Per Sri A. Hazarath Rao, President:- The complainant filed this complaint u/s 12 of the Consumer Protection Act restraining the opposite parties from collecting Rs.1,01,957.91 ps from him; directing the opposite parties to submit account copy; compensation of Rs.50,000/-; Rs.40,000/- towards mental agony; Rs.10,000/- towards traveling and incidental expenses and costs of Rs.2,000/- for filing the complaint.
2. In brief averments of the complaint are these:
The complainant on 21-03-11 purchased the lorry bearing No.AP27W 2435 with the financial assistance of the opposite parties. The 1st opposite party with the permission of the 2nd opposite party granted loan of Rs.6,30,000/- to the complainant and both of them entered into agreement. The complainant agreed to discharge the loan in 28 installments together with interest @9.5% p.a. The 1st opposite party deducted Rs.27,665/- at the time of granting loan towards 1st installment and issued cheque for Rs.6,02,335/-. The opposite parties have no right to do so. The complainant paid the entire loan amount i.e., Rs.7,79,434/-. The complainant failed to pay some installments in time for which the opposite parties collected interest @36%. The opposite parties are demanding the complainant to pay Rs.1,01,957.91 ps on delayed payments. As per Usurious Loans Act the complainant’s have to collect interest @9.5% interest and some other fine amount and the demand for Rs.1,01,957.91 is against law. The opposite parties gave a reply with false averments. If the opposite parties did as mentioned in their reply notice, the complainant will sustain huge loss due to damage of goods in the lorry which he has to compensate to the owner of the goods. The complainant sent DD for Rs.10,500/- though not due to the opposite parties who in turn returned it. The attitude of the opposite parties in recovering the 1st installment at the time of granting loan itself and charging interest 36% p.a., on delayed payments amounted to deficiency of service. The complaint therefore be allowed.
3. The contention of the opposite parties in nutshell is hereunder:
The complainant on 21-03-11 obtained loan of Rs.6,30,000/- and agreed to pay Rs.1,49,434/- as financial charges and the loan tenure is 28 monthly installments. One Thella Nageswara Rao stood as guarantor to the complainant. The complainant and the guarantor subscribed their signatures on loan documents and agreed to pay Rs.7,79,434/- in 28 installments as mentioned in schedule III of hypothecation agreement. The complainant agreed to pay interest @10.16% p.a. to be computed with monthly rests on the outstanding balance. The opposite party followed the rules and regulations of the loan/hypothecation agreement dated 21-03-11 when the complainant committed default. The opposite parties can repossess the asset at any time without notice to the complainant as per clause (6) of the hypothecation agreement. The complainant availed further loan of Rs.21,276/- towards insurance of the vehicle and another loan of Rs.24,060/- towards repairs of the loan vehicle. The complainant intentionally suppressed other loans taken by the opposite parties. At page-1 of account copy the amount due by the complainant in respect of other loans was also mentioned. The opposite parties by their notice dated 15-10-13 brought to the notice of the complainant about his indebtedness of Rs.1,05,016/- to them though as per account copy the complainant has to pay Rs.1,01,957/- to the opposite party. The opposite party calculated interest as per hypothecation agreement. The relationship between the complainant and the opposite parties is that of a creditor and debtor but not a consumer and as such the petition is liable to be dismissed. The complainant is a business man and as such he cannot approach Consumer Forum. This Forum has no jurisdiction to entertain the complaint in view of arbitration clause under the hypothecation agreement. Rest of the allegations contra mentioned in the complaint are all false and are created by the complainant to suit his case. The complaint therefore be dismissed.
4. Exs.A-1 to A-12 on behalf of complainant and Exs.B-1 to B-4 on behalf of the opposite parties were marked.
5. Now the points that arose consideration in this case are these:
- Whether this Forum has jurisdiction to entertain the complaint?
- Whether the complainant is a consumer?
- Whether the opposite parties committed deficiency of service?
- Whether the opposite parties can be restrained from collecting Rs.1,01,957.91 ps ?
