BEFORE THE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD
F.A.No.613 OF 2012 AGAINST C.C.NO.245 OF 2011 DISTRICT FORUM-II
VIJAYAWADA AT KRISHNA DISTRICT
Between:
M/s Mahindra & Mahindra Financial Services Ltd.,
rep. by its Manager, Zoom Complex, Dr.No.54-15-4A,
3rd Floor, Near Vinayak Theatre NH-5, Vijayawada-008. Appellant/opposite party
A N D
Sonti Madhavi Kumari W/o Ramba Prasad
R/o Gollapudi Village, Krishna District
Respondent/complainant
Counsel for the Appellant M/s V.Mohan Srinivas
Counsel for the Respondent Party in Person
QUORUM: SRI R.LAKSHMINARASIMHA RAO, HON’BLE MEMBER
AND
SRI THOTA ASHOK KUMAR, HON’BLE MEMBER
MONDAY THE NINETH DAY OF APRIL
TWO THOUSAND THIRTEEN
Oral Order (As per Sri R.Lakshminarasimha Rao, Hon’ble Member)
***
1. The respondent borrowed a sum of `3,30,000/- from the appellant for purchase of car, Maruthi Wagon R by executing loan agreement on 29.09.2008 agreeing to repay the loan amount of `4,65,300/- within a period of 60 months in 60 equated monthly installments of `7,755/-. The respondent hypothecated the car with the appellant.
2. The respondent filed complaint claiming release of her car , for furnishing of copy of loan agreement and compensation of `1,00,000/- and costs on the premise that the appellant without issuing notice repossessed the car on 19.03.2011 and neglected to furnish particulars of the amount due and it refused to accept payment from her. It is stated that the respondent got issued notice on 28.06.2011 seeking for acceptance of amount from her and for release of the vehicle and the appellant for which the appellant got issued reply informing her that the car was sold in auction and the date of sale, to whom the car was sold and the sale consideration were not mentioned in the reply. The respondent received E challan from traffic police, Vijayawada demanding her to pay `135/ for compounding of wrong parking of the car .
3. The appellant resisted the claim on the ground that the respondent fell due of installments for 8 months and after intimating the respondent, the appellant repossessed the vehicle and had issued several reminders under ExB4 to B6 to the respondent to pay the arrear installments. It is stated that the appellant sold the vehicle in public auction on 27.05.2011 for `2,56,000/-and credited the amount to the loan account of the respondent. It is contended that the respondent’s husband R.D.Prasad voluntarily surrendered the vehicle owing to regular breakdown of the vehicle and inability of the respondent to pay the installments regularly. The surrender of the vehicle was informed to the guarantor and the police station concerned on 19.03.2011, 25.03.2011, 18.04.2011 and 5.05.2011 and after receiving valuation report from the surveyor, the appellant sold the vehicle.
4. By the date of surrender of the vehicle, the respondent was due an amount of `69,795/- and four cheques issued by her were bounced as also she was to pay 26 future installments. The appellant kept the vehicle in its yard to return it to the respondent and the respondent had not expressed availability of funds nor did she make any payment. By the date of filing of the complaint, the appellant was not in possession of the vehicle or there was no auction proceedings pending and the respondent suppressed the facts and filed the complaint. After the sale proceeds of the vehicle are adjusted to the amount due, the respondent is still due an amount of `5,639/-.
5. The respondent consented for auctioning of the vehicle due to heavy maintenance charges and hike in fuel charges. The auction purchaser, A.Srinivas rao deposited the bid amount to the account of the respondent and forwarded the papers for transfer of the vehicle’s ownership. The respondent raised objection before the RTA, Vijayawada and the auction purchaser filed fresh registration certificate for transfer of the vehicle in his name. The auction purchaser parked the vehicle in no parking area and paid compounding fee to the police concerned. The appellant issued notice to the respondent on 1.07.2010, 1.08.2010, 1.09.2010, 1.11.2010, 1.12..2010, 1.01.2011 and 01.03.2011 as regards to the pending amount and for OD payment on time. As per arbitration clause in loan agreement the complaint is not maintainable and Clause 12.1(iii) of the agreement, the appellant can sell the vehicle without issuing notice to the respondent.
