Consumer Commission orders bank to pay compensation to retd army officer for mishandling loan account

The UT State Consumer Disputes Redressal Commission, Chandigarh, has found the Sector 47 branch of Canara Bank guilty of mishandling the car loan account of a retired army officer. The commission has ordered the bank to pay a compensation of Rs 96,000 to the complainant while observing that involving a veteran army officer in financial disputes is both unjust and distressing.

The commission has passed the order on an appeal filed by Lt Col (Retd) Vipin Bakshi through his advocate Pankaj Chandgothia. Lt Col Bakshi had taken a car loan of Rs 4.50 lakh, which was sanctioned by the bank. The loan had a tenure of 48 months, with an EMI of Rs 11,209, the first payment due on December 21, 2018. The advocate argued that the bank had obtained the complainant’s signature on the ECS mandate, which would have automatically deducted the monthly EMI payments. However, the bank failed to implement the ECS instructions, instead taking ad-hoc payments without consistency or explanation. As a result, the bank sent incorrect letters demanding arrears, which could have been avoided had the ECS mandate been processed correctly. This error also negatively impacted the complainant's CIBIL score.

In its response, the bank argued that the complainant was a defaulter and that all charges were properly debited. However, after reviewing the case, the commission found that the ECS mandate had been submitted by the complainant on November 21, 2018, but the bank did not process it until July 21, 2019. The commission concluded that the complainant should not be held responsible for the penalties arising from the bank’s delay in setting up the ECS facility. The bank's handling of the loan was found to be erroneous and in violation of banking standards.

As a result, the commission directed the bank to treat the loan account as closed and issue a No Dues Certificate. It also directed the bank to correct the complainant's CIBIL score, reverse all wrongful entries and return the cheques. Additionally, the bank was instructed to pay Rs 75,000 as compensation and Rs 21,000 for legal costs.

The commission noted, “A man who has selflessly served in the defence of our nation, facing immense challenges and making numerous sacrifices, is now, unfortunately, embroiled in a dispute with a financial institution over deficiency in service and unfair trade practice. This situation is not only distressing but also profoundly unjust, given the esteemed role the complainant has played in protecting the nation’s sovereignty and well-being.”