This revision petition has been filed by the petitioner M/s. Magma Fincorp Ltd. against the order dated 24.05.2012 of the State Consumer Disputes Redressal Commission, Punjab, (in short ‘the State Commission’) passed in FA No.434 of 2009.

2.      Brief facts of the case are that the petitioner entered into a hire purchase agreement with the respondent on 29.06.2006 for financing a vehicle to the respondent.  The loan amount was Rs.5,20,000/-, which was to be returned in 47 monthly instalments of Rs.14,750/-.  The vehicle was repossessed by the petitioner on 10.08.2008 alleging that there was an outstanding due against the respondent/complainant.  As stated by the petitioner pre-sale notice was sent to the respondent/complainant on 13.08.2008 with the information to the respondent that there is a dues of Rs.3,99,992.67 and the same should be paid within seven days. The vehicle was later on sold by the petitioner for Rs.4,20,000/-.  The respondent filed a consumer complaint being CC 08/451 on 16.09.2008 before the District Consumer Forum, Sangrur, (in short ‘the District Forum’).  The complaint was resisted by the petitioner/opposite party on the ground that the car was repossessed as per the terms and conditions of the hypothecation agreement as the complainant became defaulter of many instalments.  However, the District Forum allowed the complaint and ordered the vehicle to be released to the complainant along with a compensation of Rs.1,00,000/-.  It was also directed that if the vehicle has been sold, outstanding amount shall be adjusted from that amount and the blank cheques shall also be returned to the complainant. Both the parties preferred appeal against the order of the District Forum.  First Appeal No.434 of 2009 was filed by the petitioner herein and First Appeal No.232 of 2009 was filed by the respondent herein.  The State Commission dismissed the appeal filed by the petitioner and allowed the appeal filed by the respondent/complainant by directing the opposite party to pay lump sum amount of Rs.4,75,000/- to the complainant to be paid within a month.  It was also directed that if the amount is not paid within 30 days, it will carry an interest of 9% p.a. from the date of the order of the State Commission till actual payment. 

3.      Hence the present revision petition.

4.      Heard the learned counsel for both the parties and perused the record.  Learned counsel for the petitioner stated that the State Commission has awarded an amount of Rs.4,75,000/- as compensation to the complainant without any reason or any break up of Rs.4,75,000/-.  It is not clear as to how the figure of Rs.4,75,000/- has been arrived at.  Learned counsel stated that the vehicle was repossessed as the complainant was defaulter and it is totally legal to repossess the vehicle as per the hypothecation agreement.  There is no categorical finding of the State Commission that the vehicle was repossessed forcibly.  The learned counsel further stated that as per the provision of the hypothecation agreement the dispute was referred by the petitioner to the Sole Arbitrator, who has given his final award dated 13.01.2010 for Rs.5,501/- to be paid to the complainant only.  When the dispute has been resolved as per the agreement, there should not have been any occasion for the District Forum or the State Commission to pass any order in the consumer complaint. 

5.      Learned counsel for the petitioner stated that the State Commission and the District Forum cannot pass any order contrary to the law laid down by the Hon’ble Supreme Court in Civil Appeal No.1070 of 2006 (arising out of SLP (C) No.22535 of 2004) decided on 10.02.2006 titled “The Managing Director, Orix Auto Finance (India) Ltd. Vs. Shri Jagmander Singh and Anr.”, K.A. Mathai @ Babu & Anr. Vs. Kora Bibbikutty & Anr. (1996) 7 SCC 212 and Charanjit Singh Chadha & Ors. Vs. Sudhir Mehra, (2001) 7 SCC 417 wherein the Hon’ble Supreme Court has held that a financer has a right to repossess the hired vehicle on account of default made by the hirer in payment of instalments in terms of agreement and, therefore no offence can be made out against the finance company or the owner.

6.      Learned counsel for the petitioner further argued that the petitioner has followed the law in repossessing the vehicle as per the hire purchase agreement.  After the repossession, presale notice was sent on 13.08.2008, however, the respondent did not deposit the due amount and therefore, the vehicle was sold.  If the borrower does not deposit the due amount, the financier has the only option to recover the dues by repossessing and selling the vehicle. The learned counsel further argued that the parties are bound by the terms and conditions of the contract.  The State Commission has not appreciated this aspect. The petitioner has acted strictly in accordance with the provisions of the hypothecation agreement.    

7.      It was further argued by the learned counsel for the petitioner that the State Commission while passing the impugned order in the present case erred in holding that as per Section 13(2) of SARFAESI Act, 2002, 60 days’ notice is mandatory to the borrower in writing  whereas, the petitioner company is not a financial institution and is not covered under the provisions of SARFAESI Act, and therefore, the question of issuing notice under Section 13(2) of SARFAESI Act does not arise. 

