DATE OF FILING : 30.3.2017

IN THE CONSUMER DISPUTES REDRESSAL FORUM, IDUKKI

Dated this the 30^th day of January, 2018

Present :

SRI. S. GOPAKUMAR PRESIDENT

SRI. BENNY. K. MEMBER

CC NO.61/2017

Between

Complainant : Baiju Kumpalankal, S/o. Joseph,

Kumpalankal House,

Padamugham P.O.,

Idukki – 685 604.

And

Opposite Parties : 1. The Branch Managaer,

State Bank of India,

Adimali Branch,

Adimali P.O., Idukki – 685 561.

(By Advs: K.V. Kurian & Lissy M.M.)

2. The General Manager,

Rural Planning and Credit

Department,

Reserve Bank of India,

Thiruvananthapuram – 695 033.

O R D E R

SRI. S. GOPAKUMAR, PRESIDENT

          Complainant availed an agricultural loan of Rs.28500/-, from 1^st opposite party bank on 25.3.2015, by pledging his gold ornaments.  As per the loan agreement, the loan has to be repaid on or before 24.3.2016.  In the month of December, 2015, the sale officer of the 1^st opposite party bank approached the complainant and demanded for the repayment of the entire loan amount with defaulted interest and he discussed this matter in the front of the public and this caused much mental agony to the complainant and his family.  As per the loan agreement, complainant is having sufficient time for its repayment.  Thereafter the 1^st opposite party auctioned the gold ornament having 2 sovereign in its weight, without the consent of the complainant and adjusted the auction amount in the loan account.  The complainant further stated that, the 1^st opposite party and

(cont....2)

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some of their hench men acted indecently in this matter and auctioned the gold ornaments in a throw away price, before attaining the permitted loan period.  Through this way, the 1^st opposite party misappropriated the gold ornaments of the complainant and the act of the opposite parties are amount to deficiency in service and unfair trade practice.  Against this, the complainant  approached this Forum and filed this complaint by praying that the 1^st opposite party many be directed to pay an amount of Rs.14500/- being the balance auction price of the gold ornaments which will fetch an amount of Rs.45000/- at that time and also direct the 1^st opposite party to pay an amount of Rs.65000/- as compensation for the mental agony that caused by the sale officer of the 1^st opposite party.

          On notice, opposite parties entered appearance and filed detailed written version.  In their version, 1^st opposite party contended that complainant availed 5 gold loans from 2.2.2012 onwards and the alleged one is 5^th one and all these loans are granted with interest at a concessional rate with special direction to remit loan amount and interest once in every crop season maximum 12 months and each covering a period of 3 crop seasons.  If the borrower fails to remit the loan amount and interest within due date, where the maximum period is limited to 12 months, that will be classified as NPA.  If the borrower fails to make payments in any of the loan availed by him within the crop season, all the loans availed by him irrespective of its date of availing, will be treated as NPA.  Ordinarily, the bank determines 3 crop seasons as 3 calendar years.

          Opposite party further contended that in this matter, RBI circular clause 2.2.2, published on 1.7.2013  mentioned that “in respect of borrower having more than one facility with a bank, all the facilities granted by the Bank will have to be treated as NPA and not particular facility or part thereof which has become irregular”.  In this case, the complainant availed other loans as stated above which have already became NPA.  Therefore, the loan availed by the same borrower, on 25.3.2015, become NPA alongwith other loans. (cont....3)

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The opposite party further contended that the complainant availed another gold loan on 25.3.2015 and closed another NPA gold loan on the same date about which CC No.62/2017 is pending between the same parties. The complainant ought to have closed other NPA loans also at the earliest and the bank have given necessary direction to the complainant in that aspect. But the complainant miserably failed to close the loans and was evading to pay off the loans. Hence the bank placed the gold in public auction and realised the loan dues and there is no deficiency in service in any way on the part of the bank. The bank has auctioned the gold in openly and not conniving with any bidders as alleged in the complaint and hence the complaint is liable to be rejected with cost of this opposite party.

