Date of Filing – 10.02.2017
Date of Hearing – 08.03.2018
The instant appeal under Section 15 of the Consumer Protection Act, 1986 (hereinafter referred to as ‘the Act’) is at the behest of the Opposite Party Nos. 1 to 3 to assail the Order No.15 dated 11.01.2017 passed by the Ld. District Consumer Disputes Redressal Forum, Kolkata, Unit-II (for short, Ld. District Forum) in Consumer Complaint No. 329/2016. By the impugned order, the Ld. District Forum allowed the complaint lodged by the Respondent Nos. 1 & 2 with the direction upon the Appellants to refund an amount of Rs.35,708/- along with interest @ 12% p.a. w.e.f. 31.03.2014 till compliance, to pay compensation of Rs. 3,00,000/-, to pay litigation cost of Rs.15,000/- and if the order is put in execution, they shall have to pay penal damages @ Rs.5,000/- per month.
The Respondents herein being Complainants lodged the complaint before the Ld. District Forum asserting that the respondent no.1 opened a recurring deposit account being No.26921821165 with Canara Bank for Rs.1,000/- per month for a period of five years on 18.05.2011. The respondent no.2 obtained an educational loan of Rs.7,50,000/- from the bank and the respondent no.1 was a co-borrower of the said loan. In the month of March, 2014 on account of his need, respondent no.1 requested appellant no.2 to close the said RD account and ultimately the said RD account was closed on 31.03.2014 and the amount was credited to the educational loan being A/C No.3966517899. The respondent no.1 approached RBI Ombudsman but the same was not entertained. The respondents submit that the appellants closed the RD account before maturity due to outstanding of Rs.1,00,778/- in the EL A/C of respondent no.2 whereas the appellants admitted that an amount of Rs.3,11,611/- refunded to EL account of respondent no.2. By a letter dated 11.06.2015, the respondent no.1 requested the appellant no.1 to redress grievances of him for arbitrary closure of RD Account for adjustment with EL Account but the same remain unheeded. Hence, the respondents approached the Ld. District Forum against the appellants on the allegation of deficiency in services on the part of them with prayer for refund of Rs.35,708/-, compensation of Rs.4,00,000/- for harassment and mental agony and litigation cost of Rs.15,000/-.
The Appellants herein being OPs by filing a written version have stated that the respondent no.2 was granted with education loan to the tune of Rs.7,50,000/- and respondent no.1 was a co-obligator for such facilities. The repayment schedule of one year after completion of course or six months of getting employment whichever is earlier. The respondent no.2 after completion of the course failed and neglected to make repayment for which the RD account of co-obligator was adjusted with education loan after exercising the general lien and as such when there was no illegality/irregularity in adjusting the proceeds of the recurring deposits towards the loan account, the complaint should be dismissed.
After assessing the materials on record including the evidence led by the parties, the Ld. District Forum by the impugned final order allowed the complaint with certain directions therein. Challenging the said order, the opposite parties have come up in this Commission with the present appeal.
Ms. Aparajita Ghosh, Ld. Advocate for the appellants has submitted that as per provisions of Section 171 of Indian Contract Act, Bank has the authority of general lien and as such by adjusting the RD account stood in the name of respondent no.1 in educational loan of respondent no.2, in which respondent no.1 was a co-borrower, the Bank did not commit any illegality or irregularity and the Ld. District Forum has failed to consider the matter in accordance with the provisions of law and therefore, the impugned order should be set aside. Besides, referring to Section 171 of Indian Contract Act, the Ld. Advocate for the appellants has referred several decisions in order to substantiate her contentions like – (1) 1997 (2) CPJ 67 (NC) [Branch Manager, Union Bank of India & Anr. – Vs. – T.S. Rao]; (2) 1996 (2) CPC 455 [Allahabad Bank & Anr. – Vs. – Sushil Kumar Dass]; (3) 2004 (2) CPJ 59 [Manager, Karnataka Bank Ltd. & Anr. –Vs. – P. Gowda]; (4) 2017 (3) CPJ 430 [Branch Manager, SBI –Vs. – SM Patel] and also a decision of Hon’ble Supreme Court reported in 1992 (1) Scale 534 [Syndicate Bank – Vs. – Bijay Kumar].
