F.A.No.1112 OF 2008 AGAINST C.C.No.43 OF 2008 DISTRICT FORUM PRAKASAM AT ONGOLE

Between:

Munnangi Bhaskara Rao,

S/o. Munnangi Seetha Ramaiah,

Pothukatla Village,

Parchuru Mandal, Prakasam dist.  

                                                                Appellant/complainant

                A N D

State Bank of India,

Rep. by its Branch Manager,

Parchur, Prakasam Dist.

                                                                Respondent/opposite party

Counsel for the Appellants            Sri D.Krishna Murthy

Counsel for the Respondent          Sri M.Narender Reddy  

        QUORUM:   HON’BLE SRI JUSTICE D.APPA RAO, PRESIDENT  
                              SMT M.SHREESHA, HON’BLE MEMBER

                                                AND

SRI R.LAKSHMINARASIMHA RAO, HON’BLE MEMBER

WEDNESDAY THE TENTH DAY OF AUGUST

                                TWO THOUSAND ELEVEN

Oral Order (As per Sri R.Lakshminarasimha Rao, Hon’ble Member)

                                        ***

1.     The unsuccessful complainant is the appellant.

2.     The opposite party sanctioned educational loan of `1,40,000/- to the son of the complainant which was to be paid  in annual installments.  The complainant and his wife stood as sureties for payment of the loan.  The title deeds standing in the name of complainant’s wife Subbayamma, have been hypothecated with opposite party and they are still with them.  The complainant’s son had completed his B.E. course and in January, 2007 left for the United States for further studies.  As per the agreed terms towards the discharge of the loan the principal amount of loan has to be discharged in one year after the completion of the complainant’s son’s studies and the interest is payable annually.  On 15.03.2007 the opposite party got published notice in Eenadu daily,  Prakasam Edition where under the names of 27 defaulters including that of the complainant’s was published showing them as Chronic Defaulters.  It is contended that the opposite party had not informed nor sent any notice to the complainant of  the due amount payable.  On 20.02.2007 the complainant paid a sum of `15,000/- , on 17.05.2007 the complainant paid `30,000/-, again on 30.05.2007 the complainant paid `50,000/-.   

3.     The opposite party resisted the plea contending that the loan is for the purpose of expenses relating to the education of B.Tech., only.  As per clause 5 of the terms and conditions of agreement, the student has to take up his studies seriously, work hard and try his best to maintain a good academic record and intimate to the bank the results of periodic tests/examinations.  The complainant’s son had not done it.    The principal borrower violated the conditions of the agreement because his whereabouts not known and there is no intimation regarding his foreign studies.  Thus the entire loan is over due.  As per the terms and conditions of the agreement, the loan is granted jointly to the student and guardian and interest is to be debited quarterly and interest is to be serviced by the parent during the study period.  As per the clause 9 of the agreement the student has under taken higher studies in India and it intends to go abroad for further studies or for taking up a job, he has to intimate the bank immediately and thereupon the bank may decide whether the loan has to be repaid in full before the student leaves the country or whether to allow the loan to be continued in revised terms and conditions. 

4.     The enquiries revealed that the main borrower had  not tried for job by availing the opportunities like campus interviews etc., and went to foreign countries for further studies without informing the bank and without taking permission from the bank which is quite contrary to the terms and conditions of the loan.  The student failed to inform the change of address kept the bank and dark in violation of the terms of the agreement.  The father guardian failed to produce the student for the necessary formalities nor repaid the loan amount.  As per the terms of the loan agreement, the student must secure the job and start repayment of the loan.

5.     The complainant has filed his affidavit and the paper publication, Ex.A1.  On behalf of the opposite party bank, its Manager, P.Babu Venkatram Vijayakumar has filed his affidavit and the documents Exs.B1 to B7.

6.     The District Forum has dismissed the complaint opining that the complainant and his son defaulted in paying the loan amount and he had not informed the opposite party bank that he was going abroad.

