Karnataka

Chamrajnagar

CC/03/2011

S.Mahadevaiah - Complainant(s)

Versus

Sriram Transport Finance Company Ltd. - Opp.Party(s)

Mr.S.N.

05 Aug 2011

ORDER

ORDER

1. The complainant has sought compensation against O.Ps. by alleging deficiency of service by them to him.

 

1. The complainant’s case in brief are that he is the owner of lorry bearing no.KA-10, 3895. On 11/06/2007 he purchased the lorry by borrowing loan of  Rs.10,89,650/- from the O.P.3 under loan contract No.STFCTSLCLCR 10075756 executed by him infavour of O.P.3. The complainant paid Rs.35,125/- to the Insurance Company for insuring the said vehicle.

 

1. At the time of sanctioning the  loan to the complainant the respondent no.1 took signature of him to various blank forms, papers and cheques.

 

1. The chassis was handed over to one Body building work shop at Mettur to build the body of the vehicle. The complainant also paid Rs.40,000/- as advance for building charges.

 

1. The complainant had owned another lorry which met with an accident an account of it he was in  financial constraint. An account of this he was not able to take delivery of the new vehicle from the body building work shop in time. The O.Ps. taking advantage of this in collusion with the body building workshop persons took the vehicle by creating false documents using  signature of the complainant which was taken on blank papers.

 

1. After adjusting the money  for paying to the body building purpose the complainant approached the body building workshop at Mettur for taking delivery of the vehicle and at that time to his surprise he came to know the respondents have already taken possession of the said lorry illegally without notice to him.

 

1. After learning that the respondent took possession of the said lorry from Mettur work shop he approached O.Ps.  many times and requested them to give back the said vehicle. The O.Ps. made false promises to deliver back possession of the vehicle and they never handed over the same.

 

1. On 25/06/2009 the complainant received notice from R.T.O. , Chamarajanagar calling upon him to pay the tax amount in respect of the said lorry. The complainant replied the same.

 

1. On 13/10/2010 the respondent no.2  initiated Criminal Case in C.C.680/2010 by using the blank cheques which were received from the complainant at the time of taking loan.

 

1. The complainant entirely depending on the said vehicle for livelihood. The complainant had expected Rs.1,000/- per day from transport business.

 

1. On 15/12/2010 the complainant issued notice to the O.Ps. calling upon them to hand over the possession of the said vehicle to him and withdraw the criminal case, but the O.Ps. have not replied the same.

 

1. The O.Ps. have admitted about lending of money under Hypothecation Agreement to him and denied all other allegations made by the complainant.

 

1. The O.Ps. have stated that the complainant has availed loan from them by executing loan cum hypothecation agreement, DPM and other related documents. The complainant is the borrower and is not a consumer within the meaning of section 2(1)(d)  and hence  the complaint filed by him is not maintainable.

 

1. The complainant has purchased the vehicle for transport business and it is purely commercial vehicle and therefore he is not a consumer within the meaning of the section 2(1)(d) of Consumer Protection Act.

 

1. As per  articles 10, 14 of the loan cum hypothecation agreement there is an arbitration clause. According to which the complainant has specifically agreed to get resolve  his all disputes/ claims arising out of the agreement  through a arbitrator appointed  and nominated by the O.Ps. In view of existence of valid arbitration agreement this Forum has no jurisdiction to entertain the present dispute.

 

1. The complainant has deliberately not taken the delivery of vehicle from  Sri Amman Labour  Body builders of Kolathur. The O.Ps. have made payment to the body builders by  A/c payee D.D. No.859794 and 859785 dt.20/11/2008 amounting to Rs.1,80,000/- drawn on State Bank of Mysore and taken possession  of the vehicle. This is fact is well within the knowledge of the complainant.

 

1. The complainant was issued notice by O.Ps. as he did not pay monthly instalments. The  complainant did not responded to the notice dt.23/02/2008 , 10/04/2008  and 12/07/2008 respectively.

