Complaint filed on:19-08-2023.

                                                      Disposed on:08-01-2024

BEFORE THE DISTRICT CONSUMER DISPUTES

REDRESSAL COMMISSION, TUMAKURU

DATED THIS THE 8^th  DAY OF JANUARY, 2024

PRESENT

SMT.G.T.VIJAYALAKSHMI, B.Com., LLM., PRESIDENT

SRI.KUMARA.N, B.Sc. (Agri), LLB., MBA., MEMBER

SMT.NIVEDITA RAVISH, B.A., LLB. (Spl)., LADY MEMBER

CC.No.115/2023

Sri. Vinay S/o Nanjappa,

Aged about 29 years,

R/o Seebaiahna Palya Village,

Unjanal Post, Kallambella Hobli,

Sira Taluk, Tumakuru District.

Karnataka.

……………….Complainant/s

(By Sri.L.Shanmukha, Advocate)

                                                V/s

1.       The Manager,

          Karnataka Finance and Investment,

          Near Chamundeshwari Temple,

          Barline Road, Tumakuru.

2.       The Manager,

          Karnataka Finance and Investments,

          No.728, Ramaiah Complex,

          II Floor, T Dasarahalli, Jalahalli Cross,

          Bengaluru – 560057.

……………….Opposite Party/s

(By Sri.Shivakumar – Advocate for OP Nos.1 and 2)

: O R D E R :

BY SRI.KUMARA.N., MEMBER

This Complaint is filed by the complainant to directed the OP to receive the balance installment of Rs.64,500/- from the complainant and further prayed to direct the OP No.2 to release the vehicle which is in the custody of the OP and award compensation amount of Rs.1,50,000/- to the complainant for the deficiency of service done by the Opposite Party.

2.       In this case, the Opposite Parties are the Manager, Karnataka Finance and Investments, Near Chamundeshwari Temple, Barline Road, Tumakuru (hereinafter called as OP1) and the Opposite Party No.2 is the Manager, Karnataka Finance and Investments, No.728, Ramaiah Complex, II Floor, T.Dasarahalli, Jalahalli Cross, Bengaluru - 560057 (hereinafter called as OP No.2).

3.        It is the case of the complaint that the complainant was the customer of OP. On 23-02-2022, the complainant obtained vehicle loan of Rs.8,00,000/- from the OP which is to be repaid in 36 installments from 20-03-2022 to 20-02-2025 at the rate of Rs.32,250-00 per month (monthly EMI). The complainant being the owner of Tata Motors, model LPT 1109/42EX truck bearing registration No.KA-04-AB-5369, the vehicle documents were pledged with the OP, while taking vehicle loan. The complainant further submitted that at the time of documentation, the OP has taken blank cheques from the complainant; still those cheques are in the custody of the OP/s. The complainant regularly paid the loan installment from 23-02-2022 to 12-07-2023 and  due to some financial problems, the complainant unable to pay two installments; the OP on 12-07-2023 seized the vehicle at Gulbarga without giving any notice and still the vehicle is in the custody of the OP. The complainant requested the OP/s to release the vehicle, so that he will repay the amount regularly and the complainant issued legal notice on 14-07-2023, in-turn the OP/s on 25-07-2023 given reply. The OP/s harassed the complainant by seizing the vehicle without giving notices, which causes damages to the complainant and mental agony. This acts of OP amounts to deficiency on part of OP, hence, this complaint.

7.       The points that would arise for our consideration are:-

1. Whether the complainant proves the negligence/deficiency in service on the part of OP?

2. Whether the complainant proves that the OPs violated RBI guidelines?

3. Is complainant entitled to the reliefs sought for?

Point No.1 & 2: Partly in the affirmative

Point No.3: As per below order

:R E A S O N S:

Point Nos.(1) to (3):-

9. The complainant counsel argued that, the complainant being a customer of the OPs obtained the vehicle loan of Rs 800000.00 from the OPs by executing agreement and the vehicle documents pledged. The complainant is earning his livelihood from the vehicle and paid the EMIs regularly from 23-02-2022 to 12-07-2023. The complainant due to personal financial problems not paid two installments and according to the OPs letter the complainant paid Rs 398750.00 against the total EMIs of 516000.00 and the complainant was due to the OPs for Rs 117250.00. The OPs on 12-07-2023 at Gulbarga seized the vehicle without any notices and the informations, which is against to the RBI guidelines. Inspite of it, the complainant on 13^th 07-2023 paid Rs 35000.00 to the OPs and requested the OPs to release the vehicle, but OPs refused. On 28-08-2023 the OPs initiated the vehicle auction process, which is against the law and this act of OPs made the complainant to suffer and affected his earnings of livelihood, hence the complainant prayed to allow the complaint and award compensation. The complainant produced documents, Ex C1, copy of the document related to the vehicle, Ex C2, copy of the statement send by the OPs, ExC3, copy of legal notice dated 14-07-2023, Ex C 4 to Ex C6, postal receipts / postal acknowledgements, Ex C7, copy of the OPs reply notice dated 25-07-2023, Ex C8 copy of RPAD, Ex C9 to Ex C 10, copy of OPs receipts.

10.        The OPs counsel argued that, the complainant obtained vehicle loan of Rs 800000.00 from the OPs on 23-02-2022 which is to be repaid in 36 installments from 20-03-2023 to 20-02-2025.The complainant become defaulter in paying the EMIs inspite of the several notices and reminders, as per the terms & conditions in agreement entered between the complainant & the OPs, on 12-07-2023 said vehicle seized and initiated auction process by sending sale reminder notice dated 28-08-2023. The complainant is due to the OPs as on 16-10-2023, for Rs.2,14,000-00. The OPs counsel prayed to dismiss the complaint and produced documents, Ex OP 1, copy of the letter of authorization, Ex OP 2, copy of OPs reply notice dated 20-07-2023, Ex OP 3, copy of legal notice dated 14-07-2023,Ex OP 04, copy of statements showing EMIs paid by the complainant, Ex OP 5, copy of OPs authorization letter from Hinduja Leyland Finance, Ex OP6 copy of OPs ledger, Ex OP 7copy of Sale reminder letter dated 25-08-2023, and Ex OP 8letter of authorization.

