Court : National Consumer Disputes Redressal Commission (NCDRC)
Case No : Revision Petition No. 697 of 2018
Judges: THE HONOURABLE MR. AVM JONNALAGADDA RAJENDRA AVSM VSM (RETD) PRESIDING MEMBER & THE HONOURABLE MR. JUSTICE ANOOP KUMAR MENDIRATTA, MEMBER
Parties : ICICI Bank Limited, New Delhi Versus Sumeet Kaeley
Appearing Advocates : For the Petitioner: Chetna Bhalla, Kartik Bhalla, Anand Singh, Advocates. For the Respondent: S.K. Ray, Neetika Chaturvedi, Sandip Kar, Advocates.
Date of Judgment : 16-06-2026
Head Note :-
Consumer Protection Act, 1986 - Section 21(b) -
Judgment :-
AVM Jonnalagadda Rajendra AVSM, VSM (Retd), Member
1. This Revision Petition is filed under Section 21(b) of the Consumer Protection Act, 1986 (the "Act") against the State Consumer Disputes Redressal Commission, Delhi („the State Commission‟) order dated 23.10.2017 in FA No.287/2011, wherein the Appeal by Petitioner was dismissed and order of the District Consumer Disputes Redressal Commission, (Central), Kashmere Gate Delhi ("District Commission") dated 30.05.2011 in CC No.754/2008 was affirmed.
2. For convenience, the parties are referred to as in the original Complaint. Mr. Sumeet Kaeley is referred to as the Complainant and ICICI Bank Ltd. is referred to as the Opposite Party (OP).
3. Brief facts of the case, as per the complainant, are that he purchased a Toyota Innova G-3 vehicle on 27.10.2005 for consideration of Rs.8,94,745.13. The vehicle was duly registered with the Regional Transport Office and allotted Registration No. DL-4C-9131. The vehicle was also insured, as reflected from the Insurance Policy for the period 28.10.2006 to 27.10.2007. For the purchase of the said vehicle, the complainant availed financial assistance from ICICI Bank (OP-1) to the tune of Rs.8,00,000 under Loan Agreement No. LADEL00004936273 for a tenure of 60 months at an interest @ 9.27% per annum. The loan was repayable in equated monthly instalments (EMIs) of Rs.16,584. One EMI was paid in advance at the time of disbursement of the loan. According to the complainant, he regularly paid the EMIs up to October, 2006. It is the complainant's case that owing to a medical emergency involving a close relative, he had to travel abroad. Consequently, he could not pay three instalments on their respective due dates. The complainant alleges that on 21.12.2006, the Bank, in collusion with OP-2 and 3, forcibly repossessed the vehicle without serving any prior notice. It is further alleged that while taking possession of the vehicle, the representatives of the OPs threatened the complainant's brother and other persons present at the spot. The complainant alleged that he immediately contacted OP-3 on the mobile number provided at the time of repossession and requested acceptance of the overdue instalments and release of the vehicle. However, the request was declined. Thereafter, the complainant visited the office of OP-1, but neither was the vehicle traceable nor was any satisfactory explanation furnished. The complainant reported the matter to the police on 21.12.2006. The complainant further contended that on 22.12.2006, he addressed a letter to the Manager of OP-1 requesting acceptance of the outstanding EMIs and release of the vehicle. However, the request was not acceded to. Thereafter, the complainant made several representations to the OPs. Alleging that the actions of the OPs were illegal, arbitrary and amounted to deficiency in service and unfair trade practice, the complainant claims that he suffered substantial financial loss, harassment, mental agony and inconvenience. Accordingly, he sought refund by filing a consumer complaint before the District Forum of Rs.1,99,008 paid towards EMIs, along with the value of the vehicle assessed at Rs.6,76,210, margin money of Rs.94,750 and insurance premium of Rs.21,813. In all, the complainant has claimed Rs.9,91,781 together with interest @ 12% per annum compounded annually from 21.12.2006 till realization. The complainant has also claimed compensation of Rs.7,50,000 towards mental agony, harassment and litigation expenses.
