Telangana

Mahbubnagar

CC/08/62

M. Gnaneshwar Reddy S/o Narayan Reddy O/c Agriculture - Complainant(s)

Versus

The Branch Manager, Mahindra and Mahindra Financial Services Ltd., Mahabubnagar. - Opp.Party(s)

Sri P. Amba Shankar

27 Nov 2008

ORDER

BEFORE THE DISTRICT CONSUMER FORUM AT MAHABUBNAGAR

Thursday, the 27^th day of November, 2008

 

                                                              Present:- Sri M.Rama Rao, B.A.,LL.B., President

     Sri P.Venkateshwara Rao, B.com., LL.B., Member

       Smt.B.Vijaya Kumari, M.Sc. B.Ed., C.C.P., Member

 

                                                                       C.C.NO. 62  Of   2008

 

Between:-

M. Gnaneshwar Reddy S/o Narayan Reddy, age: 46 years, Occ: Agriculture, R/o Kothakuntapally village, Lingal Mandal, Mahabubnagar District.  

                                                                                              

        … Complainant.

And

1.   Mahindra & Mahindra Financial Services Ltd., Rep. by its Branch  

      Manager, New Town, Mahabubnagar.  

 

2.   Mahindra & Mahindra Financial Services Ltd., Rep. by its Manager,

      Park Road, Kurnool.

 

                                                                                      … Opposite Parties

 

 This C.C. coming on before us for final hearing on 12-11-2008, in the presence of Sri P. Amba Shankar, Advocate, Mahabubnagar for the complainant and of Sri B. Balagangadhar Reddy, Advocate, Mahabubnagar for the opposite parties and having stoodover for consideration till this day, this Forum delivered the following:

 

O R D E R

 

(Sri P.Venkateshwara Rao, Member)

 

1.        This is a complaint filed on behalf of the complainant under section 12 of Consumer Protection Act, 1986 seeking a direction to the opposite parties to return Mahindra Tractor bearing No. AP 22K 2384 to the complainant on receiving pending installments or alternatively repay the price of tractor Rs.4,54,000/- with 24% interest from the date of seizure till the date of realization and to return unused five cheques which were issued to OP.1 for repayment of installments and to award Rs.1,00,000/- for damages and Rs.20,000/- towards compensation and also costs of the complaint.

 

2.     The complaint averments are as follows:- The opposite party is engaged in the business of providing vehicle loans to the consumers.   The complainant purchased Mahindra 595 DI Tractor bearing  No. AP 22K 2384 from Sri Rama Engineering Co. Ltd., Mahabubnagar under Hire Purchase with the opposite party.  As such the complainant is a consumer to the opposite party.   The total cost of the tractor was Rs.4,54,000/-.   Out of this the opposite party provided finance to the tune of Rs.3,00,000/- and the complainant paid his amount of Rs.1,54,000/- towards down payment.   The complainant fallen due of 2^nd instalment which is payable by 29.10.2006 due to some problems.  The complainant issued five post dated cheques to OP.1.  But the opposite parties have not sent the same for collection.  The opposite parties fixed six half yearly instalments @ Rs.65,750/- each.   The first instalment will commence from 29.4.2006.   The opposite party without any notice and prior to completion of loan period illegally seized the tractor of the complainant on 15.12.2007.   The complainant approached OPs and offered to pay the amount.  But OPs demanded abnormal amount.   Ultimately the complainant got issued legal notice to OP.1 on 18.6.2008 and asked to return the vehicle by receiving the instalment due, but OPs did not respond.   All these acts of opposite party amount to deficiency in service.   Being an agriculturist, the complainant suffered a lot due to seizure of tractor by OPs.   Therefore OPs are liable to pay damages of Rs.1,00,000/- and Rs.20,000/- towards compensation apart from the costs of the proceedings and return of the tractor or its total cost.   Hence the complaint. 

