D.o.F:21/4/09
D.o.O:24/11/11
IN THE CONSUMER DISPUTES REDRESSAL FORUM, KASARAGOD
CC.101/09
Dated this, the 24th day of November 2011.
PRESENT
SRI.K.T.SIDHIQ : PRESIDENT
SMT.P.RAMADEVI : MEMBER
SMT.BEENA.K.G. : MEMBER
1.Dr.Sayed Mohammed
2. Mrs.Jubairi Sayed,
Puthiyavalappil, Sufash, Bendichal, : Complainant
Po.Thekkil, Kasaragod
(Adv.C.Damodaran,Kasaragod)
The Chief Manager
Canara Bank,Bank Road, Kasaragod : Opposite party
(Adv.SadannandaKamath,Kasaragod)
ORDER
SRI.K.T.SIDHIQ : PRESIDENT
This complaint is again come up for our consideration in accordance with the judgment of the Hon’ble State Consumer Disputes Redressal Commission in Appeal No.463/2010. As per the above judgment the Hon’ble State commission remanded the complaint for fresh disposal in accordance with law after giving opportunity to the parties to adduce evidence.
Both sides appeared before the Forum in view of the judgment of the state commission and produced documents to substantiate their claims and contentions.
The case of the complainant is as follows:
Complainants are FCNR(Foreign Currency Non Resident) account holders of opposite party. The Ist complainant was having FCNR deposits for 19063.07 US $(dollars) and 2125.84 US $ and the complainants jointly hold a deposit of 67688.28 US $. The period of Ist two deposits were 23/8/07 to 24/8/08 and the 3rd one was for the period 17/8/05 to 17/8/08. The complainant availed loan against these deposits to the tune of ` 29,00,000/- (Twenty nine lakhs only) stage by stage. As per the maturity schedule, loan and deposits were rolled from time to time. During Oct.2008 opposite party bank unilaterally closed all the dollar deposits for adjusting towards the loan. At that time the 3rd deposit of US $67688.28 alone should have been sufficient for closing the loan. Neither the closure of the loan nor the adjustment of dollar deposits were intimated to the complainants and this was done without their instructions. Had they been given notice for closing the loan they would have arranged fund for closing loans. Moreover sufficient balance was there in the NRE account from 12/10/07 onwards for servicing the loan interest. US Dollars exchange rate was above ` 40 for one dollar at the time of adjustment of loan, where as complainants could have received ` 51/- for one US dollar if they were allowed to maintain the dollar deposits till October 2008. On enquiry made with opposite party complainants were informed that the loan was closed as per Reserve Bank of India guidelines issued during January 2007 that restricts loan to NRI’s against their FCNR to` 20 lakhs . Even if so, the opposite party could have given the benefits upto the ceiling amount of ` 20 lakh to the loan. Due to this act complainant caused a loss of `10 lakh being the ` 10/- difference as against the dollar appropriations with regard to the Indian rupees. Complainants who came from Gulf had to change their programmed schedule so as to get the details of the transaction by visiting opposite party and suffered monetary loss of ` 2 lakh . Apart from that they suffered mental agony also. Hence the complaint alleging deficiency in service on the part of opposite party.
2. Version of opposite party
According to opposite party the Ist complainant availed a loan of ` 22 lakh on 28/6/06 against his NRI deposits worth ` 29 lakhs deposited as receipt No.KD 1321 dt.17/8/08. While availing the loan Ist complainant executed a letter for loans against the security of NRI deposits and thereby agreed authorized and permitted the opposite party bank to liquidate the loan granted to him against his currency of FCNR deposit by adjusting the deposit on maturity or before maturity. Hence the allegation that opposite party has unilaterally closed the loan is not true. Further as per circular No.35/2007 issued by the Head Office of opposite party bank based on the guidelines of Reserve Bank of India through its circular dated 31/1/2007 bearing No. AP(DIR series) Circular No.29 the opposite party has been prevented from renewing the existing loan in excess of ` 20 lakh against NRE FCNR deposits either to the depositor or third parties. Therefore the loan granted to the Ist complainant was not renewed. This fact was intimated to the Ist complainant orally. Therefore there is no negligence or deficiency in service on their part and the complainants have not sustained any loss damage or mental suffering. 2nd complainant has no locus standi to file the complaint. The complaint is therefore liable to be dismissed.
