Professional Documents
Culture Documents
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
versus
JUDGMENT
Indira Banerjee, J.
Digitally signed by
ARJUN BISHT
Pradesh [herein after referred to as the ‘State Commission’],
Date: 2020.10.01
18:58:59 IST
Reason:
the Financier.
“…..
02. The Hirer shall duly perform and observe all the
terms and condition contained in this agreement and the
covenants on his part to be performed and observed and
shall in the manner aforesaid, pay to the company,
monthly/quarterly sums by way of hire instalments as
mentioned in Schedule-II and Schedule-III of this agreement
and shall also pay to the company all other sums of money
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which may become due and payable under this agreement,
upon execution thereof regardless of the date of delivery of
the Hired Article.
a) HIRE PAYMENTS
Punctually and promptly pay to the company without
any demand in respect thereof by the company, at its
registered office the stipulated down payments/initial
payment/instalments as mentioned in Schedule-III/other
charges on the due dates, whether or not it has
received delivery of the Hired Article.
b) MAINTENANCE
Maintain and keep the Hired Article in good and
serviceable condition at his own cost. The company
and/or its Bankers shall have all the rights to inspect
and to call for the Hired Article to be produced at any
time for any time for any reason whatsoever. The Hirer
shall be responsible and liable for damage, if any,
caused to the Hired Article and/or to any other third
party.
c) LOCATION
Keep the Hired Article at the Hirer’s said premises and
shall permit the company and/or its agent at all times
to enter upon any premises at which the Hired Article is
kept/parked for the purpose of verification and also
repossession the Hired Article under the provisions of
clause 15 of this agreement and shall not under any
circumstances change the location of the Hired Article,
without express approval of the company.
d) INSURANCE
Insure and keep comprehensively insured the Hired
Article in the name of the company and/or its Banker
against loss or damage by fire, accident, flood,
earthquake, theft or any other cause and including
against third party claims with an insurance company
for the full cost of the Hired Article, such insurance
policy shall be lodged with the company and/or its
bankers duly assigned in their favour promptly and
regularly. And loss and/or liability arising to the
company for the Hirer’s omission or neglect to keep the
Hired Article so comprehensively insured shall be
entirely to the account of the Hire and the Hirer and
shall immediately make payment to the company in
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respect of all such losses suffered and/or liabilities
incurred by the company.
The Hirer confirms that he/it will get the benefit of the
insurance only if no amount is overdue by him to the
company. If the contract of hiring is terminated either
by the company or by the Hirer as provided in this
agreement, the Hirer’s interest in the insurance policy
and his/its right of claiming anything there under shall
IPSO FACTO come to an end. The Hirer further agrees
that whenever he/it is not entitled to the benefit of
insurance under the clause, the same would go to the
company and the company shall be considered to be
the insured in his/its place. However, the said
insurance shall not absolve the Hirer from his/its
liabilities towards the company under this agreement
and in no case shall the Hirer be entitled to claim any
benefit from the company beyond any amount of claim
received from the insurance company.
e) REGISTRATION
Notwithstanding the fact that the company
continues to remain the owner of the Hired
Article until payment of the entire dues by the
Hirer, the company agrees to permit the Hirer to
have the Registration under the Motor Vehicles
Act of the Hired Article in his/its own name with
endorsement of the company’s name as financier,
provided that the Hirer shall be deemed to have
transferred the registration in the name of the
company when the Hirer commits a breach of any
of the conditions of this agreement and the
company is entitled to retake the possession of
the Hired Article. The Hirer has, in order to
facilitate taking possession of the vehicles, in the
event of the Hirer committing breach of the
agreement, executed necessary documents and
has authorised the company to use the same as
and when the occasion so arises.
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f) ALIENATION OF HIRED ARTICLE
Ensure not to sell, assign, mortgage, pledge,
hypothecate or otherwise deal with the Hired Article or
any part thereof, to part with possession of the Hired
Article without the express written permission of the
company previously obtained and not to use the Hired
Article for any purpose other than that declared in the
application.
g) ……..
h) …….
i) ….
j) …….
04. ………..
