BEFORE THE MANDYA DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, MANDYA PRESENT: 1. SIDDEGOWDA, B.Sc., LLB., President, 2. M.N.MANOHARA, B.A., LLB., Member, 3. A.P.MAHADEVAMMA, B.Sc., LLB., Member, ORDER Complaint No.MDF/C.C.No.91/2008 Order dated this the 2nd day of December 2008 COMPLAINANT/S Sri.Jayaramachari S/o Narasimhachari, Teacher H.P.S. Yerahalli, Mandya Taluk, R/o 2nd Cross, Tavaregere, Mandya. (By Sri.H.S.Lokapal Rao., Advocate) -Vs- OPPOSITE PARTY/S The Manager, ICICI Bank, Mandya. (By Sri.Gerald Castelino., Advocate) Date of complaint 02.09.2008 Date of service of notice to Opposite parties 12.09.2008 Date of order 02.12.2008 Total Period 2 Months & 20 Days Result The complaint is partly allowed directing the Opposite Party to pay damages of Rs.75,000/- to the complainant with cost of Rs.1,000/- within 6 weeks from the date of complaint, failing which it shall pay interest at the rate of 9% p.a. till realization Sri.Siddegowda, President 1. This complaint is filed under section 12 of the Consumer Protection Act 1986, for damages of Rs.4,27,128/- against the Opposite party alleging deficiency in service. 2. The brief facts of the complaint are as follows; The complainant applied for home loan at the Opposite party Bank in the joint name of the complainant and his wife Smt.S.Girija to construct a house at No.42 situated at Ward No.7 at Bagalagunte Village, Yeshwanthapura Hobli, Bangalore North in the month of October 2006. After due deliberations with the complainant, the Manager of the Opposite party Bank agreed to lend Rs.10 lakhs home loan for construction of house and asked the complainant to submit the essential documents for availing the loan. So, the complainant arranged and produced the documents A to J mentioned in the complaint by spending Rs.13,500/-. The Opposite party after scrutiny of the documents asked the complainant to get a modified estimation of the proposed construction. So, the complainant obtained the modified estimation by spending Rs.3,000/-. After all formalities, the Opposite party Bank sanctioned a loan of Rs.9,45,972/- vide sanction order No.5814671 dated 09.12.2006. To get memorandum written on stamp paper, as per the direction of the Opposite party, the complainant purchased 3 blank stamp papers of Rs.100/- each and one for Rs.20/- and submitted the Opposite party Bank. Then he deposited also Rs.5,308/- towards the processing fee by means cheque bearing No.6305. At the instance of the Opposite party, the complainant submitted 5 blank cheques signed by him bearing Nos.006314 to 006318 issued by Bank of India, Mandya Branch. The complainant also spent Rs.100/- to obtain the surety on the stamp paper. After all formalities, the Opposite party Manager asked the complainant to get a No Objection Certificate from the original site owner in whose favour the original deed was executed in the year 1936. This condition was highly impossible one and in spite of hard effort, the complainant could not be able to trace out the original owner, though he spent Rs.2,000/-. The above condition is not a condition precedent, but a condition subsequent to the sanction of loan. For the non-fulfillment of the subsequent condition of the complainant and Opposite party and the Manager torned into stamp papers submitted by the complainant and refused to refund the processing fee of Rs.5,308/-. Due to the act of the Opposite party, the complainant had to suffer monitory loss, harassment and mental agony. Further, from the date of sanctioning of the loan to its cancellation there was a gap of 6 months by which time there was hike in the cost of construction materials which had gone up to Rs.15 lakhs as against the earlier estimation of Rs.12 lakhs. After the cancellation of the home loan by the Opposite party Bank, the complainant approached Devan Housing Finance Corporation Bank and got Rs.8,13,000/- loan, on the same set of documents. The complainant had to borrow another hand loan of Rs.3 lakhs from private persons to complete the construction of his house due to the fault of the Opposite party Bank. In spite of legal notice, the Opposite party Bank has not sent any reply nor paid the damages sought for and Opposite party has committed deficiency in service and liable to pay damages byway of compensation. 