No auction without title of vehicle

It's important for the finance company to have proper title and transfer registration of the vehicle

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 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 nor TCFS 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 Rs 1 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.

TCFS 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 auction can also approach the consumer fora for deficiency in service.

The author is a consumer activist