State Consumer Disputes Redressal Commission
M/S Kotak Mahindra Pirmus Limited vs Satpal Singh on 30 May, 2013
FIRST ADDITIONAL BENCH
STATE CONSUMER DISPUTES REDRESSAL COMMISSION, PUNJAB
SECTOR 37-A, DAKSHIN MARG, CHANDIGARH.
First Appeal No.417 of 2008.
Date of Institution: 02.05.2008.
Date of Decision: 30.05.2013.
1. M/s Kotak Mahindra Pirmus Limited, Registered Office at 5-C/11, Mittal
Court, 224, Nirman Point, Mumbai.
2. M/s Kotak Mahindra Primus Limited, Branch Office at 302, 2nd Floor,
Delta Chambers, 34, G.T. Road, opposite Bus Stand, Jalandhar.
(Both through M/s Kotak Mahindra Pirme Limited, SCO 153-154,
Sector 9-D, Top Floor, Madhya Marg, Chandigarh through its
Authorized Signatory).
.....Appellants.
Versus
Satpal Singh, aged about 56 years, S/o Sh. Jaswant Singh, R/o H.No.259,
Street No.7, Krishna Nagar, Hoshiarpur, Punjab
...Respondent.
First Appeal against the order dated
18.01.2008 of the District Consumer
Disputes Redressal Forum, Jalandhar.
Before:-
Shri Inderjit Kaushik, Presiding Judicial Member.
Shri Vinod Kumar Gupta, Member.
...................................
Present:- Sh. Rajnish Malhotra, Advocate, counsel for the appellants.
Sh. Deepak Verma, Advocate for Sh. Narinder Lucky, Advocate, counsel for the respondent.
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INDERJIT KAUSHIK, PRESIDING JUDICIAL MEMBER:-
M/s Kotak Mahindra Pirmus Limited and another, appellants/opposite parties (In short "the appellants") have filed this appeal against the order dated 18.01.2008 passed by the learned District Consumer Disputes Redressal Forum, Jalandhar (in short "the District Forum").
2. Facts in brief are that Sh. Satpal Singh, respondent/complainant (hereinafter called as "the respondent") filed a complaint under section 12 of First Appeal No.417 of 2008 2 the Consumer Protection Act, 1986 (in short, "the Act") against the appellants, pleading that he got financed Tata Indica bearing Engine No.48795 and Chassis No.48277, registered vide registration No.PB-07-K-5999, through appellant no.1 vide its branch office, appellant no.2 vide agreement dated 30.03.2004.
3. On 28.03.2005, the respondent was going towards the Sessions Court, Hoshiarpur from his residence and the said vehicle was forcibly seized/possessed by some anti-social elements/musclemen of the appellants. On 29.03.2005, the appellants sent the legal notice with the direction to the respondent to make the payment of Rs.1,42,899/- along with interest/charges @ 3% per month within 72 hours of the notice. The respondent sent the reply vide registered post on 05.04.2005 and specifically stated that he is ready to pay Rs.9500/- for committing fault of only two installments. No reply to the same was given. The respondent suffered a lot of mental tension and harassment and is entitled to Rs.50,000/- as compensation.
4. It was prayed that the appellants may be directed to re-deliver the said Tata Indica car illegally possessed from the respondent and to pay compensation of Rs.50,000/- and litigation expenses of Rs.10,000/-.
5. In the written version filed on behalf of the appellants, preliminary objections were taken that the complaint is not maintainable in the present form and the respondent has no cause of action to file the complaint. The District Forum has no jurisdiction. The respondent has not come to the Forum with clean hands and is estopped by his act and conduct from filing the complaint.