05. LOSS AND DAMAGE
In the event of the Hired Article, being from any cause
whatsoever, wholly lost to the company during the said
hiring, the measure of damages as admitted to be payable
by the Hirer to the company shall be the aggregate of all
arrears amounts. If any, and the total amount of the
installment which would have been payable during the
residue of the said hire purchase form. For the purpose of
this clause, the Hired Article, if damaged and not forthwith
repaired and restored to its original condition, shall be
deemed to be wholly lost to the company. However, every
opportunity and reasonable time shall be given to the hirer
to restore the Hired Article to working condition subject to
the hirer continuing to pay the hire installments as per the
agreement.
07. …..
08. USE OF THE HIRED ARTICLE FOR UNLAWFUL
PURPOSE
The Hirer undertakes not to use Hired Article either by
itself/himself or through its/his servants or agents, for
any unlawful purpose prohibited as per the terms and
conditions of the insurance policy or do or permit to be
done any act or thing which might render the insurance
invalid, and in particular, not to use the Hired Articles in
any acts liable to contravention of any of the provisions
of the Acts of the Central and State Legislatures.
13. ……
14. …..
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15. DETERMINATION
In case the Hirer shall during the continuance of this
agreement do or suffer one or more of the following:-
a) Fail to pay any of the hire installments or the
interest or other amounts (for example; insurance
premium, expenses incurred for collection of
installments, additional taxes, additional, finance
charges for late payment of installments etc.) having
fallen due hereunder within 7 (seven) days of the
amount falling due for payment whether
demanded or not;
b) …….
c) …….
d) pledge or mortgage or hypothecate or sell or
attempt to pledge or sell or part with possession of or
otherwise alienate or transfer the said Hired Article;
e)….
f) fail to keep the said Hired Article comprehensively
insured as agreed hereinbefore during the period of the
agreement.
g) fail to pay to the government or any public
authority and taxes or charges due in respect of the
Hired Article.
h) remove the Hired Article to any other State i.e. all
such States other than the State in which the Hired
Article is registered under Motor Vehicles, Act without
prior written permission of the company;
i) break or fail to perform or observe any conditions
on his/its part herein contained;
j) ……
k) …..
l) …….
then on the occurrence of any of the above such
events, the rights of the Hirer under this
Agreement shall forthwith stand determined
“IPSO FACTO” without any notice to the Hirer and
all installments due and remaining unpaid, all
future instalments in terms of this agreement
and any other charges. Expenses realizable from
the Hirer shall become due and payable forthwith
by the Hire and the company and/or its bankers
and/or its agent shall thereupon be entitled to
enter into the premises of the Hirer at such place
the vehicle may be lying and remove and take
possession of the Hired Article situated in any
land or place or house wherever the same may
then be without being liable to any
proceedings/complaint by the Hirer or any other
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person claiming through/under him or otherwise,
and the company shall have the right to sue the
Hirer for all such sums receivable from the Hirer
as stated above and also for damages for breach
of this agreement without prejudice to the
company’s right to otherwise obtaining and
recovering possession of the Hired Article. This
shall also be without prejudice to the right of the
company to sell the hired articles after
repossession without the intervention of the
court as also to proceed against the Hirer for
recovering any deficiency after adjustment of the
sale proceeds of the hired articles as stated
above in respect of the outstanding dues to the
company.
the first instalment within 1st August, 2002 and the subsequent
Financier, dishonoured.
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6. In the circumstances, the Financier took re-possession of the
Complainant.
the Financier to the Complainant, calling upon him to clear his total
9. On or about 15th July, 2005, that is, exactly two years after the
hereinbelow:
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“Provision-3 That Applicant/Complainant has Submitted
1,04,000 as a margin money And 3,15,000 was Finance from
Opposite party. That to be Submitted in 35 Equal monthly
instalments.
(b) That From the Date of Lifting of vehicle till the date
of judgment or till the date of Handing over of vehicle. It is
Requested to order that 18,000 p.m. to be given as a loss
from Opposite party.
complaint at Paragraph (7) that the Financier had “lifted the vehicle”
after the 7th, timely, due to his illness. Later, an accident case was
After the Complainant got the vehicle released from the police and
13. The vehicle was sold in November 2003. Till then, the
Complainant did not even clear the instalments outstanding upto July
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2003, that is, the outstanding instalments for the period during which
10% per annum from the date of filing of the complaint till payment
the order.
the complaint, and directing the Financier to pay the Complainant the
The Financier contended that the vehicle had to be sold since the
However, the fact finding fora under the Consumer Protection Act
1986 have concurrently found that the notice had not been sent to
accordingly held that notice had not been served on the complainant.
