A.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION
AT HYDERABAD.
F.A. 969/2006 against C.C 106/2005, Dist. Forum, Tirupati
Between:
1) The Collection Manager
ICICI Bank, Kavitha Krishna Annexure
D.No. 15-181, 3rd Floor
Subedarpet, Nellore.
2) The Section Manager
In-charge of Two Wheelers Vehicles
ICICI Bank, Nethaji Road
Tirupati, Chittoor Dist. *** Appellant/
O.Ps.
And
J. Hari Krishna
S/o. J. Allaiah
Age: 27 years,
R/o. 5-2- 148,
Anantha Street
Tirupati, Chittoor Dist. *** Respondent/
Complainant.
Counsel for the Appellants: M/s. J. Lokesh Reddy
Counsel for the Resp: M/s. K. Visweswara Rao
HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT
SMT. M. SHREESHA, MEMBER
&
SRI K. SATYANAND, MEMBER
FRIDAY, THIS THE TENTH DAY OF JULY TWO THOUSAND NINE
Oral Order: (Per Hon’ble Justice D. Appa Rao, President)
*****
1) This is an appeal preferred by the opposite parties against the order of the Dist. Forum directing them to pay Rs. 25,836/- together with compensation of Rs. 10,000/- and costs.
2) The case of the complainant in brief is that he purchased a Hero Honda motor cycle through Tata Finance Company for Rs. 48,000/-. As per the finance agreement he had to pay Rs. 8,000/- towards initial payment and Rs. 1,615/- for 25 months towards instalments. Accordingly he issued 25 post dated cheques to the finance company. The finance company collected 12 instalments by presenting the cheques. Later he was unaware as to why the remaining cheques were not encashed. While so on 14. 4. 2005 the appellant bank agent came to him and informed that it has a tie up with Tata Finance Company and demanded payment of the balance amount. The tie up agreement was not known to him. In spite of it, he paid Rs. 6,456/- towards four instalments and requested the agent to present the cheques issued by him every month for collection of future instalments. However, he did not present the said cheques. While so, on 16.9.2005 the agent of the bank took away the vehicle without intimating him. When he enquired, he gave acknowledgement for seizure of the vehicle. In spite of his requests that he would pay the remaining balance, the vehicle was not released. On that he issued lawyer notice on 7.10.2005 for which the bank did not give any reply. Since the seizure was illegal he filed the complaint claiming refund of the amount paid by him, or return the vehicle after receiving the balance amount, besides return the cheques issued by him and compensation and costs.
3) R2 filed counter adopted by R1, resisting the case. While admitting the purchase of the vehicle by the complainant through Tata Finance company and presentation of 12 cheques to the financer, however denied that the finance company did not present the cheques for the reasons not known to him. However, he admitted that an amount of Rs. 6,456/- was paid by the complainant on 14.4.2005. He denied the issuance of cheques by the complainant for the balance of amount. However, he admitted the seizure
of vehicle on 16.9.2005. He alleged that bank has taken over the Tata Finance Company in April, 2004 for which they have informed by way of letters to all the customers. On receipt of such letters the complainant has paid the instalments. The complainant has issued only 12 cheques as against 36 months as per the agreement. Five cheques that were issued by the complainant were bounced. The amount that was paid on 14.5.2005 was towards previous instalments including the bounced cheque charges. The complainant entered into an Hire Purchase Agreement willing to pay the instalments regularly and on failure to pay even a single instalment they were authorised to seize the vehicle. Since the complainant did not pay the instalments the vehicle was seized on 16.9.2005. The complainant did not make any effort to pay the amount. In spite of repeated requests by their agents he paid only Rs. 6,456/- on 14.5.2005 for the amount covering the instalments from 7.11.2004 to 16.9.2005 together with bounced cheques charges. The complainant has suppressed the material facts. Since the complainant did not respond even after taking possession of the vehicle on 16.9.2005 they issued a notice on 30.9.2005. The complainant did not pay any amount. He filed the complaint to evade payment of balance of amount of Rs. 13,384/-. Therefore he prayed for dismissal of the complaint with costs.
4) The complainant in proof of his case filed his affidavit evidence and got Exs. A1 to A8 marked. Refuting his evidence the appellants filed Exs. B1 to B4.
5) The Dist. Forum after considering the evidence placed on record opined that the appellant had high handedly taken the possession of the vehicle, without following due procedure and as such directed for refund of the amount paid by the complainant, together with compensation of Rs. 10,000/- and costs.
6) Aggrieved by the said decision, the bank preferred this appeal contending that the Dist. Forum did not appreciate either the facts or law in correct perspective. The Dist. Forum did not consider the fact that the complainant had committed default in payment of instalments and by virtue of clause 18(1)(b) of the hire purchase agreement it was entitled to take possession of the vehicle, and therefore prayed that the complaint be dismissed.
7) The point that arises for consideration is whether the order of the Dist. Forum is vitiated by mis-appreciation of evidence and law and therefore liable to be set-aside?
8) It is an undisputed fact that the complainant purchased a Hero Honda motor cycle for Rs. 48,000/- through Tata Finance Company evidenced under Hire Purchase Agreement Ex. B4. Though Ex. B4 was filled up it kept the third page blank. However, it is not in dispute that the complainant had paid Rs. 8,000/- towards initial instalment and agreed to pay Rs. 1,615/- per instalment for 25 months. He had altogether paid Rs. 25,836/-.