11. Honorable Patna High Court in the case of Dhananjay Seth v. Union of India, 2023 SCC OnLine Pat 1393, decided on 19-5-2023,by relied on ICICI Bank Ltd. v. Prakash Kaur, (2007) 2 SCC 711, wherein the Bank had recovered possession of the vehicles forcible and therefore, the Supreme Court directed the Bank to hand over the vehicles to the respective people from which they were recovered and held that “in case of default in payment of subsequent installments, the Bank would be entitled to repossess the vehicle in accordance with law”. The Court referred to Magma Fincorp Ltd. v. Rajesh Kumar Tiwari, (2020) 10 SCC 399, wherein the Supreme Court had “banned taking over possession by recourse to physical violence, assault and/or criminal intimidation. It also completely banned taking such possession by engaging gangsters, goons, and musclemen as so-called recovery agents” and opinioned that, Banks, Financial Institutions using recovery agents to forcibly seize vehicles over non-payment of loan is illegal.
12.     The RBI issued a notification on August 12, 2022 on Outsourcing of Financial Services – Responsibilities of regulated entities employing Recovery Agents and the following action of the recovery agents was highlighted to be discouraged:

• humiliate publicly,
• intrude upon the privacy of the debtors’ family members, referees and friends,

• sending inappropriate messages either on mobile or through social media,

• Making threatening and/ or anonymous calls, persistently/repeatedly calling the borrower and/ or calling the borrower before 8:00 a.m. and after 7:00 p.m. for recovery of overdue loans etc.

The RBI Guidelines on Fair Practices Code for Lenders dated 5.5.2003 provides at (v)(c) that: "In the matter of recovery of loans, the lenders should not resort to undue harassment viz. persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans, etc."

13.     In the above discussions, it’s clear that the complainant being a customer of the OPs obtained vehicle loan of Rs 800000.00 from the OPs. The complainant submitted that, the complainant paid the EMIs regularly from 23-02-2022 to 12-07-2023 and due to personal financial problems, the complainant not paid two installments and according to the OPs letter (Ex C2) the complainant paid Rs 398750.00 against the total EMIs of 516000.00 and the complainant was due to the OPs for Rs 117250.00. The allegation of the complainant, that the OPs on 12-07-2023 at Gulbarga seized the vehicle without any notices and the informations, which is against the RBI guidelines, against that, the OPs defence of several notices served to the complainant in this regard, not considered, because the OPs not produced any evidence of such notices served to the complainant. The complainant even after the vehicle seized on 12-07-2023 by the OPs, the complainant on 13-07-2023 paid Rs 35000.00 (Ex OP4) to the OPs inspite of it the OPs not reacted. The OPs issued sale reminder notice dated 28-08-2023 (Ex OP 7), i.e. after the vehicle seized on 12-07-2023 without following RBI guidelines so that the complainant lost the opportunity to repay the loan to the OPs. The OPs violated the RBI guidelines and by considering Honorable National Consumer Disputes Redressal Commission (NCDRC) in the case of Manager, IndusInd Bank Ltd. v. Abani Kanta Das, (2021 SCC OnLine NCDRC 14) decided on 11-01-2021.held that, Law is settled that illegal and forceful means cannot be adopted by Banks to seize any property, due notice had to be given for seizure of the vehicle and following the established procedure the vehicle could be seized and later auctioned. Even though the agreement entered between the complainant and the OPs accepted the conditions in the agreement that, we are aware and agree that the company shall further repossess the assets / vehicles In case of default, without notices and I / we agree to surrender the asset / vehicle in case of default, and in para 2.9 (d) of the agreement stated that, No notices, reminder or intimation will be given to the borrower regarding the obligation to pay the installment regularly on due date. It shall entirely be the responsibility of the Borrower to ensure prompt and regular payment of the installment,  but the OPs being a NBFC, should follow the RBI guidelines, but in this case the OPs seized the complainant vehicle without any notices and intimation to the complainant leads to the deficiency in service and unfair trade practice of the OPs. From March 2022 to July 2023 as per the agreement, the complainant has to pay Rs.5,48,250/-(Ex.OP4) in 17 EMIs of Rs.32,250/- Per Month, but the complainant had paid Rs.4,33,500/- which due of Rs.1,14,750/-.  Hence the OPs are not liable to pay compensation. The OP compelled the complainant to approach this commission even though violated RBI guidelines and seized the complainant’s vehicle, as a result the OP is liable to pay the litigation cost of Rs.6,000/- to the complainant. The OPs are directed to collect outstanding of Rs.1,14,750.00 from the complainant and release the vehicle in good condition to the complainant and hence force follow the RBI guidelines, accordingly, we proceed to pass the following;

The complaint is allowed in part with litigation cost of Rs.6,000-00.

The OPs are jointly and severally directedrelease the vehicle in good condition to the complainant by collecting due of Rs 1,14,750.00 (from March-2002 to July 2023) from the complainant and the OP is having liberty to collect the interest and other charges as per the agreement entered between the complainant and the OPs.

The OPs are jointly and severally directed to comply the above order within 45 days of this order, otherwise it carry fine of Rs.200=00 per day from the date of receipt / knowledge of this order to till realization.