Kerala

Idukki

CC/113/2022

Ajeesh Rajan - Complainant(s)

Versus

Managing Director Magma fincorp ltd - Opp.Party(s)

05 Jun 2023

ORDER

IN THE CONSUMER DISPUTES REDRESSAL COMMISSION, IDUKKI

Dated this the  5^th  day of June, 2023

Present :

          SRI. C. SURESHKUMAR                         PRESIDENT

          SMT. ASAMOL. P.                                    MEMBER

          SRI. AMPADY. K.S.                                 MEMBER 

CC No.113/2022

Between

Complainant                                       :   Ajeesh Rajan, S/o. Rajan,

                                                               Vallarkottu House,  

                                                               Ambalapady, Vannappuram.       

                                                              (By Adv: Alexiya Varhese)

And

Opposite Party                                    :   Magma Fincorp Ltd.,        

                                                              (Now known as Poonawalla Fincorp Ltd.),

                                                               Jain Tower 1^st Floor, NH Bypass Road,

                                                               Powerhouse Junction, Vytila, Kochi.

                                                               (By Adv: Binu K. Thottumkal)

 

O R D E R

 

SRI. C. SURESHKUMAR, PRESIDENT                                                        

 

          Complaint is filed under Section 35 of the Consumer Protection Act of 2019, alleging that complainant had availed a loan of Rs.4,75,000/- on 6.1.2020for purchasing a car, mentioned above with interest rate at 7.5% per annum from the respondent opposite party namely, Magma Fincorp Ltd., which presently is renamed as Poonawalla Fincorp Ltd.,  a non-banking finance company (NBFC).  As per terms of loan agreement, complainant has to repay Rs.5,87,802/- in 42 equated monthly instalments of Rs.12246/.  Complainant claims that he has not paid seven Monthly Instalments due to moratorium as sanctioned by respondent company.  In total, he had paid Rs.1,93,180/- towards repayment of the loan.  Balance amount to be repaid is only Rs.74,676/-, which is EMI of 6 months.  However, respondents are demanding Rs.1,37,000/- as arrears.  Opposite party is attempting to take forceful possession of the vehicle and hence the complaint.  Complainant seeks a direction against opposite party to reschedule current loan as a new one with same EMI and conditions.  A 2^nd direction is sought against forceful repossession of the vehicle.  Complainant had  also prayed for Rs.1 lakh as damages for mental agony suffered by him and Rs.50,000/- towards litigation costs.

 

          Opposite party had entered appearance and filed a written version.  Opposite party, who is the petitioner herein submits that transaction between complainant, the respondent here and opposite party is on the basis of the loan agreement executed on                                                                                                             (cont....2)        

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20.1.2020. A reading of the complaint itself would reveal that the complainant had violated the terms of contract.  He has not paid monthly instalments correctly.  It is incorrect to say that the complainant had availed vehicle loan of Rs.4,75,000/- repayable with interest at the rate of 7.5% per annum and that the complainant has to repay only Rs.5,87,808/- in 48 EMIs of Rs.12246/-.  The loan availed was of Rs.4,80,000/-.  As per terms of loan-cum-hypothecation agreement, both the complainant and guarantor have agreed to repay Rs.7,46,400/- in 60 EMIs beginning from 1.2.2020.  However, period was extended to 65 months since complainant have availed moratorium for 5 months.  Therefore total agreement value changed to Rs.8,39,467/- which has been agreed to by complainant.  As on 30.8.2022, complainant is liable to pay Rs.2,17,398/- towards pending instalments, overdue charges and cheque return charges.  When the complainant defaulted in making / paying monthly instalments, opposite party had referred the matter to arbitrator on 17.1.2022, in accordance with clause 13.1 in the loan-cum-hypothecation agreement which provides for appointment of arbitrator for settling dispute between the parties inter se.  Arbitrator had passed an award on 20.5.2022 for payment of Rs.7,00,641/- with interest against complainant.  That the award was received by complainant and his guarantor, but amount has not been paid.  They have not challenged the award under Section 34 of the Arbitration and Conciliation Act of 1996.  It has become final.  Present complaint has been filed only to avoid execution of arbitration award.  Moratorium was not granted or availed for 7 months, it was only for 5 months.  From 23.11.2020 to 30.4.2021, complainant had repaid only Rs.65,200/-.  It is incorrect to say that there was total payment of Rs.1,93,180/-.  Complainant had not approached opposite party and asked for statement of account till date.  There was no threat for repossessing the vehicle or any attempt from the side of opposite party as alleged in the complaint.  Execution of loan agreement by complainant implies that he is bound to honour these terms and conditions.  As per terms of agreement, complainant is liable to pay monthly instalments, interest, delayed payment charges, and other charges as agreed to in the agreement.  There is no substance in the complaint averments.  Opposite parties are not guilty of having resorted to any unfair trade practice.  There is no cause of action against the opposite parties.  Complaint is to be dismissed with costs.

