Chandigarh

StateCommission

A/85/2016

Khem Gupta Partner Gupta Agencies - Complainant(s)

Versus

Manager Allahabad Bank - Opp.Party(s)

Karan Singh, Adv.

11 May 2016

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

 

                                                                 

Appeal No.	:	85 of 2016
Date of Institution	:	18.03.2016
Date of Decision	:	11.05.2016

 

Khem Gupta, Partner, Gupta Agencies, SCO 80, Sector 24-C, Chandigarh.

.…Appellant/Complainant.

Versus

1.     Manager, Allahabad Bank, Chandigarh, Branch Sect.8-C, Chandigarh.

2.     GM, Allahabad Bank, Zonal Office, Sector 17-B, Bank Square, Chandigarh.

3.     Director, Head Office, Allahabad, Bank 2, Netaji Subhash Road, Calcutta – 700001.

…..Respondent/Opposite Parties.

 

Appeal under Section 15 of the Consumer Protection Act, 1986.

 

BEFORE: JUSTICE JASBIR SINGH (RETD.), PRESIDENT.

SH. DEV RAJ, MEMBER.

                SMT. PADMA PANDEY, MEMBER.

               

Argued by:

 

Sh. Karan Singh, Advocate for the appellant.

Ms. Jasleen Kaur, Advocate for the respondents.

 

PER DEV RAJ, MEMBER

              This appeal has been filed by the complainant (now appellant), against the order dated 05.01.2016, rendered by the District Consumer Disputes Redressal Forum-II, U.T., Chandigarh (in short ‘the Forum’), vide which, consumer complaint bearing No.570 of 2013 was dismissed by the Forum with no order as to costs.

2.             The facts in brief are that the complainant is Partner of Gupta Agencies and the Gupta Agencies were having an account No.20157788912 and 20157789223 with Opposite Party No.1 Branch, having mode of Cash Credit Accounts. The complainant was initially sanctioned a limit of Rs.50 Lacs in the year 2003, which was revised from time to time, and in 2010, it was extended to Rs.3.00 Crore.  It was further stated that the rate of interest on the limit of complainant in the Opposite Party Bank was higher than the prevailing rate of interest in other Banks in market and apart from that, the complainant was also facing other difficulties. It was further stated that the complainant applied for transfer of CC Limit in ING Vysya Bank.  It was further stated that the complainant paid all the dues to Opposite Party - Bank through ING Vysya Bank vide two demand drafts of Rs.1.50 crores and Rs.2,00,000/- against both accounts respectively on 1.1.2013.  It was further stated that Opposite Party No.1 encashed the said demand drafts on 1.1.2013 and by doing so, accepted the above amount, as full and final settlement including all charges and interest.  It was further stated that Opposite Party No.1 also agreed to issue ‘No Dues Certificate’ within 15 days also, as per letter Annexure C-1.  It was further stated that the complainant applied for ‘No Dues Certificate’ from the Opposite Party - Bank as the same was needed in ING Vysya Bank, but the Opposite Party Bank lingered on the matter and issued the same only after debiting Rs.3,68,777/- from the account of the complainant, as pre-payment charges, wrongly and illegally on 30.1.2013, even after accepting amount towards full and final settlements.  It was further stated that otherwise also, the account of the complainant was a Cash Credit Account and it was not a term loan, which was being paid prematurely and for that, pre-payment charges were being imposed. It was further stated that the complainant took the matter with the Opposite Parties but to no avail. It was further stated that the aforesaid acts of the Opposite Parties amounted to deficiency, in rendering service, and indulgence into unfair trade practice. When the grievance of the complainant, was not redressed, left with no alternative, a complaint under Section 12 of the Consumer Protection Act, 1986 (hereinafter to be called as the Act only) was filed seeking various reliefs.

