A city consumer commission has slapped a penalty of Rs 1 lakh on a private bank for forcibly taking possession of a hypothecated vehicle despite assuring the forum that it would not do so without following the proper course of law.
The Mumbai suburban district consumer forum also directed Kotak Mahindra Bank to hand over the vehicle to Smita Karvarkar after repairs.
In January 2008, the Goregaon resident had taken a loan of Rs 5.11 lakh from the bank to purchase a car. Karvakar said she had later taken a top-up loan of Rs11 lakh from the same bank. The vehicle loan was repaid using the top-up loan.
In April 2009, Karvakar approached the consumer forum alleging that the bank staff were harassing her despite repaying the vehicle loan. She alleged that they refused to grant her a No Objection Certificate (NOC) to sell the car.
The bank maintained that Karvakar had defaulted on several installments and that some of her cheques had been dishonoured. On June 26, 2009, the bank had made a statement before the forum that it would not take possession without following the proper legal procedure.
However, a month later, it did so. Karvarkar filed a plea seeking to initiate proceedings against the bank’s officials for contempt of court. The bank said they had taken possession through a receiver on interim orders issued by an arbitrator and sought dismissal of the plea.
However, a bench of forum president JL Deshpande and member Deepa Bidnurkar, found that a single judge of the Bombay high court had set the arbitrator’s order aside and that a division bench had upheld the high court’s order.
The forum also found that the bank had not disclosed that, a week prior to their assurance, that they had already issued an interim order for the appointment of a receiver.
The forum concluded that the bank’s action was illegal. It, however, declined to direct the bank to issue an NOC to Karvakar and also reduced her claim of compensation from Rs5 lakh to Rs1 lakh as she had not cleared legitimate dues of the bank.