COMPLAINT FILED:  23.12.2009

DISPOSED ON: 07.01.2011

BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM AT BANGALORE (URBAN)

07^th JANUARY 2011

  PRESENT:-  SRI.  B.S. REDDY                             PRESIDENT

                     SMT. M. YASHODHAMMA                MEMBER 

                     SRI. A. MUNIYAPPA                         MEMBER

       COMPLAINT NO.3053/2009

O R D E R

SMT. M. YASHODHAMMA, MEMBER

This is a complaint filed u/s. 12 of Consumer Protection Act of 1986 by the complainant seeking direction against the Opposite Party (herein after called as O.P) to refund the processing fee of Rs. 33,700/- together with interest at 2% per month from the date of remittance till the date of refund and to pay compensation of Rs.60,000/- towards hardship, mental agony suffered by the complainant on the allegations of deficiency in service on the part of OP.

2.      The brief averments made in the complaint are as follows:

Complainant is a Company incorporated under provisions of the Companies Act, engaged in the business of dealings in construction materials. The complainant is customer of OP Bank.  Complainant applied for loan with the OP for the working                 capital of its business and submitted all necessary property documents for scrutiny.  OP after scrutiny of the documents of title deeds of the complainant was to sanction loan of Rs.3 Million to the complainant as per the credit arrangement letter dated 27.12.2007 and also collected processing charges of Rs.33,700/- from the complainant.  Afterwards OP has come up with the theory that the title of the property is not clear and asked the complainant to provide some alternate properties where the titles are clear. Complainant was unable to understand as to how the title of the properties became unclear after sanction of loan when title was clear prior to sanction of loan. The reason regarding unclear title of the property offered for scrutiny is still mysterious.  OP has failed to explain the defect in the title and also unable to give an opportunity to the complainant to explain the defects in title of the property if any. OP initially accepted property offered for scrutiny, sanctioning the loan and thereafter withdrawn the loan facility, without valid reason.  Hence complainant sought for refund of the processing fee remitted by them.  OP refused to refund the processing fee without any valid reason. OP withdrawn from the sanction of loan facility to the complainant OP has no right to retain processing fee remitted by the complainant. OP is duty bound to refund the processing fee remitted by the complainant. On 31.10.2009 complainant caused legal notice calling upon OP-2 to refund the processing fee remitted by the complainant together with interest at 2 % per month from the date of remittance till the date of refund and to pay compensation by way of damages for hardship, loss and mental agony suffered by the complainant.  Inspite of receipt legal notice OP neither replied to the notice nor complied with the demand made in the notice and failed to refund the processing fee to the complainant.  Hence complainant felt deficiency in service on the part of the OP. Under the circumstances complainant is advised to file this complaint for the appropriate relief.

3.      On appearance OP filed the version admitting the fact that complainant had applied for a cash credit facility of Rs.3 Million; after considering requirement of the complainant OP agreed to sanction the said sum and communicated the same to complainant; Copy of the “Credit Arrangement Letter issued to the complainant to the complainant; which fact is not denied by the complainant; The said credit Arrangement letter was subject to certain conditions. Subject to which OP has agreed to sanction the said facility; Under security template at point No.2 it is intimating to the complainant that exclusive charge by way of equitable mortgage, in a form and manner satisfactory to the Bank. In this regard complainant had offered an immovable property standing in the name of one Mr. Lalchand. Legal clearance of the property offered as security from empanelled lawyers of ICICI group at point No. 9 it is stated that title search for a period of 30 years of the property offered as collateral to be done prior to disbursement; These facts have not been denied by the complainant.  That as title search needs to be done prior to the disbursement; It shall mean that the disbursement is subject to title search and opinion given by the lawyers of OP; It also mean the customer required to furnish all the documents pertaining to 30 years to trace the title of the given property as security;  As the title searche and opinion involves lot of working hours, efforts of officials and advocates, OP had collected the processing charges as if the same were to be collected at the end of the search and opinion; There is a every possibility of customers refusing to repay the same in the event of the party offering does not have proper title; Therefore OP had collected the processing charges in advance to disbursement of the loan and disbursement is subject to clear and marketable title; The property offered by Mr. Lalchand as security to the Cash credit loan Scheme of the complainant. On verification of the documents and empanelled Lawyers of the OP have given their opinion that the flow of the title of the property in question was suffering from certain discrepancies. a) No registered title deed to prior to the sale deed dated 19.10.1984. b) Copy of the will by which title flows is unavailable for perusal. c) The details of the other sellers to Mr. Lalchand is not ascertainable: These things were communicated to the complainant; Complainant had written email stating that same has taken considerable time, they do not want to peruse the loan.  In this regard; OP had written email communication to the complainant clearly mentioning the words that “as discussed” and “no response”; Contents of the said e-mail were not disputed by the complainant. Same shows that the reasons for not accepting the property offered as security was though within the knowledge of the complainant but has taken a false stand before this Forum. Title search requires detailed inspection and application of mind by the lawyers, which is not done at free of costs.  Admittedly flow of title of the property is not clear despite intimating the said fact complainant failed to provide the required documents.  Hence loan amount was not disbursed for that complainant shall be held responsible and hence he is required to pay the processing charges. Therefore the complainant is not entitle for refund of the same. Among these ground OP prayed for dismissal of the complaint.