18. The short question raised by the Financier in this appeal is,
whether the Financier is the real owner of the vehicle which is the
when the hirer does not make payment of instalments in terms of the
proper notice.
22. The fora constituted under the Consumer Protection Act, 1986
Act, 1986 as amended from time to time, are set out hereinbelow for
convenience:
(r) “unfair trade practice” means a trade practice which, for the
purpose of promoting the sale, use or supply of any goods or for
the provision of any service, adopts any unfair method or unfair
or deceptive practice including any of the following practices,
namely:
(1) the practice of making any statement, whether orally or in
writing or by visible representation which,—
(i) ….
(ii) falsely represents that the services are of a particular
standard, quality or grade;
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(iii) …..
(iv) represents that the goods or services have sponsorship,
approval, performance, characteristics, accessories, uses
or benefits which such goods or services do not have;
(v) ...
(vi) makes a false or misleading representation concerning the
need for, or the usefulness of, any goods or services;
(vii) …..
(viii) makes to the public a representation in a form that
purports to be—
(i) a warranty or guarantee of a product or of any goods or
services; or
(ii) a promise to replace, maintain or repair an article or
any part thereof or to repeat or continue a service until
it has achieved a specified result,
if such purported warranty or guarantee or promise is
materially misleading or if there is no reasonable prospect
that such warranty, guarantee or promise will be carried
out;
(ix) materially misleads the public concerning the price at
which a product or like products or goods or services, have
been or are, ordinarily sold or provided, and, for this
purpose, a representation as to price shall be deemed to
refer to the price at which the product or goods or services
has or have been sold by sellers or provided by suppliers
generally in the relevant market unless it is clearly
specified to be the price at which the product has been
sold or services have been provided by the person by
whom or on whose behalf the representation is made;
(x) gives false or misleading facts disparaging the goods,
services or trade of another person.
Explanation.—For the purposes of clause (1), a statement that
is—
(a) expressed on an article offered or displayed for sale, or on
its wrapper or container; or
(b) expressed on anything attached to, inserted in, or
accompanying, an article offered or displayed for sale, or
on anything on which the article is mounted for display or
sale; or
(c) contained in or on anything that is sold, sent, delivered,
transmitted or in any other manner whatsoever made
available to a member of the public,
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shall be deemed to be a statement made to the public by, and
only by, the person who had caused the statement to be so
expressed, made or contained;
(2) permits the publication of any advertisement whether in any
newspaper or otherwise, for the sale or supply at a bargain
price, of goods or services that are not intended to be offered for
sale or supply at the bargain price, or for a period that is, and in
quantities that are, reasonable, having regard to the nature of
the market in which the business is carried on, the nature and
size of business, and the nature of the advertisement.
Explanation.—For the purposes of clause (2), “bargaining
price” means—
(a) a price that is stated in any advertisement to be a bargain
price, by reference to an ordinary price or otherwise; or
(b) a price that a person who reads, hears or sees the
advertisement, would reasonably understand to be a
bargain price having regard to the prices at which the
product advertised or like products are ordinarily sold;
(3) permits—
(a) the offering of gifts, prizes or other items with the
intention of not providing them as offered or creating
impression that something is being given or offered free of
charge when it is fully or partly covered by the amount
charged in the transaction as a whole;
(b) the conduct of any contest, lottery, game of chance or
skill, for the purpose of promoting, directly or indirectly, the
sale, use or supply of any product or any business interest;
(3-A) withholding from the participants of any scheme offering
gifts, prizes or other items free of charge, on its closure the
information about final results of the scheme.
