BEFORE THE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD.
FA 1210/2008 against C.C. 377/2007, Dist. Forum-III, Hyderabad
Between:
1. The General Manager
SBI Cards and Payment Services Pvt. Ltd.,
P.O. Box No. 28, GPO,
New Delhi-110 001.
Regd. office at SBI, Local Head Office
11, Parliament Street,
New Delhi.
Branch at IInd Floor,
Ashok Bhoopal Chambers
Near Anand Theatre
Begumpet, Hyderabad.
2. The Chairman & Managing Director
State Bank of India
11, Parliament Street
New Delhi-110 001. *** Appellants/
O.Ps 1 & 2
And
1. Dr. K. Sandhya Rani
Age:: 52 years,
R/o. Flat No. 201
Harmony, Banjara Apartments
Road No. 9, Banjara Hills
Hyderabad-500 034. *** Respondent/
Complainant
2. The Governor
Reserve Bank of India
New Delhi-110 001
(R3 – Not a necessary party) *** Respondent/
O.P. No. 3
Counsel for the Petitioner: Mr. N. Harinath Reddy
Counsel for the Respondent: P.I.P.
QUORUM:
HON’BLE SRI JUSTICE D.APPA RAO, PRESIDENT.
SMT.M.SHREESHA, LADY MEMBER.
&
SRI G.BHOOPATHI REDDY, MEMBER
WEDNESDAY, THE SEVENTEENTH DAY OF SEPTEMBER TWO THOUSAND EIGHT
ORAL ORDER: (Per Hon’ble Sri Justice D.Appa Rao, President)
***
This an appeal preferred by the SBI Cards & Payment Services Pvt. Ltd., against the order of the Dist. Forum in directing it to pay punitive damages, compensation and costs.
The case of the complainant in brief is that she is a senior doctor and Gynecologist having substantial practice, and consultant to corporate hospitals at Hyderabad. In the year 2002 the appellant approached her, and issued SBI card to the doctors by mis-representing that she would be given some special privileges She has been using the credit card and paying the amounts regularly and even renewed that in the year 2004. Contrarily, the appellant has been charging excess and exorbitant rate of interest in the name of finance charges violating the RBI rules. When she asked for statement of account, the appellant sent a letter Dt. 11.10.2006 informing that the credit card facility is withdrawn with immediate effect and asked her to pay the outstanding balance of Rs. 40,302/-. Since it was an exaggerated claim, she asked her statement of account for which the appellant informed that every month on 10th they have been sending the statements. She was directed to pay Rs. 112.24 inclusive of government service tax @ 12.24% for issuing duplicate statement. Since she did not receive any statement she sent registered letter informing that she discontinued the card, and cleared the entire balance, and there was no due of any amount. However, the appellant engaged private Gundas and threatening at her clinic and through phone calls using abusive language while she was conducting surgeries and examining the patients. The appellant has been demanding and harassing her to pay abnormal amount without furnishing any statement. The appellant was guilty of deficiency in service in not furnishing statement of account. She later learnt that the appellant entrusted the credit card division to unauthorized persons, and allowed them to collect money through illegal means. Collecting money through coercion is illegal. Therefore, she claimed Rs. 4.99 lakhs towards mental agony, and for a direction to recover and pay the amount as per rules.
The appellants resisted the case. While admitting that they have extended credit card facility to her, they denied that they have charged excess rate of interest or violated the RBI rules. They have been regularly sending the copies of statements. The allegation that they have hired the Gundas for collecting the amounts was false. It is a reputed bank, never participated in any illegal activities. In order to get over payment such wild allegations were made. There was no deficiency in service on their part, and therefore prayed for dismissal of the complaint.
The complainant in proof of her case filed her affidavit evidence and Exs. A1 to A11 while the appellant filed the affidavit evidence of its officer and Ex. B1 statement of account from 10.2.2006 to 10.11.2007.
The Dist. Forum after considering the evidence placed on record opined that the appellant did not send the statements of account as alleged by them. Though she sent Ex. A5 letter Dt. 27.10.2006 informing that she stopped availing the facility and sought the statement of account and clarification of interest on which, she would pay the outstanding, the appellant did not either act upon it nor sent statement. In spite of the fact that she changed her address, they failed to change in their records and failed to send statement of account every month. Since the complaint was filed in the month of June, 2007 it could not have sent the statement of account subsequently claiming the amount with penal charges. Though the RBI guidelines authorize to appoint agents to collect amounts, they cannot resort to intimidation to collect the amounts. The allegation that she was harassed was not refuted by the appellant. In view of the fact that the doctor was unnecessarily harassed the Dist. Forum awarded punitive damages of Rs. 50,000/-, compensation of Rs. 30,000/- and costs of Rs. 2,000/- .
