Judgment:
Oral Order: (R. Lakshminarasimha Rao, Member)
1. The opposite party is the appellant. The brief facts of the complaint as seen from the complaint are that on 24.08.2010 the respondent availed loan of Rs.4,90,000/- under hypothecation agreement from the appellant for purchase of the lorry bearing No.AP 16/TU 1445 under hypothecation Agreement. The total loan amount is Rs.7,32,507/- to be payable in 36 monthly instalments @ Rs.22,329/- commencing from 6.10.2010. The respondent has also availed loan of Rs.80,000/- for purchase of the tyres. Subsequently, due to expiry of his father, the respondent could not pay the instalments and promised the appellant that he would pay the installments after performing the obsequies. On 10.12.2011 the appellant repossessed the vehicle. The respondent requested time for payment of the due amount and the appellant without giving time and prior notice sold the vehicle in auction held on 29.3.2012. The respondent got issued notice dated 7.4.2012 for which the appellant gave reply.
2. The appellant resisted the case contending that the respondent was irregular in paying the monthly instalments and he became a defaulter. The appellant issued reminder on 18.6.2011 to the respondent and the guarantor to pay the arrears of Rs.33,659/- as on 5.6.2011. Despite receipt of the notice the respondent failed to pay the due amount. Subsequently, the respondent requested for additional loan for purchase of tyres and on 9.9.2011 the second loan was granted which is to be repaid in 8 instalments. The respondent did not make any future payments. The appellant issued notice on 5.12.2011 for payment arrears of Rs.55,438/-. Another notice on 17.2.2012 to the respondent and to the guarantor to pay the entire amount of Rs.6,07,730/- and the appellant repossessed the vehicle on 10.12.2011. After publication of notice in local Telugu newspaper dated 27.3.2012 the appellant sold the vehicle on 29.3.2012 for consideration of Rs.4,90,000/- and after adjusting the amount due still the respondent was found liable to pay Rs.1,45,498/- as on 30.03.2011.
3. The respondent filed his affidavit and the documents Exs.A1 to A7. On behalf of the appellant, its Recovery Executive filed his affidavit and the documents, Exs.B1 to B11.
4. The District Forum allowed the complaint on the premise that the vehicle was not properly valued at the time of its sale and its value was not got assessed by surveyor. The District Forum observed that the date and time of auction of the vehicle is not mentioned in the auction notice published in newspaper. The District Forum opined that the appellant ought to have maintained a register with details of the auction proceedings of the vehicles it sold for recovery of the loan amount from its borrowers. The District Forum awarded an amount of Rs.80,000/- towards the amount due to the respondent and an amount of Rs.10,000/-towards compensation besides a sum of Rs.2,000/- towards costs.
5. Aggrieved by the order of the District Forum, the opposite party has filed appeal contending that the respondent is not a consumer and there was no deficiency in service on the part of the appellant in repossessing and selling the vehicle. It is contended that the District Forum failed to consider arbitration clause in the loan agreement and default committed in payment of installments by the respondent. It is contended that the vehicle was in a bad condition due to poor maintenance.
6. Counsel for both parties filed written arguments.
7. The point for consideration is whether the order of the District Forum suffers from misappreciation of facts or law?
8. The respondent availed loan, a sum of Rs.4,90,000/-from the appellant-company on 31.08.2010. The respondent executed loan agreement bearing number TRPT10008300007 in favour of the appellant-finance company. It was agreed that the loan amount is repayable over a period of 36 months with finance charges @16.5% which amounts to Rs.2,43,507/-. The loan agreement provides for repayment of the installments, a sum of Rs.20,328/- for the first installment, an amount of Rs.22,035/- each for the 2nd installment to 35th installmlent and an amount of Rs.20,320/- for the 36th installment. The loan period commenced from 05.09.2010 and would complete on 05.09.2013. K.Krishnamurthy and M.Venkata Swamy stood as guarantors for repayment of the loan amount.
