Before the District Consumer Disputes Redressal Forum, MandiH.P.



Complaint Case No.177/2008

Date of Institution 22-7-2008

Date of Decision 30-3-2009



Lekh Raj son of Sh. Biri singh resident of village and Post Office Batheri, Tehsil Padhar , District Mandi, H.P.





…Complainant

V/S

1 Mahindra and Mahindra Finance Corporation Ltd Branch Office at Nerchowk Tehsil Sadar, District Mandi, H.P..

2. Mahindra and Mahindra Finance Corporation Ltd Head Office Bombay through its Managing Director



…..Opposite parties



For the complainant Sh.Desh Raj Sharma , Advocate

For the opposite parties Sh.Rajesh Joshi, Advocate





Complaint under Section 12 of the

Consumer Protection Act, 1986.

ORDER.



This order shall dispose of a complaint under Section 12 of the Consumer Protection Act, 1986( hereinafter referred to as the “Act”) instituted by the complainant against the opposite parties. The case of the complainant is that he purchased a Mahindra and Mahindra Pick up jeep bearing registration No. HP-65-0964 in the sum of Rs.4,26,900/- on 23-8-2006. Out of the above amount , the complainant had paid Rs.66,900/- and rest of the amount of Rs.3,60,000/- was financed by the opposite parties and hypothecation agreement to this effect was executed between the complainant and the opposite parties. The vehicle was registered in the name of the complainant. As per the hypothecation agreement the amount was to be repaid in monthly instalments of Rs.11,826/ each payable by the complainant to the opposite parties. The complainant had regularly paid the instalments to the opposite parties till 24-11-2007 but thereafter due to some financial problems and failure of the business , failed to repay the regular instalments and the opposite parties illegally and forcibly with the help of some muscle men snatched the vehicle on 7-7-2008 behind the back of the complainant. The complainant thereafter visited the office of the opposite parties and requested them to receive the entire due instalments and for handing over the possession of the vehicle to him but they refused to do so and threatened the complainant by further selling the vehicle in question . It has been alleged by the complainant that due to forcible seizure of his vehicle , he had sustained loss due to the act of the opposite parties and this amounts to deficiency in service and also unfair trade practice . The complainant had suffered a loss of Rs.30,000/-.On these allegations, the complainant had sought a direction to the opposite parties to receive the due instalments , to hand over the possession of the aforesaid vehicle to him and also to pay Rs.30,000/- on account on harassment apart from costs of litigation.

2. The opposite parties resisted the complaint by raising preliminary objections that this Forum has no jurisdiction to entertain and try the present complaint by virtue of the ouster clause incorporated in the agreement , that the complainant has not come to the Forum with clean hands, that the complainant is estopped by his act and conduct from filing the present complaint , , that the complainant has no cause of action against the opposite parties to institute the complaint .On merits , the opposite parties had admitted that the vehicle was financed by them . It has been averred that the instalments were to be paid on 28th day of each month as per agreement Annexure A-1. It had been denied that the complainant had been regular in paying the instalments.. It has further been contended that the notices were sent to the complaint but he failed to comply with the averments made in the notice and hence he has surrendered the vehicle to the opposite parties . The opposite parties had issued a pre sale notice to the complainant on dated 9-7-2008 annexure A-2 after the surrender of the vehicle by the complainant but he failed to comply the same. The complainant had been issued time bond notices dated 12-2-2008 and 3-6-2008 Annexures A-4 and A-5. Thereafter the value of the vehicle was got assessed through a registered evaluer and the same was found to be valued at Rs.2.45,000/- as per Annexure A-6. Thereafter quotations were called and the vehicle was sold for Rs.2,45,000/- as per Annexure A-7. Copy of the surrender letter has been annexed as A-8. The opposite parties have denied that the complainant had visited them . The contents of para No.5 to 7 of the complaints have been denied being wrong The opposite parties had prayed for dismissal of the complaint qua it.

3. The complainant had filed rejoinder reiterating the contents of the complaint and denying those contrary to the complaint.

4. We have heard the ld. counsel for the parties and have carefully gone through the record.

5. The ld. counsel for the complainant had argued with full force that the opposite parties through their representative seized the vehicle of the complainant and taken it away behind his back which act on the part of the opposite parties tentamounts to deficiency in service and the complainant is entitled for re-possession of the vehicle apart from compensation and cost of litigation.

6. On the other hand , the ld. counsel for the opposite parties had strenuously argued that since the complainant had not paid the instalments regularly as alleged by him in the complaint , therefore , he had surrendered the vehicle to the employee of the opposite parties and as such there is no deficiency in service on their part.