- Whether the complainant is entitled to Rs.50,000/- as compensation?
- Whether the complainant is entitled to Rs.40,000/- towards mental agony?
- Whether the complainant is entitled to Rs.10,000/- towards incidental expenses?
- To what relief?
6. Admitted facts in this case are these:
a. The complainant borrowed Rs.6,30,000/- from the opposite parties on 21-03-11 and executed loan cum hypothecation agreement and demand promissory note (Ex.B-1).
b. One Tella Nageswara Rao stood as guarantor to the complainant while obtaining loan (Ex.B-1).
c. The complainant also availed other loans of Rs.21,276/- and Rs.24,060/- (Ex.B-2).
d. The opposite parties on 21-03-11 collected 1st installment from the date of granting the loan itself and paid the remaining amount to the complainant and the same was mentioned in schedule III of Ex.B-1.
e. Exchange of notices between the parties (Exs.A-12 and A11).
f. The opposite parties seized complainant’s vehicle near old bus stand, Visakhapatnam on 18-11-13 (Ex.A-9).
g. The opposite parties issued auction notice to the complainant
(Ex.A-6).
7. POINTS 1 & 2:- The learned counsel for the opposite parties vehemently contended that the complainant is not a consumer and is plying the vehicle for commercial purpose by engaging a driver and cleaner and wife of the complainant is also in possession of HMV goods carriage and as such is not entitled to approach Consumer Forum not being a consumer and this Forum has no jurisdiction to entertain the case. On the other hand, the learned counsel for the complainant countered the above contention of the opposite parties and submitted that possessing a vehicle by complainant’s wife did not bar the complainant to ply another vehicle, the complainant is plying the subject vehicle for his livelihood and thus satisfied the requirement under the provisions of Consumer Protection Act.
8. The explanation ‘exclusively for the purpose of earning livelihood by means of self employment’ to sub-clause is added in 1993 in order to safeguard the interest of small consumers who buys goods for earning their livelihood by self employment. If the purchaser is a)for exclusive use of buyer himself, b) for his livelihood and c) by self employment, the buyer of goods (or hirer of services) still falls under the definition of consumer though the purpose was commercial.
9. The Supreme Court in Laxmi Engineering Works v. PSG Industrial Institute AIR 1995 SC 148 did not accept the view repeatedly taken by the National Commission that where a person bought goods with a view of using it for carrying on a large scale for earning profit, it was to be treated as for commercial purpose. The Apex Court held, “The explanation reduces the question what is ‘commercial purpose’ to a question of fact to be decided on the facts of each case….. 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”.
10. In Cheema Engineering Services v. Rajan Singh 1997 (1) CPR 30 (SC), the Supreme Court held:
“The Explanation to the definition of 'consumer' has been added by way of an amendment in 1993 which reads as under:-
"Explanation, -For the purpose of sub-clause (i), "Commercial purpose" does not include use by a consumer of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment."
In other words, the Explanation excludes from the ambit of commercial purpose in sub-clause (i) if section 2(1)(d), any goods purchased by a consumer and used by him exclusively for the purpose of earning his livelihood by means of self-employment. Such purchase of goods is not a commercial purpose. The question, therefore, is : whether the respondent has been using the aforesaid machine for self-employment? The word 'self-employment 'is not defined. Therefore, it is a matter of evidence. Unless there is evidence and on consideration thereof it is included that the machine was used only for self-employment to earn his livelihood without a sense of commercial purpose by employing o regular basis the employee or workmen for trade in the manufacture and sale of bricks, it would be for self- employment. Manufacture and sale of bricks in a commercial way may also be to earn livelihood, but "merely earning livelihood in commercial business", does not mean that it is not for commercial purpose. 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. Whether the respondent is using the machine exclusively by himself and the members of his family for preparation, manufacture and sale of bricks or whether he employed any workmen and if so, how many, are matters of evidence. The burden is on the respondent to prove them. Therefore, the Tribunals were not right in concluding that the respondent is using the machine only for self-employment and that, therefore, it is not a commercial purpose.
