ORDER

SRI.H.R. SRINIVAS.  PRESIDENT

1.     This is the Complaint filed by the Complainant against the Opposite Parties (herein referred to as OPs) under section 35 of the Consumer Protection Act 2019 for the deficiency in service in not refunding a sum of Rs.4,47,187.50 which was deducted towards the commission arrears for further 10 quarter for given Bank Guarantee and for refund of the same along with interest at 18% per annum till the date of refund, and for Rs.2,00,000/- as compensation for causing mental harassment and agony and for such other reliefs as the Hon’ble District Commission deems fit.

2.     The brief facts of the complaint are that; the complainant is a Class-1 contractor with the Bangalore Development Authority and Public Works Department, Government of Karnataka and is in the said profession for the last 25 years.  He holds a current account bearing No.04361010005401 with OP-2 i.e. the branch situated Vijaya Nagar. OP-1 is the head office of OP-2.  On 01.06.2017 the complainant requested OP-2 to issue a bank guarantee for Rs.79,50,000/- on behalf of one Thimme Gowda Raye Gowda Pattanahalli who is his business associate.  The said bank guarantee was in favour of the Commissioner BBMP Bangalore for one of the projects which the complainant competed through a tender.  He deposited Rs.40,00,000/- on 01.06.2017 which comes to around 50% of the guaranteed amount, and OP-2 on 20.06.2017 issued the bank guarantee for Rs.79,50,000/- and charged Rs.250/- and +3% per annum for issuing bank guarantee which comes to around Rs.2,38,500/- excluding the GST. Quarterly charge of Rs.59,625/-  for 13 quarters i.e. from 01.06.2017 to 01.06.2020 i.e. Rs.7,75,125/- was collected from him. Over all OP-2 had collected Rs.9,14,627.50.

3.     It is contended by complainant that on 20.11.2017 he deposited Rs.40,54,000/- in the said bank and the bank treated the guarantee against 100% cash margin. Hence the bank guarantee for Rs.79,50,000/- issued in favour of Thimme Gowda Raye Gowda Pattanahalli is against 100% cash deposit made by the complainant.  After depositing Rs.40,54,000/- to the bank, he gave a representation on 20.11.2017 requesting the OP-2 to deduct the charges of the bank guarantee for only three quarters and refund the charges levied for the remaining 10 quarters. OP-2 vide its “inter office memorandum” dated 30.11.2017, calculated the total amount to be deducted and after deducting the charges for three quarters, and other minimum charges, referred the matter with a recommendation to refund Rs.4,47,187.50/- to the complainant. 

4.     Afterwards, he made several visits to OP-1 requesting it to refund the amount of excess charges collected. Neither OP-1 nor OP-2 took any decision to refund the said amount.  Inspite of requesting, they did not take any decision regarding refund of the amount and hence he had to issue notice on 17.08.2020 demanding to refund the said amount along with interest at 18%. Instead of complying the request of the complainant, OP-2 on 04.09.2020 claimed that there is no provision to refund the charges once collected. It was surprised and shocked to him to note the contents of the reply which is nothing but dishonesty and unfair trade practice and also exploit innocence consumers and he believes that it is an attempt to cheat him by the Ops.  There is deficiency in service, unfair trade practice within the meaning of Consumer Protection Act and also cheating under Indian Penal Code. The cause of action arose for the complaint when he obtained a bank guarantee from OP-2 and when he deposited Rs.40,54,000/and when he demanded OP-2 to refund the excess charges collected and hence the complaint.

5.     Upon the service of notice, OP 1 and 2 appeared before the commission through their advocate and filed their version. It is contended that after the merger/amalgamation of Syndicate Bank with Canara Bank, the same is being called Canara Bank. The complaint is neither maintainable in law nor on facts. There is no negligence or deficiency of service on the part of OPs. They have discharged their duty in accordance with the rules and procedure with due diligence. Complainant is blaming OP for his own fault only for exploitation. 

