MAGMA FINCORP LTD vs Tikeswar Barik

THE complainant/respondent purchased a Tipper and got the same financed from petitioner company to the extent of Rs.8,25,519/ -, contributing the balance amount of Rs.1,03,142/ - from his own pocket as down payment. The said loan was payable in equated monthly instalments comprising first instalment of Rs.21,551/ - and the remaining instalments of Rs.23,700/ -. The complainant paid a total sum of Rs.6,26,450/ - to the petitioner company. Since there was some default in regular payment of the equated monthly instalments, the vehicle was repossessed by the petitioner company on 9.11.2009, when it was on the road loaded with iron ore. The vehicle was repossessed through an agency appointed by the petitioner company for such purpose. The vehicle was later sold by the petitioner company on 1.12.2009 for a consideration of Rs.3,10,000/ -. According to the petitioner company despite receiving Rs.6,26,450/ - from complainant by way of equated monthly instalments and selling the vehicle for Rs.3,10,000/ -, there was still an outstanding balance of Rs.7,44,160/ - against the complainant, though the total finance granted by the petitioner company was only Rs.8,25,519/ -, the down payment of Rs.1,03,142/ - having been made by the complainant. Being aggrieved from the aforesaid acts of petitioner company, the complainant approached the concerned District Forum seeking the following reliefs; To direct them to handover the alleged vehicle to the complainant or; in case of selling the said vehicle, a new vehicle of same type and model be handed over to the Complainant in place of the alleged vehicle.

To direct them for payment a sum of Rs.2,50,000/ - to the complainant towards loss of earning upon self employment.

To direct them for payment of Rs.1,00,000/ - to the complainant towards physical harassment and mental agony.

To direct them to pay a sum of Rs.50,000/ - to the complainant for cost of this litigation.

Any other suitable relief which the Hon''ble Forum deems fit, just and proper may also be claimed.

THE complaint was registered by the petitioner company primarily on the ground that the complainant was in default to the extent of Rs.1,65,400/ - towards rental besides Delayed Payment Charges (DPC) of Rs.33,139/ -. It was also pointed out in reply that an award had already been passed against the complainant by an Arbitrator appointed in terms of the arbitration agreement between the parties.

THE District Forum noted that the complainant having already paid a sum of Rs.6,26,450/ - out of the financed amount of Rs.8,25,519/ -, there was an outstanding principal amount of Rs.1,29,801/ - as in November, 2009. It was further noticed by the District Forum that a vehicle which was acquired worth for more than Rs.10,00,000/ - had been sold by the petitioner company for an amount of Rs.3,10,000/ - in a hasty manner. The District Forum did not find any justification for adding the delay payment charges to the interest debited in the account of the complainant, considering that a flat rate of interest had been charged. It was also noticed that the vehicle was repossessed without any order from a Competent Court. Taking the value of the vehicle at the time of its re -sale to be Rs.8,00,000/ - and considering that the outstanding EMIs at the time of repossession of the vehicle came to Rs.1,29,801/ - whereas subsequent EMIs amounted to Rs.3,55,500/ - thereby making a total sum of Rs.4,85,301/ -, the District Forum awarded a sum of Rs.3,00,000/ - as compensation to the complainant being the difference between the estimated value of the vehicle at the time of its repossession and the amount which was found payable by the complainant including the EMIs which were outstanding at that time. A sum of Rs.20,000/ - was also awarded as compensation on account of harassment and mental agony of the complainant, whereas another sum of Rs.5,000/ - was awarded towards the cost of litigation. Being aggrieved from the order passed by the District Forum, the petitioner company approached the concerned State Commission by way of an appeal. Since, there was a delay of 151 days in filing the said appeal, an application seeking condonation of delay in filing appeal was also submitted. The State Commission vide its order dated 5.1.2015 dismissed the application seeking condonation of delay in filing the appeal and consequently the appeal was dismissed as barred by limitation.

IN ICICI Bank Ltd. Vs. Prakash Kaur and Ors., 2007 2 SCC 711, the petitioner purchased a truck getting it financed from ICICI Bank. He having defaulted in payment of the instalments, the possession of the truck was taken by the Bank by use of force. The truck having not been returned to him, a Writ Petition was filed by him, seeking registration of an FIR. Disapproving the course of action adopted by the Bank, the Hon''ble Supreme Court directed the Bank to forthwith release the truck to the petitioner. The Hon''ble Supreme Court was of the view that instead of taking resort to strong arm tactics, the bank should resort to procedure recognized by law to take possession of vehicle in cases where borrower itself defaulted in payment of instalments. During the course of a separate judgment, Hon''ble Dr. Justice A.R. Laxmanan noted that the recovery/collection agents who are contractors hired by the banks, physically and mentally torture them and force them into paying the dues and the self -respect of a man and his stature in society is immaterial to such agents. His Lordship also observed that many a times even notice is not given to the borrowers who purchased the vehicles on hire -purchase basis and the vehicle is seized in public places deliberately in order to cause embarrassment to the borrower. In a subsequent decision CITICORPN. Maruti Finance Ltd. Vs. S. Vijalaxmi, 2011 4 CPJ 67(SC), a Three Judges -Bench of the Hon''ble Supreme Court reiterated as under: "We reiterated the earlier view taken that even in case of mortgaged goods subject to Hire Purchase Agreements, the recovery process has to be in accordance with law and the recovery process referred to in the Agreements also contemplates such recovery to be effected in due process of law and not by use of force. Till such time as the owner the ownership is not transferred to the purchaser, the hirer normally continues to be the owner of the goods, but that does not entitle him on the strength of the agreement to take back possession of the vehicle by use of force".

IT is an admitted case that the vehicle in question was neither surrendered by the complainant to the petitioner company nor was it repossessed with his consent. No order from a competent court of law was obtained before repossessing the vehicle. As noted earlier, the vehicle was in use and goods were loaded on it when it came to be seized by the agency appointed by the petitioner company for such purposes. Therefore, the seizure of the vehicle in the aforesaid manner was absolutely illegal and unjustified. If the vehicle is seized in such a manner, it is bound to cause tremendous harassment and mental agony to the owner of the vehicle besides damaging his reputation. Therefore, grant of appropriate compensation on account of such gross deficiency in service would be eminently justified.

COMING to the sale of the vehicle, no material has been placed on record by the petitioner company to show that the sale was duly advertised in the newspapers before the vehicle was sold. Though the petitioner claimed to have sent a notice to the complainant before selling the vehicle, there is no proof of service of the said notice. A vehicle which was only about 2 1/2 years old at the time it was repossessed was allegedly sold by the petitioner company at less than one -third of the price for which it was acquired. This is yet another deficiency on the part of the petitioner company in rendering services to the complainant.

CONSIDERING the aforesaid gross deficiency in the services on the part of the petitioner company, award of compensation to the extent of Rs.3,20,000/ - cannot be said to be unjustified or unreasonable in the facts and circumstances of this case. Consequently, no ground for interference with the order of District Forum on merits is made out.

SINCE in my view the order passed by the District Forum is otherwise justified on merits, no useful purpose will be served by condoning the delay in filing appeal before the State Commission and remanding the matter back to the State Commission for deciding the appeal on merits. The revision petition is accordingly dismissed.