CIVIL WRIT PETITION NO.1716 OF 2010 :{ 1 }: IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH DATE OF DECISION: JANUARY 25 ,2011 Suresh Kumar .....Petitioner VERSUS Union of India and others ....Respondents CORAM:- HON'BLE MR.JUSTICE RANJIT SINGH 1. Whether Reporters of local papers may be allowed to see the judgement? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? PRESENT: Mr. R. S. Chahal, Advocate, for the petitioner. Mr. Ashwani Talwar, Advocate, for respondent Nos.3 & 5. **** RANJIT SINGH, J. Being governed by rule of law, adopting of means, which are not legally permissible to recover dues or loans by public institutions like Banks certainly can not be countenanced. Despite elaborate guidelines by the Supreme Court, deprecating practice of employing `Gundas', for taking possession of vehicles by force of law, the financing institutions apparently are continuing to adopt such means, though with some fineness. The thrust by the court should remain the same and such illegal onslaughts under the garb of law CIVIL WRIT PETITION NO.1716 OF 2010 :{ 2 }: would need to be checked. The facts in the present case would exemplify the unfair stand adopted by the respondent-Financier in taking possession of a truck laden with goods while on business journey when amount due was concededly a small sum and major part of the payment having been discharged by the petitioner. To give it a legal colour, the Financier has adopted means and relied upon an agreement, which is one sided and certainly should not receive a stamp of approval from any legal mind. The petitioner had taken a loan of `15 lacs from the respondent-Bank for purchase of a Truck. The loan was repayable in 34 monthly instalments. A sum of `2,55,600/- was charged as finance charges and another sum of `40,000/- was deposited as insurance amount on the total value. As per the agreement, sum repayable worked out to be `17,95,600/-. The agreed rate of interest was 5.68%. The petitioner has been paying instalments as per the schedule and by now claims to have repaid a sum of `18,49,848.40P. In this regard, reference is made to the statement of account furnished by the Bank, copy of which is annexed with the petition as Annexure P-1. Indeed, Annexure P-1 shows that the petitioner had repaid the amount as referred above. The Bank had refused to issue NOC and made a claim for some more charges. It is in this background that the truck, while it was laden with rice valued at `12 lacs and was on way from Ratia to Kandla Port, was intercepted on 28.1.2010 by representative of the Bank, namely, Sudhir Kumar CIVIL WRIT PETITION NO.1716 OF 2010 :{ 3 }: (respondent No.5) alongwith 10 to 12 `Gundas'. Sudhir Kumar, who is Collection Manager of the Bank, forcibly threw the driver and the conductor and took possession of the truck laden with goods. When, the petitioner complained to SHO, Police Station Sadar, Hisar, as this incident happened on Hisar-Sirsa road, he refused to take action against the respondent Bank. Apparently, he had also been managed. No notice was issued to the petitioner for taking possession of the truck or for payment of any amount. The petitioner states that he is ready to discharge the entire liability but still this truck has been taken into possession due to some extraneous consideration. It is stated that the loan was advanced at the rate of interest of around 6% (approximately) but now these rates have gone up and this action is being taken by the Bank to earn some more interest, by cancelling the earlier agreement on one pretext or the other. It is in this regard the modus-operandi of the Bank allegedly is to take possession of the vehicle, remove new tyres and genuine parts and then to replace them with old, making the truck unworkable. Money is, thus, realised by selling new parts by the `Gundas' so employed from whom, even the allegation of accepting commission is made. The petitioner accordingly has filed this writ petition to allege that a responsible Bank has adopted irresponsible means by taking possession of the vehicle and has, thus, created a state within state to harass the innocent person, who has been regular in making payment and did not default in discharging his liability. The truck of the petitioner is concededly lying in possession CIVIL WRIT PETITION NO.1716 OF 2010 :{ 4 }: of the respondent Bank from January 2010. The business of the petitioner has obviously suffered. The process of law has also moved slowly, putting the petitioner to grind of slow motion. Reply on respondent Nos.3 to 5 has been filed. By way of preliminary objections, it is stated that the petitioner has not approached the Court with clean hands and has concealed material facts. Having said so, it is not clearly stated as to what the petitioner has concealed. Even as per the respondents, loan amount for purchase of truck was `15 lacs and the rate of interest was 5.68% per annum. In case of default, additional interest of 36% per annum was payable. An INDUS Bank, thus, would term this condition to be fair, which on the face of it is arbitrary and one which would shock the conscious of any well meaning person. The rate of interest agreed is 5.68% and