Per Shri Narendra Kawde, Hon’ble Member
Appeal No.646/2010 filed by org. complainant-Mr.Prashant Vilas Patil for enhancement of compensation and appeal No.577/2010 filed by org. opponent No.2-Kotak Mahindra Bank Ltd. taking strong exception to the impugned order/judgement passed by the District Forum, Sangli. Both these appeals are directed against the order dated 09/04/2010 passed in consumer complaint No.03/2009 (Prashant Vilas Patil V/s. Shri Balasaheb Bhimrao Patil & Ors.) by District Forum, Sangli. District Forum while allowing the consumer complaint directed the org. opponent No.1 to pay an amount of `5,000/- and org. opponent No.2 was directed to pay `1 Lakh as compensation together with cost of litigation of `3,000/- within period of thirty days, failing which said amount would carry interest @ 12% p.a. Further, the org. opponent No.2 was also directed to pay `45,000/- together with interest @ 19% p.a. from 01/11/2008 to the org. complainant. Both these appeals were clubbed together and heard simultaneously and are disposed of by this common order.
2. Heard Learned Advocates of the parties. Perused the record.
In Appeal No.646/2010 it is the case of org. complainant/appellant (hereinafter referred to as ‘complainant’ for brevity) that District Forum while passing the impugned order did not consider the prayers in the consumer complaint fully and prayed for direction of payment of `5,53,500/- together with interest @ 19% p.a. as compensation and costs of `15,000/- and further prayed for issuance of receipt for the amount paid by him while purchasing Tractor.
3. The complainant has admittedly availed loan of `3,71,000/- for purchase of Tractor from org. opponent No.2-Kotak Mahindra Bank Ltd. i.e. appellant in Appeal No.577/2010 (hereinafter referred to as ‘Bank’ for brevity). The transaction was materialized through Authorised Agent of the Tractor Company, namely Mr.Balasaheb Bhimrao Patil-org. opponent No.1 in the consumer complaint. As per the agreed scheme of repayment of loan, complainant was to repay the loan by making half-yearly E.M.I. payment of `50,000/- and first such E.M.I. of `50,000/- was due on 26/06/2008 which the complainant failed to make payment on time and said E.M.I. of `50,000/- was paid only on 26/09/2008 and defaulted to make payment of `9,612/- on account of delayed interest on the said E.M.I. Since the delayed interest payment of `9,612/- was not paid at the time of rendering payment of first E.M.I., the Bank presumed that the complainant was incapable of making E.M.Is. on time and initiated proceeding by issuing legal notice for settlement of balance payment of `9,612/- within a period of three days. Such notice was issued by the Bank on 07/10/2008 and on failure to do so by the complainant, another notice dated 03/11/2008 recalling the entire loan amount of `4,23,318.10 together with interest was issued. This notice highlights the details of Overdue Installments of Loan of `69,224/-, Principal Outstanding of `3,19,569.91, Repossession Charges of `10,000/-, any Other Charges `10,143.35 and finally, Foreclosure Charges of `14,380.64. The Bank, not only issued this notice, but also took over possession of said hypothecated Tractor in the month of November 2008. It is pleaded by the Bank that repossession letter in respect of said hypothecated Tractor was given by the complainant himself. However, it is disputed by the complainant. The Bank did not adduce any documentary evidence to establish bonafides of this disputed repossession letter. Therefore, contention of the Bank is not sustainable especially when forcible action of taking over possession of the Tractor was challenged by the complainant by filing police complaint and also a court case.
4. Said Tractor was subsequently sold by an agreement dated 01/01/2009 by the Bank for a sum of `3,10,000/- and as per the scheme of said agreement, the Bank was to hand over actual possession of the Tractor on completion of sale procedure. This agreement was entered into between the prospective buyer and the Bank on 01/01/2009. There is also no valid ground as to how it was presumed by the Bank to declare the loan advanced as ‘non-performing assets’ merely on the basis of delayed payment of minor amount of `9,612/- especially when the first E.M.I. of `50,000/- was happily accepted by the Bank as repayment of loan amount. Second E.M.I. was due in the month of December 2008 and without waiting for receipt of balance payment of `9,612/- as delayed interest on the first E.M.I., the Bank has initiated the proceeding to recall the entire loan together with interest along with repossession and foreclosure charges as detailed in the repossession notice dated 03/11/2008. Ironically, when the first E.M.I. of `50,000/- was paid and adjusted in the loan account of the complainant, the Bank issued notice of repossession putting demand of `69,224/- as overdue installment of E.M.I. No explanation has come forward from the Bank as to how the amount of `69,224/- was due for payment as E.M.I. prior to December 2008, especially on the background when the first E.M.I. of `50,000/- (excluding delayed interest) was paid and accepted by the Bank and duly adjusted in the loan account of the complainant.