6. The respondent filed her affidavit and the documents, ExA1 to A6 and on behalf of the appellant, its Branch Manager filed his affidavit and the documents, Exs.B1 to B3.
7. The District Forum allowed the complaint directing the opposite party to refund `73,380/- with interest @ 9% per annum and costs of `2,000/-.
8. The opposite party has filed appeal contending that they intimated the complainant on taking possession of the vehicle and issued several reminders as also that they had not charged any amount extra or in excess from what they are contractually entitled to as per the loan agreement. It is contended that the vehicle was sold in auction on 27.5.2011 by the appellants for a consideration of `2,56,000/- and the amount was credited to the loan account of the respondent.
9. The learned counsel for the appellant has submitted written arguments.
10. The point for consideration is whether the order of the District Forum suffers from misappreciation of facts or law?
11. The sanction and disbursing of loan by the appellant to the respondent for purchase of Maruthi Wagon R and execution of loan agreement by the respondent and guarantee deed by the guarantor are beyond any dispute so also the loan amount payable as also the installments paid and the loan installments due are beyond any dispute. The respondent charged the appellant with the act of illegal seizure and sale of the vehicle and non-furnishing of details of the amount due and copy of loan agreement as also the appellant’s refusal to accept the amount due after the vehicle was repossessed.
12. The contention of the appellant is that it had acted in terms of agreement in possessing and selling the vehicle or in levying charges for possession, parking and interest on the future installments. Further contention of the appellant is that it had issued notice before repossession and sale of vehicle as also whenever the respondent committed default in paying the loan installments.
13. The respondent entered into loan agreement with the appellant on 29.09.2008 agreeing to pay a sum of `4,65,300/- within a period of 60 months in 60 equated monthly installments of `7,755/-.The appellant repossessed the vehicle on 19.03.2011 as the repossession letter would show that the respondent’s husband voluntarily had given possession of the vehicle to the representative of the appellant and the letter reads as under:
“I/we voluntarily surrender the above said vehicle /equipment/tractor/article to the representative/agent of Mahindra & Mahindra Financial Services Limited (MMFSL) in accordance with the rights vested with MMFSL under the terms and conditions of HP/Loan agreement as I/We have violated by defaulting in scheduled repayment of Loan.
14. The respondent has relied on the decision of the Hon’ble Supreme Court in “ICICI Bank vs shanti Devi Sharma and others “ 2008 (3) Supreme 682 wherein it was observed that:
“A more comprehensive version of these Guidelines was recently released on April 24, 2008. The Guidelines expressly reference the 5.5.2003 Guidelines at (i)(x) with regard to the methods by which recovery agents collect on security interests. In addition, the April 24, 2008 Guidelines further referred paragraph 6 of the "Code of Bank's Commitment to Customers" (BCSBI Code) pertaining to collection of dues. The BCSBI Code at para 6 inter alia provides: "All the members of the staff or any person authorized to represent our bank in collection or/and security repossession would follow the guidelines set out below:
1. You would be contacted ordinarily at the place of your choice and in the absence of any specified place at the place of your residence and if unavailable at your residence, at the place of business/occupation.
2. Identity and authority to represent would be made known to you at the first instance.
3. Your privacy would be respected.
4. Interaction with you would be in a civil manner.
5. Normally our representatives will contact you between 0700 hours and 1900 hrs, unless the special circumstances of your business or occupation require otherwise.
6. Your requests to avoid calls at a particular time or at a particular place would be honored as far as possible.
7. Time and number of calls and contents of conversation would be documented.
8. All assistance would be given to resolve disputes or differences regarding dues in a mutually acceptable and in an orderly manner.
9. During visits to your place for dues collection, decency and decorum would be maintained.
10. Inappropriate occasions such as bereavement in the family or such other calamitous occasions would be avoided for making calls/visits to collect dues.”
In the light of the aforementioned letter the decision relied upon by the respondent has no applicable force to the facts of the case.
15. The learned counsel for the appellant has contended that as on the date of repossession of the vehicle, the respondent was due 8 EMIs. The respondent had not disputed the amount due by the date of repossession of the vehicle. The amount of `69,795/- towards 8 monthly installments was due from the respondent. It is not denied by the respondent that four cheques issued by her were dishonoured. Thus, the arrears of monthly installments and the amount covered under four cheques was to be paid by the respondent.
