Tamil Nadu

South Chennai

CC/26/2021

Kala R, W/o T.R. Ravishankar - Complainant(s)

Versus

M/s. Axis Bank Limited, Rep by its Managing Director - Opp.Party(s)

Saravabhauman Associates and Lavanya Shankar

27 Jan 2023

ORDER

                                               Date of Complaint Filed : 28.12.2020

                                               Date of Reservation      : 05.01.2023

                                              Date of Order               : 27.01.2023

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION,

CHENNAI (SOUTH), CHENNAI-3.

 

PRESENT: TMT. B. JIJAA, M.L.,                                              : PRESIDENT

                    THIRU. T.R. SIVAKUMHAR, B.A., B.L.,              :  MEMBER  I 

                  THIRU. S. NANDAGOPALAN., B.Sc., MBA.,        : MEMBER II

 

CONSUMER COMPLAINT No.26 /2021

FRIDAY, THE 27^thDAY OF JANUARY 2023

Kala R, w/o T.R.Ravishankar,

Prasanth Colony, Thirumalai Nagar,

Flat 2 A Akriti Adheswar Apts,

3^rd Main Road, Sembakkam,

Chennai 600073.                                                                                                                              ...   Complainant                

 

..Vs..

M/s Axis Bank Limited,

Rep by its Managing Director,

Door No.16, 20, Brindavan St Ext.

Brindavan Extension,

West Mambalam,

Chennai-600033.                                                                                                                             ...  Opposite Party

 

******

Counsel for the Complainant          : M/s. Sarvabhauman Associates

Counsel for the Opposite Party       : Exparte

On perusal of records and after having heard the oral arguments of the Counsel for the Complainant, we delivered the following:

ORDER

Pronounced by Member-I, Thiru. T.R. Sivakumhar., B.A., B.L.,

1.      The Complainant has filed this complaint as against the Opposite Party under section 35 of the Consumer Protection Act, 2019 and prays to direct the Opposite Party to pay  sum of Rs.8,94,706/-towards the loss suffered by the Complainant as mentioned in paragraph 20(i) with interest @12%p.a and to pay a sum of Rs.2,00,000/- towards compensation for the deficiency in service committed by the Opposite Party as mentioned in paragraph 20 and to pay a sum of Rs.4,00,000/- towards unfair trade practice for total disregard of the notification of RBI dated 09.11.2017 RBI’s Guidelines on Fair practices code for Lenders dated 05.05.2003 and fair practices code framed by the Opposite Party as motioned in paragraph 20 (iv) and to pay a sum of Rs.1,00,000/-as compensation for all the mental agony and hardship inflicted on them by the Opposite Party as mentioned in paragraph 20(v) along with cost of Rs.1,00,000/-.