4. On issue of notice, the Opposite Party (OP) Bank contested the complaint and filed its written version raising preliminary objections that the complaint is barred by limitation, this Commission lacks jurisdiction to entertain the complaint and that he suppressed and misrepresented material facts. On merits, the OP Bank has argued that the complainant failed to pay the Equated Monthly Instalments (EMIs) regularly and committed repeated defaults under the loan agreement, misusing the loan facility extended to him. Despite issuance of EMI demand notices, loan recall notices, pre-sale notices and post-sale notices he failed to pay the loan account dues or clear the outstanding dues. The Bank contended that, in view of the continuous defaults committed by the complainant, it was constrained to repossess the financed vehicle in accordance with the terms and conditions of the loan agreement executed between the parties. According to the Bank, the possession of the vehicle was taken peacefully and strictly in accordance with law. It asserted that all actions taken by the Bank were within the four corners of the contractual terms and applicable legal provisions, and that no illegality, arbitrariness, or deficiency in service can be attributed to it.
5. The District Commission, vide order dated 30.05.2011, allowed the complaint. Relevant extracts of the operative portion are as follows:
"The present case is clear case of deficiency in service and unfair trade practice. It has caused not only the financial losses to the complainant but he has suffered harassment , pain mental agony.
In a similar case, the Hon'ble National Commission issued certain directions to the financer. That case has been reported as III (2007) CPJ 161: Citi Corp Mart Finance Ltd v/s S Vijaya Laxmi Beside other directions. It has been held that in case of forcible possession of the vehicle the financer is not entitled to recover the balance financed amount from the complainant. Considering the law and the observations as contain in the order of the Hon'ble National Commission, we direct the OP bank to comply the following directions:-
1. To pay to the complainant the insured amount of the vehicle i.e. Rs. 6,76,210 (as per annexure 'C') with 9% simple interest from the date of taking forcibly possession of the vehicle i.e. 21.12.2006 till the realization of the amount,
2. The bank will not be entitled to recover unpaid financed amount from the complainant.
3. To pay to the complainant a sum of Rs.25,000/- as compensation for causing harassment, pain and mental agony.
1. To pay to the complainant a sum of Rs.5,000/- as litigation charges.
The order shall be complied with in the 30 days (thirty days) of the receipt of the copy of the order; otherwise necessary action can be taken as per provisions of section 25 and 27 of the Consumer Protection Act.
6. Aggrieved, OP Bank filed Appeal No.287 of 2011 before the State Commission, which was dismissed vide order dated 23.10.2017, affirming the District Forum‟s findings as under:
"6. The main defence of appellant was that it had issued notice before sale as well as after sale. No such notice was placed on record. Appellant did not file any affidavit in evidence, So District Forum believed the respondent that no notice was issued. There is no infirmity in the said findings.
7. In appeal the appellant has moved an application for additional facts to place on record copies of the notice. The application does not disclose any reason as to why the same were not filed in the District Forum.
8. Counsel for the appellant relied upon decision of Punjab & Haryana High Court in Ganpati Udyog vs. PNB (1996) 113 PLR 437 in which it was held that additional evidence is not confined to enable Appellate Court to decide the appeal but it can be for any other substantial cause. But the application under consideration does not assign any cause whatsoever. Hence the cited judgment does not help the appellant. Moreover the said decision is of civil suit.
9. Per contra counsel for respondent relied upon decision of National Commission in Revision Petition No. 3216/12 titled as National Insurance Company Ltd. vs. Harpreet Singh decided on 08.02.16. It was held that there is no law that documents which were in the custody of the party and were not produced before District Forum can be placed on record for appeal. For this reliance was placed on previous decision of National Commission in Devi Dayal Gupta vs. Bajaj Alliance General Insurance Company Ltd. 2011 (3) CLT 39. The application for additional evidence moved by appellant is dismissed.
10. On merits the counsel for appellant submitted that appellant was well within its right take possession of the vehicle as respondent has failed to pay the EMI In time. In support of his submission he relied upon decision of Hon'ble Supreme Court in Criminal appeal arising out of SLP (Criminal No. 4935 of 2006) titled as ICICI Bank vs. Shanti Devi decided on 15.95.2008. He also relied upon decision of National Commission in RP No. 689/12 titled as Shri Ram Transport Finance Company Ltd. vs. Chaman Lal decided on 14.09.12. There are judgments to contrary also. In this regard reliance may be placed on decision of National Commission in:
1. City Corp. Maruti Fin. Ltd.-S.Vijay Laxmi IV (2011) CPJ 67 Supreme Court.
11. In all these cases compensation was awarded for forcible possession of the vehicle without notice.
12. Not only this the District Forum has referred to decision of National Commission in III(2007) CPJ 161 titled as City Corporation Mart Finance Ltd. vs. S.Vijya Lakshmi for directing the bank not to recover balance financed amount. In the said decision detailed discussion has been made regarding contrary views. After placing reliance on Hon‟ble Supreme Court in Sundram Finance Ltd. vs. State of Kerala AIR 1966 SC 1178 forcible possession of the vehicle by financer was held to be contrary to law.
