Haryana

Panchkula

CC/52/2021

M/S AMARTEX INDUSTRIES LTD. - Complainant(s)

Versus

BANK OF BARODA. - Opp.Party(s)

JASWANT SINGH & HIMANSHU SINGH.

29 Aug 2022

ORDER

BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION,  PANCHKULA

                                                       

Consumer Complaint No	:	52 of 2021
Date of Institution	:	29.01.2021
Date of Decision	:	29.08.2022

 

 

1.     M/s Amartex Industries Limited, House No.1846, Sector-34-D,   Chandigarh, through its Managing Director Mr. Arun Grover.

2.     Mr. Arun Grover, Managing Director, aged 60 years, M/s Amartex      Industries Limited, Industrial Plot No.365, Industrial Area, Phase-I,    Panchkula. 

                                                                           ….Complainants

Versus

1.     Bank of Baroda, SCO No.62-63, Bank Square, Sector-17-B,       Chandigarh, through its Asstt. General Manager.

2.     Asstt. General Manager, Bank of Baroda, SCO No.62-63, Bank  Square, Sector-17-B, Chandigarh.

….Opposite Parties

COMPLAINT UNDER SECTION 35 OF THE CONSUMER PROTECTION ACT, 2019.

 

Before:              Sh. Satpal, President.

Dr. Pawan Kumar Saini, Member.

Dr. Sushma Garg, Member.

 

For the Parties:   Sh. Jaswant Singh, Advocate for complainants.    

Sh. Vishal Kathuria, Advocate for OPs No.1 & 2.

 

ORDER

(Satpal, President)

1.             The brief facts of the present complaint are that the complainant-company had applied for sanction of credit facilities with a consortium of banks headed by State Bank of India and its other members were State Bank of Patiala and IDBI Bank Ltd. Later on the Bank of Baroda also join as member of consortium and agrees to advance Rs.3crores as credit facilities. The consortium of banks headed by State Bank of India entered into an agreement on 24.03.2014 with the complainant on the terms and conditions mentioned in the above said agreement. The State Bank of India was a lead bank and all the terms and conditions were to be implemented under its guidance and no terms and conditions of the loan agreement can be changed without the prior approval of the lead bank.  As per agreement, the rate of interest of the banks are mentioned in the para no.4 of the complaint. The OP also issued a sanction letter dated 01.05.2013 for Rs.3.00 crore containing terms and conditions for credit facilities sanction by bank itself. In the sanction letter, the rate of interest was 5% of base rate(Base rate is 10.25% as on date) present effective rate 15.25% P.A. with monthly rests subject to change as per credit rating, base rate & Bank’s/RBI guidelines. The base rate/MCLR rate in the year 2018 was 8.15%, as per sanction letter the OP was entitled to charge 5.00% above the base rate. Since the MCLR in the year 2018 was 8.15, hence at the maximum the OP can charge higher rate with effect from the change of base rate, but the OP has charged the excess amount of interest with retrospective effect in an illegal manner and without notice to the complainant and to the lead banks.  The OP debited an excess amount of Rs.5,25,890/- from the account of complainant in the month of December 2017 and again debited an excess amount of Rs.63920/- in the month of January, 2018 without any notice to the complainant and without any information to  the lead bank.  The complainant immediately wrote a letter dated 09.01.2018 to the OP requesting the OP to immediately credit the excess amount charged by it i.e. Rs.5,25,890/- and again requested  not to debit any further amount without notice to him but the OP again debited an excess amount of Rs.74,038/- in the  month of February, 2018 from the account of the complainant. He wrote letters dated 01.02.2018, 09.03.2018, 17.03.2018, 10.04.2018, 17.04.2018, 24.01.2019 and 07.02.2019 to the OP in which it was requested that bank had debited an excess interest amount of Rs. 6,63,848/-(Rs.5,25,890+63,920+74,038), so the bank should  credit the amount which has been debited illegally. The OP intimated that the excess interest has been debited as per the credit rating and classification of account as per the MSME Expended Guidelines and subject to change as per banks extents guidelines, but the OP never came forward with the copy of amended guidelines or amended policy of the bank. The complainant also made a complaint to “The Ombudsman (Banking), RBI, Chandigarh, and the Ombudsman also directed to the OP to remove the grievance of the complainant but despite the instructions of the Ombudsman, the OP has not credited the excess amount charged by them as interest in the account of the complainant. It is submitted that the bank did not return the property documents deposited by the complainant until the excess amount was paid to the bank.  Due to the acts and conducts of the Ops, the complainant has suffered physical harassment, mental agony and financial loss; hence, the present complaint.

