Date of Filing – 17.10.2014
Date of Hearing – 28.04.2017
The instant appeal under Section 15 of the Consumer Protection Act, 1986 (hereinafter referred to as ‘the Act’) is at the behest of the Opposite Party/Bank to impeach the Judgement/Final Order dated 03.09.2014 passed by the Ld. District Consumer Disputes Redressal Forum, North 24 Parganas at Barasat (for short, Ld. District Forum) in Consumer Complaint no. 317/2010. By the impugned order, the Ld. District Forum allowed the complaint lodged by the respondent under Section 12 of the Act on contest with the directions upon the appellant/OP – (1) to handover the vehicle and related documents; (2) to waive the interest; (3) to pay a sum of Rs.1,00,000/- as compensation; (4) to pay litigation cost of Rs.10,000/- etc.
The Respondent herein being Complainant lodged the complaint with the assertion that being an unemployed youth in order to maintain the livelihood for self and his family members, he approached the opposite party Bank for obtaining loan. The opposite party Bank disbursed a sum of Rs.11,48,986/- out of total agreement value of Rs.14,01,763/- out of which finance charged was Rs.2,52,777/- and the complainant took delivery of the vehicle from GNB Motors Ltd. and the vehicle in question was hypothecated with the OP/Bank. At the time of obtaining loan, the complainant put his signature in several documents. The complainant states that he was going on paying EMIs as per agreement but in the year 2008 and 2009 he was passing hard days on account of sudden demise of his parents and near relatives and as such became irregular in making payment of the instalment. On account of dishonour of cheques, he entered into a new agreement and rate of EMI was enhanced from Rs.19,200/- to Rs.21,700/-. On 22.07.2009 all on a sudden, the opposite party though its agent ceased/repossessed the vehicle while it was plying on NH-34. Hence, the respondent approached the Ld. District Forum against the appellant with prayer for certain reliefs, viz. – (a) to handover the vehicle and/or return the vehicle being Registration No.WB-25B/2934, Chassis No. FWH088972, Engine No. FWH285876 made by Ashok Leyland; (b) to handover the agreement and other relevant documents; (c) not to realise interest and other expenses during the retention in the custody period of the vehicle; (d) to replace the vehicle by a new one in case of major damage; (e) to pay a sum of Rs. 5,00,000/- as compensation and (f) to pay a sum of Rs.10,000/- as litigation cost etc.
The Appellant herein being OP by filing a written version has stated that complainant is not a ‘consumer’ as defined in Section 2(1)(d) of the Act as the complainant used the subject vehicle for commercial purposes. The specific contention of the OP is that the complainant defaulted in paying the instalments and as such in accordance with the terms of loan agreement, the vehicle was repossessed.
After evaluation of the materials on record, the Ld. District Forum by the impugned Order allowed the consumer complaint with certain directions upon the Appellant to the extent as indicated above, which prompted the OP to approach this Commission with the present appeal.
I have scrutinised the materials on record and considered the submission advanced by the Ld. Advocates appearing for the parties.
Having heard the Ld. Advocates for the respective parties and on going through the materials on record, it would reveal that the respondent approached the appellant for the financial assistance to purchase the vehicle (truck) being bearing Engine No. FWH285876, Chassis No. FWH088972 and Registration No.WB-25B/2934. Admittedly, respondent took a loan of Rs.7,18,144/- for the period of four years starting from 21.02.2008 to 21.01.2012 and the rate of interest was fixed @ 6% p.a. calculating Rs.1,72,355/- as interest charges thus totalling to Rs.8,90,499/-. The respondent was under obligation to pay Rs.21,099/- for first instalment and Rs.18,900/- for 2nd to 47th instalments before 21st of every calendar month. It is also not in dispute that the respondent defaulted in paying the instalments due on or before 21st of every English calendar month and moreover some of the cheques issued by the respondent were dishonoured due to in sufficient fund. In that backdrop, the appellant repossessed the vehicle on 22.07.2009.
Mr. Saptarshi Dutta, Ld. Advocate for the appellant, on the threshold of his submission has submitted that the respondent has obtained loan from the appellant Bank for purchase of other two vehicles (trucks) being Registration Nos.WB-25B/4034 and WB-25B/3734. Mr. Dutta has submitted that a person who buys three trucks at a time cannot be a ‘consumer’ as defined in Section 2(1)(d) of the Act. In support of his submission, he has placed reliance to several decisions reported in (1) III (2016) CPJ 389 (NC) (Srei Epuipment Finance Pvt. Ltd. & Ors. – vs. – S. Natarajan); (2) III (2014) CPJ 81 (NC) (Max Infra (India) Ltd. – vs. – Ashok Leyland Ltd. & Ors.); (3) I (2015) CPJ 760 (NC) (United India Insurance Co. Ltd. – vs. – Kishore Sharma) and (4) III (2015) CPJ 1 (NC) (Jagrut Nagarik & Anr. – vs. – Cargo Motors Pvt. Ltd. & Anr.).
