In a significant decision, the Nagpur District Consumer Forum has asked State Bank of India (SBI) to pay compensation to a customer for sending loan recovery notice for a loan that was already repaid.
"This decision will have long lasting impact on banks for sending recovery notices even after loan was paid and paying no heed to requests of the consumers. The Consumer Forum found deficiency in service by SBI and directed bank to pay Rs5,000 towards mental harassment and Rs2,500 as litigation costs to the consumer," says Advocate Mahendra Limaye, who represented the customer.
The case relates with V Sahasrabuddhe had availed a loan of Rs1 lakh from SBI's Dharampeth branch in Nagpur. However, he could not repay the loan in time resulting in the loan being transferred in SBI's Stressed Assets Recovery (SAR) Branch. The SAR Branch offered one time settlement scheme to Sahasrabuddhe, which he accepted and in 2014 repaid his loan as per the formula decided by the Bank.
However, in 2015, the Bank's Dharampeth branch, from where he had availed the loan, sent him notice for recovery with a warning to initiate action against him under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act.
After receiving the notice, Sahasrabuddhe visited the Dharampeth branch of SBI and informed them about his loan settlement at SARB Branch. He also requested the Branch to issue a no dues certificate, which was declined by the Dharampeth branch.
Aggrieved by this act of bank Sahasrabuddhe then moved to the District Consumer Forum at Nagpur, which after properly hearing both the parties, held State Bank of India liable for deficiency in service rendered.
In its order, the Forum observed that even after the loan was paid in one branch, the demand for repayment by other branch amounts to deficiency in service. It held SBI liable to pay the costs for litigation and mental harassment.
Advocate Limaye represented Sahasrabuddhe while Adv Pande and Adv Bhopalkar represented SBI before the Consumer Forum.