CITICORP. MARUTI FINANCE LTD.versusS. VIJAYALAXMI

                  [2011] 14 (ADDL.) S.C.R. 1050


A               CITICORP. MARUTI FINANCE LTD.
                                  v.
                          S. VIJAYALAXMI
                  (Civil Appeal No.9711 of 2011)

                       NOVEMEBR 14, 2011
B
    [ALTAMAS KABIR, CYRIAC JOSEPH AND SURINDER
                  SINGH NIJJAR, JJ.]

       HIRE PURCHASE AGREEMENT: Recovery process -
C Forcible Possession of vehicles - Held: Even in case of
  mortgaged goods subject to Hire-Purchase Agreements,
  recovery process has to be in accordance with law - Till the
  time the ownership is not transferred to the purchaser, the hirer
  normally continues to be the owner of the goods, but that does
o not entitle him on the strength of the agreement to take back
  possession of the vehicle by use of force - The guidelines
  laid down by the Reserve Bank of India support and make a
  virtue of such conduct - If any action is taken for recovery in
  violation of such guidelines or the principles as laid down by
E the Supreme Court, such action cannot but be struck down.
       CONSUMER PROTECTION ACT, 1986: Hire-Purchase
  Agreement in respect of a Maruti Omni Car - On failure of
  hirer to pay hire charges in terms of repayment schedule,
  appellant (owner-bank) took possession of financed vehicle
F and sold it in auction - Complaint by hirer before Consumer
  District Forum alleging deficiency in service - Allowed by
  District Forum directing owner to pay a sum of Rs.1,50,000 -
  State Commission, affirmed order of District Forum and
  directed payment of a further sum of Rs. 50, 0001- on account
G of punitive damages - National Commission while dismissing
  revision petition modified order of State Commission by
  setting aside punitive damages - Instead, it directed
  appellant-bank to pay a sum of Rs.10,0001- to hirer by way of
  cost - On appeal, held: After vehicle was seized, it was also
H                             1050
   CITICORP. MARUTI FINANCE LTD. v. S. VIJAYALAXMI         1051


  sold ·and third patty rights had accrued over the vehicle -       A
. Appellant-bank had complied with the directions of the District   "
  Forum notwithstanding the pendency of the case - Since
  appellant Bank had already accepted decision of District
  Forum and had paid the amounts as directed, no relief could
  be granted to appellant.                                          B
     A Hire-Purchase Agreement was entered into
 between the parties whereby the appellant hired to the
 respondent a maruti van for a sum of Rs.1,82,3961-,
 repayable, along with interest, in 60 equal monthly hire
 charges of Rs.4,6041- each. As per the agreement timely            C
 payment of the hire charges was the essence of the
 Agreement. The respondent failed to pay the hire charges
 in terms of the repayment schedule. Thereafter, in
 keeping with the terms and conditions of the Hire-
 Purchase Agreement, the Appellant took possession of               D
 the financed vehicle. A one time offer made by the
 appellant to pay Rs.60,000 for liquidating the outstanding
 dues was made but the respondent failed to pay the
 amount. Thereafter, the appellant sold the vehicle in
 auction.                                                           E
       The respondent filed the complaint before the
  Consumer Disputes Redressal Forum, against the
  appellant alleging deficiency in service. The District
  Forum directed the apellant to pay a sum of Rs.1,50,000/
                                                                    F
  -, along with interest at the rate of 9% per annum, from
  the date of filing of the complaint till the date of payment,
  together with a further sum of Rs.5,000/- towards
  harassment and cost of litigation. The State Commission
· affirmed the order of the District Forum and directed
  payment of a further sum of Rs.50,000/- on account of             G
  punitive damages. The National Commission, while
  dismissing the revision petition filed by the appellant
  modified the order of the State Commission by setting
  aside the direction to pay Rs.50,000/- on account of
  punitive damages. Instead, the Commission directed the            H
    1052 SUPREME COURT REPORTS (2011] 14 (ADDL.) S.C.R.


A appellant to pay a sum of Rs.10,000/_.__ to the respondent
  by way of cost. The instant appeal was filed challenging
  the order of the High Court.

