Punjab

Moga

CC/16/108

M/s Jit Ram Rajinder Pal - Complainant(s)

Versus

Punjab and Sind Bank - Opp.Party(s)

Sh. Varinder Garg

31 Aug 2016

ORDER

THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, MOGA.

 

 

                                                                                                                                                                     CC No. 108 of 2016

                                                                                                                                                                    Instituted on: 10.06.2016

                                                                                                                                                                    Decided on: 31.08.2016

 

M/s Jit Ram Rajinder Pal, Old Grain Market, Moga, through its Proprietor Suresh Kumar son of Sh.Pirthi Chand, resident of Moga.

                                                                          ……… Complainant

 

Versus

1.       Punjab & Sind Bank, Zonal Office, Red Cross Bhawan, Sadiq Chowk, Faridkot.

 

2.       Punjab & Sind Bank, Railway Road, Moga, through its Manager.  

 

                                                                           ……….. Opposite Parties

 

 

Complaint U/s 12 of the Consumer Protection Act, 1986.

 

 

Quorum:    Sh. Ajit Aggarwal,  President,

                   Smt. Vinod Bala, Member,

                   Smt. Bhupinder Kaur, Member.

 

Present:       Sh. Varinder Garg, Advocate, Cl. for complainant.

                   Sh. Ajay Gulati, Advocate Cl. for opposite parties.

 

 

ORDER :

(Per Ajit Aggarwal,  President)

1.                Complainant has filed the instant complaint under Section 12/14 of the Consumer Protection Act, 1986 ( hereinafter referred to as the "Act") against Punjab & Sind Bank, Zonal Office, Red Cross Bhawan, Sadiq Chowk, Faridkot and others (hereinafter referred to as the opposite parties) directing them to credit a sum of Rs.4570/- as inspection charges, Rs.5725/- as processing fee, Rs.2500/- as valuation charges and Rs.2146/- Insurance Charges in cash credit limit a/c no. 00171300002401, which the opposite parties have debited unnecessary. Further opposite parties may be directed to pay Rs.20,000/- as compensation for causing him mental tension, harassment and agony to the complainant and Rs.5000/- as costs of litigation expenses to the complainant and to grant other relief to which this Forum deems fit and proper in the circumstances of the case.

2.                Briefly stated the facts of the case are that complainant is carrying on its business under the name and style of M/s Jit Ram Rajinder Pal, Old Grain Market, Moga. Suresh Kumar son of Sh. Pirthi Chand, resident of Moga is the sole Proprietor of the said concern. So, the complaint on behalf of firm through Suresh Kumar is being filed. There is a cash credit limit a/c no.00171300002401 of complainant with opposite party no.2. The opposite party no.2 has debited a sum of Rs.4570/- as inspection charges in the above said account. No inspection has been made by any official of opposite party no.1. Moreover, there is no need of inspection in such kind cases. A sum of Rs.5725/- as processing fee has been debited in the above said account which excessive one. The opposite party no.2 has insured the building of complainant for a period of 10 years. Secondly opposite party no.2 has debited the premium amount of insurance for 10 years in the said account which is too excessive than market rate. The bank has got insured the premises of the complainant for a period of 10 years without getting the consent of the complainant and debited a sum of Rs.7156/-. The complainant has objected to the insurance of 10 years. Thereafter, the said insurance was cancelled and reduced to one year. Thereafter a sum of Rs.5010/- have been credited. In this way, the complainant has to suffer a loss of Rs.2146/-. It has been alleged that as per law the building can be insured for a period of only one year. From the record it is clear that the building was insured on 13.04.2016, whereas insurance charges have been debited to his account on 12.04.2016. This is totally illegal. After 13.04.2016 the valuation has been made. Further alleged that Rs. 2500/- have been debited to complainant as valuation charges which is also excessive one. It is pertinent to mention here that the value of the property is increased every year. There is no need for valuation the abovesaid property. The entire proceedings mentioned above were done by opposite parties behind the back of complainant and complainant was never informed about any alleged proceedings, thus the same are not binding upon the complainant. The complainant has been dealing with the opposite parties for the last so many years. No such charges have been debited by the opposite parties for the last so many years. But the opposite parties have claimed the said charges from the complainant illegally, unjustly and gross violation of prescribed rules and regulations of the bank. An application was served upon opposite party no.1, but to no effect. The entire proceedings done by the opposite parties are illegal, unjust and void. Hence this complaint.

