NCDRC Dismisses Revision Petition By IndusInd Bank, Citing Violation Of RBI’s Code Of Bank’s Commitment To Customers

The Revision Petition was filed by the Bank against the West Bengal State Consumer Disputes Redressal Commission’s order which had upheld the Howrah District Consumer Disputes Redressal Commission’s order.

Brief Facts:

The Complainant was granted a loan of Rs 8 Lakhs by the Bank. However, he defaulted on paying the due instalments, leading the Bank to repossess and sell the vehicle. The vehicle was sold at Rs 5 Lakhs. However, no documents indicating the invoice of the vehicle paid by the Complainant, a valuation of the vehicle before selling it, or any records of the sale process itself were provided by the Bank. Due to the absence of these documents, the Complainant submitted that there is no certainty whether the selling price of the vehicle was reasonable or not.

The Bank argued that a letter was sent to the Complainant, stating an outstanding amount of Rs 3,56,004/- and their initiation of the arbitrator appointment process. However, no evidence was presented by the Bank whether an arbitrator was appointed and if any arbitration award was issued.

The Complaint was filed before the District Commission and appeal was preferred by the Bank in the State Commission against the order of District Commission which allowed the complaint. Both the State Commission and the District Commission had concurrent findings and stated that the Bank disregarded the guidelines set out in the RBI’s Code of Bank’s Commitment to Customers. The Code includes detailed instructions about notifying borrowers, repossessing collateral, valuing and selling assets, and providing the borrower a chance to reclaim their collateral.

Grounds for Challenge by the Bank:

The Bank challenged the State Commission’s order on the grounds that the complaint is not maintainable due to the presence of an arbitration clause in the agreement between the Complainant and the Bank. Further, it submitted that the State Commission failed to acknowledge that the complainant is a regular defaulter on loan payments, and the agreed-upon finance charges outlined in the first and second schedules of the Hire Purchase Agreement were not adhered to. Additionally, it argued that in case of delayed instalment payments, the interest rate outlined in clause 2.9 (e) and clause 15.1 would apply, including the interest deposit within the instalment. The borrower is obligated to make timely payments.

The Bank submitted that it followed the relevant regulations, instructions, and its policy terms. These terms are available as public documents, and it is assumed that the Complainant was aware of them. Lastly, it contended that the State Commission neglected to recognize that the complainant doesn't meet the criteria for a consumer. The Bank is authorized to take possession of assets in situations where borrowers default on their payments.

Observations of the Commission:

The NCDRC dismissed the Revision Petition and observed that the remedies available under the Consumer Protection Act are in addition to those under Special Statutes and an Arbitration clause does not exclude the jurisdiction of Consumer Commissions by placing reliance on Supreme Court decisions of Imperia Structures Ltd. vs. Anil Patni and Anr. and Emaar MGF Land Ltd. vs. Aftab Singh.

Further, the Commission placed reliance on the Supreme Court case of Rubi Chandra Dutta vs. United India Insurance Co. Ltd. and Sunil Kumar Maity vs. State Bank of India & Ors., wherein it was held that NCDRC’s revisional jurisdiction is limited and can only be exercised if there is a prima facie jurisdictional error evident in the order. The Commission noted that these powers should only be invoked when it is evident that the State Commission exceeded its jurisdiction, failed to exercise its correct jurisdiction, or acted with illegality or substantial irregularity in the exercise of its jurisdiction.

In conclusion, the NCDRC upheld the order of the State Commission, finding that the Bank failed to establish any illegality, material irregularity, or jurisdictional error in the State Commission's order. It held that both the State Commission and the District Commission are well-reasoned decisions. Moreover, the records indicated the Bank had sold the vehicle during the ongoing process, disregarding interim orders that favoured the Complainant.

Case Title: Manager, IndusInd Bank Ltd & Anr. vs. Sanjay Ghosh

Click Here To Read/Download Order