DISTRICT CONSUMER DISPUTES REDRESSAL FORUM: BHADRAK
Dated the 27th day of December, 2019
C.D Case No. 20 of 2019
Present 1. Shri Raghunath Kar, President
2. Shri Basanta Kumar Mallick, Member
3. Afsara Begum, Member
Tulashi Chandra Behera
S/o Late Agani Behera
Vill: Haripur,
Po: Korkora,
Ps: Bhadrak (R),
Dist: Bhadrak ……………………. Complainant
(Versus)
1. The Chief/Senior Manager, Allahabad Bank
Bhadrak Branch, Bhadrak
At: Main Road (Opposite Jail)
Po: Bhadrak,
Ps: Bhadrak (R),
Dist: Bhadrak
2. The Chief Manager, Allahabad Bank,
Zonal Office,
3/1B, IRC Village, Nayapalli, Bhubaneswar
……………………..Opp. Parties
Counsel For Complainant: Sri D. Nayak, Adv & Others
Counsel For the O.Ps: Sri Guru Prasad Mohanty, Adv & Others
Date of hearing: 22.10.2019
Date of order: 27.12.2019
BASANTA KUMAR MALLICK, MEMBER
This dispute arises out of the complaint filed by the complainant alleging deficiency of service and unfair trade practice against the O.Ps.
The facts of the this case as described in the complaint are to the effect that the complainant is a poor farmer having good knowledge in different field of farming and has also under gone training in mushroom cultivation and mushroom spawn production. As he is well equipped with the knowledge of spawn production, he evinced interest in setting up of a spawn production unit with the credit support of financial institution. In course of final stage of training, the complainant expressed his interest before the trainers and experts of O.U.A.T who highly appreciated the idea of the complainant and encouraged to set up such unit which is highly required for the locality as there was no such unit in the District of Bhadrak. Accordingly the experts of O.U.A.T prepared a project report for the complainant for mushroom spawn production and handed over to the complainant for arrangement of credit assistances from the local Banks to startup the project. On having the project report, complainant approached OP No. 1 for credit support who agreed to extend support on compliance of requirements. OP No. 1, on compliance of requirements, sanctioned a sum of Rs 17,00,000/- excluding promoter’s contribution and imposed a condition to provide collateral security of land and building preferably within the Municipal area and to execute registered mortgage deed in favour of the OP Bank. Although the complainant belongs to a Panchayat area, took much strain and pain for such arrangement and finally arranged a person who agreed to mortgage his homestead land in favour of the OP Bank and also did so. After the documentation is over, the OP Bank released the first phase loan of Rs 2,70,000/- in two installments for construction of project shed and after that he approached for release of second phase loan for acquisition of plant and machinery as per project report which could not be materialized within a period of one and half years and finally OP No. 1 pressed hard the complainant to give an undertaking to reduce the limit to Rs 5,00,000/- and forced the complainant to give an undertaking in writing according to his dictation. Under such compelling situation the complainant found no other way other than to give an undertaking as dictated by OP No. 1. Despite such undertaking OP Bank did not release the residual loan amount and finally refused to release the loan for the project. Therefore whatever investment was made, including promoter’s distribution, went bad and the project could not be completed due to non-corporation of the OP Bank. When the complainant approached the OP Bank for reconveyance of mortgage deed as there was no need of collateral security for the loan up to Rs 5,00,000/- as per circular of Reserve Bank of India issued to all Banks. But the OP Bank did not pay any heed to the grievance of the complainant rather pressed hard to pay back the loan together with interest. The complainant, being simply and innocent person, repaid an amount of Rs 85,000/- to the credit of his loan account in disposing off the ornaments whatever were under his possession. Because of inadequate credit support, the project could not be completed and did not yield any income for repayment of loan which warranted a lot of financial problem for the complainant. The complainant had taken up such project to earn his lively hood and to maintain his family consisting of six members but the dreams of the complainant could not be materialized due to non-corporation of the banker and paucity of funds. When the Bank started initiating coercive action, the complainant very politely requested the Bank to give him time for repayment and liquidation of loan amount but the Bank went on harassing the complainant at his home and even in the public places. Finding no other way the complainant took shelter of the Forum for natural justice and deficiency of service of the O.Ps praying for a direction to the O.Ps to exempt the loan whatever is outstanding, cancelation of mortgage deed and to award cost and compensation to the complainant to augment the loss sustained by him.
