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Banks and other financial institutions that flout the law of the land have to pay for the consequences. This is the unambiguous message that comes from the apex consumer court in its order condemning forcible recovery of financed goods, including vehicles. In a 51-page order that looks at the issue in detail, the apex court has made it clear that financial institutions that re-possess goods by force and without notice have to pay "reasonable damages" to consumers, depending on the facts of the case. In this case, it has asked the financial company to pay the consumer Rs 1,50,000 along with interest at the rate of 9 per cent calculated from the date of filing the complaint till the date of payment, for forcibly taking away the consumer’s car.In addition, it has awarded Rs 5,000 as compensation and Rs 10,000 as costs. The order has its origin in the complaint filed by Ms S.Vijayalaxmi, a resident of Delhi, against Citicorp Maruti Finance Ltd. According to her, she bought a Maruti Omni after taking a loan of Rs 1,82,396. As repayment, she was to pay a sum of Rs 2,71,636 in 60 equal monthly instalments of Rs 4,604 each. From May, 2000, to January, 2003, she paid the instalments without fail, but in January, 2003, her husband met with an accident and she was unable to pay some instalments. Following this, she requested the officials of the bank for a one-time settlement and the bank agreed to settle for Rs 60,000. However, on May 29, two persons went to her house, forcibly took possession of the car and asked Vijayalaxmi and her husband to accompany them to the finance company. They were apparently followed by five people in a van, and when they reached R.K.Puram, they asked Vijayalaxmi to get down and said they would take the van along with her husband and would send him back after he deposited the money. It’s not clear (from the reading of the order) what happened after that, except that the van was forcibly taken away. Despite the couple’s visits to the company, requesting it to accept Rs 60,000 and release the car, the finance company sold the vehicle for Rs 70,000 and informed Ms Vijayalaxmi that she had to pay the remaining amount of Rs 51,000 due from her. The couple then filed a complaint before the court at the district level, seeking return of the car or its current market value, estimated at Rs 1.5 lakh, and Rs 1 lakh towards compensation for mental harassment and agony. The district forum awarded Rs 1.5 lakh with 9 per cent interest and Rs 5,000 towards compensation. The State Consumer Disputes Redressal Commission, before which the finance company filed an appeal, not only dismissed it but came down heavily on the finance company for trying to ‘’settle civil disputes through criminal force on the street." It also imposed punitive damages of Rs 50,000. In its revision petition filed before the National Consumer Disputes Redressal Commission, the finance company argued that the financier had legal rights to repossess the hypothecated goods without the intervention of the court. It was by virtue of the agreement signed between the parties. Dismissing these arguments, the court said the agreement may give the financier the right to re-possess goods but it did not give him the right to use force or unlawful means to possess it. Such unlawful and unethical procedure would be against public policy and public interest, the court said, and added that lawlessness could not be encouraged on the alleged ground that recovery of money through litigation was a slow process or in some cases, ineffective. In the end, it upheld the order of the district forum but set aside that of the state commission imposing punitive damages, on the ground that it was not necessary. However, it made it clear that the finance company would not be entitled to recover any amount from the complainant on the ground that some amount remained unpaid on their books of accounts.
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