4.      In order to substantiate the complaint averments Mr. Ranganath. T, Manager, M/s. Ceracon Ceramix India Pvt. Ltd., filed his affidavit evidence and produced Credit arrangement letter dated 27.10.2007, E-mail Communication letter of dated 14.05.2008, legal notice dated 31.10.2009, postal acknowledgements.  On behalf of OP Harish Srivatsa, Manager of OP filed his affidavit evidence. OP has not produced any documents. Complainant filed written argument. Heard arguments both from complainant and OP side.

5.      In view of the above said facts, the points now that arise for our consideration in this complaint are as under:

Point No. 1 :- Whether the complainant Proved

                     the deficiency in service on the part of

                       the OP?

     Point No. 2 :- If so, whether the complainant is

                    entitled for the relief’s now claimed?

     Point No. 3 :- To what Order?

6.      We have gone through pleadings of the parties both affidavit and documentary evidence and the arguments advanced.  In view of the reasons given by us in the following paragraphs our findings on the above points are;

Point No.1:- In Affirmative.

Point No.2:- Affirmative in part.

Point No.3:- As per final Order.

R E A S O N S

7.      At the out set it is not in dispute that the complainant is a company engaged in dealing with construction materials and also customer of the OP bank applied for loan with OP for working capital of its business. Complainant submitted all the necessary property documents for scrutiny. The OP after scrutiny of the documents of title deeds of the complainant was pleased to sanction a loan of Rs. 3 Million to the complainant as per the Credit arrangement letter dated 27.12.2007 and also collected processing charges of Rs.33,700/- from the complainant. After scrutiny of the documents of titles OP stated that title of the property was not clear and asked the complainant to furnish some alternate properties of which titles are clear.  Complainant failed to understand how properties became unclear after sanction of loan.  OP failed to explain the defect in title and no opportunity was given to the complainant to explain or cure the defect in the title of the property if any. When OP withdrawn the loan facility complainant sought for refund of processing fee paid by them.  OP refused to refund the processing fees without any valid reason.  Hence complaint approached this forum for the appropriate releifs.

8.      As against the case of the complainant the defence of the OP that subject to certain terms and conditions OP has agreed to sanction the cash credit facility same was communicated to the complainant. Complainant offered an immovable property standing in the name of one Mr. Lalchand prior to disbursement of loan.  Title search for a period of 30 years of the property which involves lots of time and efforts of officials and Advocates of OP.  The processing fees collected by OP in advance because. Customer may refuse to pay in the event party offering does not have proper title.  As per the opinion of the advocates of OP the property in question was suffering from certain discrepancies such as no registered title deed prior to sale deed dated 19.10.1994. Copy of the will not available, details of other two sellers to Mt. Lalchand was not ascertainable. After intimating the said facts to the complainant, an email was sent by the complainant stating since considerable time was taken they do not want to persue the loan.  We have perused the copy of the emails sent by both the parties. Since title of the property was not clear; hence OP failed to disburse the loan.

9.      Further it is contended by the OP that title search required detailed inspection and application of mind by the lawyers, which is not done at free of costs.  Hence OP is not liable to refund the processing fees.  This contention of the OP cannot be accepted in toto. OP has not produced any documents to prove that the entire amount collected towards processing fee has been spent towards the fee paid for obtaining the legal opinion. There is no any document evidencing the terms and conditions with regard to the processing fee, in the event of loan being not disbursed for any reasons and that the processing fee paid is non-refundable even if the loan is not disbursed. When the complainant was not able to get the disbursement of the loan, OP is not justified in retaining the entire processing fees of Rs.33,700/-. Even in the credit arrangement letter, there is no mention that the processing fee paid is non-refundable.

10.    In similar circumstances C.No.38/1999 the Hon’ble National Commission in Maharastra Police Housing and Welfare Corporation Ltd., V/s. State bank of India Home finance Ltd., has held that OP is liable to refund 50% of the processing fees to the complainant. Applying the same principle to this present complaint we are of the considered view that the complainant is entitle for refund of Rs.15,000/- of processing fees from the OP.  Accordingly we proceed to pass the following:

ORDER

          Complaint is allowed in part. OP is directed to refund Rs.15,000/- processing fees to the complainant. This order is complied within four weeks from the date of communication of this order failing which complainant is entitled for interest at 12% p.a. from the date of this order till payment.  There is no order as to the nature of cost.

(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 7^th day of January 2011.)

                                                PRESIDENT

MEMBER                                                  MEMBER                     

gm.