in case of default, it was to jump by six times of the agreed rate of interest. Who, on the earth, will accept such a condition to be fair? These conditions are such on which a person in need is made to sign without even being made aware of it. Reference is then made to the arbitration clause. Sole Arbitrator is to be nominated by the Company, which is stated at Chennai. The Bank, thus, would make a grievance that the petitioner has approached this Court instead of approaching the Arbitrator. A person who has bought a truck in this part of the country is required to approach an Arbitrator in Chennai and that too nominated/detailed by the respondent-Bank. A person who is earning his livelihood by transporting goods is required to go to Chennai to seek adjudication before an Arbitrator that too of the choice of the respondent-Bank CIVIL WRIT PETITION NO.1716 OF 2010 :{ 5 }: and this is again being termed as a course open to the petitioner under law. Is it fair? Certainly, it does not appear fair. The respondents would also urge that filing of the present petition is an abuse of process of law whereas the stand of the respondents rather appear to be an abuse of process of Court. Even as per the respondents, there was some default and the petitioner did not pay instalments and sum of `81,897/- became due towards principal, interest and penal interest. To secure this amount, a truck, which is valued at `15 lacs, has been taken in possession in the manner as disclosed in reply. To justify, the respondents would make reference to an application filed under Section 9 of the Arbitration and Conciliation Act (for short, “the Act”) before Additional District Judge, Delhi, for appointment of a Receiver. This application is filed even before initiating any proceedings before the self appointed arbitrator. The respondents claim to have given notice to the petitioner for initiating proceedings under the Act on 9.11.2009 and it is accordingly urged that the petitioner should raise his grievance before the Arbitrator. On an application moved in July 2009, respondent No.5, who is a representative of respondent Bank, was appointed as a Receiver to take possession of the vehicle. The Receiver was to take further orders from the Arbitrator regarding disposal of the vehicle. It is conceded that the Receiver had taken possession of the vehicle while it was loaded with rice. As per the respondents, the goods loaded in the vehicle were unloaded and handed over in a period of 2-3 days. It is stated that surveyor was appointed to check the condition of vehicle and value thereof was CIVIL WRIT PETITION NO.1716 OF 2010 :{ 6 }: was assessed as `10 lacs. The notice was sent to the petitioner for unloading the vehicle. By now, the outstanding amount payable has statedly swelled to `1,31,654/- and it is pleaded that the petitioner can take the vehicle subject to undertaking that he will continue to deposit the balance instalments. Reference is also made to the fact that the petitioner had approached the Consumer Forum, which fact he has not disclosed in the present petition. The justification to keep in possession and custody of a vehicle valued at `10 lacs for repayment of an amount of `1,31,654/- is thus, advanced. When the case came up for final hearing, the counsel for the respondents was given an option to return the vehicle so that the petitioner could carry on his business and the amount, if any repayable, could then be settled on the basis of mutual understanding. Counsel for the respondents, after obtaining instructions, refused point blank and had made submissions on the lines of the stand projected in the reply. The counsel was asked to explain how the amount due has been calculated, when the petitioner has already paid a sum of `18,48,848.40P against the total amount repayable was `17,95,600/- only. No reasons are forthcoming in this regard. It appears that this amount is being calculated as penal rate of interest on account of some default and, thus, the petitioner's property worth `10 lacs has been taken over by taking help of legal course and is kept by the respondents for the last over one year. No amount of legality of the course adopted would justify this approach. It is not disputed that the petitioner had already repaid nearly rupees eighteen and a half lacs and this is clearly made out CIVIL WRIT PETITION NO.1716 OF 2010 :{ 7 }: from the statement of account, Annexure P-1. Because of the action of the respondents, the petitioner has not been able to use this truck for his business purposes and, thus, certainly has been put to loss for a period of one year. The petitioner would have certainly earned substantial amount from the use of vehicle, which he has not been able to do because of unfair and unreasonable action by the respondents. The justification by the respondents for taking the possession of the vehicle may sound legalistic but law has not to be applied blindly. This action is operating in an harsh and unfair manner. Considering that it was a very negligible amount, if any required to be paid, when this truck was taken into possession, direction was issued to the respondents to release and hand over the truck to