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Case Study: Unequally Yoked

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Raghav Jaikar stood by a side inside the Siddhivinayak temple. This was his wife Raksha’s bappa. Today there were tears in his eyes as he spoke to the deity, “Did we do any wrong to you? Then forgive me... But what face will you show Raksha? You have broken her faith more than anyone else...”

Broken, Raghav came out and met Taufiq Ali, his master cutter, who was waiting on his bike. “Let’s go,” he urged. “Joshi sahib will be waiting.”

Recap: Last year, Raghav, through his friend Vinayak, had gone to the car dealer Peacock, and its resident car loan man, Hiren Dholakia, from Ambara Finance. Raghav and Raksha, tailors by profession, needed a car to help them with their work as they transported a lot of fabric and made-ups. So Raghav bought a Maruti car with a loan of Rs 3 lakh from Ambara. According to the terms of agreement, Raghav made the downpayment of Rs 1,20,600 in three instalments. The loan itself he would pay in 36 EMIs of Rs 10,800 each.

Raghav paid his EMIs religiously. Out of the 36 instalments, 17 were paid when Raghav defaulted on the 18th. By a day.


A week ago, Ambara’s people stopped Raghav on the road, forced him out of the car and drove it away. The simple folk that they were, Raghav and Raksha were greatly agitated. Their simple lives focused on the children’s schooling, and on their parents’ wellbeing. They made offerings to ‘Mumbaicha Raja’ (Ganesha) and visited Pandharpur every year. They did not have friends; they had neighbours. And they all lived in ‘accepting’ co-existence. Into that kind of life came this malevolent storm.

Eighteen months ago, Dholakia had walked into their home without any intimation, and compelled them to sign an agreement that Raghav had not read, nor could read. He sought a day’s time so his nephew could read and explain it. But Dholakia was in a hurry. He had taken Raghav’s signature on a blank agreement with no amounts or names filled. The manner in which he had arrived without intimating and showed a stern side that was different from his erstwhile sales face, had bullied Raghav into submission.

On that occasion, Dholakia also took 36 post-dated cheques from Raghav for the EMIs. Cheques that were blank as to the name of the payee. These cheques were security, he had said, but Raghav must deposit his EMI every month into a specified bank account. But he said nothing about what would happen to these post-dated cheques, when they would be returned, if they would be returned... nothing. Raghav, already overwhelmed by the fat agreement book, the English which he could not speak or decipher, and the swank showroom from where Dholakia came, felt pressured.

So he did what he was told. Even at the dealer’s showroom, Dholakia’s approach was clear: you want a loan, take it on our terms. Sign without question. Or else you don’t get the loan. Except that his tone was sweet, encouraging, and his attitude was ‘what-are-we-there-for, hanh?’

Not that Raghav intended to delay or default; but he dropped his 18th instalment, sadly. That month a client had not paid in time, causing the delay. But Raghav recalled Dholakia had told him it would only mean delayed-payment charges. Raghav decided he would pay the penalty along with the instalment as soon as he was paid by Gore Brothers.

When Raghav was followed and then stopped by hefty men with mean looks, for a brief moment he feared he was being kidnapped. But then they told him that he had defaulted and so his car was being seized. And they drove away, in his car.

Raghav had stood by the kerbside, shaken and his heart thudding, unable to breathe. That was when he realised to his horror that the six men had driven away the car along with all the material lying in it, given to him by Shilpa Garments. Later, the panchnama would record the recovery agency’s reference to this material. The value: Rs 1.2 lakh.
Raghav shared this with Ali, his master cutter, who said, “Why don’t you ask Joshi sahib whose daughters-in-law you stitch for, for guidance?  He is a good man.” And that is what Raghav did. Joshi, a retired auditor from a large company, lived in a high-rise in the locality. Raghav told him all that had happened. Joshi had a young advocate named Murali Shivmoorthy take up Raghav’s case.

