BEFORE THE DISTRICT FORUM: KURNOOL

Present: Sri. T.Sundara Ramaiah , B.Com B.L., President

And

Sri. M.Krishna  Reddy , M.Sc., M.Phil., Male Member

Wednesday the 20^th day of October , 2010

C.C.No 115/09

Between:

N.Srinivasa Reddy,S/o.Bali Reddy,Proprietor of Weal Ganesh Electronics and Home Needs,

H.No.1-8-45, Main Bazar, Allagadda-518 543, Kurnool District.         

                           …..Complainant

-Vs-

1. The Branch Manager, State Bank of India, Allagadda,

Post Bag No.9,T.B.Road, Allagadda-518 543,Kurnool District.

2) Authorized Officer,State Bank of India,

    T.B.Road, Allagadda-518 543,  Kurnool District.                                  

…Opposite PartieS

          This complaint is coming on this day for orders in the presence of Sri. A.Rama Subba Reddy , Advocate, for complainant, and Sri. Y. Sreenivasulu, Advocate for opposite parties and upon perusing the material papers on record, the Forum made the following.

ORDER

(As per Sri. T.Sundara Ramaiah, President)

C.C. No. 115/09

1. This complaint is filed under section 12 of C. P. Act, 1986 praying to direct the OPs

1.   to deduct the possession charges of Rs.53,500/- and  penal

  interest of Rs.20,585/- from the account bearing No.  

  30300800865 of the complainant.

1.   to pay damages of Rs.2,00,000/- for defaming the

  complainant.

1.   to pay damages of Rs.3,00,000/- being the loss incurred by

  the complainant.          

1.       to stop the proceedings under Securitization and

  Reconstruction of financial Assets and Enforcement of

 Security Interest Act 2002.

1.       to grant damages of Rs.50,000/-  for causing mental agony
2.       to grant future interest @ 18% p.a
3.       to grant costs of the complaint.
4.       to grant  such other reliefs as the Hon’ble Forum may deem fit and  proper in the circumstances of the case.

(2)   The case of the complainant in brief is as under:- The complainant carries on business under the name and style M/s. Wel Ganesh Electronics & Home Needs. OP.No.1 agreed to provide over draft facility to a tune of Rs.10,00,000/-. The complainant executed necessary agreement and mortgaged the property of his wife. The complainant was regular in maintaining the account and there was no default on his part. Surprisingly a notice dated 13-12-2008 under Sec. 13(2) of Securitization and Reconstruction of financial Assets and Enforcement of Security Interest Act, 2002 was received by the complainant. In the said notice it is stated that the complainant failed and neglected to repay the outstanding amount inspite of repeated requests and became irregular in repayment of the amount. It is further stated that the debt is treated as non performing asset.  The complainant did not violate the conditions of the agreement . By       11-12-2008, the account of the complainant was not treated as non performing asset. On 13-12-2008 the complainant paid Rs.1,00,000/- and on 16-12-2008 he paid Rs.50,000/-. On 20-12-2008 the complainant paid Rs.1,00,000/- and on 27-12-2008 he paid Rs.50,000/-. After receiving the notice on 16-12-2008 the complainant  met OP.No.1 and questioned about the issue of notice. The complainant was informed that his account is not treated as non performing asset and notice was issued by mistake. The complainant  was also permitted withdraw an amount of Rs.3,00,000/- on 27-01-2009. On 12-03-2009 OP.No.2 made publication. The said publication defamed the complainant in business circle. It also effected business of the complainant. The loss due to defamation is assessed  Rs.2,00,000/- . The loss in the business is to the tune of Rs.3,00,000/- The OPs made publication in violation of the law. The OPs committed unfair trade practice and there is deficiency of service on the part of the OPs. The OPs claimed Rs.53,500/- for taking alleged possession of the secured property. OPs are not entitled for penal interest of Rs.20,585/- . The OPs caused mental agony to the complainant. Hence the complaint.

3.     OP.No.1 filed written version. OP. No.2 filed memo adopting the written version of OP.No.1. It is stated in the written version of OP.No.1 that the complaint is not maintainable. Notice U/s 13 (2) of Securitization Act was issued in public interest. The complainant violated and failed to fulfill the conditions mentioned in the agreement of loan cum hypothecation executed by the complainant. The complainant has not submitted stock statements and not followed the conditions mentioned in the letter of arrangement. It is not true to say that Sec. 13(2) notice was issued to the complainant mistakenly. The OPs never committed any unfair trade practice. The complainant is liable to pay interest and expenses incurred by the OPs as per the agreement and letter arrangement. The publication was made not out of hatred against the complainant. The complainant has no status. His reputation was not diminished or destroyed in the eye of the public due to the publication made by the OP.No.2. The quantum of damages claimed by the complainant is excessive. The complaint is liable to be dismissed.   

4.     On behalf of the complainant Ex.A1 to A8 are marked and the sworn affidavit of the complainant is filed.  On behalf of the opposite parties no documents are marked and sworn affidavit of OP.No.2 is filed.

5.     Both sides filed written arguments.

6.     The points that arise for consideration are     

(i)     whether the OPs adopted unfair trade practice ?

(ii)    whether there is deficiency of service on the part of the OPs ?

(ii)    whether the  complainant is entitled to the relief as prayed for?

(iv)   To what relief?

7. Points No.1 & 2 :  Admittedly the complainant is doing business under the name and style  M/s. Wel Ganesh Electronics & Home Needs, Allagadda, Kurnool (District) . M/s  Wel Ganesh Electronics & Home Needs was provided over draft facility by OP.No.1 to a tune of Rs.10,00,000/-. Smt. N.Lalitha wife of the complainant created mortgage infaovour of the OP.No.1bank and executed an agreement  of guarantee on 29-12-2007. It is the case of the complainant that there was no default on his part at any time and that the bank issued notice under section 13(2) of the Act surprisingly.  The complainant filed Ex.A5 statement of the account maintained by OP.No.1 branch. As seen from Ex.A5 it is very clear that an amount of Rs.10,37,233/- was due by 11-12-2008 under the account No. 30300800865. 

