Date of filing: 23.07.2013.
Date of disposal: 07.01.2014.
BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM - II:
VIJAYAWADA, KRISHNA DISTRICT
Present: Sri A. M. L. Narasimha Rao, B.Sc., B. L., President
Sri S. Sreeram, B.A., B.Com., B.L., Member
Tuesday, the 07th day of January, 2014
C.C.No.132 of 2013
Between:
Sri Harpal Singh, S/o Mahindar Singh, R/o Manikanta Towers, New Teachers Colony, Funtimes Road, Vijayawada.
….. Complainant
And
1. The Branch Manager, Sriram City Union Finance Ltd.,Mangalagiri.
2. Sriram City Union Finance Ltd., Admn: Office 3-6-478, Liberty Road, Opp: Indian
Bank, Himayat Nagar, Hyderabad – 29.
. … Opposite Parties.
This complaint coming on before the Forum for final hearing on 26.12.2013, in the presence Sri D.V. Ramana Reddy, advocate for complainant; Sri D. Raja Sekhar, advocate for opposite parties and upon perusing the material available on record, this Forum delivers the following:
O R D E R
(Delivered by Hon’ble President Sri A. M. L. Narasimha Rao,)
1. This complaint is filed under Section 12 of Consumer Protection Act, 1986 for a direction to the opposite parties 1 and 2 to close the account bearing No.MANGLTF09270002 under one time settlement scheme in accordance with the guidelines of Reserve Bank of India, to pay Rs.10,00,000/- towards compensation and to pay costs.
2. The averments of the complaint in brief are as follows:
The complainant is doing business in Automobile spare parts under self-employment in Vijayawada. He approached the 1st opposite party for loan against the mortgage of property. The 1st opposite party granted loan of Rs.25,00,000/-. The loan has to be repaid in 60 months at the rate of Rs.76,042/-. The complainant delivered documents and cheques. The complainant was prompt in arranging payment of EMI for 15 months totaling to an amount of Rs.11,40,630/-. Thereafter due to global recession the business activities of the complainant fell down and he could not update his EMI payment. He made a proposal for one time settlement. The opposite party availed much time and finally the 1st opposite party delivered copy of account on 9.7.2013 showing outstanding amount of Rs.26,06,344.29 ps. The complainant came to know that the opposite parties were collecting interest higher than the rate allowed by guidelines of RBI. On 13.7.2013 the complainant sent a letter to the 1st opposite party marking copy to the 2nd opposite party requesting them to recommend his case for one time settlement under the guidelines of RBI. He expressed his willingness to pay Rs.20,00,000/- towards full and final settlement. The complainant wrote a personal letter on 15.7.2013, both the letters were acknowledged. The 1st opposite party sent a letter under Section 138 of NI Act basing on an unpaid cheque dated 16.7.2013. The said notices were dispatched on 17.7.2013. The opposite parties 1 and 2 are governed by the rules and regulations of RBI and have a duty to render their services for settlement of the issue for adopting OTS scheme. The failure would amount to deficiency in service under the provisions of C.P. Act. The opposite parties are creating trouble physically and mentally by issuing false notices and taking undue advantage of possessing valid documents. Therefore the opposite parties are liable to pay compensation of Rs.10,00,000/-. Therefore the present complaint is filed.
3. The opposite parties filed their version signed by authorized signatory of Sriram City Union Finance Limited, generally denying the allegations made in the complaint and further stating as follows:
The complainant is not a consumer and this Forum has no jurisdiction to entertain this complaint. The complaint is barred by limitation. The complainant obtained finance for doing business and therefore he is not a consumer as the loan was taken for commercial purpose. The relationship between the opposite parties and complaint is that of a creditor and debtor and it does not fall within the scope of C.P. Act. The complainant availed loan of Rs.25,00,000/-. The finance charges on the loan amount are Rs.20,62,520/-. The agreement value of Rs.45,62,520/- was to be repaid in 60 monthly instalments at the rate of Rs.76,042/-. Both the parties executed loan agreement. The complainant and his guarantors executed demand promissory note. The complainant had executed registered memorandum of deposit of title deeds. The complainant was not regular in making monthly payments. He is a chronic defaulter. The opposite party had presented cheque bearing No.144369 by the complainant for Rs.76,042/- and it was dishonoured. Then a legal notice was sent to the complainant on 9.5.2013. The opposite party presented another cheque bearing No.144371 toward clearing part payment of loan amount and it was dishonoured. Another legal notice was issued on 14.7.2013 under Section 138 N.I. Act. The complainant issued reply notice offering one time settlement which is against the terms and conditions of the loan agreement. The complainant without waiting for the notice period filed the present complaint. The opposite party is doing business as per the regulations and guidelines of RBI. There is no deficiency in service on the part of the opposite parties. The complainant was liable to pay a sum of Rs.36,44,248.85 ps as on 1.10.2013 as per the statement of account. The complaint is liable to be dismissed.