8.      It was contended by the learned counsel that once the District Forum ordered release of the vehicle, there was no occasion for the District Forum to have granted a compensation of Rs.1,00,000/-.  Thus, both the fora below have erred in passing their orders. Learned counsel for the petitioner referred to the judgment of the Hon’ble Supreme Court in Suryapal Singh Vs. Siddha Vinayak Motors & Anr., SLP(Civil ) No.(s).5302/2012, decided on 21.02.012, wherein it has been observed:-

“Prima facie it appears that the three courts below erred in not considering the facts of the case in correct perspective.  Under the Hire Purchase Agreement, it is the financier who is the owner of the vehicle and the person who takes the loan retain the vehicle only as a bailee/trustee, therefore, taking possession of the vehicle on the ground of non-payment of instalment has always been upheld to be a legal right of the financier.”

9.      Learned counsel for the petitioner stated that the loan was given for Rs.5,20,000/-.  The respondent has paid Rs.3,11,720/-. The State Commission has committed error while observing that only Rs.2,08,280/- was required to be paid by the complainant against the loan.  The State Commission has not considered the interest part and has straightway deducted the amount paid by the complainant as instalments from the basic loan amount.  The fact is that loan was given for Rs.5,25,000/- and the same was to be refunded by the complainant in 47 monthly instalments of Rs.14,750/- each.  Thus, the total amount of Rs.6,93,250/- was to be paid by the complainant as repayment of loan.  If the amount paid by the complainant is deducted from this amount, then also the complainant has to give Rs.3,81,530/-.  Thus in awarding the lump sum amount of Rs.4,75,000/-, the State Commission has kept in view a wrong fact that the complainant was to give Rs.2,08,280/-, whereas the actual figure should have been Rs.3,81,530/-.  Thus, clearly the State Commission has wrongly awarded the huge lump sum amount of Rs.4,75,000/-.      

10.    On the other hand learned counsel for the respondent/complainant stated that the price of the vehicle was Rs.7,15,500/- and the loan was taken for Rs.5,20,000/-.  The respondent has paid Rs.3,11,720/-, which has been confirmed by the State Commission as admitted fact. Learned counsel pointed out that the remaining cost of the vehicle was borne by the complainant and the vehicle had been taken away by the petitioner, therefore, the money invested by the complainant has gone waste and he is unable to own the vehicle. It was further argued by the learned counsel for the respondent/complainant that the vehicle was repossessed from the house of the complainant by using force as 5-6 gundas came to take the vehicle.  This act of the petitioner was against the guidelines issued by the Hon’ble Supreme Court and guidelines of the Reserve Bank of India.  Keeping all aspects in view, the State Commission has granted a lump sum amount of Rs.4,75,000/- as compensation to the complainant.

11.    I have carefully considered the arguments advanced by the learned counsel for the parties and examined the material on record.  The admitted facts are that the complainant got a vehicle financed from the petitioner for Rs.5,20,000/- as loan amount, whereas the total cost of the vehicle was Rs.7,15,500/-.  Apart from the loan amount remaining amount was invested by the complainant.  The other facts are that the complainant repaid an amount of Rs.3,11,720/- by way of instalments and the vehicle was sold for Rs.4,20,000/-. First of all there is no force in the argument of the learned counsel for the petitioner that the fora below did not have any jurisdiction to dispose of the present complaint as the matter was decided by the Sole Arbitrator.  The fact is that the complaint was earlier filed on 16.09.2008 whereas the petitioner filed arbitration on 30.10.2009.  When the petitioner was already contesting the consumer complaint case before the District Forum and the District Forum had already passed the final order on 05.02.2009, there should have been no question of filing any arbitration for the same cause of action as order of the District Forum had already become res judicata for petitioner to approach the Sole Arbitrator.  Thus, there is no force in the argument of learned counsel for the petitioner. 

 12.   Clearly the State Commission has erred in calculating the amount that was still to be paid by the complainant and State Commission has assessed this amount less by Rs.1,75,250/- as stated by the learned counsel for the petitioner. Thus, if this is taken into account the amount of Rs.4,75,000/- ordered by the State Commission seems to be on a higher side.  Even if the total allowance for this amount is not given to the petitioner, a reasonable compensation has to be assessed in the light of this fact.  Thus, in my view, the compensation of Rs.3,50,000/- would be sufficient and reasonable in the present set of circumstances of the case.  I do not find any merit in other grounds of appeal filed by the appellant.  Whether the matter is covered under SARFAESI Act or not, natural justice demands that petitioner should have given proper notice with reasonable time for him to pay the dues.  Thus, the process of repossession and then consequent sale has not been conducted in accordance with the guidelines issued by the Reserve Bank of India and approved by the Hon’ble Supreme Court.

13.    Based on the above discussion, the revision petition no.2724 of 2012 is partly allowed and the amount of Rs.4,75,000/- awarded by the State Commission as compensation is reduced to Rs.3,50,000/-    (rupees three lakhs fifty thousand only). Except for this change, the order of the State Commission dated 24.5.2012 is upheld.