Orissa

Rayagada

CC/152/2017

Sri Ramesh Chandra Panigrhi - Complainant(s)

Versus

The Chief Manager, State Bank of India - Opp.Party(s)

Sri L.N. Padhi

24 Jul 2019

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, RAYAGADA.

STATE: ODISHA.

 

C.C.Case No. 152/2017                                                        

Present:

 

 DR ASWINI KUMAR MOHAPATRA ,    PRESIDENT.

MR. GADADHAR SAHU ,                        MEMBER.

MRS. PADMALAYA MISHRA,                MEMBER.

 

Sri Ramesh Chandra Panigrahi, Aged 42 yrs,

S/o Sri Somonath Panigrahi, Afforestation Colony,

Goutam Nagar Vth Lane,Rayagada-765001.Odisha…

…..        COMPLAINANT.

 

Vs.

1.  The Chief Manager, State Bank of India, Main Branch,

            At/Po/ dist of Rayagada                                                       

2.  Regional Manager, State Bank of India, At- Saipriya Nagar,

            At/Po/ dist of Rayagada

3.  C.G.M., State Bank of India, LHO/111/1,PJN Marg, Bhubaneswar.                                                               … OPP. PARTIES

 

Counsel for the Parties

For the Complainant-  Sri S.K.Satapathy,,Rayagada.

For the O.P.s.:-           Sri Nrusingh Nath Panda, Advocate,Rayagada.    

 

J u d g e m e n t

          The factual matrix as per the Complaint is that the Complainant, being an adhoc employee  under the D.F.O.,Rayagada , had availed a housing loan of Rs.1,50,000/- from the O.P.s  through the O.P.1 Branch on dt.20.02.2009  vide Loan Account No. 11038988799,repayable with interest  in installments of Rs.2,300/- per month till November,2017 commencing from  December 2010. For the purpose  of repayment due authorization was made to the O.P.s to debit the instalment amount from the Savings Account No. 11039013389 standing in the name of the Complainant. The savings account is linked with salary of the Complainant  and obviously, as salary is deposited, regularly  the complainant always had the reserve in his said account to meet the debit amount of monthly installment against the loan. But Still then, the O.P.  during the tenure of the loan repayment, continuously harassed the Complainant  and his guarantor Sri Nandan Sabar, with unnecessarily arbitrarily and without assigning any reason or prior notice holding the account, thus not allowing the Complainant to withdraw his salary for his subsistence, for which he was inflicted a continuous mental harassment, socially humiliated , deprived of his right to his hard earned money, deprived the right of his wife and children to lead a dignified life, the parents of the Complainant were deprived of the right treatment and right medication at right time, and all these are the result of the arbitrary and illegal action of the O.P.s in treating the Complainant to force for repayment.      It is submitted that, the O.P.s at the time of  processing of the loan of Complainant never supplied the copy of the agreement before or after the loan was sanctioned and the documents pertaining the loan was all signed in the office of the O.P.1 at Rayagada without the contents of the booklet being read over or explained to the Complainant, and the contents of agreement were in small fonts and extended to number of pages and the technical wordings, he was neither allowed to read over and even if he was allowed ,the complainant would hardly make out the meanings and consequences of the words , but he was allowed so short time in the office of O.P. amidst of the crowd surrounding to sneak into their chance of next, and the complainant was in so dire need of the amount for repair of his house that, he had hardly any choice left but to sign wherever the Officer in the O.P.1 office indicated yet sure that his slightest objection would lead immediately the rogue officers to drive him out of his office, which is very common practice in the office of the O.P.s .The forms and booklets the complainant signed  were all on dotted lines unfilled. He was only advised always to get Rs.2,300/- available in his savings account, which was a salary savings one, as above. He was never appraised of other terms and conditions, adverse or positive. The Complainant submits that, he was an adhoc employee and sometimes it gets months to get their salary, yet, till 21.07.2017, the complainant has paid nearly One lakh Ninety thousand rupees, against the agreed sum of Rs.2,20,000/- of the loan account with interest. But by his notice dtd.02.10.2017 the O.P.s demanded Rs. 70,123/-, which is stated to be balance till 30.06.2017 excluding rest five installments, if added which should be 83,923/-. The complainant further submits that, after the notice, in consultation with the advocate of the O.P.1 he deposited Rs.10,000/- on dt.07.10.2017.It is submitted that, during 16.06.2015 to 07.10.2017, the OP has set hold his account 11 times, almost disallowing him during these two years to withdraw any amount from his account. The Complainant further submits that, he despite his requests to provide him the account statement, the O.P.s never supplied him the account. They would call over phone at the wee hours and use rough and rogue type of words demanding the repayment causing mental and social derogations inflicted to the Complainant and his guarantor.Hence the complainant filed this complaint against the arbitrary and illegal action and claiming Rs.100000/- as compensation for all such mental agony and harassment along with cost.

