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Two years ago, I took a loan from a bank and bought a car. The loan repayment period was five years and the certification of registration of the car showed that it was hypothecated to the bank. Meanwhile, two months ago, my car met with a serious accident and was severely damaged. I informed the insurance company of it and a surveyor was appointed to assess the damage. However, to my utter shock, the insurance company has paid the amount to the bank, which is refusing to pay for the repairs. What do I do? Send letters to both the bank and the insurance company, asking them to pay for the repairs. If they fail to that, you will have to lodge a complaint either with the insurance Ombudsman or the consumer court. Meanwhile, please check whether there is any clause in your insurance agreement saying that in case of any claim, the amount should be paid to the bank. If there is such a clause, you will have to argue that it is an unfair term.
The insurance company, however, handed over the entire amount, totalling Rs 4,18,500 to Tata Motors, and even argued in its revision petition before the National Consumer Disputes Redressal Commission that till the consumer repaid the loan, the financier was the owner of the vehicle and so the insurance company was bound to pay the financer in discharge of its liability under the hypothecation agreement. The National Commission in this case held that as per the Consumer Forum’s award, the insurer had to pay the complainant and he must abide by that order. (United India Insurance Company vs Md Abul Fazal Choudhary, RP No 911 of 2006). I have repaid the entire amount taken on my car loan, the bank has not terminated the hypothecation of the vehicle. This is the unfortunate part. Banks, which are so eager to take away your vehicle if you do not pay an EMI or two, do not bother to even send you a polite note thanking you for having made all the payment and informing you of the closure of the loan account. So you will have to take the initiative and complete the prescribed formalities to get the hypothecation terminated and removed from the certificate of registration. In addition to the note closing your loan account, you will need to get a “no- objection” certificate from the bank. Keep a copy for yourself and you will need one to be given to the Regional Transport Office, where you will have to fill Form 35, give that along with the “no-objection” certificate and a few other documents such as the original registration certificate, a copy of the insurance and a copy of the PUC (pollution under check) certificate. Once you submit these forms and take an acknowledgement, the RTO will let you know when you will get the RC without the hypothecation. The time taken varies from RTO to
RTO.
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Consumers beware!
In fact, I must recount a somewhat similar case decided by the consumer court some years ago. In this case, the consumer sought the help of the consumer court to get the insurer to pay for the repairs of his car, following an accident. On the basis of the surveyor’s estimate, the District Consumer Forum asked the insurance company to pay Rs 4,14,500 towards repairs. It also awarded Rs 3,000 as compensation and Rs 1,000 as costs to the consumer. 