6.     The bank guarantee is availed by one and the complaint is filed by another and not impleading one Thimme Gowda Raye Gowda Pattanahalli the beneficiary, who is also the bank guarantee holder the complaint is bad for non-joinder of party. Complainant has furnished partial collateral security at the time of issuing bank guarantee in favour of Thimme Gowda Raye Gowda Pattanahalli.  After issuing of the reply to the legal notice, the complainant has come up with the version that the Thimme Gowda Raye Gowda Pattanahalli is a business associate. Admitting that it has given bank guarantee for Rs.79.50 lakhs on 02.06.2017 which is valid for 36 months by obtaining collateral security of Rs.40,00,000/-  which is the 50% of the bank guarantee amount, contended that it not cash margin or deposit as contended by the complainant.  As per the banks internal circular in 319-2015-BC-RMD-20 dated 31.07.2015 for issue of any financial guarantee, inland bank guarantee commission is at Rs.250 + 3% per annum for issue of bank guarantee  and after collecting the same the bank has issued bank guarantee on behalf of Thimme Gowda Raye Gowda Pattanahalli. 

7.     As per the request and security of the complainant and the same is nothing but financial guarantee/collateral security. As per the prevailing banking guidelines the bank guarantee commission has to be collected for entire period of guarantee in multiples of quarters in three months and in completed quarter for above three months. A part of the quarter should be treated as full quarter for the purpose of collecting guarantee commission as per prevailing guidelines of bank.  Accordingly the bank collected commission charges for a period of 13 quarters i.e. Rs.59,625 X 13 - = 7,75,125/- and GST at 18% on the said sum i.e. Rs.1,39,522.50 in all a sum of Rs.9,14,647.50 and the said amount has been taken as per the above circular which the complainant is well aware. 

8.     As per the banking guidelines and rules, the commission for issue of bank guarantee, shall be collected in advance i.e. at the time of issuing the bank guarantee for full term.  Therefore the bank collected a commission for 13 quarters.  At the time of issuing bank guarantee, the same was not backed by 100% cash deposit, but only by a partial fixed deposit as collateral security amounting to 50% of the bank guarantee.  It is further contended by the OPs that the commission for bank guarantee is collected for the fixed period only. Even in case of the period of contract completing prematurely, i.e. before the actual time fixed for the contract, even in such cases, the person who availed the bank guarantee is not entitle for any refund of the commission.  The only exception to the above rule is that the refund of bank commission is permissible only in case if the guarantee is tendered for cancellation before the date of expiry. Even in such cases, the portion of the guarantee commission already recovered can be refunded to the customer at the half of the original rate for the unexpired period of the guarantee including the claim period, in completed quarter subject to collection for commission for a minimum period of 3 months as per prevailing guidelines. As such, the claim of complainant for refund of the bank charges is also absurd and also illegal and not sustainable. 

9.     It is contended further that, at the time of obtaining the bank guarantee either the complainant or Thimme Gowda Raye Gowda Pattanahalli furnished 100 % cash margin/deposit or 100% collateral coverage on the date of issuing of bank guarantee. Therefore the commission charged is as per the circular mentioned above at 3% per annum as on the date of issuance of bank guarantee. The coverage by way of fixed deposit furnished by the complainant was not 100% on that day, whereas it was only 50%.  At present the bank guarantee issued is expired. Further it is contended that the bank guarantee commission can only be refunded for grantees tendered for cancellation before the expiry date as per prevailing guidelines. In such cases only portion of the guarantee commission already recovered to the customer at half the original period for the unexpired period of guarantee including claim period in completed quarters subject to collection of commission for a minimum period of 6 months. In the instant case there is no cancellation of tender and there is no expiry contract before the period. As such under the provision and guidelines,  refund of the bank charges do not arise. 

