1.      The present Revision Petition has been filed by the Petitioner under Section ­­­58(1)(b) of the Consumer Protection Act, 2019 (the “Act”) against impugned order dated 22.09.2021 of the learned State Consumer Disputes Redressal Commission, UP at Lucknow (‘the State Commission’) in First Appeal No. 1911 of 2010, wherein the Appeal filed by the Complainant was partly allowed upholding the Order dated 06.10.2010 passed by the learned District Consumer Disputes Redressal Forum, Kanpur Nagar (“District Forum”) in CC No.238 of 2008, with some modification.

2.      For convenience, the parties are referred to as in the original Complaint before the District Forum. Syed Mushir Abbas is referred to as the Complainant (Respondent No. 1), HDFC Bank Ltd. is referred to as the Petitioner (OP-1), Allahabad Automobiles Garage is referred to as the Respondent No. 2 (OP-2) and Jamuna Motors is referred to as the Respondent No. 3 (OP-3).

3.      Brief facts of the case, as per the Complainant, are that on 11.02.2005, the Complainant purchased Truck No-UP-78-AN/ 0529 from Amar Nath for Rs.4,45,000, with Rs.1,02,000 paid in cash and Rs.3,43,000 through a financial loan from OP-3. The OP-3, acting as the financier, offered his surety and facilitated the loan from OP-1. Thus, on 18.10.2005, OP-3's name was replaced by OP-1 as the financier in the Divisional Transport Office, with 23 postdated cheques returned to OP-1. The Complainant discharged the entire amount owed to both OP-1 and OP-3. However, despite making full payment, OP-3 forcibly repossessed the truck on 28.04.2008, at Govt Press Square, Civil Lines, as it transported goods from Gujarat to Allahabad via OP-2. This action disrupted the Complainant's freight operations, prompting a police report. Despite legal notice, no resolution was achieved. On 28.04.2006, OP-2 repossessed the vehicle citing an outstanding balance of Rs.60,000, a sum not owed by him OP-1 or OP-3. The cause of action arose from illegal seizure of the truck. Aggrieved, the Complainant filed Consumer Complaint No. 238/2008 before the District Forum against the OPs, seeking return of the truck or its value of Rs.4,45,000, Rs.6,60,000 as damages from 28.04.2006 to 27.02.2008 at Rs.30,000 per month, Rs.2,00,000 for mental agony, and various other expenses.

4.      Despite adequate service, the OPs did not appear before the District Forum and thus, they were proceeded ex-parte.

5.      The District Forum in its Order dated 06.10.2010, partly allowed the complaint with the following order:

“….. Therefore, on the basis of the evidence available in the record, the Forum comes to the conclusion that the accused No. 3 has illegally taken possession of the truck in question. In such a situation, the complainant is entitled to get back the truck in question. The complainant is entitled to receive Rs.10,000.00 or more from the Opposite Party No. 3 as compensation on account of illegal possession of the truck by Opposite Party No.3.

          On the basis of the above, the Forum comes to the conclusion that the suit presented by the complainant is admissible against the Opposite Parties.

ORDER

Due to the above reasons, the memorandum presented by the complainant is accepted against the Opposite Parties and is directed to the Opposite Party no.3 that the truck No- UP-7A N/0529 should be returned to the complainant in working condition within 30 days of the decision. Simultaneously, Opposite Party No. 3 is also directed to pay Rs.1000.00 as compensation to the complainant within the said time. (Extracted from True Translated Copy)

6.      Dissatisfied with the District forum order, the Complainant filed FA No. 1911 of 2010 before the State Commission contending that the District Forum's decision was partly erroneous due to the failure to hold Respondent No. 1 accountable. There was an oversight in comprehending that the truck was not in a returnable state. Thus, instead of instructing Respondent No. 3 to return the truck, an order should have been for payment of its value by Respondents. Further, the District Forum overlooked the losses incurred by him, pegged at Rs.1,000 per day due to its illegal halting, whereas the ordered compensation was only Rs.10,000, despite the actual loss being Rs.30,000 per month. Also, the District Forum failed to acknowledge that the Appellant paid Rs.1,04,694 to Respondent No. 3, an excess over the due amount of Rs.98,006. He originally sought the truck's value and compensation of Rs.6,60,000, which the District Forum did not grant. He sought modification of the order dated 06.10.2010.

