Haryana

Karnal

CC/43/2020

M/s Raj International - Complainant(s)

Versus

Punjab National Bank - Opp.Party(s)

S.K. Malhotra

16 Aug 2022

ORDER

BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, KARNAL.

 

                                                       Complaint No. 43 of 2020

                                                        Date of instt.20.01.2020

                                                        Date of Decision:16.08.2022

 

M/s Raj international, shop no.99, opposite old tehsil complex, GT Road, Karnal, through its Sole Proprietor Shri Rajesh Valecha.

 

                                               …….Complainant.

                                              Versus

 

Punjab National Bank, Main Branch, G.T. Road Karnal, through its Assistant General Manager.

 

                                                                      …..Opposite Party.

 

Complaint Under Section 12 of the Consumer Protection Act, 1986 and after amendment Under Section 35 of Consumer Protection Act, 2019.

 

Before   Sh. Jaswant Singh……President

      Dr. Rekha Chaudhary…….Member

                   

 Argued by: Sh. Pankaj Malhotra, counsel for the complainant.

                   Sh. Somesh Garg, counsel for the opposite party.

 

                    (Jaswant Singh President)

 

ORDER:   

                

                   The complainant has filed the present complaint Under Section 12 of the Consumer Protection Act, 1986 as after amendment under Section 35 of Consumer Protection Act, 2019 against the opposite party (hereinafter referred to as ‘OP’) on the averments that complainant is running a business of readymade garments and has availed a cash credit (Hypothecation) loan of Rs.5 lakhs from the OP which was sanctioned on 19.02.2018 under account no.0259008700011407. The complainant executed the loan documents as required by the OP including the hypothecation agreement hypothecating the stock (finished and unfinished) in favour of the OP bank. As per the terms of hypothecation agreement it was mandatory on the part of the bank to get the hypothecated stock insured against all the risk at the cost of the borrower complainant and debit the amount of premium to his account. Unfortunately, the shop of the complainant caught fire in the night of 26.04.2018 and the entire fittings and fixtures including the hypothecated stocks were destroyed. The fire brigade extinguished the fire at 10.30 in the night. The loss was intimated to the OP on the very next day of incident. The officials of the OP visited the shop and inspected the same. On 08.05.2018 the complainant visited the OP bank and requested to lodge the claim with the insurance company under the policy of insurance which was to be purchased by the bank at the cost of the complainant but it was very surprised to the complainant that the bank did not get insured the stock as per terms and condition of hypothecation agreement. Realizing the lapse and the mistake the official of the OP bank immediately purchased insurance policy from New India Assurance Company Limited for the period 08.05.2018 to 07.05.2019 as to cover their lapse and debited the amount of premium to the account of the complainant. Again an amount of Rs.2962/- on account of insurance charges has been debited on 02.05.2019 in the account of the complainant for renewal of the policy for the year May 2019 to May 2020 which is clearly evident that it was the duty of the bank to purchase the insurance cover. Since the stock was not insured at the time of fire on 26.04.2018, the complainant has suffered a huge loss of about Rs.15 lakhs on account of the hypothecated stock worth approximately Rs.10 lakhs and the fittings and fixtures were destroyed in the fire worth Rs.5 lakhs. The last stock statement upto 31.03.2018 was submitted to the bank for an amount of approximately Rs.10 lakhs and bank is avoiding to supply the copies of the loan documents and the statement of stock dated 31.03.2018 despite the application of the complainant under RTI Act. In this way, there is deficiency in service and unfair trade practice on the part of the OP. Hence this complaint.
2.             On notice, OP appeared and filed its written version raising preliminary objections with regard to jurisdiction; locus standi and concealment of true and material facts. On merits, it is pleaded that this Forum now Commission has no jurisdiction to try and entertain the present complaint under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act), since when the complainant did not deposit his daily sale proceeds in his loan account and did not deposit interest accrued therein in his loan account as per repayment schedule for continuously three months and accordingly as per norms of Reserve Bank of India, the loan account of the complainant transferred into NPA category account. So, the OP bank issued notice under section 13(2) and 13(4) of the Act ibid and that under section 34 of the Act ibid, the jurisdiction of civil court/any court or other authority is barred and as such same deserves dismissal on this ground. It is further pleaded that complainant took loan of Rs.5 lakhs under cash credit (Hypothecation) limit under Mudra Scheme and executed the loan documents on 19.02.2018 hypothecating the stock in favour of the OP bank. The OP bank initially released the amount of Rs.3 lakhs to the complainant for purchase of goods. Thereafter, on the request of complainant from time to time i.e. on 18.05.2018, 11.06.2018, 05.07.2018 and 20.07.2018, the OP released the balance loan amount to the complainant for purchase of goods. The complainant never informed to the OP bank regarding alleged incident of fire happened in the night of 26.04.2018 prior to submitting of reply/objection petition dated 26.11.2019 in response to the notice dated 10.10.2019 under section 13(2) of SARFAESI Act and that the OP bank replied the said objection petition to the complainant in accordance with the law. It is further pleaded that if there is any dispute regarding insurance claim of alleged fire incident, then why the OP bank released balance loan amount. Moreover, it is the prime duty of the borrower i.e. complainant to get the hypothecated stock insured with its full market value in the joint name of borrower and the bank with bank clause 10 as per loan documents executed by the complainant in favour of the bank and when the complainant did not submit the insurance policy to the OP bank, so on the request of the complainant, the bank insured the stock of the complainant from New India Assurance Company and renewed the insurance policy in the next year and debited the amount of insurance in the loan account of the complainant as per loan documents. It is denied that the complainant again and again requested the bank to reimburse the  loss suffered by him due to alleged negligence on the part of the bank’s official. It is submitted that the OP bank is acting as per law under SARFAESI Act. There is no deficiency in service on the part of the OP. The other allegations mentioned in the complaint have been denied by the OP and prayed for dismissal of the complaint.