11. In Hindustan Motors vs. Narayan Pundalik Tamankar 1996 (1) CPR 150 (NC) it was held that even before the amendement inserting the explanation on commercial use below section 2(1)(d)(ii) of the Consumer Protection Act, that a person purchasing a machine or car or other items of goods as a means of self employment for earning his livelihood is a consumer entitled to seek relief under the said Act.
12. In Gulan Qadir Bhatt vs. Bajaj Tempo 2004 (1) CPJ 488 (J&K) it was held that if a person hires the services another man to ply the auto rickshaw or a taxi he cannot be treated as a consumer.
13. In Shakti Engineering Works vs. Sri Krishna Coir Rope Industries 2000 (3) CPJ 13 (NC) decided on 08-08-2000 it was held that one must engage himself in activity which generates livelihood, acting in supervising capacity could not satisfy the requirements of explanation under the Consumer Protection Act.
14. In Sri Jasobanta Narayan Ram vs. The Branch Manager, L&T Finance Limited (FA.No.880 of 2013 of National Consumer Disputes Redressal Commission decided on 26-11-13) it was held
“The Hon’ble Supreme Court have observed in their order passed in “Laxmi Engineering Works versus PSG Industrial Institute” (as reported in 1995 AIR SC 1428) that a person who purchases an auto rickshaw, a car or a lathe machine or other machine to be plied or operated exclusively by any person could not be a consumer. In the present case: the appellant/complainant has not been able to show, how he can qualify to come under the definition of consumer under the Act when he has not given any clarification about the use of operation of the other truck. The complaint, therefore, deserves to be dismissed on this ground alone that the complainant does not fall within the definition of ‘consumer’ as per the Consumer Protection Act, 1986.
15. The complainant in III (1) of his complaint mentioned that he purchased the lorry bearing No.AP27W 2435 for earning his livelihood with the financial assistance of the opposite parties. In his evidence affidavit filed on 17-01-14 the complainant mentioned that he purchased the said lorry for his livelihood.
16. The complainant after filing his case on 19-11-13 gave a written report to the Inspector of police, I town PS, Visakhapatnam (Ex.A-4) and the relevant portion in the said notice is extracted below for better appreciation:
“I Kamepalli Seshagiri RAo, S/o K. Krishna Murthy residing at D.No.1-67, Darsi Agraharam, Martur Mandalam, Prakasam District. I am the owner of AP 27 W 2435 (lorry) which was seized by Shri Ram Transport Finance Company Persons at Visakhapatnam fruits market (Old bus stand), unauthorized and illegally without authorization and identity being the matter is pending in Honorable District Consumer Forum under Case No.CC/75/2013 at Guntur. Tomorrow (20-11-2013) case was posted for counter on 20-11-2013 Shri Ram Transport Finance Company has to file counter in the above said suit (complaint) in Guntur.
Meanwhile on 18-11-2013 (Monday at 2.30 pm) my lorry AP27W 2435 unloaded Orange Fruits load at fruits market in Visakhapatnam. Finance Company persons came to approached above said lorry and struggled and scorled with my lorry driver and cleaner taken away the above said lorry from fruits market in Visakhapatnam without any authorization and identity card”.
17. The opposite parties filed RC relating to the vehicle AP27X 2435 described as goods vehicle (Ex.B-4). In Ex.B-4 the registered owner was shown as Venkayamma K. w/o Seshagiri Rao, 1-67, Dasari Agraharam, Martur Mandal, Prakasam District. The relationship of the said Venkayamma with the complainant herein was not disputed. A woman can also hold separate property as rightly contended by the learned counsel for the complainant.
18. In Laxmi Engineering Works v. PSG Industrial Institute AIR 1995 SC 148 the Supreme Court held:
“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 his personal use is certainly a consumer but a person who buys a typewriter or a car for typing others' 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 o expression "consumer". If the commercial use is by the purchaser himself for the purpose of earing 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, for 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 decided in the facts of each case. It is not the value of the goods that matters but the purpose to which the goods bought are 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 Parliament abundantly clear, that the goods bought must be used by the buyer himself, by employing himself for earning his livelihood. A few more illus- trations would serve to emphasis 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 cease 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.
