Failure To Issue NOC, Despite Loan Repayment: Shimla District Commission Holds Mahindra & Mahindra Financial Services Liable

Brief Facts:

The Complainant sought financing from Mahindra & Mahindra Financial Services Ltd. (“Mahindra”) to purchase a Mahindra Bolero Pickup. A loan agreement was established in Shimla on the same day, granting the Complainant a loan of Rs. 4,10,000/-, which was to be repaid in 42 monthly instalments of Rs. 12,200/-. The Complainant consistently paid these instalments. However, due to a false FIR and subsequent arrest, he missed five instalments. Without prior notice, Mahindra's recovery agents repossessed the vehicle, despite it being in good condition and used solely for the Complainant's business. The Complainant visited Mahindra's Shimla office, paid Rs.1,70,000/- as demanded, and received a release order for the vehicle. Upon visiting the yard in Bilaspur, the Complainant discovered that the vehicle's spare parts were replaced. Despite demanding an inventory, he did not receive it, and his subsequent complaints to Mahindra went unanswered. Consequently, the vehicle remained with Mahindra and was not operational. The Complainant accused Mahindra of misusing his cheques, deficient service, and unfair trade practices. Feeling aggrieved, the Complainant approached the District Consumer Disputes Redressal Commission, Shimla, Himachal Pradesh (“District Commission”) and filed a consumer complaint against Mahindra.

In response, Mahindra contended that the Complainant, being a company, was not a consumer as defined by law and that the vehicle was purchased for commercial purposes, not personal livelihood. The loan agreement involved Rs. 4,10,000/- with Rs. 1,02,400/- in finance charges, repayable in 42 monthly instalments. It claimed that the Complainant regularly defaulted on payments, providing timely payments for only three or four instalments. It emphasized that the repossession of the vehicle was lawful and necessary due to the Complainant's habitual default. It argued that the vehicle was in poor condition at the time of repossession and that proper notification was given to the Complainant and the police.

Observations by the District Commission:

The District Commission noted that there was insufficient evidence to determine the condition of the vehicle at the times of repossession and release. Consequently, the Complainant's claims about the vehicle's condition and the alleged replacement of parts were not substantiated. Similarly, it held that there was no evidence to support the claims regarding the misuse of cheques, as the Complainant failed to provide specific cheque numbers. Therefore, the District Commission held that it could not issue directions against the company regarding the security cheques or order the registration of an FIR by the police.

However, the District Commission found that the Complainant repaid the loan, as evidenced by the release of the vehicle. Mahindra did not claim that any loan amount remained unpaid. Despite this, Mahindra did not issue a No-Objection Certificate (NOC) to the Complainant. Therefore, it held that Mahindra was liable for deficiency in service and unfair trade practice. It held that failure to issue the NOC after the repayment of the loan was unjustified and warranted remedial action.

Consequently, the District Commission directed Mahindra to issue the NOC to the Complainant concerning the loan for the vehicle. Additionally, the District Commission directed Mahindra to pay a compensation of Rs.10,000/- for mental harassment and agony to the Complainant, and Rs.10,000 for litigation costs incurred by him.

Case Title: B.I.V. 3D Electronics Pvt. Ltd vs Mahindra & Mahindra Financial Services Ltd. and Anr.

Case Number: 71/2018

Date of Pronouncement: June 11^th, 2024