        Disposing of the appeal, the Court
B      HELD: 1.1. Since during the pendency of the Special
  Leave Petitions before this Court, the appellant had
  complied with the orders of the District Forum and the
  National Commission had already set aside the punitive
  damages imposed by the State Commission, the reliefs
C prayed for on behalf of the appellant had been rendered
  ineffective and the submissions were, therefore,
  channeled towards the question of whether the fora
  below were right in holding that the vehicles had been
  illegally and/or wrongfully recovered by use of force from
D the loanees. The said question has since been settled by
  several decisions of this Court and in particular in the
  decision rendered in */CIC/ Bank Ltd. case. [Para 21]
  [1063-F-H]

E       */CIC/ Bank Ltd. v. Prakash Kaur (2007) 2 SCC 711:
    2007 (3) SCR 253 - relied on.

      1.2. Even in case of mortgaged goods subject to
  Hire-Purchase Agreements, the recovery process has to
  be in accordance with law and the recovery process
F referred to in the Agreements also contemplates such
  recovery to be effected in due process of law and not by
  use of force. Till such time as the ownership is not
  transferred to the purchaser, the hirer normally continues
  to be the owner of the goods, but that does not entitle
G him on the strength of the agreement to take back
  possession of the vehicle by use of force. The guidelines
  which had been laid down by the Reserve Bank of India
  as well as the appellant Bank itself, in fact, support and
  make a virtue of such conduct. If any action is taken for
H recovery in violation of such guidelines or the principles
  CITICORP. MARUTI FINANCE LTD. v. S. VIJAYALAXMI 1053


as laid down by this Court, such an action cannot but be       A
struck down. In the instant case, the situation is a little
different, since after the vehicle had been seized, the
same was also sold and third party rights have acdrued
over the vehicle. It is possibly on such account that the
appellant Bank chose to comply with the directions of the      B
District Forum notwithstanding the pendency of this case.
Since the appellant Bank has already accepted the
decision of the District Forum and has paid the amounts
as directed, no relief can be granted to the appellant.
[Paras 21-23] [1064-A-E]                                       c
    Bharathi Knitting Company v. OHL Worldwide Express
Courier (1996) 4 SCC 704: 1996 (2) Suppl. SCR 653;
Sundram Finance Ltd. v. State of Kera/a AIR 1966 SC 1178:
1966 SCR 828 - referred to.
                                                               D
                     Case Law Reference:
    1996 (2) Suppl. SCR 653 referred to           Para 16
    2007 (3) SCR 253           relied on          Para 17
                                                               E
    1966 SCR 828               referred to        Para 18
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
9711 of 2011.

    From the Judgment & Order dated 27.7.2007 of the           F
National Consumer Disputes Redressal Commission, New
Delhi in Revision Petition No. 737 of 2005.
                             WITH
C.A. Nos. 9712, 9713, 9714, 9715 & 9716 of 2011.
                                                               G
    Ashok Desai, R.S. Suri, Atul Nanda, Rahul Malhotra, K.S.
Prasad, Chanchal Kumar Ganguli, Prashant Kumar, Triveni
Potekar, Chander Shekhar Ashri, Amit Singh, Amarjit Singh
Bedi, Rameeza Hakeem, Amol N. Suryawanshi (for Law
                                                               H
    1054 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.


A Associates & Co.), J.K. Mittal, Vishnu Sharma, Brajesh Pandey,
  Anupam Sharma, Vibha Narang (for Respondent-In-Person) for
  the appearing parties.

        The Judgment of the Court was delivered by
B       ALTAMAS KABIR, J. 1. Leave granted.

   ·,     2. SLP(C)No.19314 of 2007, which is being heard along
     with SLP(C)No.3119 of 2008, SLP(C)Nos.9550, 10544, 11696
     and 10547 of 2009, is directed against the judgment and order
c    dated 27th July, 2007, passed by the National Consumer
     Disputes Redressal Commission, hereinafter referred to as the
     "National Commission". By the said order, the National
     Commission dismissed Revision Petition No.737 of 2005, filed
     by the appellant herein against the judgment and order dated
0 . 10th March, 2005, passed by the State Commission. Delhi. By
     its order dated 27th July, 2007, the National Commission
     modified the order of the State Commission and set aside the
     part of the order directing the Appellant to pay Rs.50,000/- on
     account of punitive damages and further directed the appellant
E to pay Rs.10,000/- as cost to the complainant Respondent.