4. The complainant filed his affidavit as deposition of PW-1. The Branch Manager of the 1st opposite party filed affidavit as deposition of DW-1. Exs.A1 to A12 are marked on behalf of the complainant and Exs.B1 to B3 are marked on behalf of the opposite parties.
5. Heard the arguments advanced by the learned counsel for both the parties. The complainant has also filed memorandum of written arguments.
6. The points that fall for determination are:
- Whether this complaint is maintainable?
- Whether the opposite parties failed to respond for the proposal of one time settlement and thereby deficient in rendering services?
- Whether the complainant is entitled to seek closure of the account under one time settlement and for compensation and costs as claimed?
Point No.1:
7. The opposite parties have taken the plea that the relationship between the opposite parties and the complainant is that of a creditor and debtor. This aspect was already settled by the rulings of National Commission and Apex Court and there is no need to refer to the rulings in view of the definition of services under Section 2 (1) (o) of C.P. Act. Financing is one of the services in respect to which the Act applies. The opposite parties were financing amount to the complainant. Therefore they fall within the purview of C.P. Act. Financing is not mere lending amount and receiving it.
8. The complainant is doubtlessly a businessman and the loan was taken for his business purpose. It would normally fall in the exclusion part of definition of consumer. But in case of services availed exclusively for the purpose of livelihood by means of self-employment the exclusion is not applicable in view of the explanation to Section 2 (1) (d) of C.P. Act. The complainant has specifically mentioned that he was doing business under self-employment. Therefore he can maintain a complaint under C.P. Act.
9. Opposite parties also submit that there is no deficiency on their part and therefore the question of consumer dispute would not arise and consequently this Forum has no jurisdiction. This aspect related to facts of the case and they will be discussed in the following points for determination. We do not see any other tenable objection to the maintainability of this complaint.
Point No.2:
10. The complainant had admittedly availed loan of Rs.25,00,000/- on 27.9.2011 and the loan was repayable in 60 monthly instalments at the rate of Rs.76,042/-. According to the complainant he was regular in payment and paid 15 instalments and thereafter he could not make payment due to global recession and fall in business. According to the complainant he made a proposal for one time settlement and the opposite parties took much time to reach the overdue amount to a tune of Rs.5,75,733/- and finally delivered copy of account on 9.7.2013 showing the outstanding amount as Rs.26,06,344.29 ps. The complainant has not stated as to when he made proposal for one time settlement. The documents he filed show the date of earliest correspondence made by the complainant as 13.7.2013 the date of legal notice. Ex.A2 is the copy of statement of account dated 30.6.2012 showing the total amount due from the complainant as Rs.24,67,801.51 ps besides future interest of Rs.15,95,015/-. Ex.A3 is another copy of statement of account showing the amount due as Rs.26,06,344.29 ps. It is besides the future interest. This copy is dated 9.7.2013 and this is the copy referred in the complaint. The complainant shall necessarily say as to when he made the proposal for one time settlement to show that there was unreasonable delay in response from the opposite party. As observed above no such date is mentioned by the complainant and no copy of representation letter or notice is filed to show such proposal at any time prior to 13.7.2013. When a proposal is made for one time settlement the complainant is supposed to make the proposal in writing. No doubt the complainant does not say that he made an oral proposal.
11. In the notice dated 13.7.2013 got issued by the complainant to the opposite parties it is mentioned that the complainant proposed to pay Rs.20,00,000/- toward full and final settlement and expressed the same to the divisional manager by calling him on mobile phone on 10.7.2013. It is further mentioned that there was no response; that the complainant again called the branch manager on his mobile phone at about 3 PM on 13.7.2013 and the 1st opposite party informed that there is no such scheme existing in the opposite party institution for settle the scheme under OTS scheme. There is no proof for such proposal or such a reply from the opposite parties except the self serving statement of the complainant, that too through the notice and not incorporated in the complaint or in the affidavit of the complainant. When such statement is not made in the complaint or in the affidavit of the complainant the mention made in the legal notice does not have the evidenciary value.