 

1. The O.Ps. have no option but  to take possession of the vehicle from the body builders after making payment of Rs.1,80,000/-. Even after taking possession of the vehicle from body builders  through RPAD  issued to the complainant  and  his guarantors, the complainant and his guarantors have deliberately not claimed the vehicle. The O.Ps. have waited for long period with the hope that the complainant may get settle his account.

 

1. The surveyors assessed the market value of the vehicle as Rs.7,50,000/- on 05/12/2008 and after obtaining valuation report the O.Ps. had displayed for the vehicle auction sale notice in their office board and they collected  quotations  from the intending purchasers on 15/11/2009 and 17/11/2009. The vehicle was sold to one Sri Selvam for Rs.7,60,000/- which was best price got by them. After appropriation of said amount to the dues of the complainant the complainant is still due. After negotiation  the complainant had agreed to settle the account for Rs.14,00,000/- and  towards settlement of his account he has given cheque for   Rs.14,00,000/- dt.10/08/2010 drawn on State Bank of Mysore, Chamarajanagar. The said cheque dishonored and CC 80/2010 is pending against him before J.M.F.C.  court at Chamarajanagar in respect of dishonor of cheque.

 

1. There is no deficiency of service by O.Ps. The complaint is not maintainable after taking possession of the vehicle, the complainant did not turn up to pay the dues to O.Ps and dragged the matter for a long period.

 

1. The following points arises for consideration.
   1. Whether the complaint filed by the complainant before this Forum is not maintainable?
   2. Whether there is deficiency of service by the O.Ps.?
   3. To what order the parties are entitled?

 

1.  The finding on the above points are that

        1.Point No.1: Negative.

        2.Point No.2: Partly affirmative.

        3.Point No.3: As per order.

                                                                    REASONS

1. POINT NO.1: The complaint has been filed by the complainant alleging deficiency of service by the O.Ps. to him in view of seizure  and sale of the vehicle.

 

1. The O.Ps. have questioned the maintainability of the complaint by alleging that the vehicle was purchased for commercial purpose and therefore the complainant is not a consumer. The complaint as brought is not maintainable  has the complainant is not the consumer.

 

1. The O.Ps. have also stated that there is an arbitration clause in the  agreement  and as such the remedy of the complainant is by way of arbitration and not before the Consumer Forum.

 

1. Sri P.K. Mujumdhar in his Law of Consumer Protection in India, 5^th edition at page 216 has stated as follows:

Goods for re-sale or to use in profit-making activity:- The plain dictionary meaning of the word “used” in the definition section, the intention of parliament must be understood to be to exclude from the scope of the expression “Consumer” any person who buys goods for the purpose of their being used in any activity engaged on a large scale for the purpose of making profit. Since re-sale of the goods has been separately and specifically mentioned in the earlier portion of the definition clause, the words “for any commercial purpose”  must be understood as covering cases other than those of re-sale of the goods. Therefore, the parliament wanted to exclude from the scope of the definition not merely persons who obtain goods for re-sale, but also those who  also purchase goods with a view to using such goods for carrying on any activity on a large scale for the purpose of earning profit. On this  interpretion of the definition clause, persons buying goods for resale or for use in large scale profit making activity would not be “consumer” entitled to protection under the Act.

The parliament intended to restrict the benefits of the  Act to ordinary consumers purchasing goods either for their own consumption or even for use in some small venture which they may have embarked upon in order to make a living as distinct from large scale manufacturing or processing activity carried on  for profit. In  order that the  exclusion clause should apply it was, however, necessary that there would be a close nexus between the transaction of purchase of goods and the large scale activity carried on for earning profit.

 

1. The same   learned author at page 223  has further stated that

   in cases of purchase of goods by a person for use in some small venture-such as for self-employment etc. which he might embark upon in order to make a living, as distinct from a large scale manufacturing, processing or trading activity carried on for profit. Thus, cases of persons who purchase goods or even  machinery for self-employment purpose without engaging in any trading or manufacturing business on a large scale for purpose of profit making, will not fall within the scope of the exclusion caluse in the statutory  definition in section 2(1)(d)(i) of the Act and hence such persons are “consumer” entitled to protection under the Act.