02.     The Complainant has submitted copies of notices of the O.P. and his advocate, copy of passbook and affidavit in support of his contentions.

03.     The O.P.s entered their appearance to file their counter on Dt. 13.12.2017 in contention  of clean evasive denials of all the facts in the Complaint. They contend that, the complainat had availed the personal loan of Rs.1,50,000/- for his mother’s treatment on dt.19.02.2009 vide loan account No. 30687571435  repayable in 120 months starting from March 2009 to to February 2019 @ Rs.2300/- per month , and to secure the regular payment authorization was issued to deduct the instalments from  his salary savings  account No. 11038988799 opened with the O.P.They contend that, till January 2015, the Complainant was regularly paying the instalments.But after that, with ulterior motives the Complainant did not deposit his salary in the salary account as above.Only after sending legal notices from time to time, he was paying the instalments and that, it is the system of the Bank that, unless the instalment paid, it automatically holds the account.As it came to notice of the O.P.s that, the Complainant had another account in the Bazar Branch of the O.P.s as Account No. 11039013389 which was freezed by the O.P.s. And again the Complainant opened again an account in another bank to draw his salary.That the bank never harassed the Complainant.That the Complainant is a literate person and has signed all the loan documents after having read the contents.It is only for default of the borrower the bank had issued legal notice on dt. 4.10.17 for payment pof Rs.70,123/- That the loan account is now is sub-standard(IRAC-I) and outstanding amount against the loan is Rs.69,359/- till dt.19.12.17.That the O.P. bank is public sector bank and as per RBI guideline, the system deducts wherever there is short of balance as per standing Instruction Failure Fees of Rs.575/- each time. Hence, there is no default on the part of the O.P.s thus prayed for dismissal of the complaint with heavy cost.

04.     The O.P.s has submitted Transaction details  of Savings account No. 11039013389 of the Complainant stands in S.B.I.Rayagada Bazar Branch,and loan account Details, along with loan agreement, the authorization letter of Complainant in favour of the O.P.1 to deduct the salary etc.

05.     Considered.

06.     We have minutely appraised the pleadings of the parties and perused the documents submitted by them.Before delving into final adjudication of the lis, this forum has restricted its adjudication to the following issues:

          i)       Whether the complainant is a consumer as defined in the C.P.Act?

          ii)      Whether  there was any deficiency in service by one or all the Ops while dealing with the Complainant in relation to his loan account to move a petition under a consumer protection Act 1986 ?

 there is any deficiency on the part of the O.P.s while dealing with the Complainant in relation to his loan account ?

          iii)     Whether the complainant entitles for any relief ?

07.     The learned counsel for the complainant submitted that the Ops is a Scheduled bank, provides financial services to its prospects  for a valuable consideration i.e. interest. The Ops are providing services of financing their identified prospectus, now at present the complainant.

08.     Sec. 2(d) (ii) defines a consumer means any person who hires of any services for a consideration…..

09.     It is uncontroverted that, the O.P.s are bankers providing financial service and though the Complainant is a debtor, yet availing financial services for consideration in the terms of interest, hence is a consumer.