3. The Opposite party has filed version contending that the complaint is not maintainable as is not a consumer and this Forum has no jurisdiction to entertain the complaint as there was no Branch of ICICI Bank at Mandya. Admitting the complainant approached the Opposite party Bank for Housing Loan, it has denied other averments. It is the procedure that an applicant has to furnish all the necessary legal documents of the property before approval of any loan and Opposite party Bank is not at all responsible for the expenditure of the documents. The Opposite party bank does not instruct any applicant to alter or modify documents before approval of the loan. The documents furnished to the Bank by the loan are sent for legal scrutiny by the legal experts and after thorough scrutiny of the documents, the loan application is considered for loan. If the legal experts do not recommend the loan application will be rejected. The Bank had issued the sanction letter to the complainant subject to certain conditions and the complainant had failed to comply with the said conditions and not furnished the required legal documents to the Bank. The execution of the documents on stamp paper does not arise and hence the Bank has not asked the complainant to submit stamp papers. The processing fee is for the purpose of processing the loan application and it is not refundable. Usually the bank obtains cheque from the applicant in case of default to repay the loan and it is done only the loan was approved and disbursed during the execution of the mortgage agreement. Therefore, it is denied that the blank cheques are obtained by the Bank. It is the duty of the applicant to furnish guarantor to the loan. The Opposite party Bank is not responsible to refund or pay any amount to the complainant. Therefore, the Opposite party has not committed deficiency in service. Therefore, the complaint is liable to be dismissed with costs. 4. During trail, the complainant and two witnesses are examined and the complainant produced Ex.C.1 to Ex.C.23 documents. On behalf of the Opposite party Manager has filed affidavit and is examined and no documents are produced by the Opposite party. 5. Both the sides have filed written arguments. 6. We have perused the records. 7. Now the points that arise for our considerations are:- 1) Whether the Complainant is a consumer and complaint is maintainable before this Forum? 2) Whether the Opposite party has cancelled the sanction of loan due to the fault of the complainant? 3) Whether the Opposite party has committed deficiency in service? 4) Whether the complainant is entitled to the damages claimed? 5) What order? 8. Our findings and reasons are as here under:- 9. POINT No.1:- The undisputed facts are that the complainant approached the Opposite party Bank for sanction of the home loan and furnished the documents and for processing fee, complainant has deposited Rs.5,308/-. Therefore, when the Opposite party has collected this amount for processing the loan application it is an amount collected to render service. Therefore, the complainant became a consumer of the Opposite party Bank. 10. The contention of the Opposite party is that there is no Branch of ICICI Bank at Mandya and hence the complaint is not maintainable before this Forum. But, the complainant has deposed that there was a board of ICICI Prudential Loan Section. It is suggested to the complainant that there was an agent of SFS on behalf of ICICI Bank at Mandya and there was no section. So, when there was an agent of the Opposite party Bank at Mandya and the complainant furnished all the documents to the agent working in Mandya, though the documents were scrutinized at Mysore, but part of cause of action has taken place at Mandya. Therefore, we hold that this Forum has jurisdiction to entertain the complaint. 11. POINT NO.2:- It is an admitted fact that the complainant submitted the required documents suggested by the Opposite party Bank for sanction of the loan. Ex.C.2 to Ex.C.16 are the documents submitted, Ex.C.2 and C.3 are the pay certificate of the complainant and his wife, Ex.C.3, C.5 and C.6 are the encumbrance certificates, Ex.C.7 and C.8 are the title documents, Ex.C.9 is the no due certificate from the State Bank of India, Ex.C.10 and C.11 are the certificates identifying the specimen signatures of the complainant and his wife and the address, Ex.C.12 and C.13 are the pay certificates, Ex.C.14 is the estimation for Rs.12 lakhs, Ex.C.16 is the estimation for Rs.11,20,000/-, Ex.C.15 is the bill of estimation (i.e. 2nd estimation). Further, the complainant has produced Ex.C.17 the cheque submission form issued by the Opposite party Bank, wherein the signature of the complainant is made and cheque numbers are mentioned and