Andhra Pradesh

Chittoor-II at triputi

CC/13/2019

V.G.Gnana Kumar, S/o Late V.M.Govindaiah, aged 65 years - Complainant(s)

Versus

The Branch Manager, Central Bank of India - Opp.Party(s)

National Association of Consumers (NAC)

03 Jul 2019

ORDER

Filing Date: 11.12.2018

Order Date:03.07.2019

 

 

 

BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II,

CHITTOOR AT TIRUPATI

 

 

      PRESENT: Sri.T.Anand, President (FAC)

               Smt. T.Anitha, Member

 

 

 

WEDNESDAY THE THIRD DAY OF JULY, TWO THOUSAND AND NINTEEN

 

 

 

C.C.No.13/2019

 

 

Between

 

 

V.G.Gnana Kumar,

S/o. late V.M.Govindaiah,

Aged about 65 years,

D.No.18-4-383, Railway Colony,

Tirupati – 517 501.                                                                          … Complainant.

 

And

 

 

The Branch Manager,

Central Bank of India,

D.No.25, G.Car Street,

Tirupati – 517 501.                                                                          …  Opposite party.

 

 

 

 

 

            This complaint coming on before us for final hearing on 19.06.19 and upon perusing the complaint and other relevant material papers on record and on hearing The President, National Association of Consumers (NAC) - for the complainant, and Sri.K.Jagadeeswar, counsel for opposite party, and having stood over till this day for consideration, this Forum makes the following:-

 

ORDER

DELIVERED BY SRI. T.ANAND, PRESIDENT (FAC)

ON BEHALF OF THE BENCH

           

            This complaint is filed under Section-12 of C.P.Act 1986, with the following allegations:-

            2.  The complainant availed gold loan of Rs.4,80,000/- from the opposite party bank on 09.08.2017, by pledging jewelry weighing 290 grams, vide gold loan account No.3627737702. On 20.07.2018, he received a message to his mobile from the opposite party stating that the “gold loan account No. 3627737702. Repayment of Rs.5,29,647/- is due for the month of July 2018”, and asking him to pay the same immediately. As per the banking lending norms, the duration of gold loan is              12 months from the date of sanction of loan, and as such he has to close the loan on or before 08.08.2018, failing which penal rate of interest will be charged. On 8.8.2018 he visited the opposite party bank and informed that he wants to close the gold loan account by paying entire due amount with interest as on date. The opposite party prepared credit voucher for Rs.5,35,626/- and handed over the same to complainant, to pay the cash in the cash counter, and accordingly he paid the cash in cash counter at 11.20 a.m., and waited for one hour in the bank to take delivery of the pledged jewelry. But, surprisingly at 12.20 p.m., the opposite party informed him that they are unable to deliver the gold jewelry against the payment of entire loan amount with interest as on date and refunded the entire amount of Rs.5,35,626/- against his acknowledgement. The banker has to deliver the jewelry to the borrower on full payment of loan amount as per lending norms of RBI, and the banker has no right to deny the delivery of jewelry. Thus, customer / consumer was deprived of their right to take loan jewelry by the opposite party by violating the RBI fair practice lending norms. The complainant therefore issued notice dt:24.11.2018 through National Association of Consumers, Tirupati, to opposite party, which was acknowledged by opposite party and reply was also given by opposite party vide letter dt:03.12.2018 stating that he stood as guarantor to an education loan of Rs.1,40,900/- sanctioned to Miss.N.Yogitha and Mrs.N.Sushanthi. As per the education loan policy of the opposite party bank, they should not obtain any guarantee of a third party up to Rs.4,00,000/-. The parents of the student should stand as co-oblicant for the loan amount. The opposite party did not provide all the authenticated documents executed by the complainant as guarantor earlier. He availed gold loans from the opposite party  5 times during the period 2007-2017 by pledging gold, and the opposite party never informed him about the status of the education loan sanctioned to Miss.N.Yogitha and Mrs.N.Sushanthi. The opposite party bank never sent any reminder or notice to complainant regarding default in payment of education loan. The complainant is not aware of the fact that opposite party and both the borrowers have entered into an oral agreement for One Time Settlement (OTS). The opposite party sent a copy of notice dt:12.10.2018 addressed to the borrowers of the education loan. The opposite party has no right to mark a lien on the jewelry pledged by the complainant for raising gold loan. Non-delivery of jewelry, that too after making payment of full amount of loan amounts to deficiency in service and unfair trade practice on the part of opposite party. The complainant is therefore entitled to claim compensation of Rs.4,90,000/- against the aforesaid deficiency in service on the part of the opposite party. Therefore, it is prayed to allow the complaint.     