10.     Primafacie, the contentions of the the Complainant is that, he had applied the O.P.1 for a personal loan  in the category of  primary sector i.e. the repair of his house for an amount of Rs.1,50,000/-. He submits that, though there are RBI guidelines and fair practice codes for appraisal of such applications, and providing copies of the agreement and post disbursal services of intimating the customer of the changes, shortcomings and charges and penalties, and mandates of refraining from undue harassments to the customers, the O.P.s neither provided him the copies of the agreement at the time of agreement, nor allowed any time to read it , but simply instructed to sign in some pre printed forms  with dotted lines unfilled. The Complainant was in so dire need of money that, he even could not protest, even though he was literate, for he was sure he would be driven out and denied of any financial assistance had he had slightest question. And another reason for acquiescing to sign on unfilled forms was that, he trusted the Bank that, being a nationalized scheduled bank, they would not defraud of his rights.

11.     On the other hand the learned counsel for the O.P.s argue that, the relation between the Complainant and the O.P. arises of a contract, i.e. the loan agreement  between them, where in the terms and conditions well stipulated ac cording to the RBI guidelines, and that it is not true that, the conditions were not read by the Complainant. The Complainant is a literate person, and he has signed on the loan agreement after understanding the conditions stipulated therein.

12.     The complainant  argued that, the O.P. being a scheduled nationalized bank is guided by the rulings and directives of the R.B.I., and R.B.I in its different circulars has strictly instructed the banks including the present O.P. to adhere to a fair practice Code, while dealing with their customers, urging for loan advances. He has filed copies of such circulars one among them is of recent  date of 2nd,july,k2012, where in the O.P. should have adhered to a fair practice code of availing all such information and conditions to be stipulated in the agreement, special conditions prejudicial to  the interest of the customer, should be intimated prior to  sanctioning of the loan and let sufficient time to the get the customer well  go through the content of it to consent to agree with the conditions, only after which agreement should have been executed. Signing of agreement without going through the conditions stipulated therein, is void & hit by sec.23 of the Contract Act. And  in the present case the O.P. has deliberately deprived the complainant from going through the conditions of the agreement he signed  so also he is not intimated of the rate of interest, consequence  of delayed payment.

13.     The Complainant further argued that, he was regularly paying the installments as was directed by the O.P.s from dt. 30.03.2009 to May,2015 but he being an adhoc employee in the afforestation department, some times his salaries got delayed, and is paid lump sum. As his account is credited of the salary in lump sum, the debits against the loan was also made in lump sum. So there was no question of irregularity in the debt repayment. But the O.P. continuously harassed the complainant and his guarantor Sri Nandan Sabar, by calling over phone at all odd times, sometimes at midnight. In this way, the O.P.s set hold his salary account for no reason  first on 16.06.2015 and till dt. 07.10.2017 they had set hold and freeze the account 11 times, thus depriving his bread and butter forcibily and lead a respectable life. The O.P.s even set hold the account of his guarantor several times.

14.     The Complainant brought to our notice, the repayment schedule of the loan account and the transaction details submitted by the O.P.s themselves. The account statement pertains to the repayment of loan account No. 30687571435  in eight sheets of paper submitted by O.P.It is shown that, from dt. 20.02.2009 to dt.01.07.2017 the Complainant has repaid Rs.2,56,853/-  where as till july 2017  as per agreement and repayment schedule he should have paid Rs.2,27,300/-  i.e. for 99 months from dt.03/2009 to 30.06.2017 @ Rs.2,300/- per month. So the Complainant claims to have paid an amount of Rs.29,153/- in excess yet the bank claiming Rs.70,123/- till dt.02.10.2017 i.e. Rs.92,416/- in excess of the actual payment can not be supported by any law of a social welfare state, but can be sustained by any jungle or terrorist law.

15.     The Complainant further contends that, even if there was any penal interest or penal charges for any defaults, it could not have been added to the principal amount, which is illegal and in contravention of the rules of Indian banking association  or Reserve Bank of India or the precedents settled by the Honble Apex court of India.The complainant has brought our notice to the version of the Honble Supreme Court of India in Punjab & Sind Bank vs M/S Allied Beverages Company held  on 1 October, 2010, which reads as follows:

16.     Though interest can be capitalised on the analogy that the interest falling due on the accrued date and remaining unpaid, partakes the character of amount advanced on that date, yet penal interest, which is charged by way of penalty for non-payment, cannot be capitalised. Further interest, i.e. interest on interest, whether simple, compound or penal, cannot be claimed on the amount of penal interest. Penal interest cannot be capitalised. It will be opposed to public policy.