        3. From the materials on record, it appears that on 4th
  April, 2000, at the initiative of the Respondent, a Hire-Purchase
  Agreement was entered into between the Appellant and the
  Respondent herein, to enable the Respondent to avail the
F benefit of hire-purchase in respect of a Maruti Omni Car. In
  accordance with the terms and conditions of the Agreement.
  the Appellant granted a.hire-purchase facility to the Respondent
  for a sum of Rs.1,82,396/-, which was repayable, along with
  interest, in 60 equal monthly hire charges of Rs.4,604/- each.
G Clause 2.1 of the Hire-Purchase Agreement provides for
  payment of the hire charges in the manner stipulated in the
  Schedule to the Agreement and it also indicates that timely
  payment of the hire charges was the essence of the
  Agreement.
H
  CITICORP. MARUTI FINANCE LTD. v. S. VIJAYALAXMI 1055
               [ALTAMAS KABIR, J.]

       4. On the failure of the Respondent to pay the hire charges    A
 in terms of the repayment schedule, the Appellant sent a legal
notice to the Respondent on 10th October, 2002, recalling the
entire hire-purchase facility. It further appears that as many as
26 cheques issued by the Respondent towards payment of the
hire-charges were dishonoured on presentation. By the said            B
legal notice, the Respondent was informed that she had failed
to repay the hire charges according to the payment schedule
and had defaulted in honouring her commitments towards
repayment. She was requested to make payment of the total
amount of Rs.1,31,299.44p. within 3 days from the date of             c
receipt of the notice.

      5. It appears that subsequently, pursuant to a request made
by the Respondent, the Appellant, by its letter dated 10th May,
2003, made a one-time offer of settlement for liquidating the
outstanding dues of Rs.1,26,564.84p. for Rs.60,000t~. subject         D
to the payment being made by the Respondent by 16th May,
2003, in cash. It was also specifically mentioned in the offer that
in the event the Respondent delayed in making payment of the
said sum of Rs.60,000/- for whatever reason, the offer would
stand voided and the Appellant would be entitled to claim from        E
the Respondent the total dues as on date.

     6. Thereafter, in keeping with the terms and conditions of
the Hire-Purchase Agreement, the Appellant took possession
of the financed vehicle and informed the concerned Police             F
Station before and after taking possession thereof from the
residence of the Respondent. According to the Appellant, an
inventory sheet was also prepared, which was duly
countersigned by the husband of the Respondent. It is the
Appellant's case that at the time of taking possession of the         G
vehicle, six monthly instalments were overdue. On the same
day, the Respondent's husband wrote to the Appellant to extend
the time for paying the amount which had been settled at
Rs.60,000/- by way uf a One-Time Settlement. It is also the
Appellant's case that' subsequent thereto, the date of the
                                                                      H
    1056 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.


A settlement offer was extended as a special case, but despite
  the same, the Respondent failed to pay the amount even within
  the extended period. It is on account of such default that the
  Appellant was constrained to sell the vehicle after having the
  same valued by approved valuers and inviting bids from
B interested parties.

        7. On 31st May, 2003, the Appellant entered into an
    Agreement for sale of the vehicle with Mis Chin Chin Motors
    which was the highest bidder, for a sum of Rs.70,000/-.

C      8. Appearing for the Appellant Citicorp. Maruti Finance
  Ltd., Mr. Ashok Desai, learned Senior Advocate, submitted
  that the sale process followed by the Appellant after taking
  possession of the vehicle was not in violation of the Regulations
  issued by the Reserve Bank of India. After the vehicle was sold,
D the Appellant sent a post-sale letter to the Respondent on 9th
  June, 2003, informing her that the vehicle had been sold for
  Rs.70,000/- and that the said amount had been adjusted
  towards the total outstanding dues amounting to
  Rs.1,21,920.48p. The Respondent was also asked to pay the
E balance amount of Rs.51,920.48p. which still remained due
  after adjustment of the sale price of the vehicle.

