments mentioned in the complaint. The contention of the complainant is that he entered into hire contract with APSRTC under self employment.
8. Section 2 (d) of the Consumer Protection Act defines consumer and it reads as follows:
“Consumers” means any person who-
i) a person who buys any goods for 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 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 does not include a person who obtains such goods for release 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 purpose.)”
9. In Madan Kumar Singh (D) through LR Vs. District Magistrate, Sultanpur and others 2009 (6) ALD 45 it was held
“Plain reading of the same makes it abundantly clear that appellant herein would fall in the category of a ‘consumer’ as he had bought the truck for a consideration which was paid by him. It was bought to be used exclusively for the purpose of earning his livelihood by means of self-employment. The said pleading by way of amendment was incorporated by the appellant in his application filed under section 12 of the Act, before the District Consumer Forum but proper cognizance thereof has not been taken.
A further reading of the aforesaid definition of ‘consumer’ makes it clear that parliament wanted to exclude from the scope of the definition the persons, who obtain goods for resale and also those who purchase goods with a view to use such goods for carrying on any activity for earning. The immediate purpose as distinct from the ultimate purpose of purchase, sale in the same form or after conversion and a direct nexus with profit or loss would be the determinants of the character of a transaction whether it is for a “commercial purpose” or not. Thus, buyers of goods or commodities for “self consumption” in economic activities in which they are engaged would be consumers as defined in the Act.
Apart from the above, it may also be seen that the purchase of the truck by the appellant would also be covered under explanation to Section 2(1)(d) of the Act. The appellant had mentioned categorically that he had bought the said truck to be used exclusively by him for the purpose of earning his livelihood, by means of self-employment. Even if he was to employ a driver for running the truck aforesaid, it would not have changed the matter in any case, as even then appellant would have continued to earn his livelihood from it and of course, by means of self-employment. Further more, there is nothing on record to show that he wanted to use the truck for any commercial purpose”.
10. In Pawan Kumar Pawar vs. M/s Santha Khurana and another 2011 (4) CPR 24 it was held
“It was a matter of common knowledge that shares are purchased with the object of earning profit by selling the same at proper time. There is no doubt that the very purpose of purchase of shares is commercial. Yet, it appears from the provisions of Sec 2(1)(d) that a person can be a consumer even if the goods are purchased or the services are availed for commercial purpose in case the same have been availed for the purpose of earning livelihood by means of self-employment. In the matter under consideration, the complainant has not at all averred in his complaint that he purchased the shares exclusively for the purpose of earning livelihood by means of self employment, it is well settled that in the aforesaid circumstances the complainant is not a consumer as defined under Consumer Protection Act”.
11. But in this case the complainant nowhere mentioned that he entered into hire contracts with APSRTC for his livelihood by means of self employment. In addition to this the complainant entered into hire contracts with APSRTC in respect of three buses as mentioned supra. Under those circumstances, the absence of plea of self employment assumes more importance.
12. Para 1 of the complaint dealt with description of the complainant and it reads as follows:
“Complainant herein is Godavathi Bhaskara Rao s/o Rama Koteswara Rao, Hindu, aged 42 years, business, R/o D.No.3-16-16 Vinayaka Temple Street, Nandulapeta, Tenali-522 201”.
13. The complainant in para 3 of his complaint mentioned “the complainant is in hire bus contracts with APSRTC”. The complainant in page 2 of his complaint mentioned “the complainant does the business only as a hirer of the buses and earns money”. Therefore the decision relied on by the complainant reported in 2009 (6) ALD 45 (SC) is distinguishable on facts and has no application to the facts of the case on hand.
14. Self financing coined in the complaint in page 2 does not mean self employment as rightly contended by the learned counsel for the opposite party. The affidavit filed by the complainant on 01-04-11 was silent about he obtaining the loan from the opposite party under self employment. In the absence of any pleading regarding self employment the contention of the complainant do not stand to reason and it cannot be accepted.
