BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM AT BANGALORE URBAN

    05^th DAY OF DECEMBER 2019

Complainant/s: -                           

Sri.Nenalaji Rajendra

Kumar Jain

S/o Late Nenalal Jain

Aged about 52 years

No.9, Padarayanapura

Main Road, Pipeline

Road, Vijayanagar, Bengaluru-23.

By Adv.Sri.R.S.Patil

V/s

Opposite party/s:-    

HDB Financial Services Ltd., Rep by its Branch Manager No.05, 2^nd Floor, MRS Complex, Rammurthynagar Main Road, Above Pizza Corner, Rammurthynagar, Bengaluru-16.

By Advocates M/s.S.A.Associates and Advocates

ORDER

SRI. S.L PATIL, PRESIDENT

The Complainant has filed this complaint U/s 12 of Consumer Protection Act 1986, seeking direction against the Opposite Party (herein after called as OP) to pay Rs.4,65,837.79/- which is collected extra with interest at 18% p.a. towards mental agony; to pay cost and to award such other reliefs.

2. The brief facts of the complaint are as under:

The Complainant submits that, he availed LAP (loan against property) of Rs.53,70,000/- on 13.02.13 by mortgaging the property, which had to be returned in instalment. Thereafter, the Complainant requested the OP bank to enhance the loan amount. Bank enhanced the loan by sanctioning of Rs.84,11,462/- in the personal capacity of the Complainant. Again, the Complainant requested the bank to enhance the loan in his personal capacity. Accordingly, the bank enhanced the loan amount to Rs.1,16,25,000/-. All the loan amounts were crediting to the Complainant’s SB account. The instalments were paying through his SB account. The Complainant further submits that, when he went to preclose the loan amount, OP bank collected Rs.1,06,70,688.04 instead of Rs.1,02,04,851.25/- i.e. extra amount Rs.4,65,837.79/- saying that, the loan sanctioned in the name of business. The Complainant enquired with the bank stating that, loan availed by him was by mortgaging the property and in his personal capacity. Hence, he never asked the bank to sanction the loan in his business name. Finally the OP bank said that the Complainant signed the application and they sanctioned the loan in the Complainant’s business name i.e. Mahaveer enterprises, hence they collected extra amount. The bank without Complainant’s knowledge, enhanced the loan amount in the business name. The Complainant further submits that, if the loan is sanctioned in the name of business, same has to be discharged in the business name. But Memorandum of Discharge is entered between the OP bank and the Complainant on 01.07.16 not between Complainant’s business name. Hence, the Complainant issued legal notice dtd.26.08.16, to which, OP replied by repeating his stand. Hence this complaint.

3. After issuance of notice, OP did appear and filed version. OP in its version submits that, those who avail loan and avail financial facilities from the bank are duty bound to repay the amount strictly in accordance with the terms of contract. Any lapse in such matters is to be viewed seriously and the bank is not only entitled but duty bound to recover the amount by adopting all legally permissible methods. OP further submits that, the Complainant has suppressed the material facts and has suggested falsehood. The Complainant and two others representing M/s.Mahaveer Enterprises approached and requested the OP for sanction of loan against property and had availed loan of Rs.1,16,25,000/-. The Doc.B1 to B3/loan applications reflects that the Complainant had availed the loan for business purposes.  The credit facility sanctioned was subject to terms and conditions of the loan agreement executed between the Complainant and OP. Pursuant to same, the Complainant opted to foreclose both the loan account, as such the OP demanded to repay the outstanding principals and amounts towards interests apart from foreclosure penalty charges. Thereafter, the Complainant closed all amount claimed and the OP had levied the foreclosure charges as per the terms of the loan agreement and also in view of the guidelines of the RBI and hence the action of the OP is valid and not opposed to law. Hence on these grounds and other grounds OP prays for dismissal of the complaint.

4. The Complainant to substantiate his case filed affidavit evidence and produced the documents. OP filed affidavit evidence and produced the documents.  Both filed written arguments. Heard. We have gone through the available materials on record.

4a. This matter was heard in full on 18.02.19 and posted the matter for orders on 28.02.19. When this matter has taken up for passing the orders, we feel that, to hear on maintainability of this complaint. Accordingly, it was heard and posted the matter on this day. Since the entire matter has been heard, hence, we feel it to pass the final order including recording our findings on the maintainability of this complaint.

5. The points that arise for our consideration are:

1. Whether the Complainant is a consumer comes within the purview of the Sec.2(1)(d) of CP Act ?

2. Whether the Complainant proves the deficiency of service on the part of OP, if so, entitled for the relief sought for?