In their reply version, 2^nd opposite party contended that RBI is a statutory corporation constituted under the RBI Act. In case of dispute arose out of the loan given by the commercial bank, the provisions of the contract between the complainant an the commercial bank concerned, govern the transaction. In case of any dispute, the cause of action available for the complaint is through the legal process only against the bank and not against the RBI. The RBI is not a necessary or proper party to this complaint and the complainant is not a consumer of the RBI. The RBI is an authority constituted for exercising its statutory powers under the RBI Act, 1934. 2^nd opposite party further contended that, the National Commission in its judgment, in this case of Virendra Prasad Vs. RBI [1(1991) CPR 661] has observed that the RBI, as a statutory authority, is charged with the task of enforcing the provision relating to foreign exchange control contained in Foreign Exchange Regulations Act, 1973 and while acting in the said capacity, RBI cannot be said to be rendering any banking service to the complainant nor was there any element of hiring of service which the sine qua non for attracting the definition of the expression 'Consumer' contained in Section 2(1)(d) of the Consumer Protection Act and hence the 2^nd opposite party may pleased be excepted from the party array.

(cont....4)

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The evidence consists of oral testimony of PW1 and Exts.P1 marked from the side of complainant. Ext.P1 is the copy of memorandum of gold loan security dated 25.3.2015 issued by the 1^st opposite party in favour of the complainant. From the defence side, 1^st opposite party produced documents which were marked as Exts.R1 to R6. Exts.R1 to R5 are loan statements and Ext.R6 is the copy of RBI circular. No oral evidence adduced by the opposite parties.

Heard both sides. The point arose for consideration is whether there is any deficiency in service from the part of opposite parties and if so, for what relief the complainant is entitled to ?

The POINT :- We considered the submissions made by the learned counsels for both the parties and gone through the evidence on records.

It is an undisputed fact that the 1^st opposite party bank sanctioned some loan to the complainant by accepting gold as security from 2.2.2012 onwards. Almost all these loans were classified as NPA and the loan amounts were realised by auctioning the security gold ornaments. In the cross examination also, the complainant accepted this matter upto some extend. The matter in issue in the present case is relating to an agricultural loan which was sanctioned to the complainant by the 1^st opposite party bank on 25.3.2015, by accepting some gold ornaments as security and the loan amount was Rs.28500/- as per Ext.P1 memorandum. In this case, the allegations against the 1^st opposite party is that the 1^st opposite party conducted loan auction without the prior sanction of the complainant and also against the mental harassment of the sale office of the 1^st opposite party. On perusal of Ext.P1, we can see that, the loan was granted on 25.3.2015 for a period of one year and the loan amount was Rs.28500/-, the loan repayment due was on 24.3.2016. The allegation against the opposite parties by the complainant is that, opposite parties demanded loan amount before its due date and auctioned the security gold before the due date which is specifically stated in Ext.P1 and the act of the opposite party amounts to gross unfair trade practice.

(cont....5)

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On the contrary, 1^st opposite party in their reply version, specifically stated that the loans were granted with a concessional interest rate with special direction to remit the loan amount with interest once in every crop season maximum 12 months and each loan covering a period of 3 crop seasons. Ordinarily the bank determines 3 crop seasons as 3 calender years. Since the complainant failed to remit the loan amount, all the loans granted to him were classified as NPA and the bank closed the loan dues by auctioning the security gold ornaments. The learned counsel further stated that as per the master circular of RBI published on 1.7.2013, that, a borrower having more than one facility with a bank all the facilities granted by the bank will have to be treated as NPA and not particular facility or part thereof which has become irregular. Substantiating their version, opposite party produced Exts.R1 to R6. By going through these documents, we can see that, Ext.R6 is a circular of RBI. Ext.R1 is the copy of loan statement of loan account No.32171247650 sanctioned in the name of Baiju Joseph from 2.2.2012 to 22.5.2017. Ext.R2 is the statement of account of loan No.32172578715, sanctioned in the name of Baiju Joseph from 3.2.2012 to 22.5.2017. Ext.R3 is the statement of account of loan No.23404979476, sanctioned in the name of Baiju Joseph from 2.7.2012 to 22.5.2017. Ext.R4 is the statement of account of loan No.32654326272 sanctioned in the name of Baiju Joseph, from 12.11.2012 to 22.5.2017. Ext.R5 is the copy of loan No.3423941779, granted in the name of Baiju Joseph, from 25.3.2015 to 22.5.2017. On perusing these exhibits, we can see that Ext.R1 to R5 loans were sanctioned on 2.2.2012, 3.2.2012, 2.7.2012 and 12.11.2012. The loan in question was sanctioned on 25.3.2015. On further perusal, we can came to know that, Ext.R1 loan was closed on 4.3.3016 by auctioning the gold ornaments. Ext.R2 loan was closed on 25.3.2015. Ext.R3 loan was closed on 4.3.2016 through gold auction. Ext.R4 loan was closed on 4.3.2016 by gold auction. The loan in issue was also closed on 27.1.2016 through gold auction. It is very pertinent to note that, while availing the loan in question, the other 4 loans which were granted to the complainant was classified as NPA. At this