3.             Parties then led their respective evidence.

4.             Learned counsel for complainant has tendered into evidence affidavit of complainant Ex.CW1/A, copy of notice u/s 13(4) of SARFEASI Act Ex.C1, copy of legal notice Ex.C2, postal receipt Ex.C3, letter dated 27.03.2020 Ex.C4, copy of Hypothecation Agreement Ex.C5, copy of statement of account Ex.C6, copy of stock statement Ex.C7, copy of inspection report Ex.C8, copy of report of fire brigade Ex.C9, copy of insurance policy Ex.C10, copy of Registration Certificate Ex.C11, copies of bills/invoices Ex.C12 to Ex.C18, copy of Aadhar card Ex.C19 and closed the evidence on 28.10.2020 by suffering separate statement.

5.             On the other hand, learned counsel for OP has tendered into evidence affidavit of Rahul Dhull Chief Manager Ex.OP/A, copy of appraisal-cum-sanction note for Mudra loan Ex.OP1, copy of loan agreement Ex.OP2, copies of letters dated 18.05.2018, 11.06.2018, 05.07.2018, 20.07.2018 by complainant to OP Ex.OP3 to Ex.OP6, copy of 60 Days notice to borrower Ex.OP7, copy of legal notice dated 26.11.2019 Ex.OP8, copy of reply of legal notice Ex.OP9, postal receipt Ex.OP10, Notice Under Section 13(4) of SARFAESI Act dated 03.01.2020 Ex.OP11, postal receipts Ex.OP12 and Ex.OP13, copy of bank statement Ex.OP14, copy of GST invoice of Monu Garments Ex.OP15 and Ex.OP16 and closed the evidence on 12.01.2022 by suffering separate statement.

6.             We have heard the learned counsel of the parties and perused the case file carefully and have also gone through the evidence led by the parties.