 

1.   It becomes clear from the above any person who purchased goods with an intention to earn livelihood  does not becomes a consumer within the meaning of the section 2(d) of the Consumer Protection Act. In the present case the complainant has purchased the vehicle for the purpose of his livelihood and not for making large scale profits which can be considered as commercial activity. This shows that the complainant has purchased the vehicle with intention to earn his livelihood and therefore is a consumer within the meaning of section 2(d) of Act and hence the complaint is maintainable under law.

 

1.  The other ground on which the learned counsel for the O.P. has stated that there is an arbitration clause and hence   the remedy of the complaint is before the arbitration and not before this Forum.

 

1. The learned author P.K.Mujumdhar in Law of Consumer Protection in India  5^th edition, page 562 has stated as follows:

Agreement containing arbitration clause: It was not necessary for the complainant to seek redress through  arbitration by the collector. It cannot be contended  by appellant that water was being supplied for a commercial purpose.

 

1.  The same author has stated that even though there is arbitration clause, the proceedings before the Consumer Forum  need not be stayed under section 34 of the Arbitration Act. He has further  stated that the existence of remedy by way of arbitration even  assuming for the purpose of discussion with section 7(b) of the Arbitration Act covers this case  which is extremely doubtful does not preclude  an aggrieved consumer from seeking redressal before the Forums constituted under Consumer Protection Act which is a special statute enacted by parliament  for the specific purpose of providing a speedy, cheap and efficacious remedy to consumers before the special Forums created for that purpose.

 

1. The next arguments of the learned counsel for the O.P. is that since the criminal case is pending the complaint is not maintainable under law. In support of his arguments he relied upon the decisions reported in IX(1995)(3) CPR 116 Dr.G.L.Goswamy V/o M/s Mandovi Motors.

 

1. In this case the Hon’ble State Commission  has held that  the party issued cheques and the cheques were presented. He has issued instructions to stop payment of the said cheques. The complainant’s grievance is that the opposite party colluded to defraud and cheated him in instructing the bankers to stop payment. The complainant there after filed a complaint before the Cubbon park Police against the opposite parties, the police on receipt of the said complaint registered a case under section 406,409 and 420 of IPC. In the present case the subject matter  the complaint filed by the O.Ps. before the court is two receipts have been forged by payment and here compensation have been claimed wrongly seized vehicle and sold the same. As the subject matter in both the cases are different, it cannot be said that the complaint before the Consumer Forum is maintainable.

 

1. The next arguments of the learned counsel is that the relationship between the complainant and O.P. is of  creditor and borrower relationship and therefore the complaint is not maintainable under law. The above arguments of the learned counsel for O.P. cannot be accepted   in view of the decisions 2006 CTJ (209)(SC) (CP), 1992(1) CPR 456,1995(3) CPR 293, 2006(2) CPR 440, C.R.P.3199/96 and 2004(2) CPR 584 relied by the O.P. This shows the complaint against O.p. under hire purchase agreement is maintainable before the Consumer Forum. In view of this the arguments of learned counsel for O.Ps. cannot be accepted.

 

1. In view of the above it can be said that the complaint brought before this Forum is maintainable under law.

 

1. POINT NO.2:- It has been stated by the complainant that the vehicle has been seized by the O.P. without notice to him and their by there is deficiency of service.

 

1. The O.P. has denied the same and has stated that the complainant was due and had not paid the instalments and therefore as per the hypothecation agreement they  repossessed vehicle which had kept with the body builders work shop.

 

1. The affidavit of the complainant is also to the similar effect. The learned counsel for the complainant has cited the decisions reported in 2007 CTJ 1145(CP)(NCDRC) between  Citicorp Maruti Finance Ltd.,  v/s S.Vijayalakshmi and 2007(2)(SC) 711 between ICICI Bank ltd., V/s Prakash Kaur & others  and submitted that the vehicle has been repossessed without notice to him and there by there is deficiency of service.