In reply to the same, Ld. Advocate for the respondent has contended that the respondent intended to purchase those trucks for livelihood of him and his family members and as such it cannot be said that the respondent used those trucks for commercial purposes.
For appreciation of the situation, it would be worthwhile to reproduce the definition of Section 2(1)(d) of the Act which provides -
“Consumer means any person who –
- 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 then 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
- 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 purposes of earning his livelihood by means of self-employment”.
The foregoing provision provides that the ‘consumer’ is a person who buys any goods for a consideration which has been paid or promised or partly paid and partly promised or avails of any services for a consideration which has been paid or promised or partly paid and partly promised but it does not include a person who avails of services for any commercial purposes. Explanation to the Section creates an exception and states that clause ‘commercial purpose’ does not include used by a person of goods brought and used by him and services available by him exclusively for the purposes of earning his livelihood by means of self-employment.
In a landmark decision reported in (1995) 3 SCC 583 (Laxmi Engineering Works – vs. – P.S.G. Industrial Institute) the Hon’ble Supreme Court had an occasion to analyse the scheme of the Act wherein while interpreting the explanation to Section 2(1)(d)(ii) of the Act, the Hon’ble Apex Court has observed thus – “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” and “ 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”. In the case beforehand, the respondent claimed that he purchased the vehicle for earning his livelihood by means of self-employment but it is difficult to understand how a person will ply three trucks at the same time. In order to run the three vehicles at least he must employ two persons as driver for plying those vehicles. The respondent did not disclose how he will ply all three trucks by himself at the same time. Therefore, it can be reasonably presumed that the respondent has obtained loan from the appellant bank for the three trucks only for transport business. Thus, it cannot be said that the loan was obtained from the appellant bank for the purchase of three trucks exclusively for the purpose of earning livelihood by means of self-employment.
In the case reported in (1997) 1 SCC 131 (Cheema Engineering Services – vs. – Rajan Singh) the Hon’ble Apex Court has explained the terms self-employment by observing thus:
“Self-employment connotes altogether a different concept, namely, he alone uses the machinery purchased for the purpose of manufacture ........ by employing himself in working out or producing the goods for earning his livelihood. ‘He’ includes the members of his family”.
In a decision reported in 2000 (3) CPJ 13 (Shakti Engineering Works – vs. – Sri Krishna Coir Rope Industries) the Hon’ble National Consumer Commission has held that in order to have protection of explanation to Section 2(1)(d)(ii) of the Act one must establish that he himself was engaged in the activity which generates livelihood. Acting in supervising capacity would not satisfy the requirement of explanation.
The appellant in their written version has categorically challenged the maintainability of the proceeding before the Ld. District Forum and in the Judgement/Final Order, the Ld. District Forum has mentioned submission of the OP/appellant in this regard but did not give any decision on that point. In any case, when it is quite apparent that the respondent has obtained loan of three trucks at a time from the appellant bank, such taking loan must be considered to generate profit by using the vehicles commercially. Therefore, the respondent/complainant would be excluded from the purview of the Act and on that ground alone, the complaint should have been dismissed.
Now coming to the merits of the case, it would be evident that in the loan agreement, there is no condition for sending notice upon the borrower or guarantor of the loan. Clause 15.2 of the Loan Agreement dated 21.02.2008 authorises the appellant bank to take repossession of the vehicle on account of default on the part of the borrower in repaying the loan as per terms of the agreement.
It is well settled that 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 ground of non-payment of instalment has always being upheld to be a legal right of the financier. In a decision reported in 2006 (1) SCC 708 (Managing Director Orix Auto Finance (India) Ltd. – vs. – Shri Jagamandar Singh & Anr.) the Hon’ble Supreme Court has held that the financier can repossess the vehicle if the agreement permits the financier to take possession of the financed vehicle. Ld. Advocate for the respondent has contended that as notice has not been served, the sale in auction of the vehicle was not proper. In this regard, the decision placed by the Ld. Advocate for the appellant reported in II (2016) CPJ 412 (NC) (Shyam Bihari Shukla – vs. – Deepak Jain, State Chief, TATA Finance Co., Indore & Ors.) appears to be relevant wherein it has been observed that where there is no stipulation of sending notice, the approach of the financier cannot be faulted with.
After giving due consideration to the submission advanced by the Ld. Advocates appearing for the parties, it appears to me that the Ld. District Forum has completely mis-directed itself in appreciating the facts and circumstances of the case keeping in view the proposition of law and the authorities as referred above. Accordingly, the Judgement/Final Order being not sustainable in the eye of law, liable to be dismissed.
For the reasons aforesaid, the appeal is allowed on contest. However, there will be no order as to costs.
The impugned Judgement/Final Order is hereby set aside.
Consequently, CC/317/2010 stands dismissed.
The Registrar of this Commission is directed to send a copy of this order to the Ld. District Consumer Disputes Redressal Forum, North 24 Parganas at Barasat for information.