3.             The Opposite Parties, in their joint written statement, while admitting the factual matrix of the case with regard to holding of CC limit account by Gupta Agencies, its application for transfer to ING Vysya Bank, payment of Rs.1,50,00,00,00/- and Rs.2,00,000/- by the appellant/complainant, stated that all the documents were to be released on receipt of prepayment charges, as per stipulations of the sanction letter. It was admitted that ‘No Dues Certificate’ was issued and Rs.3,68,777/- were debited as prepayment charges as per Bank’s Policy. It was further stated that the condition of prepayment was conveyed at the time of sanction and the complainant had acknowledged the sanction letter wherein it was clearly mentioned that prepayment fee of 2% was to be charged on outstanding balance in case of takeover of the account. It was further stated that neither there was any deficiency, in rendering service, on the part of the Opposite Parties, nor they indulged into any unfair trade practice. The remaining averments, were denied, being wrong.

4.          The parties led evidence, in support of their case.

5.           After hearing the Counsel for the parties and, on going through the evidence, and record of the case, the Forum, dismissed the complaint, vide the impugned order, as stated above.

6.           Feeling aggrieved, the complainant has filed the instant appeal.

7.             We have heard the Counsel for the parties, and have gone through the evidence and record of the case, carefully.

8.             After hearing the Counsel for the parties and going through the evidence on record, we are of the considered opinion that the appeal is liable to be dismissed, for the reasons to be recorded hereinafter.

9.             The core question, which falls for consideration, is as to whether the respondents/Opposite Parties – Bank could charge pre-payment charges @2% when the appellant/complainant got the CC limit account transferred to ING Vysya Bank. The Counsel for the respondents/Opposite Parties submitted that Credit facility account was sanctioned to the appellant/complainant vide letter dated 03.09.2007. Other terms and conditions of sanction, as contained in Annexure ‘A’ were attached with the aforesaid sanction letter. The sanction letter was duly acknowledged by the appellant/complainant on 03.09.2007 (Annexure R-2). It has been contended by the Counsel for the appellant/complainant that Condition No.25, which reads as under, was inserted by the respondents/Opposite Parties afterwards:-

“25.  Prepayment fee 2% will be charged on outstanding balance in case of takeover of the account.”

10.           In our opinion, contention aforesaid is without any cogent evidence. Admittedly, the appellant/complainant had received the sanction letter as is evident from Exhibit R-2. Had aforesaid condition No.25 not been included in the sanction letter received by him, complainant could very well produce the sanction letter alongwith the terms and conditions to prove his point. The fact that the document (sanction letter), which the appellant/complainant received, has not been produced in evidence, fortifies the fact that Condition No.25 was existing when sanction letter dated 03.09.2007 was issued to the appellant/complainant. No doubt, ING Vysya Bank vide letter dated 28.12.2012 had written to the Opposite Parties – Bank that amount of Rs.1.50 Crore and Rs.2 Lacs were towards full and final payment/settlement of Credit Banking Facilities but the respondents/Opposite Parties – Bank never agreed to the same and informed the appellant/complainant vide letter dated 30.01.2013 that consequent upon the accounts having been taken over by ING Vysya Bank, pre-payment penalty @2% of outstanding balance on take-over date amounting to Rs.3,28,210 plus S. Tax, totaling Rs.3,68,777/- have been charged to the complainant’s account as per Banks extant guidelines. It has been categorically stated by the respondents/Opposite Parties that pre-payment charges were payable as per Policy of Bank (Page 98 of District Forum file). In our considered opinion, the action of the respondents/Opposite Parties in levying pre-payment charges, was in accordance with the terms and conditions of sanction of credit facility account.

11.           The Forum in Paras 9 & 10 of the impugned order, extracted hereunder, rightly held that complainant could not escape his responsibility of payment of pre-closure charges/penalty and no protest was raised at the time of making pre-payment penalty:-