7.             Learned counsel for complainant, while reiterating the contents of complaint, has vehemently argued that complainant was advanced a cash credit limit of Rs.5,00,000/- by OP bank for trading readymade garments on 19.02.2018, vide hypothecation agreement. As per clause 10(A) of the hypothecation agreement Ex.C5, it was mandatory on the part of the OP to get the stock insured at the cost of the borrower. Unfortunately, a fire took place in the premises of the complainant on 26.04.2018 and complainant suffered huge loss of Rs.15,00,000/- including the stock, fitting and fixtures lost in fire. The intimation to the loss was sent to the OP on the very next day. The officials of the OP were negligent in not getting the stock insured at the time of advancement of the loan. OP bank has defended the claim on the ground that it was the borrower who was to purchase the policy and in case he did not do so, only then the bank would purchase the policy. Since the borrower failed to do so, despite demanding by the bank, the OP bank purchased policy Ex.C10 on 08.05.2018 valid upto 07.05.2019 and again reviewed the same on 07.05.2019 at the cost of the borrower. The OP has also challenged the jurisdiction of this Commission on the basis that its jurisdiction was barred under section 34 of the SARFEASI Act as the proceedings under the Act had been initiated on 10.10.2019. The remedy under the Consumer Protection Act, is an additional remedy. He further argued that regarding the duty of the borrower to purchase the policy, OP bank is not able to mention neither the date as to when the borrower was asked to purchase the policy nor the date has been mentioned in the written version. If it is not the duty of the bank, then why the bank purchased the policy on 08.05.2019 and renewed it again on 07.05.2019 as proved from the statement of account Ex.C5, vide entry dated 01.05.2018 and 02.05.2019. So, it is clear that the bank’s officials to cover their lapse, wanted to threw the burden of insurance on the complainant. Learned counsel for complainant further submitted that the OP has filed the Civil Suit for recovery against the complainant which is pending before the Civil Court and thus the proceeding under SARFAESI ACT is totally illegal, null and void and not binding upon the complainant and lastly prayed for allowing the complaint. Learned counsel for complainant relied upon the judgments of Hon’ble Supreme Court in case titled as Virender Jain Vs. Alaknanda Cooperative Group Housing Society 2013(3) CCC 177 (SC); M/s Fortune Infrastructure (Now known as M/s Hicon Infrastucture) and Anr. Versus Trevor D’Lima & Ors 2018 (2) 139 (SC) and Sunil Kumar Maity Versus State Bank of India and Anr. 2022(1) CCC 630; M/s Paramount Digital Color Lab and Ors Versus M/s Agfa India Pvt. Ltd. & Ors. 2018 (2) CCC 831; State Bank of India Versus Kashmir Singh and Anr. 2011(1) CPC and State Bank of Hyderabad Versus Nirmala and Anr. 2012 (2) CPC of Hon’ble National Commission.

8.             Learned counsel for OP, while reiterating the contents of written version, has vehemently argued that Commission has no jurisdiction to try and entertain the present complaint under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act), since when the complainant did not deposit his daily sale proceeds in his loan account and did not deposit interest accrued therein in his loan account as per repayment schedule for continuously three months and accordingly as per norms of Reserve Bank of India, the loan account of the complainant transferred into NPA category account. He further argued that complainant took loan of Rs.5 lakhs under cash credit (Hypothecation) limit under Mudra Scheme and executed the loan documents on 19.02.2018 hypothecating the stock in favour of the OP bank. The OP bank initially released the amount of Rs.3 lakhs to the complainant for purchase of goods. Thereafter, on the request of complainant from time to time i.e. on 18.05.2018, 11.06.2018, 05.07.2018 and 20.07.2018, the OP released the balance loan amount to the complainant for purchase of goods. The complainant never informed to the OP bank regarding alleged incident of fire happened in the night of 26.04.2018 prior to submitting of reply/objection petition dated 26.11.2019 in response to the notice dated 10.10.2019 under section 13(2) of SARFAESI Act and that the OP bank replied the said objection petition to the complainant in accordance with the law. He further argued that if there was any dispute regarding the insurance claim of alleged fire incident, then why the OP bank released balance loan amount. Moreover, it is the prime duty of the borrower to get the hypothecated stock insured with its full market value in the joint name of borrower and the bank with bank clause 10 as per loan documents executed by the complainant in favour of the bank and when the complainant did not submit the insurance policy to the OP bank, so on the request of the complainant, the bank insured the stock of the complainant from New India Assurance Company and renewed the insurance policy in the next year and debited the amount of insurance in the loan account of the complainant as per loan documents. He further argued that the complainant again and again requested the bank to reimburse the  loss suffered by him due to alleged negligence on the part of the bank’s official. The OP bank is acting as per law under SARFAESI Act and lastly prayed for dismissal of the complaint. Learned counsel for OP relied upon the judgments of Hon’ble National Commission in case titled as State Bank of India, Branch Bellary Versus B. Nagaraj & Ors. IV( 2005) CPJ 112; Chief Manager Bank of Baroda Versus Prabir Chaki & Anr. in Revision Petition no.4196 of 2014, decided on 20.07.2015 and Keshmati Meena Versus Allahabad Bank decided on 19.03.2021 of Hon’ble State Commission, Delhi.

9.             We have duly considered the rival contentions of the parties.

10.           Admittedly, complainant got hypothecated stocks from the OP on 19.02.2018 and Hypothecation of Good and Book Debts to Secure Cash Credit Facility Ex.C5 executed between the parties. It is also admitted that a fire took place in the premises of the complainant on 26.04.2018. The loss was intimated to the OP.

