DATE OF FILING: 19.12.2013
DATE OF DISPOSAL: 24.09.2016
Dr. N.Tuna Sahu, Member:
The complainant has filed this complaint under Section 12 of the C.P. Act 1986, alleging deficiency in banking service against the Opposite Parties (in short, the O.Ps ) and for redressal of his grievance before this Forum.
2. Briefly stated the case of the complainant is that he is having a Savings Bank Account bearing No.01190016278 with O.P.No.2. He had also availed a flood loan of Rs.3,00,000/- on dated 31.12.2004 from the O.P.No.2 for a period of 10 years on Equated Monthly Installment(EMI) of Rs.3639/- vide loan Account No. 10443130634 for repairing of his house. The complainant has successfully paid 97 EMIs of Rs.3639/- each leaving the outstanding of 23 EMI @ Rs.3639/- which comes to Rs.83,697/- but the O.P.No.2 issued a demand notice on 30.5.2013 for Rs.1,47,758.77. After getting the demand notice the complainant issued a letter to O.Ps to supply the statement of account(SOA) of his term loan but they did not provide the same to enable the complainant to know his account and the O.P.No.2 without providing the SOA has forcibly transferred 13 numbers of installments @ Rs.3,700/- amounting to Rs.48,100/- from his SB account from 1.11.2011 to 31.12.2012 so also a sum of Rs.1300/- was transferred on dated 1.5.2013 without keeping the minimum balance in his account. The O.P.No.2 whimsically and arbitrarily transferred the amount of Rs.49,400/- from the S.B. Account No.01190016278 of the complainant without giving any prior information. The complainant has issued a legal notice to the O.Ps on dated 11.7.2013 for supply the SOA and to make credit entry into the account which was arbitrarily transferred from his account. Without supplying the SOA and prior intimation to the complainant, the O.P.No.2 has turned the loan account No.10443130634 into NPA (bad loan) and issued a legal notice to the complainant. The complainant is an Engineer and having his social repute so also he has given the irrecoverable letter of authority for deducting the EMI of Rs.3639/- from his salary till the end of the loan but they did not deduct the amount and turned the term loan account to NPA (Bad loan) for which the complainant has faced severe mental agony and financial loss due to deficiency in service rendered by the O.Ps. The O.P.No.2 also issued a demand notice on 30.7.2013 to pay a sum of Rs.1,49,595/- along with accrued interest for which the complainant is in severe mental agony and lost his prestige in the society by the fault of the O.Ps. In this way the complainant has suffered heavy financial loss and mental agony by running several times to the O.Ps office at Berhampur and also made several telephone calls to them but everything was in vain. Alleging deficiency in service on the part of the O.Ps, the complainant prayed to direct the O.Ps to pay a sum of Rs.1,49,595/- towards the loan shown illegally demand of the EMI and to pay a sum of Rs.48,100/- towards illegal transfer of 13 numbers of installments from the SB account of the complainant. He has also prayed to pay Rs.5000/- towards cost of telephone expenses and litigation expenses and Rs.30,000/- towards mental agony and deficiency in services in the best interest of justice.