16. The appellant issued notice to the respondent on 18.04.2011 that in the event the respondent failed to pay the arrears the vehicle would be sold and the appellant issued pre-sale notice on 5.5.2011 informing the respondent that the vehicle would be put to auction on 27.05.2011 at Manorama Hotel, Vijayawada. The letter reads as under:
“We have given enough time to settle the account but you have not responded till date. Under these circumstances, take final notice that we are going to exercise our final option by conducting auction on 27.5.2011 at Manorama Hotel, M.G.Road, Vijayawada of your Maruthi WagonR vehicle bearing Regd.No.,AP16BK0504. If there is any shortfall even after appropriating the sale Proceeds to your account, you shall be severally and jointly responsible along with the guarantor for the same and we reserve our rights to proceed against you legally for the same.
Please make arrangement to settle the account within 7 days from the date of receipt of this letter otherwise you are at liberty to participate in the auction. Please treat the matter most urgent and serious.”
17. In the matter of repossession and sale of the vehicle, as the aforementioned facts show no fault can be found with the appellant. The other aspect where the District Forum found fault with the appellant is in regard in levying charges for possession, parking and interest on the future installments. The learned counsel for the appellant has contended that the district forum had rewritten the terms of agreement by holding that the appellant cannot levy charges in the matter of possession, sale and parking of the vehicle or it cannot collect interest on the future installments after settling the loan account after a period of 34 installments. Clause 12(3) of the loan agreement dealing with levying of charges reads as follows:
“12(3) . In addition and without prejudice, to what is stated above, the Borrower shall be liable for all legal and other costs and expenses resulting from the forgoing defaults from exercise of the Lender’s remedies, including but not limited to possession of any of the Product and/or collection recovery of all or any charges payable by the Borrower/Co-Borrower as the case may be ”.
18. In paragraph 9 of the order the District Forum questioned reasonableness of collection of possession charges and parking charges when the respondent’s husband voluntarily surrendered the vehicle to the appellant, as under:
“The opposite party stated that the husband of the complainant voluntarily surrender the car to him. Then where is the question of repossession charges Rs.6,000/- and parking charges Rs.8,750/-. The opposite party collected 34 instalments with various interest charges. At the time of loan agreement the instalments would be calculated with interest amount. The opposite party has no right to collect interest on future mounts, when the account of the complainant was settled after 34 instalments out of 60 instalments”.
19. In view of power conferred on it by Clause 12(3) of the loan agreement, the appellant can recover parking charges and possession charges which however, does not mean that the appellant can collect arbitrarily. The appellant’s admission would show that the respondent’s husband voluntarily surrendered the vehicle to the representative of the appellant and in the circumstances, collection of Rs.6,000/- does not stand on the foot of any logic. A sum of Rs.1,000/- towards repossession charges is reasonable. The vehicle was said to have parked in the premises of the appellant and it had not shown any rent said to have been incurred for parking of the vehicle. Therefore, nominal parking charges of Rs.1,000/- can be collected from the respondent.
20. The learned counsel for the appellant has relied upon the decision of this Commission in F.A.No. 316 of 2012 in the case of Mahindra & Mahindra vs Battu Laxman”. In that case it was held
It is not in dispute that the opposite party had sold the vehicle in public auction on 20-2-2007 for Rs.1,60,000/- and after adjusting the sale proceeds, an amount of Rs.32,458/- has to be paid to the complainant. Though the repossessing and sale of the vehicle is justified, however, the District Forum has observed that the amount assessed by the insurance company is Rs.2,40,000/- as on 30-12-2006 but the vehicle was sold only for Rs.1,60,000/- and after deducting depreciation of 20% has directed the opposite party to pay the balance amount to the complainant. We rely on the judgement of the apex court and also the national Commission in Suryapal Singh v. Siddha Vinayak Motors & Anr. Reported in III (2012) CPJ 4 SC wherein the apex court held as follows:
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. This view was again reiterated in K.A.Mathai@ Babu @ Anr. v. Kora Bibbikutty @ Anr. 1996 (7) SCC 212; Jagdish Chandra Nijhawan v. S.K.Saraf, IX (1998) SLT 477-Iv (1998) CCR 118 (SC)-1999 (1) SCC 119; Charanjit Singh Chadha & Ors. v. Sudhir Mehra, VI (2001) SLT 883-III (2001) CCR 232 (SC)-2001 (7) SCC 417, following the earlier judgement of this court in Sundaram Finance Ltd., v. the State of Kerala and Anr. AIR 1966 SC 1178; Smt.Lalmuni Devi V. State of Bihar and Ors., I (2001) SLT26-1 (2001) CCR 9(SC)-2001 (2) SCC 17 and Balwinder Singh v. Assistant Commissioner V (20050 SLT 195-III (2005) CCR 8 (SC)-CCE 2005(4) SCC 146”.
