M/S. MAGMA FINCORP LTD. versus RAJESH KUMAR TIWARI

Citation: [2020] 11 S.C.R. 59 · Decided: 01-10-2020 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Case Allowed

cites 4 · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
59
M/S. MAGMA FINCORP LTD.
v.
RAJESH KUMAR TIWARI
(Civil Appeal No. 5622 of 2019)
OCTOBER 01, 2020
[D. Y. CHANDRACHUD AND INDIRA BANERJEE, JJ.]
Consumer Protection Act, 1986:
ss.2(1)(r) and 12 – Complaint alleging unfair trade practice
and deficiency in service – Against the appellant-financier, with
whom the complainant had entered into hire-purchase agreement
for purchase of a vehicle – Alleging that even though the
complainant had paid 7 out of 35 instalments, the Financier took
possession of the vehicle without notice and sold the vehicle refusing
to concede to his request for opportunity to clear the outstanding
instalments – Fora below allowed the complaint directing the
financier to refund the instalments paid by the complainant with
interest and to pay damages and litigation cost and also the amount
which was paid to dealer of vehicle directly by the complainant –
Appeal to Supreme Court – Held: Under a Hire-Purchase agreement,
goods are let out on hire, with an option to purchase, in accordance
with the terms of the agreement – The financier continues to be
owner of the goods until the option to purchase (upon payment of
agreed amounts) is exercised by the hirer – There is no legal
impediment to the financier taking repossession of the goods, upon
default in payment of instalments – The Consumer Protection Act
does not override the contract Act – Requirement of notice to the
hirer before repossession would depend on the terms and conditions
of the agreement – If stipulation of notice are violated, non-service
would tantamount to deficiency in service and the consumer would
be entitled to compensatory damages – If non-service of notice
causes loss to the hirer, consumer/hirer is entitled to punitive damages
– In the present case there is no evidence of any loss suffered by
hirer due to non-receipt of notice – There is no deficiency in service
and no case of unfair trade practice is made out – The direction of
fora below has given a defaulting hirer, benefit of free use of the
vehicle.
[2020] 11 S.C.R. 59
59
A
B
C
D
E
F
G
H
60
SUPREME COURT REPORTS
[2020] 11 S.C.R.
Allowing the appeal, the Court
HELD: 1.1 Section (2)(1)(r) of Consumer Protection Act,
1986 defines “unfair trade practice” to mean a trade practice, for
the purpose of promoting provision of any service, by adoption
of unfair method or unfair or deceptive practice, including any of
the practices enumerated in Sections 2(1)(r)(i) to (x), 2(r)(2),
2(r)(3) and 2(r)(3A). The complaint in the present case does not
make out any case of unfair trade practice within the meaning of
Section 2(1)(r) of the Consumer Protection Act 1986. [Para 25]
[98-D-E]
1.2 Under the terms and conditions of the hire purchase
agreement, the ownership of the vehicle was to stand transferred
to the Complainant from the Financier, upon payment of all the 35
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 the complainant to the Financier, the ownership of the
vehicle remained with the Financier. The hire purchase agreement
clearly enabled the Financier to take possession of the vehicle,
on default in payment of any of the instalments. There is no term
in the Hire Purchase Agreement, that requires the Financier to
give notice to the Complainant before terminating the Hire
Purchase Agreement, upon breach of any term thereof, or before
taking possession of the vehicle. On the other hand, clause 15 of
the Hire Purchase Agreement expressly provides for
determination of the Hire Purchase Agreement without notice to
the Complainant, upon default in hire instalments. [Paras 28-
30][98-H; 99-A-D]
1.3 The Complainant has only made a vague assertion that
the action of the Financier in taking possession of the vehicle,
admittedly for default in payment of instalments, and in not
releasing the vehicle to the Complainant, in spite of the
Complainant’s assurance to the Financier to clear outstanding
instalments and pay future instalments timely, amounts to an act
of unfair trade practice and constitutes deficiency of service. The
repossession of a vehicle under hire, in accordance with the terms
and conditions of a hire purchase agreement, upon default in
payment of hire instalments and refusal to release the same on
mere assurance of the Complainant to clear outstanding arrears
A
B
C
D
E
F
G
H
61
of hire instalments, and pay future instalments in time, does not
constitute ‘deficiency’ in 

Excerpt shown. Read the full judgment & AI analysis in Lexace.