HYDERABAD.
F.A.No.912/2011 against I.A.No.182/2011 in C.C.No.167/2010 District Forum-II, Krishna atVijayawada.
Between
R.V.Ramgopal S/o.R.Jaganmohan Rao
Aged 41 years, R/o.BHEL MIG/607,
Ramachandrapuram, Serilingampally,
Hyderabad, Occ:Transport Business. And
Shriram Transport Finance Company
Limited, Door No.76-8-1, 2ndOpp:Swathi Theatre, Bhavanipuram,
Vijayawada, rep. by its Manager.
F.A.No.913/2011 against I.A.No.184/2011 in C.C.No.165/2010 District Forum-II, Krishna atVijayawada.
Between
R.V.Ramgopal S/o.R.Jaganmohan Rao
Aged 41 years, R/o.BHEL MIG/607,
Ramachandrapuram, Serilingampally,
Hyderabad, Occ:Transport Business. And
Shriram Transport Finance Company
Limited, Door No.76-8-1, 2ndOpp:Swathi Theatre, Bhavanipuram,
Vijayawada, rep. by its Manager.
F.A.No.916/2011 against I.A.No.183/2011 in C.C.No.166/2010 District Forum-II, Krishna atVijayawada.
Between
R.V.Ramgopal S/o.R.Jaganmohan Rao
Aged 41 years, R/o.BHEL MIG/007,
Ramachandrapuram, Serilingampally,
Hyderabad, Occ:Transport Business. And
Shriram Transport Finance Company
Limited, Door No.76-8-1, 2ndOpp:Swathi Theatre, Bhavanipuram,
Vijayawada, rep. by its Manager.
Counsel for the Appellant
(common in all appeals)
Counsel for the Respondent (common in all appeals)
QUORUM:
AND
SRI S.BHUJANGA RAO, HON’BLE MEMBER.
TUESDAY, THE TWENTY NINTH DAY OF January,
TWO THOUSAND THIRTEEN
Order (Per Smt.M.Shreesha, Hon’ble Incharge President)
***
F.A.No.912/2011:
Aggrieved by the order in I.A.No.182/2011 in C.C.No.167/2010 on the file of District Forum-II,Vijayawada, the complainant preferred this appeal.
The brief facts as set out in the complaint are that the complainant
i) Hire charges
ii) Documentation and processing charges/agreement charges
iii) A/c statement charges @ Rs.500/- per statement
iv) Cheque bouncing charges amounting to 10% of the value of the dishonoured instrument
v) Swap charges
vi) Foreclosure charges
vii) Miscellaneous and other charges under various other innocuous and deceptive prefixes
viii) Compounding of interest on monthly basis @ 3% p.a. by giving the same a nomenclature of overdue charges.
The complainant further submitted that in violation of settled principles of law which mandates that any payment should first be appropriated towards principal amount and then towards interest or payment should alteast be adjusted towards a harmonious amalgam of the principle and interest component but the opposite party is adjusting all the earlier instalment of E.M.Is towards payment of interest component alone for the complete loan period of 10 years in advance within 3 years and adjusting the subsequent instalments of EMI towards payment of principle component and the front end method of calculating interest component The complainant submitted that he has been regularly paying equated monthly instalments of Rs.21,350/- per month since 2004 for the last five years and had totally paid The complainant submitted that the opposite party is justifying the interest rates by claiming that the agreement for vehicle finance is factually a hire purchase transaction and therefore opposite party is at liberty to fix its own hire charges and that fixation of Hire charges being a contract between willing parties, cannot be questioned.
The complainant submitted that the equated monthly instalments being paid by him are not hire charges but are factually repayment of loan amount and the entire transaction is a loan transaction camouflaged as Hire purchase transaction to enable the opposite party to justify its charging of various interest and the said practice is deceptive and relied on the judgement reported in The complainant further submitted that the opposite party is motivated solely for the profit factor and in utter disregard to fair trade practice, might have incorporated certain clauses in fine The complainant further submitted that the opposite party is not a Banking company and the exemption afforded to Banking Companies from the provisions contained in Usurious Loan Act, 1918 U/s.21 A of Banking regulation Act, 1949 is not available to opposite party and the provisions contained in Usurious Loans Act, 1918 mutatis mutandis applies to the finance business of the opposite party and the charging provisions contained in Section 2 of the said Act does not provide any exemption to Loans issued by companies incorporated under the Indian Companies Act, 1956 and there is no scope for applying the concept of CASSUS OMMISUS by granting an unwarranted and non existent exemption to the opposite party from the provisions contained in Usurious Loans Act, 1918.
The complainant submitted that he wanted to analyse the entire transaction, he called the opposite party to furnish The complainant submitted that the opposite party cannot be permitted to urge that the provisions contained in Usurious Loans Act, 1918 will come into operation only if the opposite party institutes a civil suit .
The complainant submitted that the opposite party is resorting to yet another pernicious mercantile practice of collecting blank cheques from its loanees at the inception of the transaction despite the ECGS bank clearing and virtually no acknowledgement is issued qua the aforesaid blank cheques are retained and when loanee subsequently raises any dispute or commits any breach of terms and conditions by refusing to pay usurious interest, the staff of the opposite party fills up the aforesaid blank cheques by writing the date and comprehensive amount as unilaterally and illegally claimed and presents the same for clearance by taking a specious stand that the loanee recently issued the said cheques towards discharge of alleged liability and counter claims of the loanee are swept and threat of penal prosecution of Negotiable Instruments Act, 1881 are raised as the said cheques are dishonoured upon presentation. . .