Explanation.—For the purposes of this sub-clause, the
participants of a scheme shall be deemed to have been
informed of the final results of the scheme where such results
are within a reasonable time published, prominently in the
same newspapers in which the scheme was originally
advertised;
(4) permits the sale or supply of goods intended to be used, or
are of a kind likely to be used, by consumers, knowing or having
reason to believe that the goods do not comply with the
standards prescribed by competent authority relating to
performance, composition, contents, design, constructions,
finishing or packaging as are necessary to prevent or reduce the
risk of injury to the person using the goods;
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(5) permits the hoarding or destruction of goods, or refuses to
sell the goods or to make them available for sale or to provide
any service, if such hoarding or destruction or refusal raises or
tends to raise or is intended to raise, the cost of those or
other similar goods or services;
(6) manufacture of spurious goods or offering such goods for
sale or adopting deceptive practices in the provision of services.
‘complaint’ within the meaning of Section 11, read with Section 2(1)
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(c) of the Consumer Protection Act, 1986. In other words, do the
and (vi) of the Consumer Protection Act exist in this case? Is there
any unfair trade practice within the meaning of Section 2(1)(r) of the
said Act?
2(r)(2), 2(r)(3) and 2(r)(3A). The complaint does not make out any
26. The Complainant has only made a vague assertion that the
deficiency of service.
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27. As observed above, deficiency has been defined in Section
service.
instalments and other dues, if any. Until then, the ownership was to
be with the Financier. As all the 35 instalments had not been paid by
Purchase Agreement.
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33. The question which follows is, whether the Financier could
sent by the Financier, and that too, without even considering how the
Complainant was prejudiced by the error, when the vehicle had been
taken away for non payment of hire instalments and sold after about
four months.
35. A notice also draws the attention of the hirer to the alleged
gives the hirer an opportunity to show that the hirer had not, in fact,
credit to the hirer for payments made, or had not presented a cheque
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in its possession for payment, even though there were sufficient
cheque.
earn a livelihood. Such vehicles are often run over long distances. A
notice ensures that the hirer is not taken by surprise and has time to
stop operating the vehicle, so that third persons using the vehicle on
vehicle was taken, to be told that the Financier had taken possession
Act, 1963, derives its power to grant relief from Section 14 of the said
the complaint about the services are proved, it may direct the service
provider to
service provider charging a price in excess of the price fixed for the
service, under any law, for the time being in force or agreed between
the District Forum is apparent from its judgment and order. The
was not even the case of the Complainant in his complaint, that the
Hire Purchase Agreement, which the complainant had signed, did not
Financier for not producing the Hire Purchase Agreement before the
possession of the vehicle. The District Forum did not exercise its
the Hire Purchase Agreement. Even otherwise, the District Forum did
new case cannot be made out by way of evidence, when there are no
Complainant.
37
46. The State Commission assumed that the error in the address
amount, due from him to the Financier, which again is contrary to the
of when the vehicle had been sold and the amount for which the
vehicle had been sold, whether such amount was more than or less
divulging anything about the sale rendered the sale ‘dubious’, the
sale.
48. The aforesaid observation, of the sale being dubious, has been
payment of all hire instalments. The hire instalments are charges for
use of the vehicle as also for the exercise of option to purchase the
vehicle in future. The Financier being the owner of the vehicle, there
the sale of that vehicle, and that too on its own, without being called
upon to do so.
49. The finding of the State Commission that the Financier sold
repossession, from which all the three fora under the Consumer
Protection Act, 1986, that is the District Forum, the State Commission
39
and the National Commission have concluded that possession of the
vehicle was taken without notice. It was not the case of the
of the complainant.
51. The error and/or discrepancy in the address is minor and there
concluded that the error was deliberate. The finding of the State
unsubstantiated.
factual findings of the District Forum, the State Commission and the
the notice should have been sent to the correct address of the
warranted the order passed by the District Forum, which has been
directly, along with interest at the rate of 10% per annum, damages
the value of the vehicle by reason of wear and tear, due to use by the
hirer, as also an admitted accident for which the vehicle lay seized
54. The Consumer Protection Act, 1986 creates fora for quick
excess of the price fixed by or under any law in force, the price
representation.
55. The Consumer Protection Act, 1986, which creates fora for
services from being charged a price in excess of the price fixed for
41
the service under any law or the price agreed between the parties
spurious services.