            3.  The opposite party filed the written version contending as follows – At the outset, complaint averments are denied. So far as para.1 of the complaint is concerned, there is no denial. The complaint allegations that on 08.08.2018, complainant had visited the opposite party bank and informed that he wants to close the gold loan account as on date and that opposite party has calculated interest up to date and prepared credit voucher for Rs.5,35,626/- and handed over to him, and asking him to pay the cash in the cash counter, and that the complainant paid Rs.5,35,626/- in the cash counter at 11.20 a.m., and that he waited for one hour in the bank hall, to take delivery of the gold jewelry are all not true and the complainant is put to strict proof of the above allegations. So far as paras. 4 and 5 of the complaint are concerned, the allegations are not true and correct and the complainant is put to strict proof of the same. As per terms of the gold loan agreement, it is clearly specified that “The Bank shall have a lien on the jewelry in respect of any other sum of money which the borrower is liable to pay to the bank either solely or jointly with other persons at any office of the Bank”. In view of the above allegation that the Banker has to deliver the jewelry on full payment of loan amount is not true and correct. The allegation in para.15 of the complaint that there is deficiency in service and unfair trade practice on the part of opposite party and the complainant is therefore entitled to get back the jewelry pledged with the opposite party on payment of Rs.5,35,626/-, and that complainant is entitled to compensation of Rs.4,90,000/-, as the complainant was subjected to mental agony and physical pain are all denied. The present complaint is pre-mature and the complainant has not come with clean hands and on this ground alone the present complaint is dismissed. It is true that complainant availed gold loan from opposite party bank. Apart from that complainant’s sister-in-law N.Sushanthi and her daughter N.Yogitha jointly availed education loan from opposite party bank under education loan account No.1585153601 for studying MCA. The complainant stood as guarantor for the said education loan by executing guarantee agreement in favour of opposite party bank. The borrowers could not repay the EMIs as per schedule. However, bank has considered their repeated requests for extension of moratorium period, taking into consideration their poor economic status. In the month of April 2018, the loan was marked as NPA w.e.f. 01.04.2017 by bank statutory auditors, as there were irregular repayments. Inspite of several reminders to the said borrowers and complainant, they did not choose to repay the said loan dues, though the student is employed and having sufficient income to repay the dues. Subsequently, in the 1^st week of August the borrower approached the bank for one time settlement of the said education loan. When the opposite party bank was negotiating OTS amount with the borrowers, they orally informed the opposite party that they planned to pay the OTS amount, if finalized by 10.08.2018 to the knowledge of complainant herein. While so, the complainant came to bank on 08.08.2018 for closing his gold loan account. At that juncture the opposite party informed him about their inability to release the gold ornaments, as the general lien on the pledged gold ornaments will be applicable till the aforesaid education loan dues are discharged. The opposite party also advised the complainant to wait till the education loan is settled under OTS or renew the gold loan till the date of closure of the said education loan. Clause-7 of gold loan sanctioning letter clearly reads that “the bank shall have the lien on the jewelry in respect of any other sum of money which the borrower may be liable to be paid to the bank either solely or jointly with other persons at any office of the bank”. The opposite party also agreed to release some of the pledged gold ornaments, if the complainant renews the gold loan to the extent of Rs.2,00,000/-, by pledging the remaining ornaments. In view of the above, the opposite party immediately refunded full amount paid by the complainant on the same day to the complainant herein. Hence, the allegations made by the complainant that the opposite party abused and misbehaved with him are not correct. The complainant issued notice dt:24.11.2018 through NAC with false allegations. The opposite party immediately gave reply on 03.12.2018. Apart from that the opposite party gave a reply dt:12.10.2018 for the notice issued by the complainant. There is no deficiency in service or unfair trade practice as alleged by the complainant. Hence, the complaint is not maintainable and the same is liable to be dismissed.

            4.  Complainant filed the chief affidavit as P.W.1 and got marked Exs.A1 to A7. On behalf of opposite party, Sri.K.Upendra Reddy, Senior Manager, filed the chief affidavit as R.W.1 and got marked Exs.B1 to B6.

            5.  The point for consideration is whether there is deficiency in service and unfair trade practice on the part of opposite party? If so, to what extent the complainant is entitled for the reliefs sought?

            6. Point:- The contention of the complainant is that the opposite party committed deficiency in service and unfair trade practice, as they did not return the jewelry pledged by him for raising gold loan vide gold loan account No.3627737702. The contention of the complainant counsel is that even though the complainant approached the bank for clearing the gold loan in response to Ex.A2, the bank did not return the gold jewelry by receiving the said amount, on the ground that the education loan obtained by N.Yogitha, for which complainant stood as guarantor, was not cleared. It is further contended by the complainant counsel that invoking general lien over the jewelry and retaining the same till the dues are cleared in another loan account is contrary to Section-171 of Contract Act, and therefore it is a clear case of deficiency in service on the part of opposite party bank.