 

3.     The opposite parties filed counter with the following averments:-   The opposite party is engaged in providing loans for purchase of vehicles.  The opposite party has provided Rs.3,00,000/- as financial assistance to the complainant to purchase the Tractor of Mahindra 595 DI which was registered with No. AP 22K-2384.  The complainant has purchased the vehicle through M/s Sri Rama Engineering Co. Ltd., Mahabubnagar.    On availing the loan facility of Rs.3,00,000/- the complainant has executed loan agreement in favour of OP agreeing to repay the total hire purchase value of Rs.3,94,500/- repayable in (6) half yearly instalments at Rs.65,750/- starting from 29-04-2006.  The complainant paid the first instalment only and fallen due of very second instalment.   As such the opposite party has issued notices on 2-11-2006 and 2.1.2007 to the complainant calling upon to pay the due instalment, but he did not respond to the said notice, as such on 8-3-2007 a telegram was also issued to the complainant to settle the account immediately or else the opposite party will take suitable action.  On receiving the said telegram on 16.3.2007 the complainant visited the office and given written undertaking with a promise to pay the amount by 24.3.2007, but he failed.  Again OP.1 issued another notice on 23.3.2007 and on 3.10.2007 and asked to pay the outstanding amount of Rs.1,97,250/- as on the date of notice.   But the complainant did not respond.   The OP waited upto 29.12.2007, but the complainant has not chosen to pay the amount as demanded by OP.   As such in terms of clause 12 of Ex.B-1 the tractor was seized on 29.12.2007 and waited till 9.6.2008.  But the complainant has not turned up, hence the tractor was sold on 9.6.2008 for Rs.2,19,000/- in a public auction.  The complainant was given reasonable opportunities to pay the instalments to avoid the seizure and sale of the vehicle but he did not avail the same.  The complainant failed to perform his part of contractual obligation.  The relationship between the complainant and the opposite party is borrower and lender and transaction between them is purely loan, as such there is no service on payment of charges and the complainant is not a consumer as defined under C.P. Act.  As such this Forum is not having any jurisdiction to entertain the complaint.  As per the agreement the documents deposited by the complainant with the opposite party will be returned back to the complainant only after clearing off the shortfall of amount due towards the loan transaction.  There is no deficiency of service by the opposite party.  Without paying the instalment amounts the complainant cannot ask for any remedy against the opposite party.   As per the clause 26 & 27 of loan agreement it is agreed that if any dispute arises between the borrower i.e., complainant and the lender i.e., OP the matter has to be referred to Arbitrator at Mumbai.  As such this Hon’ble Forum has no jurisdiction to entertain the complaint.  The alleged cause of damage of Rs.1,00,000/- and Rs.20,000/- for compensation for mental agony to the complainant is false and not tenable.  The complainant having utilized the vehicle for about two years from the date of purchase without paying loan instalment amounts the cause of loss due to its seizure is bogus, false and not tenable.  Therefore there is no deficiency in service and no unfair attitude and practice on the part of OP.  The complaint is unwarranted against the opposite party and OP is not liable to pay any amount of compensation or damages etc. as claimed by the complainant.  Hence the complaint is liable to be dismissed with exemplary costs.

 

4.  The complainant filed his affidavit and got marked Exs.A-1 to A-4.

 

5. The opposite parties filed their affidavit and got marked Exs.B-1 to B-17  on their behalf. 

 

6. The complainant and the opposite party filed their respective written arguments and are heard at length.  

 

7.  The points which fall for consideration are:

 

1. Whether the complainant is a consumer?

         2.  Whether this Forum is not having jurisdiction to try the complaint?

3. Whether the clause of Arbitration in the Agreement oust the  

     jurisdiction of this Forum?   

 

4. Whether the OP’s action is arbitrary and amounts to 

     deficiency in service?

