Supreme Court holds that Consumer Protection Act, 1986 does not override the Indian Contract Act, 1872 and is not in derogation of any existing law.
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The
Supreme Court (“Court”) in division bench comprising of J. D.Y
Chandrachud and J. Indira Banerjee in M/S
Magma Fincorp Ltd. v. Rajesh Kumar
Tiwari observed the importance of the Consumer Protection Act,1986 (“Consumer Act”). The SC further
prominently maintained the relationship between the Consumer Protection Act,
1986 and the Indian Contract Act, 1872 in contract of insurance.
Facts
On
2 August 2002, M/S Magma Fincorp Ltd (“Financier”)
entered into a hire-purchase agreement with Rajesh Kumar Tiwari (“Complainant”) to hire-purchase the
Mahindra Marshal Economic Jeep(“Vehicle”),
cost of Rs. 4,21,121 (four lac twenty
one thousand one hundred twenty one) out of which initial payment of Rs.
1,06,121 (one lac six thousand twenty one) was made by Complainant. Balance amount was paid by the financier. Complainant promised to repay the balance amount in monthly instalments till 1st
June, 2005 but failed to pay the first instalment which was required to be paid
within 1 Aug, 2020. Financier after giving notice took re-possession of the
vehicle on 14 July, 2003 and called complainant to clear the dues within 7 days
from the date of receipt of the notice. The financier sold the vehicle in
November 2003 as the complainant failed to repay the amount.
After
two year, i.e. 15 July, 2005, the complainant filed the complaint in District
Consumer Dispute Redressal Forum (“District
Forum”). District forum directed the financier to pay Rs. 2, 23,335 (two
lac twenty three thousand three hundred thirty five) with simple interest at
10% per annum, beside this district forum also directed to pay for the damage
and litigation expenses caused. Thereafter, the financier filed an appeal
before the State Consumer Disputes Redressal Commission (“State Commission”) which was dismissed later. The financier filed a
revision application before the National Consumer Disputes Redressal Commission
(“National Commission”) which was
again dismissed. Hence, the financier filed an appeal before the Court.
Held
Whether the transaction between
the financier and the claimant is hire purchase transaction or a loan
transaction?
The Court observed that though a loan
transaction confers a licence to the financier to seize the vehicle, the transaction
between the financier and the claimant is hire-purchase transaction as per the
terms and conditions of the agreement. There is no contrary provision under the
Consumer Act.
Whether
the financier is the real owner of the vehicle?
The Court held an affirmative decision. The court further held that
the financier can take re-possession of the vehicle, but the possession cannot
be taken by engaging recovery agents and shouldn’t cause physical violence,
assault or criminal intimidation.
Whether
is it necessary to give notice to the claimant for re-possession of the vehicle?
Dealing
with this issue, the Court held that serving the notice to the claimant before
taking the possession is implicit in the hire-purchase agreement and under the
Consumer Act; non-service of notice would amount to deficiency of service for
breaching the terms of the agreement. Moreover, the Consumer Act has provision
for breach of duty, the one who breached need to pay for the damage caused.
Henceforth,
the Court set aside the orders of the National Commission, the State Commission
and the District forum and awarded the financier to pay the amount for the deficiency
in the service.
Read
Judgment here.
By Bhoomika Markam.
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