District Consumer Disputes Redressal Commission (DCDRC), Jhargram: While considering the instant consumer complaint filed against Tata Motors Finance, alleging unfair trade practice; the Bench of Anjali Chaturvedi (President-in-charge) and Sadananda Sarkar (Member) had to consider several issues including arbitrability of consumer disputes. The DCDRC relying on A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386 and Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 SCC 751, held that consumer disputes are non-arbitrable, there can be no question of an arbitrator deciding on issues raised in a consumer dispute and therefore, there can be no question of applicability of res-judicata. Furthermore, the DCDRC “strongly opined” that the afore-said dictums encompass consumer disputes as the Parliament had conferred special jurisdiction to try consumer disputes to the Consumer Commissions set up under Consumer Protection Act, 2019.
However, most notably, the DCDRC held that Ayyasamy (supra) and Emaar MGF (supra) indirectly overruled NCDRC’s decision in Instalment Supply Ltd. v. Kangra Ex-Serviceman Transport Co., 2006 SCC OnLine NCDRC 144 and Magma Fincorp Ltd. v. Gulzar Ali1, and that these decisions were per incuriam and given in ignorance of the law of the land. The DCDRC therefore, refused to accept these judgments’ precedential authority.
“This Commission is fully aware that it is walking on a thin rope. On one side is judicial propriety and on the other, severe contempt. Yet this Commission will take this risk and make attempt to set legal principles clearly for the purposes of upholding judicial federalism”.
Background:
The complainant decided to purchase a Tata Ace BS IV valued at Rs 4,65,633. It was alleged that while he was at Tata Motors’ showroom, two of representatives of Tata Motors Finance Ltd., appeared and insisted that the complainant avail loan from them, stating that the loan would be provided at zero rate of interest.
The complainant agreed to take loan of Rs 4,09,995 from Tata Motors Finance and signed a detailed agreement. The complainant had made an initial down payment of Rs 58,633. The complainant alleged that Tata Motors Finance did not provide any cope of the loan sanction letter or a copy of the loan agreement. It was further submitted that the complainant had submitted 6 signed and undated blank cheques, and it was later found that the blank cheques were cashed by Tata Motors. Hence, it was alleged that Tata Motors and Tata Motors Finance had contravened guidelines laid down by RBI by failing to provide copies of the loan agreement, sanction letter, receipt of collection of the blank cheques, indulged in unfair trade practices.
The complainant started repaying the loan amount in installments; however, when he ran into financial troubles which led to irregular payment of installments. It was alleged that the complainant was threatened that his vehicle will be confiscated if he fails to regularise the payment of EMIs; furthermore, he was also threatened with the initiation of arbitration proceedings. The complainant contacted Tata Motors Finance requesting some waiver or reduction in the payment of EMI, since he was unable to manage his livelihood as his vehicle had developed several issues and the costs of repairs were burdening him. In the meantime, in November 2019, an arbitral award was passed in the favour of the Opposite Parties, directing the complainant to pay the remainder of the dues with interest and costs of proceedings. This arbitral award also entitled the Opposite Parties to possess the vehicle to recover their dues in accordance with law.
The complainant failed to repay installments due for January, February 2020. It was alleged that he was assured by the Opposite Parties that no adverse action would be taken against him as per the RBI Guidelines if he is able to pay back the dues within March 2020. Based on this assurance the complainant kept on plying his vehicle so that he can continue the payments.
However, on 24-4-2020, despite paying 21 out of 35 installments towards the loan repayment, the Opposite Parties forcibly took possession of complainant’s vehicle without advance notice. Furthermore, when the complainant demanded the loan sanction letter, he was shooed away. While these processes were going on, Covid 19 lockdown was announced, and the complainant got no relief. After a few months the complainant was notified that his vehicle had been auctioned off.
The complainant submitted that forcible possession of his vehicle, non-service of demand notice, were illegal.
DCDRC’s Assessment on Consumer, Unfair Contracts, Deficiency of Service etc:
Perusing the matter, the DCDRC had to consider that whether the complainant approached the Commission with ‘clean hands’; whether the complaint was barred by being essentially contractual; maintainability of the complaint; whether the complaint is civil dispute; whether there has been deficiency of service/ unfair trade practice; whether complainant is a consumer or not; and finally, whether complaint was liable to be dismissed due to res-judicata as an arbitral award had already been passed.
The DCDRC took note of the facts, and the legal doctrines and maxims relied on by the Opposite Parties and noted that complainant admitted that he made defaults while paying EMI installments because of the financial issues that he was facing. Therefore, there was no doubt that the complainant approached the Commission with clean hands.
Vis-a-vis complaint being barred by being contractual, the DCDRC held that every consumer transaction is essentially a contract. There is no need to show that there has been a breach of contract on part of the seller/ service provider. Alleging a breach of contract is not the sine qua non of filing a consumer complaint. Thus, this issue was decided in the favour of the complainant.
Vis-a-vis the complaint’s maintainability, the DCDRC rejected the Opposite Parties’ contention of exclusive jurisdiction of Mumbai Courts as per the loan agreement as the Commission could not find a detailed copy of the loan agreement. Vis-a-vis terms of the agreement as presented by the Opposite Parties especially the exclusive territorial jurisdiction clause, the DCDRC remarked that such clauses may fall within the scope of unfair contract. “Many fights that come before us are poor ill-informed consumers fighting single-handedly and big corporate conglomerates with branches throughout the country”. However, the DCDRC clarified that it has not adjudged the aspect of an unfair contract between the parties and the Commission’s doubts regarding this should not be construed as binding.