2.             Upon notice, OP appeared through counsel and filed written statement raising preliminary objections qua complaint is not maintainable;  concealed the material facts; no cause of action; the complainant does not fall under the category of the consumer and time barred. It is stated that as per the request made, the complainant was granted cash credit limit of Rs.3.00 crores meeting out working capital requirement vide sanction letter dated 01.05.2013. It is stated that inter-se agreement dated 24.3.2014 was entered into amongst State Bank of India, IDBI Bank, State Bank of Patiala & Bank of Baroda to provide funds in the proportions as mentioned in the said agreement. The perusal of the sanction letter dated 01.5.2013 and inter-se agreement dated 24.03.2014 clearly shows that the funds provided to the complainant were to be used for commercial purposes. It is also stated that the term “Working Capital requirement” in banking/ commercial purposes is described as the amount of money needed to finance the gap between disbursements(payments to suppliers) and receipts(payments from customers). There is not even a whisper in the complaint  that the services availed by the complainant from OP was to be  exclusively used by the complainant for earning his livelihood by way of  self-employment which was fortifies the fact that the present case does not fall within the purview of the CP Act.  It is also stated that the OP had duly replied to the letters dated 09.01.2018 & 01.02.2018 wrote by the complainant.  The OP vide letter dated 09.05.2018 rejected  in-genuine claim of the complainant  by informing him that the rate of interest is being charges in the account as per the credit rating and classification of the account as per the MSME expanded guidelines. The said account was declared as NPA in April, 2018. On merits, pleas and assertions made in the preliminary objections have been reiterated and it has been prayed that there is no deficiency in service on the part of the OP and as such, the complaint of the complainant is liable to be dismissed.

3.             The learned counsel for the complainant has tendered affidavit as Annexure C/A along with documents Annexure C-1 to C-10 in evidence and closed the evidence by making a separate statement. On the other hand, the learned counsel for the OPs has tendered nothing into evidence.

4.             We have heard learned counsels for the parties and gone through the entire record available on the file including the written arguments filed by the learned counsels for the parties, minutely and carefully.

5.             Admittedly, the complainant availed the cash credit facility of Rs.3 crore from Ops vide sanction letter dated 01.05.2013(Annexure -3). It is also an admitted factual position that the complainant entered into an agreement(Annexure C-2) on 24.03.2014 with the consortium of banks, comprising of IDBI Bank, State Bank of Patiala and Bank of Baroda, which was headed by State Bank of India. Vide said inter se agreement dated 24.03.2014(Annexure C-2), the complainant was sanctioned the working capital facilities for meeting part of its working capital needs qua its various production units, which had been duly described in the said agreement. The complainant has alleged no grievances qua the other members of consortium except the Bank of Baroda i.e. the OPs. In the present complaint, it has been alleged that an excess sum of Rs.5,25,890/-, Rs.63,920/- and an excess amount of Rs.74,038/- was deducted, from the account of the complainant, in the month of December, 2017, January 2018 and February, 2018 respectively.

                During arguments, the learned counsel for the complainant, while reiterating the averments made in the complaint, has vehemently contended that a sum of Rs.5,25,890+63,920+74,038=Rs.6,63,848/- was  deducted from the account of the complainant in excess of that provided vide sanction letter(Annexure C-2). It is contended that the OPs were requested vide letter dated 09.01.2018(Annexure C-4), dated 01.2.2018(Annexure C-5), 09.03.2018(Annexure C-6), 17.03.2018 (Annexure C-7), 17.04.2018(Annexure C-8), 24.01.2019(Annexure C-9) and 07.02.2019 (Annexure C-10) to refund the excess amount, which was charged by the OPs in violation and contravention of terms and conditions of the sanction letter(Annexure C-3) as well as agreement (Annexure C-2) but the request was declined on baseless and frivolous grounds. The learned counsel argued that the act of the OPs while charging the higher rate of interest in excess of the agreed rate vide sanction letter(Annexure C-3) retrospectively and without any notice and concurrence of the lead bank i.e. SBI was neither valid nor justified. The learned counsel reiterating the violations of Clause 3(d), 3(e), 3(j) and 4 as contained in the agreement dated 24.03.2014(Annexure C-2) on the part of the OPs contended that the charging of the excess amount was contrary to the explicit terms and conditions as contained in agreement (Annexure C-2) and sanction letter(Annexure C-3) and thus, prayer has been  made for acceptance of the complaint by directing the OPs to refund the excess amount of Rs.6,63,848/- alongwith interest and Rs.2,00,000/- as compensation and Rs.1,00,000/- on account of mental agony and harassment and Rs.55,000/- as litigation charges.

