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NEW DELHI

                                             S.C. CASE NO- FA/396/2009


DATE OF FILING :09.10.2009
DATE OF FINAL ORDER: 18.02.10

APPELLANTS/COMPLAINANTS :

Secretary,
Ghatal People’s Co-operative Bank Ltd.
PO & PS-Ghatal,
Dist- Paschim Medinipur.

RESPONDENTS/O.P.S : :

Sri Nirmal Kr Samanta.
S/o Late Radha Nath Samanta,
Vill- Kuldaha, PO- Chandur,
PS- Chandrakona,
Dist- Paschim Medinipur.


BEFORE : HON’BLE JUSTICE : Mr. Aloke Chakrabarti, President
HON’BLE MEMBER : Shri A.K. Ray.
HON’BLE MEMBER : Smt. Silpi Majumder.
HON’BLE MEMBER : Sri Shankar Coari.
FOR THE PETITIONER : . Sri P.C. Bhattacharyya. Advocate.

Sri S. Sen. Advocate.

FOR THE RESPONDENT : Sri K. Banik. Advocate.

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Sri. A.K. Ray, Hon’ble Member.

The instant appeal has been preferred by the Appellant against the order dated 8th September 2009 in case no 32 of 2009 passed by the District Forum Paschim Medinipur wherein the Forum below allowed the complaint on contest without cost and further ordered that the OP Bank who is the Appellant before us was to return the Tractor and its accessories as per seizure list in good working condition to the Complainant / borrower at his house at their own cost within 30 days from the date of communication of the order failing which the OP Bank would be liable to pay compensation @ Rs. 200/- per day till delivery of the Tractor along with its accessories. The Bank was also to issue & supply a statement of loan account to the Complainant borrower when sought for by him. The Bank was also to re-schedule the said financed account of the Complainant as per norms of the NABARD and intimate the same to the Complainant within the aforesaid period of 30 days.

2. Being aggrieved by the aforesaid order the Appellant has preferred the instant appeal mainly on the grounds that the complaint suffers from non-joinder of the Ghatal Peoples’ Co-operative Bank Ltd which was a necessary party. The Forum below wrongly passed the impugned order upon the aforesaid Co-operative Bank to return the seized Tractor without considering the fact that the said Bank was not impleaded as an OP by the Complainant. It was also wrong for the Forum below to hold that the said Bank was required to follow the norms formulated by the NABARD (National Bank For Agricultural and Rural Development) in the matter of lending for purchase of Tractor. Ghatal Peoples’ Co-operative Bank is an urban Bank and the said Bank is neither guided by the lending policy of the NABARD nor this Bank has been empowered to lend money for agricultural purpose by the NABARD .The Forum below also failed to interpret the terms and conditions of granting loan to the Respondent. It was also wrong that the EMI had been fixed wrongly. By paying the EMI at a sum ot Rs. 6167/- per month the loan would not be fully repaid in 60 months. The Forum did not consider the material fact that the agreement made between the Bank and the Complainant was based on consent and the said agreement had not been challenged by the agreement of hypothecation and power of attorney executed by the Complainant. The Bank was given full authority to re-posses the Vehicle/ Tractor in question without any notice. It was therefore, wrong to hold by the Forum below that the said Co-operative Bank was required to obtain an order from the appropriate court of law for re-possessing the Tractor. In their brief notes of argument the Appellant has further stated that Ghatal Peoples’ Co-operative Bank Ltd is a bank within the meaning of section 5 of the Banking Regulation Act, 1996. It is an urban Co-operative Bank whose object is to create funds for lending out to its members. Lending for agricultural purpose is not within the objective of the said bank. The Respondent became a member of the bank and applied for a sum of Rs. 3,70,000/- for purchasing a tractor and the bank agreed to grant the loan re-payable with interest @ 15% p.a in 60 monthly instalments of Rs. 6,167/-. The Respondent did not mention in his application that he wanted to purchase the tractor for agricultural purpose and he further stated that he had no land in possession. After the loan was sanctioned he executed a deed of agreement, a deed of hypothecation and a power of attorney in which it was clearly stated that in case of failure of the Respondent / borrower to pay the instalment the bank would be at liberty to take possession of the tractor without any notice to him and sell the same by auction or by private negotiation. The Respondent paid Rs. 1431/- towards principal and Rs. 47,323/- towards interest including penal interest of Rs. 900/-. As on the date of seizure Rs. 3,55,469/- was due towards principal and Rs. 26,336/- towards interest. The bank issued a writ of seizure and thereafter took possession of the tractor along with accessories. The Respondent thereafter moved the Ld. Forum below claiming return of the tractor in question along with accessories and compensation.