2.     The averments of Complaint in brief are as follows:-

          The Complainant had availed of an overdraft facility against the security of shares & debentures with the Opposite Party since February, 2016 and the same had been renewed. On 22.02.2017, she entered into Loan against Security (LAS) Agreement with the Opposite Party by which a sum of Rs.20,00,000/- was sanctioned to her as overdraft facility.She had accordingly pledged securities which enabled her to operate the account. As per the Bank's requirement the prescribed margin that the customer had to maintain at all points in time should be 60% or below the Loan to Value ratio (LTV). The Opposite Party always had a safety margin of 40%. In keeping with this rule, she and her husband ensured that they were within the prescribed limit of liability. She was also paying an interest of 10.50% for the OD facility service provided by the Opposite Party. At the time of availing this facility, she was residing at Baroda Street, West Mambalam. The Opposite Party had its branch at West Mambalam and therefore co-ordination and interaction with the Bank was quite easy for her and her husband especially considering that they were senior citizens. Even at that point in time, she was requesting the Opposite Party for Net Banking facility. Herhusband was interacting with one Mr. Surya Annamalai who headed the Loan Centre, Chennai. She had requested the West Mambalam Branch of the Opposite Party to accord her Net Banking facility. Also, she was constantly pointing out that her mail ID and mobile number had not been registered with the above account thereby making it extremely difficult to monitor the account. To add insult to injury, the Opposite Party has not even issued a debit card to her through which atleast she could have accessed her account statement. Strangely, all those requests seemed to fall on deaf ears. On 03.01.2020, she sent an email to the Nodal Officer, Chennai of the Opposite Party once again pointing out that none of her above mentioned requests had been met by the Opposite Party, there was no reply from the Opposite Party. Hence, she went in person on 06.01.2020 and registered an application for including her email ID and mobile number in her account. This application was received by P.Pavithra bearing Employee No.194725. and an acknowledgment was given by the Opposite Party. While all this was going on, she and her husband shifted residence from West Mambalam to Hasthinapuram (Chrompet). That was when she and her husband really felt the impact of the Opposite Party failing and neglecting to grant them Net Banking/Debit card facility and also not syncing her email ID and mobile number with the above LAS Account. They had to travel all the way from Hasthinapuram to West Mambalam to ensure that she was operating her account within the permissible limits of sanction. Needless to state that this was proving to be very strenuous because of her age. Despite all the shortcomings and deficiencies from the side of the Opposite Party, she continued with her trading activity. She always took ample precautions to ensure that she maintained the limits. Her statement of account of issued by Opposite Party for A/c 917030022806370 would prove that the limits had been studiously maintained. During mid March, 2020 due to the sudden spread of COVID-19 which brought all activity to a grinding halt, Countries across the world declared lockdowns, Public transport was banned. Life became exceedingly difficult and dangerous especially for senior citizens with co-morbidities as such people became more susceptible and vulnerable category, she and her husband were unable to go over to West Mambalam Branch of the Opposite Party from Hastinapuram, Chrompet. In fact, even the attendance of the staff at the Opposite Party's Branch had dramatically fallen because of the lockdown as a result of which, she could not even reach them over the telephone. Crash of the share markets with all commercial activity totally halted because of the lockdown, consequently the world over the share markets started to crash and the value of the shares pledged with the Opposite party which were valued at Rs.25,65,846/ on 01.02.2020 started falling. As on 30.03.2020, due to the sudden fall in the share market on account of COVID, her account apparently showed an overdrawn value of just Rs.4.48 lakhs. Ironically, she was totally in dark about the samesince the Opposite Party had failed to give her the Net banking facility to monitor her account. Not providing Net Banking facility, not linking her email ID and mobile number to her account and not providing Debit card facility are all serious acts of negligence and deficiency in service by the Opposite Party. The fact that the overdue limit had gradually increased was intimated to her orally by the aforesaid Surya Annamalai and immediately thereafter, she was taking steps to pledge further shares so as to increase the value of the securities. On 27.03.2020 the RBI, after taking into account the difficulties of the debtors during the catastrophe, issued a notification bearing No.DOR.No.BP.BC.47/21.04.048/2019- 20 "COVID 19 REGULATORY PACKAGE" to all Banks including the Opposite Party, to mitigate the burden of debt servicing brought about by disruptions on account of COVID-19 pandemic and to ensure the continuity of viable businesses. in the said notification, point No.3 under the head "Rescheduling Working Capital Facilities is extracted as follows: In respect of working capital facilities sanctioned in the form of cash credit/overdraft(CC/OD) lending institutions are permitted to defer the recovery of interest applied in respect of all such facilities during the period from 1^stMarch 2020 upto31^stMay 2020 ("deferment") The accumulated accrued interest shall be recovered immediately after the completion of this period". And in Point No.4 under the head “Easing of Working Capital Financing" is also extracted as follows:(4) In respect of working capital facilities sanctioned in the form of CC/OD to borrowers facing stress on account of the economic fallout of the pandemic, lending institutions may recalculate the drawing power by reducing the margins and/or by reassessing the working capital cycle. This relief shall be available in respect of all such changes effected upto May 31, 2020 and shall be contingent on the lending institutions satisfying themselves that the same is necessitated on account of the economic fallout from COVID 19. Further accounts provided relief under these instructions shall be such to subsequent supervisory review with regard to their justifiability on account of the economic fallout from COVID -19. Classificaton as Special Mention Account (SMA) and Non-Performing Asset (NPA). And in Point no. 8 under "Other Conditions", Lending institutions shall frame Board approved polices for providing the above-mentioned reliefs to all eligible borrowers, interalia, including the objective criteria for considering reliefs under paragraph 4 above and disclosed in public domain."