3. Upon notice the O.Ps filed written version/ written argument through their learned counsel Mr. Bijaya Kumar Mohanty, Advocate. It is stated that the averments made in the complaint petition are not all true and correct and the complainant is put to the strict proof of such of those allegations which are not specifically admitted herein. Being requested by the complainant vide its application dated 22.2.2005 to the O.P.No.2 requested for a loan of Rs.3,00,000/- for the purpose of repairing and renovation of house under flood loan scheme and the loan was sanctioned by the Bank as per the terms and conditions of its arrangement letter dated 28.2.2005, wherein the complainant has signed accepting the terms and conditions stated therein and the said application dated 22.2.2005 and arrangement letter dated 28.2.2005 are filed with the list of documents. The complainant has also executed one personal loan agreement on 25.3.2005 wherein he agreed that the request for grant of loan shall constitute the basis of the agreement and the loan shall inter alia be governed by the terms mentioned therein such as “the borrower shall repay to the Bank, the amount of the loan together with interest, as per arrangement/sanction letter which forms part of this agreement kin 120 equated monthly installments of Rs.3639/- each, which number is, however, subject change depending upon changes in rate of interest (in floating rate loans) and any other debits raised in the account like insurance charges, fees, etc. The first equated monthly installment shall be payable on April 2005 and the subsequent installments on or before the same date of each succeeding month thereafter, till the entire loan is fully repaid with interest and other unpaid penalty, costs charges and expenses. Where the loan is granted by the Bank as an overdraft limit in the current account, the drawing power will be reduced every month by an amount of Rs.3639/-. The borrower agrees to keep the outstanding amount of overdraft within the drawing power at any point of time. The Bank shall been entitled to increase or decrease the amount as well as the number of EMI as determined by the Bank till the time the entire loan together with interest and other unpaid penalty, costs charges and expenses is repaid. It was interalia agreed that, interest on the amount of the loan will be applied at the rate of 2.25 per cent above PLR/State Bank Medium Term Lending Rate herein after referred to as PLR/SBMTLR, rising and falling therewith, at quarterly rests calculated on the daily balance of the loan amount. Provided that the Bank shall at any time and from time to time be entitled to change the rate of interest depending on change in PLR/SBMTLR and such revised rate of interest shall always be construed as agreed to be paid by the borrower and hereby secured. Borrowers shall be deemed to have notice to change in the rate of interest whenever the changes in PLR/SBMTLR are displayed/notified at/by the branch/published/ in newspapers/made through entry of interest charged in the passbook/statement of accounts sent to the borrowers. It was interalia agreed that in the event of a default in payment or any irregularity in account, the Bank reserves the right to levy a higher rate of interest as it deems fit. The above loan was sanctioned based on the salary particulars provided by the employer of the complainant. Be it be noted here that, the complainant on 22.2.2005 had executed an irrevocable letter of authority in favour of his employer, authorizing himself to deduct a sum of Rs.3639/- from his salary and remit the same with the O.P.No.2 and the employer has also acknowledged the receipt of the said irrevocable letter of authority and also undertook to deposit the EMI with the bank by deducting the same from the salary of the employee. It is pertinent to note here that, the borrower had issued both the letter being the head of the office i.e. the Executive Engineer of the Division, but never deposited the EMI, in the designated account, by deducting the same from his salary. In consideration of the execution of documents by the complainant as mentioned above, the O.P.No.2 bank advanced and disbursed money in the aforesaid personal loan account of the complainant. The complainant as borrower for the aforesaid loan agreed to repay the loan amount in 120 installments @ Rs.3639/- as monthly installment starting from the month of April, 2005, regularly. However, he failed to repay the installments regularly from 12.9.2005 to 31.10.2011; the complainant has made repayment through cash deposit at irregular intervals. Thereafter, he made a bulk deposit in his Saving Bank account and as per the mandate given by him under the irrevocable letter of authority, this O.P. has deducted the EMI of Rs.3639/- from March 2012 to January 2013 and Rs.1300/- towards part payment of the EMIs. The entire transaction is reflected in the statement of account and the said statement of account is filed with the list of documents. The complainant received the full loan amount. Thereafter he failed in his commitment to make regular repayment of installments. However the O.Ps debited interest and other charges to the said loan account in conformity and as per the terms and conditions of the documents executed by the complainant. The Bank through its officers, approached the complainant on several occasions and also through a series of letters vide No.56 dated 15.5.2013, No.69 dated 28.5.2013, No. 70 dated 30.5.2013 and No.72 dated 10.6.2013 with a request for regularization of the said accounts but in vain. As requested by the complainant, the O.P. has also sent the photocopy of the sanction letter as well as statement of accounts along with a registered letter bearing No.RACPC/AM/60 dated 28.5.2013. But as the complainant failed to regularize the loan account, the account was classified as NPA, as per the banking norms and the same was intimated to the complainant vide its letter No. RACPC/AM/70 dated 30.5.2013. Again the O.P. vide its letter No. RACPC/AM/72 dated 10.6.2013 requested to the complainant to arrange for making deposit the above amount immediately failing which the bank may proceed against you as deemed fit including legal action and publication of photograph with name and address in the newspaper as willful defaulter. Instead of complying the request of this O.P, the complainant issued an advocate notice on 11.7.2013 to the bank making all false and baseless allegations. So, this O.P. through its advocate gave a suitable reply on 30.7.2013, explaining everything in detail with a request to regularize the loan account, but in vain. The relationship between bank and the complainant is that of a banker and borrower and is governed by the law of contract, under which these O.Ps had given the loan to the complainant. The complainant failed in his commitment to repay the loan and in spite of demands has not repaid the outstanding loan amount and with an ulterior motive and to complicate the matter and to prevent the bank to recover its dues. He also stated that this case involves complex question of facts, evidence and law and involves the interpretation of the contract and other complex questions relating to the rights and liabilities of the banker and borrower. This Hon’ble Forum has no jurisdiction to admit the case and try the same and the matter can be properly adjudicated in the Civil Court. Hence, these O.Ps are not liable to pay anything or responsible for the mental agony and harassment and litigation charges etc hence prayed to dismiss the case with exemplary cost.