3. The Appellant further stated that the Ghatal Peoples’ Co-operative Bank Ltd being an urban bank is guided by the directive issued by the Reserve Bank of India and its functions are being regulated by the provisions of the Bank Regulation Act, 1949 and the Reserve Bank of India Act, 1934 and not by NABARD . NABARD has no jurisdiction to enforce any of its policy decisions in the case of an urban Co-operative bank. A writ of the NABARD is applicable to the agricultural Co-operative Credit Societies and Central Co-operative banks and Agricultural and Rural Development Banks and not over the urban Co-operative banks.

4. The Respondent did not pray for re-establishment of instalment ; but the Forum below directed for re-scheduling the agreement without realizing that no Co-operative Bank can grant loan for more than 5 years. In support of its averment the Appellant has relied on certain decisions particularly of the Hon’ble High Court reported in 2007(3) CHN 975 in the case of Bhanu Pratap Singh –vs- State of West Bengal wherein it was held that the financier can seize vehicle on failure to pay instalments. In their written version filed before the Forum below the OP Bank contended inter alia that they re-possessed the tractor on 28.02.09 for non payment of the loan amount as indicated in para no. 20 by the said written version. They further contended that they had done no wrong in re-possessing the tractor as the Complainant had failed to pay the instalments against the loan and there was no deficiency in service on their part.

. The lone Respondent in his written notes of agreement filed before us mainly stated that he started making payments to the bank right from 3.3.08. He also deposited 2 cheques amounting to Rs. 18,000 and Rs. 12,000/- in the Bank against the said loan. It appears that he had paid Rs. 10,000/- to the Bank on 3.3.08, Rs. 5000/- on 31.3.08, Rs. 5000/- on 3.5.08, Rs.4000/- on 29.8.08 & Rs. 5000/- on 27.1.09 apart from the aforesaid payment by chques. But on 28.3.09 one bank staff namely Goutam Babu along with some muscle men forcibly took away the tractor and its accessories from the custody of the Complainant. He diarized the matter on 29.3.09 before the Chandrakona Police Station (GD entry no 1333) and thereafter he filed the instant complaint before the Forum below. In support of his claim he has filed several documentary evidences through affidavit and the said documents were copies of road challan, bank pass book, cash receipt, papers of agro service centre , warning notice issued by the bank dated 18.2.08, written representation by the Complainant dated 4.3.09, GD entry dated 29.3.09, LICI certificate. The Appellant Bank filed its written objection but did not produce any evidence both oral or documentary to rebut or to contravene the allegations of the Complainant made out in its petition of complaint. The Forum has rightly observed that the present loan transaction is an agricultural loan and the OP Bank should follow the norms formulated by NABARD. Regarding non-joinder of parties taken by the Appellant Bank it was contended by the Respondent that this point was not taken before the Forum below and this has been taken for the first time in the appeal. This is not permissible in view of settled principle of law. Regarding forcible repossession of vehicle he has filed several decisions of the National Commission reported in 2006 (1) CPR 55 between M/s Shriram Transport Finance Company Ltd-vs-Surekha Khanoji Khemnar wherein it was held that if a financier by using his muscle power takes away the vehicle and does not want to return it even on deposit of claimed unpaid amount, it would just mean exploitation of the poor consumer and interim direction of Consumer Forum to return the vehicle is just and equitable. In another decision reported in 2009 (3) CPR 205 between M/s Capital Trust Ltd –vs- Sanjoy Dutt and Anr, the National Commission held that financier repossessing vehicle by use of force where there was default in payment of certain instalments by purchaser under higher purchase agreement would constitute deficiency in service. Ratio of Citicorp Maruti Fiance Ltd was applicable and no reason to interfere (Citicorp Maturi Finance Ltd-vs-S. Vijayalaxmi,III (2007) CPJ 161 NC).

6. We have heard both the sides at length and have pursued the impugned order of the Forum below along with the written statements. It is a fact that the Respondent purchased the subject tractor by borrowing money from the Appellant Bank. As there was some default in making payment of instalments the Appellant Bank through its muscle men forcibly took possession of the vehicle on 28.03.09. It appears that the Complainant/Respondent made a representation before the Bank on 24.3.09. The Appellant Bank however did not obtain any order from any court of law to re-possess the subject vehicle. It transpired during hearing that the Appellant Bank has not re-sold the tractor and is agreeable to return the same along with its accessories as per seizure list to the Respondent on payment of the balance amount.

7. We do not see eye to eye with the Forum below that certain norms formulated by NABARD i.e National Bank For Agricultural and Rural Development were to be followed in the matter of agricultural long term loan as we understand that the Appellant Bank is an urban Co-operative Bank and does not fall within the ambit of the NABARD. But there is no dispute that the tractor in question was re-possessed by the Appellant on account of default of payment of instalments. It was not proved that the Respondent had surrendered the vehicle voluntarily; but it was snatched forcibly by the muscle men of the Bank. No affidavit was filed by the Appellant to prove that the vehicle had been surrendered by the Respondent voluntarily and no force was used. The Appellant did not obtain any order from any appropriate court of law for re-possessing the Tractor. It is also a fact that the Appellant did not supply/ issue any statement of loan account to the Complainant/ borrower which was a primary duty of a banker. This was indeed deficiency in service on the part of the Appellant for not issuing a statement of loan account to the Respondent.