 

5. Whether the complainant is entitled to the reliefs as prayed for?

 

8.     Point No.1:- The contention of the opposite party is that in the instant case the relationship between the complainant and OP is borrower and lender and the transaction between them is purely loan and no consideration is paid for service by the complainant, as such the complainant will not fall within the meaning of the ‘Consumer’ as defined in the C.P. Act.   Thus the complaint is not entertainable.  Admittedly OP had undertaken to perform the services as financier by providing facilities in connection with financing.  The complainant approached the opposite party for hiring its services for a consideration in the nature of interest.  The opposite party agreed to provide the same by way of financial assistance.  Therefore no doubt that the complainant who hired the services of the opposite party in connection with financing for consideration is a consumer within the meaning of the C.P. Act.   In this regard we are relying on the decision of the Hon’ble A.P. State Commission in the case of S.B.H.  Vs. Sri Bairi Lingam reported in 1991 (1) CPJ P.362.  In view of the above facts and circumstances of the case and the principles of the case law cited supra, we hold that the complainant is a consumer and the complaint is maintainable in this Forum.

 

9.    Point No.2:-  The opposite party further contended that as per clause 27 of the Loan Agreement i.e., Ex.B-1, it was mutually agreed that only Mumbai Courts shall have exclusive jurisdiction to try and legal proceedings in respect of any matter claim or dispute arising out of or in any way relating to the agreement and therefore this Forum has no jurisdiction to entertain the complaint filed by the complainant under the provisions of the C.P. Act.   Clause 27 of the Loan Agreement (Ex.B-1) reads as follows:   

 27)  Jurisdiction:

 

     “It is agreed by and between the parties hereto that the Courts at Mumbai alone shall have exclusive jurisdiction in respect of any matter, claims or dispute arising out of or in any way relating to these presents or to anything to be done under and pursuant to these presents or of any clause or provision thereof, notwithstanding that the whole or substantial part of the cause of action may not have arisen at Mumbai”.  

 

     The territorial jurisdiction of the District Forum cannot be ousted by any agreement between the parties.  They are governed by the provisions of the C.P. Act relating to jurisdiction.  Section 11 of the C.P. Act deals with the jurisdiction of the District Forum.  It is the cause of action rule which helps much to determine the jurisdiction.  As such the clause No.27 of the loan agreement is void as the jurisdiction of the District Forum is determined as per Section 11 of the C.P. Act.

 

      In this case the opposite party seized the vehicle at Annasagar village of Mahabubnagar District which fall under the territorial jurisdiction of this Forum.  As such cause of action arose in Mahabubnagar District.  We conclude that the complaint filed by the complainant in this Forum is maintainable and this Forum has territorial jurisdiction to entertain the complaint and decide the case relating to the consumer transaction between the complainant and the opposite party.   This point is decided against to the opposite party. 

 

10. Point No.3:-   According to OP, the complainant executed the Loan Agreement i.e., Ex.B-1.   It was contended on behalf of OP that as per the clause No.26 of the Agreement any dispute arising between the parties shall be referred to Arbitrator at Mumbai and in view of the Arbitration Clause, the complainant cannot invoke the jurisdiction of this Forum as the parties are governed and bound by the agreement.   Clause 26 of the Loan Agreement (Ex.B-1) reads as follows:

 

    26)  Arbitration:

 

  “All disputes, differences and/or claim arising out of these presents or in any way touching or concerning the same or as to constructions, meaning or effect hereof or as to the right and liabilities of the parties hereunder shall be settled by arbitration to be held in accordance with the provision of the Arbitration and Conciliation Act, 1996 or any statutory amendments thereof and shall be referred to the sole arbitrator to be nominated by the Lender.   In the event of death, refusal, neglect, inability or incapability of a person so appointed to act as an arbitrator, the Lender may appoint a new arbitrator.  The arbitrator shall not be required to give any reasons for the award and the award of the arbitrator shall be final and binding on all parties concerned.   The arbitration proceeding shall be held in Mumbai”. 

 

         It is settled law that even if there is an arbitration clause for   settlement that would not prevent the Consumer Forum to judge the deficiency in service by the service provider.  The remedy provided under the C.P. Act is in addition to and not in derogation of the provisions of      any other law for the time being in force.  The Hon’ble National Commission held the said opinion in its latest decision reported in CPJ  2008 (1) P.214 in Cholamandalam DBS Finance Ltd., Vs. Kishore Jain  case.   In view of this decision and due to occurrence of  cause of action  in Mahabubnagar District, we conclude that mere existence of   Arbitration clause i.e., Clause 26 in Loan Agreement  (Ex.B-1) does not oust the   jurisdiction of this Forum and that the complaint filed by the     complainant under the provisions of the C.P. Act is maintainable.  Hence  this point is decided against the opposite party.