 

1. The learned counsel appearing for the O.P. as against the above has stated that the hire purchase agreement provides  repossessing the vehicle without notice, the moment the hirer becomes defaulter in payment of any of the instalments and no notice is necessary before repossessing the vehicle. He has further stated that in the present case the vehicle has been repossessed by the O.Ps. for non-payment of instalments by the complainant from body builders where the vehicle had been given for body building and that there is no deficiency of service.

 

1. The learned counsel has further submitted that lawful agreement has been entered into between the parties and same cannot be struck down by the courts.

 

1. In support of the above arguments he has relies upon the decisions reported in 2010 CTJ 768 (CP)(NCDRC) between Sahara India Commercial Corporation ltd. V/s P.Gajendra Chary, 2006 CTJ 209(SC)(CP) between Managing Director, Orix Auto Finance (India) Ltd., V/s Jagamandar Singh and another, III-1992(1) CPR  between M.V.Krishna Reddy V/s  Andra Bank, Gudur, 1995(3) page 293 between the Manager, St. Mary’s Hire Purchase (Pvt) Ltd. V/s N.A.Jose,  C.R.P.3199/96 between Sri Stanley V/s  The Asst. General Manager, 2004(2) CPR 584 between K.A.Murugeshan V/S Jaurilal Bafna & another, Appeal No.1847/2005 between Abdul Razack V/s M/s Sriram Investments, Appeal No.2013/2006 between Venkaba V/s Sriram Investments Ltd., 2006(2) CPR between Surendra Kumar Agrawal V/s Telco Finance Ltd. & another , Appeal No.2242/2009 between Bibijan V/s The Manager, Sriram Transport Finance, II(2010) CPJ 45(NC) between Parameswari V/s V.S.T. Service Station & others.

 

1. The pleadings of the complainant is that the vehicle which had been kept in the work shop has been taken by the O.P. without giving notice to him.

 

1. The complainant has not stated that the vehicle  has been repossessed by using force by O.P. as laid down in 2007 CTJ 1145 (CP) (NCDRC) wherein it has been stated that the practice of hiring recovery agents who are muscleman deprecated and needs to be discouraged. In the present case such contention has not been taken by the complainant and therefore the principle laid down in 2007 CTJ 1145(CP)(NCDRC) will not help the complainant.

 

1. In 2007(2) (SCC) page 711, ICICI Bank Ltd. V/s Prakash Kour & others the vehicle was seized by the agents appointed by the financier and then took possession of the vehicle by using force and in such a context it has been held that the vehicle cannot be repossessed by using force against the borrowers. In the present case as stated earlier no force has been used by the creditor against the complainant to take possession of the vehicle with the help of agents and on the other hand the vehicle has been taken possession from the workshop where the vehicle had been kept for body building.

 

1. The O.P. has stated that the notice has been issued to the complainant before repossessing the vehicle asking him to pay instalments due on 23/02/2008, 10/04/2008 and 12/07/2008. The complainant has denied about the receipt of said notices in the affidavit filed by them. The O.Ps. have only produced the copies of the notice and have not produced any material to show that the notices have been served to the complainant. It becomes clear from this that no notices  have been served to the complainant before repossessing vehicle.

 

1. It has been stated in (2)(2010)CPJ 45 (NC)  between II(2010) CPJ 45(NC) between Parameswari V/s V.S.T. Service Station & others by the Hon’ble National Commission that repossessing the vehicle without issuing notice to the complainant is not bad as the right of the parties are governed directly by the terms of hire purchase agreement. In the present case the O.P. have not been able to show the notice has been issued to the complainant before repossessing the vehicle. In view of the judgements laid down by the Hon’ble National Commission it cannot be said that repossessing vehicle is bad in law and there by there is deficiency of service as alleged by the complainant.

 

1. The affidavit has been filed by the complainant  by stating that after repossessing the  vehicle has been sold by the O.P. without giving  notice to the complainant before sale. The new truck has been sold for Rs.7,60,000/- which would only shows that the O.P. has not given wide publicity and best prices has not been fetched.