9) It is also not in dispute that though initially Tata Finance Company has given the finance by virtue of agreement in between the bank and the Tata Finance Company it was taken over by the bank. The said agreement was not filed here. Evidently, pursuant to the hire purchase agreement, the vehicle was not transferred in the name of the financier or in the name of the bank. Though the bank alleges that it has informed the complainant about the tie up under Ex. B1 there is no acknowledgement from the complainant.. The fact remains that the complainant had paid four instalments amount to the appellant bank in a way admitted the transfer of the claim in favour of the bank. He himself admits in his complaint that “ In spite of it, the complainant has made payment of Rs. 6,456/- i.e., four instalment amount and requested the ICICI bank agent to present the cheques issued by him every month for collection towards future instalments.”
10) Admittedly the bank, on the ground that the complainant had committed default in payment of instalments, seized the vehicle on 16.9.2005. Later by letter Dt. 30.9.2005 it had terminated the agreement and called upon the complainant to pay the remaining outstanding. Since the complainant did not pay the amount the vehicle was disposed off by way of sale. It recovered an amount of Rs. 39,384.67/-. They credited an amount of Rs. 26,934/- to his account. According to the bank the complainant was liable to pay Rs. 13,384/-.
11) The complainant asserts that no notice was issued to him prior to taking possession of the vehicle. It was seized by an agent without informing him. Later no sale notice was even issued. The entire seizure as well as sale were illegal and therefore liable for return of the vehicle or in the alternative refund the amount paid by him towards instalments together with compensation and costs. The appellant bank admittedly did not issue any notice before seizing the vehicle. The bank could not file documents evidencing that it has issued notice prior to seizure. No acknowledgement from the complainant was obtained. No doubt, subsequent to the seizure it has issued a notice on 30.9.2005 directing the complainant to pay the amount. On 7.10.2005 the complainant issued legal notice evidenced under Ex. A4 received by the bank on 8.10.2005 evidenced under acknowledgement Ex. A5. The bank on the same day i.e., on 8.10.2005 informed the complainant that it has sent a letter on 3.10.2005, directing him to pay the amount or else it would dispose off the vehicle. The complainant denied the said fact. There is no proof that the bank has issued such notice to the complainant.
12) The bank is silent as to the date on which the vehicle was sold. While issuing notice under Ex. A7 Dt. 8.10.2005, it ought to have mentioned the date of sale. Undoubtedly having received Ex. A4 notice from the complainant the appellant bank slammed Ex. A7 notice, alleging that it has sold away the vehicle pursuant to its notice.
13) At the cost of repetition, we may state that the bank could not prove issuance of notice before seizure or prior to sale. The bank could not prove as to how it could seize the vehicle without notice or appropriate the amount by selling it away without informing to the complainant.
14) The National Commission in Ciricorp Maruti Finance Ltd. Vs. S. Vijaya Laxmi reported in III (2007) CPJ 161 (NC) after considering the various issues involved in the hire purchase agreement formulated the following questions:
I. The first question which requires determination is whether a financier is invested with the right to repossess the vehicle, for which loan has been given by it, by use of force.
It held : In our view, enactment of such legislation does not empower banks or financial institutions to make law of their convenience and to take possession of the hypothecated goods by resorting to ‘instant justice by use of force’. In the said Act, legal and just procedure is prescribed for repossessing the hypothecated properties, which is not required to be reiterated here.
II. The second question which requires consideration is : Whether the hire purchase agreement is valid or non-est?
Since the said question does not arise in the present case, we do not intend to consider the same.
III. Code of conduct prescribed by the Petitioner Bank for repossessing the vehicle :
The Commission held at para 34. It is to be stated that Section 51 of the Motor Vehicles Act, provides only special provisions regarding registration of motor vehicle subject to hire purchase agreement. This contemplates valid hire purchase or hypothecation agreement. For obtaining such a certificate, the financier has to satisfy the registering authority that it has taken the possession, i.e. the possession of the vehicle is taken by him in accordance with the law, and not by use of force. Hence, we see no force in this contention. However, the provisions for registration of motor vehicle in such cases elaborate procedure is prescribed which is not required to be discussed, as the alleged hire purchase agreement is void.
35. Further, the aforesaid Section 51(5) of the Motor Vehicles Act nowhere provides that hirer can take possession by use of force or by unauthorized method or by adopting un-authorized means.
15) The National Commission after considering the various provisions opined that without issuing notice, repossession of the vehicle cannot be made. In case where the repossession of the vehicle was held to be unfair the question is what relief that could be granted.
It held at para 46. In view of the aforesaid discussion, in our view, where the vehicle is forcefully seized and sold by the money lender/financier/banker it would be just and proper to award reasonable compensation to the Complainant. ‘Reasonable compensation’ would depend upon facts of each case.
16) Coming to the facts, the bank did not follow any of the rules. It has repossessed the vehicle by force equally sold it without giving any notice. It is ex-facie illegal. The bank cannot appropriate the amounts by selling away the vehicle illegally and claim some more amounts on the ground that still the complainant was liable to pay some more amounts. The appellant bank ought to have followed the procedure contemplated. It cannot recover by force and then contend that the cheques issued by the complainant were bounced. If the complainant committed the offence, it could have filed a criminal case u/s 138 of Negotiable Instruments Act. On that ground it cannot illegally sell away the vehicle and appropriate the sale proceeds. The Dist. Forum after considering the fact that the bank had committed illegality in seizing the vehicle as well as selling it away awarded damages to a tune of Rs. 10,000/- besides ordered refund of Rs. 25,836/- which the complainant had paid together with costs. We do not see any irregularity or illegality in the order of the Dist. Forum, in this regard. The compensation awarded is just and modest. in the circumstances. We do not see any merits in the appeal.
17) In the result the appeal is dismissed with costs computed at Rs. 2,000/-. Time for compliance four weeks.
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
3) ________________________________
MEMBER
Dt. 10. 07. 2009.
*pnr
“UP LOAD – O.K.”
