IN THE CONSUMER DISPUTES REDRESSAL FORUM, KOLLAM
DATED THIS THE 18th DAY OF NOVEMBER 2019
Present: - Sri.E.M.Muhammed Ibrahim, B.A, LLM. President
Smt.S.Sandhya Rani. Bsc, LLB ,Member
Sri.Stanly Harold, B.A.LLB, Member
I.A.No.100/2018
IN
CC.No.09/2018
The Chief Manager,
Axis Bank,
Chinnakkada, Asramam Road, : Petitioner/Opposite party
Kollam East Village, Kollam District 691 001.
(By Adv.C.Anoop Chandra & Adv.T.L.Sree Ram)
V/s
Sri.M.Thankachan,45 years,
S/o Sri.Mathewkutty,
Arikil Padinjattathil Veedu,
Chunkathara, Puthoor Village, : Respondent/Complainant
Puthoor P.O.,Kottarakkara Taluk,
Kollam District 691 507.
FAIR ORDER
Sri.Stanly Harold, B.A.LLB, Member
The above I.A is a petition filed by the opposite party in CC No.09/18 praying to hear the maintainability of the case as a preliminary issue and to dismiss the complainant as not maintainable.
The averments in the complaint in short are as follows.
The Complainant had approached the opposite party and made his willingness to pledge his 42,000/- shares in the opposite party bank scheme L.A.S(Loan Against Shares). After perusing the relevant records opposite party satisfied and agree to accept the same. On the basis the complainant opened an account bearing No.916030010110413 dated 16.02.2016 before the opposite party bank. Thereafter the opposite party had sanctioned a loan of Rs.5,40,000/- in the manner of over draft as consideration for the shares. It is pertinent to note that the said shares had a market value of Rs.16,80,000/- at the time of disbursing the loan amount.
The complainant frequently operated the account through process of withdrawing the money from the aforesaid over draft account, at the same time deposited money in the same and interest for the money which was withdrawn had charged by the opposite party.
According to the complainant he had noticed the fact on 28.11.2017, the pledged shares in his name was sold by the opposite party arbitrarily without the consent of the complainant. This was sold on three occasions for different amounts ie. 240437.57, 281565.06, 57064.77 which was credited into the over draft account. The complainant understood that the loan was already closed and having a balance of Rs.74371.85. The complainant was so much troubled with the situation and he approached the opposite party bank do the needful, the opposite party promised to rectify the same as this has happened due to the defect on the part of the staff of the opposite party bank. Complainant has sustained huge monitory loss and mental agony due to the unfair trade practice from the part of opposite party. In the circumstances the complainant claims for the return of the shares which he had pledged before the opposite party in the manner of loan against shares or the amount of shares which was sold by the opposite party without the consent of the complainant along with the compensation.
The opposite party resisted the complaint by filing the present petition as I.A.No.100/2018 seeking to dismiss the complaint as such as the complainant is not a consumer in this case. More over opposite party points out that the complainant had never made any pleadings to substantiate that he is a consumer defined under the Section 2(1) (d) of Consumer Protection Act, and it will not form a transaction in the nature of livelihood.
The opposite party would content that the LAS (Loan Against Shares) Account No.916030010110413 is over draft account opened by the complainant with opposite party bank against Security of shares is a speculative investments made for commercial purpose which intends to make profit. The nature of these investments have inherent risks which can be caused by dips in the stock market, and hence such type of deposit will not be for livelihood, since they do not guarantee any returns. The opposite party would also contend that the agreement entered into by the complainant and opposite party is exclusively a commercial activity . Over draft facility was granted to the complainant against pledging of shares thereby attracting section 172 of Indian Contract Act . Moreover the complainant had admitted in the pledging that he executed an irrevocable power of attorney authorizing the bank to dispose the shares in case of default committed by the complainant regarding the repayment.