9. The respondent stood as guarantor for the loan transaction of one Smt Anjani Kumari who committed default in payment of the loan amount as a result of which the appellant finance company repossessed the vehicle purchased by her under hypothecation agreement with the appellant and she filed complaint, C.C.No.41 of 2011. The respondent has stated that the appellant finance company bearing grudge repossessed the lorry without giving issuing notice on 10.12.2011. The Recovery Executive of the appellant company has denied the charge and he has stated that the respondent committed breach of agreement and the appellant issued reminder on 5.2.2011 to the respondent and the guarantors for payment of the due instalments and as the respondent did not pay the due instalments, the appellant repossessed the hypothecated vehicle on 10.12.2011 as per the terms and conditions of the agreement and issued a telegram to the respondent and the guarantors with a request to settle the amount due and thereafter the appellant issued notice dated 17.2.2012 with a demand for Rs.6,07,730/- for which there was no response from the respondent. He has statedâ
I submit that to minimize the loss, in pursuance of the terms and conditions of the Hypothecation agreement the opposite party obtained fresh RC on 22.3.2012 in its name by submitting the necessary forms and applications to the Transport Authorities, Nellore for the said vehicle. With a view to sell the above said repossessed hypothecated vehicle in public auction the opposite party gave a publication in Andhra Jyothi Daily dt.27.03.2012 for the sale of Hypothecated vehicle. On 29.03.2012 the opposite party company sold away the said vehicle in public auction to one G.Anantharama of Kurnool for the best available market price of Rs.4,90,0000/- and the said amount of Rs.4,90,000/- was adjusted to the complainant account.
10. The respondent has stated that he is driver by profession and used to run the vehicle to eke out his livelihood and he committed default in payment of the loan amount due to the death of his father and the appellant knowing all the fact repossessed the vehicle compelling him to file the complaint. He has stated that he paid a sum of Rs.60,000/- to RTO to make the vehicle fit to ply on the road and an amount of Rs.80,000/- for purchase of tyres as also he has stated that he paid an amount of Rs.2 lakhs towards due installments.
11. The respondent had admitted that he is a defaulter in paying the loan installments. The contention of the respondent that without issuing notice to him the appellant repossessed the vehicle is not sustainable in the light of the terms of the hypothecation agreement empowering the appellant finance company to repossess the vehicle in case of default in payment of loan installments made by the respondent. It is pertinent to note that the appellant issued notice after repossessing the vehicle to the respondent and the guarantors as also it had issued reminders demanding for payment the loan instalments due.
12. The appellant sold the vehicle after publishing notice in Andhra Jyothi daily 27.3.2012 for a sum of Rs.4,90,000/-. The District Forum has found fault with the manner of sale of the vehicle. The District Forum has pointed that in the daily newspaper dated and time of auction of the vehicle in question is not specifically mentioned. However, a perusal of the notice indicates time and date of auction of all the vehicle proposed to be sold 29.3.2012. Thus, it cannot be said that date and time of auction of the vehicle in question was not mentioned in the notice.
13. The District Forum has observed that the appellant finance company has not properly got assessed the value of the vehicle before it had put the vehicle in auction. The District Forum held that the appellant finance company ought to have maintained register showing details fo auction proceedings. The appellant has not given any reason for not assessing the value of the vehicle by an approved surveyor. However, the amount of Rs.80,000/- awarded by the District Forum towards the sum due to the respondent does not have any support from the evidence on record. The value of the vehicle has to be assessed basing on its age, condition of the vehicle and the kilometers it had covered etc.
14. The learned counsel for the appellant has relied upon the decision of the Honble Supreme Court in Surya Pal Singh vs Siddha Vinayaka Motors and Others III (2012) CPJ 4 (SC). The Honble Supreme Court considered position of financier vis-Ã -vis purchaser of the vehicle under hire purchase agreement. The Supreme Court held that financier is the owner of the vehicle and the person who takes the loan retains the vehicle as a bailee/trustee and taking repossession of the vehicle for non-payment instalments by the borrower was held to be in exercise of the legal right of the financier.
15. Admittedly, the appellant finance company assessed the value of the vehicle at Rs.4,90,000/-. In the insurance policy issued by Shriram General Insurance Company Limited for the period from 31.05.20111 to 30.5.2012, the insured declared value of the vehicle is shown as Rs.4,90,000/-. The vehicle was sold for the same amount 29.3.2012. Thus, it is difficult to hold that the vehicle was not properly assessed by the appellant finance company before it was sold in question. In the circumstances, this Commission is of the considered view that there has been no negligence or deficiency in service on the part of the appellant finance company and as such the order of the District Forum is liable to be set aside.
In the result, the appeal is allowed setting aside the order of the District Forum. Consequently, the complaint is dismissed. There shall be no separate order as to costs.