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Brief facts of the case

The complainant had obtained a loan for the purchase of a passenger car from Hinduja Leyland Finance/Finance Company against an undertaking to pay 48 monthly installments. Notices have been issued for late payments; However, without any notice, the vehicle was seized by the finance company. Despite attempts by the complainant to pay the dues, the company sold the vehicle at a low price and claimed additional outstanding amounts. Accordingly, the complainant filed a complaint with the District Commission seeking refund of installments paid, return of checks and documents, compensation for deficiency in services and correction of CIBIL records. The district committee approved the complaint and directed the finance company to issue a “non-due certificate” and pay Rs.1,00,000 as compensation. Aggrieved, the financing company has appealed to the state commission.

Finance company claims

The finance company argued that the complaint was not sustainable either in law or fact. No cause of action was alleged as it was a commercial purchase for business purposes and section 21(d) of the Consumer Protection Act would therefore bar the complaint. According to the company, the complainant is bound by the agreement under which the vehicle was seized and sold due to non-payment of EMI. It argued that under the agreement, disputes were required to be referred to arbitration and the Commission had no jurisdiction to entertain the same.

Observations of the State Commission

The Commission noted that the complainant had borrowed a loan from the finance company to purchase a vehicle, which was believed to be in her favor. The finance company was unable to provide clear details of the vehicle’s sale, including buyer information, sales price and transfer date. This lack of transparency led to a lack of service and unfair business practices. However, the complainant was found to be a willful defaulter as he had paid only a few installments despite the term of the loan. The Commission dismissed the appeal and affirmed the order of the District Commission. It confirmed that the complainant is not entitled to higher damages, but allowed the complainant to withdraw the amount deposited, with accrued interest, as partial payment of the final amount.

Case title: Hinduja Leyland Finance Ltd. vs. Merugu Bhagavan Rao

Case number: FA No. 832/2020