7. Therefore, the matter has to be scrutinized and examined with respect to the aforesaid contentions of the ld. counsel for the parties.



8 Before deciding the real dispute between the parties , we deem it proper to decide the preliminary objection regarding jurisdiction taken in preliminary objection which is hotly argued during the course of arguments . The ld counsel for the opposite parties had raised preliminary objection that this forum has no jurisdiction to try and entertain the present complaint .To decide this point it is necessary to go through the Section 11(2) of the Act first which reads as



follows:-

(2) A complaint shall be instituted in a District Forum within the local limits of whose jurisdiction,-

(a) the opposite party or each of the opposite parties, where there are more than one, at the time of the institution of the complaint, actually and voluntarily resides or carries on business or has a branch office or personally works for gain or

(b) any of the opposite parties, where there are more than one at the time of the institution of the complaint, actually and voluntarily reside or carries or business or has a branch office, or personally works for gain provided that in such case either the permission of the District Forum is given ,or the opposite parties who do not reside, or carry or business or have a branch office or personally work for gain as the case may be, acquiesce in such institution; or

(c) the cause of action, wholly or in part , arises.



From a plain reading of section 11(2)(a) of the Act it is ample clear that this Forum has jurisdiction to try and entertain the complaint because at the time of the institution of the complaint, the opposite party No.1 is carrying on its business within the jurisdiction of this Forum as the branch office of the opposite party No.1 exists at Nerchowk ,District Mandi which fact has not been denied by the opposite parties in their reply . Hence , it is held that this Forum has jurisdiction to try the present complaint and the objection raised by the opposite parties is hereby rejected.

9. The next question which requires determination in this complaint is whether the opposite parties are entitled to repossession of the vehicle and whether the financer is invested with the right to repossess the vehicle by use of force in case of default in payment of instalments. As per the complaint the vehicle was taken away on 7-7-2008 without his consent behind his back by the opposite parties with the help of some muscle men . On the other hand the case of the opposite parties is that the complainant was not regular in the payment of the instalments and , he voluntarily surrendered the vehicle to their employee and also handed over the letter of surrender to him. The opposite parties had also placed on record photocopy of Surrender letter dated 8-7-2008 whereby Sh. Biri Singh surrendered one vehicle voluntarily to the employee of the opposite parties stating therein that due to default in the payment of seven instalments , the vehicle was being surrendered. The perusal of the alleged surrender letter dated 8-7-2008 Annexure A-8 adduced in evidence by the opposite parties depicts that the same has not been signed by the complainant and in fact it had been signed by one Sh. Biri Singh who has no privity of contract with the opposite parties. Moreover neither the registration number nor any description of the vehicle has been mentioned in the surrender letter. Therefore, no credence can be attached to the surrender letter adduced in evidence by the opposite parties . No other evidence has been placed on record by the opposite parties to show that the vehicle was surrendered voluntarily by the complainant himself . Therefore, it can safely be held that the opposite parties have taken the possession of the vehicle forcibly by taking the assistance of third persons without intimating the complainant. Now the question which arises for consideration before this Forum is as to whether the opposite parties had a right to re-possess the vehicle in case of default of payment by use of force. The Hon’ble Supreme Court in the case titled Manager ICICI Bank Ltd vs Prakash Kaur and others AIR 2007 Supreme Court 1349 had held that recovery of the Bank Loans or seizure of the vehicles could be done only through legal means and the Bank cannot employ goondas to take the possession by force. In the order passed by Hon’ble National Commission in Citicorp Maruti Finance and ltd vs S.Vijayalaxmi , III(2007)CPJ-161(NC) it has been held by the Hon’ble National Commission that the recovery of the loan or seizure of vehicle could be done only through legal means .and the Banks cannot employ muscle men to take the possession by force. In para No.23 and 24 of the aforesaid order it has been held as under:-

“23. From the aforesaid law laid down by the Apex Court as well as the High Court of Delhi, it is clear that even though the hire purchase agreement may give right to take possession of the vehicle , money lenders/ financial institution/ banks have no power to take possession by use of force and have to follow the statutory remedy which may be available under the law.









24.May be that the procedure of law is slow but that is no excuse for use of force for repossessing the vehicle. If the contention of the petitioner that

it can take possession of the vehicle by means of force is accepted ,the rule of jungle would prevail and might would be right.”

In the present case also, it cannot be said that the opposite parties have taken the possession of the vehicle by following the statutory remedy available to them under the law and since the vehicle had been taken into possession by use of force , it was a clear cut case of unfair trade practice on the part of the opposite parties in view of the decision of Hon’ble National Commissioner cited supra.