Aggrieved by the said decision the bank has preferred this appeal contending that the Dist. Forum did not appreciate either the facts or law in correct perspective. When she was ex-facie committed default she filed this case to get over the payment of the amount. For the first time she sought for clarification when she was informed that her credit card was being cancelled. The statement of account filed by it shows that in the month of February, 2006 the change of address was effected. They have not deputed collection agents for recovery of the amount. Therefore, it prayed that the appeal be allowed.
It is an undisputed fact that the appellant had issued credit card facility to the complainant, a Gynecologist. Her grievances are that excessive rate of interest was collected under the garb of financial charges. Statements of account were not furnished despite demand. She shifted her residence and informed the same by FAX and letters, they continued to correspond to the old address. Though she paid the amounts, they were not given due credit while computing the amounts.
At out outset, we may state that as long back as on 11.10.2006 under Ex. A1, SBI Cards & Payment Services Pvt. Ltd., informed the complainant that her account temporarily stands withdrawn with immediate effect, requesting her to refrain from using the card and pay the outstanding balance of Rs. 40,302.10 immediately. We may mention that no reason whatsoever was mentioned as to why the same was withdrawn. Admittedly, she has been using the said card from 2002 and renewed it in 2004. The complainant sent a letter under Ex. A2 Dt. 27.10.2006 asking the appellant to note her shift of residence and send a copy of the statement of account. Though under Ex. A3 letter Dt. 19.11.2006 the appellant has informed that they have changed her mailing address and demanded Rs. 112.24 inclusive of government service tax of 12.24% in order to furnish duplicate statement of account, however, the said letter was addressed to her old address. The complainant again sent Ex. A4 letter Dt. 29.11.2006 alleging that she did not receive a single statement of account though it was mentioned that she has been sent statements of account
every month. She also complained that the private agency to whom the collection of amount was entrusted was harassing by calling indiscriminately the whole day. She further stated that she discontinued the card long back and paid enough. The allegation that she was still due was not correct. Admittedly, the bank did not respond to any of these letters. According to it, it has sent the monthly statements of account, and filed the same marked as Ex. B1 series right from 10.2.006 to 10.11.2007. The fact that the said statements were sent to the complainant was not evidenced by any document by way of acknowledgement etc.
The complainant by referring to these statements contended that assuming that those statements were sent, which in fact were not sent, the SBI Cards division has been debiting financial charges almost every month ranging from Rs. 1200/- to Rs. 1500/-, in spite of the fact that she has been clearing the amounts by way of cheques evidenced under the very statements filed by the SBI Card division. viz., Rs.5,900/- on 10.3.2006, Rs. 4,900/- on 10.4.2006, Rs. 6,500/- on 10.5.2006, Rs. 9,200/- on 10.6.2006, Rs. 6,100/- on 10.8.2006, Rs. 6,200/- on 10.11.2006, and Rs. 4,900/- on 10.2.2007 but they were not given credit. On the other hand every month they have been debiting the amount on the ground that payment was not received by due date, they swelled the amount to Rs. 40,302.10 vide Ex. A1 and Rs. 36,952.54 under Ex. A6 and finally Rs. 50,979.56 by November, 2007. When the bank had withdrawn the facility with effect from 11.10.2006 it continued to debit the amount till 10.11.2007 evidenced under Ex. B1. It is not as though by the date of Ex. A1 she was not having any amount in her bank account. A perusal of statement of account Dt. 10.11.2006 shows that a cash limit of Rs. 26,800/- was available. When the amounts were outstanding, it could have adjusted the said amount, and stopped collecting interest on delayed payment, financial charges etc. It could have addressed letter demanding her to clear the amount in view of cancellation of credit card.
