COMPLAINT FILED: 26.03.2009<br /> DISPOSED ON: 05.06.2010<br /> <br /> BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM AT BANGALORE (URBAN)<br /> <br /> <br /> 5TH JUNE 2010<br /> <br /> <br /> PRESENT:- SRI. B.S. REDDY PRESIDENT<br /> <br /> SMT. M. YASHODHAMMA MEMBER <br /> <br /> SRI. A. MUNIYAPPA MEMBER <br /> COMPLAINT NO.721/2009<br /> <br /> <br /> COMPLAINANT Sri. G. Balaji,<br /> S/o Sri. Ellaiah Naidu,<br /> Aged about 35 years,<br /> R/at No.959, 1st Floor,<br /> Chikkananjundappa Road,<br /> R.S. Palya, M.S. Nagar,<br /> Bangalore – 560 033.<br /> <br /> Advocate: Sri. R. Balaji<br /> <br /> <br /> V/s.<br /> <br /> <br /> OPPOSITE PARTY M/s Punjab National Bank,<br /> Sadashiv Nagar Branch,<br /> Sadashiv Nagar,<br /> Bangalore – 560 080.<br /> <br /> Rep: by its Branch Manager.<br /> <br /> Advocate: Sri. Narayana Shenay <br /> <br /> <br /> <br /> O R D E R S<br /> <br /> SRI. B.S. REDDY, PRESIDENT<br /> <br /> The complainant filed this complaint U/s. 12 of the Consumer Protection Act of 1986, seeking direction against the Opposite Party (herein after called as O.P.) to release the FD amount of Rs.2,00,000/- with interest at 8% p.a. from 27.09.2001 till the date of payment of the entire amount; to pay compensation of Rs.1,50,000/- towards mental and physical harassment / agony with litigation costs of Rs.5,000/- on the allegations of deficiency in service on the part of the OP. <br /> <br /> 2. In the complaint it is stated that the complainant approached OP bank for education loan for pursuing his further education in Masters in Information Technology at London. OP bank informed the complainant that since he has got no account with OP as such if he is ready to give a sum of Rs.2,00,000/- as fixed deposit and then would be able to proceed to process his application and to sanction the loan. The complainant paid sum of Rs.2,00,000/- as FD on 27.09.2001 and the said FD was deposited initially for a period of 12 months and the interest payable is at the rate of 8% p.a. On 28.09.2001 the complainant availed an education loan for a maximum of Rs.5,00,000/- repayable in 84 equal monthly installments commencing from June 2006. The LIC policy also for Rs.7,50,000/- was also pledged towards the said loan. OP assured the complainant that FD for sum of Rs.2,00,000/- deposited shall be released for education purpose as and when required. Though the repayment of the loan starts from June 2006 but the OP had started issuing letters demanding repayment from the year 2005 itself. FD was never pledged or given on lien to OP as security for the educational loan. OP has created lot of problems to the complainant during his education at London by not disbursing the educational loan installments in time; even after issuing several letters for releasing the FD amount for his education by this complainant. The conduct of OP in not releasing the FD and other installments compelled the complainant to go for employment which in turn affected his studies due to the refusal of the OP to release the FD. Complainant had written letter dated 06.06.2005 asking for several information complainant had requested OP for a loan of Rs.1,80,000/- FD itself but the same was also refused. OP had issued legal notice dated 04.10.2007 demanding to pay sum of Rs.4,48,156/- towards the said education loan. The complainant approached OP seeking clarification regarding the entire transaction; at that time he was informed that FD certificate was cancelled way back in the year 2002 itself. The said cancellation was without the knowledge of the complainant and without any authority and legal right; the complainant suffered loss of interest earned on FD, the complainant had sent a reply notice to the OP. OP has acted illegally in non-disbursing of the educational loan installments and refusing to release FD amount. This nothing but gross negligence; unfair trade practice, contrary to the policies of the Government and a clear case of deficiency in service. Inspite of harassment by OP, the complainant completed his education. The complainant filed complaint seeking necessary reliefs as stated above. <br /> <br /> 3. On appearance, OP filed version contending that the complaint filed is false, frivolous, vexatious and the same is not maintainable, the very approach of the complainant is at most unclean and lacks bonafides. The complainant had filed this complaint to avoid the payments to the OP of its legitimate dues. The complainant has not been traceable and he has not come before the OP since 2001. OP has been approaching various agencies to contact the complainant without any results. The guarantor who is an ex-serviceman has failed to give the details of the complainant and other guarantors. In this regard his complaint has been lodged with the jurisdictional police on 18.02.2009 alleging criminal breach of trust on the part of guarantor as a counter blast to which this false complaint has been filed. It is submitted that contrary to the terms and conditions, the complainant had changed the programme for which loan has been granted. The loan was granted for pursuing the masters in information technology. As per letter dated 10.06.2002 issued by the complainant he has joined MBA programme; which is a breach of terms and conditions of the sanction. <br /> <br /> 4. The complainant applied for educational loan for an amount of Rs.5,30,000/- and submitted letter dated 28.08.2001 issued by the London School of Commerce (UK) admitting him to the course