Per Smt T. Suneetha, Member:-

This complaint is filed u/s 12 of Consumer Protection Act, praying to directions on opposite party to pay Rs.4,78,508/- towards F.D.R. amount of Rs.50,000/- with interest @ 18% p.a. from           24-02-2010, damages of Rs.4,00,000/-, costs of Rs.10,000/- to the complainant.

2.   In brief the averments of the complaint are hereunder:

        The complainant is having fixed deposit bond under T.R.F.S.No.134621 dated 23-11-2004 for a sum of Rs.50,000/- along with S.B. Account No.10905185547 with the opposite party and gave standing instructions to credit the interest on the fixed deposit to the aforesaid S.B.Account from time to time. 

        The opposite party is obliged to inform and furnish the account extract/statement of the corresponding FDR Account and S.B.Account from time to time. 

        The complainant has made several representations in the matter and got issued a legal notice to the opposite party which they have acknowledged during April, 2011.  The opposite party obtained complainant’s signature on blank paper when Gorantla Lathadhara Rao applied for loan under PMRY though there is no requirement  of any collateral guarantee for PMRY loans.  The opposite party has not credited the interest every quarterly.  The opposite party stopped crediting interest from 23-05-10.  Therefore the opposite party committed deficiency of service.  The complainant sent legal notices to compensate the complainant.  But invain.  Thus the complaint. 

3.      Opposite party filed its version which is in brief as follows:

          Gorantla Lathadhararao, who is son of complainant, approached this opposite party seeking financial assistance and this opposite party sanctioned a sum of Rs.50,000/- under PMRY.  At the time of sanction the said Lathadhararao produced his father-complainant as guarantor and accordingly this complainant accepted terms and conditions besides execution of deed of guarantee dated 11-09-2004 and both, i.e. barrower as well as guarantor accepted terms and conditions under arrangement letter dated 11-09-2004 and accordingly to the 2^nd term under said arrangement letter, the guarantor-complainant placed Rs.50,000/- TDR bearing number 050564 as collateral security to the said loan.  The complainant executed a deposit delivery letter in favour of this opposite party besides execution of consent letter and handed over original FDR to this opposite party and as per the consent letter or deposit delivery letter this opposite party is authorized to effect the repayment at the description before the expiry of the period for which it has made and to adjust the demand loan and further the complainant consented that said FDR should be credited when ever his son-barrower defaulted the loan amount.  As per the terms and condition  of the loan agreement the barrower shall repay the loan in 84 monthly installments @ Rs.595/- + Rs.20/- plus interest commencing from 11-09-2004 ended with 11-08-2011 the loan account was irregular and barrower is defaulted to repay the loan amount as agreed by him and this opposite party made several oral demands to the barrower and guarantor but in vain and said loan account was declared as NPA and according to the provisions of NPA Act as well as Indian Contract Act this opposite party secured creditor entitled to take recourse to one of the measures namely, taking possession of the secured assets including the right to transfer by way of lease, assignment or sale for realizing and finally at the request of complainant on 08-03-2010 this opposite party adjusted TDR bearing No. 050564 of the guarantor-complainant in the loan account.  Here the complainant liability of the surety is coextensive with that of his son-principal debtor and to discharge his liability TDR amount was adjusted in the loan account.  The interest accrued up to the release of the TDR was adjusted in the account. 

4.     Both the parties filed their respective affidavits.  Exs.A-1 to A-6 were marked on behalf of the complainant and Exs.B-1 and B-8 were marked on behalf of the opposite party. 

5.      Now the points that arose for consideration in this          complaint are:      

        1.  Whether the complaint is within the limitation under

             Consumer Protection Act?

2.  Whether the opposite party committed deficiency of

     service?

1. To what relief the complainant is entitled to?

6.      POINT No.1 :-  The opposite party credited the interest of the complainant’s TDR bearing No. 134621 dated 23-08-04 of Rs.50,000/- to the S.B.Account No.10905185547 upto 22-02-2010 (as per statement of account Ex.B-7).  Thereafter on 08-03-10 the opposite party transferred the deposit (as per Ex.B-8) to the defaulted loan account of the principal debtor.  The next date of interest to be credited on 22-05-10.  The cause of action arose from the date of 22-05-10 and the limitation of two years period according to the Consumer Protection Act ends up on 22-05-12, the complainant filed complaint before this Forum on 13-03-12.  Therefore, the complaint is filed within the limitation period.  

7.      POINT No.2:-  The complainant alleged that the opposite party illegally adjusted his TDR dated 23-08-04 amounting Rs.50,000/- to the defaulted loan amount of Rs.50,000/- taken by his son Mr.Lathadhar Rao on 11-09-04 which is contrary to the instructions formulated by the RBI that, banks should not insist on collateral security even though offered.

8.     In support of his allegation the complainant submitted PMRY MastercircularPLNTS.BC.No.01/09.04.1/2006-07/1,RPCD.PLNFS. BC.No.01/09.04.1/2006-07 addressed to All Indian Scheduled Commercial Bank (excluding RRBS) which is Marked as Ex.A-5.  Relevant portion of the circular is extracted below for better appreciation.   

