OFFICE  OF  THE  DISTRICT  CONSUMER  DISPUTES  REDRESSAL FORUM, KAMRUP,GUWAHATI

C.C.83/2004

Present:-

                                    1)Md.Sahadat Hussain, A.J.S.  -        President

                                    2)Smti Archana Deka Lahkar   -        Member

Mr Moluparampil Mathai Varghese

S/O- Late G. Mathai , R/O-Kazi Building,

Hedayatpur,P.O- Guwahati-3,Dist-Kamrup,Assam

                              -VS-

1. Central Bank of India

Guwahati Branch,Panbazar,

P.O-Guwahati-781001,Assam

2.  The Chairman-cum-Managing Director

Central Bank of India, Chandermukhi,Nariman Point,

P.O- Mumbai-400021

Appearance:

Ld advocate Mr. Jagadish Chandra Gour for the complainant but none for the Opp. Party .

Date of Argument: 28-06-2017

Date of Judgment: 18-08-2017

JUDGMENT

This is a proceeding under Sec-12 of Consumer Protection Act,1986

1. The complainat filed by Mr Moluparampil Mathai Varghese against Central Bank of India , Guwahati Branch ,Panbazar,Guwahati -7810014  and The Chairman cum Managing Director ,Central Bankof India,Mumbai-400021 was admitted  on 06-11-2004 and notices was served on them and they also filed their written statement on 05-03-2005 . The complainant  filed evidence of Mr Biju Vergese on affidavit and he was cross examined by the opp. parties.  Thereafter opp. party  side filed evidence of Sri Debabrata Kumar Tripathi  on 26-03-2005 on affidavit  and he was cross examined  by the complainant side on 30-10-2009. Thereafter complainant side Ld. Counsel Mr Jagadish Chandra Gour filed written argument on 06-08-2011 . Before that the evidence of Sri Achyut Kumar Bose  who filed affidavit on behalf of Opp.Party No-1 & 2 was expunged vide this forum’s order dtd. 16-02-2008 . The opp. party side’s Ld advocate Mr S.Goswami filed written argument. After filing written argument by the counsels of both the parties, this forum presided by Mr. Hardeep Singh fixed the days of 24-08-2011,22-11-2011, 28-12-2011, 07-02-2012, 30-02-2012,04-05-2012, 27-06-2012,31-08-2012 for delivery of judgment  but the forum did not  deliver  the judgment and; thereafter his successor president Ms. M.Rongpi again fixed the dates for delivery of judgment on 14-06-2013 and 26-06-2013 but the forum under her presidentship did not deliver the judgment but again brought the case  to the stage of oral argument of the parties and that way so many dates  had gone and thereafter on my employment  in this forum as president this forum fixed the days of 27-11-2015,10-02-2016,16-03-2016, 06-05-2016, 08-06-20146, 10-08-2016, 29-06-2016,08-12-2016, 17-02-2017,18-04-2017 and 28-06-2017 for oral argument of the parties but in all these dates the opp. parties are found absent  without step  and finally  being compelled this forum on 28-06-2017 closed the hearing of argument after hearing of oral argument only of Ld counsel of complainant side Mr . Jagadish Chandra Gour and fixed the day of 27-07-2017 for delivery of judgment

