A.  P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION : AT HYDERABAD

FA 698 of 2012  against CC 190/2011   on the file of the District Consumer Forum, Karimnagar.

Between :

M/s. Kotak Mahindra Bank ltd

( Tractor  and Farm Products Division )

Represented by its authorized person,

Somajiguda, Rajbhavan road,

Hyderabad                                                                … Appellant/opposite party

And

Jangili Lachaiah,

s/o Mallaiah

aged about 40 years, Occ : Agriculture,

H No. 1-172/2, Katikenapally village

Dharmaram Mandal

Karimnagar District                                                  . Respondent/complainant

Counsel for the Appellants            :           M/s. Gopi Rajesh and Associates

Counsel for the Respondent         :           M/s. V. Gourisankara rao

Coram           ;          

                              Sri R. Lakshminarasimha Rao…      Hon’ble Member

And

                                    Sri T. Ashok Kumar                ..         Hon’ble Member

Wednesday, the Seventh Day of August

Two Thousand Thirteen

          Oral Order       :   ( As per Sri T. Ashok Kumar , Hon’ble Member )

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1.         This is an appeal preferred by the opposite party  as against the  orders dated  30.04.2012  in CC 190/2011  on the file of the District Consumer Forum, Karimnagar. For convenience sake, the parties as arrayed in the complaint are referred to as under :

2.         The brief facts of the complaint  are that  the complainant had obtained loan of Rs.3,87,136/- vide A/c No. APAC No. TFE-286601 from the OP for purchase of JOHN DEER Tractor bearing No. AP -15-AH -5029 agreeing to repay the said loan with interest @ Rs.35,800/- in  quarterly installments. Accordingly the complainant paid 10 quarterly installments.  Thereafter his wife fell ill and therefore he incurred huge expenditure for her treatment and thus delay was caused in paying installments. The said fact was informed to OP and requested to consider the same on sympathetic grounds but the personnel of the OP came to the house of the complainant and taken away the tractor forcibly from him. He immediately he approached the OP and expressed his readiness to pay the due instalments and requested to release the tractor as he is eking out his livelihood on the said tractor but the Ops refused to receive due amount and also to give statement of account. On accounts of illegal acts of OP the complainant sustained loss of Rs.60,000/- till the complaint. Vexed with the attitude of OP the complainant got issued legal notice dt. 11.10.2011 demanding to release the vehicle after receipt of due installment and it was served on 13.10.2011. Even after receipt of the notice the OP neither replied to it nor released the vehicle,. Hence the complaint to direct the OP to receive due installments by deducting the interest and release the tractor in favour of the complainant and also ;to pay Rs.`17,000/- towards loss of earnings and Rs.10,000/- towards compensation for mental agony and also costs.

3..The opposite party resisted the complaint by filing  written version however admitted the loan transaction between it and the complainant in connection with the purchase of the tractor and the gist of the said version is as under :

Since office of the OP is situated at Somajiguda, Hyderabad, the Consumer Forum at Karimnagar has no jurisdiction.  As per the clause 11.16 of loan agreement the dispute has to be referred to arbitrator and thus Forum has no jurisdiction.  The complainant paid 10 instalments and later became defaulter in making payments alleging the ill health of his wife and financial condition and ultimately the complainant himself surrendered the vehicle to the OP so the OP invoked its right under loan cum hypothecation agreement and had taken the custody of  the vehicle on 4.8.2011. After seizure of the vehicle the OP bank issued  letter dated 5.8.2011 to the complainant demanding to pay outstanding amount due to it within five days from the date of receipt of the notice but the complainant failed to pay the same. There is no deficiency in service on its part. The complainant is using the vehicle for commercial purpose and as such complaint is  not maintainable under C P Act as the complainant is not a consumer within the meaning of C P Act.  OP gave suitable reply dated 12.11.2011 to the legal notice and a pre sale notice has been issued to the complainant but he did not turn up for settlement and therefore the vehicle was sold to the highest bidder for Rs.3,70,000/- and the same proceeds were appropriated to the loan account and after appropriating Rs.2,59, 807/- the outstanding dues remaining amount of Rs.1,10,193/- is lying with the OP and  the said details were informed to the counsel for complainant in the reply notice but suppressing the same the complainant filed the present complaint with false and frivolous allegations and that there is no deficiency in service on the part of OP and thus prayed to dismiss the complaint.

4.         Both sides  filed  evidence affidavit reiterating their respective pleadings  and  Ex. A-1 to A-12  were marked on behalf of the complainant and no documents   were  marked for the opposite party.

5.         Having heard both sides and considering the evidence on record, the District Forum allowed the complaint in part directing the OP to pay a sum of Rs.1,98,370/- and Rs.20,000/- towards mental agony, Rs.1000/- costs giving one month time.

