K. Vijaya Bhaskara Reddy

Prior notice to the owner in case of repossession of assets mandatory

HYDERABAD: The State Consumer Disputes Redressal Commission in its recent verdict ruled that banks cannot repossess the vehicles or assets without prior notice even if they were bought under Hire Purchase Agreement (HPA). In a case of violation, it ordered ICICI Bank to return the payment made by the customer until the date of repossession.

K. Veeranjaneyulu, a resident of Pedakakani, Guntur district, bought a bike from a dealer in Guntur in 2003. He had paid Rs. 14,860 towards down payment and got a loan for rest of the amount from Tata Finance Ltd. (TFL). Entering into a HPA, he had given 17 post-dated cheques of Canara Bank to TFL. In April 2004, the company informed him that it had transferred its loan transactions to ICICI Bank, Ring Road branch, Vijayawada, and asked him to pay the remaining amount to the latter. In September 2003, all of the sudden, the bank repossessed his bike forcibly without issuing any prior notice. The bank letter (October 4) stated that he could redeem the bike only after paying Rs. 29,739 within a week.

Upon checking the bank statement, the consumer found that TFL encashed last three cheques on December 15, almost one month after repossession of the bike by ICICI. Immediately he filed a case in the Guntur District Forum asking for a directive to ICICI, TFL and the dealer to pay him Rs.35, 000 for loss of vehicle, Rs.1, 00,000 towards mental agony, financial loss and loss of reputation and Rs.2, 000 for court costs.

‘Return payment’

ICICI argued that the consumer failed to pay the loan amount and it had all rights to reclaim and sell the bike to the highest bidder. TFL said that the forum had no jurisdiction on the issue and asked for the dismissal of the case. In its verdict, the district forum ordered the bank to return Rs. 33,040, the payment made by the consumer, with an interest rate of nine per cent per annum from the date of complaint to date of realisation, along with court costs Rs. 1,200.

The ICICI Bank challenged the verdict in State Commission saying that the district forum did not appreciate the terms and conditions of HPA properly. The commission, citing the encashment of cheques by TFL and non-issuance of prior notice, upheld the district forum’s verdict and asked to pay the money with in one month.