Punjab

Ludhiana

CC/14/459

NFB Polymens pvt Ltd - Complainant(s)

Versus

Indian Overseas Bank - Opp.Party(s)

03 Apr 2017

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, LUDHIANA.

 

Consumer Complaint No.459 of 26.06.2014

Date of Decision          :   03.04.2017

NFB Polymers Pvt. Ltd., Grewal Nagar, Hambran, Ludhiana, through Daljit Singh Grewal one of the Directors.

….. Complainant

Versus 

1.Indian Overseas Bank, Sunder Nagar Branch, through its Branch Manager, Ludhiana.

2.Indian Overseas Bank, Fountain Chowk, through Senior Regional Manager, Ludhiana.

3.Indian Overseas Bank, Central Officer, 763, Anna Salai Chennai.

4.HDFC Bank Branch Hambra, District Ludhiana through its Branch Manager.

..…Opposite parties

 

 (COMPLAINT U/S 12 OF THE CONSUMER PROTECTION ACT, 1986)

 

QUORUM:

 

SH.G.K.DHIR, PRESIDENT

SH.PARAM JIT SINGH BEWLI, MEMBER

 

COUNSEL FOR THE PARTIES:

For Complainant                     :         Sh.K.S.Gill, Advocate      

For OP1 to OP3             :         Sh.Mohit Goel, Advocate

For OP4                         :         Sh.Rahul Rajput, Advocate

 

PER G.K DHIR, PRESIDENT

 

1.                          Complainant, a private limited company registered with the Registrar of Companies Regional Office, Jalandhar has filed complaint under Section 12 of the Consumer Protection Act, 1986(hereinafter in short referred to as ‘Act’) by claiming that Sh.Daljit Singh Grewal is one of the share holders of the company and is duly authorized to file this complaint in the capacity of Director. Complainant applied for a term loan with OP1 to OP3 and loan of Rs.4,70,00,000/- as term loan, but Rs.1,00,00,000/- as credit facility was duly sanctioned vide sanction letter dated 3.3.2010. Term loan amount was payable in 84 installments of Rs.5,59,524/- each along with interest @13.25% per month on each installment. At the time of sanction of loan facility, OP charged Rs.5,18,410/-; Rs17,000/- and Rs.54,756/-. These amounts included the processing fee, upfront charges and L.C. Opening charges. Total of Rs.5,90,166/- were charged. Complainant had been paying the loan installment regularly. After adjudging the performance of the complainant, a new revised sanction letter dated 25.6.2011 was issued, vide which, credit facility amount was enhanced from Rs.1 crore to Rs.2.5 crore. Ops again put a clause to recover the processing charges of Rs.65,479/- and repeated upfront fee of Rs.4.20 lacs on the term loan which was earlier sanctioned. Complainant contacted OP1 regarding charging of upfront charges repeatedly. OP1 disclosed that he has no role because the same were levied as per the system operated by OP3. As decision was not taken on the request of the complainant and as such, he issued reminder dated 16.7.2011 through email. OP1 started pressurizing the complainant time and again to deposit at least 50% of illegal upfront charges. That matter was brought to the notice of OP1 and OP2 through registered letter dated 24.8.2011. Through that letter, it was requested that if illegal upfront charges not waived of, then the company will have no other option except for some other alternative arrangement. OPs charged the processing fee on the enhanced amount of Rs.1.5 crore, as cash credit facility. However, Ops by ignoring the request of the complainant, again charged upfront charges on term loan by deducting Rs.4,20,000/-. Rs.65,479/- were recovered as processing charges. In this way, Rs.4,85,479/- were deducted from the account of the complainant without any notice and against the provisions and instructions. However, amount was deducted on 13.9.2011, but on instructions of OP3, it was returned in the account of complainant on 14.9.2011 because of raising of protest by the complainant. Again on same day namely 14.9.2011, OPs charged Rs.2,75,479/- by deducting the same from the account of the complainant maintained in IOB Sunder Nagar Branch of OP1. Upfront charges can be recovered only one time after sanction of the loan or secondly at the time of fresh sanction of loan or in case of enhancement of the cash credit facility. Complainant protested regarding the illegal deductions of Rs.2,75,479/- and thereafter, amount of Rs.2,10,000/- were returned to the complainant on 18.10.2011 after deducting the processing fee on enhanced amount of cash credit facility. It is claimed that the complainant had been harassed time and again at the hands of OP1 to OP3 and that is why a detailed request dated 16.9.2011 was submitted under the provisions of RTI Act, 2005. Office of OP2 vide letter dated 14.10.2011 informed that request of the complainant is out of the purview of RTI Act, due to which, record cannot be supplied to the complainant. OP1 to OP3 on 28.9.2012 again deducted amount of Rs.3,44,903/- as the repeated upfront charges, but on protest raised by the complainant vide letter dated 3.10.2012 and subsequent through reminders of 8.11.2012 and 16.1.2013, no action was taken. On 21.3.2013, a fresh sanction letter enhancing the cash credit limit from Rs.2.5 crore      to Rs.3.5 crore was issued on account of better dealing and goodwill of the complainant. Processing fee of Rs.71,400/- again was deducted on 25.3.2013 from the complainant, due to which, complainant again submitted request letters dated 25.6.2013 and 19.7.2013 with request to stop the practice of recovering the repeated upfront charges. A detailed letter dated 19.7.2013 again was written to OP1 to OP3 because action on the basis of earlier letters was not taken. One month time was granted to OPs for refunding the amount of Rs.3,44,903/-, but no action taken and as such, request letters again sent on 25.10.2013 and 30.1.2014 to OP1 to OP3. Complainant never committed any default in payment of loan installments. Term loan and credit facility were returned to OP1 to OP3 on 21.10.2013 by returning the amounts of Rs.2,50,87,418/- plus Rs.20,18,517/-. No Due Certificate was issued to the complainant on 11.11.2013. Thereafter, the account of loan was shifted to OP4, who to claimed Rs.1,41,832/- as processing fee; Rs.3000/- as ROC Charges; Rs.5500/- as valuation charges; Rs.5000/- as legal charges and Rs.11,236/- as valuation charges. An amount of Rs.1,66,568/- in this way was charged from the complainant by OP4. OPs being service provider committed deficiency in service in payment of loan and deducting upfront charges etc and as such, prayer made for directing OPs to refund amount of Rs.3,44,903/-(deducted on 28.9.2012); Rs.2,46,193/- (deducted as pre-closure charges on 21.10.2013) and Rs.19,807/- (deducted as pre-closure charges on 21.10.2013). Besides, directions sought against OP1 to OP3 to pay amount of Rs.1,41,832/- (recovered as processing fee on 1.10.2013 by OP4); Rs.3000/- (recovered as ROC charges by OP4); Rs.5500/- (recovered as valuation charges by OP4); Rs.5000/- (recovered as legal charges by OP4) and Rs.11,236/- (recovered as valuation charges by OP4). Litigation expenses of Rs.11,000/- more claimed along with interest @18% per annum from 28.9.2012 till recovery.

