M/S Magma Leasing Limited vs BHARAT SINGH

THE respondent in this revision petition was the complainant before the District Consumer Disputes Redressal Forum II, New Delhi (''the District Forum'', in short) and the petitioner was the opposite party (OP). For convenience, we shall refer to them as such.

THE complainant alleged deficiency in service against the OP because in January 2005 the latter forcibly repossessed his motor vehicle (a Toyota Qualis van that he had purchased in November 2003 with a loan of Rs. 3.90 lakh from the OP) though by then, according to the complainant, he had repaid Rs. 2,18,142/-. After seizing the vehicle illegally, the OP sold it in July 2005 allegedly for Rs. 1.90 lakh (though according the complainant, the vehicle was actually sold for Rs. 4.17 lakh) and then claimed a balance of Rs. 92,845/- as still payable by the complainant. He, therefore, prayed for return of the vehicle (or, payment of balance amount after deducting the amount due from the market price of the vehicle), Rs. 2.30 lakh as compensation for business loss and harassment and mental agony suffered by him and Rs. 10,000/- towards costs.

THE OP/petitioner contested the allegations by filing its written version in which it stated that it had repossessed the vehicle in January 2005 in accordance with the terms of the agreement between the parties because the complainant was a repeated defaulter. It sold the vehicle in July 2005 at the best quoted price after following due process. As the complainant did not still pay the balance loan amount of Rs. 92,845/- despite notice issued to him, the OP, again according to the terms of the loan-cum-hypothecation agreement, referred the dispute to an arbitrator in September 2005 and the arbitrator passed an award in favour of the OP. Hence, the OP claimed that District Forum had no jurisdiction to adjudicate upon the complaint.

ON consideration of the pleadings of the parties and their evidence, the District Forum passed its order on 14.08.2006, partly allowing the complaint and directing the OP to refund to the complainant the sum of Rs. 1,40,000/- and pay Rs. 25.000/- as compensation for harassment and mental agony suffered by him and Rs. 5,000/- towards cost within one month.

THE OP''s appeal against the District Forum''s order to the Delhi State Consumer Disputes Redressal Commission, Delhi (in short, ''the State Commission'') was dismissed by the latter by its order of 08.12.2006, with some additional general directions to financiers of such goods. Aggrieved, the OP filed this petition.

WE have heard Mr. Sanjeev Singh and Mr. Prashant Jain, learned counsel for the petitioner/OP and the respondent/complainant respectively and considered the documents on record.