8.     It is the case of the complainant he never committed default in payment of the amount due to the bank and that the bank issued Ex.A3 notice unnecessarily stating that the account of the complainant was treated as a non performing asset. Admittedly Ex.A3 notice under section 13(2) of the Securitization Act was issued to the guarantor Smt. N. Lalitha and also to the complainant who is the borrower. In the said notice it is mentioned that the debt due by the complainant and his wife was classified as  non performing asset . As seen from Ex.A5 account copy it is very clear that no payment was made by the complainant in discharge of the debt from 13-06-2008  to 11-12-2008.  As the out standing amount exceeded over draft limit provided to the complainant the bank classified it as a non performing asset and issued Ex.A3 notice to the complainant and his wife. The contention of the complainant that the debt due by them was not classified as non performing asset before issuing Ex.A3 notice by the OPs is not sustainable.  As already stated there is clear mention in Ex.A3 that the debt due by the complainant and his wife was classified as a non performing asset by 11-12-2008. The complainant did not place any satisfactory evidence to show that the bank informed him that Ex.A3 notice was issued mistakenly stating that the debt was  treated as non performing asset. OP.No.1 is a secured creditor. It is open to the secured creditor to treat the debt as a non performing asset and proceed against the borrower as per the provisions of Securitization Act. Admittedly the complainant did not discharge the entire debt due to the bank after he received the notice under Section 13 (2) of the Securities Act. No doubt subsequent to the receipt of Ex.A3 notice the complainant made certain payment to the bank. Admittedly on 12-03-2009 OP.No.2 made a publication regarding the possession of the properties. It is the case of the complainant  that the said publication made by the OP.No.2 defamed him in business circle and that he incurred loss of Rs.3,00,000/- in business and that he is entitled  damages of Rs.2,00,000/- . Ex.A6 is the Eenadu publication where in it is mentioned that the possession of the secured properties was taken. According to the complainant the said publication is not permissible under law. Rule 8(2) of the Security Interest Rules 2002 provides that the possession notice shall be published in two leading newspapers … by the authorized officer. As the complainant failed to discharge the entire amount due within 60 days form the date of Ex.A3 , OP.No.2 took possession of the secured asset and made publication in Eenadu daily as per Rule 8 of the Security Interest Rule. The OPs proceeded  as per the provisions of the Securitization Act and Rules framed there under. Making publication  regarding taking possession of the secured assets does not amount to unfair trade practice on the part of the OPs.

9.     The complainant therefore is not entitled to any amount towards damages. It is also mentioned in Sec. 13 (7) of the Securities Act that the borrower is liable to all costs, charges and expenses incurred by the secured creditor where action has been taken under Sec. 13 (4) of the Act.  The expenses incurred by the complainant for taking possession of the secured asset can not be deleted from the account of the complainant. As the complainant was irregular in repayment of the amount due to the bank, the bank as charged penal interest. Sec. 17 of the Securities Act provides right to appeal to the debts recovery tribunal , to the person aggrieved by any of the measures referred to           in Sec. 13 (4) of the Act taken by the secured creditor. Admittedly the complainant did not prefer any appeal to the debt recovery to the tribunal against the steps taken by the Ops 1 and 2 under section13 of the Securitization Act. Sec. 34 of the Securitization Act provides that no Civil Court has jurisdiction to entertain any suit or proceeding in respect of any matter which a debt recovery of tribunal is empowered under the Act to determine. It is the debt recovery tribunal which can order that the measures taken by the secured creditor as invalid. In view of the Sec. 34 of the Securities Act we are of the opinion that this forum has no jurisdiction to grant any relief claimed by the complainant. The complainant proceeded against the mortgaged property under the provisions of the Securities under Reconstruction Financial Assets of Security Interest Act, 2002. We do not find any deficiency of service  on the part of the OPs. There is no material to show that the OPs adopted the unfair trade practice. The complainant is not entitled to relief as prayed for.

10. Point No.4:  In the result the complaint is dismissed. In the circumstances without costs.

Dictated to the stenographer, transcribed by her, corrected and pronounced by us in the open bench on this the 20^th day of October,  2010.

         Sd/-                                                               Sd/-  

MALE MEMBER                                                            PRESIDENT

   APPENDIX OF EVIDENCE

Witnesses Examined

For the complainant : Nil            For the opposite parties : Nil

List of exhibits marked for the complainant:-

Ex.A1                Photo copy of Agreement of Loan – Cum - Hypothecation

Ex.A2.       Possession Notice dated 06-03-09 issued by Authorized Officer State Bank of India, Allagadda.

Ex.A3.       Demand Notice to Borrower issued by State Bank of India, Allagadda, dated 13-12-2008.

Ex.A4.       Photo copy of Letter of Agreement dated 29-12-2007.

Ex.A5.       Statement of account No.30300800865, dated 12-3-2009.

Ex.A6.       Eenadu daily news paper dated 12-3-2009.

Ex.A7.       Photo copy of letter dated 16-3-2009 of complainant to OP1.

Ex.A8.       Reply of OP1 to complainant dated 19-3-2009.

List of exhibits marked for the opposite parties:   Nil

        Sd/-                                                                  Sd/-

MALE MEMBER                                                            PRESIDENT

// Certified free copy communicated under Rule 4 (10) of the

A.P.S.C.D.R.C. Rules, 1987//

Copy to:-

Complainant and Opposite parties

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