2.                 In joint written statement filed by Op1 to OP3, it is admitted that loan was sanctioned and enhancements of credit facilities were provided. However, it is claimed that all the amounts are charged from the complainant as per the Extant Guidelines of the bank. Schedule of financial charges levied available on the website of the bank as a public document. OP bank being a scheduled commercial bank is strictly following the guidelines of Reserve Bank of India regarding levying of service chargers. Whole case set up by the complainant is alleged to be fallacious. Processing fee, upfront charges and L.C. opening charges were levied as per Bank’s Circular. Processing charges of Rs.65,749/- and upfront fee/financial charges of Rs.4,20,000/- were levied on the term loan as per the circular of the bank. Acknowledgment of the sanction dated 14.9.2011 was submitted by the borrower/guarantor of the account for stating that they are fully satisfied and accept the terms and conditions of the sanction of credit facilities. It is denied that charges levied against the provisions and instructions, rather they were levied as per the guidelines and instructions. An amount of Rs.4,85,479/- was returned to the complainant and lower amount of Rs.2,75,479/- was deducted from the account to maintain good customer relations. It is denied that the upfront charges leviable once only at the time of sanction of loan or secondly at the time of fresh sanction of loan or in case of enhancement of the cash credit facility. Amount of Rs.2,10,000/- was refunded to the complainant with intention to maintain  good customer relations. Public Information Officer of OP bank rightly claimed that information request of the complainant is out of the purview of the Right to Information Act, 2005. Information request was in the form of seeking redressal of the grievance of the complainant, which do not fall within the purview of the Right to Information Act, 2005. Complainant was informed that details of charges for loans are available on the website of the Bank as a public document. Rs.71,400/- were levied on the term loan as per OP Bank’s Circular and an acknowledgement of the sanction dated 25.3.2013 was given by the borrower/guarantor of the account, through it was stated that they were fully satisfied with the terms and conditions of the sanction of credit facilities. Complainant shifted to OP4 as per his choice and OP1 to OP3 cannot be held responsible for such shifting. Charges levied by OP4 is a matter of their internal policy, for which, relief cannot be claimed from OP1 to OP3.