 

11. Point No.4:-   Now coming to the merits of the case, the facts which are not in dispute are that the complainant executed Loan Agreement on 29.10.2005 and obtained financial assistance of Rs.3,00,000/- on 1.11.2005 from OPs to purchase Mahindra 595 DI Model Tractor for agriculture purpose.  The price of the tractor was Rs.4,54,000/-.   The complainant paid Rs.1,54,000/- towards down payment/margin money to the dealers.  The complainant purchased the said tractor on 21.1.2006 and got registered with bearing No. AP22 K-2384.   As per the Hire Purchase Agreement the loan amount of Rs.3,00,000/- is payable in 36 months and OPs charged Rs.94,500/- i.e., Rs.2,625/- per month towards interest i.e., @ 31.5% p.a. on the said amount for 36 months period.   OPs fixed six half yearly instalments to repay the loan together with interest.   The complainant has to pay Rs.65,750/- under each instalment.  The instalments will be commenced from 29.4.2006 and will end by 29.10.2008.  The complainant has to pay the penal interest  @ 36% p.a. on principal outstanding in case of delay in paying the instalments.   The complainant paid only first instalment amount of Rs.65,750/-.   OPs seized the tractor on 29.12.2007 and sold away on the reason of default in payment of subsequent instalments.   
12.  The specific case of the complainant is that he issued five post dated  cheques of Rs.65,750/- each to OPs in advance towards instalment amount payable by hm.   But OPs have not deposited any of the said cheques before their banker.  OPs without any prior notice seized the tractor for default of second instalment amount and sold it away at unjustifiably low price.  Thus the acts of OPs are arbitrary, illegal and tantamount to deficiency of service. 

 

      On the other hand, it is the case of OPs that the OP is having right to seize the vehicle even for default of single instalment as per clause 12 (i) (ii) (iii) of the agreement.  The OP issued several notices and given reasonable opportunity to the complainant to pay the instalments amount but he did not respond.   As such the tractor was seized and sold away for the true market value of Rs.2,19,000/-.   The complainant never issued any post dated cheques to OPs.  Therefore the complainant is a willful defaulter and breached the agreement, but the OPs acted legally in terms of agreement and followed the due procedure laid under law in seizure and selling the tractor for recovery of loan amount.   Thus there is no deficiency in service on the part of OPs.

 

13. Now coming to the point of issuance of notice for seizure of tractor, the complainant contended that there is no prior notice for seizure.  OPs denied it and vehemently contended that they have given ample opportunity to the complainant to pay the instalments amount and contended that they have issued notices on 2.11.2006, 2.1.2007 and 23.3.2007 vide Exs.B-2 to B-4 respectively and one telegram under     Ex.B-5.  In response to Ex.B-5, the complainant approached OP.1 and given undertaking on 16.3.2007 vide Ex.B-6 to pay the amount by 24.3.2007.   But the complainant failed to fulfill his promise as such OPs issued another notice dated 3.10.2007 vide Ex.B-7 demanding payment of over due amount of Rs.1,97,250/- along with delayed payment charges and other incidental charges.   Even then there is no response from the complainant.  As such on 29.12.2007 the tractor was seized. After seizure also OPs issued another notice dated 2.2.2008 vide Ex.B-9 under intimation to guarantor.   However the complainant has not chosen to pay the amount.    As such the tractor was sold away in public auction on 9.6.2008 for Rs.2,19,000/- by virtue of powers vested in OPs in terms of agreement especially as per Clause 12 (i) (ii) and (iii) of Ex.B-1.   Before going into discussion on this point, we feel it is proper to refer and reproduce the clause 12 (i) (ii) and (iii) of Hire Purchase Agreement i.e., Ex.B-1 on which OPs relied upon.