6. On merits, it was admitted that the vehicle was got financed from the appellants. The appellant never sent any anti-social elements/ musclemen to the respondent to snatch the vehicle. In fact, subsequent to the defaults committed by the respondent, the vehicle was repossessed by the appellant through their repossession agency as per the terms and conditions of the agreement. The appellants have the right to get the vehicle First Appeal No.417 of 2008 3 surrendered/repossessed in case of default in non-payment of the equated monthly installments of the amount financed by the appellants. The officials of the appellants have been requesting the respondent to regularize his account, but the respondent did not pay any heed. The respondent never approached the appellants to pay the due amount within the notice period, or offered to make any payment. The respondent was required to pay Rs.1,42,899-61p within the notice period, if he intended to get back the vehicle from the appellants, but he never paid any amount. It was stated in the notice that the vehicle will be sold if the respondent failed to make the payment of the due amount within the notice period and the appellants sold the vehicle to the highest bidder for a sum of Rs.1,36,653/- as per the agreement and after adjusting the said amount, a sum of Rs.6,246/61 was still due to be recovered. The respondent has dragged the appellants into unnecessary litigation. All other allegations were denied and it was prayed that the complaint may be dismissed with costs.
7. Parties led evidence in support of their respective contentions by way of affidavits and documents.
8. After going through the documents and material placed on file and after hearing the learned counsel for the parties, the learned District Forum observed that the notice Ex.C-3 was given to the respondent for default of two installments of Rs.4470/- after repossessing the vehicle by force, which was a clear-cut deficiency in service. Only 72 hours notice was given to sell the vehicle which was unjustified. The respondent sent reply wherein he stated that he is ready to make the payment of the default amount, but the vehicle was illegally repossessed and was sold for a sum of Rs.1,36,653/-. There is deficiency in service on the part of the appellants. However, the car cannot be delivered back, as it was sold and the respondent is entitled to compensation. The complaint was allowed and the appellants were directed to refund the sale amount of installments of Rs.54,090/- First Appeal No.417 of 2008 4 charged by them before issuing the notice Ex.C-3 and to pay Rs.50,000/- as compensation and litigation costs.
9. Aggrieved by the impugned order dated 18.01.2008, the appellants have come up in appeal.
10. We have gone through the pleadings of the parties, perused the record of the learned District Forum and have heard the arguments advanced by the learned counsel for the parties.
11. Learned counsel for the appellants contended that the respondent failed to make the payment and as per clause-14 of the agreement, the vehicle could be repossessed and the notice was given to make the payment, or else the vehicle was to be sold, but the respondent did not make any payment and ultimately, the vehicle was sold and the sale amount was adjusted in the account of the respondent. The order passed by the District Forum is illegal and is liable to be set aside.
12. On the other hand, the counsel for the respondent has contended that the impugned order passed by the District Forum is legal and valid and there is no ground to interfere with the same and the appeal may be dismissed.
13. We have considered the respective submissions advanced on behalf of the parties and have minutely scrutinized the entire record.
14. The respondent got financed the vehicle from the appellants and was paying installments regularly and he could not pay two installments of Rs.4470/- each and offered to make the payment of the same along with penalty and interest, but the appellants without following the proper procedure repossessed the vehicle. In the reply Ex.C-4 dated 05.04.2005, the respondent stated that he has committed default of two installments and he is ready to pay Rs.9500/- in total, but no response to this reply was given. The appellants have placed on file two affidavits, one of Sh. Manish Jain Ex.O-1 and the other of Sh. Maninder Saluja Ex.O-2 and legal notice Ex.O-3 which was given after the re-sale of the vehicle. No other document has been First Appeal No.417 of 2008 5 placed on file. No copy of the notice given by him to make the payment is on record. The appellants have totally failed to follow the procedure laid down for repossessing the financed vehicle.
15. The Governor, Reserve Bank of India on 01.07.2006 issued the policy known as "The Code of Bank's Commitments to Customers", and the said Code is applicable to the banks and financial companies. In the said Code, the procedure for the recovery of loan is mentioned as follows:-
"3. Giving notice to borrowers:-
While written communications, telephonic reminders or visits by the bank's representatives to your place or residence will be used as loan follow up measures, the bank will not initiate any legal or other recovery measures including repossession of the security without giving due notice in writing. Minimum 60 days time will be given to you to pay the debt failing which the bank will proceed to take possession of the asset. The notice shall be given by Registered Post with Acknowledgement Due. However, where the Bank has reasons to believe that you are avoiding acknowledgement, it will follow all such procedures as required under law for recovery / repossession of security.