it was submitted on 10.03.2007. The complainant has produced the copies of cheques, Ex.C.18 is the stamp paper of Rs.320/- with regard to the memorandum and it is signed by the complainant and his wife Girija and according to the complainant it is signed by the Smt.Lakshmi on behalf of the Opposite party. It is also undisputed that the complainant produced the original sale deed of the site and it was returned and the complainant has produced the copy of the sale deed. The production of the documents are not denied except the submission of cheques and the stamp paper, but if we peruse Ex.C.17 the cheque submission form of the Opposite party Bank, the cheque numbers are mentioned and name is mentioned, date with signature of the complainant is mentioned. Therefore, it cannot be said that the complainant has not furnished blank cheques to the Opposite party Bank. In fact the Xerox copy of the cheques are produced by the complainant. Ex.C.18 clearly proves that the complainant purchased stamp paper worth Rs.320/- in the name of ICICI Bank on 06.02.2007 and the complainant and his wife has put signatures to the stamp paper and format typed without the contents filled up. Therefore, it clearly established that at the instance of the Opposite party, the complainant has produced the stamp paper as per Ex.C.18. It is an admitted fact that the Opposite party issued Ex.C.1 letter which is a loan sanction letter dated 09.12.2006. Of course, the conditions are attached to the sanction letter. 12. According to the complainant case, after obtaining all the documents, blank cheques, stamp paper and sanctioning the loan at the end, the Opposite party asked to produce no objection certificate from the original site owner in whose favour the original deed was executed in the year 1936 and this was impossible for the complainant. 13. The contention of the Opposite party is that necessary original documents filed by the applicant for housing loan will be scrutinized by the legal experts and if the legal experts do not recommend the documents taken as security, the loan application will be rejected. Naturally the bank will sanction loan after scrutiny of all the title documents and disburse the loan after execution of the mortgage deed and furnishing the security like cheques and loan documents. If we see conditions on the back of the Ex.C.1 they do not contemplate that the sanction of the loan is subject to scrutiny by the legal experts of the bank. Of course on the first page of the Ex.C.1, the sanction of the loan is subject to legal and technical clearance / verification of the property being financed. The Opposite party has not at all produced any documents to prove that the Opposite party bank furnished all the documents furnished by the complainant for verification by legal expert and even has not produced letter of legal opinion to prove that the documents produced by the complainant are not sufficient to sanction the loan. The verification of the documents reveal certain agricultural land was purchased by one person and after change of hands sites were made after conversion and the vendor of the complainant purchased that site in question and the said site measuring 30 x 40 was purchased by the complainant in the name of complainants wife from the previous owner Shake Jamal Bhasha. When the complainant has produced all the encumbrance certificate Ex.C.4, C.5, C.6 for 12 years there was no impediment for the Opposite party not to release the loan that too when the Opposite party Bank has obtained empty cheques and also memorandum of agreement on stamp paper. Nothing prevented the Opposite party to produce the opinion of the legal expert opining that apart from the documents, produced by the complainant, specific documents are necessary. It is undisputed that Opposite party has not at all issued any letter to the complainant to produce a particular document on the basis of the opinion of the legal expert who said to have scrutinized the title deeds. As deposed by the complainant, it is impossible to get no objection certificate from the owner in the year 1936 who is no more and who was the owner of the particular survey number which changed the hands to others and made into sites after conversion. Therefore, in the absence of any legal expert opinion of the Bank about insufficiency of the documents furnished by the complainant, when the Opposite party has not at all issued any letter to the complainant to produce the relevant document and that too when the Opposite party had obtained blank cheques and stamp papers signed by the complainant and his wife, it clearly proves that there was no fault on the part of the complainant to cancel the loan sanction to the complainant. Though, the complainant has fulfilled all the conditions directed by the Opposite party Bank by furnishing relevant documents and depositing processing fee and furnished the empty cheques and the stamp paper duly signed, the cancellation of the loan by the Opposite party without giving any reason clearly amounts to deficiency in service by the Opposite party Bank and therefore we answer point no.2 in favour of the complainant. 