By Smt. C.S. Sulekha Beevi, President,

1. Complainant purchased a Honda Unicom motor cycle by availing vehicle finance of Rs.40,000/- from opposite party. The Ex-show room value of the vehicle was Rs.60,280/-. Complainant paid Rs.23,000/- at the time of purchase including service charges. The loan agreement was to repay Rs.47,020/- in 20 monthly instalment, on or before 05-3-2008. Complainant had issued necessary post dated cheques towards repayment of instalments. Opposite party collected Rs.35,000/- through these cheques. A few instalments were collected by the agent Narayanan of opposite party. Due to financial crisis complainant defaulted to pay a few instalments. He was under the belief that he had time until 05-3-2008 to make the entire repayment. To the contrary opposite party illegally repossessed the vehicle on 21-02-2008. complainant offered to clear the arrears but opposite party was not ready to accept the same. Though complainant gave a letter to receive Rs.7,000/- opposite party did not acknowledge the letter or accept the amount. That complainant is ready to pay the balance amount, but opposite party is not accepting the amount with intention to sell the vehicle. That complainant reliably understands that opposite party has sold the vehicle without complying any procedures or issuing notice to complainant. Opposite party has not returned the cheque leaves. That opposite party has committed deficiency by repossessing the vehicle and if they have sold the vehicle complainant is entitled to payment of Rs.65,000/- with interest @ 12% per annum towards loss and damages. Hence this complaint.

2. Opposite party filed version admitting the loan of Rs.40,000/- availed by complainant. It is stated that an agreement dated, 24-6-2006 was executed stipulating terms and conditions. That it is not correct to say that complainant has repaid Rs.35,000/- towards the loan. Complainant has repaid only Rs.33,063/-. Opposite party denies the averment that complainant had time upto March, 2008 to clear the loan and that interest @ 8% per annum at diminishing rate upto 05-3-2008 is calculated by opposite party for repayment schedule. That as per the agreement the rate of agreed interests is 19.1% per annum at diminishing rate. That timely repayment was essence of contract. That in the event of default complainant had expressly undertaken to voluntary surrender the vehicle. On his failure to do so complainant has authorised opposite party to take possession of the vehicle as stipulated in the default clause of the agreement. Vehicle was taken possession as per those terms stated in the agreement. Even after repeated demands complainant failed to repay the instalments of the vehicle which was taken possession on 19-01-2008. This was informed to the complainant as well as to the Valancherry Police Station. That it is not correct to say that the vehicle was repossessed on 21-02-2008. A pre sale notice dated, 24-01-2008 was issued to complainant terminating the agreement and calling upon him to pay Rs.19,987/- within time stipulated and also intimating that on failure to pay the vehicle will be sold. Complainant neither paid the amount due nor replied tot he notice. Therefore opposite party was constrained to take steps to sell the vehicle on 18-02-2008, after completing all procedures. The vehicle was sold for a sum of Rs.25,000/- being the best offered price. The sale proceeds were credited to the complainant's loan account. After adjustment an excess of Rs.5,013/- was found payable to complainant. This was intimated to him by post sale notice dated, 19-02-2008. That this complaint is filed only after receiving the post sale notice. The other allegations are denied. That claim is made without any basis and only an amount of Rs.5,013/- is payable by opposite party to complainant. That there is no deficiency in service. That complainant is not entitled to any reliefs.

3. Evidence consists of the proof affidavit filed by the complainant and Exts.A1 and A2 marked for complainant. Opposite party filed proof affidavit and Exts.B1 to B8 marked for opposite party. Either side did not adduce any oral evidence and has not sought any opportunity to adduce oral evidence.

4. Points for consideration:-

(i) Whether opposite party is deficient in service.

(ii) If so reliefs and costs.

5. Point (i):-

The undisputed facts of the case are (i) that complainant availed a vehicle loan of Rs.40,000/- from opposite party for purchase of his vehicle No.KL10/Z 5089 (ii) Complainant defaulted a few instalments (iii) Opposite party repossessed the vehicle.

6. Complainant is aggrieved that opposite party has illegally repossessed and sold his motor cycle, when he had defaulted only a few instalments, even though he had repaid a major portion of the loan. It is his case that towards the loan of Rs.40,000/- he had to repay Rs.47,020/-. He repaid Rs.35,000/- and had defaulted a few instalments in the end of 2007. The vehicle was then repossessed by opposite party on 21-02-2008 without notice. Though he offered to pay Rs.7,000/- towards arrears opposite party refused to accept the amount and return the vehicle. That opposite party has later sold the vehicle without issuing proper notice to him and without complying the procedures of sale.