            7.  On the other hand, counsel for opposite party contended that “General lien is a right to retain all the goods or any property (which is in possession of the holder) of another until all the claims of holder are satisfied. It extends to all transactions”. He relied on a decision reported in WP (C).No.30600 of 2013(Y) dt:18.12.2013, in the High Court of Kerala, by the Hon’ble Justice V.Chitambaresh, between Nakulan vs. The Deputy General Manager, Canara Bank and Others. In this decision the Hon’ble High Court dealt with the question – Can the Bank retain the gold ornaments offered as security while availing a loan even after the same is cleared on the premise that the borrower has not discharged his liability in respect of another loan?. The Hon’ble High Court answered the question affirmatively by holding as follows -       “A reading of the judgment of the learned single judge in W.P.(C) No.5670/2013 from which W.A.No.656/2013 was filed would indicate the circumstances under which the right of general lien of the bank was refused. It appears that W.P.(C) No.30600/2013 the bank had no case therein that the security furnished for the housing loan and the loan availed by a proprietary concern was inadequate and hence the general lien is to be exercised. It would be inappropriate for me to discuss more about the implications of the judgment in W.A.No.656/2013 since the same has not become final as indicated above. The bank in the instance case has a specific plea that the personal loan availed by the petitioner on the basis of a demand promissory note is without any security and that the gold ornaments have to be retained. Therefore, nothing deters me from relying on Section-171 of the Act and following the dictum in Syndicate Bank’s case supra to hold that the Bank is entitled to retain as security the gold ornaments pledged till the personal loan is also cleared. The prayer of the petitioner for a direction to the bank to release the gold ornaments pledged on his clearing the gold loan keeping the personal loan intact is hereby declined”. In the said decision it is also held that the burden is always on the borrower to establish ‘a contract to the contrary’ in order to displace the presumption in favour of the bank under Section-171 of the Act about the existence of a right of general lien. It is not for the bank to establish otherwise as a presumption of a right of general lien in its favour flows from Section-171 of the Act, which can of course be rebutted by the borrower. That the onus of proof is on the borrower is well settled over a century ago as held by the Division Bench of the High Court of Madras in Kunhan Mayan and others vs. Bank of Madras [(1896) ILR 19 Madras 234]. Mr. Justice Shephard in his separate judgment concurring with Mr. Justice Best after examining the amplitude of Section-171 of the Act observed as follows – “It being incumbent on the plaintiff to show that the bank had agreed to give up the general lien to which by law a bank is prima facie entitled, I must say that in my opinion the plaintiff has failed in his proof”.

            8. Coming to the facts of the case on hand, it is an admitted fact that complainant had availed loan by pledging gold as per Ex.A1, which is gold loan receipt. It is also an admitted fact that as per Ex.A2, which is message sent to the complainant cell phone that complainant is due Rs.5,29,647/- in respect of gold loan No.3627737702, and further asking him to pay the loan amount. Ex.A3 is loan recall notice issued by Central Bank of India to Miss Yogitha and N.Sushanthi, who obtained the education loan, and to the guarantor Mr.VG.Gnanakumar, complainant herein, asking them to pay the total balance of Rs.1,92,732/- within 10 days, failing which legal action will be initiated against them. Ex.A4 is legal notice issued by the complainant to the opposite party, calling upon them to return the gold jewelry after receiving gold loan amount due. Ex.A5 is another notice issued by the complainant to the opposite party stating that the opposite party bank failed to release the gold on 08.08.2018 even though complainant visited the bank and ready to pay the entire due amount with interest, and the same amounts to deficiency in service on their part. Complainant under Ex.A5 further claimed compensation of Rs.5,00,000/- for undergoing mental agony due to deficiency in service. Ex.A6 is postal acknowledgement filed by the complainant. Ex.A7 is letter dt:03.12.2018 sent by the opposite party to the President, National Association of Consumers.

            9.  Opposite party filed Ex.B1 application form signed by the complainant for raising gold loan and the same is filed in order to show that there is a clause in the application to the effect that the bank shall have a lien on the jewelry in respect of any other sum of money, which the borrower may be liable to pay to the bank either solely or jointly with other persons at any office of the bank. Ex.B2 is letter of declaration cum pledge dt:09.08.2017 signed by the complainant. Ex.B3 is notice dt:19.09.2018 issued by the complainant to the opposite party bank stating that complainant is ready and willing to pay full amount of his gold loan and requested to deliver the gold jewelry after receiving full amount without causing inconvenience. Ex.B4 is reply notice dt:12.10.2018 sent by the opposite party bank through their advocate to the counsel for complainant, denying the allegations made under Ex.B3. In Ex.B4, advocate asserted by drawing attention to Clause-7 of Ex.B1, that they have lien over the gold jewelry, and unless and until the education loan is cleared, the gold will not be delivered. Ex.B5 is equivalent to Ex.A5. Ex.B6 is letter dt:03.12.2018 addressed by opposite party bank to the complainant reiterating their stand over the general lien in respect of gold loan. Ex.A7 is equivalent to Ex.B6.

