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Judgment
Dr. Inder Jit Singh,Presiding Member
The present Revision Petition (RP) has been filed by the Petitioners against Respondent as detailed above, under section 21(b) of Consumer Protection Act 1986, against the order dated 25.07.2019 of the State Consumer Disputes Redressal Commission, Bengaluru, Karnataka, (hereinafter referred to as the ‘State Commission’), in First Appeal (FA) No. 811 of 2016 in which order dated 05.02.2016 of District Consumer Disputes Redressal Forum, Bellary (hereinafter referred to as District Forum) in Consumer Complaint (CC) No. 133 of 2015 was challenged, inter alia praying to set aside the order dated 25.07.2019 passed by the Karnataka State Commission.
While the Revision Petitioner(s) (hereinafter also referred to as OPs) were Appellants and the Respondent (hereinafter also referred to as Complainant) was Respondent in the said FA/811/2016 before the State Commission, the Revision Petitioner(s) were OPs and Respondent was Complainant before the District Commission in the CC no. 133 of 2015. Notice was issued to the Respondent on 13.12.2019. Petitioner filed Written Arguments/Synopsis on 17.04.2023.
Brief facts of the case, as emerged from the RP, Order of the State Commission, Order of the District Commission and other case records are that:
(i) As per complaint before the District Forum, the JCB in question was purchased in February 2013 at a total price of Rs.24,37,199/-, out of which complainant paid a margin amount of Rs.4,27,823/- and OPs sanctioned a hypothecation loan for a sum of Rs.20,22,876/-. The complainant claims to have paid back a total sum of Rs.11,10,259/- to the OPs. It is the case of complainant that as on the date of seizure of JCB by OP i.e. 19.08.2014, there were no dues payable by him and OP’s action of wrongful seizure has caused a loss of Rs.12.00 lakh to him. Complainant claims to have paid 17 instalments regularly, without fail, to the OPs, as on the date of seizure, Complainant claims to have paid extra three instalments as on date of seizure. Complainant further claims to have spent Rs.1.12 lakh on the JCB for various purposes, including purchase of two new tyres, tool box etc. Complainant alleges a forcible possession by OP from his driver. In the complaint, the complainant prayed for return of seized JCB as well as refund of Rs.12 lakh with interest, Rs.1.12 lakh with interest, damages to the tune of Rs.5.00 lakh and refund of excess amount of Rs.1,77,026/-.
(ii) The OP in its written version before the District Forum contended that complainant is a chronic defaulter, parties are governed by agreement dated 22.03.2013, as on 09.09.2014, there was an outstanding amount of Rs.21,06,823/- towards instalment amount and other charges. As per OP, the total value of JCB was Rs.24,52,799/- (as against Rs.24,37,199/- stated by complainant) and loan advanced by OP was Rs.20,38,476/- (as against Rs.20,22,876/- stated by the complainant. As per terms of loan agreement dated 22.03.2013, the amount was repayable along with compound interest @13.84% p.a. in 47 equal monthly instalments of Rs.55,249/-, each payable from 22.04.2013 till 22.02.2017. According to OP, as on 22.08.2014, Complainant was supposed to pay Rs.9,39,233/- towards 17 instalments, but he committed default. OP denies that complainant paid Rs.11,10,259/-. However, the OP has not stated in its written version as to how much amount the complainant paid as on 22.08.2014. According to OP, as on 19.08.2014, Rs.2,17,239/- was overdue hence the OP with a view to recover this amount, decided to repossess the J.C.B., and after repossessing the JCB, sent an agreement termination letter dated 25.08.2014 to Complainant, requesting him to pay total outstanding due amount of Rs.21,06,823/- within 7 days, failing which, OP will sell the JCB to recover the dues. This was followed by a reminder dated 09.09.2014.
Vide Order dated 05.02.2016, in the CC no. 133 of 2015 the District Forum has Directed the OPs to pay Rs 8,77,500 as compensation for deficiency in service and Rs 2500 as cost of proceedings to the Complainant. Aggrieved by the said Order dated 05.02.2016 of District Forum, Petitioner(s) appealed in State Commission and the State Commission vide order dated 25.07.2019 in FA No. 811 of 2016 has dismissed the appeal.
Heard counsels of both sides. Contentions/pleas of the parties, on various issues raised in the RP, Written Arguments, and Oral Arguments advanced during the hearing, are summed up below.
(i) The counsel for OP (Petitioner herein) asserts that the dismissal of their first appeal by the State Commission was done summarily, disregarding the evidence and the issues they had raised. The OP argues that the dismissal was erroneous and unfounded, particularly concerning the question of maintainability due to the complainant not being a consumer and the dispute not being a consumer dispute. The OP also highlights the absence of any violation of the Hypothecation agreement and points to Clause 7.2.1 of the agreement, supported by a Supreme Court judgment M/S. Magma Leasing & Fin. Ltd. & Anr vs Potluri Madhavilata & Anr. The OP emphasizes that the complaint's subject matter pertains to a commercial transaction, and given that the complainant is an advocate, there is no assertion of personal use.
(ii) The complainant's admission of defaulting in the payment of monthly EMIs indicates outstanding dues owed to the OP’s company, and the actions taken by the OP are deemed lawful. There is no concrete evidence of forcible repossession; on the contrary, the repossession was executed peacefully, with the complainant's consent, and the authorities were duly informed. The OP's application to introduce additional evidence for a fair hearing was unjustly dismissed, leading to a miscarriage of justice. The documents that the OP sought to produce should have been provided by the complainant but were surreptitiously withheld to obtain favourable orders. The OP asserts that the defaulter in a loan cannot exploit their own wrongdoing, and lenders should not be penalized under these circumstances.