10. The next question which requires consideration is that when the repossession of the vehicle is held to be unfair what relief should be given to the complainant . It is the case of the opposite parties that the vehicle had been sold after issuance of pre sale notice to the complainant because he had not turned up despite service of notice. The opposite parties in support of their version had placed on record photostat copies of the legal notices dated 9-7-2008 Annexure A-2,dated 12-2-2008 Annexure A-4,dated 8-6-2008 Annexure A-5 , According to the opposite parties the market value of the vehicle was got assessed through registered valuer on 18-7-2008 at Rs.2,45,000/-. Photocopy of valuation certificate of Er Harmeet Singh Kalsi dated 18-7-2008 had been adduced in evidence as Annexure A-6 . However the aforesaid valuation report is not supported by any documentary evidence to show that on what basis and in what manner the value of the vehicle has been assessed at Rs.2,45,000/-. There is nothing in the report that what procedure was adopted by the valuer in assessing the value especially in view of the fact that in the valuation report it has been mentioned that the vehicle was in good condition. Admittedly the complainant was not associated at the time of the assessment of the value of the vehicle. Moreover neither the original valuation report nor the affidavit of the Evaluer Er. Harmeet Singh Kalsi has been placed on record by the opposite parties in support of the valuation report. Therefore, no reliance can be placed upon the aforesaid valuation report for assessing the value of the vehicle on the date of sale .

11. The ld. counsel for the complainant next contended the complainant was willing to pay the due instalments but despite that the opposite parties have sold the vehicle worth Rs.4,26,900/- at a throw away price of Rs.2,45,000/- to the detriment of the complainant without associating him .He further contended that the opposite parties had not adopted a transparent procedure in selling the vehicle . Therefore, at this stage, the question which arises for determination by this Forum is as to whether the opposite parties were justified in selling the vehicle in the sum of Rs.2,45,000 and whether the sale of the vehicle had been a conducted after adopting transparent procedure. The opposite parties had not specifically mentioned the reserve price of the vehicle fixed at the time of the auction of the vehicle and had not filed any documentary evidence with respect to the proceedings of the auction of the vehicle to let this Forum know as to what was the reserve price of the vehicle fixed at the time of the auction of the vehicle and what procedure was adopted by the opposite parties for selling the vehicle. As such, an adverse inference has to be drawn against them for non placing on record the material documents.





12. At this juncture , it would be relevant to refer to the case law Citicorp case cited supra where in the Hon’ble National Commission had taken note of the Code of Conduct prescribed by the petitioner before taking the possession of the vehicle and the Hon’ble National Commission also referred to relevant portion of the Code of Conduct which gives an elaborate procedure before taking the possession of the vehicle. In the aforesaid judgment it has been held in para no. 44 as under:-

“44. It is to be stated that in this auction the consumer whose vehicle is seized has no voice or role to play. In any case , if an opportunity is given to the consumer, when his vehicle is likely to be sold at a particular price and option should be given to him to purchase the vehicle at the said price, then it is a transparent procedure. The procedure which is stated in the Conduct Book may appear to be attractive, but in practice it is not followed and causes loss to the consumer- because in many cases the bidders purchase vehicle at a throw away price. ”



13. In the present case , there is no evidence on record to suggest as to whether there is any procedure prescribed by the opposite parties for selling the vehicles in public auction and if yes whether the prescribed procedure has been adopted by the opposite parties during the sale of the vehicle in question. Therefore, in the absence of material evidence on record , it cannot be said that any transparent procedure had been followed by the opposite parties at the time of auction of the vehicle in question. Moreover ,there is no material on record to suggest that any opportunity was granted to the complainant to purchase the vehicle at the sale price of Rs.2,45,000/-Similarly there is nothing on record to suggest as to whether any opportunity was granted by the opposite parties to the complainant to bring prospective buyers to purchase the vehicle over and above the price of RS.2,45,000/-It is the admitted case of the opposite parties that a sum of Rs.3,60,000 /- had been advanced for the purchase of the vehicle and the its value was Rs.4,26,900 /-. However, no explanation has been put forth by the opposite parties as to why the vehicle was sold for a meagre sum of 2,45,000/only within a period of about two years from the date of purchase which shows unfair trade practice adopted by the opposite parties by selling the vehicle at throw away price of Rs.2,45,000/- especially in view of the fact that after seizure of the vehicle the complainant was willing to pay the due instalments but despite that the opposite parties have sold the vehicle. It is hard to believe that the value of the vehicle would be decreased to the extent of Rs.1,81,900 /-( RS.4,26,900 /- minus Rs.2,45,000/- = Rs.1,81,900 /-)within a period of two years from the date of its purchase .



