KOTAK MAHINDRA BANK LTD. vs Krishan Kumar Dhankar

APPELLANT Bank which was the opposite party No. 3 before the State Commission has filed this Appeal against the judgment and order dated 23.3.2007 passed by the State Consumer Disputes Redressal Commission, Delhi (in short, ''the State Commission'') in Complaint Case No. C -155/20002 whereby the State Commission allowing the complaint has directed the Appellant Bank to refund the amount of Rs. 4,40,000 deposited by the Complainant towards the margin money and to pay Rs. 1,00,000 as compensation for wrongful action. Opposite party No. 1 was directed to pay the sum of Rs. 50,000 to the complainant as compensation towards mental agony and the opposite party No. 2 was directed to refund the entire cost of the machine in addition to compensation of Rs. 1,00,000 for mental agony and harassment. Facts:

Complainant/Respondent purchased a L & T. 580 -3, Loader Backhoe Hydraulic Excavator Cum Loader Machine manufactured by the opposite party No. 2 from the opposite party No. 1 -Dealer for a sum of Rs. 14,15,000 on 4.12.2001 after raising a loan of Rs. 9,75,000 from the Appellant Bank. The warranty period of the machine was six months. Machine started giving trouble in the evening of 2.5.2002 opposite party No. 1 - Dealer (hereinafter to be referred to as the "Dealer") attended to the problem on 7.5.02. It made entry of the working hours in the service book as under:

DESPITE number of complaints, the defects developed in the machine during the warranty period could not be cured. Respondent paid an amount of Rs. 5,51,000 to the Appellant Bank towards the loan amount upto October, 2002. On the intervening night of 4/5th January, 2003, the musclemen of the Appellant Bank forcibly took away the machine. On Respondent approaching the Appellant Bank on 6.1.2003, it demanded Rs. 7,50,000 being the outstanding amount as also Rs. 25,000 towards other charges. Complainant, being aggrieved, filed the complaint before the State Commission alleging deficiency in service on the part of the opposite parties.

OPPOSITE party No. 1 - Dealer contested the complaint on the grounds; that its liability was limited being the dealer; that the defects in the machine pointed out by the Respondent were rectified; that the Complainant was not a ''consumer'' as the machine was purchased for commercial purposes.

OPPOSITE party No. 2 - Manufacturer was proceeded ex parte by the State Commission. Opposite party No. 3/Appellant was not a party to the original complaint filed in May 2002 and no relief was claimed against them. They were added as a respondent party by filing the amended complaint in May, 2005.

STATE Commission after considering the facts, pleadings and evidence adduced by the parties, came to the conclusion that the Appellant Bank was not justified in taking forcible possession of the machine without resorting to the legal remedy. That a defective machine was supplied to the Respondent/Complainant.

STATE Commission allowed the complaint and directed the Appellant Bank to refund the amount of Rs. 4,40,000 deposited by the Complainant towards the margin money and to pay Rs. 1,00,000 as compensation for wrongful action. Opposite party No. 1 was directed to pay the sum of Rs. 50,000 to the complainant as compensation towards mental agony and the opposite party No. 2 was directed to refund the entire cost of the machine in addition to compensation of Rs. 1,00,000 for mental agony and harassment. Opposite party No. 1 - Dealer accepted the order passed by the State Commission and did not file any appeal. Opposite party No. 2 -Manufacturer filed First Appeal No. 305/07 against the ex parte order of the State Commission which was disposed of by this Commission on 10.12.2008 by directing the opposite party No. 2 to pay a consolidated compensation of Rs. 4 lakh in place of refund of the entire cost of machine as directed by the State Commission.

APPELLANT , being aggrieved, has filed the present appeal. We have heard the learned Counsel appearing for the parties at length.

Learned Counsel appearing for the Appellant vehemently argued that once the entire cost of the machine was ordered to be refunded by the opposite party No. 2, i.e., the Manufacturer, the direction given by the State Commission to the Appellant to refund the margin money along with compensation of Rs. 1,00,000 was uncalled for and unwarranted.

STATE Commission while allowing the complaint gave the following directions to the three Opposite Parties: (i) O.P. No. 1 shall pay compensation of Rs. 50,000 for having put the complainant to mental agony, harassment for taking the machine time and again for removal of the defects.

(ii) O.P. No. 2 shall refund the entire cost of the machine to the Complainant as he raised a loan from the Bank @ 9% interest. Besides, O.P. No. 2 shall also pay Rs. 1,00,000 as compensation for mental agony and harassment.

(iii) So far as O.P. No. 3 is concerned, it has taken away the machine without resorting to the legal remedy and also raised demand of the balance amount payable by the complainant. O.P. No. 3 shall refund the amount of Rs. 4,40,000 towards the margin money paid by the complainant while raising the loan and shall also pay Rs. 1,00,000 as compensation for wrongful action.

We find substance in the submission made by the learned Counsel for the Appellant. State Commission has directed the opposite party No. 2 to pay the entire cost of the machine, Entire cost would include the margin money as well. Cost of machine was Rs. 14,15,000. Respondent raised a loan of Rs. 9,75,000 from the Appellant Bank and paid Rs. 4,40,000 from his own pocket. Direction of the State Commission to the opposite party No. 2 to pay the entire cost would be the purchase price of the machine, i.e. Rs. 14,15,000. Once the entire cost is ordered to be refunded, direction given by the State Commission to the Appellant to pay the margin money in addition to the entire cost is not justified. It amounts to double benefit. In any case, the Appellant Bank could not be made liable to pay the margin money.

LEARNED Counsel appearing for the Respondent/Complainant argued that the entire cost ordered to be paid by the opposite party No. 2 had been reduced to Rs. 4 lakh by this Commission in First Appeal No. 305/007 filed by the opposite party No. 2. Since the amount payable by the opposite party No. 2 had been reduced, Respondent is entitled to get the margin -money of Rs. 4,40,000 directed to be paid by the Appellant. We do not find any substance in this submission. While partly allowing the First Appeal No. 305/07, this Commission has observed as under: As regards refund of the entire cost of the machine, admittedly, the machine was seized by Respondent No. 3 bank in the night of 4/5th January, 2003 on ground of respondent No. 1 not having paid the balance loan amount. As may be seen from the amended complaint, the machine was in use by Respondent No. 1 till 23.10.2002 and upto this time it had worked 1022 hours. Order for refund of the entire cost against the Appellant could have been passed only subject to the return of the machine. Considering the use of machine by Respondent No. 1 for about 10 months, award of Rs. 50,000 made against the dealer who has not filed appeal and the facts and circumstances of the case, we deem it just and proper that a consolidated compensation of Rs. 4.00 lakh is awarded in place of refund of the entire cost of machine.

RESPONDENT purchased the machine for Rs. 14,15,000 on 4.12.2001. Machine was used by the Respondent for 1022 hours till 23.10.2002. While directing the opposite party 2 to refund the entire cost of the machine, State Commission did not direct the Respondent to return the machine. Under these circumstances, this Commission modified the order of the State Commission directing the Manufacturer/opposite party No. 2 to pay the lump sum compensation of Rs. 4 lakh in place of entire cost of machine. That order has attained finality. Otherwise also, we agree with that order. Respondent cannot be paid the entire purchase price as well as retain the machine. For the reasons stated above, the appeal is accepted and the direction given by the State Commission to the Appellant Bank to refund the margin money along with compensation of Rs. 1,00,000 is set aside. No orders as to cost. Registry is also directed to refund the sum of Rs. 35,000 deposited by the Appellant as statutory deposit along with accrued interest.