It’s common for finance companies to repossess vehicles for payment default. However, before the vehicle
is auctioned, it is important for the finance company to have proper title and transfer registration of the vehicle.
Otherwise, it would constitute a deficiency in service.
Sachin Lohan, who had his own business called Skylark Infrastructure and Telesystem, registered himself on eBay Motors, an online B2B platform
for the auction
of motor vehicles, and bought a vehicle
put up for sale by Tata Capital Financial Services (TCFS) for Rs 3.1 lakh.
Lohan took the delivery from TCFS
along with the relevant documents. However, when he approached the registering authority for transfer, the RTO refused to do so as the vehicle
was not registered in the name of TCFS, but owned by as person named Suresh Kumar. So, Lohan could not use the vehicle
purchased by him.
Since neither eBay Motors
redressed his grievance, he filed a complaint against both of them. TCFS
did not even bother to contest the case, while eBay Motors
questioned the maintainability of the complaint contending that Lohan could not be considered to be a consumer as he had purchased the vehicle
on a B2B platform
meant only for car dealers.
The District Forum held the complaint to be maintainable and ordered TCFS
to refund Rs 3.1 lakh, along with 12 per cent interest. It also awarded Sachin Rs1 lakh as compensation. Since eBay Motors
was only an auction
platform and was not concerned with the transfer of ownership of the vehicle, no order was passed against it.
challenged the Forum's order, but its appeal was dismissed by the Delhi State Commission. The company then filed a revision before the National Commission.
The Commission observed that the most crucial question was whether Lohan could be considered to be a consumer. It noted that even though the purchase was made on a B2B platform, Lohan had applied for transfer and registration of the vehicle
in his individual name. He had also filed his affidavit stating that the vehicle
was meant for his personal use. The National Commission
noted that there was no evidence to show that Lohan had purchased the vehicle
for resale or for any commercial purpose. So, the Commission concluded that Lohan was a consumer and that the complaint was maintainable.
The Commission observed that TCFS
had sold the vehicle
without having proper ownership documents and title. It held that TCFS
had a duty to get the vehicle
transferred to its own name before putting it up for auction.
As this was not done, Lohan could not get ownership rights despite having paid for the vehicle.
The Commission concluded that this was a deficiency in service, for which Lohan was entitled to be compensated.
By its order of May 26, 2017, delivered by Justice V K Jain, the National Commission
concluded that the order passed in Lohan’s favour was justified. Since the vehicle
was lying unused, the Commission ordered TCFS
to collect the vehicle
from where it was parked. With this observation, the National Commission
dismissed the revision filed by TCFS.
Thus, a purchaser in an auction
can also approach the consumer fora for deficiency in service.
The author is a consumer activist