BEFORE THE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD.
F.A.No.828/2008 AGAINST C.C.No.99/2007, DISTRICT FORUM-I, CHITTOOR
Between:
The Lakshmi Vilas Bank Ltd.,
Rep. by its Branch Manager,
Chittoor Branch, O.T.K.Road,
Chittoor, Chittoor Branch. Appellant/ opp.party
And
Sri G.N.Chandra Guptha, Prop. Of
M/s Udaya Match Industries,
Aged about 49 years, Occ:Business,
D.No.6/110,
Elama Street, Santhapet, Chittoor. Respondent/
Complainant
Counsel for the Appellant: Mr.K.Mallikarjuna Rao
Counsel for the Respondent: Mr.K.Prabhu Kumar.
QUORUM: THE HON’BLE SRI JUSTICE D.APPA RAO, PRESIDENT
AND
SMT.M.SHREESHA, MEMBER
.
MONDAY, THE TWENTIETH DAY OF DECEMBER,
TWO THOUSAND TEN
(Typed to the dictation of Smt.M.Shreesha, Hon’ble Member)
***
Aggrieved by the order in C.C.No.99/2007 on the file of District Forum-I, Chittoor, the opposite party preferred this appeal.
The brief facts as set out in the complaint are that the complainant availed loan of Rs.1,70,000/- under term loan account No.1/9596 in the name of M/s.Udaya Match Industries on 22-9-1999 and another loan of Rs.1,00,000/- under term loan No.3/9596 on 23-2-1996 from the opposite party bank and created equitable mortgage by deposit of his sale deeds pertaining to his factory land and building and cleared of the above said loans. It is the case of the complainant that the opposite party did not return the original sale deeds which were deposited with it. Inspite of repeated requests and demands, the opposite party postponed the return of the documents on the ground that they were misplaced. The complainant submitted that he intended to restart his business and in the absence of security, he could not avail loan. The complainant submitted that recently the opposite party informed him that for non-payment of the loan availed by the complainant’s brother, G.N.Surendra Gupta, the complainant’s property will be sold in open auction as the complainant stood as guarantor to his brother. The complainant submits that the question of taking guarantee or creation of equitable mortgage of the property of third party for a loan granted under PMRY scheme is totally against law and principles laid down by State and Central Government. Inspite of his efforts, the opposite party did not return the original sale deeds pertaining to his factory land and building. Hence the complaint for a direction to the opposite party to return the sale deeds in original pertaining to factory land and building together with compensation of Rs.1,00,000/- and costs.
Opposite party filed objections stating that the complainant’s brother, G.N.Surender Gupta availed term loan of Rs.95,000/- on 15-5-1996 for which the complainant stood as guarantor and executed a letter of guarantee on 15-5-1996 and therefore the complainant is jointly and severally liable to pay the loan amount. Further the complainant as a guarantor created equitable mortgage in favour of the opposite party by deposit of the title deeds and executed a letter dated 24-11-1995 in favour of the respondent bank to the effect that the complainant has created equitable mortgage for all the existing and future debts either personally or as guarantor and executed revival letter dated 10-5-1999 in favour of the bank pertaining to the loan availed by his brother.
Further the opposite party submitted that the complainant s barred by limitation as he discharged his mortgage debts on 17-1-2001 and 21-3-2001 respectively and there is no deficiency in service and prayed for dismissal of the complaint.
Based on the evidence adduced i.e. Exs.A1 to A6 and B1 to B3 and the pleadings put forward, the District Forum allowed the complaint in part directing the opposite party bank to return the title deeds, Ex.A4 and A5 of the complainant together with compensation of Rs.15,000/- and costs of Rs.1500/-.
Aggrieved by the said order, the opposite party preferred this appeal.