4. On the date of hearing of the dispute, we heard the arguments from the learned counsel for the complainant as well as for the O.Ps and have also gone through the complaint, written arguments filed by the parties to this dispute. We have also verified the materials on case record like personal loan application form, arrangement letter, loan agreement, irrevocable letter of authority and statement of accounts etc.
On perusal of the documents it reveals on merit that the present complaint had availed a loan from O.P. No.2 vide application dated 31.12.2004 and 22.02.2005 Accordingly, the O.P. Bank sanctioned the loan of Rs.3,00,000/- under personal loan scheme vide arrangement letter dated 28.02.2005. The loan was sanctioned under a deed of loan agreement made by both the complainant and the O.P. Bank which is placed on the case record as Document No. C & D. As per the loan agreement, the following conditions were laid down in the arrangement letter with regard to the rate of interest and repayment of the loan. The relevant portion of the arrangement letter is extracted below for reference:
2. Rate of Interest:
Floating Rate of Interest:
Interest on the loan will be charged at 2.25% p.a. over PLR/SBAR/SBMTLR which is currently 10.25% p.a. (the current effective rate being 8% p.a.) with quarterly rests. The rate of interest is subject to revision from time to time and you shall be deemed to have notice of changes in the rate of interest whenever the changes in PLR/SBAR/SBMTLR are displayed /notified at /by the branch/ published in newspaper /made through entry of interest charged in the passbook/statement of account sent to you etc. The Bank has the option to reduce or increase the EMI or extend the repayment period consequent upon changes in PLR/SBAR/SBMTLR. In the event of a default in payment or any irregularity in account, the Bank reserves the right to levy a higher rate of interest as it deems fit.
3. The loan is to be repaid in 120 Equated Monthly Installment of Rs.3639/-. The number of equated monthly installments may increase/ vary if the entire loan with interest, cost, charges and expenses is not repaid by/ with the stipulated number of equated monthly installments by reason of increase in the rate of interest or otherwise.
