Per Mr.Dhanraj Khamatkar – Hon’ble Presiding Member:
1. This complaint is filed by one Mr.Vijay Narayan Bhambure (hereinafter referred to as “the Complainant”) against (1) H.D.F.C. Bank Ltd. (hereinafter referred to as “the Opponent No.1 Bank”) and (2) Reserve Bank of India (hereinafter referred to as “the Opponent No.2 Bank”) under the Consumer Protection Act, 1986, alleging deficiency in service and unfair trade practice on the part of the Opponents.
2. The facts leading to this complaint can be summarized as under:
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The Complainant is having a current account in the Opponent No.1 Bank. He had taken an overdraft facility of Rs.20,00,000/- by pledging shares of Rs.45,00,000/- from the Opponent No.1 Bank . The Complainant used to utilize the amount for acquiring the shares of different companies as assets and not for resale. It is further stated that the activity of the Complainant of purchasing the shares is for making a profit, however, it is purely for the purpose of earning his livelihood by means of self employment. It is contended by the Complainant that from 07.05.2008 onwards the Opponent No.1 Bank had started sending threatening telegrams for regularizing the Complainant’s account and hence, the Complainant sent a letter dated 15.05.2008 to Opponent No.1 Bank with a list of the Complainant’s shares to be sold in the market by prevailing rates. The letter was received by the Opponents on 16.05.2008. It is also contended that the Opponent No.1 Bank did not furnish him the true information regarding the amount required for the regularization his account, which amounts to deficiency in service and unfair trade practice. It is further contended by the Complainant that Opponent No.1 Bank had sold the shares worth `4.5 lac without intimating the Complainant. The Opponent No1. Bank had sold the shares of ABB and ITC Companies and sold in two stages of different dates and deliberately at lowest price and the amount received from the sale of the shares was adjusted against the Complainant’s account. It is further alleged that on 11.06.2008 the Complainant had sent a letter and took objection for disposing of the said shares and sought the explanation from the Opponent No.1. By letter dated 15.05.2008 the Complainant had sent a list of shares to be sold, but, instead of selling the shares as per the list given by the Complainant the Opponent No.1 Bank had sold the shares as per their choice and this resulted in pushing the Complainant in debt trap. The Complainant made two complaints to Opponent No.1, however, the Opponent No.2 had not taken any action. Finally, the Complainant had sent a notice to Opponent No.1 Bank and demanded `60,00,000/- towards damages, compensation for deficiency in service and unfair trade practice. However, the Opponent No.1 Bank had not paid any heed to the notice. The Complainant submits that it is important in share trading that particular companies shares should be sold or purchased in particular quantity at the particular time to avoid losses and to boost profit. In the present case the Opponent No.1 Bank has not followed the well settled practice amounting to huge losses to the Complainant and this act of the Opponent No.1 amounts to unfair trade practice. Hence, Complainant has filed the consumer complaint alleging deficiency in service on the part of the Opponent No.1 Bank and unfair trade practice with following prayers:
“The Opponent No.1 Bank be directed to pay an amount of `45,00,000/- as damages towards selling shares not specified by the Complainant and not selling shares indicated by the Complainant, `14,95,000/- damages towards mental stress and strain, `5,000/- towards costs and also to direct Opponent No.1 Bank to pay `14,00,000/- for Complainant’s immediate requirement to survive with dignity.”
3. The Opponent No.1 Bank had contested the complaint by filing written version contending therein that complaint is false, frivolous, mischievous and bad in law. The Opponent No.1 Bank submitted that Complainant is not a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986. It is submitted by the Opponent No.1 Bank that the Complainant had availed of loan against the shares with a view to invest and gain by sale or purchase of the shares. It was open for the Complainant to foreclose the loan account by paying all the outstanding amounts to the Opponent No.1 and thereafter, take back all his shares. Instead, the Complainant had chosen to give instructions to Opponent No.1 Bank to sell out the shares when it is not obligation on the part of the Opponent No.1 Bank. The Opponent No.1 Bank further stated that the complaint involves disputed facts and complex factual position and hence, the Complainant may please be directed to approach Civil Court. In a written version the Opponent No.1 Bank relied on the judgements namely Oriental Insurance Co. Ltd. V/s. Muni Mahesh Patel, delivered by the Hon’ble Supreme Court and R.J. Prabhu V/s H.D.F.C. Bank Ltd., delivered by the Hon’ble National Commission, New Delhi.
4. The Opponent No.1 Bank further submitted that the Complainant had entered into an agreement dated 18th November, 2005 with the Opponent No.1 Bank relating to loan against shares under L.A.S. Account No.01452100003231. The terms and conditions between the Complainant and Opponent No.1 Bank were more particularly recorded in the said agreement. As per the said agreement the Complainant is a Borrower. As per the terms and conditions of the agreement the Complainant had availed of an overdraft facility of `20,00,000/- carrying interest @9% per annum. Clause 12.02 and 12.03 are the important terms and conditions of this agreement. The Opponent No.1 states that on or about 5th May, 2008 there was an excess withdrawal on the account of the Complainant on account of fact that value of the pledged shares had fallen below the margin requirements. By a telegram dated 06.05.2008, the Opponent No.1 Bank had informed the Complainant that if the Complainant’s account is not funded by a sum of `78,076.99 by 8th May, 2008 the Opponent will sell the shares of the Complainant. Similarly, the Opponent No.1 had informed the Complainant by telegram dated 13th May, 2008 that if the Complainant’s account is not regularized by 15th May, 2008 by funding an amount of `1,49,026.99 the Opponent will sell the shares of the Complainant as per the terms and conditions of the said agreement. The Opponent No.1, therefore prayed that there is no deficiency in service on their part and hence, the complaint may please be dismissed.