3. What order?

6. Our answer to the above points are as under:

Point No.1:- In the negative

Point No.2:- Does not survive for consideration

Point No.3:- As per final order

REASONS

7. Point No.1: We have briefly stated the contents of the complaint as well as the version filed by OP.  By way of filing the version, OP has taken the specific contention that, the Complainant has availed the loan for the purpose of business which is running in the name of Mahaveer Enterprises. In this context, placed reliance on the loan agreement/Doc.B6, wherein at Schedule I (Particulars of the loan facility) at Sl.No.9: Purpose/End use, the Complainant written as “Working Capital”. Further the Bank statement/Doc.B4 of Mahaveer Enterprises, loan a/c no.872800, wherein, under ‘Amount financed’ it is shown as Rs.1,16,25,000/-, the same is tallied with the contents of the complaint at para 4 reads thus:

4. That the petitioner again requested the bank to enhance the loan amount in his personal capacity, the bank enhanced the loan amount to Rs.1,16,25,000/- in the month of Feb 2015, loan account number bearing no.872800 sanctioned amount has credited to petitioner S/B account.

8. If these two documents/Doc.B4 & B6 are strictly construed, the loan availed to the extent of Rs.1,16,25,000/- is in respect of the ‘working capital’ which is exclusively for the purpose of commercial purpose. Referring to the said documents, OP submits that, the Complainant is not a consumer comes within the purview of Sec.2(1)d of CP Act. In respect of its stand, placed reliance on the following decisions:

1. Hon'ble National Commission, in the following cases, has held that ‘consumer’ under the Act does not include a person who obtain goods or services for a commercial purpose:

1. Lohia Starlinger ltd., vs. Zenith computers ltd., 1 (1991) CPJ 145
2. H.Vasanthkumar vs. Ford India ltd., FA.No.490/2004, dtd.10.02.09
3. Victory electricals ltd., vs. IDBI bank ltd., CC.No.248/2011, dtd.13.12.11
4. Prithviraj Narayanrao Chavan vs. National Seeds Corporation ltd., RP.No.3829 & 3289A/2007, dtd.03.01.12
5. Sri Geeta Infratech Pvt., Ltd., vs. Lodha healthy constructions and developers Pvt., Ltd., CC.No.207/2013, dtd.07.08.13
6. General Motors India Pvt., Ltd., vs. G.S.Fertilizers Pvt., Ltd., and India Automobiles (1960) ltd., II (2013) CPJ 72 (NC)
7. Heights Trade Pvt., Ltd., vs. Uco bank I (2014) CPJ 454 (NC)
8. Duggirala Prasad Babu vs. Skoda auto India Pvt., Ltd., RP.No.428/2013, dtd.04.03.14, not challenged before Hon'ble Supreme Court
9. Pharos solutions Pvt., Ltd., vs. Tata Motors ltd., & ors., CC.No.306/2014, dtd.01.09.14. Decision of NCDRC was challenged, however, the same was upheld by the Hon'ble Supreme Court
10. MCS Computer service (p) ltd., vs. Allena auto industries 2012 (2) CPR 68 (NC)

2. The Hon'ble Supreme Court in the case of Laxmi Engineering works vs. PSG Industrial institute 1995 3 SCC 583 has held that where a person does not purchase goods for exclusive use to earn his livelihood, he would not be a consumer as defined U/s.2(1)d of the Act.

3. The Hon'ble State Commission, West Bengal, recently, in a similar case of BMW India Pvt., Ltd., vs. Naveen Merico Engineering co., Pvt., Ltd., CC.No.358/2014 had dismissed the complaint vide its order dtd.12.05.15 as not maintainable on account that the car was purchased by the company for its official use, which amounts to purchase for commercial purpose, as in the present case. A similar order dtd.11.02.16 was also passed by the Hon'ble State Commission, West Bengal in Vibgyor Allied Infrastructure ltd., vs. BMW India CC.No.4/2016.

9. Per contra, the Complainant submits that, in the loan agreement/Doc.B6 nowhere it is mentioned that, he has availed the loan for commercial purpose in the name and style of Mahaveer Enterprises. Hence, the said loan availed in his individual capacity. In this context, he also placed reliance on the following decisions:

1. II (2012) CPC 65 Hon’ble Union Territory State Commission: it says that Consumer Protection Act, 1986 –Sec.2(1)(g) – banking and financial institutions services – loan – closure of loan account – deduction of pre-closer charges – legality – District Forum held that Complainants were not liable to pay pre-closer charges as there was no agreement between parties in that respect – hence appeal – neither appellant placed on record head office guidelines in regard to pre-payment charges in relation to loan account nor there was any evidence that said guidelines were brought to notice of Complainant and they agreed to same at the time of sanctioning of loan – appellant illegally charged the fore-closer/pre-payment charges from respondents-impugned order upheld.