7.      The State Commission vide order dated 22.09.2021 partly allowed the Appeal and upheld the Order of the District Forum, with the following modification in the Order: -

After considering all these facts, we come to the conclusion that the amount of compensation will be payable at the rate of Rs.01.00 lakh per annum from dated 28-04-2006. Therefore, partially accepting the present appeal, the decision and order of the Learned District Forum in question dated 06-10-2010 deserves to be modified accordingly.

ORDER.

  The present appeal is partly allowed. The decision and order in question dated 06-10-2010 passed by District Forum/Commission, Kanpur Nagar in complaint no. 238/ 2008 is modified as follows," the complaint presented by the complainant is accepted against the Opposite Parties and is directed to the Opposite Party no. 1 to 3 that they should return the truck No-UP 78AN/0529 in working condition to the complainant within 30 days of the judgment. If the truck is not in working condition and has become useless or unusable, then the entire purchase amount of that truck along with insurance amount, road tax amount, registration fee etc. should be returned. This amount should be paid within 30 days of the decision of the appeal, otherwise 09 percent annual simple interest will also be payable on this amount from 28-04-2006. Simultaneously, the Opposite Party No. 1 to 3 is also directed to pay Rs.01.00 lakh as compensation from dated 28-04-2006. (Extracted from True Translated Copy)

8.      Being aggrieved by the Impugned order dated 22.09.2021 of the State Commission, the Petitioner/OP-1 - HDFC Bank filed the instant Revision Petition bearing No. 1170 of 2021.

9.      Upon notice to the Respondents No. 1 to 3, none appeared for Respondent Nos. 2 and 3 despite service by way of publication. Therefore, vide order dated 12.06.2023, the Respondent No. 2 & 3 were proceeded ex-parte.

10.    In the instant Revision Petition, the Petitioner/OP-1 mainly raised the following contentions:

1.  The decision of the State Commission to shift liability from Respondent No. 3 to the Petitioner lacks justification. The cash payment alleged by Respondent No. 1 to Respondent No. 3 has not been sufficiently proven. Notably, Respondent No. 3 did not contest this matter in either of the preceding forums.
2.  There is no evidence connecting the Petitioner to the alleged vehicle repossession by Respondent No. 3 and Respondent No. 2 following legal obligations and protocols.
3.  The repossession of the vehicle was as per contractual norms and standard banking operations as per the Loan Agreement. Its peaceful possession from Respondent No. 3, was as per the terms established in Clause 17 of the Loan Agreement.
4. Despite availing loan from the Petitioner in October 2005, Respondent No. 1 continued making payments to Respondent No. 3 by cash until 18.04.2006, alongside postdated cheques to the Petitioner. As subsequent EMIs to Petitioner bounced, Respondent No. 1 asserted repayment of entire loan amount.
5.  The vehicle's repossession by Respondent No. 3 stems from a financial dispute between Respondent No. 1 and 3. Respondent No. 3, being the guarantor, facilitated the transfer of possession to the Petitioner to alleviate loan liability.

11.    In his reply, the Complainant denied all allegations and stated that, from the outset, Respondent No. 2 portrayed as an agent of Respondent No. 1. The loan was granted by the Petitioner through Respondent No. 2. The repossession of truck by Respondent No. 3 from Respondent No. 1 was done at the Petitioner's behest. This is evident from the truck being handed over to the Petitioner and later auctioned off to cover the alleged outstanding loan. The Petitioner cannot claim absence of association with Respondent No. 3 while benefiting from their actions. He sought the Petition be dismissed.