            10. In the written arguments, complainant had contended that though the complainant is ready and willing to pay entire loan amount pertaining to gold loan account, the opposite party failed to receive the amount and release the gold to him  without any valid reasons and the said act of opposite party bank amounts to deficiency in service on their part. On the other hand, opposite party bank contended that as per Clause-7 of Ex.B1, the bank has lien on the jewelry, and as such the bank is entitled to retain the gold even after discharge of entire gold loan amount, since the complainant stood as guarantor for the education loan obtained by N.Yogitha and the said loan is not yet cleared. As already stated by us, the documents are not in dispute. As per the above cited decision submitted by the counsel for opposite party, the bank has got every right to retain the gold till the other loan i.e. education loan is cleared. It is not open for the complainant to contend that Section-171 Contract Act is not applicable to the present case on hand, since he has signed Ex.B1 after knowing the clauses therein, and it is clear from Clause-7 of  Ex.B1 that “the bank shall have a lien on the jewelry in respect of any other sum of money which the borrower may be liable to pay to the bank either solely or jointly with other persons at any office of the bank”. Though the complainant contended that the bank shall not insist for security, when the loan amount is less than Rs.4,00,000/-, no proof is filed in this regard. On the basis of material placed before us and after going through the documentary evidence, we hold that there is no deficiency in service on the part of opposite party bank, as alleged by the complainant. Accordingly, this complaint is dismissed.

            11.  In the result, complaint is dismissed. No costs.                                     

Dictated to the stenographer, transcribed and typed by him, corrected and pronounced by me in the Open Forum this the 3^rd day of July, 2019.

 

      Sd/-                                                                                                                       Sd/-                                

Lady Member                                                                                               President (FAC)

 

 

 

APPENDIX OF EVIDENCE

 

Witnesses Examined on behalf of Complainant/s.

 

PW-1: Sri V.G. Gnana Kumar (Chief affidavit filed).

 

 

Witnesses Examined on behalf of Opposite PartY/S.

 

RW-1: Sri K. Upendra Reddy (Chief affidavit filed).

 

 

EXHIBITS MARKED ON BEHALF OF THE COMPLAINANT/s

 

 

Exhibits (Ex.A)	Description of Documents
	Original copy of Gold Loan (Loan Account No. 3627737702, Issue on 09.08.2017) Receipt issued by Central Bank of India, Tirupati. Dt: 30.06.2018.
	Message sent by the Opposite Party, Dt: 20.07.2018 submitted by the way of post card model.
	Self attested photo copy of Loan Recall Notice. Dt: 24.09.2018.
	Notice sent to the Opposite Party. Dt: 11.10.2018.
	Final Notice sent to the Opposite Party. Dt: 24.11.2018.
	Postal Acknowledgement in Original. Dt: 27.11.2018.
	Reply (Your Notice Dated 24.11.2018 on behalf of Mr V.G. Gnana Kumar) sent by the Opposite Party. Dt: 03.12.2018.

 

EXHIBITS MARKED ON BEHALF OF THE OPPOSITE PARTY/s

 

Exhibits (Ex.B)	Description of Documents
	True copy of Letter regarding ‘The application for advance against Gold Ornaments’ by the Complainant in favour of the Bank. Dt: 09.08.2017.
	True copy of LETTER OF DECALRATION CUM PLEDGE. Dt: 09.08.2017.
	Office copy of Notice issued by the complainant. Dt: 19.09.2018.
	Office copy of Reply Notice issued by the 1st Opposite Party. Dt: 12.10.2018.  (True copy).
	True copy of Notice given to the Opposite Party,  on behalf of complainant Mr. N.C.S.M. Prasad, Founder & National President, National Association of Consumers, Balaji Colony, Tirupati.  Dt: 24.11.2018.
	True copy of Reply Notice (Your Notice Dated 24.11.2018 on behalf of Mr V.G. Gnana Kumar) issued by Opposite Party. (Reply addressed to the President, National Association of Consumers, Balaji Colony, Tirupati).

 

                                                                                                                                    

                                                                                                                                                            Sd/-

                                                                                                                                                President (FAC)

    

                                    // TRUE COPY //

// BY ORDER //

 

Head Clerk/Sheristadar,

          Dist. Consumer Forum-II, Tirupati.

 

 

  Copies to:-   1.  The complainant.

                        2.  The opposite party.