13. In view of the above decision we do not find any ground to interfere with the impugned order. Appeal fails and is dismissed."
7. Dissatisfied with the concurrent findings of both the lower fora, OP (Petitioner herein) has filed the present Revision Petition, seeking to set aside the impugned orders.
8. The learned counsel for petitioner/OP reiterated the grounds urged in the Revision Petition and argued that the impugned orders of the Fora below are legally unsustainable, having been passed without proper appreciation of the facts and evidence on record. He asserted that the respondent availed an auto loan of Rs.8,00,000 in November 2005 for purchase of a Toyota Innova, repayable in 60 equal monthly instalments of Rs.16,584 each. The complainant persistently defaulted in payment of EMIs. Despite issuance of demand notices dated 11.11.2006 and 24.11.2006, followed by a loan recall notice dated 07.12.2006 demanding payment of the outstanding amount of Rs.6,74,364 within seven days, the respondent failed to regularize the account, compelling the petitioner to repossess the hypothecated vehicle strictly in accordance with the terms of the loan agreement and applicable legal guidelines. He further argued that a pre-sale notice with respect to the vehicle in question dated 22.12.2006 was also issued, affording the respondent an opportunity to clear the dues before the vehicle was sold through open auction. The intimation regarding repossession was also duly given to the local police authorities. The OP petitioner maintained that the findings of the District Forum and the State Commission were based on surmises and conjectures, ignored their admitted defaults and contractual liabilities, and failed to consider settled legal principles recognizing the financier‟s right to repossess a hypothecated vehicle upon default. Reliance was placed upon decisions in Orix Auto Finance (India) Ltd v Jagminder Singh & Anr, M/s Bhagya Products Ltd. v. Commissioner of Police & Ors., and Amarjit Singh v. ICICI Bank Ltd., wherein the right of the financier to take possession of the financed vehicle in terms of the agreement was upheld. The learned counsel also argued that the respondent‟s allegation of forcible repossession with the assistance of goons remained wholly unsubstantiated and false. There is no evidence whatsoever in support the same. OP sought the impugned orders dated 30.05.2011 and 23.10.2017 be set aside and the Revision Petition be allowed.
9. On the other hand, the learned counsel for the complainant argued that the Complainant/respondent purchased a Toyota Innova G-3 Regn No. DL-4C-9131 on 27.10.2005 for Rs.8,94,745.13, financed by the OP bank to the extent of Rs.8,00,000 repayable in 60 EMIs of Rs.16,584 each. After regularly paying instalments up to October 2006, the respondent temporarily defaulted on three EMIs while travelling abroad due to a medical emergency involving a close relative. On 21.12.2006, the petitioner repossessed the vehicle forcibly through recovery agents without following due process of law or serving any valid notice. Despite repeated requests by the respondent to clear the outstanding dues and recover the vehicle, the petitioner failed to provide any satisfactory response regarding its whereabouts. Thus, the respondent filed CC No.754/2008 before the District Commission, seeking refund of amounts paid, the insured value of the vehicle, and compensation. The District Commission, relying upon settled law that forcible repossession through musclemen or goons is entirely impermissible, allowed the complaint by order dated 30.05.2011 and directed the petitioner to pay the vehicle insured value with interest, compensation, and litigation costs, while denying recovery of the balance financed amount. The petitioner's FA No. 287/2011 was also dismissed by the State Commission on 23.10.2017 after affirming the District Forum order. The petitioner's subsequent plea that notices had been issued to the respondent was also rejected, as neither genuine copies of such notices nor proof of their dispatch or service were produced before the Fora below. In these circumstances, and in view of the concurrent findings of fact and settled legal position against forcible repossession of financed vehicles, he sought the Revision Petition deserves to be dismissed.
