State Consumer Disputes Redressal Commission
Andaman & Nicobar Islands
Port Blair
Present : Justice P.N. Sinha, President
Shri Bimal Behari Chakravarty, Member
Appeal No. 1 of 2010
The UCO bank, Port Blair Branch, Port Blair & One Others
…………………………….Appellant
-Vs-
M/s Prabha Snacks Bar through its proprietor, N.Chelladurai,
Middle Point, Port Blair
………Respondent/Opposite party
JUDGEMENT
DATED: 28.07.2010
This appeal is directed against the judgment and order dated 04.12.09 passed by the District Consumer Disputes Redressal Forum, Port Blair (hereinafter called the District Forum) in C.D.Case No.58 of 2007.
The respondent of this appeal was the complainant before the District Forum and his case, in short, was that he opened an account in appellant bank bearing No.LBY 2932 to meet the educational expenditure of his daughter. He had deposited Rs.200/- to Rs.400/- every day since the opening of the account and till date he deposited total amount of Rs.32,700/- in the said account. In December 2007, he approached the appellant to make payment of the said amount for payment of college fees of his daughter but, the appellant bank refused to release the said amount in his favour. He issued a letter to the appellant regarding the illegality and deficiency in service made by the appellant and requested the appellant to allow him to withdraw the said amount of Rs.32,700/-. In spite of receiving his letter on 12.12.07 the appellant did not release the amount in his favour. Accordingly, he lodged the complaint before the District Forum claiming total amount of Rs.52,700/- which includes Rs.10,000/- as compensation for mental agony and harassment, Rs.10,000/- for the loss sustained by him for not receiving the amount, besides the amount of Rs.32,700/- lying in account No.LBY 2932.
The appellant as opposite party before the District Forum contested the complaint by filing written objection denying therein the material averments of complaint. The appellant inter-alia contended that, the respondent had suppressed material fact and misled the District Forum. Earlier, the respondent had entered into an agreement with the bank in respect of credit facilities given to him and as per clause 13 of the said agreement the bank has the right to set off and lien over the amounts in respondent’s credit. As per the direction of the Government of India the benefits to be given as Tsunami relief is in respect of loan amounts to the tune of Rs.2,00,000/- (Rupees Two Lakhs only), and not the entire liability. The said overdraft account was made non-performing asset by the bank as the respondent had stopped operating the said account and did not clear the outstanding liability. As the bank has the right to set off and lien over the amounts in respondent’s credit, the amount lying in his credit in LBY account No.2932 was not released and the said amount was set off against the liability amount due to the bank in respect of cash credit account. The complaint was accordingly not maintainable and it should be dismissed.
Before the District Forum no oral evidence was adduced by the parties and only documentary evidence were admitted in evidence. The District Forum after hearing both the parties and on consideration of respective cases of the parties and the documents allowed the complaint in part and directed the appellant to release Rs.32,700/- by transferring from cash credit account No.1000451 to account No.LBY 2932 of the respondent forthwith and not exceeding one month from the date of the judgment failing which the appellant shall have to pay interest at the rate of 10% per annum over that amount to be calculated from the date of judgment till release of the amount. Being aggrieved by and dissatisfied with the judgment and order of the District Forum the appellant has approached this commission in this appeal.
Mr.Krishna Rao, the Ld.Advocate for the appellant submitted before us that the respondent did not approach the District Forum with clean hands and suppressed about the existence of previously incurred credit facility. As per the clause 13 of the agreement entered into by and between the appellant and respondent, at the time of allowing credit facility loan in favour of respondent the Bank is entitled to the right to set off or adjust any amount lying in the credit of respondent for his failure to clear the previously incurred credit facility loan account. The District Forum without applying proper judicial mind arrived at erroneous decision and said order of the District Forum should be set aside.
Mr.Arul Prasanth, the learned advocate for the respondent on the other hand contended that there is no connection between credit facility and respondents account No.LBY 2932. The responded opened account No.LBY 2932 to meet the educational expenditure of his daughter and he was depositing Rs.200/- to Rs.400/- per day since the opening of that account. The appellant Bank erroneously adjusted Rs.32,700/- which was the maturity amount of said LBY 2932 which resulted into loss to the respondent as he could not make payment for college fees of his daughter in time. The order of the District Forum was right and the appeal should be dismissed with costs.
We have perused the materials on record and considered the submissions made by the learned advocates for the parties. On behalf of respondent two documents were admitted in evidence which are xerox copies of bank statement in respect of account No.LBY 2932 in the name of respondent (exhibit No.1) and xerox copy of letter dated 12.12.07 written by the respondent to the Manager of the appellant bank requesting him to release the amount of Rs.32,700/- lying in LBY account No.2932 (exhibit No.2). On behalf of appellant two documents were produced before the District Forum which are exhibits A and B. Exhibit-A is the copy of hypothecation of goods to secure a demand cash credit and it was executed by the respondent on 26th August 2001 when he took cash credit facility of Rs.3,50,000/- from the appellant bank. Exhibit-B is the copy of statement of said cash credit bearing No.CC1000451 and it shows that even after adjusting Rs. 32,700/- from respondent’s LBY account No.2932 there was outstanding of Rs.3,20,167.05/- in respect of the said cash credit account.
