BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION AT BANGALORE (URBAN)

DATED 02^ND DAY OF MARCH 2023

ORDER

SMT.M.SHOBHA, PRESIDENT

1. The complaint has been filed under Section 35 of C.P.Act (hereinafter referred as an Act) against the OP for the following reliefs against the OP:-

1. Direct the OP to reverse/reimburse the amount of Rs.18,58,500/- in favour of the complainant along with interest at 24% p.a.,
2. To direct the OP to reverse/reimburse the amount of Rs.29,71,164/- in favour of the complainant along with interest at 24% p.a.,
3. To hold the amount of Rs.18,58,500/- and Rs.29,71,164/- debited by the OP from the complainant’s current account NO.0404214000001 on 15.09.2021 is unjustified and unauthorized.
4. To direct the OP to pay an amount of Rs.10,00,000/- towards deficiency of service of service on the part of the OP.
5. To direct the OP to pay the damages of Rs.10,00,000/- towards financial loss caused by the illegal and unauthorized act of the OP debited the amounts from the current account of the complainant.
6. To direct the OP to reimburse the cost of this litigation and to pass any such order/s/relief,

2. The case set up by the complainant in brief is as under:-

It is the case of the complainant is that it is a company established in the year 2005 and registered under the Indian Companies act and it is involved in the business of manufacturing “FLEXI TANKS” used for packing liquid for exporting/indigenous use and customized container liner and FIBC bags in its own manufacturing unit.

3. It is further case of the complainant that the complainant has been the customer of OP for a period of 16 years and they are availing banking services from the OP.  The OP has unauthorizedly and without giving any notice to the complainant or obtaining the consent from the complainant has deducted an amount of Rs.48,29,664.48 ps., from its current account.

4. It is further case of the complainant that on 18.05.2020 the OP issued a sanction letter bearing sanction memorandum No.39/2021 i.e., the previous sanction granting working capital and term loan to the complainant.  In the said previous sanction letter the OP had permitted continuation of certain permission particularly approving 10% concession in applicable processing charges for work capital limit.  The said previous sanction letter was valid from 07.05.2020 to 06.05.2021 and it was expired on 06.05.2021.

5. It is further case of the complainant that after expiration of the previous sanction the complainant on 01.07.2021 made a proposal to the OP to enhance the working capital limit for the financial year 2021-22 and 2022-23 and to provide lower interest rates and charges.  After four days thereafter even before the OP accepted the application of the complainant for consideration the complainant by its letter dated 05.07.2021 informed the OP about its intention to transfer its banking facilities to HDFC bank since the offer made by the HDFC was more beneficial to the complainant. The complainant has also requested the OP to support their in taking over their banking facilities by the HDFC Bank and sent a proposal letter dated 01.07.2021 and the request letter sent by the complainant on 05.07.2021 seeking Ops co-operation in transferring its facilities to HDFC Bank.  After that the OP personnel including the DGM and AGM have requested the complainant to grant them few times to match up with the offer made by the HDFC Bank. The complainant has agreed for the same and they have withhold the immediate transfer of banking facilities to HDFC Bank. After waiting for a reasonable time since the complainant did not hear back from OP has sent a letter dated 29.07.2021 re-confirm its decision to transfer its banking facilities to HDFC Bank.  The complainant indicated this is to be its final decision and they have also sent email dated 30.07.2021 about their final decision.

6. The HDFC bank took over the banking facilities of the complainant on 05.08.2021, 17.08.2021 and 23.08.2021 and also issued pay orders in favour of the OP towards full and final payment of all facilities including all interest and charges availed by the complainant until that day. The OP accepted the pay orders issued in his favour and issued a nil liability letter to the complainant on 31.0-8.2021, stating that the subject limits stands closed on 31.08.2021 and outstanding liability with their cantonment branch is nil.

7. After transferring the banking facilities to the HDFC Bank the complainant continued to maintain a current account bearing No.0404214000001 with the OP.  The OP after issued nil liability letter sent an email dated 04.11.2021 to the complainant for the first time a reference was made to sanction dated 17.08.2021.  The email indicated that the OP had issued sanction dated 17.08.2021 and hence the complainant is liable to pay processing fee of Rs.18,58,500/-.  The complainant has immediately responded to the said email by reply dated 06.09.2021 making it absolutely clear that the complainant is unaware of the sanction dated 17.08.2021 and no such sanction was issued or communicated to the complainant at any point nor the complainant has received any such alleged sanction letter or acknowledged or accepted any sanction letter and hence requested the OP to revise the charges accordingly.