10. We have examined the pleadings and associated documents placed on record, including the orders of the learned District Forum and the learned State Commission and rendered thoughtful consideration to the arguments advanced by the learned counsel for the parties.
11. The main issue to be determined is whether there was a deficiency in service or unfair trade practice by OP with respect to the vehicle loan to the complainant and its repossession? If so, what is the liability of the OP in this regard?
12. It is undisputed that the complainant purchased a Toyota Innova G- 3 vehicle on 27.10.2005 for consideration of Rs.8,94,745.13. The vehicle was duly registered with the Regional Transport Office and allotted Registration No. DL-4C-9131. The vehicle was also insured, as reflected from the Insurance Policy from 28.10.2006 to 27.10.2007. For purchase of the said vehicle, the complainant had availed financial assistance from ICICI Bank (OP-1) to the tune of Rs.8,00,000 under Loan Agreement No. LADEL00004936273 for a tenure of 60 months at an interest rate of 9.27% per annum. The loan was repayable in equated monthly instalments (EMIs) of Rs.16,584. One EMI was paid in advance at the time of disbursement of the loan. According to the complainant, he regularly paid the EMIs up to October, 2006. It is an admitted position of the complainant that the complainant did not pay the EMIs for three months thereafter due to certain family commitments and the need for him to travel. It is the allegation of the complainant that on 21.12.2006, the OP recovered the vehicle from his residence without notice. Whereas, the OP asserted that the three notices were issued to the complainants and placed the same on record. The OP also asserted that the police were also notified about the vehicle repossession and thus the police did not take cognizance of the complaint made by the complainant to police on 21.12.2006. OP asserted that despite issue of demand notices dated 11.11.2006 and 24.11.2006, followed by loan recall notice dated 07.12.2006 demanding the outstanding due of Rs.6,74,364 within seven days, the complainant failed to regularize the account. Thus, the OP repossessed the hypothecated vehicle in terms of the loan agreement. The OP asserted that a pre-sale notice dated 22.12.2006 was also issued, affording him opportunity to clear the dues before the vehicle was sold through open auction. This intimation was also given to local police. In the absence of the complainant failing to settle the account the vehicle was auctioned, and the loan account was settled.
13. It is an admitted fact that the vehicle of the complainant was financed by the OP. It is the assertion of OP and admitted by the complainant that the complainant defaulted payment of three continuous installments. The default notices were stated to have been issued by the complainant and, however, refuted by the complainant. At the same time, the complainant stated that he approached the OP Bank for more time. Due to the default of the complainant in paying EMIs, the vehicle was repossessed by the OP. There is, however, ambiguity whether the notices for admitted defaults and the repossession of the vehicle were received by the complainant. The OP bank failed to produce proof of service of the said notices. The defaults were, however admitted by the complainant. The auction notice was served on the complainant. It is settled position in law that, due process of law shall be followed for seizure of the vehicle. If the seizure of the vehicle is without due compliance of the procedure, it would amount to illegal repossession. It is the contention of OP that the OP pre-notified about the seizure of the vehicle to the complainant as well as the police authorities and thus no police intervention was made based on the complaint of the complainant.
14. As regards repossession of vehicles due to defaults in repaying loans, guidelines were given by Hon‟ble Delhi High Court in the case of Dr. Amitabh Varma vs Commissioner of Police & Ors decided on 23.10.2002, 2003(66)DRJ343. Para 28 of the same is as below:
"Before we part with this judgment, we would like to observe that a large number of similar cases are being filed in Courts. Therefore, apart from deciding the controversy involved in this case, we deem it appropriate to formulate general guidelines so that similar problems are not to be encountered or repeated in similar cases. (I) The finance companies must inform the hirers regarding the details of Instalments due and payable by a written communication.
(II) Even before repossession another written notice must be sent to the hirers and only thereafter the vehicles be repossessed.
(III) Finance companies are restrained from stopping the running vehicles or the roads and forcibly pulling out the driver and take possession of the vehicle against all provisions of law."