2. The gist of the pleading of the complainant  is that the complainant being a self employed person working as carrying and forwarding  and marketing agent of various companies under the style of M/S Es Es Enterprises  having office at Machkhowa Road, Guwahati-09, have a bank account with the Opp. Party No-1 for long time and availed credit facility against the deposit and stock  as colateral  securities . He  knows about the directions of Reserve Bank of India vide Memo No-DIR/BO/151/C-347-85-Dtd-27-12-1985 that interest rate shall be 2% above when deposit stands in the name of the partners of the firm and the advance is made to the said firm; and knowing that he wrote several letters to the opp. parties  drawing their attention to the said directive of  Reserve Bank of India and requested  them for reducing the rate of interest  charge to him by allowing concessional rate  of interest but they did not pay any heed to the matter . Then , he, vide his letter dtd. 27-11-1990, proposed the opp. parties for connecting his fixed deposits  given as colateral securities into the Seven Years monthly income unit scheme with bonus and growth 1990(ii) of the Unit Trust of India which offered higher returns for the deposits under the said scheme . Then the interest payable on fixed deposits by the opp. parties stating clearly that if the said proposal is accepted then he will get a sum of Rs.49,747/- per year in addition to the interest being paid by the opp. parties on his fixed  deposits, and further  stated that all these units  can be kept by them  as colateral security in place of fixed deposit receipts. Unit Trust of India  is also a Govt. of India undertaking and all its schemes are guaranteed  by Reserve Bank of India and the Govt. of India,  and as such the units issued  by it are as good as security as the fixed deposits of bank, and accordingly they have no reason to deny such conversion but they refused to do so taking undue advantage of its better bargaining power in comparison to him, but he continues  to request and remind them time to time for acting as per said directives of  Reserve Bank of India.But the opp. parties flatly told him that closing his accounts with them if he so desires ,and then he, by his letter dtd.25/04/2001 , requested for reducing cash credit limit Rs.9,00,000 to Rs.5,00,000  by adjusting  the value of some of his fixed deposits and also  vide his letter dtd.17/04/2003 asked Opp.Party No-1 for squaring up the cash credit  facility  given to him  and for returning  Fixed Deposit Receipts No-411145 dtd.15/11/2001 for Rs.3,49,996 , No-411144 dtd.15/11/2001 for Rs.1,27,420 and No-411099 dtd. 08/11/2001 for Rs.2,04,377 totalling Rs.6,81,793 lying with Opp.Party No-1 towards  colateral securities  for cash credit of Rs.5,00,000 . He  also vide letters dtd.05/11/2003, 01/12/2003, 08/03/2004, and 12/05/2004 requested  the opp. parties to refund the excess  interest  charged  to him on cash credit facilities as per directions and instructions  of Reserve Bank of India and then  Opp.Party No-1 wrote a letter to Zonal officer on 17/05/2004. The opp. party has no bonafide reason to deny refund of excess amount of interest  illegally charged by Opp.Party No-1. After receipt of copy of letter dtd.17/05/2004 written by Opp.Party No-1 to Zonal officer , he replied vide letter dtd. 28/06/2004 justify his claim  for refund  of excess interest amounting to Rs.1,41,223 as well as for reimbursement  of loss  suffered by him due to non conversion  of his Fixed Deposit Receipts into aforesaid  scheme of Unit Trust of India amounting to Rs.5,86,964 from January 1991 to December,2002 . Although written request of such conversion  for the 1^st time  made by him on 20/11/1990 and the cash credit facility was withdrawn in April,2003.  Opp.Party No-1 vide letter dtd. 09/08/2004 tried to justify their action stating that the interest was fixed at PLR+40% in absence  of certain criteria viz-timely renewal  of limit/ providing substantial ancillary business ect. And that he himself  had offered Fixed Deposit as Colateral  secirity and nothing prohibits the bank in obtaining colateral securities ect. In fact  Opp.Party No-1  had tried to distort  the facts by taking parts of statements  from here and there ,and totally ignored the fact that directives  issued by Reserve Bank of India and the  Opp.Party No-2 while addressing an Annual General Meeting or formulating  a policy  decision is  binding  on the bank of the country including   Opp.Party No-2 and hence opp. party has no authority to bypass such directions,  instructions or policy  decisions  but opp. party  side acted as a mighty moneylander. He had  regularly been completing all formalities as to submission of balance sheet and other relevant details to  Opp.Party No-1  and so far the providing of substantial  ancillary  business concerned, first of all it was not the condition precedent for sanction  of the credit  facility to him, secondly, he had been providing  all   ancillary  business to Opp.Party No-1 and opp. parties  had never  pointed any short comings  in this regard to him . As per guidelines of Reserve Bank of India  the bank are prohibited for obtaining fixed deposits , term deposits , cash deposits from the borrowers as colateral security for sanctioning loans  or credit facility but the opp. party obtained such security  from him under undue pressure at a very nominal rate  of interest ,whereas the money was being lent or advanced to him at a very high rate of interest and thereby they refused to abide by instructions of Reserve Bank of India  . The colateral  security  for a loan or credit  facility is required only for safeguarding  the repayment of such loan or advance but  banks are not allowed to squeeze  the money from the borrowers  themselves  at a nominal rate of interest and to be given the same borrowers at much high rate of interest in the name of colateral security and as such the refusal of the opp. parties in converting the Fixed Deposit Receipts of him as  colateral security into the 7 years monthly income units of the Unit Trust of India  which were fully  secured  instrument  is totally unjustified  and opp. parties are liable to reimburse or compensate the loss suffered  by him due to  such inaction on their part which comes to Rs5,86,964/-.The actions of the opp. parties in not settling the bonafide grievance of him are not only  arbitrary and unjustified but also  discriminatory and such inaction is ( void in  action) and therefore directions should be issued to the opp. parties to make  payment of return of excess amount of interest totalling to Rs.1,41,223 from the year 1994-1995 to 21-03-2003 as well as the payment of Rs.5,86,964 towards the reimbursement  of loss suffered by him due to non conversion fixed deposit receipts into 7 years monthly income units of the Unit Trust of India  as asked by him vide letter  dtd.20-11-1990 and also to pay interest @12% per annum on that amounts  and also to pay Rs.5,00,000 as compensation for putting him in mental agony along with the cost of the proceeding . He had needed Rs.3,00,000 for transplant operation but opp. parties put him in mental agony by not acceding his legitimate demands.

