Delhi

StateCommission

A/10/316

ICICI BANK LTD. AND ORS. - Complainant(s)

Versus

MCCOY SILICONS LTD. - Opp.Party(s)

03 Jan 2017

ORDER

IN THE STATE COMMISSION : DELHI

(Constituted under Section 9 of the Consumer Protection Act, 1986)

                                           

  Date of Arguments: 03.01.17

     Date of Decision:09.01.17

 

First Appeal No. 316/2010

 

In the matter of:

 

1. ICICI Bank Limited

Kailash Building, 3^rd Floor 26, KG Marg

Connaught Place, New Delhi-1.

 

2. ICICI Bank Limited

Through its Managing Director ICICI Bank, Towers

Babdra-Kurla Complex

Mumbai-400 051.

 

3. The Manager

ICICI Bank Limited

Sadar Bazar, Delhi.                                                     ………Appellants

 

                                                            Versus

 

M/s MCCoy Silicons Limited

A Public Limited Company

Having its registered office at

8 MM Road Motia Khan

New Delhi.

 

CORAM

                                                                                            ………..Respondent

O.P. Gupta, Member (Judicial)

1.     Whether reporters of local newspaper be allowed to see the judgment?  Yes

2.      To be referred to the reporter or not? Yes

 

JUDGEMENT

                  OP has preferred instant appeal against order dated 03.02.2010 passed by District Consumer Forum, New Delhi. The case of the complainant was that he applied for credit limit of Three million with letter of credit Rs. Nine million vide letter dated 17.11.05.  Complainant accepted the same after negotiating interest from 1% to .75% during last week of Jan., 2006.  It was clarified that processing fee was to be charged after disbursement of loan.  On assurance of OP, complainant has issued cheque dated 01.02.06 for Rs.99,180/-.  The complainant informed OP that it was not interested in financial facility and requested OP not to present the cheque.  OP has taken cheque for processing fee with the assurance that the same was being taken just to confirm the transaction and the same would be encashed only upon disbursement. Contrary to assurance OP encashed the cheque and had not returned the processing fee.

  2.   OP relied upon term no. 5 of terms and conditions of offer of allotment of loan, according to which processing fee @ .75% of sanctioned amount was payable afront on one time basis towards appraisal.  The district forum interpreted the same to mean that OP was entitled to processing fee only in case of disbursement of loan.  Hence the complaint was allowed and OP/appellant was directed to pay the amount of processing fee with compensation of Rs. 50,000/- and litigation charges of Rs. 10,000/-.

 3.        In appeal the grievance of  OP is that it has taken preliminary objection No. 3 that complainant was not a consumer.  The same has not  been dealt with by the district forum.  Apparently the argument is correct.

4.        Counsel for the appellant submitted that complainant was a public limited company incorporated under Indian Companies Act, engaged in business of import of Wacker Silicone Sealant. It applied for credit limit for business purpose  and so the transaction was commercial.   The same is not covered under consumer protection Act. In support of his submission he relied upon decision of National Commission in consumer case No. 57/15 titled as Ritman Infra Ltd. Vs. Indu Sindh Bank decided on 05.02.15.  In the same judgement reference has been made to decision of National Commission in consumer case No. 39/13 titled as National San Fine O Chem Ltd. Vs. Union Bank of India decided on 12.04.13 and complaint case No. 11/2007 titled as Samkit Art and Craft Pvt. Ltd. Vs. State Bank of India decided on 14.08.2014.  In all the three cases it was held that loan in respect of business is a commercial activity and not covered under consumer protection Act.

5.         Same view was taken by National Commission in Revision petition No. 134/11 titled as Sushma Goyal vs. Punjab National Bank of India decided on 07.04.11.

6.         Counsel for respondent submitted that company is a person and can file complaint under consumer protection Act as per decision of Hon’ble Supreme Court in Karnataka Power Transmission Ltd. Vs. Ashok Iron Works Pvt. Ltd. AIR 2009 Supreme Court 1905.  Company may be a person but whether the transaction was commercial or not was not the issue before Hon’ble Supreme Court.  Hence the cited decision does not help the complainant.

7.         On merits the counsel for the appellant relied upon decision of National Commission in Revision Petition No.3324/14 titled as G.Jayadevappa vs. Manager Syndicate Bank decided on 07.01.15.  In that case the complainant had sought refund  of charges of engineer towards valuation of house purchased by the complainant and pledged to the bank.  The complaint was dismissed by district forum on the ground that it was bounden duty of complainant to pay house valuation charges to the bank.  The order of district forum was upheld by State Commission as well as by National Commission. In para 9 it has been held that while sanctioning the credit facility of Rs. 20,00,000/- for building a house, bank had clearly indicated that processing charges would be Rs. 16,545/- and legal/valuation/surveyor charges were  Rs. 3309/-.

8.         Processing charges are meant for completing process of inquiry and to assess the ability of borrower to repay the loan.  The same has nothing to do with the actual disbursement of the loan.

9.         In Revision Petition No. 2001/12 titled as HDFC Bank Ltd. Vs. Kamal Ohri & Ors.  decided on 12.08.14 reported as 2014(3) CPR 503 National Commission held that Bank while processing application for loan spends time and money in sanctioning the same and preparing  instruments for disbursement of loan. If the applicant asks for cancellation of loan, he is not entitled to refund of the processing charges.  There is no justification in claiming refund of processing charges as bank had already carried out its part of obligation.  It is the applicant who has changed his mind.  The complaint was dismissed.

10.       For the foregoing reasons the appeal succeeds on both counts.  Impugned order cannot be allowed to stand.  The appeal is accepted.  Impugned order is set aside and complaint is dismissed.

            Copy of the order be sent to both the parties free of cost.

            One copy of the order be sent to district forum also for information.

 

(O.P.GUPTA)

MEMBER(JUDICIAL)