Opposite party filed written version resisting the complaint. Indiaand to do the business under Hire Purchase, all finance companies should get the License from Reserve Bank ofIndia Opposite party also submitted that the present complaints are not maintainable as per ‘Law of Limitation’ because the complainant entered into agreements with the above said institutions in the year 2004 and subsequently those agreements were terminated at the request of the complainant and now the complaint is agitating for getting relief through earlier agreements and filed the complaints in the month of July, 2010 and thus are barred by limitation.
Opposite party submitted that the complainant approached it in year 2004 and expressed his interest to purchase 3 new TATA 2515
The opposite party filed a petition U/s.12(3) of Consumer Protection Act, 1986 read with Order XII, Rule VI, Order VII Rule XI and U/s.151 CPC praying to dismiss the complaint on the ground of lack of jurisdiction.
The respondent/complainant filed counter contending that the mere filing of photocopy of complaint is not sufficient and that the petitioner has to file certified copy and owning several vehicles do not come under the purview of commercial transaction.
Based on the pleadings put forward in I.A. the District Forum dismissed the I.A. as well as the complaint.
Aggrieved by the said order, the complainant
The learned counsel for the appellant/complainant contended that the District Forum had wrongly dismissed the complaint at the S.R. stage on the ground of jurisdiction and that the transaction between the complainant and the opposite party is commercial and amounts to breach of terms for which civil court alone is competent to decide.
The brief points that fall for consideration here is
i) whether the complaint is a ‘consumer’ falling within the deficiency of Sec.2(1)(d) of the Consumer Protection Act, 1986?
ii) whether the directions sought for by the appellant/complainant with respect to creating a corpus for refunding the excess interest, invoking the provisions contained in Section 3 of Usurious Loans Act by reopening the vehicle’s loan transaction and directing the opposite parties to disclose the actual rate of interest substantiating each and every entry in the audit books as per the ratio of the judgements in, can be adjudicated by the consumer Fora?
iii) Whether the opposite party’s right to seize the lorry is justifiable?
1. It is the appellant/complainant’s case that he is a self-employed person and nothing prevents a self-employed person to operate three lorries and that merely because he has purchased these lorries and stated in his complaint that he is doing transport business, it should not be construed that it is for commercial purpose. Apex Court
“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. In that view, it will have to be held that the complaint itself was not maintainable in toto”.
Even in the instant case, the purchase of lorries is only for earning extra profits even if they have been taken on hire purchase and admittedly the complainant has taken these lorries on finance for improving his transport business which falls under the definition of commercial transaction and cannot be termed as a ‘consumer’ as defined under Section 2(1)(d) of the Consumer Protection Act.
2. It is the appellant/complainant’s case that the opposite party is indulging in unfair trade practice by not following the diminishing balance method of accounting though the principal amount of Rs.9,23,000/- was disbursed by the opposite party to the complainant on 22-11-2004 at 5.13% p.a., the interest rates being charged is much higher and is violative of the Usurious Loans Act. The opposite party is charging higher charges, documentation and processing charges, account statement charges at Rs.500/- per statement, cheque bouncing charges at 10% of the value, SWAP charges, foreclosure charges, miscellaneous charges and compounding interest at 3% p.a. calling it overdue charges and therefore the complainant submits that opposite party is not revealing the actual interest rate and is not adjusting the EMI’s paid by the complainant towards the payment of principal component and the front end of calculating the interest is unfair. The complainant is paying EMI’s of Rs.21,350/- per month since the year 2004 and totally paid around Rs.15,00,000/- and still the opposite party is claiming an amount of Rs.4,66,542/- for foreclosing the loan account.
The contention of the appellant/complainant that the complaint
is not complicated and that the issue will be resolved by examining the chartered accountant and other financial experts who will
It is not in dispute that the appellant/complainant approached
the Competition Commission of India and filed a complaint seeking
the following directions
It is therefore prayed that this Hon’ble Commission may be pleased to invoke the provisions contained in the Competition Act, 2002 and call for the entire record of the Respondents including the books and book entries connected to the Three (3) Lorry Finance transactions of the complainant herein for determining the term and tenure of the loan transactions and also for determining the actual interest rate a.k.a. the Internal Rate of Return being charged and conceptualised by the Respondents qua the complainant’s loan transactions and consequently, examine the said loan transactions in the light of the contracted rate of interest and the provisions contained in the Usurious Loans Act, 1918 for determining the rate of interest a.k.a. the internal rate of return being charged by the Respondents herein, and also be pleased to examine the vires of the Loan Agreement for determining as to whether the various clauses including the clause Nos. 6 & 7
It is apparent that the directions prayed for in the Competition Commission ofIndia
In the instant case, it is the case of the appellant/complainant that the opposite party is charging hidden costs and charging interest rates at an abnormal rate against the terms of agreement, which is not established by any documentary evidence and also the opposite party have demanded him to pay 3. Whether the opposite party’s right to seize the lorry is justified?
We rely on the decision of the Apex court in
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 been upheld to be a legal right of the financier.
The Court vide its judgmenet in Trilok Singh and Ors. v. 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. Bihar
, held as follows:
“It is not disputed before is that the petitioner had raised a loan of Rs.6,15,000/- to purchase the truck. India) Ltd.,
It is the case of the respondent/opposite party that they have every right to seize the vehicle financed by them as the complainant has become a defaulter in payment of the instalments and they have also issued a notice as per the terms and conditions of the agreement.
With respect to the other prayers of the complainant, Keeping in view the aforementioned decisions, we are of the considered view that the directions sought for by the appellant/.complainant do not fall within the ambit of Selection 2(1)(d) and Section 2(1)(o) of the Consumer Protection Act, 1986 and therefore cannot be termed as a consumer dispute. Civil Courtseekexclusiontimespent
F.A.Nos.913/2011 and 916/2011:
Sd/-Incharge President.
JM Dt. 29-1-2013.