It is argued by the learned counsel for the appellant that such a narrow construction may not be warranted by the scheme and object of the enactment. He says that there may be a widow or an old or invalid man who may have no other means of livelihood and who purchases an auto-rickshaw or a car or other machinery to be plied or operated by another person either on payment of consideration on a daily, weekly or monthly basis or as a servant or agent. While there is certainly some logic in the said submission it cannot be accepted in view of the language of the explanation. We are also of the opinion that the definition of the expression " person" in Section 2(m) as including a firm (whether registered or not), a Hindu undivided family, a co-operative society or any other association of persons (whether registered under the Societies Registration Act, 1860 or not) makes no difference to the above interpretation. If a firm purchases the goods, the members of the firm should themselves ply, operate or use the goods purchased. Same would be the case of purchase by Hindu Undivided Family, cooperative society or any other association of persons. Reference in this behalf may be made to the definition of the expression "consumer" in Section 20(6) of the Consumer Protection Act, 1987 of United Kingdom. It reads thus: who might wish to be supplied with the goods for his own private use or consumption; (b) in relation to any services or facili- ties, means any person who might wish to be provided with the services of facilities otherwise than for the purposes of any business of his; and (c) in relation to any accommodation, means any person who might wish to occupy the accommodation otherwise than for the purposes of any business of his:"
“This definition is undoubtedly narrower than the definition in our Act. The English Act requires that to be a consumer in relation to any goods, a person must put the goods for his own private use or consumption. Notwithstanding this difference in definition, the object of both the enactments appears to be the same, to protect the consumer from the exploitative and unfair practices of the trading and manufacturing bodies and to provide him with an easily accessible, inexpensive and speedy remedy for the wrong suffered by him.
19. Ex.A-4 clearly revealed that the complainant engaged a driver and cleaner to ply the vehicle in question. It is not the case of the complainant that he is also driving the vehicle and additionally employed another driver and a cleaner for his assistance. As already observed wife of the complainant is in possession of a goods carriage HMV (Ex.B-4). The Supreme Court in Laxmi Engineering Works v. PSG Industrial Institute AIR 1995 SC 148 held that the person used in 2(m) of the Consumer Protection Act included Hindu undivided family also. Wife of complainant namely Venkayamma is a member of the complainant’s family. Under those circumstances, we are of the opinion that the complainant is not a consumer within the definition of the Consumer Protection Act and answer these points against the complainant.
20. POINT No.3:- The complainant filed this complaint on 29-10-13. The 1st opposite party received notice on 31-10-13 and the 2nd opposite party on 04-11-13. The opposite parties also filed IA 272/13 seeking injunction restraining the opposite parties from repossessing the vehicle. The opposite parties repossessed the vehicle on 18-11-13 (Ex.A-9) during the pendency of IA 272/13 and after they entering appearance before this Forum on 05-11-13 in IA 272 of 2013. The complainant on 16-12-13 filed IA 289/13 restraining the opposite parties from auctioning the vehicle. The opposite parties in IA 289/13 through their advocate gave an undertaking that they are not going to auction the vehicle till disposal of the case. In view of the said undertaking this Forum dismissed IA 272 of 2013 as became infructuous and also in view of the undertaking given by the opposite parties in IA 289/13. This Forum on 03-01-14 closed IA 289/13 after recording the undertaking given by the opposite parties through their advocate.
21. The Supreme Court in ICICI Bank vs. Shanti Devi Sharma and others 2008 (7) SCC 532 it was held that financial institutions are bound by law and the recovery of loans or seizure of vehicles can only be done through legal means.
