CITI BANK vs RAJ KUMAR

-THIS is an appeal against order of District Consumer Disputes Redressal Forum-I, U. T. , Chandigarh (for short hereinafter to be referred as District Forum) dated 8. 8. 2007 in Complaint Case No. 784 of 2006, Sh. Raj Kumar v. Citi Bank and Another.

BRIEFLY stated the averments made by the Complainant in his complaint were that he purchased an Indica Car in October 2001 from a dealer at Chandigarh, which was partially financed by OP No. 1 to the extent of Rs. 2,70,000. It is further averred that the OP took 44 post-dated cheques, each amounting to Rs. 7,750 as security from the Complainant being the amount of EMI. The Complainant also paid Rs. 1 lac as down payment. Vide the loan agreement, the Complainant had to pay a total amount of Rs. 3,41,000 for the loan amount of Rs. 2,70,000 over a period of four years. The cost of the car, however, was only Rs. 3,30,000. When the Complainant had purchased the car, he was residing in House No. 1043, Phase III B2, Mohali but in the year 2003, he shifted to House No. 3119, Sector 52, Mohali. It is further the case of the Complainant that as per the agreement, OP No. 2 who is the collecting agent of OP No. 1used to collect the cash payment of Rs. 7,750 (EMI) from the Complainant by sending a collection agent at the residence of the Complainant. The Complainant has also attached receipt of payment from the year 2002 to February 2005 vide Annexures C-1 to C-21. It has further been averred that the Complainant always informed the OPs about his change of address and accordingly, the collecting agent kept coming to his changed address to collect payments. The Complainant has further stated that when the payment was not collected by cash, the same was done by encashing the post-dated cheque in the custody of the OPs. The first grievance of the Complainant is that OP has not returned back those post-dated cheques for which they had received the payment in cash. The Complainant had been a good pay master and out of 44 instalments, he had already paid 39 instalments to the OP. However, with preplanned mala fide intentions, OP stopped sending its executive for collection of EMIs and suddenly on 24. 3. 2005, the car of the Complainant was taken away by the OPs without issuance of any notice whatsoever. Alleging this as deficiency in service and unfair trade practice, this complaint has been filed with the prayer that OP be directed to refund the interest portion of the loan amount plus the resale price of the car and further be directed to pay another sum of Rs. 2 lacs towards mental torture. The version of OP is that interest is always charged on the loan amount advanced and, therefore, there is no question of the interest to be refunded to the Complainant. It has been admitted that the Complainant had deposited 44 post-dated cheques of Rs. 7,750 each but from 26. 11. 2001, most of issued cheques bounced and, therefore, the OP Bank had to collect the due amount by sending agent of the Bank. It, however, has been denied that as per the agreement, cash had to be collected from the residence of the Complainant. As regards return of the post-dated cheques, against which cash payment had been received, the version of OP is that these cheques have bounced with regular frequency and, therefore, there is no question of returning the same and it has been emphasized by OP No. 1 that from repayment of sale of loan, it is evident that he took the repayment very lightly because of regular bouncing of post-dated cheques. It has also been stated by the Bank that the bank was authorized to charge cheque bouncing charges and the same were added to the account of the customer. As regards repossession of the vehicle, it is the case of OP that the OP Bank was duly within its right to repossess the vehicle in respect of repeated defaults of pending dues and the Bank had totally acted in terms of loan agreement vide which it was under no obligation to send any notice to the Complainant when the Complainant did not follow the due procedure of repayment schedule.