17.     Hence, the Complainant asserts that, the O.P. bank is deficiency in service, hence shall be subjected to an exemplary compensation, so that, its anti customer attitude could be changed. 

18.     The term deficiency I defined under Sec.2 (1) (g) of the C.P.Act 1986, which reads as followed. 2(1)(g) ‘deficiency means any fault ‘in perfect shortcomings or inadequacy in quality, nature, and manner or performance which is required to be intentional by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service.

19.     Here in the section the word ‘in pursuance of a contract’ leaves no ambiguity to the question that any service, the parties bound to perform under a contract, may be that contract private or public, implicit or explicit, but arising out of a contract, which the plea of the learned counsel for the OP that the jurisdiction of the consumer court in the matter of deficiency in service on the part of the Ops is ousted in view of the existence of a private contract/agreement does not hold any water.

20.     Evidently the relation of the complainant with the OP is of a banker and debtor. And the relation is emerged out of an agreement. An agreement laying conditions for repayment of debt and creating lien over the mortgaged property.

21.     As the present dispute is all arises of an agreement we are to consider some important aspects of a valid agreement. In our country, except so far as specifically provided for and covered by any other legislation, the matter relating to all agreements constituting substratum of a valid contract are subjected to Indian Contract Act 1872.

22.     In addition to four basic ingredients as laid down in Sec.10 of the I.C.A absence of lawfulness and enforceability are pertinent in the context of investigation of the questions under consideration.

23.     Unlike in the fact, law of contract has in recent times is assuming a new and wide dimensions. The financers practicing concluding contracts in non standardized forms. Such contract contains a large number of terms and conditions which restrict and often excludes the liability of the banks/ financiers under the contract. In the ordinary way, the customer has no time to read them, and if read them, he would probably not understand them. If he did understand and object to any of them, he would generally be told that he could take or leave. An  individual with acute need of the finance can hardly bargain, his only function is to accept the offer, whether he likes its terms or not.

24      The Individual therefore deserves to be protected against the possibilities of exploitation inherent in such contracts. The courts shall evolve/ has evolved certain modes to protect the affected party i.e. invoking the doctrine of fundamental breach or by finding that the terms are unreasonable or that there was misrepresentation about them.

25.     And considering the essence of Sec.23, reproducing all of them is apprehended of lengthening the conclusion. We hold that every agreement made for or about any matter or thing which is either forbidden by status or would defeat the provisions of any lay, or the court regards it as opposed to public policy, is unlawful and ipso fact void.

26.     Hence, where the terms of agreement show the interest charged is penal, the transaction hence unfair and that the agreement was totally against public policy. The decision of Hon’ble Supreme Court in S.Raj Gopalswami Naidu Vs The Bank of Karaikudi Ltd, reported in AIR 1971 SC 684 supports the complainant herein.

27.     We have referred two notices of the O.P.s dtd. 20.09.2016 by the O.P.1 itself whereas it was stated that, the Complainant was irregular by Rs.9,574/- only where as on Dt. 02.10.2017 the advocate of O.P. sends legal notice to the Complainant demanding Rs.70,123/-. The instalments remained between these two points of time were only 11 instalments @ Rs.2,300/- would come to 25,300/- and  if included the previous demand comes to Rs. 34,874/- . And it is also seen from the account statement submitted by the O.P. that, the Complainant has paid Rs.71,624/-  in between the period.

28.     From the account statement submitted by the O.P.s we observed, that, at different times penalty have been charged for non payment or under other terms. But the penalty charged by bank can not be termed as liability of the Complainant to the bank, but it is special arrangement by banks to establish its usurious action. The penalty of Rs.570/- as charged by the bank, as submitted by its learned counsel is standing instruction failure fees which is charged for non keeping sufficient balance in the account of debtor. What so ever, we are not appraised that, the penalty amount should be capitalized and interest be calculated and forced for collection.