6.         Feeling aggrieved with the said order the opposite parties   filed this appeal on several grounds and mainly contended that the complainant become defaulter in repaying the loan amount and did not stick on ito  the payment schedule and he surrendered the vehicle to the OP voluntarily and that after giving presale notice the vehicle was sold in public auction and realized Rs.3,70,000/- and that out of the said amount Rs.2,59,807/- was appropriated towards the due amount and the balance of Rs.1,10,193/- is lying with the OP and that even though the complainant is aware of the same he did not turn up to receive the balance amount  and that the sale of the vehicle was in accordance with the recitals of the loan cum hypothecation agreement and that the complainant is not a consumer and that  there is arbitration clause in the said agreement and that consumer Forum at Karimngar has no jurisdiction and that  the District Forum did not consider the said aspects  in correct manner and arrived at wrong conclusion in allowing the complaint in part and thus prayed to allow the appeal and set aside the impugned order.

7.         heard both sides with reference to their   respective contentions in detail.

8.            Now the point for consideration is whether the order of the District

Forum is sustainable ?

9.            There is no dispute that the complainant had obtained loan of Rs.3,87,136/- vide A/c No. APAC No. TFE-286601 from the OP for purchase of JOHN DEER Tractor bearing No. AP -15-AH -5029 agreeing to repay the said loan with interest @ Rs.35,800/- as quarterly installments and became defaulter in paying the instalments and that the vehicle was sold by the opposite party in the auction. The contention of the opposite party is that the complainant is not a consumer as the vehicle was used for commercial purpose. There is no dependable evidence from the side of the opposite party that the complainant used the vehicle for the purpose other than for eking out his livelihood under self-employment and therefore under the provisions of Section 2 (1)(d) of C P he comes within the meaning of Consumer and thus the objection of OP in the said context could not be appreciated. 

10. It is the contention of the OP that as per the terms of agreement any dispute arising out of the agreement is to be settled by single arbitrator appointed by the Bank and that the arbitration will be in Chennai in accordance with the Arbitration and Conciliation Act, 1986 and therefore Consumer Complaint is not maintainable. None of the parties to the proceedings filed Arbitration agreement to appreciate the said aspect.  Even otherwise in a decision  between National Seeds Corporation Limited Vs. M. Madhusudhan Reddy reported (2012) 2 SCC 506, the Hon’ble Supreme Court of India held  :

“ The remedy of arbitration is not only remedy available to a grower. Rather, it is an optional remedy.  He can either seek reference to an arbitrator or file a complaint under the Consumer Act. If the grower opts for the remedy of arbitration, then it may be possible to say that he cannot, subsequently, file complaint under the Consumer Act. However, if he chooses to file a complaint in th first instance before he competent Consumer Forum, then he cannot be denied relief by invoking Section 8  of the Arbitration and conciliation Act, 1996 Act.  Moreover, the plain language of Section 3 of the Consumer Act makes it clear that the remedy available in that Act is in addition to and not in derogation of the provisions of any other law for the time being in force “

In view of the said decision, once the party opts for remedy of arbitration it may be possible to say that subsequently Consumer Complaint is not maintainable but in this case none of the parties opted for remedy of arbitration so as to say that subsequently this complaint under C. P. Act cannot be filed and thus by virtue of Section 3 of C P Act being additional remedy provided to the complainant the complainant  can file the consumer complaint before this Commission and thus the said objection of the opposite party does not hold any water. Thus the said aspect is answered in favour of the complainant and against to the opposite party.

11. The complainant’s contention is that since the office of the opposite party is at Somajiguda at Hyderabad the Consumer Forum at Karimnagar has no jurisdiction.  The said contention could not be appreciated for the reason that the vehicle was delivered at Karimnagar, payment of installments were made at the said place and also the repossession of the vehicle at Karimnagar.  The Complainant did not place any material on record in proof that his wife was suffering from ailment and that incurred heavy medical expenditure in the said context. Therefore the said plea of the complainant could not be appreciated to say that the default was not deliberately but for the reasons beyond his control. It appears that he designed the said plea to  overcome his laches.  The complainant pleaded that no notice was issued to him regarding repossession of the vehicle.  Even though hypothecation cum loan agreement is not filed the contention of the OP that the said agreement contains a clause for repossessing the vehicle in the event of the complainant committing default the complainant did not controvert the same by filing rejoinder or  in his evidence affidavit and thus the contention of the OP is believed as true in the said context. 

12.    The Hon’ble Apex Court in a recent Judgement reported in

Suryapalsingh vs Siddha V inayak Motors & Anr. III (2012) CPJ 4 (SC) has  held as under :

“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.