8. We feel inclined to rely on the views of the Hon’ble National Commission with regard to hire purchase agreement in the case of Citicorp Maruti Finance Ltd –vs- S. Vijaylakxmi [III(2007)CPJ 161(NC)]wherein it was held inter alia that “in a democratic country having well established independent judiciary and having various laws it is impermissible for the money lender/ financier/ banker to take possession of the vehicle for which loan is advanced, by use of force. Legal or judicial process may be slow but it is no excuse for employing muscle men to re-posses the vehicle for which loan is given. Such type of “instant justice” cannot be permitted in a civilized society where there is effective rule of law. Otherwise, it would result in anarchy, that too, when the borrower retorts and uses the force.”

9. The Appellant Bank should therefore recast its re-payment schedule so that the Respondent borrower is able to re-pay the entire balance amount with interest. The seized tractor is to be returned to the Respondent forthwith with accessories as per seizure list in good working condition to the Respondent at the cost of the Appellant Bank. The statement of loan account showing principal and interest already paid and to be paid is to be given to the Respondent within a fortnight from the date of communication of this order. Accordingly the appeal succeeds in part and the order of the Forum below stands modified in the light of our aforesaid observations. In case of failure of the Appellant to comply with out aforesaid directions within 30 days from the date of communication of this order the Appellant Bank will be liable to pay compensation @Rs. 200/- per day till compliance of our order.
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(A.K. Ray.)
Hon’ble Member
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HON’BLE JUSTICE : ( Mr. Aloke Chakrabarti,)
PRESIDENT.
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(Smt. Silpi Majumder.)
Hon’ble Member
.…………………………..…..

(Sri Shankar Coari)
Hon’ble Member
FA/396/2009

I have perused the judgment prepared by Shri A.K. Ray, the Ld. Member. I have also perused the records of the Forum and the materials disclosed by the parties. It appears out of the documents disclosed in the Forum below the application dated 02.06.2007 by the Complainant/ Respondent to the Appellant contained an Agreement between the Complainant/Respondent and the Appellant and Clause 8(d) thereof is as follows:

“d) If in the opinion of the Bank the security hereby created is for any other reason, in the sole discretion of the Bank, in jeopardy then the Bank or any persons authorized by the Bank may, without being liable for any loss or damage, sustained thereby at any time thereafter, take possession and sell or dispose of in the Bank’s absolute discretion and on such terms and conditions and in such manner as the Bank may think fit, the hypothecated vehicle for realizing the Bank’s dues and the Bank may apply the net proceeds of the sale in or towards the payment to discharge of all moneys and liabilities the payment or discharge of which is secured by this security and no previous notice to the Borrower(s) of any such sale or realization shall be necessary and the Borrower(s) hereby/waives/waive such notice and the borrower(s) will accept the Bank’s acknowledgement as sufficient evidence of the amount realized any such sale or received and of the amount of costs, charges and expenses there of and the Borrower(s) shall sign all the documents and furnish all the information and doth/do such acts and things as may be required by the Bank for effecting such a sale or realization.”

Clause 19 of the said Agreement is as follows:

“Notwithstanding anything hereinbefore contained if after the execution hereof any circumstances, shall occur, which in the sole judgment of the General Manager/Secretary of the Bank are prejudicial to or imperil or are likely to prejudice or imperil this security, then the Bank, it is thinks fit shall be entitled at the expense and risk of the Borrower(s) without any notice at time or times after such occurrence to depute any officer to enter any place where the said vehicle may be and to inspect, value, insure, and take charge or possession of all or any of the hypothecated vehicles and it there shall be any default of the Borrower(s) in payment of any moneys hereby secured or in any circumstances shall occur which in the opinion of the Bank shall be prejudicial or shall endanger or be likely to endanger this security, the Bank shall be entitled to seize, receive, remove and sell by public auction or private contract or otherwise dispose of or deal with all or any part of the hypothecated vehicle without being liable for any losses in the exercise of the said powers thereof and without prejudice of the Bank’s rights and remedies of suit or otherwise the Borrower(s) shall agree to accept the Bank’s accounts of sale and realization and to pay any shortfall or deficiency thereby shown and if the net sum realized by such sale shall be insufficient to pay the amount secured the Bank shall be at liberty to apply any other money or moneys in the hands of the Bank standing to the credit or belonging to the Borrower(s) in or towards the payment of the balance.”

