Order Date: 4th November 2024
Order Name: Sher Singh vs Kotak Mahindra Bank Ltd.
Case No.: Revision Petition No. 895 of 2019
The National Consumer Disputes Redressal Commission (NCDRC) in New Delhi, led by Dr. Inder Jit Singh, recently ruled against Kotak Mahindra Bank Ltd. for poor service. The bank was found to have wrongfully repossessed a vehicle secured under a loan agreement without issuing a prior notice or providing the borrower a chance to clear his dues. The vehicle was subsequently sold at a price lower than its value.
Background of the Case:
Sher Singh, the complainant, had taken a loan of Rs. 16,55,000 from Kotak Mahindra Bank to finance his heavy goods vehicle. The loan had to be repaid over 47 months with monthly installments of Rs. 45,600. Singh missed the September installment due to mechanical issues with the vehicle but later paid it. In October and November, he again missed the full payments but requested more time, which the bank granted. He eventually paid the dues for both months.
Despite this, just two days after the payments, bank employees forcefully repossessed Singh’s vehicle in Haidargarh, U.P., and later sold it. Singh’s attempt to retrieve his vehicle through a civil suit failed since the sale had already occurred. Feeling wronged, Singh approached the District Consumer Disputes Redressal Commission in New Delhi, which ruled in his favor. The bank was ordered to compensate him with Rs. 10 Lakh and Rs. 50,000 for legal expenses. Unsatisfied, the bank appealed to the State Consumer Disputes Redressal Commission, which reduced the compensation to Rs. 5 Lakh.
Both Singh and the bank then approached the NCDRC with revision petitions—Singh for higher compensation and the bank to overturn the previous rulings.
NCDRC’s Findings:
The NCDRC noted that the vehicle was taken by force, countering the bank’s claim that Singh had voluntarily surrendered it. The commission highlighted that the bank did not issue a repossession notice or offer Singh a chance to settle his dues. The NCDRC referred to precedents like the case of Manager, ICICI Bank Ltd. v. Prakash Kaur, which emphasized that repossessions must be lawful and non-forceful.
The NCDRC also observed that the bank failed to provide evidence that Singh was informed before the repossession or given an opportunity to settle his payments. The commission upheld the State Commission’s ruling, confirming that the bank’s actions constituted a deficiency in service, affecting Singh’s livelihood, especially since the vehicle was sold hastily for only Rs. 12 Lakh.
In the case of Ruby (Chandra) Dutta v. United India Insurance Co. Ltd., the NCDRC stated that revisional interference is necessary only when there are significant legal or procedural errors. Since both the District and State Commissions provided sound judgments without such errors, the NCDRC dismissed both revision petitions.
Takeaway:
This case underscores the importance of banks adhering to legal procedures for repossession. They must provide proper notice and opportunities to borrowers to settle dues before taking drastic actions like repossession and sale. Borrowers should be aware of their rights and ensure that banks follow due process.