          “Government Sponsored Programme – Insistance on Collateral Security by Banks on Loans Sanctioned under PMRY, SJSRY, SGSY. 

1.  Reserve Bank of India vide their circular No. RPCD/No.SP.BC/33/09.16.01/2000-2001 dated 4/11/2000 have informed that during studies undertaken by RBI/Govt., it was observed that banks are insisting on collateral security for the loans sanctioned under PMRY, SJSRY, & SGSY Schemes.

2.  As you are aware, banks are not supposed to insist on collateral/third party Guarantee while sanctioning/disbursing loans upto Rs.1.00 lakh under PMRY.  Similary, loans sanctioned under SJSRY, SGSY, for individual loans upto Rs.50,000/- and group loans upto Rs.3.00 lakhs do not require any collateral security /guarantee. Assets created out of the loan availed of under the programme are to be hypothecated/mortgaged/pledged to the Bank.  In this connection please refer to our circular No.CO/SSI/PMRY/1999.

(VII) Security :- 

          a).   …………….

          b).  ……………

          c).   Borrowers will not be required to give collateral security under Industry Sector projects with the cost upto Rs.2.00 lakhs and upto Rs.1.00 lakh for business and service sectors.  Banks overtly/covertly should not insist on collateral from the borrowers under PMRY, even though they are expected to exercise special care while scrutinizing cases of loans exceeding Rs.1 lakh where no fixed assets are created.  In case of partnership, the exemption from collateral is limited to Rs.1 lakh per person, participating in the project.  The exemption limit in respect of partnership projects in Industry Sector for obtention of collateral security will be Rs.5.00 lakhs per borrowal account in the tiny sector.  Even where offered, such collateral security or guarantee should not be accepted. 

  18.  Recovery :- 

          a).  Banks have been permitted to file criminal complaints against the borrower who misuses/diverts the loans sanctioned under PMRY. 

          b).  Banks are sometimes facing difficulties in recovery of their loans availed by unmarried girls after their marriage due to their migration to their new place.  It has now been decided that banks may include the parents/heads of the family of the unmarried girls as a co-borrower of the PMRY loan”. 

9.      According to the above guidelines opposite party is not supposed to take any collateral security even where offered for granting PMRY loan to the borrower. 

10.    The opposite party obtained the complainant’s TDR worth Rs.50,000/- as collateral security towards the loan taken by the complainant’s son M.Lathadhara Rao and  further stopped crediting the complainant TDR interest from 23-02-2010 instead of collecting the loan amount from the actual borrower.  It is nothing but deficiency of service.    

11.    The opposite party ought to have filed Criminal Case as enumerated in the recovery part of the above circular on the Principal debtor/borrower Mr.Lathadhara Rao instead of adjusting the TDR amount of the complainant to the loan.  The opposite party failed to take any Civil or Criminal steps against the borrower and bothered the complainant.  Therefore opposite party committed deficiency of service and is liable to compensate the complainant.  The point is answered in favour of the complainant. 

12     POINT NO. 3:-   The relief sought by the complainant was TDR amount of Rs.50,000/- interest @ 18% p.a. and costs of Rs.10,000/- and compensation of Rs.4,00,000/-.  The complainant have willfully offered his TDR as collateral security to the opposite party at the time of loan agreement by the barrower.  Subsequently he came to know about the RBI Circular and took the advantage of it.  Moreover the complainant failed to show the loss he sustained due to the stoppage of the interest by the opposite party.  In view of the above discussion the Forum opines that making opposite party liable to compensate the complainant is not proper. The complainant is not entitled to that exorbitant amount of Rs.4,00,000/-as compensation.  The Forum opines that awarding Rs.2,000/- as compensation to the complaint besides return of TDR along with accrued interest would meet the ends of justice.

13.    In the result, the complaint is allowed in part in terms as indicated below : 

1.  The opposite party is directed to refund the TDR amount of

     Rs.50,000/-(Rupees fifty thousand) to the complainant along

     with accrued interest from the date of stoppage i.e.,

     24-02-2010 till realization. 

2.   The opposite party is further directed to pay a sum of

      Rs.2,000/- (Rupees two thousand) towards compensation

      for mental agony to the complainant. 

3.   The opposite party is further directed to pay a sum of        

      Rs.1,000/- (Rupees one thousand) towards costs of the

      complaint to the complainant. 

The above order shall be complied within a period of six weeks from the date of receipt of the order, failing which the amounts ordered in the item No.2 shall carry the interest @ 9% p.a.

Typed to my dictation by Junior Stenographer, corrected by us and pronounced in the open Forum dated this the  24^th day of September, 2012.

MEMBER                                  MEMBER                                  PRESIDENT

APPENDIX OF EVIDENCE

DOCUMENTS MARKED

For Complainant:

For opposite parties:

PRESIDENT