And in Point no. 10 under "Other Conditions", "The instructions in this circular come into force with immediate effect. The Board of Directors and the key management personnel of the lending institutions shall ensure that the above instructions are properly communicated down the line in their respective organisations, and clear actions are issued to their staff regarding their implementation. The Opposite Party had shown total disregard to the notification of RBI dated 27.03.2020, as just 3 days after the said notification was issued by the RBI, the Opposite Party sent a mail dated 30.03.2020 at 3:39pmto her which came as a rude shock to the Complainant. A part of the email is extracted as follows: "This is to inform you that invocation is triggered in the Loan against Shares A/c no XXXXXXXXXXXXXXX6370. The invocation is triggered due to breach in Loan to Value Ratio percentage. The LTV% has crossed more than 90% Accordingly the equity shares offered for pledged, total pledged shares will be invoked and sell.It is to recover current outstanding balance along with unapplied as well as penal interest charges to regularize the account. Please note that the invocation value of the pledged equity shares will be corresponding to the capital market price on the date of invocation and thus shall correspond to the overdrawn position in the your How account on the date of processing unilateral selling. Further details regarding invocation will be communicated shortly”. She replied immediately at 4:00p.m. to the mail received at 3:59p.m. making haste to inform the Opposite Party that arrangements had been made to remit Rs.5,00,000/- into her account on or before the previous Friday itself. She pleaded with the Opposite Party to grant time till 14.04.2020. The contents of the reply mail is extracted as follows, "I have already made arrangements to remit in my account Rs.5,00,000/-lakhs. Due to sudden covid 19 decision by the government and fall in securities has happened. I request you to give me time till 14.04.2020, Once all the offices starts functioning normal shall remit therequired amount and regularize my account In fact I am having on hand securities to the value of 4 lakhs which I am unable to give as courier is also not functioning.In the circumstances I request you to give time till normalcy is restored. Ministry of finance in their notifications informed banks over dues ifany may be deferred till April 2020 end. I hope you will permit time."However, it is very apparent that the Opposite Party blatantly chose to ignore all of the above. Exhibiting total callousness and disregard to the notification to the RBI and the hardships faced by the customers and the general publicduring the pandemic, the Opposite Party sent a mail on 04.04.2020which was identical in contents of the earlier mail dated 30.03.2020.She, in reply, sent 2 emails back to back on 04.04.2020, one at 7:10 p.m. and the other at 9:16 pm. In the first email, she pleaded for time and tried to explain hardships faced by her on account of Corona. In the second mail, she listed out the shares to be sold for adjustment of overdue as a first step, incase the Bank had decided to sell the shares. It was further requested by her to grant time till April, 2020 within which she had assured to clear the liability, close the account and take back her shares pledged to the Complainant. However, the mail dated 04.04.2020 received from the Opposite Party was only an eye wash because by then they had already sold the shares and it became apparent that they had not even cared to heed to the pleas and requests sent by her. Such a hasty and uncalled action was taken by the Opposite Party without even affording sufficient time to regularize her account. On 24.04.2020 she sent an email to the Nodal Officer of Opposite Party expressing her anguish on the hasty action taken by the Opposite Party. In that email, she stated that even if they had adjusted 50% of the securities held by them, the overdue would have been satisfied. However, unilaterally and without caring to issue a proper notice or according time to set right the overdue especially in the light of the RBI notification, the Opposite Party chose to sell all the shares for an overdue of barely Rs.4.48 lakhs. The action on the part of the Opposite party would show how they have exploited the helpless public during the very difficult pandemic time and would also highlight the arrogance and superior power of the Opposite Party when dealing with the general public. The Opposite Party did not even care to respond the anguished email sent by her, as a result of which a reminder mail was sent to them on 05.05.2020.  In the month of June, 2020, she approached the Banking Ombudsman with a complaint which was duly taken on file. Then there was a virtual conciliation meeting on 16.07.2020. It was explained by her that she was neither given time to regularize her account nor had the Opposite Party sold the shares as per the Complainant's choice. On 14.09.2020 the Banking Ombudsman had failed to appreciate the genuineness of her case and merely acted as an extended limb of the Opposite party Bank and had rejected her complaint at threshold by giving liberty to approach Consumer Forum or any other legal authority for her grievance. She had requested the Banking Ombudsman to reconsider its order and to review the same on sympathetic mindset with pandemic in the backdrop, as there was no response, she was made to approach Deputy Governor, RBI vide letter dated 12.10.2020, which had not evoked any sympathetic response. Because of the act of deficiency on the part of the Opposite Party by not providing Net Banking facility, linking her Email ID and mobile number to her account and not providing debit card facility, she could not monitor her account or view statement, as she was going in person to the Opposite Party Bank till lockdown. As the actual overdue as on 30.03.2020 was only Rs.4.48 Lakhs, due to pandemic lockdown though she had made arrangements for money she could not deposit or transfer the same to her account nor she could provide additional securities towards the said overdue amount. Of which her shares were sold at an all time low which fetched only Rs.12,75,974/- by the Opposite party hastily, if not the same would have fetched Rs.21,70,500/-, thereby had caused her loss to the tune of Rs.8,94,706/-, the Opposite party is liable to make good for the said monetary loss with interest thereon at 12% per annum and also liable to compensate her monetarily for the deficiency of service, mental agony apart from total disregard to the RBI Notifications.Hence the complaint.