 

Clause No.12 (i) (ii) (iii) of Ex.B-1:

 

12)   Consequences upon event of default:

 

12.1 “Upon the occurrence of any event of default and any time thereafter, the   Lenders shall without prejudice to its rights in law, be entitled to        declare all sums due and to become due hereunder for the full term of   the agreement as immediately due and payable including that the     Borrower shall be liable to pay to the Lender foreclosure charges     calculated as the percentage (as per Schedule 1) of the balance   principal outstanding along with other dues including unpaid installments, service taxes, late charges etc., due as on date of such  declaration and upon the Borrower failing to make the said payment in     full within 7 days thereof, the Lender may, at its sole discretion, do any    one or more of the following:

 

1.  Upon notice to the Borrower terminate this agreement;

 

2.  Demand that the Borrower should return the Product to the Lenders at the risk of expense of the borrower, in the same condition it was delivered to him (Ordinary wear and Tear Excepted) at such Location as the lender may designate and upon failure of the borrower to do so within the period of demand the lender/agents/allies as agent and constituted attorney of the Borrower can enter upon premises where the product is located and take immediate possession of and remove the same without liability to the lenders or their agents of such entry or for damage to property or otherwise.  Upon such return of the product or upon the lender taking possession of the product as herein before stated the loan agreement can be foreclosed or terminated by the lender at its discretion and provided however the remedies available to the lender as herein given shall survive such foreclosure and termination of loan and the lender shall be entitled and authorized to exercise its rights herein including in connection with the product to recover its dues under this Agreement.

 

3.  Of such terms and conditions and for such consideration as the Lender may deem fit with or without any notice to the Borrower sell the Product at a public or private sale, otherwise dispose of upon such return of the Product or use, or operate, lease to others or keep idle such Product, all free and clear of any rights to the Borrower and without any duty to account to the Borrower for such action or inaction or for any proceeds in respect thereof.”

 

****

 

The Hire Purchase Act, 1972: 

 

Section18:- “Rights of owner to terminate hire purchase agreement    

for default in payment of hire or unauthorised act or breach of  

express conditions:-

 

1.  Where a hirer makes more than one default in the payment of hire as provided in the hire purchase agreement then, subject to the provisions of section 21 and after giving the hirer notice in writing of not less than—
   1. one week, in a case where the hire is payable at weekly or lesser intervals;
   2. two weeks, in any other case,

        the owner shall be entitled to terminate the agreement by giving the hirer notice of termination in writing.

       Provided that if the hirer pays or tenders to the owner the hire in arrears together with such interest thereon as may be payable under the terms of the agreement before the expiry of the said period of one week or, as the case may be, two weeks, the owner shall not be entitled to terminate the agreement”.  

 

2. (a) xxx

    (b)  xxx

 

Section19:-  Rights of owner on termination:-

      

       Where a hire purchase agreement is terminated under this Act, then the owner shall be entitled—

1. to retain the hire which has already been paid and to recover the arrears of hire due:

 

       Provided that when such goods are seized by the owner, the retention of hire and recovery of the arrears of hire due shall be subject to the provisions of Section 17:

2. xxx
3. xxx
4. xxx
5. xxx

      According to the Section 18 & 19 of H.P. Act, the lender should give two weeks prior notice to terminate Hire purchase agreement for default in payment of more than one instalment in case where the instalment is payable more than one week intervals.  On termination of H.P. Agreement only owner is entitled to repossess the vehicle.   But whereas in Clause 12 (i) (ii) and (iii) of Ex.B-1, it is mentioned that if borrower failed to pay the amount within (7) days, lender will repossess the product and sell it in the public or private sale with or without any notice to the borrower.   It is clear that the provisions of Clause 12 (i) (ii) and (iii) are contrary to the law.  It is settled law that the conditions which are contrary or against to the law are void and not enforceable.   Therefore OPs cannot take the advantage of the said Clause.   