7. These allegations are resisted by opposite party raising the contention that the vehicle was taken possession as per the terms and conditions of the agreement, because the complainant had defaulted the payment of instalments. It was repossessed after informing the complainant as well as Valancherry Police station. A notice was issued to complainant after taking possession of the vehicle, to pay the arrears but he did not respond. The vehicle was therefore sold at the best offered price after publication. The sale proceeds were adjusted to the loan account and only Rs.5,013/- is payable to complainant.

8. The foremost question that poses for analysation is whether the repossession of the vehicle was proper and legal. Repossession of a vehicle without notice prior to repossession intimating default and also repossession with the use of force is illegal repossession. The complainant herein does not have a case that opposite party used force to repossess the vehicle. Admittedly complainant has defaulted payment. But the repossession was without his consent and knowledge. Complainant has pleaded and affirmed that the vehicle was repossessed on 21-02-2008. This date is disputed by opposite party who states that the vehicle was repossessed on 19-01-2008 and was later sold on 18-02-2008. It is also stated by opposite party that the post sale notice was issued to complainant on 19-02-2008. Opposite party relied upon Ext.B3, B4 and B5 documents and submitted that sufficient notice was issued to complainant prior to repossession. On scrutiny of these documents it is seen that Ext.B3 is a loan recall notice dated, 10-01-2008. In Ext.B3 it is seen stated by opposite party that the complainant was called upon several times to clear the dues but has not repaid it. It is also stated that Rs.9,255/- is due towards arrears of instalment and Rs.2,362/.- is due as additional interest. Thus Rs.11,617/- is stated to be due as on 10-01-2008. in the second portion of the very same notice it is stated that an amount of Rs.16.987/- is due under the agreement and the break up given is as under:

a) Principal Outstanding : Rs.13352.00

b) Interest : Rs. 43.80

c) Other Charges : Rs. 3591.50

-----------------

Total Due : Rs.16987.30

==========

When in the first portion of the Ext.B3 notice opposite party demands Rs.11,617/- as arrears, in the second portion of the very same notice the demand is for Rs.16,987/-. It is not explained before us how the amount outstanding towards principal can be Rs.13,352/- when the arrears towards instalment is already stated to be Rs.9,255/- only. In Ext.B2 account statement dated, 23-01-2008 the instalment overdue is again only Rs.9,255/- and the other overdue is shown as Rs.2,362/-. It is candid that Ext.B3 notice does not furnish true and correct information to the consumer about the amount to be repaid by him. This manner of stating hidden calculations and charging baseless amounts (other charges Rs.3,591.50) in the notice is nothing but imperfection in the quality of service rendered by opposite party Bank.

9. Further complainant disputes Ext.B3 notice and has submitted that he has not received any such notice. Opposite party relies upon Ext.B3(b) which is the xerox copy of a courier receipt and contended that Ext.B3 notice was send by courier. In Ext.B3(b) the date shown is 10-01-2008. The original of this courier receipt/consignment note is not produced by opposite party. The proof of delivery is also not available before us. When complainant has vehemently denied receiving any notice prior to repossession of vehicle, the non-production of the original of Ext.B3(b) and the proof of delivery is material. This only impells us to hold that Ext.B3 notice was not served upon the complainant. Ext.B4 is a notice which is seen to have been issued to the Valancherry Police Station informing the intention to repossess the vehicle. Ext.B4 is dated, 18-12-2007. Again Ext.B4(b) is only a xerox copy of a courier receipt showing date as '18/12'. It is not supported by proof of delivery. Interestingly, as per Ext.B4 opposite party contends to have informed the police station about the default committed by borrower and intention to repossess the security as early as 18-12-2007. But the actual borrower is seen informed as per Ext.B3 only on 10-01-2008. These discrepancies cast a shadow on the reliability of these documents. Complainant disputes these documents and has submitted that he has not received any notice intimating default. Further as per Ext.B2 account statement the 18^th instalment as on 05-01-2008 was collected by opposite party vide post dated cheque No.603386. After the default committed by the borrower in December, 2007 if opposite party was able to collect the next instalment then definitely the borrower has to be issued notice intimating default and intention to repossess security prior to repossession. In the absence of reliable evidence to prove that Ext.B3 notice was issued and served upon the complainant the mode of service adopted being private courier service and not by registered post, we are not inclined to accept the contention of opposite party that opposite party has issued Ext.B3 notice to the complainant prior to repossession. Repossession without prior notice intimating default, and alerting the borrower about the intention of repossessing the security, if he does not clear dues, is illegal repossession. We have to hold that the vehicle was illegally repossessed by opposite party Bank.