3.                Upon notice, opposite party nos.1 & 2 appeared through their counsel and filed their written reply taking certain preliminary objections that this Forum has got no jurisdiction to try and entertain the present complaint. The loan account in question is an Over Draft Limit against the property for Rs. 10 lacs, which is meant for "Commercial Purposes" and thus under the amended provisions of the Consumer Protection Act, 1986, the "complainant firm" does not come under the definition of "consumer" and thus the present complaint does not lie and as such, the present complaint being false, frivolous, vague and without any cause of action deserves dismissal with compensatory costs; that the opposite parties have not rendered any deficient services as alleged by the complainant. The charges debited in the loan account of complainant has been charged correctly and according to rules, regulations, practice and policies of the opposite party bank as per Reserve Bank of India Guidelines.

          On merits, it is submitted that vide letter dated 21.06.2016, the complainant firm has requested to cancel its above said ODP Limit Account and as such upon the written request of the complainant firm, the opposite party bank has already cancelled the said ODP Limit account. It is admitted correct upto the extent that inspection charges for Rs.4570/- were debited in the loan account of the complainant firm. Further submitted that opposite party bank has deducted Rs.1140/- on dated 29.06.2015 and 25.09.2015 each and Rs.1145/- on dated 23.12.2015 and 22.03.2016 each i.e. totalling Rs.4570/- according to bank rules and regulations and as per instructions mentioned vide HO Credit Monitoring Deptt. Circular Letter no.39/2014-15 and letter no.3/2015-16. According to these circulars the inspection charges are to be deducted on quarterly basis in ODP Limit Accounts @ Rs.1000/- for the limits above Rs.5 lakhs upto Rs.10 lakhs plus service tax. Accordingly the opposite party bank branch had deducted said amount by following the abovesaid instructions/policy/rules of the bank in letter and spirit. It is further admitted correct upto the extent that a sum of Rs.5725/- were debited in the loan account of complainant firm on account of processing fee/renewal fee. Further submitted that in fact as per bank rules and guidelines vide HO Credit Monitoring Deptt. Circular letter no.44/2013-14, the processing fee/renewal fee is to be charged @ Rs.500/-per one lakh of the loan/limit plus service tax. In the present case, the complainant firm was enjoying Credit facility in the shape of CC Limit of Rs. 10 lakhs and thus Rs.5000/- plus service tax @ 14.25% i.e. Rs.5725/- were debited in the said loan account on dated 31.03.2016. Further submitted that such types of Cash Credit Limits are renewed/reviewed every year as per rules and therefore processing/renewal fee is applicable on such accounts. As far as debiting of insurance premium is concerned, a premium of Rs.7126/- was directly paid to National Insurance Co. Ltd. for issuance of Standard Fire and Special Perils Policy no.401700/11/16/3100000026 in the name of complainant firm insuring its building for 10 years w.e.f. 13.04.2016 to 12.04.2026. The insurance policy was correctly issued keeping in view the interest of the complainant firm as well as opposite party bank during the pendency of the loan in question as per loan agreement, rules, policy and guidelines of the bank. The insurance for continued 10 years was purchased as it was available on less premium than the rate of premium for one year. In fact, the complainant firm itself responsible for insuring the security property given to the bank to secure a loan at its own costs during the pendency of loan, vide loan agreement clause no.12, the complainant firm through its proprietor had undertaken as under:

            "The security property given to the bank to secure a loan will be insured at my/our cost during the continuance of loan transaction and till its adjustment for the full value of security through the bank to its satisfaction. All insurance cost and other expenses connected with the insurance will be paid by the borrower or debited to his loan account as amount advanced."