 

      With regard to the issuance of notice admittedly the complainant has to pay the second instalment amount by 29.10.2006 and third instalment amount by 29.4.2007.  The notices said to have been issued by OPs vide Exs.B-2 to B-5 and B-7 and B-9 prove that under these notices OPs demanded the complainant to pay second instalment amount of Rs.65,750/- within a (7) days period.    There is no material to show that all these notices were served on the complainant.  OPs have not filed any acknowledgements in proof of serving of these notices.   It is evident from Ex.B-8, B-10 and B-11 that the notices vide Exs.B-7 and  B-9 were not served on the complainant and the postal authority returned them with an endorsement that “Addressee not in village”.  There is no whisper even in the undertaking letter of complainant, dated 16.3.2007, i.e., Ex.B-6 about the serving of the notices.   Therefore first of all we hold that all the notices said to have been issued by OPs are not served on the complainant.  Even otherwise also, they cannot be treated as proper notices.   According to Section 18 (ii) of the H.P. Act, 1972 the lender should give two weeks prior notice for terminating the agreement and to exercise the right of seizure in case of default in payment of more than one instalment.  In the instant case, the notices vide Exs.B-2 to B-4 and B-5 were issued with a seven days time and for default of only one instalment, i.e., second instalment payable on 29.10.2006.   First of all OPs cannot seize the vehicle for default of one instalment.  The notices said to have also been issued for third instalment due which is payable on 29.4.2007 were also not served on the complainant.   Thus it is clear that the tractor was seized without any notice to the complainant and without terminating the H.P. Agreement. 

 

     Without issuing any prior and proper notice as required under Section 18 of the H.P. Act, 1972, OPs cannot proceed U/s 19 of the H.P. Act to recover the arrears of hire dues.   Therefore we hold that OPs failed to comply with the mandatory provisions of the H.P. Act, 1972 and without any proper, valid and prior notice for termination of agreement as required U/s Section 18 (ii) of the H.P. Act, 1972 seized the tractor arbitrarily.  The OPs have not filed any material before this Forum to show that they have intimated the date, venue of the proposed auction.    Therefore we hold that OPs sold the tractor without intimation to the complainant and they have not followed the procedure required under law for sale of the tractor. 

     

14.  With regard to the sale of the tractor at throw away price the contention of OPs is that they have sold the tractor in public auction on 9.6.2008 for Rs.2,19,000/-.   The learned counsel for OPs argued that this rate was quoted by the auction participants considering the condition of the tractor.   As such there is no other intention in selling the tractor for Rs.2,19,000/-.   On the other hand, the learned counsel for the complainant vehemently argued that there is no proof of conducting auction and other proceedings to show that OPs followed the procedure as required under law and OPs sold the tractor as per their will and wish at unjustifiably low price of Rs.2,19,000/- whereas the tractor was used for two years.  There is no dispute on the fact that the tractor was purchased on 21.1.2006 and it was repossessed by the OPs on 29.12.2007 and sold on 9.6.2008.  So it is clear that the complainant used the said tractor for two years and it was sold within 28 months of its purchase.   OPs have not filed any material before us with regard to sale of the tractor and procedure followed by them in conducting the public auction and determining the cost of the tractor.   In absence of the evidence, we safely conclude with a presumption that OPs sold the tractor without following the procedure as required under statute.   As per the principles laid in the decision of the Hon’ble National Commission in the case of ICICI Bank Ltd. Vs. Sandeep Kumar case reported  in CPJ 2007 (4) P.391, in the instant case 35% depreciation is quite reasonable to consider as the tractor was 28 months old as on the date of sale.  Therefore after deducting the depreciation of 35% the value of the tractor as on the date of sale was of Rs.2,95,100/-.    But whereas OPs sold the same at Rs.2,19,000/-.   The OPs cannot sale the tractor less than its value.   If they did so they cannot insist the complainant to pay the difference amount.   