10. The next question that is to be considered is whether the sale of the vehicle was conducted after complying necessary procedural formalities. The documents relied by opposite party to contend that the sale was valid and proper are Ext.B5, B6 and B7. Ext.B5 is purported to be office copy of the presale notice issued to complainant after repossession of the vehicle, which is seen dated, as 24-01-2008. In this notice opposite party has demanded Rs.19,987/- towards full and final settlement of outstanding amount which is to be paid by the borrower along with overdue charges @ 24% per annum and also other contractual charges. The exact amount to be repaid by the borrower is not specifically stated. In Ext.B3 dated 10-01-2008 the amount demanded including all hidden calculations was Rs.16,987/-. Within 14 days, in Ext.B5 dated, 24-01-2008 opposite party has increased the amount payable by borrower as Rs.19,987/- with over due charges @ 24% per annum and other contractual charges. At the cost of repetition we have to say that as per Ext.B2 account statement as on 23-01-2008 the instalment overdue is only Rs.9,255/- and other overdue is Rs.2,362/-. We are amazed as to how a Bank registered under the Banking Regulation Act and functions under the control and supervision of Reserve Bank of India is able to issue notice to borrower with such false and hidden calculations. The Bank who deals with public money is under the bounden duty to inform the borrower the balance to be repaid with utmost accuracy to the last single paise. Demand of huge and baseless amounts in the notice so as to ward off the borrower from closing the loan and claiming return of the vehicle is definitely illegal and arbitrary action on the part of opposite party. In Ext.B5 the date of repossession of the vehicle is suppressed. There is no document produced on the side of opposite party to prove the date on which opposite party repossessed the vehicle.

11. Complainant has denied receiving Ext.B5 notice. Ext.B8 is the cover containing pre-sale notice send by registered post by opposite party to complainant on 24-01-2008 which was returned as 'not known'. The cover bears the correct address of the complainant, which would prove that Ext.B8 notice was issued to complainant. But in this pre sale notice (Ext.B5) opposite party has not stated the details of sale. No notice has been issued to the complainant informing him about the date, time venue of sale and the upset price fixed for the vehicle. It is highly necessary on the part of the Banker to inform these details of conduct of sale to the borrower. In case the sale does not fetch an amount so as to close th loan account, it is the borrower who will be called upon to make up the balance liability. So also if the sale proceeds fetch a value in excess of the amount to be repaid to the Bank then the excess of sale proceed has to be paid to the borrower by the Bank. The borrower will be interested to get the maximum price for the vehicle so that it will reduce his liability. So it is highly necessary that the vehicle has to be disposed of with notice and knowledge of the borrower. Opposite party contends that sale was conducted after publication. Nothing is produced before us to prove such publication. Opposite party has no case that any notice was issued to the complainant informing him about the details of sale. The sale conducted without complying necessary procedures is invalid and vitiated by lack of transparency. Relying upon Ext.B7 which is a valuation report prepared by a surveyor in which it is stated that the market value of the vehicle without its' documents is Rs.21,000/- opposite party contends to have sold the vehicle for Rs.25,000/- which according to opposite party was the best offered price. In Ext.B7 the surveyor has stated that the vehicle is in working condition. In Ext.B7 the surveyor has not noted any damage to the vehicle. Without any document to prove the actual consideration received the contention that vehicle was sold for Rs.25,000/- is unacceptable. All these lead to the only conclusion that opposite party has conducted the sale in a desultory manner. In a recent decision by the Apex Commission 2009 CTJ 992 (CP) NCDRC HDFC Bank Ltd Vs. Balwinder Singh, it was observed as under:

"Respondent not given notice before possessing the vehicle nor any notice before making it's sale. Entire process carried out in a perfunctory manner, rather in a high handed manner – such type of 'instant justice' not permitted in a civilised society having an effective rule of law. Petitioner's (Banks) entire action was arbitrary, illegal and criminal".

