1. These two First Appeals (FAs) have been filed by the Appellants against the Respondents, as detailed above, under section 19 of Consumer Protection Act 1986, against the order dated 16.01.2019 of the State Consumer Disputes Redressal Commission, West Bengal,  (hereinafter referred to as the ‘State Commission’), in Consumer Complaint (CC) no. 78 and 79 of 2023 respectively. 

 

2. FA 290 of 2019 and FA 291 of 2019 have been filed by the Appellants, who were Complainant before the State Commission in the said CC No. 78 of 2013 and CC No. 79 of 2013 respectively. 

 

3. As both the Appeals have been filed against the similar order of the State Commission, Respondents are the same, and issues for consideration/determination are related, these are being taken up together under this order. However, for the sake of convenience, First Appeal (FA) No. 290 of 2019 is treated as the lead case. 

 

4. Notice was issued to the Respondent(s) in both the FAs on 09.12.2021.  Parties filed Written Arguments/Synopsis on 01.05.2023 (Appellant) and on 28.12.2023 (Respondent 1 & 2) respectively in both the appeals.

 

5. Brief facts of the case, as emerged from the FA/290/2019, Order of the State Commission and other case records are that: -

 

i) The Appellant, a partnership firm, comprising Appellant No. 2 and Appellant No. 3, invested over 2 crores in managing a factory previously owned by Smt. Jaya Das. On 30.07.2007, the Appellant applied for a cash credit facility of Rs.150 lakhs from Respondent No. 2 and was sanctioned Rs.147 lakhs of cash credit on 14.08.2007. The Gorkha Movement and landslides severely disrupted the factory’s operations, leading to significant losses to the Appellant’s firm.                                                  

 

ii) On 02.02.2009, the Appellant requested restructuring of the loan into 120 monthly instalments at 10% p.a. interest. With no response, the Appellant offered Rs.75 lakhs for a One-Time Settlement (OTS) on 08.08.2009, and repeated the offer on 12.12.2009 for OTS. Respondent No. 2 rejected the offer but proposed revising it vide letter dated 15.12.2009. On 26.12.2009, Appellant revised the OTS and offered a sum of Rs.1 crore as full and final settlement. On 09.08.2010, Appellant then increased the settlement amount to Rs.1.20 crores which was subsequently increased to Rs.1.30 crores.

 

iii) Respondent No. 2 vide letter dated 24.01.2011 requested modification of the settlement offer to either by repaying Rs.1.20 crores in 3 months or an EMI plan for a period of 12 months with interest. The Appellant opted for the EMI plan, depositing Rs.9 lakhs on 12.04.2011 as an upfront amount and also submitted an application for acceptance of OTS. On 04.08.2011, Respondent No. 2 informed that the settlement proposal was for Rs.1.30 crores, which was later approved at Rs.153.28 lakhs on 25.08.2011 with an increased amount of Rs.23.58 lakhs.

 

iv) As the settlement was pending, Respondents filed a case before the Kolkatta Debts Recovery Tribunal on 02.11.2011 for the recovery of Rs.1,97,17,722.50/-. The Appellant was compelled to settle the amount for Rs.1.55 crores on 29.03.2012 and paid Rs.14 lakhs which was borrowed from M/s. CMJ Foundation. Under the pressure of the guarantor, Mr. R. Poddar, Appellant paid Rs.1,57,96,055/- against originally settled amount of Rs.1.20 Crores and deposited Rs.1,43,96,055/- in addition to Rs.14 lakhs.  (1,43,96,055+14,00,000=1,57,96,055)

 

v) On 26.05.2012, the Appellant requested the withdrawal of the DRT case and release of securities. On 21.06.2010, Respondent No. 3 issued a circular to Respondent No. 1 and 2 to provide a certificate stating that “the compromise/settlements are in conformity with the RBI guidelines”, but the same was not mentioned which was the mandatory part. On 30.10.2012, the Appellant sought the refund of Rs.27,20,504/- and the requested certification with the aforesaid statement. Consequently, a complaint was filed for the recovery of this excess amount with interest and other reliefs.

 

6. Brief facts of the case, as emerged from the FA/291/2019, Order of the State Commission and other case records are that: -

 

i) The Appellant is a registered company under the Companies Act, 1956. Prior to transfer of management, the Appellant had a credit facility with Syndicate Bank, which was subsequently transferred to Respondent No. 1 & 2.  