2. I (2014) CPJ 67 (TN) Hon’ble Tamil Nadu State Commission: Consumer Protection Act, 1986  - Sec.2(1)(d), 2(1)(o), 17(2) – consumer – sanctioning of loan – Complainant being the proprietrix having business in small and medium industries in field of embroidery and button stitching for export garments in computerized embroidery machine with a view to start the automated embroidery applied for loan of Rs.30,08,000/- on basis of supporting document and by deposit of title deeds – deficiency of service challenged relating to sanction of loan and even after sanction, loan was not disbursed due to certain discrepancies – commercial purpose not established Complainant consumer U/s.2(1) and bank service provider U/s.2(1)(o) of Act.

Hence submits to reject the contention of the OP.

10. We have gone through the rival contention taken by both the parties. To substantiate its stand, OP placed reliance on the said Doc.B4 & B6, wherein it is clearly goes to show that, the loan availed by the Complainant is in the name of Mahaveer Enterprises for commercial purpose. Further under Doc.B4/bank statement submitted by OP, it is specifically mentioned that ‘Name: Mahaveer Enterprises, Loan account no:872800.’ These facts are not denied by the Complainant. Further the reply letter/Doc.B5 dtd.06.09.16 issued by OP bank to the learned counsel for the Complainant reads thus:

To

R.S.Patil, Advocate

Bengaluru-10.

Sub:Reply to your notice dtd.26.08.16

Ref: Loan a/c 872800

Dear Sir,

With reference to your letter dtd.26.08.16, the company would like to inform you that your client availed a loan in the name of the company i.e. Mahaveer Enterprises which is a commercial entity therefore prepayment charges are applicable.

The company would like to draw the attention in the RBI definition that circular DNBS (PD) CC no.80/03.10.042/2005.06 dtd.28.09.06 and para 2(A) iii of Master circular DNBS (PD) CC.No.388/03.10.042/2014.15 dtd.01.07.14 as a measure of customer protection and also in order to bring in uniformity with regards to prepayment of various loans by borrowers of banks and NBFCs. It is advised that NBFCs shall not charge foreclosure charges/prepayment penalties on all floating rate terms loans sanctioned to individual borrowers, with immediate effect.

Please be noted that in the above mentioned definition it has been specifically clarified by the RBI that if the first applicant is an individual in the loan structure and do not hold any commercial entity that prepayment charges will not be levied but your client expressly entered into an loan agreement with the name of the company i.e. Mahaveer Enterprises having floating rate of interest then prepayment charges are applicable. Hence, the request for refund which you put across on behalf of your client through your letter amounting to Rs.4,65,837.79/- cannot be processed.  

 11. The contents of the said reply notice is also not specifically denied by the Complainant. Since the loan availed is of ‘working capital’ for commercial purpose, under such circumstances, the decisions cited by the learned counsel for the OP to substantiate its stand is acceptable. When such being the fact, the Complainant is not a consumer comes within in the purview of Sec.2(1)d of CP Act. Utmost, he can approach Civil court to get redress his remedy by way of filing suit by taking the assistance of the decision of Hon'ble Supreme Court in the case of Laxmi Engineering works v. PSG Industrial Institute, II (1995) CPJ 1 (SC) on the question of limitation. Accordingly, we answered the point no.1 in the negative.

 12. Point no.2: In view of our findings on point no.1, this issue does not survive for consideration. Accordingly it is answered.

13. Point no.3: In the result, we passed the following:

ORDER

          The complaint filed by the Complainant is dismissed as not maintainable, since the Complainant is not a consumer comes within in the purview of Sec.2(1)d of CP Act. 

2. Anyhow, an option is left open to the Complainant to get redress his remedy before the competent court of law having got jurisdiction to try the same.

3. Looking to the circumstances of the case, we direct both the parties to bear their own cost.  

Supply free copy of this order to both the parties.

(Dictated to the Stenographer, got it transcribed and corrected, pronounced in the Forum on this 05^th day of December 2019)

        MEMBER                                             PRESIDENT

Witnesses examined on behalf of the Complainant dated.05.04.17

Sri.Nenalaji Rajendra Kumar Jain

Copies of Documents produced by the Complainant:

Witnesses examined on behalf of the OP dated.07.06.17

Sri.Prashantkumar.B.B, Legal Manager   

Copies of Documents produced by OP

            MEMBER                                           PRESIDENT