Selling Used Tractor As New Under Govt Loan Scheme Is 'Unfair Trade Practice'; State Commission Upholds Order Against Dealer & Society: MP State Consumer Commission

State Commission Upholds Ruling Against Dealer for Selling Used Tractor as New to Farmer

Bhopal, MP – The Madhya Pradesh State Consumer Disputes Redressal Commission has upheld a District Commission order finding a tractor dealer and a government-affiliated cooperative 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 bench, comprising Presiding Member Dr. Monika Malik and Members Dr. Shrikant Pandey and D.K. Shrivastava, confirmed the Satna District Commission's directive for Hariom Tractors to replace the faulty vehicle with a brand new one or refund the full amount of ₹4.85 lakhs with interest. However, the State Commission set aside the punitive damages of ₹1 lakh each imposed on the dealer and the society, which were to be deposited into the Consumer Relief Fund.

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Background of the Case

The complainant, Manjeet Bagri, a farmer belonging to a scheduled caste, had secured a loan of ₹4,97,000 under a government self-employment scheme from the Zila Antyavasayi Sahakari Vikas Samiti (the Society). The loan was intended for the purchase of a new tractor and trolley to support his agricultural activities. The payment of ₹4.85 lakhs was made directly to the dealer, M/s Hariom Tractors.

Bagri alleged that the dealer, in collusion with the society, delivered a used 2005 model tractor, which was previously registered in the name of another individual, while charging him the price of a new one. He claimed the vehicle was problematic from the start and that his signatures were taken on blank papers, with essential documents like the service book being withheld. Upon discovering the fraud in 2009, he filed a complaint with the District Consumer Commission.

Arguments from the Parties

• Complainant (Manjeet Bagri): Argued that he was deceived into accepting a used, defective tractor for the price of a new one, which constituted a clear case of unfair trade practice and deficiency in service by both the dealer and the financing society.

• Opposite Party 1 (Hariom Tractors): The dealer contended that Bagri was fully aware he was purchasing a used tractor that they had acquired from a bank auction. They claimed to have installed new parts worth ₹2.15 lakhs and that Bagri had voluntarily signed all agreements.

• Opposite Party 2 (The Cooperative Society): The society denied any liability, stating they disbursed the loan amount based on a quotation provided by Bagri and a satisfaction certificate he submitted. They accused Bagri and the dealer of colluding to misuse the loan and evade repayment.

Commission's Findings and Reasoning

The State Commission, after a thorough review of the evidence, concurred with the District Commission's primary findings. It highlighted a critical flaw in the transaction: government loan schemes for self-employment are exclusively for the establishment of new enterprises, which includes the purchase of new vehicles and equipment.

The Commission noted:

"Under the loan financing scheme, an old tractor and trolley could not have been provided... only new tractor-trolleys could be financed. In such a situation, the documents presented [by the dealer] regarding the sale of a used tractor-trolley to the complainant cannot be legally validated, because according to the rules, a used tractor-trolley could not be given to the complainant under the said loan scheme."

The Commission found that both the dealer and the society had failed in their duties. The dealer engaged in an unfair trade practice by supplying a used vehicle for the price of a new one. The society was also held liable for its negligence, as its officials failed to conduct physical verification to ensure the loan amount was used for its intended purpose. The Commission observed that the society's "silent approval" was apparent in the transaction and it had failed to protect the beneficiary's interests.

However, citing a National Commission precedent ( ICICI Bank Ltd. vs. Tapan Bose ), the State Commission struck down the order directing the dealer and society to deposit ₹1 lakh each as punitive damages into the Consumer Relief Fund, terming it legally unsustainable.

Final Verdict

The State Commission issued the following directives:

1. Partially Allowed Appeals of Dealer and Society: The appeals from Hariom Tractors and the Cooperative Society were partially allowed, only to the extent of setting aside the ₹1 lakh penalty each was ordered to deposit in the Consumer Relief Fund.
2. District Commission Order Upheld: The rest of the District Commission's order was confirmed. Hariom Tractors must either:
   • Provide Manjeet Bagri with a new Same Deutz-Fahr 393 model tractor and trolley with all necessary documents, registration, and tax paid within 60 days, in exchange for the old vehicle.
   • Alternatively, refund the full amount of ₹4.85 lakhs with 10% simple annual interest from March 31, 2008, until the date of payment.
3. Compensation Stands: The order for both the dealer and the society to jointly pay ₹1 lakh (₹50,000 each) as compensation to Mr. Bagri for the unfair trade practice was upheld.
4. Complainant's Appeal Dismissed: Manjeet Bagri's appeal for enhancement of compensation was dismissed, with the Commission stating that adequate relief had already been granted.