Kerala

Idukki

CC/213/2024

Bibin Shaji - Complainant(s)

Versus

ESAF Finance Bank - Opp.Party(s)

30 Oct 2024

ORDER

DATE OF FILING :  18.10.2024

IN THE CONSUMER DISPUTES REDRESSAL COMMISSION, IDUKKI

Dated this the      30^th   day of  October,   2024

Present :

SRI. C. SURESHKUMAR PRESIDENT

SRI. AMPADY K.S. MEMBER

CC NO.213/2024

Between

Complainant     :      Bibin Shaji, S/o. Shaji,

Muthassiveettil House,

Kallumedu, Chenkara P.O.,

Peerumade – 685533.

Proprietor, B.M. Traders,

3/870, Muthassiveettil House,

Kallumedu, Chenkara P.O.,

Peerumade – 685533.

          (By Adv: Baby Joseph)

And

Opposite Parties     :  1. ESAF Small Finance Bank,

Kattappana Branch,

Kattappana – 685508,

           Represented by its Branch Manager.

       2. Bibin Narayanan,

AVP and Cluster Head,

MSME & Corporate Business,

ESAF Small Finance Bank,ESAF Bhavan,

Mannuthy P.O., Thrissur – 680651.

 

O R D E R

 

SRI. C. SURESHKUMAR, PRESIDENT

 

1.  This is a complaint filed under Section 35 of the Consumer Protection Act of 2019 (the Act, for short).  Case of complainant is briefly discussed hereunder :

 

Complainant is a business man engaged in the business of spices including cardamom and pepper.  He is proprietor of B.N. Traders (GSTIN – 32HGIPS7007EIZE) and has a Spices Board Licence No.CS/DL-268/137/2023-2024.  1^st opposite party is a banking company with a branch at Kattappana, represented in this complaint by its branch manager.  2^nd opposite party is  ‘AVP’ and Cluster Head of MSME and corporate business of 1^st opposite party having its office in Mannuthi, Thissur.  Complainant had availed a micro, small and medium enterprises loan of ₨. 54,00,000/- from 1^st opposite party on 17/10/2022. He was duly repaying the loan instalments.  At the time when loan was availed, agreed interest rate was 11.35%.  However, opposite party had unilaterally increased the rate of interest without the consent of complainant in violation of loan terms and conditions. Complainant has two accounts in 1^st opposite party bank.  One is a current account with No.10220002107858 and another is an overdraft account with No.74220000037682.  When complainant had opted to close the loan, an amount of Rs.1,27,440/- was initially claimed as preclosure charges by opposite parties on 28.7.2023.  A tax invoice was given for payment of pre-closure charges.  However, 1^st opposite party, as instructed by 2^nd opposite party, had actually appropriated Rs.1,39,362/- from current account of complainant as preclosure charges.  This is unconscionable, excessive and unjustified.  Amount was charged without consent of complainant.  RBI has mandated that banks should permitted pre-payment of floating rate loans without levying any pre-payment penalty.  This has not been obeyed by opposite parties.  On 29.7.2023, an additional amount of Rs.11,934.36/- was deducted from overdraft loan account by opposite party upon instructions given by 2^nd opposite party.  Thus, there is irrational deduction of Rs.1,39,362/- from current account of complainant against invoice amount of Rs.1,27,440/-.  

 

In order to improve his business, complainant had applied for an overdraft limit of Rs.80 lakhs from HDFC bank Nedumkandam branch as takeover loan from 1^st opposite party.  For closing the existing loan availed from 1^st opposite party, complainant had obtained a loan of Rs.54,00,000/- from HDFC bank. Demand draft for Rs.53,61,746/- was issued from HDFC bank out of the said loan of Rs.54 lakhs, to 1^st opposite party on 7.7.2023 for settling outstanding balance.  Upon receipt of the said amount on 7.7.2023, 1^st opposite party closed the loan only on 29.7.2023.  A closure certificate was given thereafter on 6.9.2023.  However, 1^st opposite party had only returned the loan documents on 8.8.2023 after a delay of more than a month, since post payment of Rs.53,61,746/-.  Delay had adversely affected the complainant’s business operations and future financial prospects.  Due to complainant’s existing repayment history, HDFC bank had offered an enhancement of the loan to Rs.1,50,00,000/-.  since opposite party had not returned the necessary loan documents within time, complainant could not avail this opportunity.  CIBIL score of the complainant was also adversely affected.  Though several attempts were made by complainant to resolve these issues with opposite parties, there was no timely response from their side.  2^nd opposite party had sent a reply e-mail only on 13.8.2024 stating that credit report of complainant’s concern has been updated.  If there were to be prompt closure of the loan, CIBIL score of complainant or his concern would not have been lowered. As complainant was not able to avail  enhanced loan facility from HDFC Bank, he had lost business opportunities worth crores.  However, complainant is limiting his claim to Rs.25 lakhs.  Conduct of opposite parties amount to severe deficiency in service and unfair trade practice.  Complainant therefore prays for compensation of Rs.25 lakhs for mental agony, financial loss and goodwill, due to deficiency in service from the side of opposite parties.  He seeks a direction against opposite parties to rectify the discrepancy in complainant’s CIBIL report.  He also seeks payment of litigation costs from opposite party.  