12.    In his arguments, the learned Counsel for Petitioner reiterated the grounds of the revision petition and asserted that the Respondent is not a Consumer under the Act as the loan was taken for a commercial vehicle and not for personal use. There was clear default in repayment of loan by the Respondent and thus the Petitioner was entitled to recover the defaulted amount as per Loan Agreement. He contended that the State Commission and the District Forum did not appreciate their right to repossess the vehicle due to his default. The reply of the Complainant as regards default was unsupported by documentary evidence and was accepted without scrutiny. He asserted that Complainant presented a document dated 15.04.2006, which was never brought forth in any previous proceedings. This appears to be a letter purportedly issued by the Petitioner Bank to Mr. Amarjeet Singh of M/s Jamuna Motors, authorizing repossession of the vehicle on behalf of the Petitioner. The Counsel strongly contested the authenticity of this document, asserting that it seems manufactured and was not part of the records in any previous fora. He contended that this letter was never issued by the Petitioner bank to Mr Amarjeet Singh and categorically stated that they had no reason to issue such a letter. According to the terms of the Loan Agreement, the Petitioner holds the right to repossess the vehicle in case of payment defaults, rendering this letter, submitted without prior permission, as forged and fabricated. Furthermore, the Counsel refuted Respondent No. 1's attempt to suggest that they did not opt for a loan from the Petitioner against the vehicle in question. The learned Counsel for the Petitioner argued that Respondent No. 1 never disputed executing the loan documents or the agreement, nor did they contest their signatures on these documents. He asserted that Respondent No. 1 is an admitted defaulter in the loan obtained against the vehicle. The reasons cited by the Complainant, including payment to another entity, do not justify their default in payment to the Petitioner Bank.

13.    The learned Counsel for the Petitioner has relied upon the following judgments to support his arguments: -

1. M/s Magma Fincorp Ltd. Vs. Rajesh Kumar Tiwari [Civil Appeal No. 5622 of 20191 decided by the Supreme Court of India;
2. HDFC Bank Ltd. Vs. Nilesh Mangaldas Shah in R.P. NO. 1185 of 2013 dated 05.10.2020 decided by NCDRC.
3. Bharathi Knitting Co. Vs. DHL Worldwide Express Courier [reported in (1996) 4SCC 704]
4. HDFC Bank Ltd. Vs. Kanwar Ohri && Ors." [RP No. 2001 of 2012] judgment dated 12.08.2014 decided by NCDRC.
5. SGS India Ltd. Vs. Dolphin International Ltd. Reported in : [LL 2021 SC 544].

14.    The learned Counsel for Respondent No. 1/Complainant reiterated the facts and evidence before the fora. He contended that the bank unlawfully confiscated Complainant’s truck despite full payment being made. He argued that the Respondent Nos. 2 and 3 acted under instructions of the bank, serving as its agents. Referring to a letter dated 15.04.2006 allegedly issued by the Petitioner to Respondent No. 3's proprietor, he asserted that this letter evidenced the fact that Respondent No. 3 was acting at the behest of the bank. He highlighted the occupation of Complainant as a transporter, earning his livelihood by transporting goods across states using the truck in question. The illegal confiscation occurred while the vehicle was transporting transformers from Gujarat to UP, forcibly taken by employees of Respondent No. 2. This confiscation on 28.04.2006 resulted in continuous losses for him till date. Thus, the decision of the State Commission to increase compensation to Rs. 1 Lakh from 28.04.2006 was justified. He relied on Manager ICICI Bank Ltd. Vs. Prakar Kaur & Ors. AIR 2007 SC 1349 and Chander Vs Government of Uttar Pradesh & Ors, 2007 SCC OnLine All 625.

15.    I have examined the pleadings and associated documents placed on record and rendered thoughtful consideration to the arguments advanced by the learned Counsels for both the parties.

16.    The main issue is the legality of confiscation of the truck owned by the Complainant by the Petitioner Bank (OP-1) vis-a-vis the claim of the Complainant of making full payment against the loan. This allegedly resulted in losses for the Complainant, who earns his livelihood by using the truck as a transporting vehicle.

17.    It is a matter of record that on 11.02.2005, the Complainant purchased a used truck from Shri Amarnath through the proprietor of OP-3 for Rs. 4,45,000/-. Of this, Rs.1,02,000/- was paid by him Shri Amar Nath and the balance Rs.3,43,000/- was paid by obtaining loan from OP-3 (who acted as Surety/ Guarantor). The Complainant paid EMIs to OP-3 in cash from 12.03.2005 to 18.04.2006. Subsequently, OP-3 arranged vehicle finance of Rs.3,43,000/- for the Complainant from OP-1 in October 2005. Thus, on 18.10.2005, the name of OP-3 as Financer in records of the RTO was replaced as OP1-Bank after receipt of the loan amount and OP-3 had issued 23 post-dated cheques to the OP-1 Bank drawn on Federal Bank from 05.11.2005 to 05.09.2007, with EMI of Rs.16,401/- payable by the Complainant to OP-1 Bank from October 2005. Records reveal that the Complainant paid EMIs to OP-3 against cash receipt until 18.04.2006. Thus, till 18.04.2006, the Complainant is stated to have paid Rs.2,03,100/- to OP-3. As per the Complainant, he discharged the entire amount owed to both OP-1 and OP-3 and, however, even thereafter, OP-3 forcibly confiscated the truck on 28.04.2008 at Govt Press Square, Civil Lines while transporting goods from Gujarat to Allahabad, thorough OP-2, who is the agent of OP-3. On 28.04.2006, OP-2 claimed repossession citing an outstanding balance of Rs.60,000, a sum not owed by him to OP-1 or OP-3.