5. By an order dated 05.02.2009 on the application of the Complainant the name of Opponent No.2 was deleted. Therefore, the Complainant is proceeded as against Opponent No.1 Bank only.
6. The Complainant filed rejoinder in reply to the Written version filed by the Opponent No.1 Bank, contending therein that any action such as taking possession/sale of securities, the Opponent is bound to give 60 days notice to the Complainant to transfer ownership right from Complainant to Opponent No.1. Also Complainant submitted that the Opponent No.1 Bank has filed part of agreement instead of complete agreement document to hide vital information and therefore, the Complainant stated that he rejects the complete agreement. The Complainant had also taken a plea that a copy of the agreement was not furnished to him which is mandatory on the part of the Opponent No.1 Bank. He also submitted that the agreement is one sided.
7. Both parties were directed to file evidence on affidavits and accordingly, both parties have filed their evidence on affidavits. After closing their evidence they were directed to file brief notes of arguments and accordingly, the brief notes of arguments were filed by both the parties. We heard the Complainant in person and Advocate Mr.Ashutosh Marathe, for the Opponent No.1 Bank.
8. At page No.51 of the complaint compilation there is an overdraft request letter from the Complainant wherein he has requested the Opponent No.1 Bank to grant him overdraft facility of `20,00,000/- against the pledge of shares. In the request letter there are various purposes for the overdraft facility. The Complainant has ticked ‘personal’ which comes to other categories. Below there is a declaration wherein “Ï/we confirm that the funds will be used for the stated purpose only and will not be used for the purpose of making capital market or for any speculative purpose and/or anti-social purpose. In the event of the funds being used for market purpose I/we will give written intimation to the Bank and the Bank. The Bank has the right to recall the advance for any other purpose other than declared and/or speculative and/or anti-social purpose”. The Complainant has signed the said declaration. The Complainant is a highly educated person and it is very difficult to believe that he has signed the agreement without reading it.
9. It is the contention of the Complainant that he has informed to the Opponent No.1 Bank to sell particular companies shares, however, the Opponent No.1 has not sold the said shares and sold the shares which the Complainant has not permitted it to sell. The Opponent No.1 Bank has denied this and brought to our notice the clause 12(ii) and clause 12(iii) of the loan agreement. Clause 12(ii) states that:
“If at any time the value of the said securities falls so as to create a deficiency in the margin requirements specified by the Bank from time to time or there is an excess over the overdraft facility limit the Borrower shall within seven days of notice from the Bank deposit with the Bank additional security in the form of cash or such other securities which may be acceptable to the Bank, failing which, the Bank may at its discretion sell, dispose off or realize any or all of the securities then held by the Bank without being liable for any loss or damage or diminution in value sustained thereby.
As per Clause 12(iii) In case of expiry of the term or in case the Borrower fails to make any payment due to the bank in respect of the overdraft facility, the Bank would have the full rights to sell, dispose off or realize the said Securities after giving the Borrower, notice of not less than 7(seven) days, on such terms and for such price that the Bank deems fit and apply the net proceeds towards the satisfaction of the balance outstanding in the overdraft account including charges, expenses, etc”..
10. The Complainant mainly relied on the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. However, the Provisions of the said Act are not applicable to the overdraft facility. The loan against shares is basically the loan against pledge of shares account and the customer is required to execute the agreement-cum-guarantee to that effect.
11. In the present case the loan given to the Complainant clearly goes to show that the overdraft facility was granted to the Complainant against the pledge of shares attracting section 172 of the Indian Contract Act, 1872. In the complaint, the Complainant had taken a plea that the Complainant used the amount taken from the Opponent No.1 Bank to acquire shares as an asset and not for resale. However, he submitted that if this Hon’ble Forum comes to the conclusion that the Complainant’s activity of purchasing shares is for profit making, it is purely for the purpose of earning his livelihood by means of self employment. As against this in paragraph 9 of the complaint the Complainant submits that “it is important in share trading that particular Company’s shares should be sold or purchased in particular quantity at a particular time to avert losses and to book a profit”. Both the statements are contradictory to each other. The admission of the Complainant in para 9 of the complaint itself established that the Complainant had taken an overdraft facility from the Opponent No.1 Bank for earning a profit and hence, the Complainant is not a ‘consumer’ under section 2(1)(d) of the Consumer Protection Act, 1986. We hold accordingly and pass the following order:
O R D E R
(i) Complainant stands dismissed.
(ii) In the given circumstances, parties to bear their own costs.
(iii) Inform the parties accordingly.
Pronounced on 31st July, 2013.