The DCDRC also rejected the argument that the instant case was a civil dispute. Regarding whether the complainant was a consumer, the DCDRC took an affirmative stand.
The DCDRC also took strict note of advocates of Opposite Parties quoting the submissions made by parties in the cases cited and presenting them as ratio decidendi. The DCDRC sternly cautioned that such ways of tricking the Commission will not be encouraged.
As regards deficiency of service by the Opposite Parties, the DCDRC delved in detail into the allegations made by the complainant and facts of the case. The DCDRC noted that there was deficiency in service vis-a-vis the Opposite Parties not providing copy of the loan agreement, statement of loan account on demand along with the repayment history. The DCDRC further noted that other alleged deficiencies indicated that unwarranted and arbitrary procedures were adopted by the Opposite Parties. The Opposite Parties not following the RBI Guidelines, made a lapse and therefore were at default. The DCDRC further pointed out that as far as taking possession of the hypothecated asset i.e., the complainant’s vehicle, Tata Motors Finance being a NBFC, are governed by the RBI Guidelines as well as SARFAESI Act. The DCDRC found that the Opposite Parties had acted arbitrarily and did not follow the process of law. Therefore, the DCDRC held that there was deficiency of service.
DCDRC’s Assessment on Arbitrability of Consumer Disputes:
While considering contention raised by the Opposite Parties that the complaint was liable to be rejected due to res judicata as an arbitral award in the matter was already passed in November 2019. The DCDRC took note of Instalment Supply Ltd. v. Kangra Ex-Serviceman Transport Co., 2006 SCC OnLine NCDRC 144 and Magma Fincorp Ltd. v. Gulzar Ali, in both cases the NCDRC focussed on the jurisdiction of the consumer court in the event when parties opt for arbitration. In these cases, the NCDRC had held that Consumer Court’s jurisdiction is barred in case the parties opt settle the disputes before an Arbitrator.
It was pointed out that a consumer dispute is non-arbitrable and to support its view, the DCDRC relied on A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386, wherein the Supreme Court had stated that in addition to various classes of disputes which are generally considered by the courts as appropriate for decision by public fora, there are classes of disputes which fall within the exclusive domain of special fora under legislation which confers exclusive jurisdiction to the exclusion of an ordinary civil court. That such disputes are not arbitrable dovetails with the general principle that a dispute which is capable of adjudication by an ordinary civil court is also capable of being resolved by arbitration. However, if the jurisdiction of an ordinary civil court is excluded by the conferment of exclusive jurisdiction on a specified court or tribunal as a matter of public policy such a dispute would not then be capable of resolution by arbitration2.
The DCDRC observed that Parliament had conferred special jurisdiction over Consumer Commissions vis-a-vis cases related to deficiency of service. Hence, if something can be decided by a consumer forum then how does the question of res-judicata come into picture? The DCDRC opined that the essence of res-judicata is ‘competent authority’; and an arbitrator is not a competent authority for adjudicating consumer disputes.
Therefore, the DCDRC strongly opined that effects of NCDRC’s decision in Instalment Supply (supra) and Magma Fincorp (supra) were indirectly negated by the Supreme Court in A. Ayyasamy (supra). Thus, since Supreme Court’s judgments take prevails vis-a-vis its precedential value, therefore, the DCDRC found no merit in the contention of non-maintainability of the complaint due to res-judicata.
The DCDRC further relied on Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 SCC 751, wherein the Supreme Court upheld NCDRC’s verdict which held that, “An arbitration clause (…) cannot circumscribe the jurisdiction of a Consumer Fora, notwithstanding the amendments made to Section 8 of the Arbitration Act”. It had been further held that in light of the overall architecture of the Consumer Act and court-evolved jurisprudence, amended Section 8(1) of A&C Act, 1996, cannot be construed as a mandate to the Consumer Forums, constituted under the Consumer Protection Act, to refer the parties to arbitration in terms of the arbitration agreement.
Therefore, the DCDRC pointed out that Supreme Court’s verdict in Ayyasamy (supra) and Emaar MGF (supra) clearly holds that when a power to decide certain class of disputes has been specifically conferred by the Parliament to a Special Court though a legislation, then such disputes are not arbitrable.
The DCDRC held that Ayyasamy (supra) and Emaar MGF (supra) indirectly overruled NCDRC’s decision in Instalment Supply (supra) and Magma Fincorp (supra). The DCDRC further held that the dicta passed by the NCDRC in Instalment Supply (supra) and Magma Fincorp (supra) are per incuriam and in ignorance of the law of the land.
The Bench thus emphasised that, “by the virtue of extraordinary adjudicatory power vested in it in the diaspora of Common Law Jurisdiction”, the DCDRC cannot adhere to the judgments of Instalment Supply (supra) and Magma Fincorp (supra).
Decision:
With the afore-stated assessment, the DCDRC held that Tata Motors Finance exhibited unfair trade practices, and therefore, were held liable for causing acute mental agony. With the complaint succeeding in part, the Opposite Parties were directed to pay Rs 6 Lakhs and Rs 20,000 as compensation and costs of proceedings respectively.
[Jagannath Mahato v. Tata Motors Finance, CC/4/2020, decided on 18-6-2025]
Judgment by Anjali Chaturvedi (President-in-charge)
Advocates who appeared in this case :
Advocate Devnath Chowdhury for the complainant
Advocate Anindya Sundar Chattopadhyay for OPs 1-3
Buy Arbitration and Conciliation Act, 1996 HERE
1. RP No. 3835 of 2013
2. [Para 38 corrected vide Official Corrigendum No. F-3/Ed.B.J./101/2016 dated 17-7-2017.]