        9. In June, 2003, the Respondent filed Consumer
  Complaint No.280 of 2003 before the Consumer Disputes
  Redressal Forum, Sheikh Sarai, against the Appellant alleging
F deficiency in service on their part. The Appellant filed its reply
  to the said complaint before the aforesaid Forum in August,
  2003. Thereafter, the Respondent filed an application to amend
  Consumer Complaint No.283 of 2003. The same was allowed
  and the amended complaint was taken up for consideration.
G By its order dated 22nd December, 2003, the District Forum-
  VI I, Sheikh Sarai, directed the Appellant to pay a sum of
  Rs.1,50,000/-, along with interest at the rate of 9% per annum,
  from the date of filing of the complaint (16.6.2003) till the date
  of payment, together with a further sum of Rs.5,000/- towards
H harassment and cost of litigation.
  CITICORP. MARUTI FINANCE LTD. v. S. VIJAYALAXMI 1057
               [ALTAMAS KABIR, J.]

     10. Aggrieved by the said order, the Appellant preferred        A
Appeal No.65 of 2004 before the State Commission, Delhi, on
30th January, 2004. By its order dated 10th March, 2005, the
State Commission, Delhi, affirmed the order of the District
Forum and directed payment of a further sum of Rs.50,000/-
on account of punitive damages.                                      B

     11. Aggrieved by the said order of the State Commission,
Delhi, the Appellant filed Revision Petition No.737 of 2005
before the National Commission in March, 2005, in which the
stand taken before the lower Fora was reiterated. It was also        C
indicated that the Appellants had followed the letter and spirit
of the Hire-Purchase Agreement and had re-possessed the
vehicle in terms of the default clause in the Agreement. On 27th
July, 2007, the National Commission, while dismissing the
Revision Petition modified the order of the State Commission
by setting aside that part of the judgment directing the Appellant   D
to pay Rs.50,000/- on account of punitive damages. Instead,
the Commission directed the Appellant to pay a sum of
Rs.10,000/- to the Complainant/Respondent by way of cost.

     12. Appearing in support of the Appeal, Mr. Ashok Desai,        E
learned Senior Advocate, began his submissions by posing a
question as to whether the High Court was justified in coming
to a finding in observing that the hire-purchase system or
leasing system was contrary to the interest of the society.
Referring to Clause 25 of the Hire-Purchase Agreement dealing        F
with events of default, Mr. Desai submitted that Sub-Clause
25.1.1 provides that non-payment of any monthly hire charges
on the due date as per terms of the Agreement, would amount
to an event of default and the consequences thereof were set
out in Clause 26 dealing with the Owner's Rights On Default          G
By Hirer. Since the said clause is relevant to a decision in this
case, the same in its entirety is extracted hereinbelow :-

    "26. OWNER'S RIGHTS ON DEFAULT OF HIRER

    26.1 The occurrence of any/all of the aforesaid events shall     H
    1058 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.


A      entitled the Owner to terminate this Agreement. On such
       termination, the entire sum of money (inclusive of hire
       charges and all other sums and charges of whatsoever
       nature, including but not limited to, interests on account of
       default of insurance premia and on account of other taxes)
B      which would have been payable by the Hirer if the
       agreement had run to its full terms, shall become due and
       payable forthwith.

        26.2 The owner, through its authorized representatives,
        servants, agents, shall have unrestricted right of entry in the
c       aforesaid events and shall not be entitled to retake
        possession of the vehicle(s). The Hirer shall be bound to
        return the vehicle(s) to the owner at such location, as the
        Owner may designate, in the same condition in which it
        was originally delivered to the Hirer (ordinary wear and
D       tear excepted). For the said purpose it shall be lawful for
        the Owner forthwith or at any time and without notice to the·
        Hirer to enter upon the premises, or garage, or godown,
        where the vehicle(s) shall be lying or kept and to take
        possession or recover and receive the same and if
E       necessary to break open any such place. The Owner will
        be well within his rights to use tow-van to carry away the
        vehicle(s). The Hirer shall not prevent or obstruct the Owner
        from taking the possession of the vehicle and shall be
        liable to pay any towing charges or other expenses
F       incurred in this regard.