15. The judgment of Hon‟ble Supreme Court in of M/s. Magma Fincorp Ltd. Vs. Rajesh Kumar Tiwari, Civil Appeal No.5622 of 2019 decided on 1.10.2020 wherein it has held as under:
"87. The question raised by the financier in this appeal, that is, whether the financier is the real owner of the vehicle, which is the subject of a hire-purchase agreement, has to be answered in the affirmative in view of the law enunciated by this Court in Charanjit Singh Chadha v. Sudhir Mehra, (2001)7SCC417: 2001 SCC (Cri) 1557 , K.L. Johar & Co., K.L. Johar & Co. v. CTO, AIR 1965 SC 1082 and Anup Sarmah v. Bhola Nath Sharma, (2013) 1 SCC 400 : (2013) 1 SCC (Civ) 513 : (2013) 1 SCC (Cri) 51. The financier being the owner of the vehicle which is the subject of a hire-purchase agreement, there can be no impediment to the financier taking possession of the vehicle when the hirer does not make payment of instalments/hire charges in terms of the hire-purchase agreement. However, such repossession cannot be taken by recourse to physical violence, assault and/or criminal intimidation. Nor can such possession be taken by engaging gangsters, goons and musclemen as socalled recovery agents."
...
"90. In a case where the requirement to serve notice before repossession is implicit in the hire purchase agreement, non- service of proper notice could tantamount to deficiency of service for breach of the hire purchase agreement giving rise to a claim in damages. The complainant consumer would be entitled to compensatory damages, based on the assessment of the loss caused to the complainant by reason of the omission to give notice. Where there is no evidence of any loss to the hirer by reason of omission to give notice, nominal damages may be awarded."
16. In the recent judgment of the High Court of Judicature at Patna in the case of Dhananjay vs. The Union of India through Secretary Department of Finance and Commerce, New Delhi. & Ors., Civil Writ Jurisdiction Case No.3456 of 2021 and other connected matters, decided on 19.05.2023 wherein it has been observed and directed as under:
"64. Having discussed the entire facts and circumstances of the case and the laws on the subject, this Court would make it clear that so far as the allegations against the Banks and Financial Institutions that they had forcibly seized/ repossessed the vehicles is concerned, this Court, instead of dwelling much upon that issue in the present proceeding, leaves it open for the Investigating Agency to look into the complaints of the petitioners and investigate them independently and in accordance with law. This Court has mainly concentrated on the plea of the Banks and Financial Institutions that they can seize and repossess the vehicle without taking recourse to law and legal procedures as envisaged under the Act of 2002 and the Rules framed thereunder. Thus, even as the allegations of forceful seizure and possession has been taken note of, the same would not come in the way of an independent investigation. This Court has found that at least in one case (C.W.J.C. No. 16155 of 2021) a first information report being Sadar P.S. Case No. 22 of 2023 dated 08.01.2023 has been lodged by the petitioner‟s husband. In case other petitioners have also lodged any complaint with the respective police station, the same will be registered and duly investigated. It is still open to the petitioners to lodge their respective complaint with the jurisdictional police station within whose jurisdiction the vehicle in question has been seized and repossessed allegedly by use of force.
65. Since this Court has come to a conclusion that the covenants in the loan agreement of these cases are at best creating a „security interest‟ in the „secured asset‟ i.e. the vehicle in favour of the Banks and Financial Institutions, as the case may be, this Court directs that the Banks/Financial Institutions who are contesting respondents in these cases shall henceforth, exercise their power to seize and repossess the vehicle only in accordance with the provisions of the Act of 2002, and the Rules framed thereunder and the RBI guidelines. Their right to seize or repossess is not in question, it is the manner in which it is being exercised is illegal, hence, they cannot continue with the same.
66. The Superintendent of Police of all the districts in the State of Bihar are directed to ensure that within their jurisdiction no recovery agent of the Bank and Financial Institution may take the law into their hands, intercept the vehicles on way and takes possession of the vehicle in default without an order of the competent court of law. Any seizure/repossession of the vehicle in default may be given effect to only in accordance with the law and the procedure established by law;
67. In all such cases where the vehicles have not been sold, the petitioner(s) and the Bank/Financial Institution through it‟s authorized representative shall sit together and reconcile the account to determine the amount due in the loan account, however, the Bank/Financial Institution shall not charge any interest for the period during which the vehicle remained in seizure and they will treat the Covid-19 period in accordance with lockdown notification. Such reconciliation be made within a period of four weeks from today whereupon the petitioner(s) shall pay 30% of the outstanding amount and get release of the vehicle after giving an undertaking that he will pay the rest of the 70% of the outstanding amount with applicable interest from the date of handing over the possession of the vehicle till the date of payment in suitable installments as may be decided by the Banks/Financial Institutions. In the meantime, the petitioner(s) shall continue to pay the current EMI, failing which it will be open to the Bank/Financial Institution to proceed against the petitioner(s) in accordance with the provisions of the Act of 2002 and the Rules framed thereunder to re-possess the vehicle.