3.                In separate written statement filed by OP4, it is claimed that the complaint is not tenable because the allegations levelled in the complaint are not true and correct. Reasons not mentioned qua deficiency in service on the part of OP4. OP4 is not responsible for any loss suffered by the complainant. It is denied that there is any relationship of consumer and supplier service between the complainant and OP4. Other averment of the complaint denied for want of knowledge or otherwise. Rather, it is claimed that the complainant has no cause of action against OP4.

4.                Sh.Daljit Singh, a share holder of complainant concern tendered in evidence his affidavit Ex.CA along with documents Ex.C1 to Ex.C17 and thereafter, closed the evidence.

5.                On the other hand, Sh.Awakash Kumar Sinha, Senior Manager of bank of OP1 to OP3 tendered in evidence his affidavit Ex.RA1 along with documents Ex.R1 to Ex.R5 and then closed the evidence.

6.                Sh.Rahul Rajput, Advocate for OP4 tendered in evidence written reply of OP4 and thereafter, closed the evidence.

7.                Written arguments in this case submitted by Op1 to OP3. However, complaint against OP4 i.e. HDFC Bank Branch was withdrawn by counsel for complainant by suffering statement in that respect on 6.5.2016. So, main relief of the complainant remains against OP1 to OP3 only.

8.                Oral arguments by counsel for parties even heard as those were addressed. Records gone through minutely. 

9.                It is the case of complainant himself that the complainant is a private limited company, who availed facilities of term loan and of credit facility of Rs.4,70,00,000/- and Rs.1,00,00,000/- respectively in the first instance through sanction  letter dated 3.3.2010, but thereafter, the limit of credit facility was enhanced from Rs.1,00,00,000/- to Rs.2,50,00,000/- on 25.6.2011 and thereafter, the cash credit limit was enhanced from Rs.2.5 crore to 3.5 crore vide sanction letter dated 21.3.2013. So, virtually services of cash credit limit and of term loan limit were availed by a private limited company in connection with affairs of the company.

10.              Copy of Memorandum and Articles of Association of complainant concern has been produced on record as Ex.C1. Perusal of the same reveals that main object of the complainant company is to carry on business as manufacturer, producer, processor, purchaser, seller, importer, exporter, mixer etc. Reference to page no.1 of Memorandum & Articles of Association can be specifically made in this respect. After going through page no.4 of this Ex.C1, it is made out that other objects for which, company established are to carry on the business of broker, agent and manufacturer’s representative; as dealers and purchaser of dairy, poultry, fishing, floriculture products etc; to carry on business of manufacturing and selling of carbonated or other waters etc. All the articles of memorandum of association (Ex.C1) spell out the other objects, for which, the company established. After going through all clauses NO.1 to 60 of Section C of Ex.C1, it is made out that the company virtually established for carrying on the business of all types. Even as per Ex.C1, company can avail the financial assistance from the financial institutions. Borrowing powers, as per clause 49 (available at page no.7) of Ex.C1 vests in the Director. Director of the company may borrow any sum or money or                    make any arrangement for finance for the purpose business of of company. So, after going through all these clauses of Ex.C1, it is made out that financial assistance in the shape of term loan and cash credit facility was availed by the complainant company for carrying on the objects, for which it was established. Those objects as already discussed in detail above is to carry on business as manufacturer, importer, exporter etc., and as such, it is obvious that services of OP1 to OP3 availed by the complainant company for carrying on its business. As and when services availed for commercial purposes, but without mentioning that said business carried by the company for earning livelihood, then complainant concerned will not be a consumer. As per Section 2(1)(d) of the Consumer Protection Act (as amended by Act No.62 of 2002), which came in force w.e.f.15.02.2003,                                                 consumer means any person, who hires or avails any services for consideration etc., but does not include the person, who avails such services for any commercial purposes. However, the commercial purpose as per explanation appended to Section 2(1)(d) of the Act does not include use by a person of goods bought or             services availed by him exclusively for the purpose of earning his livelihood by means of self employment. As the loan services availed by the complainant company from OP1 to OP3 for commercial purposes namely of carrying on business, which not alleged to be carried exclusively for the purpose of earning livelihood by means of self employment and as such, certainly the complainant is not a consumer within the meaning of Section 2(1)(d) of the Act(as amended by way of amendment of 2002). In holding this view, we are fortified by law laid down in case titled as Bunga Daniel Babu vs. M/s Sri Vasudeva Constructions-2016(3)RCR(Civil)-924(S.C.). The latest law on the subject is the law laid down by the Hon’ble Supreme Court of India in this           cited case and as such, in view of the above discussed factual position, it is obvious that the complainant is not a consumer. If that be the position, then certainly the complaint is not maintainable.