6.             The OPs had resisted the complaint by raising preliminary objection as well as merits in their written statement. The preliminary objections as raised by the Ops are mentioned as under:-

1. That the complainant does not fall under the category of the consumer as defined vide Section 2(7) of the Consumer Protection Act, 2019.
2. That the complaint is time barred in view of Section 69 of the Consumer Protection Act.

The above objections are taken up for discussion as under:-

7.  

1. M/s Miracle Coro Plast Pvt. Ltd. Vs. United Bank of India & Ors. decided on 12.02.2018 in F.A.No.1322 of 2017(NC).
2. Oriental Bank of Commerce Vs. Sushil Gulati decided on 05.01.2016 in F.A.No.225 of 2008(SCDRC, Delhi)
3. M/s Bird Machines Pvt. Ltd. Vs. Indusland Bank Limited & Anr. decided on 31.01.2020 in CC No.137 of 2020(NC).

 

8.  
1. Sunil Kohli & Anr. Vs. M/s Purearth Infrastructure Ltd. 2019(4)   Civil Court Cases       649(SC).
2.  

3. Arun Bhatiya Vs. HDFC Bank & Ors. in Civil Appeal nos.5204-5205 of 2022 decided on 08.08.2022(SC).
4. The Branch Executive, Goderej Soaps Limited & Anr. Vs. M.V.Harshavardhana Reddy and Anr. in F.A.No.142 of 1995   decided on 21.06.1996(NC)

9.                Now, we advert to the definition of consumer, which is defined in Section 2(7) of C.P.Act, 2019, the relevant part of which is reproduced as under:

1. Consumer means any person who buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose.

10.            As per definition of consumer, a person who buys goods for consideration is excluded from the category of a consumer in the following eventualities:-

1.  When such person re-sales the goods as purchased by him for consideration.
2.  When such person buys goods for commercial purposes.

11.            The question as to whether an activity or a transaction is for a commercial purpose has been discussed at length in various cases by the Hon’ble Apex Court as well as the Hon’ble National Consumer Commission. The Hon’ble National Commission in consumer complaint no.137/2020 decided on 31.01.2020 in case titled as M/s Bird Machines Pvt. Ltd. Vs. Indusland Bank Limited vide Para No.4 & 5 discussed the issue as under:-

4.       The issue involved in this complaint came to be considered by this Commission in West Fort Hi-Tech Hospital Limited Vs. Punjab National Bank decided on  07.01.2020 in FA No.1264 of 2018 and the following view was taken:-

“The term ‘Consumer’ used in Section2(1)(d) of the Consumer Protection Act came up for consideration of this Commission in Revision  Petition No.2833 of 2018 decided on 06.01.2020 and after considering several decisions  on the issue, including  Synco Textiles Pvt.Ltd. Vs. Greaves Cotton & Company Ltd.(1991) 1 CPJ 499(NC), Cheema Engineering Services Vs. Rajan Singh(1997) 1 SCC 131, Madan Kumar Singh(Dead) through L.R.Vs. District Magistrate, Sultanpur & Ors.(2009) 9 SCC 79 and Paramount Digital Colour Lab & Ors. Vs. Agfa India Private Limited & Ors. (2018) 14 SCC 81, the larger Bench inter-alia held as under:-

1. Only a person  engaged in large scale commercial activities for the purpose of making profit is not a consumer;
2. There should be a direct nexus between the large scale commercial activities in which a person is engaged and the goods purchased or the services hired or availed by him, before he can be excluded from the purview of the term ‘consumer’. Therefore any goods  purchased or the services  hired or availed even by a person carrying on business activities  on a large scale  for the purpose of making profit  will not take him out of the definition of the term ‘consumer’, if the transaction of purchases of goods or hiring  or availing  of services is not intended to generate profit through the large scale commercial activity undertaken by him and dos not contribute to or form an essential part of his large scale commercial activities.

(c )     What is crucial for the purpose of determining  whether a person is a                       ‘consumer’ or not is the purpose for which the goods were purchased or               the services were hired or availed and not the scale of his commercial                          activities.