11.           Before going into the merits of the case, firstly we decide whether this Commission has jurisdiction to try and entertain the present complaint if the proceeding under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act) is going on.

12.            The OP has taken a plea that the complainant had not deposited his daily sale proceeds and interest accrued thereon in his loan account as per repayment schedule continuously for three months and accordingly as per norms of Reserve Bank of India, the loan account of the complainant transferred into NPA category account and notice was issued to complainant under SARFAESI Act Ex.OP7 dated 10.10.2019. In this regard, we can rely upon the authority in Prabir Chaki’s case (supra) wherein Hon’ble National Commission held that this well settled that the Consumer Fora have got no jurisdiction wherever the SARFAESI Act is applicable. The Hon’ble Supreme Court while affirming the observation of this Commission in case of Yaswant G. Ghaisas & Ors. Versus Bank of Maharashtra in civil appeal no.1359 of 2013 decided on 01.03.2013, was pleased to hold:-

“The appellants challenged the action of the bank by filing a complaint under Section 21 of the Consumer Protection Act, 1986 (for short, the 1986 Act). The National Commission referred to Section 34 of the 2002 Act whereby jurisdiction of all Courts and authorities to entertain challenge to the action taken by the Bank has been ousted and dismissed the complaint by recording the following observations:

19. The National commission s not empowered to arrogate to itself the powers which comes within the jurisdiction of debt recovery tribunals. This mater is purely covered within the jurisdiction of DRT or DRAT. If there is any grievance against the notice under Section 13(2) of the SARFAESI Act that should be brought to the notice of the concerned authority. It is well settled that main creditor and the guarantors are equally responsible. There lies no rub for the bank to take action against the guarantor directly. It cannot be alleged that he is adopting the policy of pick and choose. Form the allegations stated above, there appears to be no deficiency on the part of the opposite party. In case the bankers are working within the ambit of SARFAESI Act, it cannot be said to be deficiency on the part of the bank. It must be established that there is deficiency on the part of the bank. In that case this commission can take action. For the reasons stated above. The complaint is dismissed at the stage of admission. Nothing will preclude the complainants from approaching appropriate Forum as per law”

 

Further in Keshmati Meena’ case (supra) wherein Hon’ble State Commission held that the complaint is not maintainable before the Consumer Forum(now Commission)since the complainant being the auction purchaser is not a consumer and thus not entitled to raise the consumer disputes. Secondly the issue, relying on Section 34 of the SARFAESI Act, cannot be adjudicated by this Commission. Accordingly, the complaint is returned granting liberty to the complainant to file it before the appropriate forum enjoying the jurisdiction thereof.

13.           During the arguments, learned counsel for the complainant pointed out that OP has filed recovery suit against the complainant in the Civil Court, Karnal, if the alleged proceeding under SARFAESI ACT was legal, the OP should had to approach the Debt Recovery Tribunal (DRT), not in civil court. Thus, the alleged proceeding under SARFAESI Act itself is illegal one. The question with regard to the proceeding under SARFAESI ACT genuine one or not, cannot be decided in summary trial and without leading detailed evidence and cross examination upon the witnesses by the all parties.

14.           Hence, keeping in view the law laid down in the above judgments and facts and circumstances of the case, we are of the considered opinion that present complaint cannot be exercised when the statutory remedy under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act) has been invoked. Thus, the present complaint is not maintainable before this Commission and same deserves to be dismissed.

15.           In view of the above, we dismiss the present complaint. No order as to costs. If the complainant has any grievance with regard to proceeding under SARFAESI ACT he can approach the appropriate court of law, if so desired. In view of the law laid down Hon’ble Supreme Court in Laxmi Engineering Works Versus PSG Industries Institute (1995) 3 SCC 583 the complainant would be at liberty to get the benefit of provisions of section 14 of the Limitation Act, to exclude the period spent in prosecuting the present complaint before this Commission while computing the period of limitation prescribed for filing such complaint. The parties concerned be communicated of the order accordingly and the file be consigned to the record room after due compliance.

Announced

Dated:16.08.2022.

                                                                       

                                                        President,

                                                   District Consumer Disputes

                                                   Redressal Commission, Karnal.

     

                (Dr. Rekha Chaudhary)      

                      Member