- The present Revision Petition Nos.4133 and 4134 of 2014 are filed under section 21(b) of the Consumer Protection Act, 1986 (for short ‘the Act’) by Mrs.Seema Jeetendra Longani (hereinafter referred to as the Petitioner/ Complainant) against M/s Citicorp Finance India Ltd. and M/s Sterling Motors Ltd. (hereinafter referred to as the Respondent No. 1/ Finance Company and Respondent No. 2 respectively) challenging the Impugned Order dated 22.08.2014 of State Consumer Dispute Redressal Commission, Maharashtra (hereinafter referred to as the ‘State Commission’) in FA No.408 of 2009 and FA No.457 of 2009. FA No.408 of 2009 filed by the Complainant was disallowed whereas FA No.457 of 2009 filed by Respondent No.1 was allowed. Further, the State Commission had dismissed the Order of the District Consumer Redressal Forum, Ahmednagar (hereinafter referred to as the District Forum) in CC/32/2009.
- Since the facts and question of law involved in both the Petitions are similar, therefore, these two Revision Petitions are being disposed of by this common Order. However, for the sake of convenience, Revision Petition No.4133 of 2014 is treated as the lead case.
- Brief facts of the case as narrated in the Complaint are that, on 20.10.2006, the Complainant purchased a Tata Truck bearing Registration No.MH-17-T-7683. The Complainant had obtained two loans from Respondent No. 1 for an amount of Rs.10,10,091/- and Rs.1,01,984/- both with 41 instalments. The Complainant paid a total of Rs.6,61,516/-, covering 20 and 21 instalments for each loan, respectively. The Complainant further spent Rs.1,85,000/- in body building of the truck, accessories and RTO registration, etc. The Respondent No.1 on 04.02.2008 forcibly took the possession of vehicle from Indore as one instalment of loan was due.
- Aggrieved by the above acts of the Respondents, the Petitioner/Complainant filed a Consumer Complaint in the District Forum, bearing Consumer Case No. 32/2009, which was allowed. The District Forum vide Order dated 13.04.2009, held as under:
- Complaint of Complainant’s is hereby partly allowed.
- Within the 30 days, the Opponent No. 1 shall :
- Compensation amount of Rs. 25,000/- (Rs. Twenty Five Thousands) be given to complainant with interest thereon at the rate of 10% p.a. from the filing of original complaint.
- Except the column No. “A” there is any due balance against the complainant, the said due amount be shown as "additional compensation amount" and said be debited in loan account of complainant. And Loan amount of complainant be declared as "Nil"
- An amount of Rs. 5,000/- (Rupees Five Thousands only) be given to complainant as a mental harassment and Rs. 3,000/- (Rupees Three Thousands only) be given to the complainant as a cost of proceeding.
- No order is passed against the Opponent no. 2.
- Order be informed to concerned parties.
- Aggrieved by the Order of the District Forum, the Petitioner/Complainant filed the First Appeal being Appeal No.408 of 2009 for enhancement of compensation and Respondent No.1 filed Appeal No.457 of 2009 to set aside the Order of the District Forum in the State Commission.
- The State Commission vide its Order dated 22.08.2014 in both the Cross Appeals held as under:
“1. Appeal No.457/09 filed by finance company is allowed. 2. The impugned judgment and order passed by District Consumer Forum is quashed and set aside. 3. Consumer complaint stands dismissed. 4. Appeal No.408/09 filed by complainant is dismissed. 5. No order as to cost. 6. Copies of the judgment be supplied to both the parties.” - Aggrieved by the Order of the State Commission, the Petitioner/Complainant filed two Revision Petitions i.e. RP/4133/2014 and RP/4134/2014 before this Commission with the prayer to set aside the common Order dated 22.08.2014 in FA/408/2009 and FA/457/2009 respectively.
- I have heard learned Counsel for the parties and perused the record.
- Learned Counsel for the Petitioner/ Complainant argued that on 20.10.2006, the Petitioner had obtained two loans of Rs.10,10,091/- and Rs.1,00,091/- respectively for the purchase of a TATA truck and its body bearing registration no. MH-17-T-7683. The said loan amount was to be repaid in 41 instalments each. The Complainant paid a total of Rs.6,61,516/-, covering 20 and 21 instalments for each loan, respectively. The Petitioner defaulted on the payment of one monthly instalment for which Respondent No.1 on 04.10.2008 took forceful possession of the vehicle at Indore. The Respondent No. 1 then sold the truck in question at auction during the pendency of the Complaint before the District Commission.
- Learned Counsel for Respondent No.1 argued that the Complainant stopped making payments of Instalments of loan amount. The Respondent No.1 sent notice dated 24.07.2008, 14.08.2008, and 06.10.2008 to the Complainant, requesting payment of the outstanding balance. The Complainant even after receiving several notices failed to make the payment of due amounts. The Respondent No.1 seized the vehicle in question within the terms and conditions of the contract executed between the Complainant and himself/ itself.
- The Complainant was required to repay the first loan of Rs.10,10,091/- in 41 instalments of Rs.29,909/- each, from 20.11.2006 to 20.03.2010, and the second loan of Rs.1,01,984/- in 41 instalments of Rs.3,016/- each, from 27.12.2006 to 27.04.2010. However, he had made a payment of Rs.6,61,516/- only against the total loan amount of Rs.11,12,075/- thereby defaulting on due amount.
- On perusal of the record, it is seen that Respondent No. 1 had issued several notices, specifically five in number, for the repayment of loan instalments. However, he defaulted in payment in the very first month as evident through the first notice issued in the month of December 2006, furthermore, Respondent No. 1 had asked the Complainant to deposit Rs.30,183.12/- within 7 days. The Respondent No. 1 issued another notice dated 05.01.2007, vide which the Finance Company had recalled the loan facility that was provided and called upon the Complainant to pay the entire due amount of Rs.10,70,006.68/-, including interest, penal charges and foreclosure charges.
