[Citi Corpn. Maruti Finance Ltd. v. S. Vijayalaxmi, AIR 2012 Supreme Court 509]
On 4th April, 2000, at the initiative of the respondent, a hire-purchase agreement was entered into between the appellant and the respondent, to enable the respondent to avail of the benefit of hire-purchase in respect of a Maruti Omni Car. Clause 2.1 of the hire-purchase agreement provided for payment of the hire charges in the manner stipulated in the agreement and it also indicated that timely payment of the hire charges was the essence of the agreement. On the failure of the respondent to pay the hire charges in terms of the repayment schedule, the appellant sent a legal notice to the respondent on 10th October, 2002, recalling the entire hire-purchase facility.
Pursuant to a request made by the respondent, the appellant made a one-time offer of settlement for liquidating the outstanding dues of Rs. 1,26,564.84p. for Rs.60,000, subject to payment being made by the respondent by 16th May, 2003, in cash. Thereafter, in keeping with the terms and conditions of the hire-purchase agreement, the appellant took possession of the financed vehicle and informed the concerned police station before and after taking possession of the vehicle from the residence of the respondent. It was also the appellant’s case that subsequent thereto, the date of the settlement offer was extended as a special case, but despite the same, the respondent failed to pay the amount even within the extended period. It is on account of such default that the appellant was constrained to sell the vehicle after having the same valued by approved valuers and inviting bids from interested parties.
In June, 2003, the respondent filed consumer complaint before the Consumer Disputes Redressal Forum, against the appellant alleging deficiency in service on their part. By its order dated 22nd December, 2003, the District Forum, directed the appellant to pay a sum of Rs.1,50,000, along with interest at the rate of 9% per annum, from the date of filing of the complaint till the date of payment, together with a further sum of Rs.5,000 towards harassment and cost of litigation. The National Commission, while dismissing the revision petition modified the order of the State Commission. The Commission directed the appellant to pay a sum of Rs.10,000 to the complainant/respondent by way of cost.
On appeal to the Supreme Court, the Court observed that the lower forum had held that the vehicle had been illegally and/or wrongfully recovered by use of force from the loanees. The Court observed that recovery process should be effected in accordance with due process of law and not with use of force. Although till such time as ownership is not transferred to purchaser hirer normally continues to be the owner of goods, but that does not entitle him on strength of the agreement to take back possession of vehicle by use of force. Such acts are in violation of RBI guidelines. Hence, recovery by financial corporation was against process of law and RBI guidelines and hence order of Consumer Forum directing financial corporation to compensate the purchaser was proper.