in Masters in Information Technology Programme as well as details of the fee payable. He represented that his father is an ex-serviceman drawing monthly pension and furnished the address. OP had sanctioned the loan by accepting the guarantors. It was stated that the amount of Rs.2,00,000/- held in fixed deposit may be held as an additional security. The complainant executed the loan agreement on 28.09.2001. As per the terms therein the complainant was required to inform his progress in the studies as well as his conduct from time to time. Further he was required to inform OP of the change of address from time to time. Any violation of the terms and conditions the OP has entitled to recall the entire loan at once. An amount of Rs.2,92,467/- was released as first installment on 28.09.2001. The 2nd installment of Rs.1,80,000/- was released on 16.10.2001. An amount of Rs.29,500/- was disbursed later. Thus the entire loan amount of Rs.5,00,000/- has been disbursed in favour of the complainant. The complainant failed to remain in contact with OP bank for a long duration. There is no communication till about the year December – 2004 except a letter written by the complainant seeking extension of time for the repayment of the loan. The complainant as well as the guarantors could not be contacted since they have changed the residence without notice to the OP. In the very first year itself the conduct of the loan account by the complainant has failed to keep the terms and conditions based on which the loan was sanctioned, hence the amount of Rs.2,00,000/- lying in the security deposit was adjusted towards the dues. OP had sent letters dated 15.12.2003, 22.05.2004 and 10.06.2004 to the complainant and guarantors which were not responded. The first guarantor and father of the complainant had sold the house and shifted to some other place without informing the OP. After more than 3 years the first guarantor the father of the complainant was traced at the new address he has executed a balance confirmation. Legal notice dated 11.04.2005 was issued recalling the loans and calling upon the borrower as well as the guarantors to repay the loan within seven days. The 2nd legal notice dated 29.04.2005 was issued but without any results. The father of the complainant being guarantor had paid an amount of Rs.1,00,000/- to OP on 08.03.2007 and has promised to regularize the accounts within six months. OP had denied the other allegations of the complainant. While submitting parawise objections, hence it is prayed to dismiss the complaint with costs. <br /> <br /> 5. In order to substantiate the complaint averments, the complainant filed affidavit evidence, additional affidavit evidence and produced documents. The duly authorized and Senior Manager of the OP filed affidavit evidence, additional affidavit evidence in support of the defence version and produced documents. <br /> <br /> 6. Both the parties filed written arguments. Arguments on both sides heard. The Points for now that arise for our consideration:<br /> <br /> Point No.1:- Whether the complainant has proved <br /> the deficiency in service on the part of <br /> the OP?<br /> <br /> Point No.2:- Whether the complainant is entitled<br /> for the reliefs now claimed?<br /> <br /> Point No.3:- To what Order?<br /> <br /> 7. After going through the pleadings, documents produced and our findings on the above points:<br /> <br /> Point No.1:- Negative. <br /> Point No.2:- Negative. <br /> Point No.3:- As per final Order.<br /> <br /> R E A S O N S<br /> <br /> 8. At the out set it is not at dispute that the complainant availed an educational loan for a maximum limit of Rs.5,00,000/- from OP bank on 28.09.2001 repayable in 84 equal monthly installments. The complainant deposited sum of Rs.2,00,000/- as FD on 27.09.2001 in OP bank for a period of 12 months and the interest payable at the rate of 8% p.a. The grievances of the complainant is OP assured that the FD for the sum of Rs.2,00,000/- deposited shall be released for educational purpose as and when required. The FD was never pledged or given on lien to the OP as security for the said loan. OP even after issuing letters for releasing the FD amount for his education refused to release the same the said FD certificate was cancelled in the year 2002 itself without the knowledge of the complainant, and his authority. Further the complainant claims that the repayment of the loan starts from June – 2006 but OP started demanding the repayment from the year 2005 itself as per the legal notice issued on 11.04.2005. Due to the cancellation of the FD by OP illegally in the year – 2002 itself, the complainant has lost by way of loss of interest at the rate of 8% p.a. amounting to approximately Rs.1,28,000/-. OP has not disbursed the educational loan instalments in time thus the act of the OP in not disbursing the educational loan instalments in time and also refusing to release FD amount is unfair trade practice contrary to the policies of Government and deficiency in service. <br /> <br /> 9. The main defence of OP is that the complainant failed to stick the terms and conditions of the loan, as a result OP was entitled in exercising the right to recall the loan. The fixed deposit of Rs.2,00,000/- was offered as security for the loan sanctioned the complainant failed to remain in contact with OP and failed to respond to the letters and changed the programme against which loan was sanctioned, failed to inform change of address, failed to pay the premiums