The facts not in dispute are that the complainant availed loan of Rs.1,70,000/- and another term loan of Rs.1,00,000/-as evidenced under Ex.A2 & A3 bank pass books respectively and created equitable mortgage by deposit of his sale deeds pertaining to his factory land and building. It is the case of the complainant that he had cleared the said loans on 17-1-2001 and 21-3-2001 respectively. It is an admitted fact that the complainant’s brother obtained a loan of Rs.95,000/- from opposite party bank under the PMRY scheme on 15-5-1996 and the complainant stood as a guarantor to his brother. The loan is still pending and opposite party has not returned the title deeds inspite of several requests. Thereafter the complainant got issued a legal notice on 31-8-2007 evidenced under Ex.A1 calling upon the opposite parties to return his title deeds. It is the complainant’s case that in the absence of security, no bank is willing to sanction any loan to him to restart his business.
It is the case of the opposite party bank that the complainant stood as a guarantor to the loan obtained by his younger brother evidence under Ex.B2 and also executed a revival letter evidenced under Ex.B3.
The main point that falls for consideration is whether the bank can withhold the title deeds of the complainant on the ground that he stood as guarantor for his brother’s loan?
Ex.A6 gives the rules of PMRY scheme as follows:
Clause 8 of the Prime Minister’s Rozgar Yojana reads as follows:
iii) Loan amount:
a) Banks may provide a composite (term loan/working capital)
not exceeding Rs.95,000/- or Rs.1,90,000/- per individual
borrower depending upon whether the project is in the
business sector or other than the business sector respectively,
after satisfying about the viability and bankability of the
project.
vii)
c) Borrowers will not be required to give collateral security under
Industry sector project with the cost up to Rs.2,00 lakhs and upto
Rs.1.00 lakh for business and service sectors. Banks overtly/covertly
should not insist on collateral from the borrowers under PMRY even
though they are expected to exercise special care while scrutinizing
cases of laons exceeding Rs.1 lakh where no fixed assets are created.
ix) Repayment schedule
a) Repayment schedule may be fixed in the range of 3 to 7 years after
an initial moratorium as may be prescribed by the financing bank,
depending on the nature and profitability of the venture. Working
capital limit should be reviewed periodically.
It is evident from the rules of the scheme that the bank need not collect any security or mortgage from the unemployed beneficiaries to obtain loan of Rs.95,000/- or below. It is pertinent to note that the Branch Manager of the bank mentioned in his written version that the complainant voluntarily gave guarantee to his brother’s loan. The District Forum has observed that the complainant brother obtained loan in May, 1996 and the letter which the opposite party is relying upon with respect to creation of equitable mortgage is dated 22-11-1995 and as on that date, the complainant’s brother did not borrow any amount from the opposite party. Moreover, we observe from the rules of PMRY scheme, that there is no such term or condition which empowers the bank to demand security for a loan of Rs.95,000/-. The appellant bank also filed additional evidence under Exs.B4 and B5, the plaint copy of O.S.No.8/2009 (filed by the bank against the complainant’s brother) and the written statement filed on behalf of the second defendant in O.S.No.8/2009, who is the respondent/complainant herein in which he contended that he has approached the District Forum and an appeal is pending before the State Commission and denies the letter of guarantee dated 15-5-1996. The appellant/opposite party did not file any documentary evidence to establish that under the PMRY scheme, they are entitled to take security from the borrower. While it is an admitted fact that the complainant has cleared his loans, the act of the opposite party in withholding his title deeds on the ground that he stood as guarantor to his brother, who obtained a loan of Rs.95,000/- under PMRY scheme, which does not even necessitate taking of security by the bank, amounts to deficiency in service. The contention of the appellant that the complaint is barred by limitation is unsustainable since the complainant has discharged the debt on 17-1-2001 and 21-3-2001 respectively and it is an admitted fact that the title deeds were not returned from those dates to the complainant and hence this can be construed as continuing cause of action. Therefore, we see no reason to interfere with the well considered order of the District Forum.
In the result this appeal fails and is accordingly dismissed. Time for compliance four weeks.
Sd/-PRESIDENT.
Sd/-MEMBER.
.
JM Dt.20-12-2010