        26.3 The Owner shall be in the aforesaid events be entitled
        to sell/transfer/assign the vehicle(s) either by public action
        or by private treaty or otherwise. However, the Owner shall
        however, be liable to pay for any deficiencies after the said
G
        appropriation. In case there is any surplus after adjusting
        the dues of the Owner, the same shall be paid to the Hirer.

        26.4 The Hirer shall not be entitled to raise any objections
        regarding the regularity of the sale and/or actions taken by
H       the Owner nor shall the Owner bt} liable/responsible for any
   CITICORP. MARUTI FINANCE LTD. v. S. VIJAYALAXMI 1059
                [ALTAMAS KABIR, J.]

     loss that may be occasioned from the exercise of such             A
     power and/or may arise from any act or default on the part
     of any broker or auctioneer or other person or body
     employed by the Owner for the said purpose.

     26.5 The Owner shall be entitled to recover from the Hirer
                                                                       8
     all expenses (including legal costs on full indemnity basis)
     incurred by or on behalf of the Owner in ascertaining the
     whereabouts, of taking possession, insuring, transporting
     and selling the vehicle and of any legal proceedings that
     may be filed by or on behalf of the Owner to enforce the
     provisions of this agreement. It is expressly clarified that      C
     the remedies referred to hereinabove shall be in addition
     to and without prejudice to any other remedy available to
     the Owner either under this agreement or under any other.
     Agreement or in law.
                                                                       D
     26.6 Without prejudice to the generality of the foregoing
     words, the Hirer hereby consents to the Owner
     disseminating to and sharing with third parties (including
     banks, financing entities, credit bureaus of which the Owner
     is a member or any statutory body or regulatory authority)        E
     all information within the knowledge of the Owner and
     pertaining to Hirer (including credit history and credit status
     of the Hirer) at any time as the Owner may consider
     necessary or be requested or directed to do."

      13. Mr. Desai contended that in order to act in accordance       F
with the aforesaid clause, the Appellant had framed its own
Code of Conduct, wherein, the guidelines as to how recovery
of dues is to be effected, has been laid down in great detail,
with the emphasis on politeness and treating the customer with
dignity. Mr. Desai submitted that it had also been provided in         G
the guidelines that any breach of the conditions by the collecting
agency would attract punitive action.

     14. Mr. Desai contended that the concept of hire-purchase
i~ just another form of bailment, where the goods are held by          H
    1060 SUPREME COURT REPORTS [2011) 14 (ADDL.) S.C.R.


A the hirer in bailment till such time as the ownership thereof is
  made over to him. Mr. Desai also urged that the jurisdiction of
  the Consumer Forum was to ensure that the Agreement
  between the parties was duly executed, but it had no jurisdiction
  to rewrite the terms of the Agreement. In this regard, Mr. Desai
B submitted that the Consumer Forum had gone beyond its
  jurisdiction in settling and deciding the question regarding the
  validity of the Hire-Purchase Agreement itself. Learned counsel
  submitted that the Reserve Bank of India had issued guidelines
  on 24th April, 2008 to all Scheduled Commercial Banks,
c regarding the policy to be adopted by Banks in engaging
   Recovery Agents for recovering their dues. On the issue relating
  to the engagement of Recovery Agents, the Banks were
  directed to take note of the specific conditions set out in the
  guidelines in that behalf. Clause 2(ii) makes it very clear that
D Banks should have a due diligence process in place for
  engagement of Recovery Agents, which should be so structured
  to cover, among others, individuals involved in the recovery
  process. Clause 2(ix) relates to the method to be followed by
  Recovery Agents and the Banks were advised to strictly adhere
E to the guidelines/Code during the loan recovery process. The
  said guidelines also provided for the manner in which the
  possession of mortgaged/hypothecated property is to be taken
  and it was clearly indicated that the recovery of loans or seizure
  of vehicles should be done through legal process.