There is an undertaking dated 04.10.2007 by the complainant agreeing that in case of default in repayment of loan, if the Bank Authority for recovery of loan arranges for sale of the vehicle the complainant would not raise any objection.

In the complaint filed by the complainant he made out a case that on 28.3.09 one Gautam Babu being a staff of the OP/Bank along with some musclemen forcibly took possession of the vehicle and on demand by the complainant the bank authorities refused to issue any receipt. This complaint is supported by an affidavit. But the complainant neither filed any evidence on affidavit nor filed any document disclosing facts which may show taking of forcible possession of the vehicle. In the entry in GD by the complainant on 29.3.2009 it was only stated that at 10 A.M. on 28.3.2009 Goutam Babu, a staff of the Bank, came to complainant’s house and forcibly took some Goondas and took away the truck and on demand for receipt/paper it was denied. The Order No.8 dated 04.8.09 passed by the Forum in the complaint case recorded clearly the parties did not want to adduce any oral evidence and the documents filed by the parties were marked exhibits on admission, whereupon argument was advanced and the matter was decided.

Therefore, totality of the materials on record of the Forum only contains only one allegation of forcible possession by a named staff of OP/Bank along with some alleged musclemen. No other particulars were supplied. Complainant has not disclosed any details of the incident on 28.3.09 which can show any actual forcible possession inspite of objection by the complainant. The GD entry on the day next to date of incident also did not mention any details of application of force.

Law in this regard has been settled. In the case of M/s. Shriram Transport Finance Co. Ltd.-Vs-Surekha Khanoji Khemmar reported in 2006(1) CPR 55 the Hon’ble National Commission relying on the judgment in the case of Tarun Bhargava-Vs-State of Haryana AIR 2003 Punjab & Haryana 98 reiterated that rights of the creditors are akin to those of hypothecatee and, therefore, hypothecatee could not take possession of the security without intervention of the Court. It was observed that if a financer by using his muscle power takes away the vehicle and does not want to return the vehicle even on deposit of the payment of the claimed unpaid amount and to receive it after delivery of the vehicle, it would just mean exploitation of the power consumer who gets his vehicle financed by the finance company. As neither use of muscle power nor proposal to deposit unpaid amount, has been even alleged this judgment does not apply here.

In the case of Tata Motors Ltd.-Vs-Indrasen Choubey reported in 2009(2) CPR 238 the Hon’ble National Commission considered several judgments of the Hon’ble Supreme Court and approved of the order of the State Commission under challenge, awarding compensation against the financer for taking forcible possession of the vehicle.

But in the case of Bhanu Pratap Singh-Vs-State of West Bengal reported in 2007(3) CHN 975 exercising Writ jurisdiction a Division Bench of the Hon’ble High Court at Kolkata considered the law taking into consideration the judgments in the cases of Charanjit Singh Chadha-Vs- Sudhir Mehra, 2001(7) SCC 417; Hari Singh-Vs-State of U.P., 2006(5) SCC 733; K.A. Mathai-Vs-Kora Bibbikutti, 1996(7) SCC 212; Manager, ICICI Bank Ltd.-Vs-Prakash Kaur, 2007(1) Crimes 407(SC); Manipal Finance Ltd.-Vs-T. Bangarappa, 1994 Sup 1 SCC 507; Sardar Trilok Singh-Vs-Satyadeo Tripati, 1979(4) SCC 396 and Union of India-Vs-Hansoli Devi, AIR 2002 SC 3240 and upon consideration of the said law it was held that a loanee having admittedly defaulted in payment of installment is not entitled to get an order for recovery of vehicle which has been already taken by the financer nor any direction can be given to the police for the purpose of taking the vehicle from the financer and to hand over the same to an admitted defaulter. But this judgment does not consider the aspect of deficiency in service under the Consumer Protection Act, 1986.

Therefore, the consideration relevant for present case is as to whether OP Bank took possession of the vehicle from the complainant applying force.

In above view of the law, in the present case when agreement permits taking of possession of the vehicle by financer in case of default by the loanee, the taking of possession by the financer exercising that right under the agreement cannot be held to be a deficiency in service. As regards forcible possession mere statement on oath of forcible possession without supplying any particulars as regards application of force by musclemen, does not satisfy the requirement of law as taking of possession applying force has to be considered in given facts where force has been actually applied. If mere taking of possession by the financer is described as forcible possession, without describing the application of force against obstruction by loanee, the same does not satisfy the requirements. In above view of the matter I am of the opinion that impugned order cannot stand as there is no material to uphold deficiency in service by OP Bank in taking possession of the vehicle when default in payment is admitted and application of force in taking possession has not been proved.

Appeal is allowed. Impugned order is set aside. Complaint is dismissed. No order as to costs.
Justice A. Chakrabarti)

PRESIDENT
(Silpi Majumder)
MEMBER
(S. Coari)

MEMBER