68. In the cases where the vehicle has been sold to a third party and the Bank/Financial Institution is not in a position to restore the vehicle, they would be liable to pay the petitioner(s) to the extent of the value of the vehicle(s) as per their insurance value on the date of their seizure. The said amount shall be adjusted against the outstanding vehicle loan and thereafter if any surplus comes out the same will be made available to the petitioner. It will be open for the petitioners, if so advised to challenge the accounts furnished by the Banks/Financial Institutions and claim any compensation etc. for the loss arising out of seizure of their respective vehicles before appropriate court/forum.
69. Since the action of the Banks/Finance Companies are found illegal, the petitioners who have been made to contest this case shall be entitled for cost of litigation. Accordingly, this Court directs that each of the contesting respondents i.e. Banks/Financial Institutions would be liable to pay a sum of Rs. 50,000/- (fifty thousand) as cost of litigation to the respective writ petitioners within a period of 30 days from the date of receipt/production of a copy of this judgment.
70. These writ applications are disposed of accordingly."
17. It is an undisputed position that the complainant purchased the vehicle for a consideration of Rs.8,94,745.13. Of this, he contributed Rs.94,745.13 from his own funds and obtained a loan of Rs.8,00,000 from the OP Bank, repayable in 60 Equated Monthly Instalments (EMIs) of Rs.16,584 each. It is also not in dispute that the complainant had regularly paid the instalments up to October 2006 and had, however, defaulted three instalments thereafter. The vehicle was repossessed by the OP Bank on 21.12.2006. The complainant immediately lodged a complaint with the police alleging unauthorized seizure of the vehicle, while the OP Bank justified its action on the ground of default in repayment of instalments.
18. The principal question is not limited to whether the complainant had committed default in payment of certain instalments, but whether the repossession of the vehicle was carried out in accordance with law and the terms of the loan agreement? As discussed above, the complainant had admitted to have defaulted three consecutive EMIs. At the same time, the OP Bank failed to establish delivery non-payment notices and notice of repossession upon the complainant, prior to taking possession of the vehicle. The requirement of issue of notice before repossession is not only embedded within the contractual arrangement between the parties but has also been consistently recognized in judicial precedents governing repossession of financed vehicles. The failure of the OP Bank to establish delivery of repossession notice verges to violation of the prescribed procedure. Although the financier may have a right to repossess a hypothecated vehicle upon default, such right can only be exercised by following due process of law and not by unilateral action.
19. Having regard to the facts and circumstances of the case, including the admitted position of the complainant that he had in fact defaulted three consecutive payments, he was in receipt of auction notice of the repossessed vehicle and still he failed to settle the loan account, we are of the considered view that the both the fora below have granted excessive relief, which requires to be interfered. The failure of the complainant in repeatedly defaulting the loan EMIs under the loan agreement entered into with open eyes cannot be lost sight of. At the same time, the OP Bank is also liable for its actions in repossessing the vehicle, without adhering to the mandatory requirement of prior notice and due process. It is a matter of record that the complainant paid Rs.94,745 as the margin money over and above the loan of Rs.8,00,000 granted by the OP-1 Bank. Thus, balancing the equities between the parties, we deem it appropriate to modify the impugned orders and direct the OP Bank to pay to the complainant a consolidated compensation of Rs.2,50,000 for deficiency in service and the harassment caused to the complainant. The said amount shall be paid within one month from the date of this order. Failing which, it shall carry interest @ 12% per annum from the date of default till realization.
20. Consequently, the Revision Petition No.697 of 2018 is partly allowed to the aforesaid extent and the orders of the Fora below stand modified accordingly.
21. In the facts and circumstances of the case, there shall be no order as to costs.
22. All pending applications, if any, stand disposed of.