3. The Complainant Submitted her Proof Affidavit and Written Arguments. On the side of the Complainant, documents marked as Ex.A-1 to Ex.A-11.  The Opposite Party did not appear before this Commission even after sufficient notice served and remained absent and set exparte.

Points for Consideration:-

1. Whether there is deficiency in service on the part of the Opposite Party?

2. Whether the Complainant is entitled for reliefs claimed?

3. To what other reliefs the Complainant is entitled to?

Point No.1:

On careful reading of the complaint and exhibits marked in support of the complaint, from Ex.A-1 it is clear that the Complainant had availed Loan Against Securities to the tune of Rs.20 Lakhs and had entered into a Loan Against Securities Agreement dated 22.02.2017 with the Opposite Party Bank and had agreed to pay interest at the rate of 10.25% and to repay the Overdraft facility within a tenure of 12 months and the Complainant had also executed an irrevocable power of attorney in favour of the Opposite Party Bank on 22.02.2017 as well as Pledge Confirmation Letter was executed by the Complainant in favour of the Opposite party Bank. Ex.A-2 is the Mail dated 03.01.2020 sent by the Complainant to the Opposite party, wherein the Complainant had sought for net banking facility, which was not provided in spite of her request made earlier and had also sought for linking of her email Id and mobile number to her account, which were not done and had raised issue as to why the above facilities was not provided and also the debit card in order access her statement at least. Ex.A-3 is the Acknowledgement dated 06.01.2020 for the request made by the Complainant. Ex.A-4 is the statement of accounts of the Complainant for the period 01.02.2020 to 20.04.2020 showing LTV (Loan to Value ratio) Percentage. Notification dated 27.03.2020 in DOR No.BP.BC.47/21.04.048/2019-20 issued with detailed instructions on regulatory measures announced to mitigate the burden of debt servicing brought about by disruptions on account of COVID-19 pandemic and to ensure the continuity of viable businesses, which was marked as Ex.A-5. Email dated 30.03.2020 sent by the Opposite Party to the Complainant at 3.39pm informing about the invocation was triggered in the Loan against shares in Complainant’s account due to breach in Loan to Value Ratio percentage, hence LTV percentage crossed more than 90% and intimated that the equity shares offered for pledge, total pledged shares would be invoked and sold, in order to recover the current outstanding balance along with unapplied as well as penal interest charges to regularize the account. Also informed that the invocation value of the pledged equity shares would be corresponding to the capital market price on the date of invocation and shall correspond to overdrawn position in your account on the date of processing unilateral selling. For which, an immediate reply mail dated 30.03.2020 was sent by the Complainant to the Opposite Party at 4 pm, wherein it was explained that the Complainant had made arrangement to remit Rs.5 Lakhs in her account on or before last Friday, due to sudden COVID 19 decision by Govt, fall in securities happened and sought for till 14.04.2020 and she had also expressed her inability to hand over securities to the value of Rs.4 Lakhs due to non-functioning of courier service and also about the notification issued by Ministry of Finance informing the banks to defer overdues if any till April 2020. Ex.A-7 mail dated 04.04.2020 sent by the Opposite Party to the Complainant at 3.23pm containing the same facts mentioned in their mail sent on 30.03.2020, Ex.A-5, for which the Complainant had sent a reply mail on the same day, ie., on 04.04.2020 at 7.10pm requesting time till 30.04.2020 to close her account, as found in page no.27 of Ex.A-7. And another reply mail was sent by the Complainant at 9.16pm to the Opposite Party, wherein it was requested to sell the shares listed in the said mail, in case of time could not granted till 30.04.2020 by the Opposite Party Bank, as found in Page No.28 of Ex.A-7.