8. The OP without reply to the letter dated 06.09.2021 and without giving any notice to the complainant debited an amount of Rs.18,58,500/- towards process fee and an amount of Rs.29,71,164.48 ps., as LC charges.  The complainant wrote and disputed the deductions made by the OP in its letter dated 21.09.2021, 28.09.2021, 07.10.2021, 29.10.2021.  The complainant in its letter has disputed the deductions made under three heads i.e., deduction towards pre-closure of GECL loan, deduction towards process fee for sanction dated 17.08.2021 and deduction towards LC concession under the previous/expired sanction.  

9. The OP on 12.11.2021 wrote to the complainant agreeing to reverse the deductions made towards pre closure of GECL loan but outrightly deducted the complainant’s request for reversal with respect to processing fee amount of Rs.18,58,500/- and LC concession charges of Rs.29,71,164.48 ps., without giving any valid reasons.  The OP refused to reverse the deducted amounts without giving any just and reasonable explanations for its actions.

10. It is further case of the complainant that the Hon’ble Supreme Court and the Hon’ble National Commission have taken consistent view that the services of the bank availed for cash credit limit do not disentitled the complainant from becoming the consumer under this act and that any application for cash credit limit will not be treated as commercial purpose. When the OP unilaterally debited the amount of Rs.48,29,664.48 ps., from the current account of the complainant and has not reverse the amount inspite of the several request sent by the complainant through email and letters the complainant has filed this complaint.     

11. In response to the notice, OP appears and files version. It is the case of the OP that the complainant being a private limited company has approached this OP for a term loan for working capital amount of Rupees five crores on 18.05.2020 and the same included the following terms at (1)(b) upfront fee; applicable as 1% of the loan amount + applicable GST and permitted upto 10% concession in the applicable charges. In the said sanction memorandum it is clearly stated that pre-payment penalty at that point of time was 2% on the outstanding liability in case of transfer of loan account to other banks/FIS.

12. It is further case of the OP that the complainant had sought an enhancement of funds from 30 crores to 35 crores on 01.07.2021 which was immediately under process.  The complainant taking undue advantage of long standing relationship with the OP has arm-twisted the OP to grant further concession.  After enhancement request the OP bank immediately started processing the same and the enhancement was finally approved on 17.08.2021.  At that time the OP was shocked to discover that the complainant wanted to move to HDFC bank and the complainant kept wavering its stance from 05.07.2021 to 29.07.2021 and no action was taken up by the complainant until the enhancement was sanctioned on 17.08.2021.  The decision of the complainant to move from Op bank to HDFC Bank intimated to the OP bank after this OP had processed the loan and sanctioned received internal approvals from the head office.  At no point of time did the complainant specifically asked for a withdrawal of the enhancement application and hence they cannot protest the processing and penalty charges at this point of time.

13. It is further case of the OP that they had deducted Rs.18,58,500/- on 15.09.2021 towards the processing fee for the sanction on 17.08.2021 concession were made as per II-(b)(2) under other permissions.  The sanction letter dated 17.08.2021. This OP acting upon the instructions of the complainant the enhancement application was immediately processed and sent for approvals and after various approvals it was finally approved on 17.08.2021.  immediately the OP has informed the complainant of the sanction as a knee-jerk reaction and perhaps with the intention of avoiding the charges due HDFC bank wrote to the OP intimating takeover of the facilities and enclosed pay orders for the full and final settlement of the liabilities from earlier transactions. This does not in any manner includes the processing or penalty charges and hence a nil liability certificate was issued.  Merely expressing the intention to revoke the banking facilities in any manner entitle the complainant to avoid the liability and make good the processing charges and LC charges which have always been issued on loan charges.  This OP has deducted Rs.18,58,500/- and ILC/FLC charges of Rs.5,68,772.98 ps., and Rs.24,02,391.50 ps., respectively and the LC charges as per sanction letter dated 07.05.2020 and 18.05.2020 as the sanction is valid until 06.05.2021.  The complainant cannot be absolved of the responsibility to make good the processing and LC charges which are well within the rights of the bank to recover. The total sum of Rs.48,29,664.48 ps., has been deducted by this OP and such deductions are valid in the eye of law. The reversal of the GECL penal charges and GST charge of Rs.14,22,000/- and Rs.2,55,960/- deducted shows that the manner in which the OP has acted is bonafide.

14. The complainant agreed to all the conditions for the purpose of sanction loans as well as the other conditions clause of the sanction document dated 17.08.2021.  The complainant has filed this complaint falsely with an intention to extract money from this OP.  Hence the OP prays for dismissal of the complaint.

15. Senior finance manager of the complainant has filed his affidavit evidence and relies on 14 documents.  OP has not adduced any evidence.

16. Heard the arguments of advocate for the both the parties.  Complainant has filed written argument.  Perused the written arguments.

17. The following points arise for our consideration as are:-

1. Whether the complainant proves deficiency of service on the part of OP?
2. Whether the complainant is entitled to relief mentioned in the complaint?
3. What order?

