Supreme Court Partially Allows Appeal on Deficiency of Service: IndusInd Bank vs. Simarjit Singh (2022)

Introduction

Date of the Judgment: 03 February 2022

Citation: Civil Appeal No. 784 of 2022

Judges: Dr. D.Y. Chandrachud, J. and Sanjiv Khanna, J.

Can a consumer forum rely solely on the complainant’s valuation of goods without supporting evidence? The Supreme Court of India addressed this question in a case involving a truck and its cargo of timber that was forcibly repossessed by a bank. The court examined whether the State Consumer Disputes Redressal Commission (SCDRC) and the National Consumer Disputes Redressal Commission (NCDRC) had correctly assessed the value of the repossessed timber. The judgment was delivered by a two-judge bench comprising of Dr. D.Y. Chandrachud, J. and Sanjiv Khanna, J.

Case Background

In July 2006, Simarjit Singh (the respondent) obtained a loan of ₹13,50,000 from IndusInd Bank Limited (the appellant) to finance a truck. The loan was to be repaid in monthly installments of ₹35,150. Simarjit Singh defaulted on three installments due in October 2007, November 2007, and February 2008. The bank issued a demand notice on March 12, 2008, for ₹1,39,335. Subsequently, Simarjit Singh paid ₹1,04,200 on March 24, 2008, ₹35,150 on May 6, 2008, and ₹36,000 on May 31, 2008. By May 31, 2008, he had paid ₹8,19,300, while the required payment up to June 2008 was ₹8,08,000.

Despite the payments, on July 3, 2008, while transporting timber from Gandhi Dham, Gujarat, to Srinagar, Simarjit Singh’s truck was forcibly seized by 10-12 individuals near Bhasaur village. The truck and the timber were taken into physical possession. Simarjit Singh filed a consumer complaint alleging deficiency in service.

Timeline

Course of Proceedings

The District Consumer Disputes Redressal Forum, Sangrur, dismissed Simarjit Singh’s consumer complaint on December 4, 2008. Subsequently, an appeal was filed before the State Consumer Disputes Redressal Commission, Punjab (SCDRC), which was converted into an original complaint. The SCDRC allowed the complaint on October 26, 2018, directing the bank to pay ₹10,80,000 for the truck, ₹20,00,000 for the timber, compensation for loss of livelihood at ₹3,000 per month, and ₹40,000 for litigation expenses, all with 9% interest from July 5, 2008.

The bank and its chairman then filed a revision petition before the National Consumer Disputes Redressal Commission (NCDRC), which was dismissed on July 20, 2021. The bank then appealed to the Supreme Court. The Supreme Court, while issuing notice on September 17, 2021, noted that the SCDRC had found the bank’s documents of surrender to be fabricated. The notice was limited to the direction assessing ₹20,00,000 as the value of the timber.

Legal Framework

The judgment primarily deals with the principles of deficiency of service under the Consumer Protection Act, 1986 (now replaced by the Consumer Protection Act, 2019), particularly regarding the assessment of damages and the burden of proof in consumer disputes. The case also touches upon the principles of natural justice and the need for a fair assessment of evidence.

Arguments

Appellant (IndusInd Bank) Arguments:

• The bank argued that Simarjit Singh had voluntarily surrendered the truck. However, this claim was rejected by the SCDRC and NCDRC as the surrender documents were found to be fabricated.
• The bank contended that the value of the timber was ₹4,13,710, not ₹20,00,000 as claimed by Simarjit Singh. They presented documents (Annexures P/12 to P/18) to support this claim, including a consignment note, retail invoice, and confirmation of delivery to the consignee.
• The bank highlighted that the timber was delivered to the consignee, Fayaz Timber Traders, and that they had received payment for it.

Respondent (Simarjit Singh) Arguments:

• Simarjit Singh claimed that the documents related to the valuation of the timber were in the truck when it was seized.
• He stated that the truck union, of which he was a member, had settled the matter with the consignor/consignee, but did not provide any supporting documents to prove the settlement or the valuation of the timber.
• He argued that the SCDRC and NCDRC were correct in accepting his valuation of ₹20,00,000 for the timber as he had stated in his complaint.

Innovativeness of the argument: The bank’s argument was innovative in that it produced documents that were not previously on record to counter the valuation of the timber.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issue was:

• Whether the SCDRC and NCDRC were correct in accepting the respondent’s valuation of ₹20,00,000 for the timber without any supporting evidence, and whether the bank’s documents regarding the timber’s value should be considered.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The judgment does not explicitly cite specific case laws or legal provisions, but the implicit legal principles relied upon are:

• Principles of natural justice and fair hearing, requiring that both parties have an opportunity to present their case and evidence.
• The burden of proof in consumer disputes, which generally lies with the complainant, but also requires the consumer forum to assess evidence properly.
• The principle that consumer forums must not act arbitrarily and should base their decisions on evidence and not merely on claims.

Judgment

How each authority was viewed by the Court?

No specific authorities were cited in the judgment.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the lack of evidence supporting the valuation of the timber. The Court noted that neither the SCDRC nor the NCDRC had conducted a proper examination of the evidence, and that the orders were flawed to that extent. The court emphasized the need for a fair assessment of evidence and the importance of not relying solely on the complainant’s claim without any supporting documents.

The court was more influenced by the factual aspects of the case, particularly the absence of supporting evidence for the timber’s valuation. The legal principles were applied to ensure a fair assessment of the facts.

The Supreme Court considered the lack of supporting evidence for the respondent’s claim as the primary reason for remitting the matter back to the SCDRC.

The court also considered the bank’s documents, which were not previously on record, and found that the value of timber was not properly assessed by the SCDRC and NCDRC.

Key Takeaways

• Consumer forums must not rely solely on the complainant’s claims without supporting evidence.
• Both parties should have the opportunity to present their evidence.
• The assessment of damages should be based on a fair examination of evidence.
• The Supreme Court can intervene when lower forums fail to properly assess evidence.

Directions

The Supreme Court directed the following:

• The matter was remitted to the SCDRC to examine the issue of timber valuation afresh.
• Both parties were permitted to file additional documents regarding delivery and valuation of the timber.
• The parties were asked to lead evidence through affidavits.
• The SCDRC was directed to conclude the proceedings within six months from the first date of hearing.
• The bank was directed to pay the amount as upheld by the Supreme Court.
• Compensation for loss of livelihood was to be paid until October 31, 2018.
• Parties were directed to appear before the SCDRC on March 21, 2022.

Specific Amendments Analysis

(Not Applicable as no specific amendments were discussed in the judgment)

Development of Law

The ratio decidendi of the case is that consumer forums cannot rely solely on the complainant’s claim without supporting evidence, and must conduct a fair assessment of evidence before awarding damages. This case reinforces the principle that consumer forums must act judicially and not arbitrarily. There is no change in the previous position of law, but the case clarifies the application of the principles of natural justice and fair assessment of evidence in consumer disputes.

Conclusion

The Supreme Court partly allowed the appeal filed by IndusInd Bank, setting aside the order of the NCDRC and SCDRC regarding the valuation of the timber. The matter was remitted to the SCDRC for a fresh examination of the timber’s value, emphasizing the need for a fair assessment of evidence and not relying solely on the complainant’s claim. The court upheld the other directions regarding the truck’s value, compensation for loss of livelihood, and litigation expenses.