IN adjudicating the dispute, it will be useful to notice the relevant observations/findings of the District Forum: " The complainant is a resident of Delhi. The OP has its Zonal Office at Sant Nagar within the territorial jurisdiction of this forum. The agreement was executed at Delhi and finance was made available to the complainant in Delhi. Hence no part of cause of action arose at Kolkata where the registered office of the OP is situated. It is settled law that the parties by agreement cannot create jurisdiction on a court at a particular place which does not have the same at all. In the case in hand the contract was completed within the territorial jurisdiction of this Forum and cause of action also arose within our jurisdiction. Hence, this Forum has the territorial jurisdiction in the matter. As to the arbitration clause in the agreement, such a clause cannot bar the remedy under the Consumer Protection Act, 1986 (''Act'', for short) because by virtue of section 3 of the Act the remedy under the Act is in addition to and not derogation of provisions of any other law. In the case of M/s Fair Air Engineers Pvt. Ltd. vs N. K. Modi, AIR 1997 SC 533, it has been held by the Hon''ble Supreme Court that though the District Forum, State Commission and National Commission are judicial authorities for the purpose of section 34 of the Arbitration Act, in view of the Act and by operation of section 3 thereof, it would be appropriate that these Forums created under the Act are at liberty to proceed with the matter in accordance with the provisions of the Act rather than relegating the parties to any arbitration proceeding pursuant to a contract entered into between the parties. In view of the law on the point, we hold that the complaint is maintainable even if an arbitration clause exists in the agreement. There is also no force in the plea regarding the commercial purpose. The complainant has stated that he purchased the vehicle for self-employment. There is no evidence to the contrary. Even otherwise financing of a vehicle is a service and this service was not obtained by the complainant from the OP for further trading or resale. Hence the hiring of this service cannot be said to be for commercial purpose. On merits, the complainant has categorically stated in paragraph no. 4 of the complaint that the vehicle was seized on 12.01.2005. According to the OP as stated in the corresponding paragraph no. 4 of the reply, the vehicle was seized only after the complainant filed to make the payment demanded vide notice dated 17.01.2000. This reply is in contradiction to the notice dated 17.01.2005 which clearly stated that the possession of the vehicle had been taken as per the terms of the agreement. That is to say, the OP seized the vehicle of the complainant some time before 17.01.205. If the notice dated 15.01.2005 is taken as the notice for seizure of the vehicle, the vehicle was seized before the period of 7 days granted in this very notice. It appears to us that these notices are just an eye wash and no prior notice was given to the complainant for seizure of the vehicle and thus the OP violated the judgment of the Hon''ble High Court of Delhi in Amitabh Verma vs Commissioner of Police, 2003 Rajdhani Law Reporter 144. Besides this the alleged sale of the vehicle by the OP for a consideration of Rs.1,90,000/- for recovery of the dues against the complainant is a dubious one. According to the OP it was sold for Rs.1,90,000/- only. The purchase value of this vehicle was around Rs.6 lakh. On the date of seizure by the OP in January 2005, the vehicle was only 2 years old and the current insured value of the vehicle was Rs.4,72,000/- The OP has not disclosed the details of the sale. In these facts and circumstances of the case the averment of the complainant that the vehicle was sold for Rs.4,17,000/- carries weight. In any case we hold that the value of the vehicle at the time of the alleged sale by the OP was not less than Rs.4 lakh. As on 31.12.2004 the complainant had paid to the OP a total sum of Rs.2,18,192/- against the total amount of 20 installments of Rs.2,72,740/-. Thus the complainant was in arrears of Rs.54,548/- as on 31.12.2004 which was demanded by the OP vide letter dated 15.01.2005. The balance amount of the remaining 15 installments was Rs.13,637/- x 15 = Rs.2,04,555/-. Thus, the total amount due from the complainant in January 2005, including the arrears of Rs.54,548/- was Rs.2,59,103/- which is rounded off to Rs.2,60,000/-. The pre-payment of remaining 15 installments includes the interest also. So at the most the OP was entitled to recover from the complainant Rs.2,60,000/- in full and final settlement of its dues from the complainant. The sale price of the vehicle in question having been fixed at Rs.4 lakh a sum of Rs.1,40,000/- is due from the OP to the complainant and hence the payment of Rs.92,945/- raised by the OP against the complainant is illegal and unjustified. Taking into consideration the totality of the circumstances we hold that the OP is guilty of deficiency in service as well as of unfair trade practice. We direct the OP to refund to the complainant the sum of Rs.1,40,000/-. We further direct the OP to pay to the complainant a compensation of Rs.25,000/- for the inconvenience, harassment and mental agony suffered by him. The OP shall also pay Rs.5,000/- as cost of litigation. OP is directed to comply with the order within one month of its receipt."

