Karnataka

Chamrajnagar

CC/86/2012

S.Durai Swamy - Complainant(s)

Versus

Syndicate Bank - Opp.Party(s)

MR.N.G.J.

26 Mar 2013

ORDER

ORDER

1. The complainant has filed the complaint alleging deficiency of service by the O.Ps.

 

1.  The complainant’s case in brief are that  the complainant is an account holder with the O.P.3. The complainant had deposited Fixed deposits mentioned in para-4 of his complaint.

 

1. The complainant apart from having current account and Savings account with the O.P. had also Over Draft Account and Loan account.

 

1. The complainant had Over Draft facility from the O.P. and he had deposited Rs.14.00 lakhs at the time of opening of Over Draft Account with O.P.3 and further had hypothecated  his machineries/ vehicles for the security of the said account. The said account is still in operation.

 

1. The complainant on 21/01/2009 availed  Over Draft facility and increased his amount from Rs.14.00 lakhs to Rs.22.00 lakhs through the account bearing no.SOD 1706125000370  for Rs.12.00 lakhs and another account bearing no.BG 01/2009 for Rs.10.00 lakhs.

 

1. The complainant    deposited a sum of Rs.5,00,000/-  cash as  Term Deposit and further continued hypothecation of his machineries/vehicles valued at Rs.22.00 lakhs and obtained facility  of operating the above said account. The purpose of opening of the said account was to give bank guarantee for his government tender works to O.P.3.

 

1. The O.P.3 has extended bank guarantee through a letter dated 24/02/2010 for Rs.10.50 lakhs. The bank guarantee was again extended up to 28/02/2012.

 

1. The Executive Engineer of RDPR planning division, Mysore wrote a letter on 01/02/2012 to extend the bank guarantee and the complainant was surprised to see the letter written by O.P.3 about revocation of bank guarantee.

 

1. The letter of revocation wrote by O.P.3 to the Executive Engineer  without any intimation  and knowledge to the complainant. The complainant came to know about the same only on 01/02/2012. The revocation of bank guarantee  of O.P.3 is illegal.

 

1. The O.P.3 had written a letter on 07/06/2012 to the complainant by saying that deposited Rs.37,68,289.26/-   are adjusted to SOD and the same has been done  without his knowledge and without intimation to him. This act of O.P.3 is illegal.

 

1. The O.P.3 has prematurely closed all the accounts of the complainant and the complainant was not aware  on what basis O.P.3 has prematurely closed all the account  or on whose instruction has passed order to do all these acts.

 

1. The complainant had deposited Rs.50,000/- on 04/03/2009  in his name and it was to be matured on 17/07/2010. The complainant further deposited Rs.6,00,000/- in the name of his son and also it was to be matured on 17/07/2012. The O.P. has not released the said amounts to complainant.

 

1. The complainant during transaction with O.P.3 had deposited total of Rs.37,68,289.26/- on various heads, but the O.P.3 was not ready to provide information about the F.D. and guarantee deposits.

 

1. The complainant is unable to participate in any of government tenders  an account of O.P.3. The complainant has lost 2-3 crores  of rupees in his business  an account of O.P.3

 

1. The O.P.3 has filed version and has admitted  about the account of the complainant with it. It has denied all the allegations made against it by the complainant.

 

1. The complainant’s O.D. account was closed due to non-operation of said accounts and bringing into credit once in a year . The complainant did not  submit  any application for renewal of his O.D. facility after adjusting the fixed deposits which were offered as security for the said O.D. account No. SBE 991073 in account no.1706460000057 and renewed  account no.17064050022573.

 

1. The fixed deposits are offered as security and amount due under Fixed deposits have been adjusted towards outstanding balance of SOD account.

 

1. The complainant opened over draft account on 21/01/2009 and not on 01/01/2006.  The Over draft  account was opened  by the complainant  with sanction limit of Rs.12.00 lakhs  only and not limited to Rs.14.00 lakhs. The bank guarantee  was limited to Rs.10.00 lakhs only.

 

1. The complainant at the time of opening of Over draft account kept Rs.5,52,000/- on 15/12/2009, Rs.50,000/- on 04/03/2009, Rs.2,65,000/- on 08/04/2009 and Rs.3,35,000/- on 25/04/2009 total of Rs.12.02,000/-. The Over Draft account was closed  due to non-operation. The complainant had hypothecated second hand machineries/ vehicles worth Rs.22.00 lakhs.

 

1. The O.P.3 has not acted in terms of  the letter dt.30/05/2011 by revocation of bank guarantee. The complainant has not given intimation to extend bank guarantee issued to him within the time. The complainant approached the O.P.3 on 09/03/2012 for further extension  from 28/02/2012 and by that time  the bank guarantee time  had expired and it was not extended due to non complying of required facilities in time by the complainant.