 

1. The learned counsel appearing for O.P. has submitted that the notice has been issued to the complainant before sale of the vehicle and has returned as not claimed. The documents has been produced to show that the notice has been returned as not claimed. The documents produced shows that on  front side of the cover endorsement has been made as  not claimed while  on the back side it has been  stated no such addressee  and not known. The endorsements  if seen, it becomes clear that the endorsement made cannot be accepted. It cannot held due service as  argued by the  learned counsel for the O.P.

 

1. Admittedly  the vehicle has been sold without notice to the 3^rd party by the O.P. The learned counsel for O.P. has laid down the decisions reported in II(2010) CPJ 45(NC) between Parameswari V/s V.S.T. Service Station & others wherein the Hon’ble National commission has hold that the vehicle has been repossessed and disposed of to  3^rd person without issuing notice to the complainant and in such a case rights of parties are  governed strictly by terms of hire purchase agreement and in such case the complainant has to show that the prejudice has been caused to him. In view of this judgement it has to be held that the sale without a notice cannot be said to be bad unless the complainant has able to show that some prejudice has been caused to him by such a sale.

 

1. The affidavit has been filed by stating the new vehicle has been sold for a lesser price and there by there is prejudice.

 

1. In the present case the admitted facts are that new vehicle after purchase was given to work shop for body building. When the vehicle was with the body builders the O.P. has seized the same as the instalments due was not paid by the complainant. The new vehicle had  kept in yard of the O.P. before sale of the same and it has not been use on road.

 

1. The O.P. has produced documents  to show  valuation report made by the assessor in respect of the vehicle. The valuation has been done on 05/12/2008. In the valuation report it has been stated engine required minor repair, transmission required  repair, suspension required repairs, battery is found to be dead. As stated earlier the new vehicle  which has been kept for body building has been taken and kept in the yard of the O.P. before sale. The vehicle has been sold for Rs.7,60,000/-. The vehicle  was of the year 2007 and has been sold on 17/11/2009 for Rs.7,60,000/-. The value of  the new vehicle Rs.10,89,650/-. The vehicle has never been played on the road except for taking it to dealer for body building. This shows that the vehicle  did require any repairs except replacing of battery. In view of this  the valuation on the face of it appears has to be not correct. Considering  even the depreciation  it cannot be said that the vehicle has been sold for best price. The documents produced  shows that  notice of indenting sale has been published in the notice board and there is no wide publicity to sell the vehicle  in order to get best price.

 

1. It is not doubt true that the complainant has not paid instalments but the financer who have taken steps for sale should have  taken  steps by wide publicity to get best price. In the present case it has not been done by the O.Ps. and there by prejudice has been caused to the complainant  as per the judgement cited  by the O.P. reported in (II) (2010) CPJ (45) (NC), wherein the Hon’ble National Commission has held that if the complainant is  able to show that the prejudice has caused to him in repossessing the vehicle without notice  and also sell of the same, then there is deficiency of service by the O.Ps.

 

1. In the present case for the above said reasons, it can be said that there is deficiency of service.

 

1. The next question for  what compensation if any  the complainant is entitled. It has been stated that the complainant could have used the vehicle and earned money and therefore that has to be compensated.

 

1. The Judgements of Hon’ble National commission relied upon by the O.P. shows that it has  right to repossess the vehicle and sale the same. In the present case admittedly the instalments have not been paid and the vehicle has been repossessed and sold. Considering this the complainant is not entitled for compensation in not using  the vehicle on road as stated by him.

 

1. The Forum has said that there is deficiency of service is there in not taking proper steps to sale the vehicle and also valuation made by the assessor is not correct and this has to be compensate to the complainant.  Considering this, the complainant is  awarded compensation of Rs.2,00,000/- with 6% p.a. interest from the date of petition till realization of the same  along with cost. The cost fixed at Rs.3,000/-

 

1. In view of the above following

 

ORDER

The complaint is allowed in part .

The complainant is entitled for compensation of Rs.2,00,000/- from the O.Ps. along with interest at 6% p.a. from the date of petition till realization of full amount and also entitled for Rs.3,000/- being the cost of the complaint.