3. 2nd complainant filed proof affidavit. Exts.A1 to A8 marked on the side of complainant during earlier proceedings. On the side of opposite party Exts B1 & B2 marked. Subsequently after the remand, the complainant produced Exts.A9&A10. On the side of opposite party Exts.B3 series are produced and marked. Both sides heard and the documents perused carefully.
4. The opposite parties relying on Ext.B1 and Ext.X1 to justify their stand. Opposite party has no case that before closing the loan by appropriating the FCNR Fixed deposits they have given any notice in writing to the complainant so as to give them a chance to arrange fund to close the loan. Ext. B1 is only a letter for loans/ advances against the security( prima/ collateral) of NRI deposits. From the wordings of Ext.B1 it is seen that it no way confer any authority to liquidate the loan granted by adjusting the FCNR fixed deposits without giving an opportunity to the depositor for closing the loan. As per Ext.B1 letter FCNR fixed deposits are given as “ security”:- The term “security” is usually applied to a deposit lien or mortgage voluntarily given by a debtor to a creditor to guarantee payment of a debt. Security furnishes the creditor with resource to be sold or possessed in case of the debtor’s failure to meet his or her financial obligation. In other words it is a thing deposited or pledged as a guarantee of the fulfillment of an undertaking of the repayment of a loans to be forfeited in case of default. So as per the definition of the word ‘security’ there shall be default in repayment of loan to appropriate the security. In this case opposite party has no case that the complainants have defaulted the repayment of loan or even if committed any default a notice is served upon them informing the default and the consequential appropriation of security in case of non repayment of loan. Ext.B1 does not give any unbridled authority to the opposite party to violate the well established procedures of loan and appropriation of security in case of its default. Even the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 ( for short SARFAESI Act 2002) which is promulgated and enacted for the sole benefit and interest of the Banks and Financial Institutions, provides an opportunity to the debtor to receive a notice U/S 13(2) of the said Act before taking repossession of the secured assets. Therefore the appropriation of security without giving a notice and there by an opportunity to close or repay the loan is in violation of fundamental principle of natural justice and it amounts to deficiency in service. In this regard the learned counsel for opposite party Sri.Sadananda Kamath has contended that there is a contract entered between the complainants and opposite party at the time of availing the loan and as per that agreement complainants have agreed that the loan granted to him in the currency of FCNR deposit shall be liquidated either by fresh inward remittance or adjusting the deposits on maturity or before maturity and the loan could be liquidated by local remittance out of NRI resources also. The Ist complainant apart from agreeing to pay interest normal rate compounded at monthly rests from time to time as per the clause 9 and 11 of the said agreement has waived the notice of variation of interest without further notice to him.
5. But on a bare perusal of clause 9 reveals that the notice is waived only with respect to the variation of interest including its enhancement. Clause 11 gives power to the opposite party the right to recall the entire loan at their discretion without any notice. But even these clauses will not give any authority to appropriate the security without giving an opportunity to close the loan. The right to recall the loan does not mean that the arbitrary closure of loan adjusting the security deposits. So these clauses will not help the opposite party to justify their action.