29.     Now coming to the point of arbitray action of banks holding the savings account of the Complainant, inflicting shame, troubles, social degradation and deprieving of his daily needs of bread and butter does not seem to be supported by any legislature of any rogue state leave alone if in practice in a welfare state like India .Irrespective of the type of the loan, the borrower always has a right to be treated humanely and any undue harassment, humiliation or breach of privacy of the borrower is a serious breach of the banking rules and ethics which are punishable by law.

30.     The right of banker's lien is provided under Section 171 of the Indian Contract Act, 1872 which states as under: -

"171. General lien of bankers, factors, wharfingers attorneys and policy-brokers-Bankers, factors, wharfingers, attorneys of a High Court and policy- brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect."

31.     The word 'bailment' has been defined under Section 148 of the Indian Contract Act, 1872 and it refers to delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished be returned.

32.     First  to the mean the words used in section 171 of the Contracts Act, by virtue of which, the bank lien over the deposit of the customers arises, as contented by the learned counsel for the O.P.  in  Black's Law Dictionary is that,   The word 'banker' means'a person who engages in the business of banking' 'Retain' has been defined as continue to hold and keep possession of something. 'Any goods' means that the article has to be a tangible movable article. The Sale of Goods Act, 1930 defines 'goods' under Section 2 (7) to mean any kind of movable property other than actionable claims and money.

33.     Thus,  it can safely be held for the purpose of answering the issue No. 1 that, for the operation of Section 171 of the Indian Contract Act, 1872, the deposits made in the bank accounts cannot be treated as goods and the right of the banker as lien over the deposit is not applicable. This would demonstrate that the principle of bailment shall not apply in a case where a customer has deposited his money in the account to a bank and the bank promises to pay back the same upon demand with interest or under any term as it may exist.

34.     The Bombay High Court in the matter of State Bank of India v.Javed Akhtar Hussain and another 11 considered the question of Bank exercising lien over customer's account unilaterally and without giving notice to the customer and it has been held that the action of the Bank in keeping lien over both these accounts was unilateral and high handed and observed as under in paragraph 12

"12. The action of keeping lien was a sort of suo moto act exercised by the Bank/applicant in the present case, even without giving notice to the non-applicant No.2 and his wife. Even though the applicant had filed Special Dark hast No. 200 of 91, it could have moved the court for passing orders in respect of the amounts invested in TDR and RD accounts. However, the action of the applicant in keeping lien over both these accounts was unilateral and high-handed and even it is not befitting the authorities of the State Bank of India to do so. If such thing would continue, perhaps in future the customer would lose his confidence in the Bank and I am afraid that the days are not far off."

35.     Chattisgarh High Court in Dr. Achinto Chakraborty vs Chairman & Managing Director, S.B.I. and others, by his order  on 22 August, 2017,  deciding a case of arbitrary alignment of customers deposits towards the debt, ordered as thus,

“29. As a fallout and consequence of aforesaid discussion, the impugned order is quashed and the State Bank of India is directed to deposit the entire amount along with interest in the savings bank account of the petitioner within two weeks from the date of order along with 8% interest per annum from the date of withdrawal of that amount till the date of deposit. The respondent Bank is saddled with cost of ₹ 10,000/- for its arbitrary action.”

36.     Hence, we are beyond  confusion to hold that the relationship of banker and customer arises as the result of a contract, express or implied, according to which the customer delivers to the bank money, funds or credits constituting the deposit and the bank assumes obligation to pay out on his demand or order a sum equal to the amount deposited. This arrangement is to the advantage of both the parties, for the customer receives the benefit of banking facilities and the bank the benefit of the use of the customer's money with or without interest. The moment the money is deposited in the bank, the relation of debtor and creditor comes into existence, the bank being the debtor of the customer.The bank may be acting on any implied or explicit contract or authority my assume lien over the money, only to such extent as the customer obliges, and not beyond that, the bank can not set hold his account restricting to withdraw whole of his money arbitrarily, inhumanely and like a road rogue even to get him deprieved of the bread and butter of his family.