- Thereafter, Respondent No.1 issued a third notice dated 24.07.2008 informing that there were 3 instalments due amounting to Rs.6,87,190.12/-, and called upon the Complainant to pay the mentioned amount immediately. Further, Respondent No.1 issued Notice dated 06.10.2008 immediately after the seizure of vehicle in question on 04.10.2008, asking the Complainant to pay the outstanding amount of Rs.6,58,248.31/- within 7 days. The Notice clearly mentioned that in case the Complainant failed to pay the outstanding amount, it would be considered as concurrence of the Complainant to sell or dispose of the vehicle in question at the time and convenience of the Respondent No.1. It is evident from the records that the Complainant had been given ample opportunities and notices by Respondent No.1 to clear the loan dues but he failed to do so despite several reminders.
- In the loan documentation executed between the parties, it has been mentioned that in case of default, Respondent No.1 is entitled to take the possession of the same. For the sake of convenience, I would like to reproduce the relevant portion of the Loan Documentation as under:
5.Events of Default: The Borrower shall be deemed to have committed an act of default on the happening of, inter-alia, any one or more of the following events, namely:- a. Failure to make payment to CFIL of any part of the loan amount on demand or any other rate or charge due and payable under these presents or in respect of the said credit facilities. 6.CFIL’s Rights on Default: In the event of the Borrower committing any act of default, as aforesaid, then, notwithstanding anything to the contrary herein contained. CFIL shall be entitled at its absolute discretion, to inter alia: (c) to take all necessary steps as fully and effectively as the Borrower could take to dispose off the said hypothecated assets at the risk and cost of the Borrower in all respects and it shall be lawful for CFIL forthwith or at any time thereafter and without notice to the Borrower to enter upon the premises, or garage where the Hypothecated assets shall be lying or kept and to take possession or recover and receive the same and if necessary to break upon any such place of storage and CFIL shall be entitled to appoint any officer or officers of CFIL or any other person authorized in this behalf as receiver of the said hypothecated assets or any part thereof with power to do all things as fully and effectively as the Borrower could do and/or to sell the said hypothecated assets by public auction or private contract or otherwise dispose off the said hypothecated assets including any material thereon at the risk and costs of the Borrower in all respects with power to rescind or vary any contract for sale without being bound or answerable for any loss of diminution in value and without being bound to exercise any of the powers hereby conferred or being liable for any loss occasioned by the exercise of any such power and to give effectual receipts and discharge for the purchase money and to do all such other acts and things for completing the sale as CFIL or the receiver, shall think proper. The Borrower shall not raise any objection to the regularity of any sale or other disposition made by CFIL nor shall CFIL be responsible for any loss that may arise from any act or default on the part of any broker or auctioneer or other person or body employed by CFIL or the receiver for the purpose of the sale or disposition. Therefore, the action of taking possession of the vehicle by Respondent No.1 on 04.10.2008 was in order and in accordance with the loan documentation. In this regard, I am relying on the Order of the Hon’ble Supreme Court in Suryapal Singh v. Siddha Vinayak Motors and Another, SLP (Civil) No. 5302/2012, decided on 21.02.2012, wherein it has been held as, “Under the Hire Purchase Agreement, it is the financier who is the owner of the vehicle and the person who takes the loan retain the vehicle only as a bailee/trustee, therefore, taking possession of the vehicle on the 2 ground of non-payment of instalment has always been upheld to be a legal right of the financier. This Court vide its judgment in Trilok Singh & Ors. vs. Satya Deo Tripathi, AIR 1979 SC 850 has categorically held that under the Hire Purchase Agreement, the financier is the real owner of the vehicle, therefore, there cannot be any allegation against him for having the possession of the vehicle. This view was again reiterated in K.A. Mathai alias Babu & Anr. vs. Kora Bibbikutty & Anr., 1996 (7) SCC 212, Jagdish Chandra Nijhawan vs. S.K. Saraf, 1999 (1) SCC 119, Charanjit Singh Chadha & Ors. vs. Sudhir Mehra, 2001 (7) SCC 417 following the earlier judgment of this Court in Sundaram Finance Ltd. vs. the State of Kerala & Anr., AIR 1966 SC 1178, Smt. Lalmuni Devi vs. State of Bihar & Ors., 2001 (2) SCC 17 and Balwinder Singh vs. Asstt.Commisioner, CCE, 2005 (4) SCC 146. In view of the above, prima facie we are of the view that the courts below has committed an error in granting compensation to the present petitioner and which appears to be non-sustainable in law.” - In my considered opinion, the District Forum erred in allowing the Complaint by overlooking the binding Agreement clauses which rightfully gave privileges to Respondent No. 1 to seize and auction the vehicle in case of default on the part of the Complainant in payment of dues.
- This Commission, vide its order dated 27.06.2024, directed the Petitioner and Respondent No.1 to submit an affidavit within two weeks, confirming whether the Finance Company had closed the loan account and issued a No Objection Certificate (NOC) to the defaulting borrower upon recovery of the outstanding amount. However, as neither party has complied with the directive, it is presumed that the Finance Company has not closed the loan account or issued the NOC to the said borrower.
17. I do not find any new question of law or any legal infirmity in the Order of the State Commission. Therefore, the present Revision Petitions are disposed of partly upholding the Order of the State Commission and directing Respondent No.1 to close the loan account and issue the NOC to the borrower within six weeks of this Order, failing which an amount of Rs.500/- per day shall be payable to the Petitioner till the date of compliance. |