 

1. The complainant did not submit any application for renewal of O.D. account and also did not operate the account after 11/02/2010. The O.P.3 demanded the complainant  on 15/12/2011 to pay the outstanding balance  of SOD account but the complainant did not respond to the said demand and therefore the O.P.3 adjusted the deposits towards outstanding balance   of the O.D. accounts and it was also agreed between the complainant and O.P.3 to adjust the deposits  towards balance O.D. account which were given as security for O.D. facilities  and the O.P. has not closed  complainant’s account prematurely.  After adjusting deposits remaining balance of Rs.9,497/- was transferred to the complainant’s current account on 08/06/2011 and copy of the said letter dt.07/06/2012 has been sent.

 

1.  The following points arises for consideration.
   1. Whether the complainant has shown the deficiency of service by the O.Ps.?
   2. To what order the parties are entitled?

 

1. The findings for the above points are that

  Point No.1:  Affirmative in part.

  Point No.2: As per order.

 

REASONS

1. POINT NO.1:- The admitted facts are that  the complainant has current account as well as savings account with the O.P.3. He was given O.D. facility by the bank on 21/01/2009 for Rs.12.00 lakhs.

 

1. The complainant was given the facility of bank guarantee by the O.P.3 for Rs.10.00 lakhs and it was renewed upto 28/02/2012.

 

1. The agreement produced by the O.P.3 shows that the O.D. facility extended to the complainant must be closed with all dues at the end of the year and after crediting the due the O.D. facility would be extended.

 

1. The bank guarantee was also to be extended by the O.P.3 on the request letter of the complainant from time to time.

 

1. The complainant had two F.Ds. with the O.P.3 and two F.Ds. in the joint name of himself and his son.  The following F.Ds. were with the complainant.
   1. Rs.5,52,000/- dt. 15/12/2009.
   2. Rs.50,000/- dt.04/03/2009.
   3. Rs.2,65,000/- dt.08/04/2009.
   4. Rs.3,35,000/- dt.25/04/2009.

 

1.   It has also admitted that the complainant was due at the end of the year of the O.D. facility and therefore the O.D. facility was not extended  and the  F.Ds. which were in the joint name of himself and his son have been closed and amount due under the said F.Ds. have been utilized by the O.P.3 for clearing the amount due on the O.D. facility  extended to the complainant.

 

1. The O.P.3 had written a letter on 30/05/2011 by revoking bank guarantee  given by him which was up to 28/02/2012.

 

1. The learned counsel appearing for the complainant has submitted that the O.Ps. could not have closed the O.D. facility account  without notice to him and therefore there is deficiency of service by the O.Ps.

 

1. The learned counsel in support of this arguments has relied upon the decision report in SC-NCDRC 1994 page 2893 between Dr. Purushothamnagar V/s Zonal Manager, UCO Bank and (1995)(III) CPJ 396 between United Bank of India V/s  Anindita Sen & another.

 

1. The learned counsel appearing for the complainant has relied upon the decision (1994) SC-NCC cases page 2893 between Dr.Purushotham Nagar V/s Zonal Manager, Uco Bank  and has stated that the freezing of an account without giving any reason amounts to deficiency of service by the bank. He has stated that in the present case  amount of the complainant has been freezed by the bank without notice and therefore there is deficiency of service.

 

1. In the present case  as stated earlier  O.D. facility  as per agreement  is that by end of the year the complainant should have cleared all the dues under the O.D. account and  should have sought  for renewal of the O.D. facilities. The complainant has not repaid  amount due under the O.D. account and therefore  the bank was at liberty to close  the accounts as per agreement and by invoking general lien it was at liberty  to utilize the amount due to the complainant from it in various accounts. Considering this it can be said that there is no deficiency of service in closing the O.D. account.

 

1. The learned counsel appearing for the complainant has submitted that the O.D. facility given to him could not been closed by the O.P. and has further stated that the account was inoperation and therefore by closing O.D. facility  given to the complainant there is deficiency of service by the O.P.3.

 

1. The learned counsel appearing for the complainant has submitted that the F.Ds. given by him and his son could not have been closed by the O.P. and the amount due under the said F.Ds. could not have been used for repayment of the due under the O.D.  facility and therefore there is deficiency of service by the O.P.3.

 

1. In support of the above arguments he has relied on the decision reported in (1995)(III) CPJ 396 (SC)(NCC), 1998 page 1277, (2001) (III) CPJ 264, (2004) (VII) Supreme  247. Also in judgement reported in (1995)(III) CPJ 396 between United Bank of India V/s Anindita Sen  and another.

 

1. The learned counsel appearing for  O.P. has submitted that an agreement executed by the complainant to the O.Ps. for utilizing the O.D. facility says as follows.

“ For O.D/cash crediting by operating it briskly to the extent of limit /drawing power fixed and bring it to  credit at once  a year and closing it in time by end of one year”.

 

1. The learned counsel for the O.P. on the basis of above has stated O.D. facility of Rs.10.00 lakhs had been given to the complainant by O.P.3 which was extended  upto 28/02/2012 and at the end of 28/02/2012 the complainant  should have repaid the entire balance amount due under the O.D. facility given to him and after that the O.D. facility would be extended again.  In the present case the learned counsel has stated that the complainant did not paid entire outstanding balance at the end of the year and therefore the various amounts which were  in the account of the complainant and F.Ds. have been utilized under the general lien by closing F.Ds. and the amounts due in the said F.Ds. have been appropriated  towards  balance due by the complainant to the O.D. facility extended to him.