10.   Further there is no provision in the bank for providing additional Fixed deposit at later date after date of issue of bank guarantee, and bank never asked or insisted the complainant to furnish additional deposit. Hence the contention of the complaint that he has furnished 100% cash margin on the sanction date of bank guarantee is nothing but a prior assumption and the same cannot be considered as 100% cash margin at any point of time.  As such, the allegation and claim for refund of commission is not sustainable and complainant not entitle for any of the relief claimed and also, the concession from the bank.  The complainant lacks merit and do not survive for consideration and the same is filed without legal basis. Denying all the allegations made in each and every para of the complaint except granting of the bank guarantee and recovering the commission from the complainant, prayed the commission to dismiss the complaint at there is no deficient service and unfair trade practice on its part.

11.   In order to prove the case, both parties have filed their affidavit evidence and produced documents. Arguments Heard. The following points arise for our consideration:-

1) Whether the complainant has proved deficiency in service on the part of the Opposite Parties?

2)        Whether the complainant is entitled to the relief prayed for in the complaint?

12.   Our answers to the above points are:-

POINT NO.1 :   In the Affirmative

POINT NO.2 :   Partly in the affirmative.

                        For the following.

REASONS

POINT No.1:-

13.   It is not in dispute that the complainant obtained bank guarantee for Rs.79.50 lakhs on 02.06.2017 for a period up to 02.07 .2020 against the cash security of Rs.40 lakhs and bank collected Rs.9,14,647.50 including GST of 18% for 13 quarters as per the prevailing guidelines.  It is also not in dispute that the complainant deposited a further sum of Rs.40.54 lakhs with OP-2 on 20.11.2017 towards the bank guarantee taking the total cash margin of Rs.80.54 lakhs against the bank guarantee of Rs.79.50 lakhs.  The complainant also requested OP.2 to treat the said deposit along with the original deposit as 100% cash margin against the bank guarantee and refund the commission with effect from 20.11.2017  to 02.07.2017.

14.   It is in the letter written by OP-2 to the regional manager, credit section Regional office, Bangalore dated 30.11.2017 that the bank has accepted and confirmed having marked lien on the total deposit of Rs.80.54 lakhs for the bank guarantee of Rs.79.50 lakhs and has also calculated the amount of commission which it has received from the complainant i.e. for 13 quarters at the time of giving the bank guarantee at Rs.9,14,647.50 including the GST of Rs.1,39,522.50.  Deducting the GST, the amount collected as commission is Rs.7,75,125/- and as per the request, the remaining quarter is 10 quarters and calculated a balance of Rs.4,47,187.50 to be refunded after deducting 25 % on Rs.5,96,250/- being the commission on the said cash margin and recommended for refund of Rs.4,47,187.50 and sought for the approval for refund.  Series of correspondence have taken place between the complainant and OP and even legal notice has also been issued which is also replied. 

15.   OP-1 and 2 have not disputed the facts regarding offering the bank guarantee for Rs.79,50,000/- and receiving Rs.40 lakhs as collateral security. Further the receiving the commission as mentioned above. It is only their contention that as per the circular 315-2015-BC RMD 0-20 dated 31.07.2015, they are not bound to refund the commission amount received from the complainant and that they have not sought for additional collateral deposit.  Though it is true that OPs have not demanded the complainant for additional collateral deposits, the Intra Office Memorandum dated 30.11.2017 from the Assistant General Manager, Vijayanagar, Bangalore to the Regional Manager Credit Section Regional Office-1 Bangalore clearly states that they have accepted the additional cash deposit of Rs.40.54 lakhs and have confirmed of marking the total lien on the said deposit of Rs.80.54 lakhs for the bank guarantee of Rs.79.50 lakhs. When such being the case, though OPs have not demanded for additional collateral security for the bank guarantee, it has accepted the additional deposit as collateral security for the bank guarantee.  When such being the case, it ought to have refunded a sum of Rs.4,47,187.50/- being the commission collected for the period of 10 quarters.

16.   We have gone through the circular referred by OPs.  The provision for refund of BG commission is as under:-

“Refund of BG Commission:

When a performance guarantee is issued and if contract is completed before the guarantee period, guarantee commission for the unexpired period should not be refunded.