3. The gist of the pleading of Opp.Party No-1 &2 is that there is no cause of action for filing the complaint. It is  not true that  complainant had also availed credit facilities from the bank against  deposits and stock  as colateral security. The account of the complainant is a trading account  and he had  availed a cash  credit ( working capital)  loan from them against primary  security of hypothecation of stocks , goods etc. and colateral security in the form of  lien  of security of fixed deposit of Rs.3,00,000 backed by personal guarantee  of one Abdul Rahman  and he accepted the aforesaid loan without any objection.   At that time direction of RBI  vide Memo No- DRI/BO/151/C -347-85 dtd.  27/12/1986 will be applicable when parties applied for demand loan / overdraft  against a fixed deposit and not the cash credit / term loan/ bill purchase loan where deposits are given as colateral security but in case of demand loan which are generally granted against deposit receipts upto 90% against deposit, return of interest on such loan is at present  deposit rate + 1 % at present, and earlier it was 8% above deposit rate + interest taken. There is no procedure / rule  of the bank that the bank will confer the fixed deposit and invest into the 7 years monthly  income unit schemes with bonus growth.  ,1990(ii) of the Unit Trust of India or any other financial institution in the name of the complainant . The  complainant could have withdrawn the money and invested in the schemes of Unit Trust of India directly. The complainant on 25-04-2001 has requested the bank by stating “ While we like to keep the sanction limit of Rs.9 lacs intact for the time being from 01-05-2001, we would like to operate the limit to the extent of Rs.5 lacs only. However, the remaining portion of the amount against the sanction limit may be allowed to be operated by at any point of time on our requirement by giving  you  an intimation . In view of what you write above we are not disturbing the securities given to you against cash credit sanction please confirm that it would be in order with you”.    In view of aforesaid request of the complainant they on 27-04-2001  informed the complainant as follows by keeping option against the sanction limit of Rs.9,00,000 as follows- “ As desires  by you we have reduced your cash credit limit to Rs.5,00,000 w.e.f 27-04-2001 from existing limit of Rs.9,00,000 . Please operate the account within the limit of Rs.5,00,000 henceforth” but complainant no where requested them to adjusting value of some of his fixed deposits  in letter dtd. 25-04-2001 . After receiving letter of the complainant letter dtd. 07-04-2003 by which request is made to  Opp.Party No-1 for squaring up the cash credit facility given to him and returning the Fixed Deposit Receipts , they immediately cancel his limit and he has received back Fixed Deposit Receipts. The complainant misread and misconceived the rate of interest charged by them. The cent trade  is a different and a new scheme  and the rate of interest is also different. The trade  schemes are as follows  

i)The purpose of Cent Trade  Scheme is overdraft limit for business requirement.

ii)Eligibility : Traders/ retailers/distributors/commission agent and arhtiyas.

iii)Quantum of finance : Upto Rs.25 lacs per borrower . The limit is to be assessed by turn over method.

iv)Security : Equitable mortgage of property situated in Metro/Urban/Semi Urban its market value of 200 % of overdraft limit and in the name of the spouse may be acceptable as security by making the owner either co-borrower or guarantor.

v)Rate of interest: Upto Rs.2 lacs –PLR over Rs.2 lacs – PLR+4% concession in rate of interest may be considered on case to case basis. 