 

1. The learned counsel has submitted that in view of the above there is no deficiency of service by the O.Ps. and therefore the complaint is liable to be rejected on this score.

 

1. In order to find out whether there is deficiency of service  or not by the O.Ps. it is necessary to state law laid down by the Hon’ble Supreme Court in (2004) (VIII) SCC 498  between Anumati V/s Panjab National Bank, (1995) (III) CPJ 396 between United Bank of India V/s Anindita Sen & another which went to Hon’ble Supreme court from the Judgement of National Consumer Disputes Redressal Commission, New Delhi.

 

1. The law laid down in the above said judgment is as follows;-
   1. The bank is at liberty under the general lien to close the F.Ds. standing in the name of the borrower to appropriate  the amount due under the said bond towards loan outstanding by him to the bank.
   2. The F.Ds. standing in the name of the borrowers as well as another person cannot be closed by the bank and utilize the amount due under the said bonds towards loan due by the borrower to it.

 

 

1. In the present case there are four F.Ds. Out of four F.Ds. two F.Ds. stands in the name of the complainant for Rs.3,35,000/- and Rs.2,65,000/- and it is closed by the O.P. under the general lien and has utilized towards outstanding loan amount by the complainant to it due under the said F.Ds. ( This has been laid down in the judgement cited by the complainant himself). The O.P. has right under general lien to close the F.D. standing in the name of the complainant to adjust to  the loan outstanding. This cannot be said  as deficiency of service.

 

1. The O.P. 3 could  not have close the F.Ds. standing in the joint name of the complainant as well as his son and utilize the said amount towards outstanding  loan amount of the complainant. Both F.Ds. are payable  either to survivor or to the both on maturity. The law laid down by the Hon’ble Supreme court  in the above judgement cited by the complainant is that the F.Ds. standing in the joint names of the borrower as well as another person  could  not be closed  and the amount due under the F.Ds. could  not be utilized towards outstanding loan by the borrower.

 

1. One of the limb of the argument of the O.P. is that the F.Ds. were given as security. The O.Ps. have not able to produce any material to show that  the son of the complainant has stood as guarantee or given any letter to the bank to utilize amount due under the F.Ds. standing in his  name and the complainant towards loan due by the complainant to the bank. The O.Ps. have not been able to produce any documents to show F.Ds. stands in the name of the complainant and his son have been given as security  towards O.D. facility given to the complainant. In view of this and  also  considering the principles laid down by the Hon’ble Supreme Court in the above said judgements, it can be said that the O.Ps. could not have close the F.Ds. standing  in the name of the complainant as well as his son and utilize the amount due under the said F.Ds. towards loan outstanding to it. There is deficiency of service by the O.P. to this extent.

 

1. The complainant has alleged that there is deficiency of service  by the O.Ps. in writing letter  on 30/05/2011 in revoking the bank guarantee given by it  till 28/02/2012.

 

1. The O.Ps. have admitted about writing letter dt. 30/05/2011 by revoking  the bank guarantee, but have  stated that it never acted upon the terms of the said letter. This contention of the O.P. cannot be accepted for the reason that once it has written letter  by revoking bank guarantee  extended by it and not be acted upon on the said letter and if it  were  so it should have  written letter  to the complainant  as well as  to P.W.D. by stating by mistake  letter has been written and it never amounts to revoking   bank guarantee extended by it. This shows that there is deficiency of service by the O.Ps. in revoking the bank guarantee given by the O.P.3. prematurely.

 

1. The deficiency of service must  always    result in loss  to the complainant. In the present case the complainant has stated that  an account of revocation of the bank guarantee he could not participate in the tenders of the P.W.D. and therefore he suffered loss an account of that.

 

1. The complainant has not produced any materials before the Forum to show  after revocation letter by the O.P.3 how many tenders were called by P.W.D.  and he  could not  apply to the said tenders  for want of bank guarantee. In view of this, it can be said that the complainant  has not been able to show that he has suffered loss an account of revocation of the bank guarantee  by the O.Ps.

 

1. In view of the above point no.1 is held in the affirmative in part.

 

1. POINT NO.2:- The Forum has come to the conclusion that the complainant has been able to show there is deficiency of service by the O.Ps. in part and in view of this the complainant is entitled for compensation for deficiency of service by the O.Ps. along with costs.

 

1.   In view of the above following

 

ORDER

The complaint is allowed in part.

 

1.The O.Ps. shall pay the amount due under the  F.Ds. standing in the name of the complainant and his son  along with interest till payment of the same within 30 days from today.

 

2. The complainant is also entitled to compensation of Rs.20,000/- from the O.Ps. which shall be payable within 30 days from today.

 

3. The complainant is also entitled to the cost of Rs.5,000/- from the O.Ps. to be payable within 30 days from today.