    In view of the above discussion it is clear that OPs action with regard to not issuing proper notice and seizing the tractor without termination of H.P. Agreement and selling it at unjustifiably low price without any proper procedure is arbitrary and against to the law in force as such it amounts to deficiency in service.  In this regard we are relying upon the decisions of the Hon’ble National Commission in TATA Finance Ltd., Vs.  Francis Soeiro case reported in CPJ 2008 (3) P.65 and Hon’ble A.P. State Commission in S. Kiran Kumar Vs. Centurion Bank of Punjab Ltd. case reported in CPJ 2008 (3) P.7, wherein their Lordships categorically held that seizure of vehicle without prior notice to the complainant and its auction and sale at unjustifiably low price tantamount to deficiency of service and the OPs are liable for heavy costs and compensation.  Hence this point is decided in favour of the complainant and against to the OPs.    

 

15.  Point No.5:-   The complainant seeking direction to OPs for returning his tractor after receiving the instalments amount or alternatively sought refund of entire price of the tractor i.e., Rs.4,54,000/-.   Admittedly the tractor was already sold.   Hence OPs may not be in a position to return the tractor.  The remedy left to the complainant is only to ask for refund of tractor price.  Even according to the complainant he has paid only first instalment amount and defaulted remaining five instalments amounts.  In terms of Ex.B-1 Agreement, the complainant cannot escape from his liability to clear off the loan to OPs.  The Hon’ble National Commission in ABN AMRO Bank Vs. Sangeet Srivastava case reported in CPJ 2007 (2) P.269 held that the complainant is entitled for the amount paid by him towards margin money to the dealer in the cases where the financial institution rendered services in deficit by seizing and selling the tractor illegally and arbitrarily.   The said case law is quite applicable to the case on hand as such the complainant is entitled to get the amount of Rs.1,54,000/- which he paid to the dealers towards margin money while purchasing the tractor.  However the liability lies on the complainant to clear off the loan together with agreed interest and other charges as agreed by him under Ex.B-1 because he is a willful defaulter.  OPs are entitled to recover their loan amount by adjustment out of the amount of Rs.1,54,000/- after deducting the payments made by the complainant and adjusting the value of the tractor as on the date of sale as decided by this Forum in Point No.4 above.  As per the above discussion, OPs are liable to pay the amount to the complainant as calculated here under.    

 

 

I )                                                                                               Rs.      Ps.

Principal amount                                                                3,00,000-00

Add: Interest @ Rs.2,625/- from 1.11.2005

to 9.6.2008 i.e., the date of sale (31 months 9 days)          82,163-00

                                                                                           _______________

                                                                                             3,82,163-00

Add: Penal Interest @ 36% p.a. payable on principal

Outstanding i.e., Rs.50,000/- in terms of Ex.B-1.

 

1. 2^nd Instalment from 29.10.2006 to

29.12.2007 i.e., Date of seizure of tractor     Rs.     Ps.

(14 months @ Rs.1,500/- p.m.)                  21,000-00

 

2. 3^rd Instalment from 29.4.2007 to

29.12.2007 (8 months @ Rs.1,500/- p.m.)  12,000-00

 

3. 4^th Instalment from 29.10.2007 to

         29.12.2007 (2 months @ Rs.1,500/- p.m.)     3,000-00           

__________   36,000-00

                                                                                                       _____________

     Total amount with interest payable by the complainant

     as on 29.10.2007 i.e., date of seizure of tractor                      4,18,163-00

 

     Less:

1. Amount paid under 1^st Instalment               65,750-00
2. Value of the tractor as on 9.6.2008 i.e.,

The date of sale after deduction of                                                       depreciation @ 35%                                      2,95,100-00   

                                                               _______________  3,60,850-00 

                                                                                       ______________

      Amount recoverable from the complainant by OPs

      For full and final settlement of loan.                                        57,313-00

                                                                                                  _____________

 

II )  Margin money entitled by the complainant                           1,54,000-00

 

      Less: The amount payable by him towards full

      Satisfaction of the loan.                                                            57,313-00

                                                                                                _______________

      Amount payable by OPs to the complainant                             96,687-00

                                                                                                _______________

 

      Therefore, we hold that the OPs are liable to pay Rs.96,687/- to the  complainant.  The complainant is claiming amount together with interest   @ 24% p.a.  It is evident from Ex.B-1 that the OPs charged interest @ 31.5% p.a. and penal interest @ 36% p.a. for their amount.  Thus OPs are also liable to refund the amount of the complainant together with interest.  We would not hesitate to award interest @ 24% p.a. as asked by the complainant because it is much less than the rate of interest charged by OPs.  Therefore we hold that the complainant is entitled to get his entitled amount of Rs.96,687/- together with interest @ 24% p.a. from the date of filing of the complaint till the payment to meet the ends of justice and OPs are not entitled to demand the complainant to pay any amount under the subject loan. 