F       15. Mr. Desai also referred to a RBI Circular dated 24th
  April. 2009, on re-possession, clarifying the manner in which
  vehicles financed by Non-Banking Finance Companies
  (NBFCs) were to be recovered. Mr. Desai pointed out that in
  the said guidelines, it was indicated that NBFCs must have a
G built-in re-possession clause in the contracUloan Agreement
  with the borrower, which must be legally enforceable. In order
  to ensure transparency, the terms and conditions of the contracU
  loan Agreement should also contain provisions regarding notice
  period before taking possession; circumstances under which
H the notice could be waived; the procedure for taking
   CITICORP. MARUTI FINANCE LTD. v. S. VIJAYALAXMI 1061
                [ALTAMAS KABIR, J]

possession of the security and provision providing for a final       A
chance to be given to the borrower for repayment of the loan,
before proceeding with the sale or auction of the property. Mr.
Desai submitted that the said guidelines had been duly
embodied in the Hire-Purchase Agreement and that the
Appellant was, in fact, taking steps, in accordance with such        B
provisions, to recover the hypothecated properties in case of
default.

      16. Mr. Desai lastly contended that the Tribunal was not
entitled to modify the terms of the Agreement which had been         C
arrived at between the parties and that when there was an
acute dispute relating to facts, the Tribunal, in this case the
National Commission, ought not to have gone behind the terms
of the Contract and should have instead referred the parties to
the Civil Court. It was also observed that only in an appropriate
case was the Tribunal entitled to enter into the validity of the     D
terms of the contract. In support of his submissions, Mr. Desai
referred to the decision of this Court in Bharathi Knitting
Company Vs. OHL Worldwide Express Courier [(1996) 4 SCC
704], where the aforesaid principal has been considered and
explained. Mr. Desai submitted that the order of the National        E
Commission was erroneous and is liable to be set aside.

      17. Appearing for the Finance Industry Development
Council (FIDC), Ms. Haripriya Padmanabhan, learned
Advocate, submitted that the Council is a self-regulatory            F
organization registered with the Reserve Bank of India and is
governed by the guidelines issued by the Reserve Bank of India
from time to time. Ms. Padmanabhan submitted that on 26th
October, 2007, this Court had in the present proceedings
expressed concern over the manner in which loans by financial        G
institutions were being recovered. Learned counsel submitted
that this Court was particularly concerned with the procedure
adopted for recovery of such loan amounts by financial
institutions by alleged use of force, despite the directions given
by this Court io -/CIC/ Bank Ltd. Vs. Prakash Kaur [(2007) 2
SCC 711]. It INas submitted that the Reserve Bank of India had       H
    1062 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.


A formulated operational guidelines for adoption by all
  commercial banks. Pursuant to the guidelines of July, 2009,
  relating to Debt Collections Standards in India, the Citibank had
  updated its Code for collection of dues and re-possession of
  security. It was submitted that the said guidelines were detailed
B and expansive and attempted to cover all the shortcomings in
  the earlier guidelines in order to ensure that no force was used
  for the purpose of effecting recovery of the dues.

          18. Mr. Prashant Kumar, learned Advocate, appearing for
C   the Appellants in the four Special Leave Petitions filed by
    Mahindra & Mahindra Financial Services Ltd., adopted the
    submissions of Mr. Ashok Desai and Ms. Padmanabhan. He
    added that from the month of September, 2009, the financial
    institutions were following the process of arbitration in order to
    recover its dues. Mr. Prashant Kumar submitted that the
D   matters in which he was appearing do not contemplate the
    financial institutions as the owner of the goods and the
    transaction was a loan simplicitor. Consequently, the said
    matters could not be treated on the same footing as those which
    involved Hire-Purchase Agreements. It was urged that although
E   the provisions of the SARFAESI Act, 2002, could be applied
    in similar cases, the same would not apply as far as the
    present cases were concerned, since they constituted loan
    agreements in respect of which either the normal civil or the
    arbitration law would have application. It was further submitted
F   that if a loan had been taken against a mortgage, the remedy
    on account of recovery would be with the Civil Court in regard
    to the mortgaged properties. In this regard, reliance was placed
    on the decision of this Court in Sundram Finance Ltd. Vs. State
    of Kera/a [Al R 1966 SC 1178]. Reliance was also placed on
G   a decision of this Court in Civil Appeal No.5993 of 2007
    (Commissioner of Central Excise Vs. Bajaj Auto Finance
    Ltd.), where similar views have been expressed.