Besides above conditions in the loan arrangement letter, in the loan agreement paper, it was also mentioned that the borrower shall repay to the Bank, the amount of the loan together with interest, as per arrangement/sanction letter which forms part of this Agreement in 120 Equated Monthly Installments (EMIs) of Rs.3639/- each. It is also a fact the complainant was a party to this agreement and has signed voluntarily to abide by the agreement and to repay the loan sanctioned by the bank. As per Clause 11 (iii) of the Loan Agreement “the bank shall have a paramount right of set off and in exercise of the Bank’s general lien under law, the Bank shall also have a paramount right of lien on all monies, accounts, securities, deposits, goods and other assets and properties belonging to the Borrower or standing to the Borrower’s credit (whether singly or jointly with any other person/s) which are or may at any time be with or in possession or control of any branch of the Bank for any reason or purpose whatsoever”. From the aforesaid clause, it is clear that the bank has got general lien under law to exercise for recovering the loan amount from the borrower and the present complainant was agreed to abide by the conditions of the loan. It is also a fact that the complainant has executed an irrevocable letter of authority with O.P.No.2 Bank for deducting a sum of Rs.3639/- from his salary per month beginning from the salary for the month of April 2005 which is not denied or disputed by the complainant placed on the case record as a document as Document–E (i). It is also a fact not in dispute that the complainant has successfully repaid 97 EMIs of Rs.3639/- each leaving the outstanding of 23 EMIs @ Rs.3,639/- which comes to Rs.83,697/. Therefore, the O.P. Bank issued a demand notice to the complainant for payment of Rs.1,44,888.38 towards loan outstanding and the said letter was replied by the complainant on 13.05.2013 stating to explain the difference amount of Rs.61,191.38 along with requested the O.P. Bank to provide the copy of loan application, sanction order of flood loan and month wise statement since the date of loan sanction for his perusal. After that the O.P. No.1 on dated 15.05.2013 vide letter No.RACPC/AM/56 informed the details of the loan sanction, repayment and regarding loan outstanding of Rs.2,95,797/- and requested to make arrangement for payment of unpaid installment of Rs.13,641/- immediately for regularization of the loan account. The complainant also replied the aforesaid letter on 24.05.2013 by registered post with a request to supply the documents as asked for in his letter dated 13.5.2013. Subsequently, the O.P. No.1 in his letter vide No.RACPC/AM/69 dated 28.05.2013 informed the complainant about highly irregular of the loan account for non-payment of EMIs and sent the photocopies of the sanction letter and statement of account for the reference of the complainant with a request to make immediate repayment of defaulted EMIs. In the said letter the O.P. Bank has also intimated to the complainant that his account was turned in to NPA due to nonpayment of EMIs since February 2013. The complainant also replied the aforesaid letter on 2.6.2013 expressing his concern as illegal and arbitrary increase of his EMIs from 3,639 to 13,641/-. He also alleged that the O.P. Bank has forcefully withdrawn money from his savings bank account and transferred deposits from the said savings bank account which is arbitrary and illegal. He also warned legal action for arbitrary increase of installment amount and raise of rate of interest on the loan by the Bank. Further, the O.P.No.1 in his letter No.RACPC/AM/72 dated 10.06.2013 again requested the complainant to make immediate payment of irregular overdue amount of Rs.15,980/- referring the earlier letters for his information. However, the complainant instead of making repayment of his overdue amounts, he issued a legal notice through his advocate on 11.07.2013 asking the O.P. Bank to send detail Statement of Accounts of his loan account bearing No.10443130634 and to make credit transfer of Rs.49,000/- to his S/B account number failing which he will initiate legal action against the bank. The O.P. Bank also replied after receipt of the said legal notice from the loanee complainant through his advocate by registered post asking to advise his client to make repayment of Rs.1,49,595/- only along with accrued interest failing which to initiate legal action in the competent court of law.
5. From the above discussion, it is clear that the present complainant is a loanee/borrower under the O.Ps (Bank) and he had availed a loan of Rs.3,00,000/- from the O.Ps as discussed earlier under flood loan scheme for his personal purpose. The complainant turned into defaulter and did not make repayment of said loan as agreed through an agreement to repay Rs.3,639/- EMIs per month within a period of 10 years i.e. through 120 EMIs as a result of which the O.P. Bank issued notices of nonpayment of EMIs and transferred 13 Nos. of EMIs at the rate Rs.3,700/- amounting to Rs.48,100/- as total from his Savings Bank Account bearing No.01190016278 during 1.11.2011 to 31.12.2012 along with a sum of Rs.1300/- transferred from the same account on 1.5.2015 toward loan repayment as alleged by the complainant. In the present fact and circumstances of the case, the Forum is to adjudicate (i) whether the action of O.P. bank is arbitrary/ illegal or justified? (ii) Whether O.P. Bank is liable to return the amount transferred from the account of the present complainant towards his loan due for repayment?