14. POINT NO.3:- The complainant has sought for damages and refund of the amounts deposited by him and amounts spent for obtaining the documents. 15. It is well known that only on the assurance of the Bank a person will spend the amount for obtaining the documents from the Sub-Registrar Office and Revenue Office or Municipality and even to get a surety one has to spend the amount. Though, it is natural to submit all the documents for sanction of the loan only when the Bank Manager assures to sanction the loan, the applicant will spend money for obtaining all the documents by moving office to office. Further, admittedly Opposite party has collected Rs.5,308/- as processing fee. What is the processing done is not at all explained by the Opposite party Bank, because the Opposite party Bank has not at all produced the opinion of legal expert about the documents of the property furnished by the complainant nor technical report or any correspondence except sanction letter. The complainant has produced two estimation at the instance of Opposite party and it is not disputed. Naturally he has to incur the expenses for the property estimates by an engineer. Further, though this loan was sanctioned in December 2006 it is not at all released by the Opposite party Bank in spite of obtaining all the documents when the Opposite party Bank did not release the loan, the complainant approached DHFL and it has sanctioned the loan as per Ex.C.19 on the basis of same documents and the evidence clearly proves that the DHFL released the loan of Rs.8,13,000/- and further complainant has raised hand loan of Rs.3 lakhs, because he had applied for loan of Rs.10 lakhs and the estimation was Rs.11 lakhs and Rs.12 lakhs. As per Ex.C.14, the complainant has paid Rs.6,000/- for the estimation and again paid Rs.3,000/- as per Ex.C.16. The complainant has examined witnesses S.Vittal Rao a Contractor and witness Prakash a Cement Dealer. Sri.Prakash, a cement dealer produced Ex.C.22 and C.23 to show the rate of cement per metric ton. Witness S.Vittal Rao has filed affidavit stating that he has constructed the house for the complainant starting from June 2007 till the end of December 2007 at the rate of Rs.1,20,000/- per square and he has received total Rs.14,40,000/-. According to him, initially the agreement was for Rs.95,000/- per square (10ft x 10ft). Since, there was delay in sanction of the loan and starting of the construction, the cost of the cement, steel, wood, bricks, sand etc. went hike and so the cost of construction was increased. Even though, the Vittal Rao has not produced any documents of agreement for construction in so many instances, on oral agreement, the private contractors who are not engineers construct the houses receiving the amount in installments. It is well known that from the last two years, the cost of building materials has gone up upto 25 to 30% and it is not an exaggeration at all. Necessarily, the complainant has spent more amount than the original estimate after sanction of the loan by DHFL in the month of May 2007 due to fault of Opposite party and complainant is burdened with more cost for constructing. Under these circumstances, the complainant is entitled to damages by way of compensation to an extent of Rs.75,000/- which includes the deposit amount and processing fee and other expenditure made by the complainant for obtaining the documents and purchasing the stamp paper. 16. In the result, we proceed to pass the following order; ORDER The complaint is partly allowed directing the Opposite Party to pay damages of Rs.75,000/- to the complainant with cost of Rs.1,000/- within 6 weeks from the date of complaint, failing which it shall pay interest at the rate of 9% p.a. till realization (Dictated to the Stenographer, transcribed, corrected and then pronounced in the open Forum this the 2nd day of December 2008). (PRESIDENT) (MEMBER) (MEMBER)