56. The Consumer Protection Act, 1986 does not override the
The said Act also protects consumers from being overcharged for any
pay (if the parties have agreed to deferred payment), charges and/or
the party not in breach, such damages as would restore the position
of the party not in breach, to the position before the breach occurred.
may have been paid by the complainant [Section 14(1)(c)]. The said
In the instant case, the District Forum did not even undertake the
63. The District Forum, as also the State Commission and the
no right in rem on the hirer, until the conditions for transfer of the
the owner of the goods under a hire purchase agreement. The hirer
simply pays for use of the goods and for the option to purchase
price and the hire purchase price represents the sum which the hirer
has to pay for the privilege of being allowed to pay the purchase
all the terms of the agreement are satisfied, and the option is
exercised, a sale takes place of the goods, which till then, had been
hired.
2. AIR 1965 SC 1082
46
67. In Anup Sarmah v. Bhola Nath Sharma and Others 3 cited
with the latter. Thus, in case the vehicle is seized by the Financier, no
and Another4, relied upon by the Financier, this Court held that if
was taken could not be a ground to contend that the hirer was
seizure, this Court held that there could not be any generalization.
each case. However, it would not be appropriate for the Court to lay
Anr.5, cited on behalf of the Financier, this Court held that where the
Agreement.
70. The Financier has also cited the Judgments Jagdish Chandra
terminated, the dispute was of a civil nature. The High Court had
whether facts which could give rise to a civil claim, could also amount
to offence. This Court held that merely because a civil claim was
maintainable did not mean that the criminal complaint would not be
allegation that the respondent Nos. 2 and 10 had fraudulently got the
the majority of the Judges held that, the true effect of a transaction
Agreement, is not estopped from proving that the real bargain was a
the reason for which it was entered into, was to raise money. If the
the goods, the property passes under the documents embodying the
where the owner enters into a transaction of hiring out goods on the
terms and conditions set out in the agreement, and the option to
instalments of hire, arises when the instalments are paid and not
buy goods; the hirer being under no obligation to buy, has an option
of the stipulated hire and the price for exercising the option. This
agreement, under which the lender is given the license to seize the
goods.
75. In the aforesaid case, the majority of the judges were of the
purchase and allied agreements was to secure the return of the loans
the liability of a hirer to pay sales tax on the goods acquired under
77. The law which emerges from the judgments of the Court
referred to above, is that goods are let out on hire under a Hire
the terms and conditions of the Hire Purchase Agreement. The hirer
simply pays for the use of the goods and for the option to purchase
them.
payment of all amounts agreed upon between the hirer and the
subject of hire purchase. Till such time the hirer remains a trustee
covered by a hire purchase agreement till all the hire instalments are
paid and the hirer exercises the option to purchase. Thus, when the
appear from the terms and conditions thereof. In any event, the fora
under the Consumer Protection Act, have not arrived at any specific
83. In ICICI Bank Ltd. v. Prakash Kaur & Ors. 9 cited on behalf
the case where it was alleged that possession of a truck had been
Rs.50,000/-
the complainant, this Court held that the fora under the Consumer
Protection Act, 1986 were right in holding that the vehicles had been
The judgment was rendered in the facts and circumstance of the case
and this Court deprecated the use of force. In this case, there was no
10 (2012) 1 SCC 1
54
Maruti Finance Ltd. (supra), Kabir, J. held:-
86. This Court held that the Financier continues to be the owner of
place of lender/financier.
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
Singh Chadha (supra), K.L. Johar & Co. (supra) and Anup
Sarmah (supra). The Financier being the owner of the vehicle which
into hire purchase agreements with the Financier. The Financier who
56
set down the terms and conditions of the hire purchase, construed
purchase agreement.
If the Financier was not agreeable to accept the offer, the Financier
was within its rights under the hire purchase agreement. This is not a
case where payment had been tendered by the hirer but not
payment.
the vehicle, out of which the Financier had been able to realize
a year. The District Forum did not even notionally assess the
94. The District Forum was not justified in directing the Financier
after the Complainant had held and used the vehicle for almost a
58
year. The Complainant, admittedly a defaulter, has in effect, been
allowed free use of the vehicle for about a year, plus damages, for an
receipt of the notice, and without making any assessment of the loss,
95. For the reasons discussed above, the impugned orders of the
the vehicle.
..….…..............................J.
[D.Y. CHANDRACHUD]
..….…..............................J.
[INDIRA BANERJEE]
NEW DELHI
OCTOBER 01, 2020