H.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION, SHIMLA.

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FIRST APPEAL NO.377/2007.

DATE OF DECISION: 02-03-2009.



In the matter of:



1. Mahindra & Mahindra Financial Services Limited, Gateway Building, Apollo Bunder, Mumbai 400 001, through its Managing Director,

2. Mahindra & Mahindra Financial services Limited, SCO 54-55, Sector 9-D, Chandigarh through its Regional Legal Officer.

3. Mahindra & Mahindra Financial Services Limited, NH-21, Lunapani, PO Bhangrotu, Tehsil Sadar, District Mandi, H.P. 175 021 through its Manager.

… … Appellants.



Versus



1. Nashib Chand son of Chote Lal, Village Rageyana, P.O. 53 Miles, Tehsil and District Kangra, H.P.

2. Himachal Tractors & Automobiles, Man Pul Hoshiarpur Road, Nadaun, District Hamirpur, H.P. through its Manager/Proprietor.

… … Respondents

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Hon’ble Mr. Justice Arun Kumar Goel (Retd.), President.

Hon’ble Mrs. Saroj Sharma, Member.



Whether approved for reporting? Yes



For the Appellant: Mr. D.N. Sharma, Advocate, Advocate

Vice Mr. Rahul Mahajan, Advocate.

For the Respondents. Mr. Rakesh Kumar Dogra, Advocate,

For respondent No.1.

None for respondent No.2.

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O R D E R



Justice Arun Kumar Goel (Retd.), President (Oral),





1. This case shows that how the appellants as financiers when decide to indulge into unfair trade practice vis-à-vis a loanee who had obtained finance from them can act in a most highhanded, unjust, unfair as well as illegal manner. We are constrained to make this observation keeping in view of the fact that so long the writ of Constitution runs in India, the rule of law has to prevail in the civil society. All laws as well as contracts including their terms have to be always reasonable, just and fair. We are also aware that when rights of parties are fructified under a contract or hire purchase agreement placed on record by the appellants, they have to be governed by those.



2. However, the question that needs determination is, can litigants like appellants be permitted to say that they will overlook either the legal provisions or give a complete go-by to the statutory law or the law settled by the Hon’ble Supreme Court in this behalf. It hardly needs to be clarified here that the law as laid down by the Hon’ble Supreme Court is the law of the land as per Article 141 of the Constitution of India.



3. Admitted facts of this case are that the appellants are the financiers and they had financed a tractor that was purchased by respondent No.1. From the complaint file, it is established beyond any shadow of doubt that finance was provided only in the sum of Rs.2,16,000/- by the appellants whereas respondent No.1 had paid Rs.90,000/-. Despite this established as well as admitted position, appellants claiming themselves to be the owners of the vehicle in question in terms of the agreement of hire purchase, repossessed the tractor in question by use of force by deploying 5-6 persons who not only misbehaved with respondent No.1, but threw him down the tractor. This position according to us is clearly established and proved from the affidavits of S/Sh. Suman Kumar, Arvind Kumar, besides that of respondent, Nasib Chand.



4. Before proceeding further it may also be mentioned that a sum of Rs.2,16,000/- was repayable with interest in 47 monthly instalments in the sum of Rs.6702/- per month. According to the appellants, there was default in repayment of instalments, and being unable to clear the same, it was respondent No.1 who himself surrendered the tractor and averments made in the complaint to the contrary were seriously disputed being incorrect.



5. We shall first deal with the legal position as to whether the appellants as financiers were owners or not of the vehicle under law as was seriously pleaded on their behalf. As per provisions of the Hire Purchase Act, which never came into force and now stands repealed, appellants have to be the owners and respondent No.1 to be the hirer of the financed tractor in question. Best evidence to have strengthened the alleged claim of the appellants was the Registration Certificate of the tractor in question. There is no material placed on record by the appellants. Thus, we are constrained to draw adverse inference against them. Nothing could be pointed out at the time of hearing from record to show that the financier was the registered owner of the financed tractor.



6. Another very intriguing and irritating aspect of this case is that the vehicle after having been repossessed on 12.1.2005 with force was disposed of in post haste on 14.1.2005, for Rs.90,000/- by the appellants. This action of the appellants is not only arbitrary, illegal and unreasonable besides being contrary to the well settled position of law, needs to be deprecated in the strongest possible terms.



7. In this behalf we are of the view that the so called hire purchase agreement on which great emphasis was laid on behalf of the appellants at the time of hearing, is nothing but a simple loan agreement. As such, on the strength of the terms thereof, appellants cannot be allowed to use extra constitutional and/or illegal means in repossessing the vehicle. Though this position was specifically denied by learned Counsel for the appellants. As according to him on being unable to pay the defaulted instalments, respondent No.1 wilfully handed over the possession of the tractor. This plea is being noted to be rejected.



8. While dealing with an identical situation in the case of Manager, ICICI Bank Ltd. Versus Prakash Kaur & Ors., AIR 2007 SUPREME COURT 1349, Hon’ble Supreme Court has held that the recovery of bank loans or seizure of vehicles could be done only through legal means and the banks cannot employ goondas to take possession by force. Relevant observation made in this behalf by the Hon’ble Supreme Court is as under:-



“18. Before we part with this matter, we wish to make it clear that we do not appreciate the procedure adopted by the Bank in removing the vehicle from the possession of the writ petitioner. The practice of hiring recovery agents, who are musclemen, is deprecated and needs to be discouraged. The Bank should resort to procedure recognized by law to take possession of vehicles in cases where the borrower may have committed default in payment of the instalments instead of taking resort to strong arm tactics”.



