Petitioner/opposite party – M/s Tata Motors Ltd. is the financier of a loan advanced to the respondent/complainant for the purchase of a Tata 407 vehicle.  Vide a loan-cum-hypothecation agreement dated 22.9.2004, the petitioner/opposite party had agreed to advance a loan of Rs.4,25,000/-.  After the payment of margin money and the first installment of Rs.11,790/-, the respondent/complainant was to re-pay the loan in 46 equated monthly installments of Rs.11,585/- commencing from 22.10.2004.  However, payment of the second installment was delayed  by a month and was paid on 23.11.2004.  Thereafter,  the complainant on the ground of having fallen sick did not re-pay the loan installment for the months of November and December, 2004.  For the non-payment of these two  installments, the vehicle was taken possession of by the petitioner/opposite party.  The respondent/complainant, however, was advised to clear defaulted instalments along with additional charges for the period of delay and take back the vehicle.  When the complainant even thereafter, failed to clear the up-to-date dues, the petitioner/opposite party disposed of the vehicle in an open auction for a sum of Rs.3,40,000/- on 7.4.2004. 

            Alleging unfair trade practice and harassment, the respondent/ complainant approached the District  Consumer  Disputes Redressal Forum, Saini Enclave, Delhi (for short ‘District Forum’).  The District Forum, after analyzing the evidence produced by both sides, found the petitioner/opposite party guilty of highhandedness in forcibly taking possession of the vehicle and awarded the following reliefs :-

(1)              “to return the vehicle in good working condition ;

(2)              not to charge any installments for the period 20.1.2005 till the date of delivery to the complainant ;

(3)              pay a sum of Rs.8000/- as compensation and Rs.2000/- as cost of litigation to the complainant and ;

(4)              deposit a sum of Rs.20,000/- in Hon’ble State Commission Consumers Welfare Fund as punitive damages as such illegal activity was committed by the most reputed industrial house of the country.”  

          Aggrieved thereupon, the petitioner/opposite party filed an appeal challenging the order of the District Forum before Delhi State Consumer Disputes Redressal Commission (For short ‘State Commission’) who vide the impugned order held as under :-

1.    The question of return of the vehicle did not arise since the petitioner/opposite party has already sold the vehicle soon after taking its possession. 

2.    The punitive damage ordered by the District Forum, being unjustified was quashed.

3.    The respondent/complainant was not entitled to refund of the amount which he had already paid by way of installment as the vehicle had been used by him during the period of default. 

4.    The respondent/complainant  was entitled to refund of 50% of the margin money which he had paid while raising the loan.

5.    The petitioner/opposite party was not entitled to payment of any installment subsequent to the possession of the vehicle.

          The petitioner/opposite party – M/s Tata Motors Ltd. are aggrieved on this waiver of installment and refund of 50% of the margin money and, therefore filed this revision petition.

Having heard the learned counsel for the parties and taking note of the fact that the respondent/complainant has not filed any revision petition seeking restoration of the award by the District Forum which defers us from giving any relief to the complainant, we cannot but hold that this revision petition has absolutely no merit and deserves to be dismissed on the following grounds :

Admittedly, the petitioner - Finance Company had advanced a loan to the respondent/complainant for the purchase of a vehicle.  It was a loan-cum-hypothecation agreement and not a hire purchase agreement.  It has to be clearly understood that while in the case of hire purchase agreement, the ownership of the vehicle is in the hands of financier, the loanee is the owner in case of a loan-cum-hypothecation agreement.  In this case, there is no dispute about the vehicle having been registered in the name of the respondent/complainant.  It is, however, established from the records that the respondent/complainant had failed to re-pay two installments after having paid the second installment with a delay of about a month.  The question to be considered in this background is as to whether for the default of just two installments, the petitioner – company should have resorted to taking possession of the vehicle and then disposed it off in open auction.  In this regard, it has to be noted that clause 4 of the agreement stipulates that the Borrower on his failure to pay the installments when becoming due pay ‘delayed payment’ charges at 3% p.m.  Further clause 26 thereof prescribes that in the event of default, the financier is entitled to recall the said loan by giving a notice in writing to the Borrower.  Para 34 of the said agreement further provides that all disputes and differences or claims should first be referred to an arbitrator.

