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2026 Supreme(Online)(SCDRC) 1821
BEFORE THE TELANGANA STATE CONSUMER DISPUTES REDRESSAL COMMISSION : HYDERABAD
G. Radha Rani, President, Meena Ramanathan, Member
1.Tata Motors Finance Ltd. – Appellant
Versus
Kalakotla Malathi – Respondent
FA.No.811 OF 2020 | C.C.45/2019
For the Appellants/Petitioners: S. Keshava Rao
For the Respondents: G. Malathi
Financiers cannot legally seize a vehicle without providing a pre-seizure notice to the borrower; a notice invoking arbitration proceedings does not substitute for a specific notice of seizure.
Headnote:The matter involves the Consumer Protection Act, 2019 and the Arbitration and Conciliation Act, 1996. A borrower obtained a loan for a vehicle under a hire purchase agreement but defaulted on installments due to personal emergencies. The lender seized and sold the vehicle to a third party without prior intimation to the borrower. The lower commission found a deficiency in service and awarded compensation for loss of livelihood. The primary issue is whether the seizure of the vehicle without notice is legal despite the existence of an arbitration clause in the loan agreement. The court reasoned that a notice invoking arbitration proceedings does not translate to a notice of seizure and that financiers cannot forcefully seize a vehicle without a specific pre-seizure notice. In the result, the appeal is dismissed without costs by confirming the impugned order dated 10.02.2020 passed in CC.No.45/2019 by the District Commission, Warangal.
| Table of Content |
|---|
| 1. loan default and unauthorized vehicle seizure by the finance company. (Para 1 , 2 , 3 , 4 , 5) |
| 2. arguments on maintainability, limitation, and the effect of arbitration awards. (Para 6 , 7 , 10) |
| 3. evaluation of the loan agreement and the lack of pre-seizure notice. (Para 12 , 13 , 14 , 15 , 16 , 17) |
| 4. illegality of vehicle seizure without specific pre-notice regardless of arbitration clauses. (Para 18 , 19 , 20) |
Order : (PER HON’BLE SMT. MEENA RAMANATHAN, MEMBER-NJ)
1. This appeal is filed U/s.41 of Consumer Protection Act, 2019 by the Opposite Parties, praying this Commission to allow the appeal and to set aside the order dated 10.02.2020 of District Consumer Disputes Redressal Forum at Warangal in CC.No.45 of 2019 and to pass such other order or orders as this Commission may deem fit and proper in the circumstances of the case.
2. For the sake of convenience, the parties are described as arrayed in the complaint. The Appellants are the Opposite Parties and the Respondent is the Complainant in CC.No.45/2019.
3. The brief averments of the complaint are as follows:
The Complainant obtained loan of Rs.4,88,000/- from the Opposite Party for the purchase of Tata Vista Vehicle (TS-03-UA-7374) by entering into Hire Purchase Agreement vide Agreement No.5001778228 dated 13.04.2015 agreeing to pay Rs.12,950/- per month in 60 installments. The said vehicle was used by the Complainant earning income.
4. It is submitted that the Complainant paid 19 installments and thereafter she incurred an expenditure of Rs.3,00,000/- for her son’s treatment and had not paid the installments for two months. Later she paid one installment in April,2017, but the Opposite Party No.1 seized the vehicle without any intimation and sold the said vehicle to third party for Rs.4,80,000/- on 22.04.2015 to one Inugala Vijay Kumar.
5. It is further submitted that the Opposite Party No.1 threatened the Complainant to pay Rs.1,77,870/- failing which she will be sent to jail. The Complainant purchased the vehicle for her livelihood. The Complainant requested the Opposite Party No.1 to furnish the statement of account, but there was no response. On 05.04.2019, the Complainant received legal notice from the Opposite Party No.1 demanding to pay Rs.1,77,870/- towards “One Time Full & Final Settlement Offer”. The Opposite Party No.1 upon request of Complainant issued statement of account dated 17.04.2019 without deducting the amount of the sold vehicle. Due to the acts of the Opposite Party, having no other remedy left, the Complainant issued legal notice dated 20.04.2019 to the Opposite Parties, but there no reply. Hence, alleging deficiency in service on the part of the Opposite Parties, the Complainant filed the complaint as prayed for.
6. The Opposite Parties filed their written version denying the allegations made in the complaint and stated that the Complainant does not fall within the definition of Consumer and the relationship between the Complainant and the Opposite Parties are that of Borrower and Lender. As such no consumer dispute arises as it is a civil dispute, hence the complaint is not maintainable.
7. It is further stated that the Complainant had taken a loan of Rs.4,88,000/- vide Loan-cum-Hypothecation Agreement No.5001778228 dated 13.04.2015 for purchasing the said vehicle and agreed upon all terms and conditions of the said Agreement. The terms and conditions of the said Agreement clearly states that the monthly installments due are to be paid regularly and any delay or default is a breach in terms and conditions of the Agreement, thereby giving the Opposite Parties a legal right to terminate the loan account and repossess the said equipment to secure the loan payment. The said dispute was referred to the Arbitrator and as per the award, the Opposite Parties are entitled to recover their dues through taking possession of the vehicle through selling it to a third party. Thus it is contended that the vehicle was re-possessed under due pro