12. The last paragraph of the notice of Ex.A4 dated 13.7.2013 would reveal a request made to the opposite parties for settlement of loan account under OTS scheme as per the guidelines of RBI within seven days from the date of receipt of the notice by dispatching a letter to that extent and else the complainant would be constrained to initiate legal action for deficiency in service. Copy of this notice sent to 2nd opposite party and banking ombudsman in Hyderabad. This notice was posted on the same day after 5 pm as per Ex.A5 postal receipt. On 15.7.2013 the complainant had personally sent a letter to the 1st opposite party under Ex.A7 inter alia stating that he got issued a legal notice on 13.7.2013 by marking copy to administrative officer of the bank and to banking ombudsman for finalization of loan account under OTS and asking the 1st opposite party not to make any attempt for withdrawal of EMI from the bank account. So this is a letter asking the opposite party not to recover the amount due to the opposite parties from the complainant though patently several instalments were due. The opposite party got a notice sent to the complainant under Ex.A9 dated 14.7.2013 informing about the presentation of cheques and return of cheques with endorsement ‘account blocked’. The opposite parties informed the complainant through that notice that appropriate legal action would be taken under Section 138 of NI Act. Subsequently it appears from the envelop used for Ex.A9 that it was dispatched on 17.7.2013. The complainant got issued a reply notice dated 20.7.2013 under Ex.A11 reiterating request for settlement under OTS.
13. The deficiency pointed by the complainant is that opposite parties did not respond to the notice issued proposing one time settlement and that the branch manager of the opposite party informed the complainant that there was no OTS scheme applicable to the opposite party bank. The opposite parties did not say that one time settlement is not applicable to them and at the same time they did not say if the debt due from the complainant could be settled under OTS facility. They simply state that there is no deficiency in service on their part. They further say no time was given for them to make a reply and the complainant was filed within a short period after issuing notice under Section 13. OTS facility if available will have to be decided by the higher authorities of the institution unless there are standing guidelines to all the branches. Different parameters are to be looked into for consideration of OTS. They include percentage of amount received from the borrower towards principal amount.
14. The learned counsel for the complainant relies upon a few decisions and one time settlement policies in support of the complainant’s case. In N. Sahadevan Vs Manager Syndicate Bank, 1991 (2) CPR 617 the State Commission of Kerala found deficiency on the part of the bank when there was delay in sending advices on remittances from a branch at Kerala to the branch at Bangalore. In the ruling of State Commission, Kerala in N. Raveendran Nair Vs Branch Manager, State Bank of India, 1991 (2) CPR 472 the State Commission found deficiency on the part of the bank when a DD was dishonoured for an omission on the part of the bank employee in filling of the DD. That matter was taken to the National Commission and in the ruling of SBI Vs N. Raveendran Nair 1992 (2) CPR 400 the National Commission upheld the decision of State Commission and found deficiency for dishonouring a DD while honouring DDs with similar omissions earlier. In Prudential Capital Markets Vs State of Andhra Pradesh in W.P. No.11067 of 1997 disposed of on 3.8.2000 the High Court of A.P. observed that Consumer Protection Act, is applicable to the companies to non-banking financial companies unless specifically excluded under Companies Act. In Vimal Chandra Grover Vs Bank of India AIR 2000 (SC) 2181 the Apex court found deficiency on the part of the bank for the failure to process the sale of shares pledged with the bank on request made by the account holder. The above rulings show certain deficiencies on the part of the banks. They only show that the C.P. Act is applicable and this Forum is empowered to decide if there is deficiency on the part of the banking or nonbanking financial companies.
15. The learned counsel for the complainant relied upon a ruling of National Commission in CC. No.51/2007 between Awaz Puneetha Society and two others Vs Reserve Bank of India and others decided on 7.7.2008. The National Commission has given some directions to the banks while concluding the order. The directions given are as follows:
- Charging of interest at rates in excess of 30% p.a., from the credit card holders by banks for the former’s failure to make full payment on the due date or paying the minimum amount due, is an unfair trade practice.
- Penal interest can be charged only once for one period of default and shall not be capitalized.
- Charging of interest with monthly rests is also an unfair trade practice.
- Hence, the banks are directed not to indulge in the aforesaid unfair trade practices or repeat them.
After the National Commission passed the order, the opposite parties therein seem to have preferred appeal to the Supreme Court. Initially the Supreme court declined to stay the operation of the order of the National Commission. But it appears that subsequently on 3.2.2009, the Apex Court stayed the operation of the order of National Commission in CC.51/2007 refereed to above. We are unable to get the copy of that order either from the law journals or from the website of Apex Court. The news is available from the website of Indian Express and Times of India. Even if the terms and conditions noted above given by the National Commission are taken into consideration we do not see their applicability to the present case.