6. The further contention of the counsel for opposite party is that they are prevented from renewing the loan of the Ist complainant in view of the restriction imposed by Ext.X1 circular. Ext.X1 is a circular dtd 2/2/2007. It nowhere says that the loan exceeding ` 20,00,000(Rupees twenty lakhs) already granted shall be forfeited. It only says that the branches of opposite party banks are permitted to grant fresh loans or renewals of the existing loans against the security of NRC/FCNRCB) deposits either to the depositor or to the third parties up to a maximum of ` 20,00,000/- only. It is seen that the security of the complainants were appropriated for liquidating the loan approximately 1 ½ year later to this circular. The information about the closing of the loan and the appropriation of deposit is given to the complainants only when the 2nd complainant sent an e-mail to the opposite party before 16/10/2008. Only in its reply e-mail the opposite party for the first time intimated the 2nd complainant about the closing of loan and appropriation of deposits done in July 2008. This method of closing the loan and by appropriating the security is contrary to the guidelines of the opposite party to its branches. Ext.X1 clearly give instruction to the branches of opposite party to note the guidelines of the loan for compliance and bring the contents to the information of NRE depositors and not to sanction the loans against the security of FCNMR(B)/NRE deposits within the ceiling limits fixed by RBI. This shows that Ext.X1 also stipulates to bring the contents of said guidelines to the information of the NRI depositors. The opposite party has no case that this guidelines has been brought to the notice of the complainants by any method so as to give them an opportunity to bring their loan within the parameters of the restriction or ceiling fixed by the Reserve Bank of India and thereby avoid the unjust appropriation of security towards the said loans.
7. Bank being a custodian of trust and faith reposed in it by the public at large is under an obligation to provide services to its customers as that of a trustee. But by arbitrarily appropriating the security towards the loan without giving notice to the complainants and thereby causing huge loss to them by the opposite party has broken the said trust and faith in this case.
8. The contention of opposite party is that the complainant has not given any instruction or request to renew the loan upto `20,00,000/- inspite of orally informing him regarding the closure and non renewal of the loan. Admittedly, both the complainants are NRI ‘s. So how and on what mode they were orally informed? Was there any telephone communication? If the communication was through phone then there would have call records. But not a scrap of paper is produced to show that before closing the loan the NRI complainants were informed orally over phone requesting the closure of loans by appropriating the security.
9. The learned counsel for opposite party further took a contention that the complainant has claimed `50,000/- as compensation for deficiency in service and the rest of the claim amount `12,00,000/- is beyond the jurisdiction of the Forum and the Forum could not pass any award or a decree for a monetary loss sustained by the complainant but can award only compensation for damages sustained on account of deficiency in service and the complainant is not a consumer and there is no deficiency in service on the part of opposite party. The opposite party also have a contention that 2nd complainant has no locus standi to file this complaint because no deposits were made in her name in the bank.
10. The aforesaid contentions are absolutely baseless and not sustainable. The pecuniary jurisdiction of the District Forum is `20,00,000/- This means the District Forum have jurisdiction to entertain the complaints where the value of goods or services and the compensation if any claimed does not exceed rupees twenty lakhs. Therefore the contention is that the claim of the complainants are beyond the jurisdiction of this Forum has no legs to stand.
11. The further contention is that the complainants are not consumers it is also baseless. Banking is a service comes under the definition of ‘service’ U/s 2(1) (o) of the Consumer Protection Act and the Forum is competent to give the relief provided under section 14(1) (a) to(i) of the Act.
12. The other contention is that the 2nd complainant has no locus standi to file this complaint is also baseless because one of the deposit is stands in her name.
13. The complainant produced Ext.A9A10 documents after the matter is remitted back to us for fresh consideration. Similarly opposite party produced Ext.B3 series to substantiate their contentions.
Learned counsel for the complainant has agreed that as per Ext.A4 statement of SB NRE account pertaining to the first complainant and it is seen that only on 20/10/08 and on 23/10/08 the proceedings of the FCNR deposits are credited and he loan was closed and it was not in order of the maturity of the Fixed deposits. Had it been appropriated on the date of attaining its relevant maturity dates, then the said amount would have been credited on the date of maturity of the FCNR fixed deposits itself. The maturity date of FCNR fixed deposits were 16/8/2008 and 24/8/2008 respectively. In fact the amount ought to have been credited to the day on which they closed the fixed deposits.