7.     Aggrieved by the order of the District Forum, the complainant has filed the appeal contending that the opposite party has not issued notice to him or to his son and that he had paid `1,05,000/- on various dates till 30.5.2007 and there was no default committed by him. 

8.     The counsel for the appellant has filed his written arguments

9.     The point for consideration is whether there is any deficiency in service on the part of the opposite party bank in publishing the chronic defaulters list that include the name of the complainant’s son?

10.    The complainant had obtained a sum of Rs.1,40,000/- sanctioned as educational loan by the opposite party bank and the loan was payable in annual instalments.  For repayment of the loan transaction, the complainant and his wife stood as sureties.  As per the terms and conditions of the loan agreement, the principal amount has to be discharged within one year of the completion of the studies of the complainant’s son and the interest is payable annually.  The opposite party bank had published on 15.3.2007 the names of chronic defaulters which include the name of the complainant’s son.  The complainant contends that he has paid `15,000/- on 20.2.2007, `30,000/- on 17.5.2007 and `50,000/- on 30.5.2007. 

11.    The opposite party bank has published the chronic defaulters list on 15.3.2007.  The complainant contends that he was not aware of the terms of the loan agreement and he was not informed of the arrears of the loan.  In the complaint the complainant refers to the repayment schedule of the loan and in that context it cannot be said that the complainant is not aware of the terms of the loan agreement.  According to the complainant, the interest is payable annually and the principal has to be paid within one year of completion of studies of his son. 

12.    The complainant has not informed the opposite party bank that his son is going for the foreign country for the purpose of education nor the complainant’s son for whose education the loan was sanctioned and released by the opposite party bank had not informed the opposite party bank about his going abroad.  The opposite party bank was kept in dark about the complainant’s son going abroad.  It is the obligation of the complainant to inform the opposite party bank about the completion of his son’s education and pay the principal amount within one year thereof.  The complainant has committed default in payment of interest which has become overdue by `16,630/- for the period from 1.2.2006 to 31.3.2007  even after repayment of `15,000/- on 20.2.2007 and the opposite party bank has specifically stated in its reply dated 21.5.2007 that it had sent reminders several times by its field staff requesting the complainant to pay the interest component of the loan amount

13.    The complainant’s son has completed his B.E. Course in the month of April 2006 and he has not submitted the progress reports of third and fourth year as also the pass certificate of the course.  The opposite party bank in its reply has reminded the complainant the non-submission of progress report and pass certificate.  In the loan agreement it is specifically provided that the complainant and his son should inform the bank about the change in their financial condition, necessity for obtaining permission of the bank for the complainant’s son doing job and the mandatory requirements of informing the bank from time to time of any change of address on account of study leave, study tour etc.  Clause IX of the agreement reads as under:

In case the student has undertaken higher studies in India and intends to go abroad for further studies or for taking up a job he shall intimate to the bank immediately and thereupon the bank may decide whether the loan has to be repaid in full before the student leaves the country or whether to allow the loan to be continued on revised terms and conditions.

14.    The complainant and his son had not informed the opposite party bank that the complainant’s son had left for the USA.  The complainant had committed default as also failed to inform the opposite party bank of the change in his address.  The complainant and his son had committed default  in making payment of the principal loan amount and the interest payable thereon.  Violation of the terms and conditions of the loan agreement committed by the complainant and his son made the opposite party bank entitled to publish the names of chronic defaulters inclusive that of the complainant’s son.  The complainant having been a defaulter and having violated the terms of the loan agreement cannot question the publication of defaulters list by the opposite party bank.  The statement of the account of the complainant speaks volumes of his negligence in allowing the loan amount pouring up into arrears for a considerable length of time.  We do not seen any factual or legal error in the order of the District Forum. 

15.    In the result the appeal is dismissed.  The order of the District Forum is confirmed.  There shall be no order as to costs.

                                                                                     Sd/-

                                                                                PRESIDENT

                                                                                     Sd/-

                                                                                  MEMBER

                                                                                     Sd/-

                                                                                 MEMBER

                                                                            Dt.10.08.2011

KMK*