HDFC BANK LTD. vs BALWINDER SINGH

WE are stunned to observe that HDFC Bank which has a high standing in the corporate world had hired Goondas directly or through their recovery agents to recover the money financed by it.

IN this case, Tata Indica DLS car was purchased by the respondent with the financial assistance from HDFC Bank. As there was some default, musclemen engaged by the HDFC Bank/its agent forcibly took the possession of the vehicle, which compelled the consumer to file a complaint before the District Forum.

THE District Forum directed that Rs. 4 lakh may be paid as compensation for mental and physical harassment. This vehicle was also sold subsequent to re -possession and Rs. 1,65,000 was realised by the petitioner. District Forum observed as follows: "The vehicle was snatched by the OPs on 20.7.2007. The OPs shall not be entitled to any interest with effect from that date on the amount remaining unpaid after adjusting the sale price of Rs. 1,65,000. The OPs are, therefore, directed to return the cheques received by them and to redraw the account of the complainant and ascertain the principal amount due from him on 20.7.2007 and adjust the amount of Rs. 1,65,000 towards the principal amount. The remaining amount, if any, shall be adjusted out of the compensation amount of Rs. 4,00,000.

The OPs shall pay the balance amount to the complainant within thirty days from the date of receipt of the copy of the order, failing which they would be liable to pay the same with penal interest @ 12% per annum with effect from the date of filing of the present complaint i.e. 1.10.2007, till realization. In addition, they would also be liable to punishment as provided under Section 27 of the Consumer Protection Act, 1986. The OPs shall also pay Rs. 10,000 as costs of litigation".

Aggrieved by the order of the District Forum, HDFC Bank filed an appeal before the State Commission. The State Commission after analysing the case in great detail and after hearing the Advocate for the appellant, HDFC Bank observed, inter alia, as follows: "We have gone through the copy of letter Annexure R -9. It shows that the borrower on the left side had signed at two places. It is not clear as to why he had signed at two places. The endorsement on the typed letter under the heading relinquishment'' of all claims'' it has been mentioned by someone as under - I am unable to pay the instalments. Request you to recover loan from sale of vehicle. I will clear balance dues.''

Certainly this endorsement was not signed by the respondent. No evidence has been led by the bank that it is written or signed by the respondent. There are no signatures under the said endorsement. This means that the bank had tampered with the letter annexure R -9. It appears that this letter was got signed by the bank from the respondent at the time of advancing loan, so, no reliance can be placed on this letter. It further amounts to unfair trade practice. There is no evidence that any notice was given to the respondent for repossessing the vehicle on account of default of payment of instalments. There is also no evidence that any notice was given to the respondent before sale of the vehicle. In fact whole proceedings had been done in a perfunctory manner, rather in highhandedness manner. It is not proved on file that respondent had surrendered the vehicle voluntarily but it was snatched forcibly by the musclemen of bank. There is no affidavit of responsible officer of the bank that the respondent had voluntarily surrendered the vehicle and no force was used.

The vehicle was sold to Shri Rakesh Sharma who had not given any quotation for purchase of the vehicle till 23.8.2007. But a perusal of Annexure R -7 shows that it is dated 11.8.2007 and then date was scored off and it was mentioned to be 1.9.2007. The date 11.8.2007 was printed along with body of letter vide which vehicle was released to Shri Rakesh Sharma. It shows that the bank had already made up its mind without proper quotation to sell the vehicle to Shri Rakesh Sharma for Rs. 1,55,000. This again shows high -handedness or perfunctory manner in which whole proceedings were carried out by the bank."

THEREAFTER , the State Commission concurring with the reasoning given by the District Consumer Forum, dismissed the same in limini with costs of Rs. 5,000.

DISSATISFI ED by the order of the State Commission, HDFC Bank filed this Revision Petition before us. When the matter came up for admission, we observed, inter alia, as follows: "Learned Counsel for petitioner submits that he is willing to pay Rs. 2.5 lakh directly to the respondent/complainant Shri Balwinder Singh within a period of 4 weeks from today by means of Demand Draft. He further submits that he is confining his observation only to the compensation awarded to the complainant by the District Forum was concurred by the State Commission.

