PRESIDENT, KRIYA YOGA FOUNDATION TRUST vs TEAM FINANCE COMPANY

THIS is a complaint alleging deficiency of service of Financier under the hire purchase agreement

COMPLAINANT No, 1 is a trust of which complainant No. 2 is the President. COMPLAINANT No. 1 has established English Medium School at Bhubaneswar. For facilitating the functioning of the trust, it intended to have a bus. President entered into contract with opposite party No. 1 through its agents to finance complainants for possessing such a bus. After mutual offer and acceptance, an agreement was entered into where complainant was to pay Rs. 1,00,000/- initially and the balance was to be paid monthly instalment of Rs. 10,953/-. On such hire purchase agreement ORF 9079 came into legal possession of complainants in the month of September, 1989. COMPLAINANTs got the bus registered with Regional Transport Officer, Bhubaneswar on 16.10.1989. When the bus was sent to opposite party No. 1 for third free service on 6.1.1990, it was seized and a letter to that effect was sent on 6.1.1990 by opposite party No. 1. COMPLAINANT sent a notice through lawyer disputing the validity of such seizure which was received by opposite party No. 1 on 29.3.1990. But no reply having been given, this complaint has been filed alleging deficiency in service where prayer is made to direct the opposite parties to pay the following : (1) Hire Charges of the vehicle for period from January To May @ Rs. 18,000/- per month. Rs. 90,000/- (2) Taxes etc. Rs. 2,500/- (3) Salary of staff Rs. 7,500/- (4) Reputation & good will Rs. 50,000/- (5) Damage caused to the vehicle Rs. 15,000/- Rs. 1,65,000/- It was further prayed to direct opposite parties to deliver back the bus after effecting the service in good condition to accept the monthly instalment from the date they deliver the bus and to exclude the period of detention of the vehicle from computing the period for payent of monthly instalment. After receipt of notice, opposite parties stated their case jointly. A challenge to the maintainability of the complaint has been made. They allege that dispute does not relate to unfair trade practice adopted by trader, defect in goods or deficiency in service and also does not relate to charging excess price fixed. Opposite parties" claim that complainant is not a consumer. It is stated that Opposite Party No. 2 not being within the jurisdiction of the Commission, this complaint is not maintainable against it. It is asserted by them that the foundation trust had a meeting on 5.7.1989 at 10 A.M. where it was resolved that it would enter into hire purchase agreement for finance from Industrial Credit and Development Syndicate Limited, New Delhi. This hire purchase facility was to be used for purchase of DCM Toyota standard bus. On the basis of such resolution an amount of Rs. 94,316/- was received by opposite party No. 1 and on 25.7.1989 and on the date the bus was supplied on 23.9.1989, hire purchase agreement was entered into between the parties. The bus was used by complainants for hire which is contrary to the purchase agreement. Complainant No. 2 was intimated on 6.1.1990 that in spite of commitment to start payment after two months of taking delivery of the bus, no payment of estimated monthly instalment was made. Accordingly, the bus has been detained till default amounts are paid up to date. It was stated that instalments of September, October and November amounting to Rs. 32,859/- was remaining outstanding. In the letter, it was further intimated that instalments of December and January may be paid by February, 1990. They claim that on receipt of the lawyer''s notice, reply was given through lawyer on 2.4.1990.

Proprietor of Team Finance Company (O.P. No. 1) filed a further affidavit on 23.2.1991 for self and being authorised by opposite party No. 2. In the said additional affidavit it was stated that physical delivery of possession of the vehicle was given on 26.3.1989. In August, 1989, complainants approached the opposite parties and intimated that the vehicle would be purchased by complainant No. 1 as per resolution of the Trust Board and not by Miss Pratima Tiwary, a member of the trust on whose behalf the bus was received by complainant No. 2. This fact was intimated to the Insurance Company by opposite party No. 2 and necessary documentation of hire purchase was made on 23.9.1989.