of the life insurance policy submitted to OP, all of which were committed contrary to the terms and conditions of the sanction. The educational loan to the maximum extent of Rs.5,30,000/- is availed by the complainant as against security apart from others of the LIC policy of Rs.7,50,000/- and fixed deposit of Rs.2,00,000/-. The amount of Rs.2,00,000/- deposited in fixed deposit, subsequently a lien was marked. The complainant was required to inform the OP of change in the address from time to time. The term loan was granted specifically for the complainants use for pursuing study in masters in information technology from London School of Commerce. Any violation of the terms and conditions, OP was entitled to recall the entire loan at once. The OP was justified in adjusting the FD amount towards the total loan amount due and there was no any delay in disbursing the loan sanctioned as such there is no deficiency in service on the part of the OP, and OP is not liable to pay any amount the complainant.<br /> <br /> 10. The loan application filed on 20.09.2001 by the complainant reveals that he has applied for term loan of Rs.5,30,000/- repayable in 84 monthly installments beginning two years after the disbursing of loan to enable him, to prosecute Higher Education in Masters in information technology. The latter issued by London school of Commerce (UK) dated 28.08.2001 was produced along with loan application showing the total expenses to be incurred for completing the course of Master of information technology. OP Bank sanctioned loan to the tune on Rs.5,00,000/- subject to FD of Rs.2,00,000/- taken as a Collateral Security. The letter dated 10.06.2002 addressed by the complainant to OP Bank, goes to show that the complainant has requested the OP bank to hold back Fixed Deposit as security towards his education loan. Thus its becomes clear that the FD amount of Rs.2,00,000/- was taken as security for the loan advanced. In the said letter itself the complainant has informed OP that he has been taken admission to Master in Business Administration in the London School of Commerce. At the time of availing the loan the complainant represented that he as taking up Higher Education the Master in information technology based on that and the letter issued by London School of Commerce regarding the fee structure and other expenses OP Bank has sanctioned the loan. The complainant without prior permission of OP changed the course by taking MBA. The agreement for education loan executed by the complainant that at the end of each academic year borrower will produce a certificate from the head of the institution at which he is studying testifying the results achieved by him during and at the end of the year as well as about his conduct. Further it is stated that if the said certificate is not produced or the certificate furnished for any year is not considered satisfactory the bank will (in its absolute discretion) have the right to stop giving any further financial assistants in terms of the agreement and the bank will be entitled at its option to recall the loan already given together with the interest accrued thereon by a demand in writing. As per the this clause the OP Bank was entitled to recall the loan already advanced, as the complainant has changed the course without obtaining prior permission of OP and he has not furnished any certificate from the head of the institution. The statement of account produced by OP reveals that the FD amount was adjusted towards the total amount due on 28.10.2002. The said FD was given as security for the loan, the complainant has violated the terms of the agreement by changing the course of his higher education, consequently OP bank was justified in adjusting the FD amount towards the loan amount due. The amount of Rs.2,92,467/- was released as first installment on 28.09.2001, then amount of Rs.1,80,000/- released on 16.10.2001 and amount of Rs.29,500/- was disbursed later. Thus the entire loan amount of Rs.5,00,000/- has been released in favour of the complainant. In view of the same there is no merit in the contention that the loan amount sanctioned was not released in time.<br /> <br /> 10. In the loan agreement executed by the complainant interest at 15% per annum with quarterly rest has been agreed on the loan availed. The interest on FD was at Rs.8% per annum. In case FD amount was not adjusted towards the loan amount due, the complainant would have been liable to pay interest on that amount at 15% per annum with quarterly rest. By adjusting that amount in the total loan, interest has been charged on the balance loan amount. Therefore by adjusting the said amount of FD, infact the complainant has been benefitted. <br /> <br /> 11. Under these circumstances we are consider view that the complainant failed to prove deficiency in service on the part of the OP. In view of the same, the complainant is not entitled any of the reliefs claimed, accordingly we proceed to pass the following:<br /> <br /> O R D E R<br /> <br /> The complaint filed by the complainant dismissed. Considering the nature of dispute no order as to cost.<br /> <br /> Send the copy of this order to both the parties free of cost.<br /> <br /> (Dictated to the Stenographer and typed in the computer and transcribed by him, verified and corrected, and then pronounced in the Open Court by us on this the 5th day of June 2010.) <br /> <br /> <br /> <br /> <br /> MEMBER MEMBER PRESIDENT<br /> <br /> Snm: <br /> <br /> <br /> <br /> <br />