 

                   Further submitted that since the inspection of said loan i.e. w.e.f. dated 01.03.2005 till the date of payment of insurance premium i.e. 12.04.2016, the complainant firm never bothered to insure the said security property and therefore, the opposite party bank in the interest of the complainant as well as bank got insured the said security property from National Insurance Co. Ltd. but the complainant firm vide its written letter dated 24.05.2016 instructed the bank to reduce the insurance policy tenure, however which was not feasible, but still the opposite party bank on the same day requested the Divisional Manager, National Insurance Co. Ltd., Moga vide letter dated 24.05.2016 for the cancellation of said insurance policy. The concerned insurance company after deducting its cancellation charges for Rs.2146/- directly credited the account of complainant firm for Rs.5010/- as a refund of insurance premium on dated 01.06.2016 and cancelled the said insurance policy. As far as amount of Rs.2500/- as valuation charges is concerned, it is submitted that the same were also debited as per rules/policy/guidelines of the bank. According to rules security property has to re-valued once in three years inspect of the loan amount sanctioned to the borrower. In the present case since the start of loan account as on dated 01.03.2005, however, the valuation of the property was done only two times i.e. on 16.01.2003 and on 22.04.2016 from the impaneled valuer of the bank. The charges of Rs.2500/- were paid to the said valuer, who had issued the valuation report and which were debited to the loan account of complainant firm. As per the guidelines of the bank the valuation charges were to be debited @ Rs.125/- per lakh of the value of the security property. In the present case, the total value of the property was Rs.57 lakhs approximately and the charges were to be deduced Rs.7125/- (Rs.125 x 57), but the opposite parties bank debited only Rs.2500/- in the loan account of complainant firm keeping in view the interest of the complainant firm. The all other allegations made in the complaint have been denied and a prayer for dismissal of the complaint with compensatory costs have been made.

4.                In order to prove the case, complainant's firm tendered into evidence affidavit of Sh.Suresh Kumar s/o Sh.Pirthi Chand Proprietor Ex.C-1 and copies of documents Ex.C-2 to Ex.C-7 and closed the evidence.

5.                In rebuttal, the opposite party nos. 1 & 2 tendered in their evidence duly sworn affidavit of Sh.P.K. Verma, Chief Manager, Punjab & Sind Bank, Railway Road, Moga Ex.OPs/1 and copies of documents Ex.OPs/2 to Ex.OPs/19 and closed the evidence.

6.                We have heard the learned counsel for the parties and have very carefully gone through record placed on file.

7.                Learned counsel for the complainant argued that the complainant is carrying on its business under the name and style of M/s Jit Ram Rajinder Pal. There is a Cash Credit Limit account of complainant with opposite party no.2. The opposite party no.2 debited a sum of Rs.4570/- as inspection charges in the above said account which is wrong and illegal. No inspection has ever been made by any of the official of the opposite parties. The opposite parties also debited a sum of Rs.5725/- as processing fee from the account of the complainant, which is also wrong and illegal. Opposite party no.2 insured the building of the complainant for a period of 10 years without any consent of the complainant and debited an amount of Rs.7156/- as insurance premium from the account of the complainant. Further they got the insurance of the building for 10 years against the rules. As per rules they can get the building insured only for one year, thereafter they can renew it. On the objection of the complainant and they got cancelled the insurance for 10 years and reduced its period for one year. They only credited a sum of Rs.5010/- in the account of the complainant towards the insurance premium of Rs.7156/- and in this way the complainant suffered a loss of Rs.2146/-. He is entitled to get refund of the amount as he has suffered this loss due to gross mistake of opposite parties. The opposite parties also debited a sum of Rs.2500/- as valuation charges of the building, which is also wrong and illegal. There is no need of valuation of the property. The value of the property is increased every year. All these transactions were made by opposite parties on the back of the complainant and without his consent. They never informed about these transactions to complainant, as such the same are not binding upon the complainant. The complainant has a loan account with the opposite party bank for about last 12 years and prior to these entries the bank never charged any amount from complainant as inspection charges, valuation charges, and renewal charges etc. They charged this amount first time without any consent and prior notice. These charges are debited from the account of the complainant illegally, unjustly and there is a gross violation of rules and regulations of the bank as well as RBI. The complainant made a complaint to opposite parties regarding the same, but to no effect, copy of the complaint dated 07.05.2016 is Ex.C-2. The complainant requested the opposite parties to admit his rightful claim and refund of the amount charged by them wrongly and illegally, but they refused to do so. All these acts of the opposite parties are amounts to deficiency in service and trade mal practice. Due to these acts of the opposite parties, the complainant has suffered a lot of mental harassment and financial loss. The complainant is entitled for the refund of the above charges alongwith interest and compensation.

