Telangana State Commission Holds Hinduja Leyland Finance Liable For Deficiency In Service And Unfair Trade Practices

Brief Facts of the Case

The complainant had obtained a loan for purchase of a passenger vehicle from Hinduja Leyland Finance/finance company against an undertaking to pay 48 monthly installments. Notices were issued on account of defaulted payments; however, without giving any notice, the vehicle was seized by the finance company. Despite efforts by the complainant to settle dues, the company sold the vehicle for a low price and claimed additional outstanding amounts.. Consequently, the complainant filed a complaint before the District Commission and sought a refund of paid installments, return of cheques and documents, compensation for deficiency of service, and correction of CIBIL records. The District Commission allowed the complaint and directed the finance company to issue a “No due certificate” and pay Rs.1,00,000 as compensation. Aggrieved, the finance company filed an appeal before the State Commission.

Contentions of the Finance Company

The finance company argued that the complaint was neither maintainable under law nor by facts. It pleaded no cause of action since it was a commercial purchase made for business purposes and Section 21(d) of Consumer Protection Act would, thereby, bar the complaint. According to the company, the complainant is bound by the agreement which seized and sold the vehicle due to default in payment of EMI. It contended that disputes must be referred to arbitration according to the agreement, and the Commission lacked jurisdiction to handle the same.

Observations by the State Commission

The Commission observed that the complainant borrowed a loan from the finance company to purchase a vehicle, which was hypothecated in its favour. The finance company could not provide clear details regarding the sale of the vehicle, including the purchaser's information, sale price, and transfer date. This lack of transparency amounted to deficiency of service and unfair trade practices. However, the complainant was found to be a willful defaulter, having paid only a few installments despite a four-year loan term. The Commission dismissed the appeal and upheld the District Commission's order. It confirmed that the complainant is not entitled to enhanced compensation but allowed the complainant to withdraw the deposited amount, with accrued interest, as part satisfaction of the decretal amount.

Case Title: Hinduja Leyland Finance Ltd. Vs. Merugu Bhagavan Rao

Case Number: F.A. No. 832/2020