There are so many schemes and different categories of loan and the complainant’s loan is covered under the categories of Trading and other non manufacturing accounts and theirrate of interestis differentand they charged interest in each and every account as per central office circular based on RBI guidelines and notifications issued time to time . They cannot charge higher or lower rate of interest violating said circulars issued by central office based on RBI guidelines. They rightly rejected the claim of the complainantand statements of the complainantin Para No-9 to 16 areneither correct nor tainable in law. The complainant has availed such credit/ working capital loan and not the demand loan againstdeposit receipts but under categories of Trading and other non manufacturing accounts; and as per the central officecircular the rate of interest was PLR + 4% + Tax in the year of 1995 (on 06-01-1995) which comes to Rs.14=18.00+ .75 as interest tax , total=18.75% . Non renewal of cash credit limit by non submission of financial data i.e. balance sheet, profit & loss statements etc. is an adverse features of an account . Being a trading account it was not falling under credit rating system and the account of saidadverse features did not command any concession whatsoever.The complainant, though availed the limit and regularly transacted the loan account, he hasnot renewedthe limit till 02-02-2001, though under sanction letter dtd 06-01-1995 the limit was to be reviewed/ renewed after 11 months,but as he failed to submit monthly stock statement regularly and balance sheetfor that the said limit cannot be renewed till 02-02-2001 and the limit wasrereduced to Rs.5,00,000 on the application dtd. 25-04-2001 filed by him. At no point of time they requested him to increase the fixed depositagainst the sanction limit, instead he had requested them to renew the MMDC (FIXED DEPOSIT) on variousdates on 03/12/1992,18/05/1993,22/03/1995 , 19/08/1995, 19/06/1996and 14/10/1998, but no where he requested themto adjust the interest against his loan account and as such the MMDC amount increased day by day whenever renewed and as suchthe originalMMDC was in lien against the loan and susequentlyrenewed MMDCautomaticallyget under lien against the loan but not a single MMDC hasbeen asked by himto be adjusted against the loan. Time to time rate of interesthas charged on the direction of RBI and circular issued by central office when PLR rate increases, the rate of interest also increases and when PLR rate decreases the interest rate is also decreases. Present PLR rate is 11% and as such interest comes to PLR +4% =50% against trading and other non manufacturing accounts. Since 2001 Reserve Bank of India has issued notifications not to chargeinterest tax and as such no interest tax has been charged by themagainst all trading accounts including the accounts ofthe complainant . Theyhave not charged even interest in the loan account but charged interestas per Reserve Bank of India guidelinesand the circular of central office issued time to time and as the complainant account was not getting credit rating system but being a trading account , interest applicablewas PLR+4%+ interest tax as per central office guidelines. Furtherinterest rate cannot be fixedwithin the band of PLR+ 2.5% + interest tax as the concession in rate of interest is to be allowed by the competent authority only at the request of the borrowersvery selectively ascash to cash basis. After complying certain criterias i.e. existing accounts classified asperforming assetsduring last 2 years and accounts generates income to branch through ancillary business from drafts and accounts back by colateral securities . Though the accountwas kept performing assets adequately backed by colateral securities but limit was no renewed for non -submission of financial datasi.e. balance sheet etc.and that was the major deficiency in the conduct of the accounts. As per extent policy if an account is not renewedin time the account is to be classified as non performing asset despite its other good features . As such his account did not command any concession in the rate of interest and applied rate of interest is PLR+4%+interest tax was perfectly in order.Priorto 03-09-1998 no concession was allowed by central office and rate of interest for trading and non manufacturing accounts was w.e.f. 13-03-1993 minimum rate 18.05 (PLR+3%+interest tax) . The complainant lodged the complaint misunderstanding the notification issuedby Reserve Bank of India (Annex.-1 of the complaint) which is against a new scheme of the bank and not coveredunder trading and non performing accounts and as such the complaint is not tenable in law and liable to be dismissed.