5. In Appeal No.577/2010 the appellant/Bank has come out with the ground that the opportunity was extended to the complainant to settle the loan amount. However, as averred the complainant miserably failed to make regular payment of first E.M.I. together with interest `9,612/- within period of three days Learned Advocate for the Bank tried to justify invoking provisions of loan agreement Para 5.2. The notice purportedly issued under this loan agreement provides for taking steps by the borrower to settle the loan within period of three days. It is the case of the complainant that alleged notice recalling the entire loan amount was not received by him. Receipt of earlier notice has been referred to by the complainant and he was prepared to make payment of delayed interest of `9,612/- on first E.M.I. However, no opportunity was extended by the Bank to settle this loan amount.
6. We observe that Bank without extending the adequate opportunity to the complainant/borrower to settle the sum of `9,612/- as interest, doubted the bonafides about financial capacity of the complainant/borrower to make regular payment of E.M.I. against the loan. The process of recovery of loan by issuing notice, in strict sense, cannot be construed under provisions of the Loan Agreement clause No.5.2. Notice is defective as calling for E.M.I. of `69,224/- which was actually the second E.M.I. and was due in December 2008. The scheme of agreement does not provide for calling for recovery of E.M.I. due in advance. Therefore, action on the part of the Bank for recalling of entire loan amount is inconsistent with the provisions of agreement of loan entered into between the parties and therefore, this action is prima-facie arbitrary.
7. After seizing and taking over the hypothecated Tractor from the complainant, the Bank sold the Tractor at the costs of `3,10,000/- by inviting bids as stated in the appeal memo. However, it is not clarified whether it was a Public Auction inviting bids and whether the appropriate procedure laid down under the provisions of the Securitisation In absence of any documentary evidence to this effect it is inferred that no such procedure has been followed by the Bank prior to selling of the property by issuing notice to the complainant of such intended sale. There is no sufficient justification on record for action of the Bank to impound and repossess the Tractor and putting it to sell for recovery of loan advanced to the complainant. The role of org. opponent No.1-Mr.Balasaheb Bhimrao Patil as an Authorised Agent of the Automobile Company was to facilitate sale of tractor. No appropriate and required steps were taken by org. opponent no.1 before reporting the financial status of the complainant. Therefore, submission of Learned Advocate for the complainant that the Bank has arbitrarily invoked provisions of the loan agreement is sustainable in view of aforesaid observations.
8. We do not find any merit in the appeal No.577/2010 filed by the Bank as there is total arbitrariness in recalling the loan advanced without following the provisions laid down in the loan agreement and selling the Tractor. Therefore, this appeal No.577/2010 deserves to be dismissed.
9. As regards appeal No.646/22010 filed by the complainant is concerned, prayer of the complainant in the complaint is for awarding compensation of `1,25,000/- with interest @ 18% and release of Tractor in his favour and `1,000/- per day as compensation till the impounded Tractor is restored to his possession. In the appeal, complainant prayed for compensation of `5,53,500/- as the impounded Tractor has been sold out by the Bank though purchase price was `5,71,000/-. The Bank has obtained security for the amount of `6,51,000/- from the complainant for advancing loan of `3,71,000/- i.e. over and above the purchase cost of the Tractor. The Bank has sold the impounded Tractor according to them to the highest quotation for `3,10,000/-. The complainant has paid first E.M.I. of `50,000/- against the loan advanced by the Bank. The Bank thus, recovered `3,10,000/- from sale proceeds of the Tractor and `50,000/- by way of first E.M.I. totalling into `3,60,000/-. Prayer for awarding compensation on daily basis from the date of repossession by the Bank till realization is not tenable as it will amount to compensate business loss. However, it is open for the complainant to take up this matter in appropriate Court for alleged omissions and commission of the Bank in attaching and selling of Tractor without following procedure. District Forum has considered the consumer complaint and allowed on certain terms. We therefore do not want to disturb the findings of District Forum. We hold accordingly and pass the following order :-
-: ORDER :-
1. Appeal No.577/2010 and Appeal No.646/2010 stands dismissed.
2. In the circumstances, both parties to bear their own costs.
3. Copies of the order be furnished to the parties.
Pronounced
Dated 24th January 2013.
