Selling Old Tractor as New Under Govt Loan Scheme is 'Unfair Trade Practice'; Dealer and Financier Held Liable: State Consumer Disputes Redressal Commission - 2025-09-13

State Consumer Commission Upholds Order Against Tractor Dealer for Selling Used Vehicle as New

Bhopal: The State Consumer Disputes Redressal Commission has upheld a District Commission order finding a tractor dealer and a government financing society guilty of "unfair trade practice" and "deficiency in service" for selling a used tractor to a farmer under a government loan scheme meant for new vehicles. The Commission confirmed the dealer must either replace the old tractor with a new one or refund the full amount with interest, but set aside the penalty requiring a deposit into the Consumer Welfare Fund.

The judgment was delivered by a bench comprising Presiding Member Dr. Monika Malik and Members Dr. Shrikant Pandey and D.K. Shrivastava, while hearing a set of three cross-appeals filed by the farmer, the tractor dealer, and the financing society.

Background of the Case

The complainant, Manjeet Bagri, a member of a scheduled caste, had applied for a loan under a government self-employment scheme to purchase a new tractor and trolley for his agricultural work. The loan of ₹4.97 lakh was sanctioned by the Zila Antyavasayi Sahakari Vikas Samiti Maryadit, Satna (the financing society).

The loan amount was disbursed directly to M/s Hariom Tractors, the dealer, for a new tractor. However, Bagri alleged that the dealer, in collusion with the financing society, delivered a used 2005 model tractor that was previously registered in someone else's name, while charging him the full price of a new vehicle, ₹4.85 lakh. He claimed he was made to sign blank documents and was never given proper paperwork like the service book. When the tractor started malfunctioning, he discovered the fraud and filed a complaint with the District Consumer Commission, Satna.

The District Commission, in its order dated February 22, 2011, ruled in favor of Bagri, holding both the dealer and the financing society liable.

Arguments Before the State Commission

Three separate appeals were filed against the District Commission's order:

• Hariom Tractors (Dealer): The dealer argued that the complainant was fully aware he was purchasing a used tractor. They claimed to have spent ₹2.15 lakh on new parts for the old tractor and that Bagri had signed an agreement to this effect. They contended that the complaint was a false pretext to avoid paying an outstanding amount.
• Financing Society: The society contended that its role was limited to sanctioning and disbursing the loan based on the quotation and satisfaction certificate provided by the complainant himself. It denied any collusion and argued it should not be held liable for the transaction between the buyer and the seller.
• Manjeet Bagri (Complainant): The farmer appealed for an enhancement of the compensation from the awarded ₹1 lakh to the ₹5 lakh he had originally sought. He also argued that the ₹2 lakh penalty which the District Commission ordered the opposite parties to deposit in the Consumer Relief Fund should be paid directly to him as compensation for the harassment he endured.

Commission's Findings and Judgment

The State Commission meticulously examined the evidence and arguments. It made several key observations:

• Violation of Scheme Rules: The Commission noted that the government loan scheme, administered by the financing society, was exclusively for the establishment of new enterprises. Therefore, financing a used tractor was fundamentally against the rules of the scheme.
• Collusion and Negligence: The Commission concluded that the dealer and the financing society acted in concert. It held that the society could not absolve itself of responsibility merely by citing a satisfaction certificate. The Commission stated: > "It was the duty of the financing society to conduct a physical verification of the asset purchased with the loan. They had to ensure that the beneficiary utilized the loan for the intended purpose as per rules... Tacit approval of the officials of [the financing society] is reflected... as they neglected or failed to protect the interests of the beneficiary."
• Unfair Trade Practice Established: The act of taking payment for a new tractor and delivering a used one was a clear case of unfair trade practice. The Commission found the dealer's claims about Bagri's awareness unconvincing, pointing to discrepancies in signatures on various documents.

Based on these findings, the State Commission largely upheld the District Commission's order regarding relief to the consumer. It affirmed that Hariom Tractors must:

1. Provide Manjeet Bagri with a new tractor and trolley, along with all documents and bearing all costs, or;

2. Refund the amount of ₹4.85 lakh with 10% annual simple interest from March 31, 2008.

3. Pay ₹50,000 in compensation and ₹1,200 in legal costs to Bagri.

The Commission also upheld the order for the financing society to pay its share of compensation (₹50,000) and costs (₹1,200) to the farmer.

However, citing a National Commission precedent ( ICICI Bank Ltd. vs Tapan Bose ), the State Commission set aside the direction for the dealer and society to deposit ₹1 lakh each into the Consumer Welfare Fund, ruling it was not legally appropriate in this case. Consequently, the farmer's appeal for enhanced compensation was also dismissed, as the Commission found the relief already granted to be adequate.