Notice shall issue to the respondent subject to the petitioner directly remitting Rs. 5,000 to the respondent by means of Demand Draft to enable him to incur travel and other related expenditure. Subject to the above payments, order of the Fora below shall be stayed. Stay order shall operate only on payment of above said amounts to the respondents. Stand over to 26.2.2009. Dasti in addition."

WE have heard the learned Counsel for the petitioners and the respondents.

THIS case is squarely covered by the ratio of Judgment of this Commission in Citicorp Maruti Finance Ltd. v. S. Vijayalaxmi, III (2007) CPJ 161 (NC), wherein it was held as under: "Hire Purchase Agreement: A -1. When a vehicle is purchased by a person (consumer) by borrowing money from the money lender/financier/banker, the consumer is the owner of the vehicle and not the money lender/financier/banker, unless the ownership is transferred.

In a democratic country having well established independent Judiciary and having various laws it is impermissible for the money lender/financier/banker to take possession of the vehicle for which loan is advanced, by use of force. 3. Legal or judicial process may be slow but it is no excuse for employing musclemen to repossess the vehicle for which loan is given. Such type of instant justice'' cannot be permitted in a civilized society where there is effective rule of law. Otherwise, it would result in anarchy, that too, when the borrower retorts and uses the force.

B -1. A hire -purchase agreement is a normal one under which owner hires goods to another party called the hirer and further agrees that the hirer shall have an option to purchase the chattel when he has paid a certain sum, or when the hire -rental payments have reached the hire -purchase price stipulated in the agreement.

As against this, when a person desires to purchase vehicle/goods and not having sufficient money on hand, borrows the amount needed from a. money lender/financier/banker and pays it over to the vender of the vehicle, the transaction between the consumer and the money lender will unquestionably be a loan transaction. In such a case the vehicle purchased by the consumer is registered in the name of the consumer and remains at all material times so registered in his name. The consumer remains qua the world at large the owner and remains in possession of the vehicle. By an agreement the vehicle can be given as security for the loan advanced. In such a case, the right to seize the vehicle is merely a licence to ensure compliance with the terms of the so -called hire purchase agreement (Re. AIR 1966 SC 1178). C. -It is to be stated that many financiers/banks are in race for giving loan for purchase of vehicles or various articles. After giving loan and taking interest in advance, the polite behaviour changes because of the documents which are signed on the dotted lines by the borrower. On occasions, borrower suffers harassment, torture, or abuses at the hands of the musclemen of the money lender. Such a behaviour is required to be prohibited and the process of repossession is required to be streamlined so as to fit in cultural civilized society. Let the rule of law prevail and not that of jungle where might is right.

THE National Commission analysed the following Judgments: 1. In Orix Auto Finance (India) Ltd. v. Jagmander Singh and Anr., (2006) 2 SCC 598. 2. In ICICI Bank v. Prakash Kaur and Ors., (2007) 2 SCC 711. 3. Dr. Amitabh Verma v. Commissioner of Police and Ors., 100 (2002) DLT 581 (Delhi High Court). 4. Tarun Bhargava v. State of Haryana and Anr., AIR 2003 P and H 98.

THE Commission held that the entire action of the appellant, Citicorp Maruti Finance Ltd. was arbitrary, illegal and criminal. To quote the Commission, "The entire action of the appellant was illegal, arbitrary and criminal in nature and requires to be visited with punitive damages besides refunding the market value of the vehicle with interest. We dismiss the appeal and impose punitive damages of Rs. 50,000 which shall be paid to the respondent for the mental agony, harassment, and humiliation she suffered before her neighbours, friends and relatives at the hands of such an unscrupulous and uncouth provider of service. In the result appeal is dismissed with aforesaid order. Payment shall be made within one month."

ACCORDINGL Y , we dismiss this Revision Petition. As the petitioner has dragged the complainant up to the level of the National Commission; we hereby award Rs. 25,000 as exemplary cost. We also direct the HDFC Bank not to resort to illegal practice of engaging musclemen directly or through their recovery agents in future. As the petitioner has already paid Rs. 2,50,000 to the respondent in compliance of our order dated 12th January, 2009, the balance amount shall be payable as per the orders of the Fora below and the tost imposed by us within a period of four weeks'' from the date of this order.