 

          Opposite party had filed IA 2/2022 raising issue of maintainability and sought for preliminary hearing on that point.  No counter was filed.  Petition was allowed and we heard the parties.  Now the point which arise for consideration are :

1)  Whether complaint is maintainable ?

2) Order to be passed ?

 

Point No.1 :

 

          Along with written version, 6 documents were produced from the side of opposite party.  Out of the 6, one is a loan-cum-hypothecation agreement.  Execution of the same

                                                                                                                   (cont….3)

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has not been denied by complainant in complaint.  Another document is copy of the award passed by the arbitrator in Calcutta.  Award is dated 20.5.2022.  Present complaint is filed only on 11.7.2022.  Though a decision of Hon’ble National Disputes Redressal Commission is mentioned in the written version, citation has not been given.  However, we have come across a similar decision rendered in the matter of Magma Fincorp Ltd. Vs. Mansingh in FA 12/313 rendered on 29.6.2012.After considering the decision of Hon’ble Supreme Court and National Commission, Hon’ble State Commission of Chhattisgarh has held that if an award is passed by arbitrator, then the only remedy available to an aggrieved party is to file an application under Section 34 of Arbitration and Conciliation Act, 1996 for setting aside the award.  Since award has already been passed by the arbitrator which has not been challenged, complaint before the District Forum under the Consumer Protection Act 1986 is not maintainable.

 

          In the New Act also there are no specific provisions whereby despite there being an arbitration award, complainant can proceed with a complaint under Section 35 of the Act.  As mentioned in the petition, there is already a finding by the arbitrator with regard to the amount due from the complainant to opposite party.  In the present case, the only contention advanced alleging unfair trade practice is that more amount which are not due to opposite party from complainant are being attempted to be collected from him.  We also notice that there is hypothecation clause in the agreement whereby the vehicle can be repossessed by opposite party in case of default in repayment of loan by the borrower, since ownership of vehicle will pass to complainant only upon payment of entire  consideration as per agreement.  Hence there is no meaning in contending that the opposite party is attempting to take forceful possession of the vehicle as admittedly repayment of loan has been defaulted.  To summarise, an arbitration award has already been passed against complainant whereby he is found liable to pay Rs.7,00,641/- to opposite party towards repayment of loan admittedly availed by him. He has also admitted that he has defaulted in paying loan installments. But he would only contend that he is laible to pay a lesser amount as dues whereas opposite party claims that more is outstanding as per terms of loan agreement. This is only a bonafide dispute regarding amount due from complainant as per loan agreement. We find no malafides in demand raised by opposite party as mere demand for sums due not admitted by complainant will not amount to unfair trade practice or deficiency in service. Even if loan has been rescheduled after grant of moratorium, the liability does not cease to exist.  Extension of period would automatically involve payment of more interest towards the loan.  Contentions advanced by opposite party that overdue charges and cheque bounce charges were also collected in accordance with the agreement,   supported by the clauses in the loan-cum-hypothecation agreement have not been challenged by complainant, in as much as that complaint does not even disclose existence of loan agreement or say about the terms therein.   Prima facie contentions that liability is only to  repay 6 months instalments amount will not survive for consideration upon merits too.  It's purely a civil                                                                                                              (cont….4)

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dispute. An award has been passed by arbitrator appointed on the basis of loan agreement executed by complainant and opposite party, which has not been challenged by complainant.  It has become final.  As per law, a copy of award is to be given to parties by the arbitrator and complainant has no case that copy of award was not given to him.  In fact, the complainant is silent about the award.  Admittedly, complaint has been filed after the passing of award and its communication to complainant.  Award has not been challenged and it has become final. That being so, as per the decision of Hon’ble State Commission of Chhattisgarh, complaint cannot be maintained,  on the principles of res judicata.  The matter has been decided finally by the arbitrator.  Complaint therefore is not maintainable.  Point No.1 is answered accordingly. 

 

Point No.2:

 

          In view of our findings rendered above, we find that the complaint is liable to be rejected.  Accordingly the same is rejected, considering the circumstances, without costs, as not maintainable.                                              

 

          Pronounced by this Commission on this the   5^th   day of June, 2023

 

                                                                                                Sd/-

   SRI. C. SURESHKUMAR, PRESIDENT

                             Sd/-

                                                                              SMT. ASAMOL. P., MEMBER

                                                                                                Sd/-

                                                                             SRI. AMPADY. K.S., MEMBER

 

 

                                                                                      Forwarded by Order,

 

 

 

                                                                                 ASSISTANT REGISTRAR