 

ii) On 17.02.2006, Respondent No. 1 & 2 sanctioned a loan of Rs.32,00,000/- and a cash credit limited of Rs.95,00,000/-, with Rs.25,00,000/- transferred from Syndicate Bank. In 2009, the Appellant’s business was severally affected by the Gorkha Movement, leading to significant losses to the Appellant’s business.    

                                              

iii) On 02.09.2009, Appellant requested a restructuring of the cash credit loan account, proposing repayment in 120 instalments at 10% p.a. On 30.06.2009, respondents sanctioned a working capital term loan of Rs. 109.94 lakhs, combining the cash credit and term loan, with a moratorium until June 2010 and payable in 108 EMIs.

 

iv) On 18.07.2011, respondents issued a recall notice under section 13(2) of SARFAESI Act, demanding Rs.1,29,64,788.26/-. The appellant proposed a One-Time Settlement (OTS) vide letters dated 12.08.2011, 29.08.2011, and 15.09.2011, offering Rs.87 lakhs. Respondents rejected this offer on 20.09.2011, requesting a revised proposal and deposit 25% of the revised proposal as upfront fees stating a total outstanding of Rs.1,33,12,970.26/- further revised as Rs.126.13 lakhs on 18.10.2011. 

 

v) On 27.10.2011, the appellant reaffirmed the OTS proposal as per RBI guidelines. Respondents did not respond but issued a notice on 22.11.2011 for taking possession of the property under section 13(4)(a) of SARFAESI Act, 2002. On 20.03.2012, respondents sent a legal notice demanding Rs. 1,34,76,867.26/- along with upfront fees without acknowledging the earlier OTS proposals. The appellant offered a revised settlement amount of Rs.1.20 Crores which was subsequently increased to 1.34 Crores and deposited Rs. 12 lakhs vide dated 30.03.2012.

 

vi) On 21.04.2012, respondents issued a settlement sanction letter for Rs. 134.20 lakhs including Rs.20.51 lakhs towards interest as per module approach and Rs.3.77 lakhs towards legal and other expenses but failed to account for earlier payments after the loan became as NPA. Due to continued interest charges on NPA, the appellant paid Rs.1,71,05,862/- instead of the original NPA amount of Rs.1,02,93,267.26/-, date of final payment of settled amount would become Rs.1,38,83,784.26/- resulting in an excess amount of Rs.32,22,078/- 

 

vii) On 29.10.2012, the Appellant requested to refund the excess amount of Rs.32,22,078/- and issue a certificate stating that “the compromise/ settlements are in conformity with the RBI guidelines”. RBI issued a circular dated 21.06.2010 mandated a certificate of compliance with RBI guidelines, which was not provided by respondents. Consequently, on 09.04.2013 a complaint was filed for the recovery of this excess amount with interest and other reliefs.

 

7. Vide Order dated 16.01.2019, the State Commission has passed the following order in both the appeals:

 

 

8. Appellant(s) in FA/290/2019 have challenged the Order of the State Commission mainly/inter alia on following grounds:

 

(i) The Court (State Commission) didn’t appreciate the fact that the respondents have failed to settle the loan account of the appellant as per RBI guidelines and also have violated the norms & guidelines prescribed by the RBI.

 

(ii) The court didn’t appreciate the fact that due to negligence & deficiency of the respondents, the appellant was unable to avail the benefits of One Time Settlement Scheme. 

 

(iii) The court didn’t consider the fact that the respondent bank has committed default in services by charging more money from the appellant in the garb of settlement.

 

(iv) The court didn’t appreciate the fact that the respondents enhanced the OTS amount from Rs.1.20 Crores to Rs.1,66,96,504/- violating the said guidelines of RBI.

 

9. Appellant(s) in FA  291 of 2019 have challenged the Order of the State Commission mainly/inter alia on following grounds:

 

(i) The court did not appreciate the fact that the appellant had to pay the entire amount of loan as the provisions of SARFAESI Act 2002 was compelled by the respondents. 

 

(ii) The court did not appreciate the fact that the respondents failed to settle the accounts for more than 3 years for their wrongful gains.