(iii) The OP asserts that ample opportunities were provided for the complainant to make regular payments, which were not seized. Instead, the complainant allegedly filed the complaint with hidden facts to gain wrongful benefits. The suppression of crucial facts and documents amounts to deceiving the court and is reason enough for the dismissal of the complaint. The OP argues that the complainant does not qualify as a consumer within the definition stated in Section 2(1)(d) of the Consumer Protection Act, 1986. OP denies allegations of service breach by the complainant and asserts that the complainant hasn't furnished any documentary evidence to prove the OP's calculated amount as excessive and contrary to RBI guidelines. Moreover, the OP states that disputes related to interest rates are beyond the scope of consumer disputes, and the OP should not be required to compensate for a contested amount, which adheres to the agreement terms.
(iv) The complainant is noted to be a chronic defaulter of installment payments, engaging in late and partial payments. These actions have resulted in additional delayed payment charges and accrued overdue charges, thus violating the agreement's terms. As such, the complaint is deemed not maintainable and should be dismissed. The issues raised in the complaint involve questions of both facts and law, necessitating evidence deposition and trials, which can only be appropriately conducted by a civil court. The forums have not taken into account that OP never received any alleged legal notice from the complainant. Rather than repaying the dues as agreed in the loan agreement, the complainant has initiated the complaint with false allegations, seemingly to delay the proceedings initiated by the OP for selling the vehicle. The OP asserts their legitimate right to repossess and sell the vehicle to recover their dues, emphasizing the complainant's failure to repay the loan as agreed. The complaint is portrayed as a tactic adopted by the complainant to defraud the OP by misleading the forum with false statements.
(v) In compliance of the order dated 20.06.2023, the OPs filed an affidavit on 30.06.2023 showing the said JCB’s selling price.
We have carefully gone through the order of State Commission as well as District Forum. District Forum has stated that it is impermissible for the money lender/financier/banker to take possession of the vehicle for which loan is given, by use of force. District Forum observed that contents of notice to Police show that they have given notice to concerned police about seizure of vehicle of complainant, but not to the complainant. Financier has to give mandatory notice prior to seizure. Respondents have not produced any documents to show that they have given a notice to complainant before seizing the vehicle. Relying on various judgments of Hon’ble Supreme Court & High Court, the District Forum observed that even though the hire purchase agreement may give right to take possession of the vehicle, the money lenders/financial institution/banks have no power to take the possession by use of force and have to follow the statutory remedy which may be available under the law. District Forum, after taking note of various case laws, have concluded that act of the respondents clearly establishes deficiency in service on their part towards complainant. District Forum on examination of receipts EX. P1 to P18 have concluded that complainant had paid Rs.11,70,000/- (rounded) to respondent towards loan instalment amount, hence he is entitled for the said amount. District Forum further states that as per statement of the complainant, he had purchased the JCB on 31.03.2013, respondents seized it on 19.08.2014, accordingly, the complainant used the said JCB for more than one and half year, hence it is just and proper to reasonable deduction out of said amount, accordingly the District Forum ordered that complainant is entitled to recover Rs.8,77,500/- towards compensation for deficiency in service from the Respondents.
The State Commission in its order states “On perusal of the impugned order it is seen that complainant availed loan for purchase of JCB and that there was a hypothecation agreement between the parties. It is the contention of the complainant that he has repaid loan, however, it is denied by the appellant/OP. The matter in issue is regarding seizure of the vehicle without issuing notice to the complainant herein. District Forum on looking to the grounds urged as well as documents placed before it came to the conclusion that the vehicle was seized by the appellant herein without issuing any notice and in violation of provisions of SARFAESI Act. Therefore, there is violation of hypothecation agreement. The seizure of the vehicle without notice is not just and proper. In that view of the matter the District Forum justified in directing OPs to pay sum of Rs.8,77,500/- along with cost thereon. We do not find any irregularity and illegality in the impugned order and the appeal retires to be dismissed.”
Although the District Forum has given a detailed well-reasoned order, duly addressing various contentions raised by the OP and taken note of relevant case laws, it has not specifically mentioned as to how the figure of Rs.8,77,500/- was arrived towards compensation for deficiency in service. The District Forum has stated that the complainants have paid Rs.11,70,000/- (rounded) to the Respondent towards loan instalment amount, hence, he is entitled for the said amount. As the complainant used JCB for one and a half years, hence, reasonable deduction out of the said amount. Hence, probably the amount of Rs.2,92,500/- has been deducted as depreciation, for use of JCB by the complainant for about one and a half years, from Rs.11,70,000/- and arrived at figure of Rs.8,77,500/- as compensation. In the present case the original price of the JCB is Rs.24,54,799/-, even if we go by the India Motor Tariff Method of calculating depreciation, the depreciation for vehicles exceeding one year but not exceeding two years is calculated at 20% (for fixing IDV). Hence, in the present case, if 20% depreciation is taken for use by the complainant for a period exceeding one year but not two years, it comes to Rs.4,90,959/-. Moreover, in the present case, the complainant has paid Rs. 4,27,823/- as margin money and only a balance was financed by the OP. Hence, in a way, he is losing Rs.7,20,323/- for use of the JCB for the period upto 19.08.2014. As the vehicle was re-processed and sold by the OP and entire proceeds have been retained by the OP, the complainant is entitled to get the depreciation value of the vehicle. Hence, the award of amount of Rs.8,77,500/- by the District Forum, and as confirmed by the State Commission is just and reasonable.
Accordingly, we find no merit in the Revision Petition. The order of the State Commission is upheld. Accordingly, the Revision Petition is dismissed. Parties to bear their respective costs.
The pending IAs in the case, if any, also stand disposed off.