18. Our answers to the above points are as under:

       Point No.1:  Affirmative

      Point No.2: Affirmative in part

      Point No.3: As per final orders

REASONS

19. Point No.1 AND 2: These two points are inter related and hence they have taken for common discussion.  We have perused the allegations made in the complaint, version, evidence and documents filed by the complainant and arguments filed by the complainant.

20.  It is undisputed fact that the complainant being a private limited company have got the banking transactions with the OP bank for more than 16 years. It is also undisputed fact that the complainant have approached the OP bank for a term loan for working capital amount of Rupees five crores on 18.05.2020.  It is the contention taken by the OP that as per the terms the upfront fee applicable was 1% of the loan amount + applicable GST and permitted upto 10% concession in the applicable charges.  It is also the condition on the part of the OP that the pre-payment penalty at that point of time was 2% on the outstanding liability in case of transfer of loan account to other banks.

21. It is also undisputed fact that the complainant has sought for enhancement of funds from thirty crores to thirty five crores on 01.07.2021.

22. It is the specific case of the complainant that the OP has unauthorisedly and without giving any notice to the complainant or obtaining the consent from the complainant has deducted an amount of Rs.48,20.664.48 ps., from its current account on 15.09.2021.  the deduction was made towards processing fee for issuing the alleged sanction dated 17.08.2021 and deducted Rs.18,58,500/-. The OP has also deducted Rs.29,71,164.48 ps., for withdrawal of LC concession granted to the complainant under a previous expired sanction dated 18.05.2020.

23. It is further case of the complainant that in addition to the above deductions the OP had also deducted an amount of Rs.16,77,960/- on 06.09.2021 without any notice from the account of the complainant towards preclosure charges of GECL loan account.  After several request and letters and bringing to the notice of the OP that GECL loan is a government loan and hence no preclosure charges are mentioned in the GECL loan document the OP had agreed to reverse the amount deducted towards GECL preclosure charges.  The deductions made by the OP Rs.18,58,500/- and Rs.29,71,164.48 ps., are unilateral and unauthorised and illegal.  

24. It is the specific contention taken by the complainant that he has made a proposal to the OP to enhance working capital limit for the financial years 2021-22 and 2022-23 and to provide lower interest rates and charges as per Ex.P.3 on 01.07.2021.  the complainant vide letter dated 05.07.2021 as per Ex.P4 has informed the OP about its decision to transfer banking facilities to HDFC Bank, since the offer made by the HDFC bank was more beneficial to the complainant. The complainant on 29.07.2021 and 30.07.2021 as per Ex.P5 and P14 has reconfirmed its decision to transfer its banking facilities to HDFC bank indicating the same to be its final decision. The HDFC bank took over the banking facilities of the complainant from OP bank on 05.08.2021, 17.08.2021 and 23.08.2021 as Ex.P6, P7 and P8 and the OP has issued nil liability letter as Ex.P9 on 31.08.2021.

25. The OP have sent email for the first time to the complainant on 04.09.2021 as Ex.P13 with attached work sheet refers to sanction letter dated 17.08.2021 and had indicated a charge of Rs.18,58,500/- for processing fee. The complainant has given reply by email dated 04.09.2021 stating that this complainant has not at all received any sanction letter NOR have acknowledged or accepted any sanction letter.  The OP on 15.09.2021 deducted the amount of Rs.18,58,500/- for issuing alleged sanction letter as service charges as Ex.P.11 the bank statement.  The complainant sent email on 21.09.2021, 28.09.2021, 07.10.2021, 29.10.2021 sent emails asking for refund of Rs.18,58,500/- which was recovered from the account on a sanction that was neither communicated to the complainant nor accepted as per Ex.P.10.  The OP on 12.11.2021 for the very first time replied to the letters written by the complainant and refused to refund the amount deducted from the account of the complainant as Ex.P.13.  The complainant again sent a letter on 24.11.2021 requesting for refund of the amount deducted unauthorisedly as process fee since no sanction letter was issued by the OP nor it was communicated to the complainant.  The OP has deducted the processing fee after they have issued the nil liability letter to the complainant.  The OP has issued a reply letter dated 24.12.2021 had made references to terms of sanction letter dated 17.08.2021which was not at all communicated to the complainant.