        19. Reference was also made to Seetion 51 of the Motor
    Vehicles Act, 1988, which makes special provision in regard
H
  CITICORP. MARUTI FINANCE LTD. v. S. VIJAYALAXMI 1063
               [ALTAMAS KABIR, J.]

to motor vehicle which was subject to a Hire-Purchase               A
Agreement in cases covered under a Hire-Purchase
Agreement. In cases covered under Hire-Purchase
Agreements, provision has been made for the Registering
Authority to make an entry in the Certificate of Registration
regarding the existence of such agreement. Clause (b) of            B
Section 51 provides for cancellation of such an endorsement
on proof of termination of the agreement by the parties.

     20. The last person to address us was Shri Dharampal
Yadav, Respondent No.1 in Special Leave Petition (Civil)
No.9550 of 2009 and Special Leave Petition (Civil) No.10544         C
of 2009, who appeared in person. He submitted that in most
cases, the various guidelines framed by the Reserve Bank of
India and the Bank themselves, were not followed and more
often than not the hypothecated goods, mostly vehicles were
forcibly taken possession of by Recovery Agents hired by the        D
financiers. Mr. Dharampal Yadav submitted that the
methodologies adopted by the Recovery Agents were contrary
to the guidelines laid down by the Banks themselves and in the
decisions of this Court in several other matters, where it has
been uniformly indicated that recovery would have to be             E
effected in due process of law and not by the use of muscle
power.

      21. Since during the pendency of the Special Leave
Petitions before this Court, the Appellant had complied with the
orders of the District Forum and the National Commission had        F
already set aside the punitive damages imposed by the State
Commission, the reliefs prayed for on behalf of the Appellant
had been rendered ineffective and the submissions were,
therefore, channeled towards the question of whether the fora
below were right in holding that the vehicles had been illegally    G
and/or wrongfully recovered by use of force from the loanees.
The aforesaid question has since been settled by several
decisions of this Court and in particular in the decision
rendered in /CIC/ Bank Ltd. Vs. Prakash Kaur (supra). It is, not,
therefore, necessary for us to go into the said question all over   H
    1064 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C R


A again and we reiterate' ·the earlier view taken that even in case
  of mortgaged goods subject to Hire-Purchase Agreements, the
  recovery process has to be in accordance with law and the
  recovery process referred to in the Agreements also
  contemplates such recovery to be effected in due process of
B law and not by use of force. Till such time as the ownership is
  not transferred to the purchaser, the hirer normally continues to
  be the owner of the goods, but that does not entitle him on the
  strength of the agreement to take back possession of the
  vehicle by use of force. The guidelines which had been laid
C down by the Reserve Bank of India as well as the Appellant
  Bank itself, in fact, support and make a virtue of such conduct.
  If any action is taken for recovery in violation of such guidelines
  or the principles as laid down by this Court, such an action
  cannot but be struck down.

D      22. In the instant case, the situation is a little different, since
  after the vehicle had been seized, the same was also sold and
  third party rights have accrued over the vehicle. It is possibly
  on such account that the Appellant Bank chose to comply with
  the directions of the District Forum notwithstanding the
E pendency of this case.

         23. Since the Appellant Bank has already accepted the
    decision of the District Forum and has paid the amounts as
    directed, no relief can be granted to the Appellant and the
    Appeals are disposed of in the light of the observations made
F   hereinabove.

       24. The application filed in Special Leave Petition (Civil)
  No.10547 of 2009 on 26th August, 2011, for bringing on record
  the legal heirs of the sole respondent Shiv Nath Sareen is no
G longer relevant on account of the aforesaid decision and the
  same is, therefore, dismissed. The Appeals are also disposed
  of in terms of the observations made hereinabove.

         25. There shall, however, be no order as to costs.

H D.G.                                            Appeal disposed of.