COMPLAINANTS in reply filed a petition including further facts. On the assertions and another assertions, main points for consideration are : (i) Whether complainants are consumers; (ii) Whether the dispute raised comes within the scope of adjudication under the Consumer Protection Act; (iii) What direction would be given to opposite parties on the facts and in the circumstances of this case?

IT is not in dispute that opposite party No. 2 is agent of opposite party No. 1. Whatever might have been the position before, it is not disputed that on 23.9.1989, parties entered into a hire purchase agreement and bus continued in possession of complainants on basis of such agreement. There is no dispute that complainants have not paid the instalments as reflected in the hire purchase agreement. Undisputedly complainants took the vehicle to opposite party No. 1 for third free service on 6.1.1990 when it was seized. Seizure was disputed by complainants for which notice through lawyer was issued by them. In the agreement, there is a clause that all disputes, differences and/or claim arising out of the agreement are to be settled by arbitration of a named arbitrator as provided in the agreement. Agreement contained another clause which is material for this complaint which is quoted below : - "6. The owners may terminate with or without notice the contract of hiring and forthwith retake and recover possession of the vehicle. (a) If any monthly hire or part thereof is in arrears and left unpaid on the date fixed for its payments for any reasons whatsoever and particularly notwithstanding any claim which the Hirer may have in respect of the policy of Insurance hereinafter mentioned. (b) If the Hirer omits to inform the owners within 48 hours of any accident which causes damage to the vehicle, bodily injury to any third party or damage to any other vehicle or property. (c) If the Hirer commits or suffers any breach of the conditions and obligations herein stipulated to be observed and performed by him. (d) If the Hirer or Guarantor dies, becomes insolvent or has received orders made against him, is adjudged lunatic or allows the vehicle to be seized in distress or execution or under any other process of law. (e) If the Hirer abandons the vehicle. (f) If in their opinion (which shall be conclusive and binding on the Hirer) there shall be or arise any danger or possibility of their not receiving or recovering the full amount or amounts then due to them under Clause V and condition 3 hereof or of their being unable to exercise any or all of the powers of rights or enforce any or all of the benefits conferred upon them by this agreement whether by reason of any act deed or omission on the part of the Hirer or by reason of any circumstances or occurrence whatsoever beyond the power and control of the owners expressly including any ordinance and Legislation of or under the authority of the Central or any Union Government or other body or person entitled/to legislate)".

Opposite party No. 2 is the financier and is the owner of the vehicle. It has given the vehicle on hire under the terms of the hire purchase agreement. Any owner of the vehicle who gives such vehicle on hire either on payment of hire charges or promised to pay the same or on deferred payment, shall be deemed to be rendering service to the hirer. If there would be deficiency in such service of hiring, as per the agreement the hirer who has paid for the hiring service being a consumer can make a complaint. Accordingly, the opposite party No. 1 being the owner has agreed to render service as per the hire purchase agreement and complaint No. 1 is a consumer under this Act. Complaint is maintainable. Grievance of the complainants is that the vehicle was seized when it was sent for third free servicing without any notice. Seizure being in Orissa, cause of action arises in this State and residence of opposite party No. 2 is immaterial. Added to it, opposite party No. 1 is a resident in Orissa. Accordingly, this Commission has jurisdiction to consider the grievance.

AS per the hire purchase agreement, opposite party No. 2 may terminate the contract with or without notice and retake or recover possession of the vehicle. There is no agreement for temporary seizure of the vehicle. Letter dated 6.1.1990 reflects temporary seizure of the vehicle. It reads as follows : "This has to bring to your kind knowledge that you have not paid your SMI''s as promised. In spite of your commitment to start payment after two months of taking delivery of the DCM Toyota Bus. AS per the instruction from M/s. Industrial Credit Development Syndicate, we are detaining your vehicle under our possession till the defaults amounts is upto dated. We are left with no alternative than to possess the vehicle indefinitely".

