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Consumer Forum cannot decide on issues covered by the Securitisation Act

By Adv. Jatin Ramaiya

Forums constituted under the Consumer Protection Act, have vast powers to decide on any dispute which arises between any consumer and service provider or seller of goods. Due to the informal, speedy, cost efficient disposal of cases more and more consumers are approaching the Forums. However, even powers of the Consumer Courts are fettered by special statutes such as the Securitisation Act enacted for curbing bank defaulters.

Widower Brijesh Mahabaleshwar Halankar, Vasco, complained against State Bank of India, SBI General Insurance and New India Assurance Company and alleged deficiency in service. Halankar and his wife had taken home loan of Rs 9.9 lakh from SBI and the loan was covered with Free Group Personal Accident Insurance. Halankar’s wife passed away in an accident.  Halankar in his complaint claimed that he wasn’t aware of the Free Group Personal Accident Insurance and none of the officers of SBI had informed him about the same.

Halankar further claimed that he began receiving notices under Securitization Act, from the bank demanding repayment of the loan. He said that, the loan ought to have been settled through said insurance cover but instead, the bank initiated proceedings under SARFAESI Act. The New India Assurance Company also rejected the claim raised by the bank on the ground that there was a delay of six years in raising the claim and the delay was on account of negligence on the part of the bank.

The Vasco resident claimed that due to the untimely death of his wife, he is not in position to pay the loan and such notices create more mental tension and therefore, he was entitled for a refund of Rs 7.54 lakh collected from him from June 2012 to September 2018 with interest and an amount of Rs 5 lakh as compensation towards mental trauma.

The bank and the insurance companies disputed any liability. New India Assurance Company pleaded that Halankar is not a consumer and the application for claim was received after six years after the cause of action and without showing any reason for the delay and stated that it was the duty of the bank to intimate the company in writing about the death giving all the particulars within 60 days from the date of death of loaner.

The bank pleaded that the complaint was not filed within two years from the time of deficiency and therefore is not maintainable. They said that, the complaint is an afterthought filed to avoid action under SARFAESI and the Forum has no jurisdiction to entertain the complaint.

The members of the Forum, dismissed the complaint holding that it did not have jurisdiction to decide the issue.  The members relying on the provision of Securitisation Act, observed that, the complaint has been filed about eight months after the bank invoked the provision of sub-section 2 of Section 13 of SARFAESI Act.  The Members further observed that the question pertaining whether Halankar is a defaulter or not and whether the bank can demanded payment under SARFASEI Act  are to be decided by the Debt Recovery Tribunals specially constituted for redressal of  loan disputes.

The Forum held “The Opposite Party No1 has already invoked powers under SARFAESI Act by issuing notice u/s 13(2). The complainant, therefore cannot now approach this Forum.”

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