For guarantees tendered for cancellation, before  the date of expiry , only portion of the guarantee commission already recovered be refunded to the customer at half the original rate for the unexpired period of guarantee (including claim period) in completed quarters, subject to collection of commission for a minimum period of 6 months.”

17.   There is no provision made in respect of the person who is offering collateral security to the full extent of 100 % to get the bank guarantee. Though it is true that at the time of obtaining the bank guarantee, the complainant deposited Rs.40 lakhs as security for their bank guarantee, on 20.11.2017 he deposited a further sum of Rs.40.50 lakhs though not requested by OP, and made it as more than 100% collateral security for the bank guarantee he obtained.  The bank has also made a lien on Rs.80.54 lakhs against the bank guarantee of Rs.79.50 lakhs. In view of this, we are of the opinion that the bank is bound to return the commission for the rest of the quarters i.e. 10 quarters. Withholding the same, amounts to unfair trade practice and also deficiency in service. Hence we answer POINT NO.1 IN THE AFFIRMATIVE.

POINT NO.2:

18.   In view  of our answers to Point No.1, OP-1 and 2 are bound to refund a sum of Rs.4,47,187.50  along with interest at 12% per annum from 20.11.2017 till date of the payment of the said amount and further Ops did not take any decision on his request, put the complainant into mental agony and hardship. Only when the complainant issued a legal notice, in the reply only, they have denied to pay the amount as requested by citing the circular.  In view of the complainant suffering physical and mental agony and forced to file this complaint, we deem it proper to order OP to pay a sum of Rs.25,000/- as damages and Rs.10,000/- as litigation expenses. Hence we answer POINT NO.2 PARTLY IN THE AFFIRMATIVE and pass the following:

ORDER

1.  The complaint is allowed in part with cost.

2. OP No.1 & 2 are jointly and severally hereby directed to pay a sum of Rs.4,47,187.50  to the complainant along with interest at 12% per annum from 20.11.2017 till date of the payment of the entire amount.

3. Further OPs are hereby directed to pay to the complainant a sum of Rs.25,000/- towards damages for physical and mental strain and Rs.10,000/- towards cost of the litigation expenses.

4. OPs are hereby directed to comply the above order within 30 days from the date of receipt of this order and submit the compliance report to this commission within 15 days thereafter.

5. Send a copy of this order to both parties free of cost.

Note: You are hereby directed to take back the extra copies of the Complaints/version, documents and records filed by you within one month from the date of receipt of this order.

(Dictated to the Stenographer over the computer, typed by him, corrected and then pronounced by us in the Open Commission on this day the 30^th day of JULY 2021)

MEMBER                                PRESIDENT

ANNEXURES

1. Witness examined on behalf of the Complainant/s by way of affidavit:

Copies of Documents produced on behalf of Complainant/s:

Ex P1 & P2: Two copy of the terms deposit certificates.

Ex P3:Bank guarantee given to the commissioner of BBMP.

Ex. P4: Copy of the Bank Guarantee

Ex P5: Letter written by me to the Bank Manager

Ex P6: Letter written by OP recommending for refunding Rs.4,47,187.50.

Ex P7 to P9:Letter written by complainant to Manager of OP.

Ex P10: Copy of the Legal Notice

Ex P11: Copy of the Reply.

2. Witness examined on behalf of the Opposite party/s by way of affidavit:

RW-1: Sri Rajappa, Asst. General Manager of OP.

Copies of Documents produced on behalf of Opposite Party/s

Ex R1: Copy of the Bank guarantee

Ex R2: Copy of the Details of service charges with annexure.

Ex R3: Copy of the legal notice issued by complainant to OP.

Ex R4: Copy of the Reply given by OP.

Ex R5: Copy of the second notice issued by the complainant.

Ex R6: Copy of the Reply  given by OP

MEMBER                                PRESIDENT

RAK*