As per the learned District Forum, the basic dispute is that OPs took away the car on 24. 3. 2005 illegally when it had already received 39 instalments and only 5 instalments remained to be paid. As regards recovery of the payment from the Complainant of EMIs, the learned District Forum was of the view that when the OP had adopted the procedure of seeking the payment from the Complainant in cash, then remaining payments whatsoever due towards the Complainant and for which the cheques allegedly bounced, the OP should have adopted the same means of collecting the payment by sending their agent to the Complainant but the same had not been done and the OP illegally took away the vehicle from his possession. On the basis of record, the learned District Forum found it clear that the post-dated cheques issued by the Complainant had been bouncing but for such bouncing, the Complainant had been paying the cheque bouncing charges and, therefore, OP should not have had any complaint regarding encashment of post-dated cheques or its bouncing that too when the agent of the bank had been collecting the payment of instalments from the Complainant in cash whenever the cheques bounced. The learned District Forum further, after perusal of the record, found that certain documents attached with the written reply regarding the car loan agreement from page 19 to page 39, were unfilled/blank preformas and had been signed by the Complainant. In the view of the learned District Forum, this practice adopted by the Bank of getting blank forms signed from the customers certainly amounts to unfair trade practice. Further perusing the account statement of the Complainant, submitted by the OP, the learned District Forum found that cheque bouncing charges, service tax/education cess and even on certain occasions penalty had been charged from the Complainant and further there is a lone entry on page 46 dated 30. 6. 2005 showing repossession sale of 45,000, which on the inquiry by the learned District Forum was intimated to be the sale price of the car, which was taken away and was sold by the Bank. This act of the Bank also, as per the learned District Forum, was illegal. In this context, the learned District Forum has also recorded the observations of the Hon''ble Supreme Court in a similar case wherein the Hon''ble Apex Court had held that no financial institution including banks and other organizations could take away the vehicle, which have been hypothecated with them and muscle men must not work in such cases for taking possession of the vehicle from its owners and law must be permitted to take its due course in such types of defaults of loan amount. Thus, holding the OPs guilty of deficiency in service and unfair trade practice, the learned District Forum allowed the complaint and directed the OPs to pay the Complainant compensation of Rs. 1,50,000 along with cost of litigation amounting to Rs. 2,100 within 30 days from the date of receipt of copy of order failing which the decretal amount of Rs. 1,50,000 was to carry penal interest @ 9% per annum from the date of order till its actual realization. The learned District Forum further directed the OP Bank not to take law in its own hand and also to stop carrying unfair trade practice as well as illegal activity of getting signed blank preformas from their customers and taking possession of the vehicle from the customers/loanees forcibly.

AGGRIEVED by the said order of the learned District Forum, the OPs have filed the present appeal. The appeal having been taken on board, notice was sent to the Respondent/complainant. Ms. Meenakshi Verma, Advocate appeared on behalf of the Appellants. Notice sent to the respondent could not be served as notice sent on his address was received back with the remarks that no such person resides on the given address. Therefore, the Appellant was asked to furnish the new address of the Respondent. However, the Bank could not supply the same because Sh. Raj Kumar, Respondent/ Complainant never contacted the Bank with regard to receipt of the amount awarded by the learned District Forum. As a last resort, the Respondent was served through proclamation in the newspaper ''dainik Bhaskar'' dated 16. 5. 2008 but none was present on behalf of the Respondent and hence, he was proceeded against ex parte. Ms. Meenakshi Verma, Advocate, learned Counsel for the Appellants/ops submitted that the Respondent/complainant had been a regular defaulter in repayment of the loan and out of 39 instalments, 38 post-dated cheques given by him had bounced and a representative of the Bank had to be sent to his house for collecting cash payments. She emphasized that collection to be made from the residence of the Complainant was a courtesy extended by the Bank to the Complainant and it is not the procedure agreed to as per the loan agreement. The next submission of learned Counsel for the Appellants was that as per the agreement, the Bank had the right to confiscate the car as per Clause 4 of the Agreement even if one instalment was due from the Complainant and in this particular case, the Complainant had been a regular defaulter and he did not pay the instalments after 39th instalment. She further submitted that there is no evidence on record that the car was repossessed forcibly from the Complainant by the use of antisocial elements or Gundas. She further referred to Annexure A-5 vide which SHO, Police Station, Sector 34, Chandigarh had been intimated that the Complainant had been making defaults in repayment and under the loan agreement, the Bank is authorized to repossess the vehicle and therefore, the Bank had decided to enforce its right to request the borrower to handover the vehicle as per contractual understanding. She, therefore, reiterated that the Bank followed proper procedure for the repossession and no forcible repossession was done. The next submission of the learned Counsel was that a due sale notice dated 12. 4. 2005 was given to the Complainant to pay the dues. Since, he failed to do so, the car was subsequently sold.

THE learned Counsel for the Appellants also submitted that the compensation awarded by the learned District Forum to the tune of Rs. 1,50,000 is very much on the higher side. Thus reiterating that there was no deficiency in service on the part of the OP, she prayed that the appeal be allowed and the impugned order be set aside and the complaint be dismissed. We have gone through the record on file and have also perused the impugned order and have heard learned Counsel for the parties. The main controversy to be discussed is whether the Bank followed the correct procedure as laid down in the agreement and whether any forcible repossession of the car was done by employing antisocial elements/gundas?