Today, reaching Joshi’s home, Raghav stood in a corner seeing a number of men in discussion. Joshi was asking his neighbour Anil Vartak, a respected banker, “Tell me, when you give loans for cars and computers, is your attitude towards a borrower who is a white-collared manager like our Parandikar from the cigarette company, different from that to a borrower like, say, Damu, our barber down the road? Mind you, Damu earns well with his facials, etc.”

Vartak: It is unwritten but practised widely by banks and NBFCs: a defaulting white-collared borrower will be forgiven. Sometimes, even the penalty can be waived if he makes up the EMI. And his asset won’t be seized. But if a non-white collared borrower defaults even once, he is removed from the system even if he says he was attending his mother’s funeral. No remorse is felt.  The reasoning goes that ‘these type of people’ have a tendency to not take loans seriously. So, if they default, it stands to reason that they will always default. One slip and it’s goodbye for them.

Joshi: And why is that?

Vartak: Parandikar type of big-company employees can lead to more colleagues borrowing; that’s good for our business. So we look after him. The barber, the carpenter, etc., are not big company people, you see!

Murali: Yes, the Damus and the Raghavs are good fish for their bottom line though!

Murali knew the racket. His consultation with Raghav confirmed what he was expecting. All the forms were in English. Dholakia explained everything in Marathi and satisfied Raghav’s questions. It was only later that Raghav realised that his signature had been taken on documents that were not explained to him.

Murali: Did he explain to you what the document contains? Did he explain how the loan would work?

Raghav: He told me how many cheques to make out. He said don’t worry if you delay payment one month, but you will pay penalty.
[Later, when Ambara Finance produced the agreement before the consumer forum, the following startling facts were revealed. One of the clauses stated that the contents of the agreement have been read out and explained to the borrower in xx language. But sadly, the blanks in this clause had not been filled up.

Two, the agreement was undated. Even when Murali pointed this out to Ambara and the sitting judge, Ambara did not fill in the date. Three, the saddest of them all, a painful spotlight on Indian conditions: the agreement had neither been stamped nor registered.]

Raghav now told Joshi’s audience: “When I went to pay the outstanding instalment and the penalty, Ambara refused to accept it. They said, since I had defaulted, I would now have to clear the entire balance of Rs 2.25 lakh if I wanted the car released.”

Raghav had also been facing tough exchanges with Shilpa Garments, whose fabric had been driven away with the car. While Ambara’s men compelled him to clear the entire loan amount, Raghav desperately asked them to at least return the fabric.
Ambara refused.

As a result, Raghav got into more trouble with clients, who not only cancelled orders but refused to place fresh orders. Worse, they threatened him with a police complaint. Gradually all work stopped and his relationship with everyone broke down. Raghav lost the source of his livelihood, his dignity, and his sleep.
Murali had meanwhile obtained a copy of an agreement form from Ambara’s sales staff, and shared it with Joshi. “What kind of an agreement is this?” asked Joshi. “It provides for interest to be paid for delay in EMI, but I see nothing about repossession. How did they do this then?”

Murali: That is why it is not in the agreement. It allows the finance company the leeway to do what it wants. Even fill up whatever it wants in the blank spaces, at a later date! Recall Raghav said the agreement he signed was not filled.
Joshi: Arre! The fact that the car was forcibly repossessed, is not evidence?

Murali: The gentlemen who performed the act are not in Ambara’s employ.

Joshi began to hyperventilate. He now asked Raghav, “What happened after you signed the agreement?”

Raghav: Saheb, I don’t know what the papers said. They took my signature on 18 papers. Abhi usme kya likha hai, humko kya maloom?

Vartak: Why did you sign when you didn’t know what you are signing?

Raghav (upset now): Saheb, padha-likha to woh hai na? Dholakia is the literate one, why don’t you ask him why he did what he did not reveal?

(another banker friend of Joshi’s): But see, there is a statutory requirement that all banking and non-banking companies have to read out the forms to non-English speaking customers. We call it vernacular declaration... the borrower signs this.

