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IN recent years there have been a number of cases of finance companies harassing consumers for failing to pay one or two instalments of the loan or forcibly, and without notice, taking re-possession of vehicles. There have also been incidents where consumers have been bashed up by recovery agents of finance companies. In one particular case in Hyderabad, the victim died. In another case in Bangalore, the victim was admitted to hospital with severe head injuries. There have also been cases of consumers committing suicide, unable to take the harassment and humiliation inflicted on them by banks. In September last year, a Mumbai resident committed suicide after being hounded by recovery agents. All this finally forced the government and the banking regulator to issue a stern warning against use of force by recovery agents. But two orders of the apex consumer court, forcing the financial institutions to pay a steep penalty for such acts, should go a long way in protecting the interests of consumers. Last July, for example, in response to a complaint of illegal and forcible repossession of a car by a finance company, the apex court made it clear that financial institutions that repossess goods by force and without notice have to pay compensation to the consumers. The amount of compensation would depend on the facts and circumstances of each case, but they have to pay for their unlawful acts, the court had said. It had also clarified that in cases where goods have been taken away or re-possessed by force and without prior notice, the financial company loses the right to demand from the consumer unpaid amounts. In addition, the client has to be paid the market value of the recovered goods and even compensation for the harassment and humiliation undergone. In this particular case, the finance company had forcibly and without notice re-possessed the car of the consumer and sold it. Now in another case of forcible re-possession, it has reiterated these points and also imposed exemplary damages on the finance company, thereby sending a message to all financial institutions that it would not condone such high-handed and unlawful behaviour. This case has its origin in the chassis purchased by an individual on hire-purchase. The consumer, who wanted to run a luxury passenger bus to earn his livelihood, spent considerable amount of money on building the bus. However, there was an inordinate delay on the part of the bodybuilder in completing the work and this resulted in his defaulting on three instalments. The finance company, however, put up a demand for six instalments and forcibly took away his bus. By then he had barely run it for two months. Even as he pleaded with the finance company to return the bus, the company sold it to a third party at a throwaway price and refunded only Rs 26,190. Financially ruined and devoid of his means of livelihood, the client filed a complaint before the state commission, seeking justice. His allegation was that on a loan of Rs 3 lakh, he had already paid Rs 3,55,500. The finance company was negligent in that it did not take into consideration some of the payments made by him and proceeded under the false impression that he had defaulted in payment of six instalments. In any case they had not given any notice prior for re-possession. In the end, taking into consideration the fact that the consumer had spent Rs 7,55,854 on building a luxury bus, the state commission directed the finance company to pay the amount along with interest calculated at the rate of 15 per cent. Coming down heavily on the company for its behaviour, it also directed the firm to pay exemplary costs of Rs 50,000. The apex court, before which the finance company filed an appeal, upheld the order of the state commission and said that in the circumstances of the case, the order of the lower court directing the finance company to refund the loss suffered by the consumer was in no way illegal or erroneous. Observing that this case illustrated how a financial company could ruin a person who takes a loan, the commission commented: " By such an act of the appellant (by illegally seizing the vehicle and selling it at an unjustifiably low price), a poor man who had taken a loan for purchase of the chassis and for building the body of the vehicle has lost his life’s savings and is made a debtor. His dream of having a vehicle for self-employment has been frustrated for years together".
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