Ramdas Urkudaji Gajbhiye vs L & T Finance Ltd

Challenge in this Revision Petition, under Section 21(b) of the Consumer Protection Act, 1986 (for short "the Act'), by the Complainant, is to the order dated 23.12.2014 passed by the State Consumer Disputes Redressal Commission, Maharashtra Circuit Bench at Nagpur (for short "the State Commission") in First Appeal No.795 of 2009. By the impugned order, the State Commission has overturned the order dated 28.10.2009, passed by the Additional District Consumer Disputes Redressal Forum, Nagpur (for short "the District Forum") in Complaint No.78 of 2009 and has dismissed the Complaint filed by the Petitioner.

In the first instance, while allowing the Complaint filed by the Petitioner, alleging deficiency in service on the part of the Respondent, namely, L & T Finance Limited (for short "the Finance Company"), the sole Opposite Party in the Complaint, in repossessing and auctioning the Tractor to the Petitioner, for which the Finance Company had granted financial assistance to the Petitioner for a total sum of ₹3,20,000/-, under the 'Kisan Gaurav Scheme', for purchase of the Tractor, costing to ₹5,10,000/-, without following due process of law, the District Forum had directed the Finance Company to refund to the Complainant a sum of ₹1,90,000/-, the amount paid by him from his own sources, for the purchase of the Tractor; a lump sum compensation of ₹50,000/- for the mental agony and harassment suffered by him, and costs, quantified at ₹1,000/-, after adjusting an amount of ₹22,782.33p. The District Forum had also directed that if the amount, so arrived at, was not remitted to the Petitioner within one month from the date of its order, it would carry interest @12% p.a. from 23.06.2009 till realization.

As there is no dispute with respect to the grant of the said financial assistance; execution of a Loan-cum-Hypothecation Agreement; the repossession and auction of the Tractor in question, it is unnecessary to burden the order with narration of other facts, leading to the filing of the Complaint. It would suffice to note that the main grievance of the Petitioner in the Complaint was that the Finance Company had forcibly taken possession of the Tractor and had also auctioned the same without any intimation to him at both the stages. Hence, the short question for consideration is whether, on facts at hand the Finance Company had followed the due process of law, as enunciated in a catena of decisions on the point, including by the Hon'ble Supreme Court, while repossessing and auctioning the hypothecated Tractor?

We have heard learned Counsel for the parties and perused the documents placed on record at the time of filing of this Petition and some additional documents/information obtained by us during the course of these proceedings.

Pressing into service a hand written note, purportedly written by the Petitioner to the Insurance Company on 20.01.2009, pursuant to the issue of default notice, dated 15.01.2009, issued by the Insurance Company, calling upon him to pay an installment, amounting to ₹41,375/-, due on 25.11.2008, it is asserted by learned Counsel appearing for the Insurance Company that the possession of the Tractor having been voluntarily surrendered by the Petitioner to the Finance Company, there was no necessity of issuing a fresh notice to him for surrender of the Vehicle. Having carefully perused the said note, we are unable to persuade ourselves to agree with the learned Counsel. Apart from the fact that the very receipt of the letter dated

15.01.2009 was disputed by the Petitioner, even assuming for the sake of argument that it was so, yet by the said letter the Petitioner was only called upon to pay a sum of ₹41,375/-, stated to be due as on 25.11.2008. In the said letter there is not even a whisper, threatening re-possession of the vehicle in the event of non-deposit of the said amount. It is only in the nature of a reminder to the Petitioner that "as per the terms of the said agreement, compensation charges @ 36% p.a. on the loan are payable by him from the due date till the date of payment". It is important to note that within a span of less than 15 days, i.e. on 28.01.2009, the Petitioner was called upon to pay a sum of ₹2,26,176/- within seven days from the date of receipt of said notice, as compared to a demand of ₹41,375/- on 15.01.2009.

On a pointed query about the disproportionate hike in the demand within a short span of time, viz. from 15.01.2009 to 28.01.2009, learned Counsel appearing for the Finance Company has clarified that the increase in the amount was on account of recall of the entire loan, on account of default in the payment of the installment by the due dates. However, admittedly, there is no communication on record indicating recall of the loan. On the contrary, the learned Amicus Curiae, while referring to the repayment schedule, has highlighted the fact that out of a total amount of ₹2,76,000/- due towards installments, as on 25.11.2008, a sum of ₹2,37,600/- had already been paid by the Petitioner to the Insurance Company, leaving a balance of ₹38,400/- payable to the Insurance Company. As noted above, ultimately, the amount got inflated to ₹2,26,126/- as on 28.01.2009, probably because of levy of a very high rate of interest @ 36% p.a., on the loan under the 'Kisan Gaurav Scheme'. We really wonder whether the Scheme was meant to enhance the 'Gaurav' of the Kisan or to lead him to insolvency. We say no more on this aspect.

Now adverting to the nub of the matter, in order to satisfy ourselves as to whether or not the Insurance Company had adhered to the legally acceptable procedure, for repossession and the auction of the Vehicle, vide order dated 17.02.2017, we had asked the Finance Company to place on record: (i) the letter of foreclosure of the loan; (ii) intimation about re-possession of the Tractor; (iii) presale notice dated 28.01.2009, whereby a sum of ₹2,26,126/- was demanded from the Petitioner, with complete break up of the said amount and the rate of penal interest charged; and, (iv) the procedure followed before putting the Tractor in question to auction on 19.02.2009. After several opportunities, the Finance Company has placed on record certain documents.

We are constrained to observe that none of the documents so filed, throw any light as to when the loan was foreclosed/recalled and that the Petitioner was put to notice either before repossessing the vehicle or putting it to auction. It is candidly stated by learned Counsel appearing for the Finance Company that as per his instructions, no other document is available with the Finance Company.

In light of the afore-noted factual matrix, as emerging from the documents on record, we have no hesitation in reaching to the conclusion that the Insurance Company has failed to prove that it had followed the due process of law, as enunciated in a catena of decisions (See: ICICI Bank v. Prakash Kaur & Ors.(2007) 2 SCC 711 and Citicorp Maruti Finance Ltd. vs. S. Vaijayalaxmi - (2012) 1 SCC 1, In that view of the matter, we are convinced that the State Commission has committed material irregularity in reversing the order passed by the District Forum, issuing the afore-stated directions to the Finance Company.

Consequently, the Revision Petition is allowed; the impugned order is set aside and that of the District Forum is restored with a direction that the amount due to the Complainant in terms of the order of the District Forum shall be remitted by the Insurance Company directly to him, by means of Demand Draft drawn in his favour, within four weeks from the date of receipt of copy of this order. Needless to add that while remitting the said amount, it will be open to the Finance Company to account for a sum of ₹44,000/-, which has admittedly been received by the Complainant. The Complainant shall be entitled to costs, quantified at ₹15,000/-.

Before parting with the case, we place on record our appreciation for the valuable assistance rendered by the learned Amicus Curiae. A further sum of ₹10,000/- shall be paid to her by the office as honorarium.

The Revision Petition stands disposed of.