From Exts.A7, A7(a) and A7(b) the paper copy of e- mail messages it can be realized that the complainants were not aware about the appropriation of FCNR deposits towards the closing of the loan. DW1 during cross examination has deposed that if the party/depositor keep quiet on maturity of their NRI deposits then it will be renewed automatically. In this case evidently there is no instruction was given to opposite party to close the accounts and the FCNR deposits were credited only on 20/10/08 and 23/10/08. Had it been so the opposite party is liable to pay conversion rate of US dollar viz Indian Rupees as on that dates. As per Ext.A9 the extract of history of currency exchange rate produced by the complainants after remanding this case, the rate of one US $ as on 15/10/08 was `49.1560 and on 23/10/08 it was `51.23180. According to the learned counsel for complainant Sri.C.Damodaran if ` 51/- is taken on the conversion rate then the total amount would have been `5003352.47 and after deducting the loan amount `2695000/-, the balance ought to have been `2308352.447. But the opposite party credited only `1405000.47 in the accounts of complainant. So the complainants have a total loss of `903352.47 on account of the deficient service of opposite party.
14. Where as according to opposite party conversion of rate of US Dollar with Indian Rupee is not as per the market rate but it can be reckoned only as per the Reserve Bank rates and the opposite party is bound to follow the exchange rates announced by their International Division Mumbai. To support this contention the learned counsel for the opposite party produced Ext.B3 series . Ext.B3 is the exchange rate (buying and selling rate) as on 27/8/08. Ext.B3(a) is the rate prevalent on 10/10/08 and Ext.B3 (b) shows the buying and selling rate existed on 20/10/08 and Ext.B3(c) denotes the conversion rate prevalent on 23/10/08. As per these, it is seen that on 27/8/08 the selling rate was `43.9650. On 10/10/08 it was `49.5850 and on 20/10/08 the rate was `49.0725 and on 23/10/08 it was `50.1750. According to the complainants they wished to close the deposits on 23/10/08 when the US-INR exchange was `51/- in open market. But it is ` 50.1750 as per Ext.B3(c). So the rate prevailing on 23/10/08 can be taken for consideration for calculating the loss sustained to the complainant. As per Ext.A8 the rate of adjustment is shown below.:
FCNR in
US $ Rate INR
76797.71 43.68 3354524
19947.99 43.68 871328
2224.52 47.95 106666
The complainant was entitled for the following amount as on 23/10/08
$ 76797.71 X 50.1750 3853325.09
$ 19947.99 X 50.1750 1000890.39
$ 2224.52 X 50.1750 111615.29
TOTAL `4965830.77
But the complainant received 4332518.50 only. Hence the loss of the complainants is
`4965830.77-`4332518.50= `633312.27
The complainants are entitled to get the said amount with interest agreed as per Exts.A1&A2 FD receipts.
Therefore the complaint is allowed and the opposite party is directed to pay the aforesaid amount of `633312.27 to the complainants with interest @ 4.5%( the rate of interest as shown in Exts.A1&A2) from the date of complaint till payment together with a cost of `5000/-. Time for compliance is limited to 30 days from the date of receipt of copy of order. Failing which opposite party shall be liable to pay interest at an enhanced rate @6% per annum from the date of complaint till payment.
Exts:
A1toA3- Copies of deposit receipts
A4 to A6- Copies of statement of accounts
A7 series - printed copy of e-mail messages
A8- copy of FCNR details
A9-Historical currency exchange rates
A10-Reference rate archive
B1-copy of letter of NRI deposits
B2-copy of SB/Ac pay in slip
B3 series exchange ratex
X1- copy of circular
DW1-Nagaraja Bhagavath- witness of OP
MEMBER MEMBER PRESIDENT
eva
D.o.F:21/4/09