4. Repossession of Security:-
Repossession of security is aimed at recovery of dues and not to deprive you of the property. The recovery process through repossession of security will involve repossession, valuation of security and realization of security through appropriate means. All these would be carried out in a fair and transparent manner. Repossession will be done only after issuing the notice as detailed above. Due process of law will be followed while taking repossession of the property. The bank will take all reasonable care for ensuring the safety and security of the property after taking custody, in the ordinary course of the business.First Appeal No.417 of 2008 6
5. Valuation and sale of Property:-
Valuation and sale of property repossessed by the bank will be carried out as per law and in a fair and transparent manner. Before effecting sale (save and except in case of moveable property subject to speedy or natural decay or expenses for custody exceeds its value), you shall be given 30 days' notice for the intended sale. If sale is to be affected either by inviting tenders from the public or by holding public auction, copy of public notice shall also be sent to you. The bank will have right to recovery from you the balance due if any, after sale of property. Excess amount if any, obtained on sale of property will be returned to you after meeting all the related expenses provided the bank is not having any other claims against you.
6. Opportunity for the borrower to take back the security:
As indicated earlier in the policy document, the bank will resort to repossession of security only for purpose of realization of its dues as the last resort and not with intention of depriving you of the property. Accordingly the bank will be willing to consider handing over possession of property to you any time after repossession and before concluding sale transaction of the property, provided the bank dues are cleared in full. If satisfied with the genuineness of your inability to pay the loan instalments as per the schedule which resulted in the repossession of security, the bank may consider handing over the property after receiving the instalments in arrears. However, this would be subject to the bank being convinced of the arrangement made by you to ensure timely repayment of remaining instalments in future. In such cases possession of asset will be returned to you/person concerned immediately maximum within 10 days, on payment of defaulted amount and/or execution of supplementary First Appeal No.417 of 2008 7 agreement/consent and confirmation of guarantors as the case may be."
16. From the above, it is clear that the procedure as prescribed for repossessing the vehicle was not followed by the appellants. Hon'ble Supreme Court in case "Manager, ICICI Bank Ltd. v. Prakash Kaur and Ors.", AIR 2007 SC 1349 observed in para No. 18 as follows:-
"18. Before we part with this matter, we wish to make it clear that we do not appreciate the procedure adopted by the Bank in removing the vehicle from the possession of the writ petitioner. The practice of hiring recovery agents, who are musclemen, is deprecated and needs to be discouraged. The Bank should resort to procedure recognized by law to take possession of vehicles in cases where the borrower may have committed default in payment of the instalments instead of taking resort to strong arm tactics."
17. The Central Government also made the rules in exercise of the powers conferred by sub-Section (1) and clause (b) of sub-section (2) of Section 38 read with sub-section (4), (10), (12) and Section 13 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest known as "The Security Interest (Enforcement) Rules, 2002".
18. As per Section 13(2), 60 days notice is mandatory to the borrower in writing to discharge in full his liabilities to the secured creditor failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-Section 4. But no notice of 60 days for repossession of the vehicle was served by the appellants upon the respondent and against the law, repossessed the vehicle from the legal possession of the respondent.
19. In view of above discussion, the order passed by the District Forum is legal and valid and there is no ground to interfere with the same. First Appeal No.417 of 2008 8 The appeal being false and frivolous is required to be dismissed with special costs.
20. Accordingly, the appeal filed by the appellant is dismissed with special costs of Rs.10,000/- and the impugned order under appeal dated 18.01.2008 passed by the District Forum is affirmed and upheld. Amount of costs shall be paid by the appellants to the respondent/complainant within 45 days of the receipt of copy of the order.
21. The appellants had deposited an amount of Rs.25,000/- with this Commission at the time of filing of the appeal and another sum of Rs.79,000/- vide receipt dated 24.06.2008 in compliance of the order dated May 27, 2008 passed by this Commission. Both these amounts with interest accrued thereon, if any, be remitted by the registry to the respondent/ complainant by way of a crossed cheque/demand draft after the expiry of 45 days under intimation to the learned District Forum and to the appellants.
22. The arguments in this appeal were heard on 22.05.2013 and the order was reserved. Now the order be communicated to the parties.
23. The appeal could not be decided within the stipulated timeframe due to heavy pendency of court cases.
(Inderjit Kaushik) Presiding Judicial Member (Vinod Kumar Gupta) Member May 30, 2013.
(Gurmeet S)