Joshi: What nonsense! You print on a paper and say ‘the agreement was read out to me’ and I sign it? How do I know what you read out is what the document says? Is there a reciprocal law that allows Raghav to allege that what was read to him was not what was printed? After all, Ambara did not give him a copy of the agreement or the time to understand it! Then? Where is completeness and accuracy?

To Murali: “Is it there in the agreement that defaulting even once will lead to seizure of the car? If so, then under what circumstances and at whose discretion?”

Murali: No. On the contrary, the agreement states that notice would have to be given.

Joshi: Had they told him this at the time of purchase?

Murali: I think not. It was forcible re-possession. I see that Ambara also took from Raghav an advance declaration saying, “I hereby voluntarily surrender the vehicle, due to inability to pay the instalments”.

Joshi cursed under his breath. Then turning to Raghav, he asked, “Tell me everything that happened. The finance-wala called you? Or did somebody else call you? What did they say? Did you ask for time? And when did they say they were coming and who did they say would come?”

Raghav: Nahin saheb! Aisa kuchh bhi nahin. No phone call, nothing. They came, stopped my car, told me to get out, and drove away with my car.

Around this time, Ambara strategically filed for arbitration proceedings and sent the Jaikars a notice accordingly. Even as Murali contemplated squashing it on grounds that the arbitrator would then need to be jointly appointed, he gagged when he read the notice. Though Ambara’s registered office was in Mumbai, and the Jaikars also stayed in Mumbai, and the entire car purchase-loan-EMI-banking-transaction including repossession, seizure, etc., all occurred in Mumbai, in a unique turn of complete insanity, Ambara had sought arbitration proceedings to be held in Kolkata by an arbitrator appointed by them!

Joshi and the rest swore and abused. “Chee, chichichi!” sang Joshi. “Kaay halkat maansa! (What cheap people!) Unethical and downright corrupt practice!” he declared in his 1985 internal audit war cry.

Murali knew the moves well. He decided to ignore the arbitration, and filed a consumer complaint in the District Forum, appearing free of cost for the Jaikars. Based on Murali’s complaint that the arbitrator was not appointed by consensus, the court, too, ignored Ambara’s arbitration.

At the District Forum, Ambara claimed Raghav’s consumer complaint was false, because “he had himself surrendered the car due to inability to repay the loan”. Murali did not need to exert himself over this: this was soon falsified by the statement of Ambara’s recovery agents who stated that they had forcibly evicted Raghav and taken repossession.

After this, Ambara stopped appearing for the hearings. The District Forum directed Ambara to refund Rs 1.62 lakh paid by the Jaikars along with 9 per cent interest.
Once the District Forum passes an order, any appeal against it has to be filed within 30 days of the order. Ambara did not do so.

Meanwhile, overwhelmed by the sudden devastation in his life, Raghav went numb with anxiety, so that he sought execution of the order only three months later, prodded by Murali and Joshi. The Consumer Forum issued a notice to Ambara to honour the court order and pay up.

Ambara did not comply within the time prescribed. This tantamount to disobedience of the court and enforcement proceedings were initiated against it. (In such a proceeding the MD of the company can be sentenced to imprisonment for disobedience.) 

That was when Ambara woke up and decided to file an appeal with the State Commission. The law made it possible for the delay to be condoned if the delaying party filed an application to that effect. Ambara claimed floods had destroyed their office and restoration work had not allowed them to appeal sooner. The court was annoyed and said that the delay (120 days) seemed to exceed Mumbai’s monsoon season itself, and there was no known flooding in September. Besides, other laws had not been breached by them (such as deposit of PF and TDS, etc., which had happened in time, as had business, for Ambara’s revenue had grown instead of dropping in that period). So, the State Commission dismissed the appeal, refusing to condone the delay.
Did Ambara pay up? No. It filed an appeal in the National Commission.

Joshi stood up and stretched.  He would now raise dust. 

To be continued.

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(This story was published in BW | Businessworld Issue Dated 22-04-2013)