Admittedly the Complainant had availed Loan against Securities to the tune of Rs.20 Lakhs from the Opposite Party Bank on 22.02.2017 and had executed Loan Agreement in favour of the Opposite Party, as per the terms and conditions the Opposite Party Bank had agreed to grant Overdraft facility, accordingly under Clause No.1 it is mentioned that “The overdraft facility shall not exceed the said sanctioned amount. However, the actual Overdraft facility would depend upon the value of securities at the time of grant of the said facility. The valuation of securities, margin money and actual overdraft facility would be exclusive decisions of the Bank and shall be binding on the parties. The facility is repayable unconditionally on demand at the Bank’s absolute discretion. The Bank would give 4 days written notice to the Borrower to repay the amount due.” And under Clause No.2 it is mentioned that “Without prejudice to the provisions of Clause (1), the facility may be available for a period of 12 (twelve) months only and the Borrower shall repay the same on demand or before the expiry of the said period. The Bank may, at its absolute discretion, agree to renew the facility and if the facility is recalled, the Borrower shall be bound to repay the entire amount together with accrued interest on demand. And under Clause No.7 it is mentioned that “ If any time the value of the said securities falls so as to create a deficiency in the margin requirement specified by the Bank from time to time or if there is an excess withdrawal over the overdraft facility limit the Borrower shall within four days of Notice from the Bank, deposit with the Bank additional security in the form of cash or such other securities which may be acceptable to Bank, failing which the Bank may at its sole discretion sell, dispose off or release any or all of the securities without being liable for any loss or damage or diminution in value sustained thereby and such sale shall not be contested by us and shall be binding on us.” And under Clause No.8 it is mentioned that “ In case of expiry of the term or in case of any of the event happening as stated hereinbefore, the Bank would have the full right to sell, dispose off or release the said securities on such terms and for such price that the Bank deems fit and apply the net proceeds towards the satisfaction of the balance outstanding in the Overdraft Account including charges, expenses etc.,”. Further in Clause No.13, it is mentioned that the prescribed margin shall always be maintained on the value of the Shares/Securities calculated on daily basis. Shortfall if any, as compared with advance value of the Shares/Securities, drawing power and actual outstanding in the Borrower’s Overdraft Account at any time shall be made good by the Borrower within 4 days of receipt of intimation from the Bank in whichever made by post or telephone or e-mail or courier and/or any other accepted and practiced methods”. Further the Complainant had executed Irrevocable Power of Attorney and nominated the Opposite Party Bank to transfer, sell or dispose of or otherwise realise or encash the said securities.

