Surat: The Navsari District Consumer Disputes Redressal Commission (CDRC) has directed a AU Small Finance Bank to refund Rs 2.5 lakh proceeds from the sale of a customer’s repossessed car and pay compensation after holding that the lender had sold the vehicle without following due legal procedure.The complainant had purchased the car in Feb 2021 by availing a loan of Rs 7.35 lakh from the bank, repayable over five years in 60 monthly instalments ending in Feb 2026. According to the complaint, he had regularly repaid the loan till July 2025. However, despite only seven instalments remaining, the bank repossessed the vehicle through a recovery agency on Aug 21, 2025, asking him to clear the outstanding dues.The customer received an arbitration notice dated Oct 31, 2025, asking him to pay Rs 2.74 lakh. When he approached the bank to make the payment, he was informed that the vehicle had already been sold. On obtaining his loan statement, he discovered that the bank had closed his loan account and sold the car on Oct 30, before issuing the arbitration notice.He then moved the consumer commission with a complaint that the bank had illegally sold the vehicle in collusion with the recovery agency to earn unlawful profits. He also pointed out that the Regional Transport Office (RTO) records still showed the vehicle registered in his name. He sought either return of the vehicle or compensation equivalent to the loan amount.The bank argued that the borrower had defaulted on instalments in 2022 and 2023 as well. It claimed that police were informed before and after the seizure and that the complainant was given nearly two months to clear the dues before the vehicle was sold on Oct 30.The complainant’s counsel, however, argued that while his client had temporarily defaulted due to financial difficulties, the bank had bypassed the mandatory legal process. The arbitration notice gave him 10 days to pay the dues, but by then the vehicle had already been sold and the loan account closed.After examining the records, the commission held that the bank had failed to establish that the loan account had been classified as a non-performing asset (NPA) or that it had followed the prescribed procedure before selling the vehicle. It observed that the complainant had regularly repaid instalments in the past, even with delays, for which the bank had recovered penal charges and interest, indicating his willingness to repay.The commission also found several discrepancies in the seizure and sale process and concluded that the bank had indulged in unfair trade practice. Since the vehicle could not be restored to the complainant, it directed the bank to refund the sale proceeds of Rs 2.5 lakh along with Rs 50,000 as compensation.