18.    It is undisputed that the Complainant entered into a loan agreement with OP-1 Bank dated 05.11.2005. In terms of the said loan Account Agreement, he was to pay EMIs @ Rs.16,401 to the OP-1 Bank from 05.11.2005 to 05.09.2007. Out of the 23 EMIs of Rs.16,401 each due to be paid by the Complainant to the OP-1 Bank, the Complainant paid only Six installments up to 05.04.2006 and defaulted Four installments as on 05.08.2006 and total balance of 17 installments were due as on the date of repossession. In terms of Clause 17.2 - ‘Enforcement’ of the said vehicle loan Agreement, in the “Event of Default”, pursuant to the terms of Clause 13 arise (whether demand for repayment is actually made or not) then and in such case and at any time thereafter, the Bank through its officers, agents or nominees shall have the right (without prejudice to the right in clause 7) to take any one or more than one of the following actions without specific intervention of a Court or any Court Order:

(i) Without any notice and assigning any reason and at the risk and expenses of the Borrower and if necessary as Attorney for and in the name of the Borrower take charge and/or possession of, seize, recover, appoint receiver of and remove the Hypothecated vehicle. The Bank will be within its rights to use Tow-van to carry away the vehicle/and/or.

(ii) Enter into or upon any place or premises where the Hypothecated Vehicle may be kept or stored and inspect, value or insure the same at the costs and expenses of the Borrower, and/or.

(iii) sell by auction or by predicate contract or tender, dispatch or consign for realization or otherwise dispose of or deal with the Hypothecation acts and powers mentioned in Clause 13 and clause 6. 

19.    OP-3 was the surety for the Complainant’s vehicle loan from OP-1. When the Cheques issued by the Complainant towards EMI payments repeatedly bounced, OP-1 invoked enforcement clause of the Agreement and notified the surety (OP-3) for surety liability. OP-3 requisitioned OP-2 to recover the said truck of the Complainant truck on behalf of OP-1 Bank. It was OP-3 who received the cheques of payments of the loan from the Complainant and directed the same to OP-1. It is also an admitted position that the vehicle in question was repossessed on 25.08.2006. In the present case, while no specific notice for the same was issued by Bank to the Complainant, the intimation of its repossession was made to the police station and inventory list was prepared accordingly. OP-1 thereafter, auctioned the vehicle on 24.09.2006 for Rs.2,63,000/- to one Shri Samshul and notice was forwarded to the Complainant on 24.09.2006 after the sale proceed of the vehicle in question were offset against the loan account balance and he was asked for balance Rs.33,069.97 due. However, as per the statement of account of the loan produced by the Petitioner Bank, after sale proceed of the vehicle in question balance was shown as Zero as on 29.09.2006. Subsequently, a second notice was forwarded on 07.11.2006 through the Office of Divisional Transport Officer for transfer of ownership of the vehicle to the auction purchaser.

20.    The learned Counsel for the Petitioner relied upon the judgment of the Hon’ble Supreme Court in the case of M/s. Magma Fincorp Ltd. Vs. Rajesh Kumar Tiwari, Civil Appeal No.5622 of 2019 decided on 1.10.2020 wherein it has held as under:

“92. In the instant case, there is no evidence of any loss suffered by the complainant by reason of non-receipt of notice. Admittedly, several instalments, remained unpaid. After repossession the complainant contacted the Financier and was informed of the reasons for the repossession. He only made an offer to pay outstanding instalments and gave an assurance to pay future instalments in time. If the Financier was not agreeable to accept the offer, the Financier was within its rights under the hire purchase agreement. This is not a case where payment had been tendered by the hirer but not accepted by the Financier/lender. The Complainant had not tendered payment.