 

(iii) The court did not appreciate the fact that due to SARFAESI Act 2002, the appellant was forced to deposit Rs.1,71,05,862/- instead of Rs.1,38,83,784.26/- as calculated in the letter dated 29.10.2012. 

 

(iv) The court did not consider the fact that the appellant submitted a proposal for enhancement of cash credit and term loan for development of new infrastructure to recover losses and commence smooth operation and also requested the respondents for restructuring the previous cash credit & term loan which the respondents did not considered. 

 

10. Heard learned counsels of both sides.  Contentions/pleas of the parties, on various issues raised in the FA/290/2019, based on their FAs/Replies, Written Arguments, and Oral Arguments advanced during the hearing, are summed up below:

 

10.1 In this case, the Appellant with its partners took a loan from the Respondent No. 2/Bank of Rs.147 Lakhs against the stocks of raw materials, stock in progress, finished goods, stores and spares and receivables etc. Due to Gorkha Movement and badly affected road, Appellant’s business suffered heavy loss and requested Respondent No. 2 to restructure the C.C. Loan Account and further requested for One Time Settlement (OTS) but Respondent No. 2 rejected the one time settlement and asked to revise the settlement amount to match the outstanding amount. 

 

10.2 Finally, the settlement amount was fixed at 1.30 Crores instead of 1.20 Crores which was offered by Appellant but during the pendency of the application for OTS, Respondent No. 1 & 2 filed an application before the Kolkatta Debts Recovery Tribunal No. 2 and summon of which was issued under section 19 (4) of the Recovery of Debts Due to Banks & Financial Institutions Act, 1993 for the recovery of Rs.1,97,17,722.50/-. Under the pressure of the Guarantor, Mr. R. Poddar, Appellant was compelled to pay Rs.1,57,96,055/- as against the originally settled amount of Rs.1.20 Crores and deposited Rs.1,43,96,055/- in addition to Rs.14 Lakhs. 

 

10.3 After paying the amount, Appellant requested the Respondent to withdraw the case pending before the DRT-II, Kolkatta and requested to release the hypothecated securities & title deeds of the Guarantor Mr. R. Poddar and further requested to refund the excess amount of Rs.27,20,504/- and to issue a certificate stating that the compromise/OTS made is in conformity with the RBI Guidelines. 

 

10.4 On the other hand Respondent No. 1 & 2 contend that the complaint/appeal is not maintainable in law and in facts. As the Appellant accepted the settlement proposal and paid the settlement amount to the bank, but before payment of the settlement amount to the bank, the Appellant did not raise any objection and it is the clear violation of the settlement arrived and acted upon. 

 

10.5 The Respondent Bank alleges that there is no violation of the guidelines of the Reserve Bank of India. As the transaction between the parties is a commercial transaction and as such the Appellant/Complainant cannot be treated as consumer as per section 2 (d) of the Consumer Protection Act, 1986 and hence the complaint is not entertainable. 

 

10.6 Further, the Respondent states that there is no guidelines of the Bank to issue a certificate that the settlement proposal is accepted as per guideline of the RBI. Though, the Appellant availed the cash credit facility but due to non-payment of the dues, account became irregular and thus declared NPA on 30.10.2008 and to recover the dues Respondent filed an application under Section 19 of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 on 23.07.2010.

 

11. Contentions/pleas of the parties, on various issues raised in the FA/291/2019, based on their FAs/Replies, Written Arguments, and Oral Arguments advanced during the hearing, are summed up below:

 

11.1 In this appeal, the Appellant, a registered company had a credit facility with Syndicate Bank, which was subsequently transferred to Respondent No. 1 & 2. On 17.02.2006, Respondent No. 1 & 2 sanctioned a loan of Rs.32,00,000/- and a cash credit limited of Rs.95,00,000/-, with Rs.25,00,000/- transferred from Syndicate Bank. 

 

11.2 On 02.09.2009, the Appellant requested a restructuring of the cash credit loan account, proposing repayment in 120 instalments at 10% p.a. Respondents sanctioned a working capital term loan of Rs.109.94 lakhs on 30.06.2009, combining the cash credit and term loan, with a moratorium until June 2010.