37.     The recovery of a debt is often a sensitive process and a process which can put a significant amount of strain on the defaulter. Recognizing this, the Reserve Bank of India and the Indian Banking Association has strict rules and guidelines which outline the proceedings banks are supposed to follow to recover loans and the general codes of conduct which govern any contact the bank might make with the borrower for such a process.

38.     On perusal of the irrevocable letter of authority purported to be submitted and executed by the Complainant, the copy of which is submitted by the O.P. itself, we could not find the perpetrator’s signature on it.The dotted lines in the authorization letter is unfilled and left blank. It is signed by somebody other than the present Complainant. Hence, except an assumption of implied contract no explicit contract could be put before us for consideration.

39.     The counsel for the Complainant during the course of hearing brought to our notice that ,banking is an organised institution and most of the banks press into service long-running documents wherein the borrowers fill in the blanks, at times without caring to read what has been provided therein, and bind themselves by the stipulations articulated by the best of legal brains. Borrowers other than those belonging to the corporate sector, find themselves having unwittingly fallen into a trap and rendered themselves liable and obliged to pay interest the quantum whereof may at the end prove to be ruinous. At times the interest charged and capitalised is manifold than the amount actually advanced. Rule of dam-dupat does not apply. Penal interest, service charges and other overheads are debited in the account of the borrower and capitalised of which debits the borrower may not even be aware.. Statements of accounts  are not supplied by banks to the customers, and even if supplied by banks to borrowers many a time do not contain particulars or details of debit entries and if entries are made, they are in such technical terms that a common man hardly make out the contents of it, putting to test the eyes and wits of the borrowers. Instances of unscrupulous, unfair and unhealthy dealings are engineered to be multiplied though they cannot be generalized. Suffice it to observe that such issues shall have to be left open to be adjudicated upon in appropriate cases as and when actually arising for decision and we cannot venture into laying down law on such issues as do not arise for determination before us.

40.       The plea of the complainant is that, the OP at the time of sanctioning loan did not provide the copy of loan agreement or did not allow a moratorium for the first installment of repayment is a fact of dated back to dt.19.02.2009, and the complainant had never complained of the same to OP.s since then, till filing of the complainant, hence being time barred, we abstain from considering the fact on principle of “vigilanti bus non dormientibas jura subveniunt”.

41.       However, considering all the facts in the case, we hold that, the Complainant has already repaid  an amount of Rs. 2,56,853/-  till 01.07.2017 against the agreed sum of Rs.2,76,000/- i.e.Rs.2,300/- p.m for 120 months, leaving an outstanding of Rs.19,147/- apart from other penal charges. And during the disputed period he was repaying his instalments though irregularly, which can be said out of compulsion, as he is found always paying an excess than due. But it was the O.P. Bank harassing him regularly with holding S.B. accounts of the complainant inter alia  guarantors freezed arbitrarily and inhumanely inflicting injury on his social, fianancial and mental establishment.

Hence, the complaint is allowed in part  on contest.

O R D E R

1. The Complainant shall pay the bank  the differed balance amount  of Rs. 19,147/- in the loan account and on such event the O.P. bank shall immediately issue no Dues/ clearance certificate to that effect.
2. The O.Ps are further directed to pay an amount of Rs.20,000/- towards mental agony inter alia cost of litigation.

 03.Any hold/freeze  to the accounts of the complainant bearing  S.B. Account No. 11039013389  or that of Guarantor Sri Nandan Sabar  vide S.B. account No. 1039027450  with the O.Ps shall  be released  immediately hence after receipt of this order and any deviation as such shall be viewed seriously.

The above order is to  be complied  by the O.Ps within  45 days from the date of receipt of this order. The interim order passed by this forum in different dates  are  made  final with the above direction.

Certified copy of this order be supplied to both the parties as per rules.

Dictated and corrected by me.    Pronounced on          24th. day of    July, 2019.

 

MEMBER                               MEMBER                      PRESIDENT