Though the Complainant had contended that she has not been provided with Netbanking facility in spite of her earlier request and also her email ID and mobile number was not linked with her account, hence she could not monitor her account’s statement and also could not avail moratorium, the Complainant had not produced any documentary evidence to prove the said contentions made except Ex.A-2 mail dated 03.01.2020 and Ex.A-3 Acknowledgement dated 06.01.2020 which does not contain any seal of the Opposite Party Bank, as the Complainant had availed Overdraft facility by pledging her shares/securities on 22.02.2017 and it would be clear that only nearly after 3 years she had sought for the said facility. Further the Complainant had also admitted that she has to maintain the LTV (Loan to Value Ratio) percentage at 60% or below and the Complainant herself had admitted that till the lockdown she and her husband used to visit Opposite Party Bank’s branch in person. Hence she was able to manage her Overdraft Account by her personal visit to the Branch and as also she was aware of the LTV Percentage had gone above 60% from 01.02.2020 and as the LTV Percentage had reached to 86.38% as on 30.03.2020 as found in Ex.A-4, the Opposite Party Bank had sent a Mail dated 30.03.2020, Ex.A-6 and intimated about invocation and sell of pledged equity shares of the Complainant. Though the Complainant was aware of the terms and conditions of the Loan Agreement that whenever the demand is made by the Opposite Party Bank either to deposit Cash for the overdrawn amount or additional securities to the value to be provided within 4 days, had sought for time knowing fully well that the Opposite Party Bank would not accept the same and would proceed with sale of the Pledged shares had sent a list of Shares to be sold, as found in page no.28 of Ex.A-7 and the monetary Loss sustained on comparison made with the sale of shares done by the Opposite Party Bank on 04.04.2020 with that of the present value of those shares sold, it is to be noted that out of the list of 14 Companies/Bank’s shares found in page No.28 of ex.A-7, it is found that 7 Companies/bank’s shares as listed were sold in addition with three other companies shares, namely, Power Finance Corp, India Cem, Adani enterprises, by the Opposite Party Bank. As it is admitted by the Complainant as discussed above that till the lockdown she use to visit the Opposite Party Bank’s branch in person and having failed to prove the services requested were not provided with regard to Net banking and linking of her Email ID and mobile number, it would be clear that even before the notifications issued by RBI, Ex.A-5, the LTV percentage in her Overdraft Loan Account triggered for invocation and sale of the shares pledged by the Complainant, the Complainant cannot attribute deficiency in service on the part of the Opposite Party. Therefore, we are of the considered view that the Opposite Party had not committed deficiency of service or unfair trade practice. Accordingly Point No.1 is answered against the Complainant.

Point Nos.2 and 3:

As discussed and decided Point No.1 against the Complainant, the Complainant is not entitled for the reliefs claimed in the complaint and for any other relief/s. accordingly, Point No.2 and 3 are answered.

In the result the complaint is dismissed. No costs.

Dictated to Steno-Typist, transcribed and typed by her, corrected and pronounced by us in the Open Commission, on 27^th of January 2023.

 

S. NANDAGOPALAN               T.R. SIVAKUMHAR                 B.JIJAA

         MEMBER II                       MEMBER I                        PRESIDENT

List of documents filed on the side of the Complainant:-

Ex.A1	22.02.2017	Loan Against securities agreement
Ex.A2	03.01.2020	Email to Opposite Party requesting for Net banking
Ex.A3	06.01.2020	Acknowledgment issued by the Opposite Party
Ex.A4	01.02.20 to 20.04.2020	Statement of account
Ex.A5	27.03.2020	RBI Notification
Ex.A6	30.03.2020	Email exchanged between the Complainant and the Opposite Party
Ex.A7	04.04.2020 & 05.04.2020	Emails exchanged between the Complainant and the Opposite Party
Ex.A8	24.04.2020 & 05.05.2020	Email from Complainant
Ex.A9	14.09.2020	Closure intimation of the complaint from Banking Ombudsman
Ex.A10	12.10.2020	Letter to the Deputy Governor sent by the Complainant
Ex.A11	-	Details of the scrips sold by Opposite Party and loss incurred by the Complainant

 

List of documents filed on the side of the Opposite Party:-

 

NIL

 

 

S. NANDAGOPALAN               T.R. SIVAKUMHAR                    B.JIJAA

         MEMBER II                       MEMBER I                         PRESIDENT