Per contra, Mr. Prabir Basu, Ld. Advocate for the Respondents has contended that right of lien is not available for deposits, since deposits are neither goods nor securities. Expanding his argument, the Ld. Advocate for the respondents has submitted that Section 171 of Indian Contract Act has two parts – the first part gives a statutory right of lien to the following categories, viz.- bankers, factors, wharfingers, attorneys of a High Court and policy brokers subject to their contracting out of Section 171 and the second part of Section 171 applies two persons other than the aforesaid five categories and two of them Section 171 does not give a statutory right of lien. To fortify his contention, Ld. Advocate for the respondents has placed reliance to a decision of Hon’ble National Consumer Commission dated 31.01.2006 in RP/2458/2003 (ING. Vysya Bank Ltd. – Vs. – Y.G. Sreeram Setty] and also a decision of Bombay High Court reported in (1992) 94 BOMLR 585 [State Bank of India – Vs. – Javed Akhtar Hussian & Ors.].
I have scrutinised the materials on record and considered the submission advanced by the Ld. Advocates appearing for the parties.
Having heard the Ld. Advocates for the respective parties and on perusal of materials on record, it would reveal that the respondent no.1 was an employee of Canara Bank and respondent no.2 was a student. The respondent no.2 being son of respondent no.1 opened a RD account being No.26921821165 with Canara Bank for Rs.1,000/- per month for a period of five on 18.05.2011. It is also not in dispute that the respondent no.2 being son of respondent no.1 has obtained an educational loan from the Canara Bank, Sealdah Branch being EL A/C No.03966517899 amounting to Rs.7,50,000/- which was a clear loan without any co-lateral security and it was stipulated that the repayment will be made in 36 instalments and the repayment will commence after completion of course or six months from the date of getting employment. The said educational loan was sanctioned on 29.10.2007.
Admittedly, on 25.03.2014 the respondent no.1 being an employee of the bank wrote a letter to the Manager, Canara Bank, Lake Town Branch where he used to maintain RD account for closure of the said account before maturity and to pay by way of Demand Draft/Pay Order. Again on 27.03.2014 the respondent no.1 requested for closure of the said RD account. Subsequently, on 31.03.2014 the bank authority closed the RD account of respondent no.1 prematurely and credited the proceeds of the said account to educational loan being No.03966517899 having with Sealdah Branch of the same Bank.
Now, the only question centres around as to whether the bank had any authority to adjust the proceeds of RD account in education loan without any consent of account holder. In order to understand the situation, it would be worth while to reproduce the provisions of Section 171 of the Contract Act which provides –
“171. General lien of bankers, factors, wharfingers, attorneys and polity brokers. – Bankers, factors, wharfingers, attorneys of a High Court and Policy brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them; but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect”.
The foregoing provisions make it abundantly clear that in case of bailment of goods, the banker can retain as a security for general balance of account of any goods bailed to them. However, this would not mean that bank can straightway appropriate the amount due and payable under the FDRs for a general balance of account. In this regard, the bankers right of lien (Handbook of Banking Information by NS Toor – 31st ED) indicates that lien has been defined as the right of a creditor to retain the possession of the goods and the securities owned by the debtor until the debt has been paid. Lien does not include the right of sell of goods and securities, so retain by the creditor. Lien is available on goods and securities only (such as bills, cheques, promissory notes, share certificates, bonds, debentures). In the instant case, there was no co-lateral security for the purpose of obtaining educational loan and the Sanction Memorandum dated 29.10.2007 expressedly indicate that it was a ‘clear’ loan. Therefore, there was hardly any scope on the part of bank with regard to adjustment of proceeds of RD account of respondent no.1 with education loan of respondent no.2 without calling upon the respondent no.2 to repay the loan amount and also the respondent no.1in case loan is not paid by respondent no.2.