IN this context, it is undisputed that the Complainant had taken a loan of Rs. 2,70,000 from OPs and towards repayment of which, he had given 44 post-dated cheques of Rs. 7,750 each as payment for EMI. A perusal of the agreement, duly signed by OPs and the Complainant indicates that the Complainant had agreed to the payment of EMI being made through post-dated cheques and, therefore, the contention of the Complainant that the amount of EMI was being collected from his residence by the agent of OPs as per the agreement, is not proved by evidence on record. In this context, the contention of OPs that the Complainant had been regularly defaulting in making payment of EMI due to bouncing of his post-dated cheques and, therefore, it had to send its agent to collect the amount of EMI from the Complainant, stands proved by the evidence on record. We do not agree with the view of the learned District Forum that merely because that the OPs had been earlier sending its agent to collect the amount of EMI from the residence of the Complainant that it became the accepted procedure and that the OP had to continue to follow the same. Further Clause 4 of the agreement indicates that in the event of the borrowers failing to pay any one EMI or any amount due for a period of 45 days from the date on which it is due, then the Bank is entitled to deem immediate repayment of loan and the Bank will be entitled to charge 2% extra or any other rate, which is applicable at that time as per Bank policy on the principal outstanding. There is nothing on record nor is there any clause in the agreement, which permits the Appellant to repossess the vehicle without giving any notice. Clause 4 is relevant to the default in payment, which was the case in issue. However, under this clause, the Appellant was only entitled to deem immediate repayment of loan and it was entitled to charge 2% extra or any other rate, which is applicable at that time as per the Bank policy on the principal outstanding. To do this, there had to be some correspondence with the Complainant, vide which the repayment of the due/defaulted amount had been sought. However, there is no such document on record. Thus, it is clear that the Appellants/ops had gone beyond the terms and conditions of the agreement in repossessing the vehicle without due notice or recall of loan. However, the Complainant on his part has failed to provide any evidence to point out that there was forcible repossession of the vehicle or that any antisocial elements/gundas were employed by the Bank to repossess the vehicle. In this context, it is also important that the Bank had written to SHO, Police Station, Sector 34, Chandigarh that it has decided to ensure its right to request the borrower to handover the vehicle as per contractual understanding. However, as stated by us in the earlier part of the order, no such request to the borrower to handover the vehicle is on record. Subsequently, however, the Bank did sent a sale notice to the Complainant through registered post wherein it had been clearly told to him to clear the outstanding dues and if he failed to do the same within the given time, then the car would be sold by the Bank to recover its dues. However, the Complainant never approached the OPs to clear the dues sought from him.

FROM the above analysis, the only deficiency on the part of Bank in this context of this complaint is that it did not inform the Complainant through any notice that it had decided to ensure its right to repossess the vehicle due to default in payment by the Complainant. We, however, did not find the Bank guilty of forcible repossession of the vehicle by employing antisocial elements/gundas as there is no evidence to prove the same on record. In the impugned order, the learned District Forum has also pointed out an unfair trade practice followed by the Bank wherein it has been found that the Bank had been getting blank loan documents signed from the customers. We are in consonance with the view held by the learned District Forum that such an unfair trade practice and illegal activity on the part of the Bank must stop immediately. In view of the foregoing discussion, taking a holistic view of the case in hand, we are of the considered opinion that the compensation awarded by the learned District Forum to the Complainant is on the higher side because even though his vehicle had been repossessed without notice, there is no evidence to prove that it was so done by using any antisocial elements/gundas. It is also on record that the Complainant had been a regular defaulter in payment of EMIs and had not paid any EMI since November 2004 till 24. 3. 2005 when the car was repossessed. Further, it is also on record that the Complainant had been given a due notice after repossession of the vehicle that in case he did not pay up the dues, the car would be sold but he never approached OPs to clear the due and thus, OPs sold the car as per the agreement and credited the sale proceeds, admittedly, in the loan account of the Complainant. In this view of the mater, the impugned order needs to be modified with regard to the amount of compensation directed to be paid to the Complainant.

Consequently, the appeal is partly allowed and the impugned order is modified to the extent that the amount of compensation is reduced from Rs. 1,50,000 to Rs. 50,000 only. Subject to this modification, the impugned order is upheld.

COPIES of this order be sent to the parties free of charge. Appeal partly allowed.