16. The complainant has not stated that interest was collected at a rate in excess of 30% p.a., or penal interest is charged repeatedly for the same period or that penal interest was capitalized or interest was charged with monthly rests or such unfair trade practice was resorted to by the opposite parties. Therefore the aforesaid rulings would not give any advantage to the complainant.
17. The learned counsel for the complainant further submits that according to guidelines of Reserved Bank of India the non-banking financial companies (NBFC) shall allow the customers to discharge the debt through one time settlement. We do not find any such guidelines anywhere in the website of Reserve Bank of India. The guidelines of Reserve Bank of India to banking companies are different from the guidelines to non-banking companies. The RBI did not provide one time settlement policy to be followed by NBFCs. One time policies have to formulated by each NBFC. The opposite party filed one ‘revised policy for OTS’ which does not say to whom it is applicable. In the first page the notation ‘pickup’ is mentioned. ‘Pickup’ means ‘Prudential Interest and Investment Corporation of Uttar Pradesh’. So the revised policy filed is the policy of that company in respect of dealings between that company and its customers. The complainant have filed one OTS policy containing two pages along with the memo of written arguments. There is no description as to which organization has issued the policy. On verification of websites we found that this is the document of Indian Overseas Bank. It has no application to other organizations. SIDBI (Small Industrial Development Bank of India) scheme for OTS cannot be taken to have binding nature of all the financial companies. It is for the company to provide such scheme and accordingly formulate the policy. So it cannot be said that OTS policy as shown in the copies filed by the complainant is applicable to the opposite party company. It is for the opposite party to formulate its own policy for OTS of debts.
18. As observed in the previous paragraphs the opposite party even now does not say if it has a OTS policy or scheme and if the said scheme or policy is applicable to the case of the complainant. It cannot be said as deficiency because by the time of the complainant filing the complaint even the time for making consultations and give reply was not over and so it cannot be said that there was deficiency in service on the part of the opposite parties. The complainant remained quiet for more than eight months after making payment of 15 instalments according to him and wants to opposite party to respond within a week to his offer to receive Rs.20,00,000/- towards OTS. The filing of complaint is nothing but a hasty action on the part of the complainant may be to secure some interim order to avoid payment of instalments. As observed above we find that there is no deficiency in service on the part of the opposite parties.
Point No2:
19. In view of the answer on point no.1 this forum shall normally deny the relief to the complainant. As we have observed that the opposite party does not say anything about the availability of OTS we feel it proper to give directions to the opposite parties to inform the complainant and marking copy to this Forum about the availability of OTS, if it is applicable to the complainant’s case and in the event of applicability to make offer for OTS. It shall be done within one month from the date of order of this Forum. No other relief can be granted to the complainant.
20. In the result this complaint accordingly disposed off and the opposite parties are directed to inform the complainant and mark a copy to this Forum about the availability of OTS, if it is applicable to the complainant’s case and in the event of applicability to make offer for OTS. It shall be done within one month from the date of order of this Forum. Complaint for rest of the reliefs is dismissed. No order as to costs.
Dictated to steno, N. Hazarathaiah, transcribed by him, corrected by me and pronounced by us in the open Forum, this the 07th day of January, 2014.
PRESIDENT MEMBER
Appendix of evidence
Witnesses examined
For the complainant: For the opposite party:
Sri Harpal Singh – PW-1. Branch Manager of OP.1-DW-1;
(by affidavit) (by affidavit)
Documents marked
On behalf of the complainant:
Ex.A1 Copy of memorandum evidence the deposit of title deeds.
Ex.A2 30.06.2012 Photocopy of statement of account.
Ex.A3 09-07-2013 Photocopy of EF loan ledger summary.
Ex.A4 13.07.2013 Photocopy of legal notice got issued by complainant to OP.1.
Ex.A5 Postal receipts.
Ex.A6 Postal acknowledgment.
Ex.A7 15.07.2013 Photocopy of letter issued by complainant to OP.1
Ex.A8 Postal acknowledgment.
Ex.A9 14.07.2013 Copy of legal notice got issued by OP.1 to complainant.
Ex.A10 Envelope
Ex.A11 20.07.2013 Photocopy of reply got issued by complainant to OPs
Ex.A12 Postal receipt.
On behalf of the opposite party:
Ex.B1 Photocopy copy of loan agreement.
Ex.B2 01.10.2010 Photocopy of statement of account.
Ex.B3 Copy of memorandum evidence the deposit of title deeds.
PRESIDENT