8.                To controvert the arguments of complainant, learned counsel for opposite parties argued that the complainant's firm had an ODP Limit account against the property with the opposite party bank which is meant for commercial purpose, as such under the Consumer Protection Act, he does not come under the definition of Consumer. Hence this Forum has no jurisdiction to try and decide the present complaint. The opposite parties have not rendered any deficiency in service as alleged by the complainant. The amount debited from the account of the complainant has been charged correctly and according to rules, regulations, practice and policies of the bank as well as RBI guidelines. Vide letter dated 21.06.2016, the complainant firm has requested to cancel its ODP limit and on the written request of complainant, the bank has already cancelled ODP limit account. It is correct that the bank has deducted Rs.1140/- on dated 29.06.2015 and 25.09.2015 each and Rs.1145/- on dated 23.12.2015 and 22.03.2016 each totalling Rs.4570/- as inspection charges according to the rules and regulations and as per instruction mentioned in Circular letter no.39/2014-15 and letter no.3/2015-16, copies of the circular are Ex.OPs/4 & OPs/5 respectively. According to these circulars the inspections charges are to be deducted on quarterly basis in ODP limit account @ Rs.1000/- for the limits above Rs.5 lakhs upto Rs.10 lakhs plus service tax. Accordingly, the bank has deducted this amount by following the instructions of the bank. It is correct that bank debited the amount of Rs.5725/- from the account of the complainant as processing fee and renewal fee. It is wrong that the bank debited these entries wrongly and illegally. The opposite parties charged this amount as per bank rules and guidelines. As per circular letter no.44/2013-14, the processing fee are to be charged @ Rs.500/-per one lakh of the loan limit plus service tax. As loan limit account of the complainant's firm is Rs. 10 lakhs, so the amount of Rs.5000/- plus service tax @ 14.25 % i.e. Rs.5725/- were debited in the said loan account on 31.03.2016, the copy of the relevant circular is Ex.OPs/7 & OPs/8. These types of cash credit limits are renewed/reviewed every year as per rules and regulations. Therefore, the processing fee is applicable on such accounts. It is correct that the bank get security property of the complainant insured for 10 years and a premium of Rs.7156/- of the insurance company was debited from the account of the complainant. This insurance policy was correctly issued by keeping the interest of complainant's firm and opposite party's bank during the pendency of loan. As per loan agreement, rules, policies and guidelines of the bank, the complainant itself responsible for insuring the security property given to bank at its own during the pendency of loan or otherwise the bank can got the property insured at the costs of borrower. In the present case since the inception of the loan i.e. from 01.03.2005 till 12.04.2016, the complainant never bothered to insure the security property, so in the interest of complainant and bank, opposite parties got insured the said property, however complainant vide its letter instructed the bank to reduce the insurance policy period and on his instructions bank requested the insurance company for cancellation of insurance policy. The insurance company after deducting its cancellation charges directly credited the amount of Rs.5010/- in the account of the complainant as refund of insurance premium. The bank also got valuation of the property as per rules and guidelines of the bank. According to the rules, security property has to be re-valued once in three years and in the present case, since the start of the loan account on dated 01.03.2005, the valuation of the property was done only two times. So, the bank got the valuation of the property from the impaneled valuer and paid Rs.2500/- as valuation charges and debited this amount from the account of the complainant. It is wrong that bank charged this amount excessive. As per the guidelines of the bank, the valuation charges to be debited @ Rs.125/- per lakh of the value of the security property and in the present case values of the property is Rs.57 lakhs. So, the charges of valuation comes to Rs.7125/-, but bank debited only Rs.2500/- in the loan account of the complainant, copy of the circular is Ex.OPs/15. It is wrong that the bank charged this amount wrongly and illegal, all these charges debited as per rules and regulation of the bank. It is further wrong that this amount is debited by the bank without his consent and information. All these acts of the bank were as per the policy of the bank and as per the guidelines of the RBI and there is no deficiency in service or mal trade practice on the part of opposite parties. The complainant has filed the present false and frivolous complaint only to harass the opposite parties. The present complaint may be dismissed with costs.