I have gone through the decisions referred by the Ld. Advocate for the appellant but nowhere it has been observed that without any bailment or ‘lien’ over the amount, bank has any authority to realise the amount on their own whim or fancy.
In that view of the matter, the Ld. District Forum was quite justified in directing the appellants herein to refund the amount of Rs.35,708/- w.e.f. 31.03.2014 till compliance.
However, I do not find any reason why the Ld. District Forum imposed an interest over 12% p.a. over the said amount when in prayer clause – (a) to the petition of complaint, the respondents themselves claimed an interest @ 11% p.a. over the said amount. In any case, a Forum constituted under the Act has a wide reach and even in cases of service rendered by statutory and public authorities. Such authorities became liable to compensate for misfeasance in public office i.e. an act which is oppressive or capricious or arbitrary or negligent provided loss or injury is suffered by a citizen. In the case beforehand, it is quite clear that due to adjustment of account from RD account to EL account, the respondent no.1 has been deprived of gaining interest over the fixed deposit amounts. It is well settled that in such a case compensation has to be awarded in the form of interest and in catena of decisions of the Hon’ble Supreme Court has observed that interest must be awarded as per prevalent bank interest provided by any nationalised bank or financial institutions. In this regard it would be worthwhile to have a look to the provisions of Section 3(1) of the Interest Act 1978 which provides – “in any proceedings for the recovery of any debt or damages or in any proceedings in which a claim for interest in respect for any debt or damages already paid is made, the Court may, if it thinks fit, allow interest to the person entitled to the debt or damage or to the person making such claim, as the case may be at a rate not exceeding the current rate of interest, for the whole or part”.
The Ld. District Forum did not consider the relevant provision while imposing interest. In the foregoing Section, ‘current rate of interest’ would mean the highest of the maximum rate at which interest may be paid on different classes of deposits by different classes of scheduled banks in accordance with the directions given or issued by the Reserve Bank of India under the Banking Regulations Act, 1949.
Therefore, relying upon the provisions of law, the Ld. District Forum should not have imposed and interest which was excessive and considering the prevalent bank interest, the interest should have been awarded @8% p.a. from 31.03.2014 till its realisation.
Now, the point falls my consideration as to whether the Ld. District Forum was justified in awarding Rs.3,00,000/- as compensation. It is now well settled that compensation has to be worked out after looking of each case and after determining what is the amount of harassment/loss which has been caused to the consumer. The respondents have suffered loss only to the extent of interest only and the same has happened on account of whimsical activities of some of official of bank causing drainage of public money. In that perspective, the Ld. District Forum has totally failed to appreciate the real situation, particularly when it has awarded compensation in the form of interest, there was no reason to award separate compensation in respect of same deficiency. In my opinion, the order of Ld. District Forum is vitiated for non-application of mind to a vital and relevant factor and hence, suffers from the vice of unreasonableness.
There was no prayer in the petition of complaint as to penal damages and as such the Ld. District Forum should not have awarded any amount to that effect keeping in view the principle of law that fair procedure is the hallmark of natural justice. However, the imposition of litigation cost of Rs.15,000/- was within the discretionary power of the Ld. District Forum and as such the said part of the order remain undisturbed.
In view of the above, the impugned order is modified to the extent that the appellants/opposite parties shall refund Rs.35,708/- along with interest thereon @ 8% p.a. from 31.03.2014 till its recovery and also entitled to litigation cost of Rs.15,000/- imposed by the Ld. District Forum. The above amount along with interest must be paid within 30 days from date. The other part of the order are hereby set aside.
With the above observations and directions, the appeal stands disposed of.
The Registrar of this Commission is directed to send a copy of this order to the Ld. District Consumer Disputes Redressal Forum, Kolkata, Unit-II for information.