15. The Supreme Court in Lakshmi Engineering Works vs. PSG Industrial Institute AIR 1995 SC 1428 held
“Now coming back to the definition of the expression “consumer” in Section 2 (d), a consumer means in so far as is relevant for the purpose of this appeal, i) a person who buys any goods for consideration it is immaterial whether the consideration is paid or promised or partly paid or partly promised, or whether the payment of consideration is differed, ii) a person who uses such goods with the approval of the person who buys such goods for consideration iii) but does not include a person who buys such goods for resale or for any commercial purpose. The expression resale is clear enough. Controversy has, however, arisen with respect to meaning of the expression “commercial purpose”. It is also not defined in the Act. In the absence of a definition, we have to go by its ordinary meaning “commercial” denotes “pertaining to commerce” (chambers 20th century dictionary) it means connected with, or engaged in commerce merchantile having profit as the main aim (Collins English dictionary) where as the word “commerce” means financial transaction especially buying and selling of merchandise, on a large scale (concise oxford dictionary). The National Commission appears to have been taking a consistent view that where a person purchases goods “with a view to using such goods for carrying on any activity on a large scale for the purpose of earning profit” he will not be a “consumer” within the meaning of section 2 (d) (i) of the Act. Broadly affirming the said view and more particularly with a view to obviate any confusion the expression “large scale” is not a very precise expression – the Parliament stepped in and added the explanation to section 2 (d) (1) by Ordinance/ Amendment Act, 1993. The explanation excludes certain purposes from the purview of the expression “commercial purpose” – A case of exception to an exception. Let us elaborate: a person who buys a typewriter or a car and uses them for them for his personal use is certainly a consumer but a person who buys a typewriter or a car for typing other’s work for consideration or for plying the car as a taxi can be said to be using the typewriter/car for a commercial purpose. The explanation however clarifies that in certain situations, purchase of goods for “commercial purpose” would not yet take the purchaser out of the definition of expression “consumer”. If the commercial use is by the purchaser himself for the purpose of earning his livelihood by means of self employment, such purchaser of goods is yet a “consumer”. In the illustration given above, if the purchaser himself works on typewriter or plies the car as a taxi himself, he does not cease to be a consumer. In other words, if the buyer of goods uses them himself i.e., by self employment, per earning his livelihood, it would not be treated as a “commercial purpose” and he does not cease to be a consumer for the purposes of the Act. The explanation reduces the question, what is a “commercial purpose”, to a question of fact to be decide in the facts of each case. It is not the value of the goods that matters but the purpose to which the goods bought or put to. The several words employed in the explanation, viz., “uses them by himself”, “exclusively for the purpose of earning his livelihood” and “by means of self employment” make the intention of the parliament abundantly clear, that the goods bought must be used by the buyer himself, by employing himself for earning his livelihood. A few more illustrations would serve to emphasize what we say. A person who purchases an auto-rickshaw to ply it himself on hire for earning his livelihood would be a consumer. Similarly, a purchaser of a truck who purchases it for plying it as a public carrier by himself would be a consumer. A person who purchases a lathe machine or other machine to operate it himself for earning his livelihood would be a consumer. (In the above illustrations, if such buyer takes the assistance of one or two persons to assist/help him in operating the vehicle or machinery, he does not seize to be a consumer). As against this a person who purchases an auto rickshaw, a car or a lathe machine or other machine to be plied or operated exclusively by another person would not be a consumer. This is the necessary limitation flowing from the expressions “used by him”, and “by means of self employment” in the explanation. The ambiguity in the meaning of the words “for the purpose of earning his livelihood” is explained and clarified by the other two sets of words”.
16. In Birla Technologies Limited vs. Natural Gas and Allied Industries Limited 2011 SAR (Civil) 126 it was held
“In view of their findings of the national Commission that the goods sold by the appellant to the respondent/complainant amounted to ‘goods’ and that such goods were purchased for commercial purpose of earning more profits, there could be no dispute that even the services which were offered had to be for the commercial purpose. Nothing was argued to the contrary. It seems that the whole error has crept in because of the wrong factual observation that the complaint was filed on 01-08-2000. In that view, it has to be held that the complaint its self was not maintainable, firstly on the count that under section 2(1)(d)(i), the goods have been purchased for commercial purposes and on the second count that the services were hired are availed of for commercial purposes. The matter does not come even under the explanation which was introduced on the same day i.e., on 15-03-2003 byway of the amendment by the same Amendment Act, as it is nobody’s case that the goods bought and used by the respondent herein and the services availed by the respondent were exclusively for the purpose of earning the respondent’s livelihood by means of self employment. In that view, it will have to be held that the complaint itself was not maintainable in toto”.
17. In Branch Manager, Sanghi brothers vs. Rajkumar Jaiswal 2011 (II) CPR 365 NC it was held
“The complainant had himself admitted in the complainant that the vehicle was on under contract with Madhya Pradesh State Transport Corporation on account of which he suffered loss of business @ Rs.5000/- per day for 22 days and the total amount claimed for business loss is Rs.1,10,000/- in this behalf. The complainant had also admitted in paragraph 2 of the complaint that he got the vehicle repaired on his own cost from the out side. The averments in the complaint itself establish that the vehicle was purchased for commercial purpose and the complainant had suffered business loss. In view of this, complaint cannot be considered as a consumer within the definition of section 2(1)(d) of CP Act. Besides this the vehicle was taken to an unauthorized work shop; there was violation of terms of warranty and the servicing was not done on the due dates; and the vehicle has already done 96,929 kms”.