The complainant in order to show that they have created all these statements referred Ex. A9 Dt. 10.5.2006. The said statement was sent to Road No. 9 address, when she has informed for the first time under Ex. A2 Dt. 27.10.2006 that she shifted her residence. It could not have noted the address in earlier statement. Ignoring Ex. A9, under Ex. A3 Dt. 19.11.2006 the bank has informed that they have changed her mailing address. Curiously in Ex. A8 statement of account Dt. 10.6.2006, her address was noted as Road No. 9, Banjara Hills. Her contention was that even the statement of accounts were prepared later. These statements were preceded Ex. A3. Undoubtedly, when the complainant asserts these facts, the appellant could not show as to how these discrepancies crept in. It could show that it informed the complainant as to the rate of interest and as to the exact amount that is payable towards financial charges etc. The bank did not respond when she gave notice. Her contention that excessive rate of interest was collected was not refuted by the appellant by placing any documentary evidence as to the exact percentage of interest that was charged on these amounts. No evidence was filed to prove that they were sending the statements of account every month. When she alleged that she had discontinued the card long back, and that she has been receiving threatening calls by registered letter, neither reply was given nor could prove that she had utilized the SBI card.
It is an undisputed fact that the complainant is having an S.B. account with second appellant SBI to which first appellant SBI Card division is a subsidiary.
Though the second appellant is governed by RBI, the first appellant is a non-banking financial company. The Reserve Bank of India (R3) in its counter mentioned that RBI does not regulate the day to day affairs of the non-banking financial companies including the fist appellant, and the rate of interest that is to be charged as per the agreement between the complainant and the appellant. It has issued Non-Banking Financial Companies Prudential Norms
Directions, 1998 for regulating the matters relating to income recognition, accounting standards, making of proper provision for bad and doubtful debts, capital adequacy based on risk weights for assets and credit conversion factors etc. In regard to the credit card operations of the bank, it has issued circular guidelines which were mentioned in Annexure-1 & 2 and Fair Practices Code in Annexure-3 annexed to their counter. In fact SBI Card has informed that it has adopted Fair Practices Code as per the RBI regulations.
In this regard the RBI in its counter has categorically mentioned that “It was observed that there were certain deficiencies in the Fair Practice Code adopted by the company. The company was advised to revise the Fair Practices Code. The company has replied to RBI that it shall place the revised Fair Practices Code before its Board meeting to be held in September, 2007. The RBI is not stipulating rate of interest to be charged by the NBFCs. However, in view of the complaints received on excessive interest rates charged by NBFCs the RBI vide its circular DNBS.PD/CC No. 95/03.05.002/2006-07 Dt. 24.5.2007 advised the NBFCs to lay out appropriate internal principles and procedures in determining interest rates and processing and other charges keeping in view the guidelines issued by RBI on fair practices code.” (emphasis supplied).
It has further stated that in exercise of powers conferred under RBI Act the guidelines for Fair Practices Code were framed. RBI has directed R1 to appraise the cardholder as to the terms and conditions for payment of credit card dues, including the minimum payment due and the changes in charges etc. Annexure-I pertains to Credit Card Operations of the Banks cautioned when it outsource its operations. Clause 2- pertaining to interest rates and other charges reads as follows :
a. Card issuers should ensure that there is no delay in dispatching bills and the customer has sufficient number of days (at least one fortnight) for making payment before the interest starts getting charged.
b. Card issuers should quote annualized percentage rates (APR) on card products (separately for retail purchase and for cash advance, if different). The method of calculation of APR should be given with a couple of examples for better comprehension. The APR charged and the annual fee should be shown with equal prominence. The late payment charges, including the method of calculation of such charges and the number of days, should be prominently indicated. The manner in which the outstanding unpaid amount will be included for calculation of interest should also be specifically shown with prominence in all monthly statements. Even where the minimum amount indicated to keep the card valid has been paid, it should be indicated in bold letters that the interest will be charged on the amount due after the due date of payment. These aspects may be shown in the Welcome Kit in addition to being shown in the monthly statement.