The National commission in Surendra Kumar Agarwal V. Telco Finance Ltd. and another reported in II(2010) CPJ 163 NC dated 11-3-2010, 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. No statement of account showing repaying of loan instalments has been filed by the petitioner. It was admitted before the State Commission that the petitioner had defaulted several times in making the payment on the dates when it was due. Further it is not disputed that as per Hire Purchase Agreement the financier was authorised to repossess the vehicle in case of default in repayment of loan instalments. Supreme Court of India in Manaing Director Orix Auto Finance (India) Ltd., Case (Supra) has held that the financier can repossess the vehicle if the agreement permits the financier to take possession of the financed vehicle. There is nothing to show that the vehicle was repossessed forcibly. Mere fact that possession was taken by the respondents cannot be the ground to contend that the hirer is prejudiced. We agree with the view taken by the State Commission”
Keeping in view the aforementioned judgements, we are of the considered view that the complainant is a defaulter and the opposite party has sent notices to the last known address of the complainant and repossessed the vehicle. However, the date of auction was not notified in any newspaper and we agree with the finding of the District Forum that sufficient publicity was not given and that the vehicle was sold for a very low price. However, we do not agree with the finding of the District Forum that since it is a vehicle two years old, 20% depreciation can be deducted and the balance amount be paid to the complainant. While the complainant is entitled to the admitted amount of Rs.32,458/-. We find it fit case a compensation of Rs.25,000/- as the auction contrary to the rules was not given any publicity in the newspaper to warrant a higher sale price
21. In the present case, the District Forum pointed out discrepancy in the date mentioned in ExB9 which is extracted herein below;
‘The opposite party again filed statement of account copy stating that is original of Ex.B11. We noticed some entries in it as (1) accounting date 29.8.2008 (2) Tenure 60 months (3) Finance amount Rs.3,30,000/- (4) finance charges Rs.1,35,300/- (5) Agreement value Rs.4,65,300/- (6) No entry for interest rate (7) Nos of instalments with dates (8) settlement account on 27.5.2011 Rs.2,56,000/- (9) cheque bounce charges Rs.2,000/- (10) Repossession charges Rs.6,000/- The opposite party failed to show that the purchaser A. Srinivasa Rao deposited the auction prize amount in the complainant’s account. Ex.B9 was prepared on 3.4.2011, but it was mentioned at the corner of the 1st page as 23.5.2011 and the auction was conducted on 27.5.2011.”
22. The appellant stated that it had adjusted the sale proceeds of the vehicle to the loan account of the respondent whereas in the same breath the appellant has stated that the auction purchaser deposited the amount to the credit of the respondent’s account. Be that as it may, as on the date of repossession of the vehicle the amount due from the respondent according to the appellant is `69,795/-. Repossession notice speaks otherwise and the amount due from the respondent as `42,320/- as on 19.03.2011.
23. Clause 12.2 ( c) of the loan agreement mandates the appellant to terminate the agreement or cancel the loan before it opted to sell the hypothecated vehicle. The respondent paid 34 installments and by that time the vehicle was repossessed and was sold to A.Srinivas Rao. If one goes by the amount mentioned in the repossession letter, the appellant cannot demand for `2,61,639/- and adjust the sum of `2,56,000/- to the loan account of the respondent. In the circumstances, we are inclined to modify the order of the District Forum by reducing the amount of `32,000/- and maintain the relief for `2,000/-towards costs.
24. In the result, the appeal is allowed modifying the order of the District Forum and reducing the amount of `73,380/- to `32,000/- and confirming relief of costs of `2,000/-. The parties shall bear their own costs in the appeal. Time for compliance four weeks.
MEMBER
MEMBER
Dt.09.04.2013
కె.ఎం.కె.*