 

2.  Along with complaint, 11 documents have been submitted.

 

We have gone through the complaint and documents produced.  Complaint was filed on 18.10.2024.  Though it was taken up for admission hearing on that date, complainant or counsel were not present. Upon representations by proxy counsel, admission hearing was adjourned to 21.10.2024 and again to 22.10.2024.  As party or counsel were not present, upon representation by proxy counsel, admission hearing was again adjourned to 28.10.2024.  On that date also complainant or his counsel were not present.  Proxy counsel, Adv:  Babichen submitted that appropriate orders can be passed in this matter.  Now the points which arise for consideration are :

1)  Whether complaint is maintainable ?

2)  Order to be passed ?

 

3.  Point No.1 :

 

Complainant has mentioned in the complaint itself that he had initially availed a loan of Rs.54 lakhs from 1^st opposite party which was sanctioned as a micro small and medium enterprises loan.  It is very much evident from the complaint averments and documents produced that the loan was availed for the business of complainant.  Complainant is engaged in the business of spices including cardamom and pepper.  Documents 1 to 4 were produced in support of these contentions.  Complainant’s grievance is that pre-closure charges were demanded by opposite parties which is against RBI mandate that no such pre-closure charges should be collected in the case of loans given on floating rates. Besides, more amount was debited as pre-closure charhes than invoiced amount.

 

He further submits that  taken over of the loan was arranged with HDFC bank.  Considering his excellent repayment history, bank was prepared to enhance the loan to Rs. 1.5 crores.  However, due to delay from the side of opposite parties, complainant was unable to avail the additional loan / overdraft promised by HDFC bank which has resulted in loss of several business opportunities.  

 

In short, pleadings are to the effect that business of complainant was badly affected along with its goodwill due to delay from the side of opposite parties in returning the loan documents and further owing to delay in updating the repayment details which had resulted in lowering of CIBIL score of the complainant.  Entire loss alleged is of present  and future business prospects.  Pleadings at large would show that the loan earlier availed was for business purposes and the overdraft facility which was intended to be availed was also for business purposes.  Earlier borrowing and the intended one also was for commercial purposes. Borrowing funds has direct nexus to the business of complainant; in fact liquid cash was the fuel for the business of complainant.  Money was not intended for his personal use or for other purposes than his business.  Considering the facts and circumstances, which have emerged, it is clear that the act of borrowing is only for the purpose of business which can be only termed as commercial purpose.  Therefore, complaint is not entitled for the protection given in the explanation under Section 2(7) of the Act.  Complainant is not a consumer and therefore he cannot maintain a complaint also of this nature before this Commission.  

 

We also notice that the allegations in the complaint would require scrutiny of the transactions which have taken place between complainant and opposite parties along with the transaction entered into between complainant and HDFC bank.  This Commission will have to examine the terms of loan evidenced by the agreement executed between the parties, which has not been produced by  complainant.  Again, it will have to be examined whether there was any RBI mandate prohibiting collection of pre-closure charges of floating rate loans. If so, whether it can be waived or not? No such circular is seen produced along with the complaint.  17 documents have been produced by complainant at the initial stage itself.  It is evident that account will have to be examined  to verify whether any amount not warranted by the loan agreement and against RBI mandate, has been collected or not. Further question whether terms of contract are fair or not may also arise for which there is lack of jurisdiction. We may also have to consider which business opportunities were lost or could not be utilized effectively by complainant which he could have successfully utilized to augment his business profits for quantifying compensation due. It may become necessary to examine records of take over with HDFC Bank and also documents relating to enhanced loan facility offered. To put it shortly, complaint involves consideration of complicated questions of law and facts.  Therefore, we are of the opinion that it should be considered by a civil court of competent jurisdiction.  Hence we find that complaint is not maintainable.  Point No.1 is answered accordingly.

 

4.  Point No.2 :

 

In the result, this complaint is rejected.  Complainant is directed to take back extra copies, without delay.

 

           Pronounced by this Commission on this the   30^th  day of  October,  2024

Sd/-

  SRI. C. SURESHKUMAR, PRESIDENT

Sd/-

           SRI. AMPADY K.S., MEMBER

     Forwarded by Order,

 

ASSISTANT REGISTRAR