Despite the fact that she was protesting that wrong billing was made neither R1 nor R2 tried to resolve the matter. It may be stated herein that R2 bank cannot get over by stating that it was not responsible and it was R1 a private company that was dealing with the matter. In the coloumn of Right to privacy it was mentioned that “the card issuing bank/NBFC should maintain a Do not Call Registry (DNCR) containing the phone numbers of customers as well as non-customers who have informed the bank/NBFC that they do not wish to receive unsolicited calls/SMS and also customer confidentiality and fair practices in debt collection. Redressal of grievances is contemplated under Clause 6. Despite the complainant has made her complaint it was not resolved nor referred to redressal agency. No notice as contemplated was issued for reporting the cardholder as defaulter nor the procedure for withdrawal nor the recovery procedure. Neither R1 nor R2 has issued any notice. Though she was withdrawn the card facility on 11.10.2006 it continued debiting the amounts towards financial charges and interest towards payment not received by due date etc. No rule was brought to our notice to impose the above charges on discontinued cards. Undoubtedly, this amounts to deficiency in service.
The complainant when she alleged that she has been receiving unsolicited phone calls, the appellant except denying in general terms did not refute the statement. It requested her to furnish the numbers from whom she has received the calls. Though belatedly, at the time of hearing the appeal, the complainant in person, filed the details of phone calls received by her stating that she had received calls from Chennai Card Division etc. showing the details of date, time and duration of calls. According to her she requested the SBI Card Division, Chennai on 29.3.2007 not to disturb by frequently telephoning her. Her case is that, while she was conducting surgeries or evaluating the patients, phone calls are received threatening her. The appellant dare not refute the same. The complainant contended that despite the fact that she paid the amounts by way of cheques they were not given deduction, and the appellant was showing the amount as due. Her contention is that after she filed the case before the Forum, suddenly, they stopped collecting finance charges and the terminology has been changed to DPI. The appellant could not give any explanation for such discrepancies in the statement. A perusal of the statement of account would undoubtedly disclose that SBI Card Division except refuting the same by stating that the complainant has come with false case did not allege positively as to the percentage of interest that was collected, the payments that were reflected, they could not explain as to how the amount was deducted under the head ‘finance charges’. Ex-facie it was running into thousands.
By the date her facility was withdrawn under Ex. A1, no statement of account was annexed. According to the statement of account Dt. 10.10.2006 it was mentioned that an amount of Rs. 26,697.90 was available credit, cash limit was Rs. 26,800/-, available cash was Rs. 26,697.90 and the minimum amount due was Rs. 5,772.92 . However, it was mentioned that an amount of Rs. 40,302.10 was due. The appellant could have informed as to how it could arrive the said amount despite the fact that she has been paying the amounts by
way of cheques received and credited by it vide statement of accounts Dt. 10.6.2006 etc. When the complainant could prove that the statements of account were not regularly sent and the rate of interest was not informed, did not change her address despite her notice and submitting a false statement would undoubtedly amount to deficiency in service. The complainant when asserted that she has been harassed, no responsible officer filed affidavit stating that no agency on their behalf has ever visited nor threatened her. She is a responsible doctor. She would not have made such an allegation without any basis. In fact, to substantiate the same she has filed the details of telephone calls. Therefore, we are of the opinion that the complainant could prove that the appellant had committed irregularities.
Considering the fact that the complainant as long back as on 27.10.2006 has issued notice protesting the statement etc. for which no reply was given, there is no reason why it should not be awarded damages which was rightly awarded by the Dist. Forum. When she faced humiliation through phone calls and also from Gundas she being a lady her agony could not be described except stating that it would undoubtedly cause nuisance as well as disturbance to her work. She must have been subjected to mental tension, physical insecurity. It is unfortunate that SBI being a reputed bank is entrusting this activity to private agencies and as we could see that it has no control over its activities. When its own agency is pursuing unethical activities despite the fact that the same was informed to it, it could not check such activities. Obviously, it intended to emulate the private banks which were indulging to such sort of activities for collecting the amounts. This is obviously, due to unhealthy competition between the banks, which in fact , amounts to unfair trade practice.
Considering the nature of the complaint, it had to pay damages of Rs. 50,000/- as determined by the Dist. Forum. The Dist. Forum has observed that the amount could be deducted and set off for the amount payable by her. This is just and reasonable in the circumstances. We believe that awarding compensation of Rs. 30,000/- once again is unjust as the appellant should not be penalized twice under the same head.
In the result the appeal is allowed in part setting aside the compensation of Rs. 30,000/- awarded by Dist. Forum. In all other aspects, the order of the Dist. Forum is confirmed. However, in the circumstances, each party to bear its own costs.
PRESIDENT LADY MEMBER MALE MEMBER
Dt. 17.9.2008.
*pnr
CORRECTED – O.K.