11.              Besides, law laid down in cases Mahesh Kumar vs. Shubhanker Marketing Pvt. Ltd. and others-2016(2)CLT-552(N.C.); Nikita Cares vs. Surya Palace IV(2015)CPJ-405(N.C.); Pharos Solution Pvt. Ltd. and others vs.  – Tata Motors Ltd., Bombay House-2015(IV)CLT-265(N.C.); Jagrook Nagrik and others vs. Cargo Motors Pvt. Ltd. and others-III(2015)CPJ-1(N.C.); Birla Technologies Limited vs. Neutral Glass and Allied Industries Limited-(2011)1-Supreme Court Cases-525; The Branch Manager, Punjab National Bank vs. M/s Bhaskar Textile-2015(1)CLT-89(N.C.) and Lords Wear Pvt. Ltd. vs. Rance Computer Pvt. Ltd.-I(2014)CPJ-332(N.C.) also provides that as and when the goods purchased or services availed for commercial purposes without mentioning that those were availed exclusively for the purpose of earning livelihood by means of self employment, then the concerned complainant will not be a consumer. Ratio of all these cases also applicable to the facts of the present case and as such, certainly complainant is not a consumer. Even if this contention not raised by any of the parties, but despite that it is the duty of this Forum to find out as to whether the complainant is a consumer or not? Consumer Forum to assume jurisdiction only if the complainant concerned is a consumer and not otherwise. So, even in the absence of pleadings or contentions, it was the duty of this Forum to find out as to whether complainant is consumer or not?

12.              Counsel for the complainant vehemently contends that in view of clause 2.q.3 of Ex.C3, upfront fee @1% on the term loan alone admissible only once. However, no mention made in this Ex.C3 that this upfront fee chargeable claimable only once and is not chargeable on renewal of limits. However, in clause 2.q.3 of Ex.C3, it is mentioned that upfront fee is non refundable, even if the customer does not take up the limits sanctioned/renewed or forecloses the loan/facilities account within the mentioned period. Clause 2.a of Ex.C3 provides that bank reserves its right to amend, alter the terms and conditions or withdraw all or any of the credit limits sanctioned at any time at its discretion without assigning any reasons. Clause 2.i of Ex.C3 provides that prepayment of borrowal accounts will be subjected to the applicable prepayment charges and revised terms and conditions. In view of all these clauses, it is obvious that bank is entitled to charge the revised charges as per the revised terms and conditions. Besides, there is no bar in recovering the upfront charges at time of revision/enhancement of the limits. It is on account of this that Rs.5,20,966/- consisting of processing fee of Rs.17,000/- on CC limits, Rs.33,966/- on              FLC; Rs.4,70,000/- as upfront fee @1% plus tax were charged on the opening of LC as per terms and conditions of Ex.C3(see clause 2.q.3 of Ex.C3). As per clause 13 of Ex.C13, company will not withdraw any funds from the business without consent of the bank and besides the company to submit the stock statement also as per other terms and conditions of consent letter Ex.C3. So, all these terms and conditions also leans in favour of holding that loans/limits were contracted by the complainant company for generating funds for carrying on business. Letter Ex.C4 shows as if the cash credit limit was enhanced to Rs.2.50 crore, but the existing term loan facility to Rs.4.20 crore. Other terms of charging of pre-closure charges etc., incorporating in Ex.C4 are the same as are incorporated in Ex.C3. Through Ex.C4, it was disclosed that OP bank to recover the processing charges of Rs.65,479/- and upfront fee of Rs.4.20 lac on term loan from the complainant company for remitting to R.O. Certainly complainant sent request letters Ex.C5 to Ex.C7 and Ex.C9 to Ex.C11 for protesting against the repeated charging of upfront charges, but he sought information under The Right to Information Act, 2005 by writing letter Ex.C8. The Right to Information Act, 2005