6. With regard to the first question, we would like to say that the present complainant is a loanee/ borrower and the O.Ps Bank is banker. The relationship of the loanee and borrower is governed by banking law and specifically through the contract of loan agreement and the letter of arrangement. The complainant has also voluntarily signed the loan agreement and has also given his consent to abide by the loan agreement as executed between parties as discussed hereinabove. In this regard, we would like to point out that the complainant had also issued an irrevocable letter of authority on 22.07.2005 for deducting a sum of Rs.3639/- per month from his salary account and to crediting the same to his account with State Bank of India, Khodasing ADB Branch till further instructions by the complainant. It is also agreed by the complainant that he will not be entitled to withdraw or revoke his authority even in case of his transfer until the whole of his debt inclusive of interest to the State Bank of India Khodasing ADB Branch is liquidated and written consent of the Bank is obtained. However, despite his valid consent and irrevocable letter of authority, the complainant being authorized to disburse salary and allowances did not deposit the loan installment the best reasons known to him only. No reasonable reasons mentioned in his complaint/argument and nor any materials placed on record to hold that he was not guilty of non-crediting the installment amounts to his savings account with State Bank of India, Khodasing ADB Branch but have paid the amount erratically by case as is evident from the statement of accounts. From the aforesaid discussion, it is clear that the action of bank is not arbitrary or illegal since as per the agreement, the O.P. Bank can exercise lien in case the loanee failed to deposit his loan installments. In our considered view, the O.P. Bank has not done any illegal act by transferring 13 Nos. of EMIs at the rate Rs.3,700/- amounting to Rs.48,100/- as total from his Saving Bank Account bearing No.01190016278 during the period 01.11.2011 to 31.12.2012 along with a sum of Rs.1300/- from the same account on 1.5.2015 toward loan repayment as alleged by the complainant. The O.P. Bank has done this due to indifferent attitude of the loanee complainant who despite several notices i.e. on 15.05.2013, 28.05.2013 and 10.06.2013 did not prefer to make repayment of the default loan installments. As a result the loan account of the complainant became Non Performing Asset (NPA). In our opinion, where there is NPA of an account, it is not just an interest income loss to the bank, but a principal loss as well, hence in our considered view; the act of O.P Bank is not illegal or arbitrary.
7. With regard to the second question, we would like to say that where the O.P. Bank has not done any illegal act by transferring the above amount from his savings bank account toward non-repayment of his loan installments, the question of refund or return of said amount transferred from his saving bank account towards his loan due does not arise. In this regard, we would like to point out that as per the statement of account placed on case record the complainant has repaid the loan installments by cash in an irregular manner. We would like to say who forced the complainant not to deduct the installment amount of Rs.3639/- per month from his salary and not to debit the said amount to his loan account with State Bank of India, Khodasing ADB Branch towards repayment of his loan. This clearly reveals his ulterior motive not to repay the loan properly and systematically despite agreed as per the loan agreement and issuance of his irrevocable letter of authority to the O.Ps. From the above discussion, it is clear that the complainant has not come in clean hand to redress his grievance before this Forum against the O.Ps. From the materials on case record and in the light of above discussion, it is clear that he was a defaulter of his loan under the O.P. Bank despite being a government employee. When a loanee failed to make repayment of the loan amount, the O.P. Bank can realize the amount from his account as per the agreement and irrevocable letter of authority and for that action of O.P. Bank, they are not liable to return the same to the complainant as it is not illegal.
8. In a sequel to the above discussion and after verification of the materials on record, we found that the O.Ps are not deficient in service and we do not find any irregularity in the collection of EMIs by the O.Ps rather the complainant is highly irregular in repayment of the EMIs though being a government employee. The ulterior motive of the complainant to avoid loan repayment is very much clear from the materials placed on record. So the O.P. Bank is at liberty to recover the outstanding loan amount due on the complainant under appropriate legal process. We, therefore, find no merit in the present complaint of the complainant. The complaint is devoid of merit and is dismissed as such. We also hold that it is amounts to wasting the time of this Forum in a frivolous petition. Section-26 of the Consumer Protection Act 1986 seeks to discourage and disallow such proceedings. The complaint is therefore dismissed with fine of Rs.1,000/- which shall be paid by the complainant into the Consumer Welfare Fund of the State Government with in a period of 45 days from the date of receipt of this order. The office/registry is directed to ensure the deposit as per law. The case of the complainant is disposed of accordingly.
9. The order is pronounced on this 24th day of September 2016 under the signature and seal of this Forum. The office is directed to supply copies of the order to the parties free of cost as per rules.