26. It is clear from the above documents that the proposal made by the complainant for enhancement of the loan amount for working capital amount dated 01.07.2021 was not processed by the OP. the complainant has withdrawn the proposal dated 01.07.2021 on 05.07.2021/29.07.2021 /30.07.2021 by informing its intention to transfer banking facilities to HDFC bank.  The complainant on the request made by the OP bank has waited for reconfirmation its decision of transferring banking facilities to HDFC bank and finally on 29.07.2021 /30.07.2021 confirmed its final decision to accept the offer made by the HDFC bank.  Hence the complainant has made it clear to the OP about the moving of its banking facilities to HDFC Bank.  After that there is no occasion for the OP to process for proposal of the complainant dated 01.07.2021. it is also clear that the OP had not taken up the proposal of the complainant for consideration since at no point the OP intimate to the complainant that the proposal of the complainant is being considered.  The OP has also not issued the sanction letter dated 17.08.2021 or communicated the said sanction letter to the complainant.  The complainant has not at all received any communication about his sanction letter till they received the letter dated 17.08.2021 about the sanction of the loan.  As no sanction letter has been issued or communicated to the complainant the OP have no authority to claim the processing fee.  The OP have neither issued or communicated sanction letter nor sanctioned the loan amount to the complainant and in such circumstances the OP have no authority to collect the processing fee.

27. It is pertinent to note here that OP after issuing nil liability letter dated 31.08.2021 in favour of the complainant imposes processing fee on a nonexistent sanction.  The OP has not produced any sanction letter which was communicated to the complainant before this Commission. The OP has not denied in the version about the contentions of the complainant regarding non issuance and non communication of the sanction.  The OP has deducted the amount of Rs.18,58,500/- unauthorisedly without giving any notice to the complainant.

28. The OP have deducted Rs.29,71,164.48 ps., towards the LC concession.  It is pertinent to note here that the concession on LC charges was admittedly a concession granted to the complainant under the previous/expired sanction.  The previous sanction was valid from 07.05.2020 to 06.05.2021. There was no condition mentioned in the previous sanction documents stating that the benefits given can be withdrawn at any time.  The previous sanction documents dated 18.05.2020 does not contemplate any condition reserving a right to withdraw concession given under the sanction document after the expiry of the sanction period.  In addition to this the OP have failed to produce any documents to show that it has got the authority to withdraw any concession given on LC charges.  The OP after issuing nil liability letter dated 31.08.2021 in favour of the complainant have deducted the LC charges.  The OP has failed to show the computation of the LC charges and has not shared any calculation of the same with the complainant.  The OP have deducted the amount of totally Rs.48,29,664.48 ps., unauthorisedly and without giving any notice to the complainant or obtaining consent from the complainant. Under these circumstances, the complainant has clearly established the deficiency of service and the unfair trade practice on the part of the OP.  The OP has seriously contested this complaint on the ground that the complainant is not a consumer and the proposed loan raised by the complainant is for commercial purpose and hence the complaint is not maintainable.  This Commission after hearing th arguments of both the parties passed an order on IA filed u/s 2(1)(d) and sec 13(4) on 07.09.2022 holding that the complaint is maintainable and dismissed the IA filed by the OP and posted the matter for arguments of the parties on main.  Hence the complaint filed by the complainant is maintainable. Hence the complainant is entitled for the relief claimed in the complaint. Hence we answer point No.1 in affirmative and point No.2 partly in affirmative.

29. Point No.3:- In view the discussion referred above the complaint is liable to be allowed in part.  The amounts of Rs.18,58,500/- and Rs.29,71,164.48 ps., debited by the OP from the current account No.0404214000001 on 15.09.2021 without giving any notice or intimation to the complainant is unjustified and unauthorized. Hence OP is directed to reverse/reimburse the amount of Rs.18,58,500/- in favour of the complainant with interest @ 10% p.a., and OP is directed to reverse/reimburse the amount of Rs.29,71,164.48 ps., with interest @ 10% p.a., from the date of deduction till realization.  The OP is further directed to pay an amount of Rs.5,00,000/- towards damages for deficiency in service and financial loss caused by the OP to the complainant with Rs.10,000/- towards litigation expenses and we proceed to pass the following;

O R D E R

1. The complaint is allowed in part.
2. OP is directed to reverse/reimburse the amount of Rs.18,58,500/- with interest @ 10% p.a., and Rs.29,71,164.48 ps., with interest @ 10% p.a., from the date of deduction till realization to the complainant. 
3. The OP is further directed to pay an amount of Rs.5,00,000/- towards damages for deficiency in service and financial loss caused by the OP to the complainant with Rs.10,000/- towards litigation expenses.
4. The OP shall comply this order within 60 days from this date, failing which the OP shall pay interest at 12% p.a. after expiry of 60 days on Rs.18,58,500/- and Rs.29,71,164.48 ps., on till final payment.
5. Furnish the copy of this order and return the extra pleadings and documents to the parties.

(Dictated to the Stenographer, got it transcribed and corrected, pronounced in the Open Commission on this 02ND day of MARCH, 2023)

Documents produced by the Complainant-P.W.1 are as follows:

Documents produced by the representative of opposite party – R.W.1;

NIL