4. We have perused the pleading as well as evidence of both the parties. We have also perused argument of both sides’ Ld. counsels. From the evidence it transpires to us that, the complainant Mr.Moluparampil Mathai Varghese in the year of 1985, had availed a cash credit working Capital loan from opp.party bank against primary security of hypothecation of stocks, goods etc. and collateral security, in the form of lien of security of fix deposit of Rs.3,00,000/- back by personal guarantee of one Abdul Rahim and the complainant accepted the said loan without any objection and during continuation of the said loan the complainant on 25.4.2001 requested the bank to keep the sanction limit of Rs.9,00,000/- intact for the time being from 1.5.2001, but allow to operate to the extent of Rs.5,00,000/- and the remaining amount was to be allowed to be operated at any point of time and accordingly the opp.party reduced the cash credit limit of Rs.5,00,000/- with effect from 24.4.2001 from the existing limit of Rs.9,00,000/- and directed the complainant to operate the account upto the limit of Rs.5,00,000/-. It is also seen from that letter that in the said letter the complainant never asked the opp.party bank to adjust the value of sum of his fixed deposits. We have also found that the complainant vide letter 17.4.2003, wrote to the opp.party bank for squaring up the cash credit facility given to him and returning the fixed deposits receipts and on receipt of that letter, the opp.party bank immediately cancelled cash credit facility his limit and he received back in fixed deposits receipts .

5. After perusing the evidence it is also seen that, the complainant vide letter dtd. 20.11.90 requested the opp.party to convert of his fixed deposits certificates to Unit Trust of India in respect of seven years, but the opp.party bank had not done it. But it is seen that after 20.11.1990, the complainant never approached the opp.party bank to request them to act upon his letter dtd.20.11.1990. Thus, it is clear that the complainant himself avoided to take further steps to get the fixed deposits converted to certificate of Unit Trust of India. It is already found that in the year of 2013 ,the complainant got his loan facility stopped and he also received back the fixed deposits receipts without any objection. Thus, it is found that the complainant had not taken active stepafter filing petition dtd. 20.11.1990 for converting fixed deposits to certificate of Unit Trust of India through the opp.party bank rather he willingly closed the cash credit facility and received back the fixed deposits receipts without any objection. Therefore, we are of opinion that there is no fault on the part of the opp.party bank in not taking step for converting the fixed deposits filed to certificates of Unit Trust of India. Secondly, it is also found that the cash credit facility was stopped at the will of the complainant as per his request letter dtd. 17.4.2003; and he also, without objection, received back the fixed deposits without any objection, meaning thereby, he has no grievances against the opp.party bank on 17.4.2003 for not converting his fixed deposits to certificate of Unit Trust of India. In these premises , we hold that, the complainant has not suffered any loss of Rs.5,86,964/- for not converting fixed deposits of certificates of Unit Trust of India and if he suffered any such loss, then it is due to his own negligence and fault.

6. The second plea of the complainant is that as per guidelines of Reserve Bank of India issued indifferent times and the notification of issued by the opp.party bank basing RBI circular Memo No. Dir/BO/151/C-347-85 dtd.27.12.1985, the interest rate shall be 2% above when deposited stands in the name of one of the partners of the firm and the advance is made to the said firm, and accordingly he wrote various letters to the opp.party bank drawing their notice to the said directive to Reserve Bank of India, and requested to reduce the rate of interest charged on his loan, but they did not act upon his request, rather , fixed higher interest on the said amount. On the other hand, the opp.party side submits that they have not charged higher rate of interest on the cash credit facility given to the complainant. Their view is that the loan taken by the complainant is cent loan and the criteria of obtaining thatloan one must have an account with the bank and have been doing business ,as it was not a manufacturing loan, and accordingly they fixed interest @ 14% + 4% P.L.R. +.75 interest tax (total = 18.75) which is a justified rate . We have perused the evidence of the complainant and found that the complainanthas failed to establish his assertion by giving concrete evidence. Secondly, it is also found that , when the cash credit loan was closed, he did not file any objection before the opp.party bank about the rate of interest but conceded to the rate of interest fixed by the opp.party bank, but after closure of the credit facility and taking backall fixed deposits,he made out a case and filed the samebefore this forum. Because of what has been discussion as above, we are of opinion that the interest taken by the opp.party bank from the complainant against the said cash credit facility is justified interest and therefore, the complainant is not entitled to get back any amount from the opp.party bank in the name of excess interest collected.

7. Closing our discussion as above, we hold that the complaint has no merit and it is liable to be dismissed. Accordingly, the complaint is dismissed on contest.

           Given under our hand and seal on this day of 18^th August ,2017.

       ( Smti A. D. Lahkar)                                                                         ( Md.S.Hussain)

Member , DCDRF,Kamrup                                                        President, DCDRF ,Kamrup