 

11.3 On 18.07.2011, respondents issued a recall notice demanding Rs.1,29,64,788.26/- under section 13(2) of SARFAESI Act. The Appellant offered a One-Time Settlement (OTS) of Rs.87 lakhs vide letters dated 12.08.2011, 29.08.2011, and 15.09.2011, which was rejected.  The Respondents requested a revised offer with an upfront fee, setting the outstanding amount at Rs.1,33,12,970.26, later revised to Rs.126.13 lakhs.

 

11.4 On 27.10.2011, the Appellant reaffirmed the OTS proposal. Despite this, respondents issued a notice on 22.11.2011 for possession under section 13(4)(a) of SARFAESI Act. On 20.03.2012, a legal notice was sent demanding Rs. 1,34,76,867.26, not acknowledging earlier OTS proposals. The Appellant then offered Rs. 1.34 Crores and deposited Rs. 12 lakhs.

 

11.5 Respondents issued a settlement letter on 21.04.2012 for Rs.134.20 lakhs but did not account for previous payments. This led to an excess payment of Rs.32,22,078 by the Appellant. On 29.10.2012, the Appellant requested a refund and certification of compliance with RBI guidelines. A complaint was filed on 09.04.2013 for recovery of the excess amount, interest, and other reliefs.

 

11.6 On the other hand Respondent No. 1 & 2 contend that the complaint/appeal is not maintainable in law and in facts. As the Appellant accepted the settlement proposal and paid the settlement amount to the bank, but before payment of the settlement amount to the bank, the Appellant did not raise any objection and it is the clear violation of the settlement arrived and acted upon. 

 

11.7 Further, Respondent contended that the case under OTS at Rs.1,34,20,000/- was settled and the said settlement was in conformity with the RBI guidelines. 

 

12. Challenge is to orders dated 16.01.2019 in CC/78/2013 and CC/79/2013 of the State Commission vide which the consumer complaint filed by the appellants herein have been dismissed on grounds of (a) pecuniary jurisdiction, (b) appellant not being consumer, having taken loan for commercial purpose, (c) dispute having reached DRT.

 

13. During the hearing, learned counsel for the petitioner admitted that the entire amount as per the agreed settlement with the Bank has been paid and what they are praying for in their complaint is the refund of the excess amount paid. Learned counsel for R-1 and 2 (Oriental Bank of Commerce now merged with Punjab National Bank) stated that it was subsequent to the receipt of the entire settlement amount under the OTS policy as per RBI guidelines that the bank has since withdrawn their cases before the DRT and at this stage no relief can be granted to the appellant herein as otherwise bank could not have withdrawn the DRT cases and would have continued with their case on merits there.

 

14. State Commission, vide its order dated 16.01.2019 in CC/78/2013 observed as follows:

 

 

       Admittedly, the Complainants took loan for a sum of Rs.1,47,00,000/- from the OP Bank. Subsequently, the said loan account was settled on payment of the OTS amount. Be it the loan amount being sanctioned by the OP Bank or the settlement amount being paid by the Complainants, it appears that both are far above the pecuniary jurisdiction of this Commission. 

 

       It is also the undisputed fact of this case that the subject loan was availed of by the Complainants for pursuing commercial interests. It is nobody’s case that the said venture was embarked upon by the Complainants for the purpose of maintenance of their livelihood by means of self employment.

 

       Further evident is the fact that the dispute once reached the end of Debts Recovery Tribunal and subsequently, the complaint case was filed.

 

       On due consideration of all these discernible facts, we are of view that the present dispute does not construe a consumer dispute and this Commission lacks due jurisdiction to try this case.”

 

15. State Commission vide its order dated 16.01.2019 in CC/79/2013 observed as follows:

 

 

       Be it the sanctioned loan amount or the settlement sum being paid by the Complainant to the OP Bank, the same being well above the pecuniary jurisdiction of State Commission, it is inadmissible before this Commission. 

 

       Further, as it was a purely commercial venture and element of livelihood by means of self-employment is sorely missing here, for this reason also, the complaint case is not maintainable.”

 

16. After careful consideration of the entire facts and circumstances of the case, especially the fact that the amount paid by Petitioner(s) to Respondent Banks was as per settlement, and subsequent to receipt of amounts under the said settlement, the bank has withdrawn its cases before DRT, the Petitioners are not entitled to any relief under the provisions of Consumer Protection Act. We see no merit in the appeals. Accordingly, both the appeals are hereby dismissed. 

 

17. The pending IAs, in both the FAs, if any, also stand disposed off.