93. The Financier admittedly paid Rs.3,15,000/- for acquisition of the vehicle, out of which the Financier had been able to realize Rs.1,19,000/- inclusive of all charges. There was depreciation in the value of the vehicle by reason of usage by the Complainant, for about a year. The District Forum did not even notionally assess the depreciation in the value of the vehicle.

94. The District Forum was not justified in directing the Financier to pay the Complainant Rs.2,23,335/- being the entire amount paid by the Complainant to the Financier from the inception as well as the payment of Rs.1,04,000/- made by the Complainant to the dealer along with damage of Rs.10,000/- and litigation costs of Rs.1,000/- after the Complainant had held and used the vehicle for almost a year. The Complainant, admittedly a defaulter, has in effect, been allowed free use of the vehicle for about a year, plus damages, for an error in the notice of repossession, without considering the prejudice. if any, caused to the complainant by the error and consequential non receipt of the notice, and without making any assessment of the loss. if at all, to the Complainant by reason of the error/omission.

95. For the reasons discussed above, the impugned orders of the National Commission, the State Commission and the District Forum, under the Consumer Protection Act, 1986 cannot be sustained and the same are set aside.

96. The appeal is accordingly allowed. The Financier shall, however, pay a composite sum of Rs.15,000/- to the Complainant towards damages for 'deficiency' in service and costs for omission to give the Complainant a proper notice before taking repossession of the vehicle.”

21.    In the present case, out of 23 instalments of Rs.16,401/- each, the Respondent/Complainant paid only Six instalments up to 05.04.2006 and he has defaulted Four installments up to 05.08.2006. The Petitioner bank has not issued notice of repossession of the vehicle to the Complainant prior 25.08.2006. While the Complainant stated that he has paid the instalment without any default, but he has not produced any evidence to that effect. Although he produced case receipts paid to OP-3, these relate to previous loan taken from OP-3. The Petitioner Bank vide notice dated 24.09.2007 claimed Rs.33,069.97 as outstanding from the Complainant but no evidence to that effect was produced by the Petitioner bank. As the same time, there is no evidence of any loss suffered by the Complainant by reason of non-receipt of notice as regards the repossession of the vehicle in question. In the case of Magma Fincorp Ltd. (Supra) in para 90 of the judgement it has been held as under

“In a case where the requirement to serve notice before repossession is implicit in the hire purchase agreement, non-service of proper notice could tantamount to deficiency of service for breach of the hire purchase agreement giving rise to a claim in damages.  The complainant consumer would be entitled to compensatory damages, based on the assessment of the loss caused to the complainant by reason of the omission to give notice.  Where there is no evidence of any loss to the hirer by reason of omission to give notice, nominal damages may be awarded.”

22.    In the present case, the vehicle loan Agreement between the Petitioner Bank and the Complainant is undisputed. OP-3 was the surety. The Complainant failed to ensure payment of EMIs in time and Four of his EMI cheques bounced. Therefore, the Petitioner invoked the enforcement clause of the Agreement and repossessed the vehicle, auctioned the same and recovered the loan liability of the Complainant. In the process the Bank failed to give notice of repossession and, however, caused the repossession executed with the involvement of police and inventory was accounted for. In any case, it is an established position that the Complainant had taken loan from OP1-Bank and had defaulted. Merely because the OP-1 Bank had repossessed the vehicle due to repeated defaults of EMIs without giving due notice to the Complainant, the Complainant is not absolved of his liability towards the Bank for the vehicle’s loan as per the Agreement dated 05.11.2005.

23.    For the reasons discussed above and the precedent established in Magma Fincorp Ltd. (Supra), the impugned order of the learned State Commission dated 22.09.2021 and the order of the learned District Forum dated 06.10.2010 cannot be sustained and, therefore, the same are set aside.

24.    The Revision Petition No.1170 of 2021 is allowed. However, the Petitioner Bank is directed to pay a composite sum of Rs.50,000/- to the Complainant towards damages for ‘deficiency’ in service and costs for omission in ensuring the Complainant due notice before taking possession of the vehicle. 

25.    There shall be no order as to costs. All other pending Applications, if any, stand disposed of.