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EVERY year, without fail, the government pays lip sympathy to the cause of consumers — once on March 15, World Consumer Rights Day, and again on National Consumer Day on December 24. Then the poor man is completely forgotten. How else can one explain the absence of clients’ protection laws in this country? Take just one area of financial activity where the customer is particularly vulnerable — hire-purchase transactions. In the absence of a law to protect his interest, financial institutions often exploit the vulnerability of the client. First and foremost, they come up with agreements that are often one-sided and unfair to the consumer. Second, they resort to illegal practices to re-possess the financed product — mostly vehicle — forcing the hapless customer to knock at the doors of courts to get back the vehicle or the money. A recent case decided by the apex court is a typical example. Here, it all began with the Orissa Voluntary Association for Rural Social Development purchasing a Mahendra Marshall with a loan from Magma Leasing. As per the agreement signed on November 24, 1999, the total loan was to be repaid in 36 instalments of Rs 10,003 each. On February 26, 2002, when the vehicle was on its way to Bhubaneswar, it was stopped and forcibly taken away by the financier and, eventually, even sold to a third party. The Orissa State Consumer Disputes Redressal Commission, before which the association filed a complaint, found that between the time the agreement was signed and the time the vehicle was forcibly taken away, the association had paid Rs 3,75,175. Observing that this was a case of sheer arbitrariness on the part of the financier amounting to deficiency in service, the commission directed that the association be paid Rs 4 lakh. In response to the appeal filed by the leasing company, the apex court examined the issues afresh and found that there was no outstanding amount in so far as the repayment was concerned. When questioned about this, the leasing company said the association had not paid the insurance premium and the road tax. However, the national consumer disputes redressal commission found, on examination of the facts, that a notice about the amount overdue on road tax from the Transport Department had been issued almost eight months after the repossession of the vehicle. The leasing company had also not issued any notice about repossession of the vehicle — even the one given to the police was after the act of repossession. Observed the commission: "It is clear that it is a case of repossession of a vehicle without any justification and without any notice. Even the notice to the police is subsequent to the act of repossession and not before. Worse still, there is clear indication of attempt to create evidence in justification of the act of repossession."
Pointed out the commission: " The opposite party has failed to provide any details of the amount of loan that was overdue. On the contrary, payment details examined by the state commission showed that no amount was overdue. It was a case of repossession of the vehicle without justification, which cannot be sustained." Concluding that the state commission was fully justified in asking the leasing company to pay Rs 4 lakh to the consumer towards the loss of his vehicle and also towards the financial inconveniences undergone by him, the national commission directed the leasing company to pay in addition, Rs 10,000 towards costs. If only we had a law such as the Hire-Purchase Act to protect consumer interest, the ordinary man in this case would have been protected from such arbitrary and illegal action. Ironically, we did have a law to protect people in hire-purchase transactions, but thanks to the pressure from financial institutions, the law never came to be enforced. In fact the Hire-Purchase Act of 1972 was to come into effect from September 1, 1973, but a month prior to that, the government issued a notification rescinding the operation of the Act. Then several
attempts were made to bring in the law in a modified form, but
eventually, it was abandoned. In fact, an amendment Bill was
introduced in the Rajya Sabha on May 8,1989, but this was again
referred to the Law Commission as it was felt that the Bill was too
complicated to be understood by the common man. The Law
Commission even submitted its report in March 1999, but eventually the
law got a good burial as it was felt that it did not fit in the new
scenario of economic liberalisation. It is time we demanded a new,
comprehensive law to protect people from unfair practices in the
hire-purchase sector.
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