act is a complete code in itself, which provides for the available remedy thereunder. So, complaint under the Consumer Protection Act is not maintainable for redressal of grievance with respect to the matter covered by the Right to Information Act. In holding this view, we are fortified by law laid down in cases S.Dorai Raj vs. Divisional Personal Officer-I(2014)CPJ-444(N.C.) and Sanjay Kumar Mishra vs. Public Information Officer and others-I(2015)CLT-259(N.C.). Being so, complaint is not maintainable in so far as redressal of the grievance under the Right to Information Act, 2005 is sought.

13.              Service Charge Circular Ex.R2 is produced on record by OPs to establish that the processing charges for loans/advance proposals, is            recoverable as per worked out schedule. Credit Sanction Advice dated 14.9.2011 is placed on record as Ex.R3,which too provides that processing charges of Rs.65,479/- along with upfront fee of Rs.4.20 lac on the term loan recoverable from the complainant for remitting the same to R.O. But this Ex.R3 is acknowledged by Sh.Daljit Singh, Director of the complainant company through acknowledgement of 14.9.2011 itself. Through this acknowledgement, satisfaction was recorded regarding terms and conditions of the sanction of the credit facilities. Even acceptance of these terms and conditions of the sanction was conveyed through this acknowledgement of 14.9.2011. Subsequently, when the limit was enhanced, then credit sent advice dated 21.3.2013 was issued on Ex.R4 and that also is accompanied with acknowledgement dated 25.3.2013 qua satisfaction and acceptance of the terms and conditions of sanction of credit facilities. Ex.R5, the circular dated 3.9.2012 shows as if upfront fee at the time of sanction chargeable @1.02%. However, Ceiling of Rs.5.09 lacs is put on the financial charges(for renewal). Service charges proposed as 1.02% of the reviewed/renewed amount of term loans/per borrower with Ceiling of Rs.5.09 lacs. So, this circular Ex.R5 provides that financial charges including upfront charges on review or renewal or on first sanction can be to the extent of Rs.5.09 lacs and not above that. Case of OPs is that Rs.4,85,491/- were returned to the complainant and lower amount of Rs.2,75,479/- was charged while enhancing the cash credit facility limits on 13.9.2011. Even it is admitted by the complainant in para no.13 of the complaint,  it is stated that after protest, the above referred amount of Rs.4,85,491/- was returned, but amount of Rs.2,75,479/- was charged. As acknowledgements on 14.9.2011 and 25.3.2013 were given by the guarantor/borrower themselves as discussed above and as such, complainant is estopped his act and conduct from claiming that he was not satisfied with the terms and conditions of the sanction through which upfront charges were claimed, particularly when those are not shown to be claimed in excess of ceiling limit of Rs.5.09 lacs. If the complainant has switched over to OP4, who has charged the processing fee, R.C. charges, valuation charges and legal charges etc, then for that OP1 to OP3 cannot be blamed because the terms and conditions of the contract are binding on the parties. Complainant after agreeing for payment of upfront charges and having refund of the amounts referred above cannot complain that charges claimed are excessive, particularly when those are not beyond the ceiling limit of Rs.5.09 lacs as discussed above. Deduction of amount of Rs.4,20,000/- cannot be said to be against the provisions contained in Ex.C4 because the complainant himself acknowledged through acknowledgements about the satisfaction of the terms and conditions. Even the terms and conditions of Ex.C4 were acknowledged through acknowledgements as discussed above and as such, in view of above discussion, complaint is not maintainable, particularly when the complainant is not a consumer and deficiency in service not established.

14.              Therefore, as a sequel of the above discussion, complaint dismissed without any order as to costs Copies of order be supplied to parties free of costs as per rules.

15.                        File be indexed and consigned to record room.

 

                      (Param Jit Singh Bewli)                        (G.K.Dhir)

                                  Member                                        President

Announced in Open Forum

Dated:03.04.2017

Gurpreet Sharma.