13.              In Trilok Singh and Ors. vs Satya Deo Tripathi, AIR 1979 SC 850, has categorically held that under the Hire Purchase Agreement, the financer is the real owner of the vehicle, therefore, there cannot be any allegation against him for having the possession of the vehicle. This view was again reiterated in K A Mathai @ Babu @ Anr. Vs Kora Bibbikutty @ Anr., 1996 (7) SCC 212; Jagdish Chandra Nijhawan vs S K Saraf, IX (1998) SLT 477 – IV (1998) CCR 118 (SC) – 1999 (1) SCC 119; Charanjit Singh Chadha & Ors. vs Sudhir Mehra, VI (2001) SLT 883 – III (2001) CCR 232 (SC) – 2001 (7) SCC 417, following the earlier judgment of this court in Sundaram Finance Ltd., vs The State of Kerala and Anr., AIR 1966 SC 1178; Smt Lalmuni Devi vs State of Bihar and Ors., I (2001) SLT 26-I (2001) CCR 9 (SC) – 2001 (2) SCC 17 and Balwinder Singh vs Assistant Commissioner, V (20050 SLT 195 – III (2005) CCR 8 (SC) – CCE 2005 (4 ) SCC 146”.

14.    The Hon’ble Natinal Commission in a recent judgement in the case of  ‘Surendra Kumar Agarwal vs TELCO Finance Limited and Anr  [ (II (2010) CPJ 163 (NC) ] decided on 11.03.2010 has held as under:

“It is not disputed before is that the petitioner had raised a loan of Rs.6,15,000/- to purchase the truck. No statement of account showing repaying of loan instalments has been filed by the petitioner. It was admitted before the State Commission that the petitioner had defaulted several times in making the payment on the dates when it was due. Further it is not disputed that as per Hire Purchase Agreement the financier was authorised to repossess the vehicle in case of default in repayment of loan instalments. Supreme Court of India in Managing Director Orix Auto Finance (India) Limited Case (supra) has held that the financier can repossess the vehicle if the agreement permits the financier to take possession of the financed vehicle. There is nothing to show that the vehicle was repossessed forcibly. Mere fact that possession was taken by the respondents cannot be the ground to contend that the hirer is prejudiced. We agree with the view taken by the State Commission”.

15.  Relying upon the said decisions, the Hon’ble National Commission in R.P. 3319/2012 order dt. 31.7.2012 dismissed the Revision holding that the moment the borrower did not pay the installment it gives legal right to the financier to repossess the vehicle.  In the present case also, it is believe that  there is such a clause in the agreement   giving right to the opposite parties to repossess the vehicle with or without any notice. That apart, there is no dependable evidence on record that the vehicle was reposed forcibly. Therefore, merely because the Ops had repossessed the vehicle for the default committed by the complainant it cannot be held that it amounts to deficiency in service.

16. As per  Ex. A13 reply notice of the OP issued to the counsel for the complainant  also it is clear that the OP invoked its right in hypothecation and seized the  vehicle on 4.8.2011 and even after such a seizure OP addressed a letter dt. 5.8.2011 demanding the complainant to pay amount within five days or else the hypothecated property  will be sold for realization of the due amount and  since the complainant failed to pay the amount the vehicle was sold for Rs.3,70,000/- and appropriated Rs.2,59,807/- towards the amount payable by the complainant to the OP out of the said sale proceeds and an amount of Rs.1,10,193/- is  lying with the OP to be paid to the complainant and the complainant did not turn up to receive the amount. No rejoinder notice was given to it by the complainant disputing the said aspects. In such circumstances, we are satisfied to hold that resale notice was given to the OP after seizure of the vehicle and the complainant did not avail the opportunity and thus we did not see any fault with the OP in repossessing and selling the vehicle in public auction as they were so done basing the recitals in the hypothecation agreement. 

17. Even though the complainant did not turn up to receive the said remaining amount of Rs.1,10,193/- it was the duty of OP to  send the same to the complainant by way of cheque or demand draft but it  did not do so.  The said lapse on the part of the OP amount to deficiency in service for which the OP is liable to pay some compensation apart from the paying the said remaining amount of Rs.1,10,173/- . In the said circumstances of the case, the said compensation is fixed at Rs.10,000/-. In such circumstances, the observation of the District Forum that  OP failed to give notice before repossession and selling of the vehicle in auction could not be appreciated so also fixing the sale proceeds at Rs.4,01,453/- after allowing 30% depreciation on the cost of vehicle Rs.5,73,504/- . In view of the above discussion , the OP is liable to pay Rs.1,10,173/- remaining sale proceeds of the seized vehicle  with interest @ 9% PA from the date of complaint ie., 14.11.2011 till realization, so also, Rs.10,000/- as compensation for such deficiency in service to the complainant  so also, costs of Rs.5,000/- though out. Thus the order of the District Forum is liable to be modified by allowing the appeal in part.

18. In the result, the appeal is allowed in part, order of the District Forum is modified directing the opposite party to pay Rs.1,10,173/- remaining sale proceeds of the seized vehicle  with interest @ 9% PA from the date of complaint ie 14.11.2011  till the date of realization, Rs.10,000/- towards compensation for deficiency in service and costs of Rs.5,000/- to be paid to the complainant within four weeks from the date of receipt of this order.

                                                                                    MEMBER

                                                                                    MEMBER

                                                                                    DATED : 07.08.2013