THERE is no mention in this letter that contract has been terminated. It only indicates that the vehicle is being detained till default amounts are paid up to date. No term in the agreement has been brought to our notice where temporary detention is permissible. Thus, both, opposite party Nos. 1 and 2 have detained the vehicle without any authority as per the terms of the agreement. This is, a deficiency in service. Assuming that opposite parties had authority to detain the vehicle to realise the sum, till payment of instalments, it is to be examined whether there was a fair deal in this case. Complainants have hired the vehicle under the hire purchase agreement to be ultimate owners thereof in order to further their object. Detention of the vehicle has caused hindrance in furtherance of the object and it goes without saying that such hindrance is likely to affect reputation of the complainants whatever it might have. Unless term in a contract is applied reasonably, it can be said to be deficiency in service. Financing organisations assist persons for carrying out object lawfully and reasonably. Drastic action of seizure as per terms of the contract would be an action which can be described as of terrorism of financial institutions. Merely because there is an agreement does not mean that in all circumstances, it is to be exercised. Even the agreement provided that in case of disputes, they are to be resolved by an arbitrator. Instead, by detaining the vehicle, they replied to the notice. Finance Corporations established under State Finance Corporations Act have been given power of seizure of the industries under Section 29 of the Act. Even there, safeguards have been provided that before exercise of such power, notice is to be given. The letter dated 6.1.1990 indicates that instalments are to be paid two months after the delivery of the vehicle. Thus, instalments were to be paid from month of November. There is a gap of two months between November and January. No document has been produced before us where complainants have been reminded by the opposite parties that they were in default and unless payment is made, vehicle may be retaken. Having full faith and confidence on opposite party No. 1 when the vehicle was brought to him for third free service believing in good faith after service, the vehicle would be taken back by them, it was suddenly detained betraying the confidence reposed. This itself indicates high handed action of opposite party Nos. 1 and 2. Exercise of right under any term of contract if is an outcome of betrayal, cannot be supported and would amount to deficiency in service. Courts have not hesitated to give direction to telephone authorities to reconnect where telephone lines have been disconnected on the ground of default of payment of charges. Disconnection of supply line of electricity without notice on the ground of default in payment of charges had also not been approved. These are all treated to be deficiency in service. Same should be the principle applicable to financing organisations which have the power to retake vehicles on account of default in payment of instalments if adequate notice has not been given. One can imagine the plight of a person whose vehicle is retaken. Suppose young students would have been taken in a vehicle to visit a place at a long distance. If that place is in the midst of a jungle where no other communications would be available if the vehicle is seized in exercise of the right under the agreement, there would be no hesitation to come to a conclusion that those young students would suffer. Can any adjudicating authority support exercise of such right to detriment of others? Such a term in the agreement therefore, cannot stand on the way to give relief to a consumer where it is found that there was no contumacious conduct of the complainants to keep the vehicle or any property out of reach of the financier. There is no such allegation here. In an Indian Society governed by rule of law, no person, howsoever, high his status may be, shall be allowed to take law to its own hands to disadvantage of erring party merely because the erring party entered into an agreement to that effect. It would lead to a chaotic situation in society. To prevent chaos, adjudicating authorities have been created so that persons would not take law to their own hand.

From the aforesaid discussions, I am inclined to hold that temporary detention of the vehicle on 6.1.1990 contrary to term in the agreement is deficiency in service and cannot be supported.

ComPlaint is allowed. OPPosite Parties 1 and 2 are directed to return the vehicle to comPlainant No. 2 within one month on receiPt of this order on receiPt of Payment of the instalments for four months. In case, the vehicle is returned back as directed, the instalments amount shall be rePhased excluding the Period between 6.1.1990 till delivery is given for all PurPoses. In case, on Payment of the four instalments, the vehicle is not delivered back, comPlainants shall be entitled to damages at the rate of Rs.,250/- Per day till delivery is given. There shall be no order as to costs. ComPlaint allowed.