the petitioner within 24 hours. It is not clear whether the truck has been handed over to the petitioner or not. The approach adopted by the respondents, requiring the petitioner to approach the Arbitrator at Chennai and relying on the agreement in this regard to say that he has abused the process of Court is rather unreasonable. A person earning his livelihood by plying truck and who has taken loan, if asked to approach the Arbitrator stationed at Chennai, would make this alternative dispute resolution system to be unfair, unreasonable and a remedy which is beyond his reach. How this person, whose truck is intercepted at Hisar, can go to Chennai to approach arbitrator for seeking relief. It is an illusionary remedy and in fact no remedy in the eyes of law. The Arbitrator is at Chennai. Application for appointment of a Receiver is moved at Delhi. CIVIL WRIT PETITION NO.1716 OF 2010 :{ 8 }: Justification in this regard is that agreement was entered at Delhi. The truck is taken in possession at Hisar in the State of Haryana and, thus, the petitioner is exposed to three different jurisdictions to defend this unfair and illegal onslaught being made by the respondents. This will certainly sound unacceptable, unfair, unreasonable and inequitable. One may still have ignored this but for the fact that amount repayable is hardly of any substance. It can not be glossed over that the petitioner has repaid more than the amount, which otherwise was payable as per agreed terms. This special measure, thus, was adopted to reach this injustice and a bit extra ordinary measure was adopted in this case to issue directions for release of truck so that the petitioner was able to earn his livelihood, which he is deprived of for over a year. The petitioner has been put to a substantial loss, for which the respondents would not be able to escape liability to pay damages. Liberty is, therefore, left open to the petitioner to claim such damages. The petitioner would also be at liberty to challenge the arbitration clause on the ground that this is unfair and unreasonable and no remedy in the eyes of law. This one sided contract has been entered into by the respondents, being in a position of dominance and the petitioner being in need of resources. This would make this clause of the agreement to be arbitrary and unenforceable in law. The petitioner has already discharged the complete liability. The payment, if any, can be settled mutually, for which the petitioner has expressed his willingness. The petitioner need not be deprived of his source of livelihood. The amount due CIVIL WRIT PETITION NO.1716 OF 2010 :{ 9 }: was `81,897/- only, while the property of the petitioner worth `10/15 lacs is in the custody of the respondents. This Court need not to go into the validity of appointment of a Receiver by the Court at Delhi. Prima-facie, the Court at Delhi may have been lacking in jurisdiction to entertain such an application. Even on merits, such a case can not be termed as a case of substantial default as more than the amount taken as loan stood repaid. It is not a case of a default in repayment that the direction could have been given to appoint a Receiver. The well thought of suggestions given by the Hon'ble Supreme Court in Manager, ICICI Bank Ltd. Vs. Prakash Kaur & Ors., AIR 2007 SC 1349, may need a notice here. As per the Supreme Court, chronic defaulter should mean a default of maximum of three months if intermitted payments have been made. The petitioner can not certainly be termed a chronic defaulter. Hon'ble Supreme Court has suggested that the Banks should be vicariously held liable for the acts of its agents. The suggestions as given by the Hon'ble Supreme Court in Manager, ICICI Bank Ltd.'s case (supra) may again need an attention. The Court at Delhi had appointed the Receiver on two counts. It is noticed that the petitioner had not appeared despite service of summons and the arbitration proceedings have been initiated. The arbitration proceedings were initiated on 9.11.2009 and this order was obtained from the Court at Delhi on 21.11.2009. The proceedings before Arbitrator appears to have been initiated only to get a recourse to the appointment of a Receiver, for which the application has been moved even prior to making any move before CIVIL WRIT PETITION NO.1716 OF 2010 :{ 10 }: the Arbitrator. Once the respondents are requiring or asking the petitioner to approach the Arbitrator, why could not they have approached the Arbitrator for recovery of this amount. They can not be permitted to approbate and reprobate at the same time. If they expect the petitioner to act in a particular manner in accordance with agreement, they can also be expected to approach the Arbitrator for recovery of this small amount, which is stated to have remained unrealised, as per the respondents. The respondents are clearly seen acting in an unfair and unreasonable manner. This writ petition deserves to be allowed and is accordingly allowed. The parties are advised to sit together and decide the dispute in an amicable manner instead of invoking arbitration clause, which is found operating in an unfair manner. January 25,2011 (RANJIT SINGH ) khurmi JUDGE