(cont....6)

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juncture, a pertinent question arises that, how the 1^st opposite party bank granted this loans to the same borrower, while his 4 loans were already classified as NPA. Moreover, as per the exhibits produced by 1^st opposite party, we can see that out of 5 loans, the loan sanctioned to him in the year 2012 was settled in the year 2016. That means at the time of sanctioning the loan other 4 loans were classified as NPA. It is very clear that the first 4 loans are sanctioned in the year 2012 and the proceedings recollecting these loan amounts were carried on by the 1^st opposite party nearly after 4 years, that is in the year 2016. At the same time, the bank initiated recovery proceedings in the alleged loan was in the month of December 2015 itself, that is before the permitted period of one year as per Ext.P1. This fact is fortified from the exhibit produced by the 1^st opposite party and with the contention in the written version.

On going through the above discussed aspect, we observed that, the act of the 1^st opposite party bank cannot be acceptable and was dead against the prevailing banking rules.

Moreover, it is also to be considered that the bank settled the loan in issue by auctioning the gold ornaments which are given as security. For this, the version of the opposite party bank is that, they followed the circular of RBI which is narrated in the version. But it is not at all believable and acceptable. Moreover, no evidence is produced by the bank, to convince the Forum that whether they intimated the matter of auction to the borrower and whether they published the auction proceedings to the general public. Also no evidence is produced by the 1^st opposite party to convince that for what amount the security was auctioned and whether any amount is remaining and who is the auction purchaser. The 1^st opposite party bank is liable to answer all these questions. But they miserably failed to adduce any evidence to clarify the genuine doubts of the complainant. The act of the 1^st opposite party bank is a gross deficiency in service and unfair trade practice. In view of the fact that the complainant is a local resident and the loan is for a period of one year and

(cont....7)

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the 1^st opposite party had hurridly auctioned the gold ornaments especially in view of the fact that the price of the gold is always on the ascend. At the same time, it is also observed that since there is no allegation against 2^nd opposite party, 2^nd opposite party is deleted from the party array.

From the above discussion, the Forum is of a considered view that the allegation against the 1^st opposite party is proved by the complainant with clear and cogent evidence and hence the complaint allowed. The Forum directs the 1^st opposite party to pay an amount of Rs.10000/- to the complainant as compensation, within 30 days from the receipt of a copy of this order, failing which the amount shall carry 12% interest per annum, from the date of default. No order to cost.

Pronounced in the Open Forum on this the 30^th day of January, 2018

Sd/-

SRI. S. GOPAKUMAR, PRESIDENT

Sd/-

SRI. BENNY. K., MEMBER

APPENDIX

Depositions :

On the side of the Complainant :

PW1 - Baiju Joseph.

On the side of the Opposite Party :

Nil.

Exhibits :

On the side of the Complainant :

Ext.P1 - copy of memorandum of gold loan security dated 25.3.2015.

On the side of the Opposite Party :

Exts.R1-R5 - loan statements.

Ext.R6 - copy of RBI circular.

Forwarded by Order,

SENIOR SUPERINTENDENT