9.                We have thoroughly gone through the file, evidence and arguments lead by both the parties. The case of the complainant is that complainant's firm has a Cash Credit Limit account with opposite party bank for the last about 12 years. The bank debited certain amount from his loan account on the ground that the inspection charges, renewal fee and valuation fee and insurance premium without any consent and information, it is against the rules and regulations of the bank. In reply, opposite parties admitted that they debited the alleged amount from the account of the complainant, but they argued that all these charges are debited by the bank as per their policy, rules and regulations and as per the guidelines of bank as well as RBI. Learned counsel for complainant argued that complainant's firm has loan account with opposite party bank for the last about 10/12 years, prior to these transactions the bank never debited any amount from their account, as inspection charges, renewal fee and valuation fee and insurance premium. They debited this amount from the account of the complainant first time without giving any information and consent of the complainant at their own, against the rules and regulations of the bank and guidelines of RBI. On the other hand, learned counsel for opposite parties claimed that they debited all these charges from the complainant as per rules and regulations of the bank. Admittedly the loan account of the complainant is running with opposite parties bank for the last about 10/12 years even as per the submission of the opposite parties the account is running from 01.03.2005. It is further admitted by the opposite party bank that prior to the transactions in question, they never debited any amount to the account of the complainant as inspection charges, renewal fee, valuation fee and insurance premium and they debited all these charges first time. They failed to prove that they ever given any prior intimation or got the consent of the complainant before debiting these charges from their account. As the question of insurance of security property, it is clear from the loan agreement that the borrower is responsible to get the property insured during the loan period at their own cots and the bank is also at liberty to get the property insured to their satisfaction on the costs of borrower, but in the present case, the bank got insured the property for such a long period of 10 years, which is excessive one at the own without the consent of the complainant. Further it is admitted that on the objection of the complainant they got cancelled the said insurance and insurance company refunded the premium amount after deducting Rs.2146/- as cancellation fee. The act of the bank for getting the property insured for a long period of 10 years cannot be said a bonafide and as per agreement, rules and regulations of the bank. Due to these acts of the opposite parties, the complainant unnecessarily suffered a loss of Rs.2146/- which is deducted by the insurance company as cancellation charges.

10.              From the above discussion, we are of the considered opinion that the complainant is having a loan account with the opposite party bank for the last about 10/12 years and they never charged any amount from his account, as inspection charges, valuation charges, and renewal charges etc. prior to it. First time they have charged these amount from the complainant in the year 2015-16 without any prior notice or intimation. The plea of the bank is that they debited all these charges as per rules and regulations of the bank as per circulars issued by the head office, copies of which are placed on record. From the perusal of these circulars, it is transpired that all these circulars are also issued in the year 2015-16. So, the opposite have to give notice to complainant before debiting these charges from his loan account, but they failed to give any notice regarding it to complainant. So, by debiting these charges from the account of the complainant without giving any notice, amounts to deficiency in service and mal trade practice on the part of opposite parties. Hence the present complaint in hand is hereby allowed and opposite parties are directed to refund the amount debited by them to the account of the complainant, as inspections charges, valuation charges, processing fee and Rs.2146/- charged as cancellation of insurance alongwith interest @ 9% p.a. from the date of debit of this amount till final realization. Further opposite parties are directed to pay Rs.4000/-(Four thousand only) as compensation on account of mental tension, agony and harassment suffered by the complainant and Rs.2000/-(Two thousand only) as litigation expenses to complainant. Compliance of this order be made within one month from the date of receipt of the copy of the order, failing which complainant shall be entitled to proceed under Section 25 and 27 of the Consumer Protection Act. Copy of order be supplied to parties free of cost as per law. File be consigned to record room.

Announced in Open Forum

Dated : 31.08.2016

 

                        (Bupinder Kaur)                           (Vinod Bala)               (Ajit Aggarwal)

                               Member                                   Member                      President