22. The complainant in his affidavit mentioned that he agreed to pay interest at 9.488%. Ex.B-1 promissory note revealed that the complainant agreed to pay interest at 10.16% p.a. In the 3rd schedule of hypothecation agreement (part of Ex.B-1) the interest rate mentioned was 10.16% p.a. Ex.B-1 hypothecation agreement and demand promissory note was signed by the complainant and his guarantor. The contention of the complainant about he agreeing to pay interest at 9.488% p.a., falls to ground. The complainant filed containing guidelines on fair practices code for NBFCs. The guidelines did not stipulate any payment of interest.
23. In this case the complainant though committed some default in payment of installments paid Rs.7,79,434/- on the date of filing the complaint. The attitude of the opposite parties in seizing the vehicle and issuing notice of auction that too during the pendency of this case deserves to be condemned. The said attitude in our considered opinion amounted to deficiency of service. We therefore answer this point in favour of the complainant.
24. The decisions relied on by the complainant in Laxmi Chand and Bal Chand vs. Ashok Leyland Limited LAWS (APH) -2011-1-11; Investment Trust of India, Chennai vs. P. Varahalamma 2013 (6) SLD 781; Kotak Mahindra Bank Limited vs. Md. Safir Ansari 2013 (2) CPR 47; Kulanand Swaroop Brahmachari vs. Tata Motors Limited and others 2012 (2) CPR 131; Tata Finance Limited vs. Francis Soeiro LAWS (NCD)-2008-2-85; Tata Motors Finance Limited vs. Bishan Lal Patkar 2013 (1) CPR 259, (Chatt); Mohanlal vs. Shriram Transport Company Limited 2012 (4) CPR 58 (HP) in our considered opinion in no way help the complainant as he failed to establish that he is a consumer within the definition of the Consumer Protection Act.
25. POINTS 4 to 7: In view of above findings on point No.3, the opposite parties are liable to compensate the complainant in respect of damages in seizing the vehicle and keeping it idle. But in view of our findings on points 1 and 2, we feel that deciding these points may not be proper. We therefore answer this point accordingly.
26. POINT No.8: In view of our findings on points 1 &2, in the result the complaint is dismissed without costs.
Typed to my dictation by Junior Steno, corrected by me and pronounced in the open Forum dated this the 18th day of March, 2014.
MEMBER MEMBER PRESIDENT
APPENDIX OF EVIDENCE
DOCUMENTS MARKED
For Complainant:
Ex.No | DATE | DESCRIPTION OF DOCUMENTS |
A1 | 18-02-13 | Xerox copy of RBI guidelines |
A2 | 04-12-13 | Xerox copy of reply notice by RBI to the counsel for complainant |
A3 | 19-11-13 | Receipt bearing No.51 issued by I town PS of Visakhapatam |
A4 | 19-11-13 | Office copy of the report given by the complainant against the opposite parties to the CI of Police I town PS, Visakhapatam |
A5 | 28-03-11 | Xerox copy of confirmation letter given by OP1 to the complainant |
A6 | 09-12-13 | Xerox copy of sale intimation letter issued by OP1 to the complainant |
A7 | 17-01-14 | o/c of calculation of interest on insurance premium paid by finance company |
A8 | 29-11-13 | Xerox copy of complaint copy issued through the counsel on behalf of the complainant to RBI |
A9 | 18-11-13 | Xerox copy of letter issued by the OP1 to the complainant mentioned the seizing of the lorry |
A10 | 22-11-13 | Xerox copy of the legal notice issued on behalf of the complainant to the OP1 |
A11 | 07-10-13 | o/c of legal notice issued on behalf of the complainant to the OP1 |
A12 | 15-10-13 | o/c of registered reply legal notice from OP1 |
For opposite parties:
Ex.Nos | DATE | DESCRIPTION OF DOCUMENTS |
B1 | 21-03-11 | Xerox copy of loan cum hypothecation agreement |
B2 | - | Xerox copy of account copy |
B3 | - | Specialized account copy of the vehicle loan amount |
B4 | - | Xerox copy of RC in the name of the complainant’s wife |
PRESIDENT
NB: The parties are required to collect the extra sets within a month after receipt of this order either personally or through their advocate as otherwise the extra sets shall be weeded out.