5.       It would thus be seen that a person engaged in large scale commercial           activities intended to make profit, is not a consumer and what is crucial                for the purpose of deciding whether a person is a consumer or not is the            purpose of which the goods are purchased or the services are hired or                     availed, as the case may be.

12.            Now, recently, the Hon’ble National Commission in consumer case no.886 of 2020 titled as M/s Freight System(India) Private Limited Vs. Omkar Realtors & Developers Private Limited & Anr. decided on 25.01.2021 in para no.11 of the said order, has placed reliance on the law laid down by the Hon’ble Supreme Court in the case titled as Lilawati Kirtilal Mehta Medical Trust in Civil Appeal No.12322 of 2016 decided on 14.11.2019, wherein the Hon’ble Apes Court has held that:-

          7.       To summarize from the above discussion, though a straight-jacket       formula cannot be adopted in every case, the following broad principles can be       culled out for determining whether an activity or transaction is ‘for a         commercial purpose’:

i.         The question of whether a transaction is for a commercial purpose would                  depend upon the facts and circumstances of each case. However,                            ordinarily, ‘commercial purpose’ is understood to include manufacturing/              industrial activity or business-to-business transactions between                                     commercial entities.

ii.       The purchase of the good or service should have a close and direct nexus                 with a profit-generating activity.

iii.       The identity of the person making the purchase or the value of the                          transaction is not conclusive to the question of whether it is for a                         commercial purpose. It has to be seen whether the dominant intention or            dominant purpose for the transaction was to facilitate some kind of profit            generation for the purchaser and/or their beneficiary.

iv.      If it is found that the dominant purpose behind purchasing the good or            service was for the personal use and consumption of the purchaser                           and/or their beneficiary, or is otherwise not linked to any commercial                             activity, the question of whether such a purchase was for the purpose of              ‘generating livelihood by means of self-employment’ need not be looked                   into.

13.            From above, it is found that the Hon’ble Apex Court has laid down the twin test of “close & direct Nexus with profit generating activity” and “dominant purpose” behind purchasing of goods or services to determine and ascertain the status of a person, who has purchased the goods for consideration.

14.            Further, as per test law laid down by the Hon’ble National Commission is that the purpose for which the goods were purchased or service is hired is crucial  to determine the status of a person as  consumer. Now, we advert to the admitted factual position of the present case that the complainant was provided the working capital facilities for meeting part of its working capital needs qua production units located at the following sites:-

1. Plot No.72, Industrial Area, Dharuhera, District Gurgaon, Haryana
2. Plot No.35-B, measuring  5416-67, sq yds, Phase  III, Mohali, Punjab
3. Land and building measuring 8 bigha 6 biswas at village saidpura Tehsil Derabassi, Punjab.
4. Plot No.138 measuring 511 square meters at I.A. Baddi, Himachal Pradesh.
5. Plot No.B-XXXll 741/16-A, measuring 1244-4 sq. yards at Taraf Karabara Abadi Azad nagar, Bahadur ke road, District Ludhiana, Punjab.
6. Plot No.195-F, Phase-vi, Udyog Vihar, Gurgaon, Haryana
7. Plot No.362 La Phase l, Panchkula, Haryana in the name of Mr. Arun Grover.
8. Plot No.365 La Phase l Panchkula, Haryana the name of Mr. Arun Grover
9. Plot No.366, Industrial Area, Phase-l, Panchkula in the name of KVS International Pvt. Limited formerly known as KVS Apparels Pvt. Ltd.

 

15.  
16.  
17.  
18.  
19. Banking-Consumer Protection Act, 1986, Section 2(1) (d)-Banking-Cash         Credit limit-Commercial purpose-Consumer –Plea of OP that the complainant          had availed services  of the bank namely loan  for its business  and also the cash    credit limit, hence consumer complaint not maintainable-Held-That this is a case     of hiring/availing of services of the bank for commercial purpose-Therefore, in           view of inbuilt exception in the definition of the consumer, the complainant      cannot be termed as consumer-Appeal dismissed”.

 

19.  
1. Oriental Insurance Co. Ltd. Vs. J& K State Consumer Protection Commission in          OWP No.362 of 2002 decided on 19.12.2005(J&K, HC).
2.  
20.  
21.  

Announced:29.08.2022

 

 

Dr.Sushma Garg          Dr. Pawan Kumar Saini         Satpal          

        Member                           Member                               President

 

Note: Each and every page of this order has been duly signed by me.

                                         Satpal,                              

                                President