12. In the instant case, though opposite party contends that the vehicle was sold for Rs.25,000/- there is no document to support this. It is merely stated that after adjustment of sale proceeds Rs.5,013/- is payable to complainant. The account statement showing the adjustment or the details of such calculation are not furnished to the borrower till date and has not been placed before us. From the above discussions, and applying the law laid by the catena of cases we have no hesitation to conclude that the act of taking possession of the vehicle by opposite party and it's sale are both illegal. Demanding incorrect and fictitious amounts in notices issued to borrower is also short coming in the quality of the service rendered to the consumer. These acts of opposite party amount to deficiency in service. We find opposite party deficient in service.

13. Point (ii):-

The complainant claims for return of the vehicle or in the alternative for direction to pay Rs.65,000/- being value of vehicle. He prays for return of cheque leaves, for compensation of Rs.15,000/- towards deficiency and mental agony and costs of Rs.5,000/-.

14. The vehicle has already been sold and hence this prayer has become infructuous, as on the date of complaint itself. Admittedly the complainant had committed default in payment of instalments. The complaint was filed much after the alleged incident of repossession. It is stated by him that he offered to pay Rs.7,000/- after repossession and requested for return of vehicle. There is no case that he tendered payment by cheque or Demand Draft. Ext.A2 letter upon which the complainant placed reliance is admittedly not served on opposite party and the amount stated as offered in Ext.A2 is inconsistent with his pleading. It is not established that he tendered amount after repossession. For these reasons we hold that the claim for payment of value of vehicle is to be disregarded. In our opinion, the complainant has to be compensated for the deficiency and the mental agony suffered by him. Towards the loan of Rs.40,000/- as per Ext.B2 complainant has repaid Rs.26,648/- towards principal and Rs.6,415/- towards interest. Thus the total amount paid is Rs.33,063/-. Evidently he has repaid more than half of the loan. But the vehicle was illegally repossessed and sold by opposite party. In such circumstances an amount of Rs.7,000/- as compensation together with costs of Rs.1,000/- will be adequate relief to the complainant. In addition opposite party is liable to pay the admitted excess of sale proceeds being Rs.5,013/- with interest @ 9% from the date of sale (18-02-2008) till payment.

15. In the result we allow the complaint and order the following:-

(i) Opposite party shall pay to the complainant Rs.7,000/- (Rupees Seven thousand only) as compensation.

(ii) Opposite party shall also pay Rs.5,013/-(Rupees Five thousand and thirteen only) with interest @ 9% per annum from 18-02-2008 till payment.

(iii) Opposite party shall pay Rs.1,000/- (Rupees One thousand only) as costs of these proceedings.

(iv) Opposite party is restrained from using the remaining post dated cheques against the complainant in any manner.

(v) The time for compliance of this order is fixed as one month from the date of receipt of copy of this order.

Dated this 8th day of December, 2009.

 

Sd/-

C.S. SULEKHA BEEVI, PRESIDENT

Sd/-

MOHAMMED MUSTAFA KOOTHRADAN, Sd/-

MEMBER E. AYISHAKUTTY, MEMBER

APPENDIX

Witness examined on the side of the complainant : Nil

Documents marked on the side of the complainant : Ext.A1 and A2

Ext.A1 : Photo copy of the Brief Description of Vehicle

Ext.A2 : Photo copy of the letter dated, 29-02-2008 by complainant to opposite party.

Witness examined on the side of the opposite parties : Nil

Documents marked on the side of the opposite parties : Ext.B1 to B8

Ext.B1 : Photo copy of the Credit Facility Application Form with agreement

dated, 24-6-2006 submitted by complainant to opposite party.

Ext.B2 : Photo copy of the statement of account.

Ext.B3 : Photo copy of the Loan Recall Notice dated, 10-01-2008 from opposite party

to complainant.

Ext.B4 : Photo copy of the Information to the Police Station about possession

dated, 18-12-2007.

Ext.B5 : Photo copy of the pre sale notice dated, 24-01-2008 from opposite party

to complainant.

Ext.B6 : Photo copy of the post sale notice on loss (by regd. Post with A.D.)

from opposite party to complainant.

Ext.B7 : Photo copy of the Valuation Report by Ranjish Puthukudi, Insurance Surveyor.

Ext.B8 : Cover send by registered post dated, 24-01-2008 by opposite party to complainant.

Sd/-

C.S. SULEKHA BEEVI, PRESIDENT

Sd/-

MOHAMMED MUSTAFA KOOTHRADAN, Sd/-

MEMBER E. AYISHAKUTTY, MEMBER