18. Since the complainant entered into agreements with APSRTC to ply three buses on different routes it can be said that the complainant purchased those buses for commercial purposes but not under self employment. The hiring of services or goods for commercial purpose is excluded from the purview of Consumer Protection Act. The commercial purpose is gathered from the recitals of the complaint as discussed supra. Therefore the complainant is not a consumer under the Consumer Protection Act as rightly contended by the opposite party. Under those circumstances the complaint is not maintainable. In view of the discussion made above this point is answered against the opposite party.
19. POINTS. 2 to 6:- In view of finding on point No.1 they need not be gone into. Therefore the decisions relied on by the complainant reported in Tata Motors Limited vs. Indrasen Choubey and others 2009 (2) CPR 238 (NC) and K. Habibunnisa vs. Sriram Transport company Limited 2009 (4) CPR 49 have no application to the facts of this case. Under those circumstances the other documents filed by both the parties need not be discussed. For the discussion made supra we answer these points accordingly.
20. POINT NO.7:- In view of our findings on point No.1 in the result the complaint is dismissed without costs.
Typed to my dictation by Junior Stenographer, corrected by me and pronounced in the open Forum dated this the 31st day of October, 2011.
MEMBER MEMBER PRESIDENT
APPENDIX OF EVIDENCE
DOCUMENTS MARKED
For Complainant:
Ex.No | DATE | DESCRIPTION OF DOCUMENTS |
A1 | - | Copy of loan communication |
A2 | | Copy of loan & Bank account |
A3 | 23-06-10 | Copy of letter from Dy. Manager (legal) M/s. Sundaram Finance, Chennai |
A4 | | Copy of Deposition of Mr. A. Baskar Krishna, B.M, Guntur of the OP in CC.No.783/2008 on the file of V AMM Court, Guntur |
A5 | 26-03-10 | Copy of Certificate issued by RTO, Vijayawada |
A6 | | Copy of Driving license |
A7 | 21-05-07 | Copy of route allotment letter issued by APSRTC to the complainant |
A8 | 13-06-07 | Copy of temporary receipt issued by the opposite party against the payment made by the complainant |
A9 | 21-06-07 | Copy of policy and receipt issued by National Insurance Company |
A10 | 10-07-07 | Copy of loan agreement sent to the complainant by OP |
A11 | 24-09-07 | Copy of certificate of registration issued by RTA, Vijayawada |
A12 | 14-06-07 | Fax copy of the Temporary Agreement in between the complainant and OP |
A13 | 21-07-08 | Copy of Seizure letter dt.21-07-08 issued by OP to the Complainant for which the seizure had taken place on 14-07-08 |
A14 | 07-07-08 | Copy of demand notice and reminder issued by OP |
A15 | 17-02-09 | Office copy of the registered legal notice got issued by the complainant to the OP along with postal receipt and acknowledgment |
A16 | 19-05-09 | Copy of Reply registered notice got issued by the OP to the advocate for the complainant |
A17 | 18-08-09 | Copy of Reply letter from the OP along with returned DD paid by the complainant. |
A18 | 07-10-09 | Copy of reply |
A19 | 22-08-09 | Office copy of the complaint issued by the complainant to the General Manager, RBI, Chennai |
A20 | 06-01-10 | Copy of letter from AGM, RBI, Chennai addressed to the complainant |
A21 | 11-01-10 | Certified copy of the authorized letter by OP in favour of Sri S. Joseph Reddy along with certified true copy of resolution |
A22 | 02-02-10 | Letter from AGM, RBI, Chennai addressed to the complainant |
A23 | - | Certified copy of registration of the OP notified as NBFC by RBI |
A24 | 10-03-10 | Copy of letter from RBI, addressed to the complainant along with fair practice code for NBFCs |
A25 | 26-03-10 | Deposition of Asst. Manager of Bank of India Mr. G. Narasimha Rao in CC 783 of 2008 on the file of V AMM Court, Guntur |
A26 | 06-09-10 | Acknowledgment & Lodging complainant No. bearing F/No/SFIO/Complaints/2010/2196 from Ministry of corporate affairs, Government of India, Serious fraud investigation office, New Delhi. |
A27 | 16-04-08 | NOC issued by OP to the complainant to run the buses on roads |
For opposite parties:
B1 | 14-06-07 | Copy of loan communication |
B2 | 05-06-10 | Copy of letter from Dy. Manager (legal) M/s. Sundaram Finance, Chennai |
B3 | 21-07-09 | Copy of statement of account of the complainant |
B4 | 21-07-08 | Copy of letter by Sundaram Finance to complainant |
B5 | 17-02-09 | Copy of legal notice got issued by the counsel for complainant |
B6 | - | Claim statement filed by the claimant |
PRESIDENT
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