14 Now the point left for consideration is that what should be the value of the vehicle at the time of its sale by the opposite parties . In a case titled Magma Leasing Ltd vs Bharat Singh 1 (2007) CPJ-200 it has been held by the Hon’ble Delhi State Consumer Disputes Redressal Commission that in such cases cost of the vehicle shall be adjusted by depreciating the value at the rate of 5% per year in case of passengers vehicle and @ 10% per year in a case of commercial vehicle .Para No.10 and 11 of the order reads as under:-

“10.Whenever the financer chooses to take possession of the vehicle, it has to refund the contribution made by the person concerned after adjusting the unpaid instalment till the date of seizure of the vehicle and not beyond that as no person can be deprived of the amount contributed toward the purchase price of the vehicle. By giving loan amount of Rs.3,90,000/- against the cost of Rs.5,89 lacs , financier cannot be allowed recovery of post dated cheques as the vehicle against which loan was advanced had been seized and the consumer is no more in possession of the goods for which he had raised the loan.

11. In such a situation , financier has to adjust the value of the vehicle by way of depreciated value and the value at which it has auctioned or sold the vehicle. The value of such a vehicle cannot be fixed by the financier at its whims or caprice. Experience shows that one or two years old vehicles are sold at half or little more value to the known people or friends or for many other consideration. That is why we have taken a view that cost of the vehicle shall be adjusted by depreciated value @

5 % per year in case of passenger vehicle and @ 10% in case of commercial vehicle ”



15. In the present case , as per the admitted case of the parties , the vehicle in question was a commercial vehicle and the same was purchased by the complainant on 23-8-2006 in the sum of Rs. 4,26,900 /-The vehicle was seized by the opposite parties on 7-7-2008 and was sold for Rs.2,45,000/- to Sh.Santosh Kumar on 23-7-2008 as per Annexure A-9 .Therefore at the time of the sale , the age of the vehicle in question had not exceeded two years from the date of its purchase by the complaint . Hence the cost of the vehicle at the time of the sale has to be adjusted by calculating its market value by depreciating the amount at the rate of 20% ( i.e.10% per year) from Rs.4,26,900 /- i.e. the actual purchase price of the vehicle by the complainant Since the vehicle has been sold , therefore , no direction can be issued to the opposite parties to return the same to the complainant. Therefore, in the facts and circumstances of the case, it would be in the interest of justice if we direct the opposite parties to adjust the sale proceeds of the vehicle towards the satisfaction of the dues by calculating its market value by deducting 20% of the amount from Rs.4,26,900 /- i.e. from the purchase price of the vehicle instead of Rs. 2,45,000/- and to adjust Rs.66,900/- ,the margin money contributed by the complainant towards the price of the vehicle and also to adjust various amounts deposited by the complainant from time to time with the opposite parties towards the payment of the instalments after adjusting unpaid instalments till the date of seizure of the vehicle and not beyond that as the vehicle against which the loan was advanced had been seized and the complainant was no more in possession of the same for which he had raised loan as laid down by the Hon’ble Delhi State Consumer Disputes Redressal Commission in the case titled Magma Leasing Ltd vs Bharat Singh 1 (2007) CPJ-200, supra.





16. The complainant had claimed Rs.30,000/- as damages besides costs of litigation. In this respect, it would be relevant to mention here that the entire action of the opposite parties was illegal and arbitrary in nature and the complainant had suffered humiliation before his neighbours, friends and relatives and also suffered mental pain and agony besides loss of business . Therefore, in such circumstances an amount of Rs.10,000/- will be sufficient to meet the end of justice on this score and Rs.1500 /- as costs of litigation.



17. In view of what has been stated hereinabove, the complaint of the complainant is allowed against the opposite parties with directions as under:-

(i) The opposite parties are directed to adjust the sale proceeds of the vehicle towards the satisfaction of the dues by calculating its market value by deducting 20% of the amount from Rs.4,26,900/- i.e. the purchase price of the vehicle by the complainant instead of Rs.2,45,000/-and to adjust Rs.66,900/- ,the margin money contributed by the complainant towards the price of the vehicle and also to adjust various amounts deposited by the complainant from time to time with the opposite parties towards the payment of the instalments after adjusting unpaid instalments till the date of seizure of the vehicle . It is further directed that the after adjustment of the amounts as aforesaid, if it is found that any excess amount has been paid by the complainant , the same shall be refunded to him.

(ii) The opposite parties are further directed to pay Rs.10,000/- on account of harassment, mental agony , pain , loss of business and Rs.1500 /- as costs of litigation.

18 Copy of this order be supplied to the parties free of cost as per Rules.

19 File, after due completion be consigned to the Record Room.

Announced

30-3-2009 (Sushil Kukreja ) President