Apparently, in plain eye it would appear that the appellant made mistake by not releasing Rs.32,700/- lying at the credit of respondent in his account No.LBY 2932 when the respondent requested the appellant to release the said amount. It appears to us that the District Forum was swayed away by the action of the appellant bank when it refused to release the amount of Rs.32,700/- lying at respondent’s account No.LBY 2932 and adjusted the said amount of Rs.32,700/- against the cash credit loan account lying with appellant bank in the name of respondent which was previously incurred by him. The exhibit-A reveals that the respondent obtained the cash credit facility from appellant bank in August 2001 whereas he opened the LBY account No.2932 in March 2007, as it appears from exhibit-1. Clause 13 of exhibit-A makes it clear that the bank has the right to set off against any amount lying in the credit of respondent in case he fails to make payment of loan incurred by him at the time of availing of cash credit facility. It indicates that the bank has a right of lien over all forms of securities deposited by the respondent. Banks right of lien over all forms of securities deposited by customers has been recognized in several judicial decisions.
The Supreme Court in Syndicate Bank V.Vijay Kumar reported in(1992) SCC 330 has held that the banks have general lien over all forms of securities. The National Commission in Branch Manager, Union Bank of India and another v. Tele Surya Rao reported in 1997 CTJ 588 (CP) laid down the law by observing that, “Lien is a right of defence and not right of action and, therefore in no question of bar of limitation coming to the field of exercise of lien. Lien in a primary service is a right in the bank to retain that which is in his possession belonging to person until certain demands of the person in possession are satisfied. A lien is a right of defence, not a right of action, and consequently can be claimed in respect of a time barred debt. Where a customer deposited its security with a Bank , the Bank is given a general lien over all the securities, except in cases where the deposit was for a larger purpose or where there was an agreement or contract in consistent with the lien. The Banker’s lien gives the Bank a right on all the moneys of the constituent in its hand so that they may be transferred to whatever account the Bank chooses, to set-off or liquidate the debt.”
The same view was propounded by the State Consumer Disputes Redressal Commission, Orissa in Narayan Pradhan –Vs- Syndicate Bank reported in 2009 CTJ 329(CP). In the said decision the Orissia State Consumer Disputes Redressal Commission further held that, “This being the settled position of law, we find that when the complainant was in debt and there was outstanding amount towards the loan incurred by him, the action of the opposite party-Bank in withholding and setting off the money in the pigmy deposit scheme towards the said loan outstanding in no way can be termed as deficiency in service, rather the Bank has rightly exercised its right”.
It is thus clear that the respondent previously incurred loan when he obtained cash credit facility from appellant Bank in 2001 and he did not clear the said loan obtained by him as it is evident from exhibit-B. Clause 13 of the hypothecation agreement (Exhibit-A) makes it clear that the Bank has a right to set off or to adjust any amount of the customer lying at Bank’s credit in case of his failure to clear the outstanding loan. The legal position which we have indicated above makes it clear that the Bank made no mistake by not releasing Rs.32,700/- lying in LBY 2932 of respondent and rightly exercised it’s right of lien. We find that the respondent had previously incurred loan which he did not clear and he was in debt and the outstanding amount of the loan incurred by the respondent remained unpaid. The action of appellant Bank in withholding and setting off the money which was lying in LBY 2932 account of respondent towards the said outstanding loan cannot be described in any way as deficiency in service. The District Forum was in error by not considering the settled principle of law in this respect.
Mr. Krishna Rao, the learned advocate for the appellant submitted before us that the respondent earlier gave consent in writing for deduction of amounts from other accounts for adjustment of his cash credit facility and even the amount from his savings bank was deducted earlier. He submits that he wants to produce such papers as additional evidence. We are unable to accept his submission and cannot permit him to adduce any document at this such stage in this appeal when in the written objection before the District Forum the appellant bank never stated that the respondent earlier gave consent in writing to deduct amounts from his account to adjust against cash credit loan.
At the same time the arguments advanced by Mr.Arul Prasanth, the learned advocate for the respondent that at the back of exhibit-A at page 8 goods which where hypothecated in the favour of the appellant bank were mentioned and the appellant without taking control of such goods could not have deducted money from LBY account, is not acceptable. We have already indicated above that the banks have general lien over all forms of securities and clause 13 of the agreement (Exhibit-A) empowers the bank to set off any amount lying at bank’s credit to clear the outstanding loans.
In view of the discussion made above the appeal is allowed and the order of the District Forum passed in C.D. Case No.58 of 2007 being not in accordance with law is set aside. Consequently, the complaint filed by the respondent having no merit stands dismissed.
We make no order as to costs, and parties would bear their respective costs.
Send a copy of this order along with records of C.D.Case No.58 of 2007 to the District Forum, Andaman, Port Blair for information and necessary action.
The amount of Rs.25,000/- which was deposited by the appellant at the time of admission of appeal be returned to the learned advocate for the appellant on proper receipt after completion of all the formalities in this respect. A copy of judgment be handed over to the learned advocates for the parties free of cost.
