In July last year, in response to a complaint of illegal and forcible repossession of a car by a finance company, the apex consumer 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 apex consumer court had said.

It had also clarified that in cases where goods have been taken away or repossessed by force and without prior notice, the financial company loses the right to demand unpaid amounts from the consumer. In addition, the consumer 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, repossessed the car of the consumer and sold it (Citicorp Maruti Finance Ltd vs S.Vijaylaxmi, RP No. 737 of 2005, decided on July 27, 2007).

Now in another case of forcible repossession, 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 a consumer 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 body builder in completing the work and this resulted in his defaulting on three installments. The finance company, however, demanded six installments 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 throw-away price and refunded only Rs 26,190.

Financially ruined and devoid of his means of livelihood, he sought the help of the consumer court (Goa State Commission), which took into consideration that he had spent Rs 7,55,854 on building a luxury bus and directed the finance company to pay the amount along with 15 per cent interest. Condemning the behaviour of the company, it also awarded exemplary damages of Rs 50,000.This was upheld by the apex consumer court (Tata Finance Ltd vs Francis Soeiro, FA No. 720 of 2003, decided on February 22, 2008).