LEARNED counsel for the petitioner has primarily emphasised that the impugned order of the State Commission is legally invalid because it has given directions in paragraph 14 of the order which is beyond the purview of the powers of the State Commission under section 14 of the Act. Moreover, he has drawn attention to the documents purported to have been filed before the State Commission which would show that the due notices were issued by the OP to the complainant bringing to his notice the persistent default in the payment of EMI as well as documents showing quotations were invited before the sale of the vehicle in January 2005 and it was sold to the highest bidder for Rs.1.90 lakh as against the assessed value of Rs.2.2 lakh. Copy of the letter dated 30.07.2005 issued by the authorised signatory of the OP to the complainant has also been produced in support of his contention that the complainant was given time for 5 days to pay the balance of the loan (Rs.92,945/-) after adjustment of the sale proceeds of the vehicle against the loan as outstanding at the time of the sale of the vehicle. A copy of the arbitration award dated 19.08.2006 passed by one Swapan Kumar Chatterjee, Advocate, arbitrator nominated by the OP has also been produced on record.

THESE contentions have also been reiterated in the revision petition.

ON the other hand, the learned counsel for the respondent/complainant filed a reply to the revision petition in which he has pointed out that in the written version before the District Forum, the OP did not ever mention issuance of notices dated 17.11.2004 and 17.12.2004 and reiterated that the complainant received only two letters from the OP dated 15.01.2005 and 17.01.2005. Moreover, as is clearly noticed in the District Forum''s order that there was no denial by the OP that the vehicle was repossessed on 12.01.2005. Learned counsel for the respondent has also emphasised that the document purporting to be a report on the assessment of the value of the vehicle and quotations received from the two intending buyers are also manufactured documents because these were not produced before the District Forum as noticed in the District Forum''s order.

BOTH the counsels cited several judgments of the Apex Court as well as this Commission in respect of their contentions.

IT is clear from the order of the District Forum that copies of notices dated 15.01.2005 and 17.01.2005 were produced by the OP by way of documentary evidence in support of his case, we therefore, inclined to agree with Mr. Jain. Learned counsel for the respondent states that copies of the so called notices dated 17.11.2004 and 17.12.2004 could not be read as an evidence at this stage. Moreover, the content of these two notices as shown that they are merely notices for repayment of EMI and did not amount to any notice advising the complainant/respondent to pay up the entire balance amount of outstanding loan failing which the vehicle will be repossessed and sold. The District Forum has also cogently explained how the notices dated 17.01.205 was not followed up by the OP because that notice gave seven days time to the complainant to pay up the balance dues failing which the vehicle would be repossessed. However, the vehicle was actually reposed on 12.01.2005.

AS regards, the fair market value of the vehicle, the District Forum''s order clearly states that the OP did not disclose the details of the sale before the District Forum. Therefore, Mr. Jain contents that the document purported to be shown as the assessment of the market value in January 2005, quotations and intending purchasers are the documents which were not produced before the District Forum are once again not read as evidence at a later stage. Further, the fact that the vehicle was insured for Rs.4,72,000/- at the relevant time, would also suggest that the alleged sale value was Rs.1,90,000/- was grossly under estimated amount.

AS regards the judgments of the Apex Court cited by the learned counsel for the petitioner/OP, there is no dispute regarding the general preposition that hirer/financier of a vehicle obtain on a higher purchase basis by another person has the right to repossess the vehicle for default in payment by the purchaser. However, from the well-reasoned order of the District Forum, it is quite clear that the vehicle was actually repossessed on a date prior to the issue of notice on which the OP itself has relied. Similarly, the OP did not produce any document in his support. It is a clear that the vehicle was sold at a best price of Rs.1,90,000/-.

AS regards the question of jurisdiction, the District Forum has adequately addressed the issue of jurisdiction of Consumer Fora even when the cases were agreed between the parties provided for arbitration has been reiterated by the Apex Court in the case of National Seeds Corporation Ltd., v M. Madhusudan Reddy and Another [ (2012) 2 SCC 506].

IN view of the discussion above, we partly allow the revision petition and set aside the directions/observations of the State Commission in paragraph 14 of its order. However, part of the order dismissing the appeal of the petitioner and confirming the award of the District Forum needs no intervention under the provisions of section 21 (b) of the Consumer Protection Act, 1986.

THE revision petition is disposed of in the aforesaid terms leaving the parties to bear their own cost.