All these provisions have been given a go-by by the petitioner/opposite party.  They have not placed on record any notice or communication imposing additional charges for the period of delay or having warned the complainant to recall the loan.

In this background, the District Forum has correctly held that the vehicle was forcibly possessed by the petitioner/opposite party.  However, the admission of the respondent/complainant that he was advised to take back the vehicle on payment of dues, though does not clear the petitioner of its highhanded action to seize the vehicle somewhat mitigates the gravity of the arbitrary action. It appears that when the respondent/complainant could muster his resources to clear his dues by the month of May 2004, he was taken by surprise that the vehicle had already been sold in open auction.  A notice to the respondent/complainant prior to the disposal of the vehicle in open auction was warranted so as to make the transaction transparent which was not done.  This Clearly offends the principle of natural justice.  Besides sale of a three month old vehicle at only Rs.3,40,000/- as against its original cost of Rs.4,53,968/- over which the complainant too had invested additional amount to make it worthy    of carrying goods ; adds weight to the allegation that the petitioner/opposite party had taken undue advantage of the complainant’s inability to pay two installments in time.  It cannot be believed that a three month old truck worth about Rs.5 lakhs would depreciate by about 30% within three months and that too when the truck had hardly been used as the owner driver was sick during this period.  The petitioner/opposite party has not produced any proceedings of the ‘auction sale’ and since the respondent/complainant was not given any prior information, the claim of the petitioner/opposite party that there has been a fair auction has to be rejected.

This Commission in matters relating to forcible possession of vehicle on flimsy grounds and without following the due process of law in the case of “Citycorp Maruti Finance Ltd. Vs. S.Vijayalaxmi” has already held that :

“In a case when the vehicle was repossessed by use of force, and, thereafter sold without informing the complainant, in our view, it would be unjust to direct the consumer to ay the balance amount, as alleged by the financier to be outstanding.  It such a relief is given to the money lender/financier, it would be unjust enrichment to the money lender and against equity.  That question may arise for consideration only if the complainant willing to surrenders the vehicle for sale and for recovery of the outstanding amount.  Then, in such cases, consumer dispute would not arise.”

It has further held that “where the vehicle was forcefully seized and sold by the financier, it would be just and proper to award reasonable compensation to the complainant”.

          Reliance on the subject can also be placed on the judgment of Hon’ble Supreme Court  reported in the case of ICICI Bank Vs. Prakash Kaur and Ors. (2007) 2 SCC 711. 

Learned counsel for the petitioner has relied upon the orders passed by this Commission rendered in “Manager, St.Mary’s Hire Purchase Pvt.Ltd. Vs. N.A. Jose” reported in III (1995) CPJ 58 (NC) and “Chellappan Vs. Kerala Financial Corporation & Anr.” reported in III (2002) CPJ 46 (NC).  However, none of these orders support the case of the petitioner/opposite party.  While  the case of “Manager, St.Mary’s Hire Purchase Pvt.Ltd. Vs. N.A. Jose”  relates to hire purchase agreement and, therefore, not applicable to the instant case of a loan agreement, the facts in the case of  “Chellappan Vs. Kerala Financial Corporation & Anr.”  are totally different inasmuch there the vehicle was repossessed thrice for chronic default whereas in the case in hand, it was merely the first default and the vehicle has been seized within three months of its purchase on which the complainant had invested sizeable amount to make the vehicle fit for carrying goods so as to earn his livelihood.

Since  the complainant has not challenged the order of the State Commission and has made a mere submission that the District Forum’s order be restored, we limit our order only to the extent of dismissal of the revision petition which is totally devoid of any merit with a cost of Rs.10,000/-.