 

    The second relief sought by the complainant that directions may be given to OPs to return the five post dated cheques which are handed over by him to OPs.  There is no evidence before us to show that the complainant has handed over the said cheques to OPs and other particulars of the cheques.  Therefore we cannot direct the OPs in this regard.  However the complainant can address a letter to his banker not to honour the cheques which are said to be handed over by him to OPs.    The OPs are not entitled to withhold the documents after clearance of the loan.   Hence OPs are liable to return all the documents pertaining to the loan to the complainant. 

     The complainant is claiming Rs.1,00,000/- towards damages and Rs.20,000/- towards compensation.   The complainant has not filed any material in proof of his claim.   Therefore we hold that the complainant is not entitled to these amounts.   However the complainant is entitled for Rs.1,000/- towards costs of the proceedings as he filed the complaint by spending court fee and advocate fee.      

16. In the result, the complaint is allowed.  The opposite parties are directed jointly and severally to pay an amount of Rs.96,687/- together with interest @ 24% p.a. thereon from 11.7.2008 till the payment and Rs.1,000/- towards costs of the proceedings to the complainant and also return the documents to the complainant within 30 days from the date of receipt of this order.

 

        Typed to dictation, corrected and pronounced by us in the open Forum on this the 27th day of November, 2008.           

 

        

 MEMBER                                MEMBER                              PRESIDENT 

  

 Appendix of evidence

       Witness examined

 

For complainant: Nil                                                 For opposite parties:  Nil

Exhibits marked for Complainant:-  

 

Ex.A-1:        Copy of Legal Notice, dt.18.6.2008.

Ex.A-2:        Copy of letter issued by complainant, dt.17.6.2008.

Ex.A-3:        Copy of Certification of Registration, dt.21.1.2006.

Ex.A-4:        Copy of Statement of Account, dt.27.6.2008.

 

Exhibits marked for OPs:-   

 

Ex.B-1:        Copy of Loan Agreement, dt.29.10.2005.

Ex.B-2:        Copy of Statement of Account, dt.8.11.2008.

Ex.B-3:        Copy of Notice issued by OPs, dt.3.5.2006.

Ex.B-4:        Copy of Notice issued by OPs, dt.6.7.2006.

Ex.B-5:        Copy of Demand Notice issued by OPs, dt.2.11.2006.

Ex.B-6:        Copy of Demand Notice issued by OPs, dt.2.1.2007.

Ex.B-7:        Copy of Telegram, dt.8.3.2007.

Ex.B-8:        Undertaking letter issued by complainant, dt.16.3.2007.

Ex.B-9:        Copy of Legal Notice, dt.23.3.2007.

Ex.B-10:      Copy of Demand Notice issued by OPs, dt.3.10.2007.

Ex.B-11:      Returned Registered Post Postal cover, dt.8.10.2007.

Ex.B-12:      Copy of Telegram, dt.29.12.2007.

Ex.B-13:      Copy of letter issued by OPs, dt.2.2.2008.

Ex.B-14:      Registered Post Postal Receipt.

Ex.B-15:      Registered Post Postal Receipt.

Ex.B-16:      Returned Registered Post Postal cover, dt.14.2.2008.

Ex.B-17:      Returned Registered Post Postal cover, dt.16.2.2008.

 

 

By the Forum:

     - Nil-

                                                                                                                                                                                                                             PRESIDENT

Copy to:-

1. Sri P. Amba Shankar, Advocate, Mahabubnagar for the complainant.
2. Sri B. Balagangadhar Reddy, Advocate, Mahabubnagar for OPs.