“9]       The complainant has claimed that the Opposite Parties have acted in a deficient manner while claiming the pre-payment charges, when the existing cash credit limit was offered to be taken over by the ING Vysya Bank vide letter dated 28.12.2012 Ann.C-1, which accompanied two Pay Orders/DDs amounting to Rs.1.5 Crore and Rs.2.00 lacs respectively. The last line of this letter also mentions the condition that in case of any reason for withholding the release of securities, the Pay Orders/ DDS be returned immediately. The Opposite Party No.1 while accepting this offer of takeover, adjusted the Pay Orders/DDs in different accounts of the complainant and at the same time, raised the demand of Rs.3,68,777/- disclosing the pre-payment penalty at the rate of 2% on the outstanding balance through its letter dated 30.1.2013. The complainant claims that the Opposite Parties should not have demanded Rs.3,68,777/- and should not have imposed the pre-payment penalty while accepting the takeover offer from the ING Vysya Bank.  The complainant even went to the extent of claiming that no such pre-payment penalty was agreed upon at the time of sanctioning of Cash Credit Facility.  However, we are not inclined to accept this line of pleadings of the complainant as the document found annexed as Ann.R-2 is a letter from Opposite Party NO.1 to the firm of the complainant, wherein the receipt of sanction letter along with terms & conditions and their acceptance is mentioned.  This letter is signed by two different partners of the Firm of the Complainant and it does not lie in the mouth of the complainant to deny the receipt of terms & conditions, when he has not filed the affidavits of the partners, whose signatures are found appended on document Ann.R-2.  Therefore, on the basis of Ann.R-2, it can be safely concluded that the sanction letter, dated 3.9.2007 along with Ann.A-1, which included the other terms & conditions of the sanction, was received by two partners of the Firm of the Complainant and the same was binding upon the complainant too.  The complainant cannot escape from his responsibility of payment of pre-payment penalty on the outstanding principle of the Cash Credit Facility availed by his Firm from the Opposite Parties.

 

10]      It would not be out of place to mention here that though the complainant had preferred the taking over of his existing loan facility of the Opposite Parties by another bank i.e. ING Vysya Bank, which was, according to us was a necessary party, to disclose whether a pre-foreclosure statement was required by it to process the takeover of Cash Credit Facility of the complainant from the Opposite Parties.  It is necessary to mention here that ING Vysya Bank must have confirmed itself of the existing loan liabilities of the complainant outstanding at the time of takeover offer, and the information of such liabilities were to be adduced from the existing banker of the complainant i.e. Opposite Parties, apart from other documents necessary for the forwarding of fresh Cash Credit Limit by the new bank, in the present case, ING Vysya Bank.  We feel that by following such process, the complainant would have been in advance knowledge of the pre-payment penalty to be levied by the Opposite Parties in terms of the sanction letter and could have challenged the same in the very first instance, rather than raising the matter, after having paid the same without raising the protest, at the time of such payment.  It is also necessary to mention there that the complainant has placed on record the copy of legal notice as well as its reply by the Opposite Parties, but there is no mention about the protest, which was raised by the complainant at the time of making good the pre-payment penalties to the Opposite Parties.”

 

Thus, the District Forum, was right in holding that the respondents/Opposite Parties were entitled to charge the prepayment charges. In Hotel Vrinda Prakash Vs. Karnataka State Financial Corporation, AIR 2007 Kant 187, the principle of law, laid down, was that the Financial Corporation had authority to charge premium for prepayment/foreclosure of the loan account, on the outstanding loan balance. In C.S.No.513 of 2001 - Hatsun Agro Products Chennai Vs. Industrial Development Bank of India, Chennai, decided on 14.10.2009, by the Madras High Court, the plaintiff was charged Rs.51,42,895/-, as prepayment charges/premium, before foreclosing the loan. The demand was challenged as illegal. The Hon’ble High Court held that the prepayment charges, before foreclosing the loan, were legally charged by the defendant, and, ultimately, dismissed the suit. The principle of law, laid down, in the aforesaid cases, is fully applicable to the instant case. Thus, the impugned order passed by the Forum, being based on true appreciation of facts and law, does not call for any interference.

12.           No other point was urged by the Counsel for the parties.

13.           For the reasons recorded above, the appeal, being devoid of merit, is dismissed, with no order as to costs. The impugned order passed by the Forum is upheld.

14.           Certified Copies of this order be sent to the parties, free of charge.

15.           The file be consigned to Record Room, after completion.

Pronounced

May 11, 2016.

[JUSTICE JASBIR SINGH (RETD.)]

PRESIDENT

 

 

(DEV RAJ)

MEMBER

 

 

(PADMA PANDEY)

MEMBER