9. As already observed, there is no evidence placed on record by the appellants to show that the vehicle was purchased in the name of the financier who had provided Rs.2,16,000/-. We further hold that in case the tractor had been purchased in the name of the financier, it would have been registered in its name or atleast bill would have been raised in its name. As such, adverse inference is being drawn for non production of material to that effect and further no benefit can be derived by the appellants from the hire purchase agreement which was heavily relied upon by their learned Counsel during the course of hearing for allowing this appeal and setting aside the impugned order.



10. In Tarun Bhargava Versus State of Haryana and another, AIR 2003 PUNJAB AND HARYANA 98, in almost identical facts as are in the appeal before us, the Hon’ble Punjab and Haryana Court has held that transaction was a loan transaction and not hire purchase transaction even though described as such in the agreement. And the hypothecation of goods by way of loan agreement, rights of creditor like appellant before us were held akin to those of hypothecatee who cannot be allowed to take possession of security without intervention of Court. Clause authorizing a financier like appellants in the appeal before us to repossess the vehicle in case of default was held to be void, and the financier was held to be liable for being criminally prosecuted.



11. The vehicle having been repossessed, as is the situation before us, came up before the Orissa State Commission in the case of Birabhadra Sahoo Versus Managing Director, Shriram City Union Finance Ltd. & Ors., III (2004) CPJ 306, and the State Commission held that in such a situation, this was a case of clear cut unfair trade practice on the part of the financier.



12. National Commission in the case of Shriram Transport Finance Co. Ltd. Versus Surekha Khanoji Khemnar, 2006 (1) CLT 379, while dealing with taking over of the hypothecated vehicle in the case of a hire purchase agreement, as has been held by us, has held that the hypothecatee could not take possession of the security without intervention of the Court and direction given regarding release of vehicle to the complainant by the State Commission and to pay the monthly instalments to the Bank were upheld.



13. In the instant case before us, without giving a reasonable opportunity to respondent No.1 to liquidate the amount in question, within two days of the repossession of the vehicle it was sold. Where was the necessity of having sold the vehicle in this manner by the appellants, could not be explained by their learned Counsel. This action of the appellants in our opinion was nothing but abuse of their powers as a high contracting party against the helpless loanee like respondent No.1.



14. We are further of the view that after having repossessed the vehicle, it was necessary as well as just and proper for the appellants to have called upon respondent No.1 to liquidate the instalments which were in default and in case he failed to do the needful then to have proceeded with the sale of the hypothecated Tractor. Admittedly, there is nothing on record to suggest anything in that behalf. Not only this, even after adverting to sale, appellants should have put the respondent No.1 to notice regarding offer received by them in auction and in case he had got any better buyer he should be produced with the cash amount. This was also not done by the appellants, why, could not be explained on their behalf.



15. Similarly before putting the legally repossessed vehicle to sale, a financier must get it evaluated. There is no such material on record. The manner in which the sale of the tractor took place shows, that the same was done with some ulterior motive with post haste within two days of its repossession. Learned Counsel could not justify such action of his clients when specifically confronted by us at the time of hearing.



16. What falls from the above discussion is that the appellants did everything under the table in a hush hush manner thus giving complete go-by to transparency. Merely because there was default in repayment of instalments does not operate as a licence in favour of the appellants to commit such acts which are either contrary to law or are not warranted by law.



17. Faced with this situation, great emphasis was laid on behalf of the appellants that the vehicle was repossessed in case of default of instalments after it was handed over by the respondent, therefore, all the pleas to the contrary are factually incorrect and are purely after-thought. This plea is being noted simply to be rejected. In case this was the situation, then the appellants would have certainly obtained some writing in that behalf. This was admittedly not done by the appellants and no reason for this omission could be pointed out.



18. In the circumstances of this case, we are of the view that this is a case of forcible repossession by the appellants by use of illegal and unauthorized means, and they cannot enforce the hire purchase agreement relied upon and referred to on their behalf by their learned Counsel, including any action for recovery of the amount if any. Question of return of tractor would have been considered in case the appellants had allowed some opportunity to respondent No.1 to repay the defaulted instalments before its sale. And even after sale, they having informed the respondent No.1 that he should bring a better buyer than the offer received by them before confirming the sale in favour of the purchaser. In our opinion, it could only be confirmed on the failure of respondent No.1 to have either refused to bring a better buyer and/or on his having shown his inability to do so. That is also not the case of the appellants. The so called hire purchase agreement is heavily loaded against respondent No.1 and in favour of the appellants. Therefore, no benefit can be derived from such terms by the appellants.



19. No other point was urged.



In view of the aforesaid discussion, we find no merit in this appeal which is accordingly dismissed subject to what has been said in the preceding paras, leaving the parties to bear their own costs.



All interim orders passed in this appeal from time to time shall stand vacated forthwith.



Learned Counsel for the parties present have undertaken to collect authenticated copy of this order free of cost from the Court Secretary as per Rules and office is directed to send the same in the like manner to respondent No.2 by post.



Shimla,

March 02, 2009.





( Justice Arun Kumar Goel ) (Retd.)

President.





/BS/ ( Saroj Sharma )

Member.