According the opposite party the loan agreement entered in to between parties confers full right/authority to the bank to sell dispose off the said securities on such terms and such prize as the banks deem fit and adjust the sale proceeds towards the loan account. The opposite party would also content that without specific authorization no one can sell the shares of another person and points out that after specifically agreeing bank to sell the shares and also executing irrevocable power of attorney for the same the complainant is trying to turn around and pleading ignorance, which will not stand scrutiny of Law, and points out all these aspects are revolving round the commercial activity and loan extended to by the opposite party by way loan against security of shares which in turn shall not be construed as are failing under Consumer Protection Act. According to the opposite party the complainant filed as such is not maintainable before this Forum. Hence prays to consider the maintainability as preliminary issue and to dismiss the complaint.
In view of the above pleadings the point that arise for consideration are:-
- Whether there is any deficiency in service or unfair trade practice on the part of opposite party Bank?
- Whether the opposite party Bank has any right or authority to sell the shares offered by the complaint as security for the over draft?
- Whether the complaint is maintainable or not?
The complainant had produced 2 documents which are marked for the purpose of this IA as Ext.P1 & P2. Ext.P1 the agreement between opposite party bank in relation to the pledging of shares. Ext.P2 is the power of attorney executed by One Thankachan in favour of Sunil Chacko .The opposite parties had produced two documents which are marked as Ext.D1 and Ext.D2. Ext.D1 is the LAS agreement and Ext.D2 is irrevocable power of attorney executed by the complainant in favour the opposite party bank.
Heard both sides and perused the records.
Point No.1 to 3
For avoiding the repetition of discussion of materials these 3 points are considered together. The case of the complainant is that he had pledged his 42000 shares which is having a market value of 16,80,000 and availed a loan Rs. 5,40,000 that he has been maintaining an over draft account bearing Account No.916030010110413 with the opposite party bank. The complainant for his personal necessities sometimes with drew money from the said account as well as deposit in the same. Admittedly the opposite party has sold the pledged shares on 3 occasions and appropriated the sale proceeds towards loan account and balance is kept in the bank account of complainant. According to the complainant the sale of pledged shares is illegal and unauthorized. The averments in the complaint and Ext.P1 document would indicate that the complainant had opened an over draft account with opposite party Bank by pledging the securities. The said account is known as Loan against security account No.916030010110413. The learned counsel for the opposite party has argued that the terms and conditions in Ext.D1 & D2 documents would make it clear that the loan transaction is in the nature of commercial activity which is not for the purpose of earning his livelihood.
However the complainant being an account holder of the opposite party Bank would come with in the definition of consumer.
The learned counsel for the opposite party has argued that the complainant has already executed Ext.D2 irrevocable power of attorney in favour of opposite party Bank authorizing to dispose the shares in case of default but the complainant has suppressed that fact and approached the forum with unclear hands by seeking a civil remedy which cannot be considered by this forum. We find force in the above argument. Though the complainant has not pleaded anywhere in body of the complaint, the wordings in (B) relief would make it clear that the complaint has defaulted the payment of loan. Deficiency in service or unfair trade practice cannot be inferred if bank or a commercial institution acting on the basis of specific authorization of its customer even if the customer would come within the definition of consumer. Ext.D1 and D2 documents would make it clear that the complainant had conferred full and irrevocable right and authority to the opposite party bank to sell or dispose off the said securities on such terms and price the bank deems fit and adjust towards the loan account. The complainant has not denied having executed Ext.D1 and D2 documents in favour of the opposite party bank by admitting the terms and conditions of the same. He has also no case that the opposite party Bank has forged any such documents for the purpose of selling his shares. In view of the above specific authorization in Ext.D2 given by the complainant the opposite party bank is having every authority to sell the shares and adjust the sale proceeds towards loan in case of default.
On evaluating the entire materials available on record we come to the conclusion that though the complainant is the act of selling the pledged shares a consumer primafacie would not constitute deficiency in service or any unfair trade practice. Since the opposite party has acted in accordance with the terms and conditions in Ext.D1 & D2 documents executed by the complainant in favour of the bank.
Points answered accordingly.
In the result complaint stands dismissed as not maintainable.
Dictated to the Confidential Assistant Smt.Minimol S. transcribed and typed by her corrected by me and pronounced in the Open Forum on this the 18th day of November 2019.
E.M .MUHAMMEDIBRAHIM: Sd/-
S.SANDHYA RANI: Sd/-
STANLY HAROLD:Sd/-
Forwarded/by Order
Senior Superintendent