O.Ps objected the points of allegation and contested the case. The counsel of the O.Ps filed the written version raising the question of maintainability on the ground of status of the complainant as a consumer, cause of action and limitation. That apart the O.Ps have denied the points of allegation elaborated in the complaint on the plea that the complainant has filed a false case to avoid repayment of loan installments even the O.Ps have denied who have sanctioned Rs 17,00,000/- in favour of the complainant to setup a mushroom spawn production unit. In narrating the facts, O.Ps have stated that on the request of the complainant the O.Ps sanctioned a loan and after completion of all formalities released a sum of Rs 1,20,000/- instantly and thereafter Rs 1,50,000/- as first phase of loan. But at the later stage the complainant requested the Bank to sanction a sum of Rs 4,00,000/- instated of Rs 17,00,000/- as an ordinary agricultural loan to manage setting up of the mushroom project. Basing upon the written undertaking given by the complainant, O.Ps have reduced the limit of loan from Rs 17,00,000/- to Rs 4,00,000/- and on utilization verification conducted by the O.Ps where it was found the loan so released earlier was not properly utilized, the residual amount of Rs 1,30,000/- was not released in favour of complainant. Further it is also raised that there is no such circular issued by the Reserve Bank of India regarding exemption of collateral security up to the limit of Rs 5,00,000/- loan. In addition to above fact the O.Ps have also highlighted that they have served notice upon the guarantor-cum-mortgager of the loan under the provisions sub Section 2 of Section 13 of SARFAESI (Securitization And Reconstruction of Financial Assets and Enforcement of Security Interest) Act 2002, directing the mortgager and the borrower to repay the entire amount outstanding within a period of 60 days which is a legal instrument applied by the Bankers against the defaulting borrowers. In this manner, the O.Ps have adopted the legal procedure to recover the loan. Therefore the claims raised by the complainant in the complaint are all illegal and vexatious. Finally the O.Ps prayed to the Forum that the complaint itself does not bear any merit and deserves to be dismissed with cost.
Gone through the complaint of complainant, written version submitted by O.Ps, perused materials on record, heard both the parties in course of hearing and observed as discussed below.
1. At the outset of hearing, the complainant submitted all about his allegations and how the O.Ps are deficient in providing proper service to the complainant causing huge financial loss. Thereafter the O.Ps raised the question of maintainability on the ground of the status of complainant as a consumer. In compliance of the question, the complainant submitted that at the time of processing of loan, the O.Ps have realized a sum of Rs 3,424/- towards service charges and Rs 4,879/- towards supervision and inspection charges by way of debiting the loan account of the complainant which entitles the complainant to be a bonafide consumer of the OP Banks and therefore the objection raised by the OP Bank is not sustainable. Secondly according to the materials available on record it is evident and crystal that the cause of action arose on 29.01.2018 when the O.Ps served notice upon the complainant through District Legal Aid Cell and on 26.11.2018 when the O.Ps served a notice for repayment of loan. In such a situation it is observed that the objection raised by the O.Ps on the ground of cause of action and barred by limitation is not sustainable.
2. In course of hearing complainant submitted that the limit amounting Rs 17,00,000/- was sanctioned on 19.08.2015 for setting up of mushroom spawn production unit out of the total project cost of Rs 20,00,000/- and accordingly executed Demand Promissory note on the same date along with other loan documents as required by the OP Bank but did not handover a copy of the sanction letter and loan agreement so as to enable to the complainant to know about the terms and conditions stipulated therein as a result of which the complainant remained in darkness. Out of the total sanctioned amount of Rs 17,00,000/- O.Ps released Rs 1,20,000/- on the same day to start construction of shed and Rs 1,50,000/- on 15.09.2015 to complete the construction of the shed. The second installment of loan was released after verification of utilization of first installment released. Since then the complainant, after utilizing the second installment of loan, met OP No. 1 requesting for release of the loan required for acquisition of machineries and tools required for installation of project equipments as specified in the project report but the O.Ps neither visited the spot for verification of utilization nor responded to the complainant to take any follow up action for completion of the project. The complainant, being disappointed, fervently requested the Branch Manager in position of OP No. 1 Bank to release the amount who always used to say “we are considering to release further installment” but did not take any step for release of loan in spite of several requests. In this manner more than a year was passed, no concrete action was taken by the banker to enable the complainant to avail the loan and to complete the project. Surprisingly on a day, Branch Manager of OP No. 1 Bank asked the complainant to be present in their Bhadrak Branch and when the complainant reached at the Branch, the Branch Manager along with two other Officers forced him to give an undertaking according to their dictation which was done by the complainant as he was helpless there. The complainant was directed there to give the undertaking to reduce the limit from Rs 17,00,000/- to Rs 5,00,000/- which was mentioned in said undertaking note. Although the amount is very much inadequate to complete the project for generating income, the complainant utterly failed to complete the project. Such act of O.Ps clearly proves deficiency of service and taking of undertaking forcibly from the complainant indicates their ulterior motive and unfair trade practice. On perusal of material on records it is seen that the complainant, although under compulsion, has given undertaking for sanction of Rs 5,00,000/-, which has subsequently been corrected as Rs 4,00,000/- by cutting and overwriting. Therefore the Forum arrives at the conclusion that the OP No. 1 has intentionally and deliberately reduced the amount from Rs 17,00,000/- to Rs 4,00,000/- without any justifiable reason leading incompletion of project and thereby causing financial sufferings for the complainant.
3. In course of hearing the complainant raised that although he has sincerely requested the O.Ps to cancel the mortgage deed as no collateral security is required for an advance of Rs 4,00,000/- as per circular issued by Reserve Bank of India vide No. RBI/2009-10/449/RPCD.SME.BC.No. 79/060231/2009-10 dt. 6th May 2010 wherein all the Banks have been directed not to insists upon the borrowers for collateral security up to the limit of Rs 10,00,000/-. Preliminarily the mortgage deed was executed for a limit of Rs 17,00,000/- but when the limit was reduced, it was responsibility of the OP Bank to cancel the said mortgage deed but did not do so with ill intention and ulterior motive. On the other hand O.Ps submitted in stating that the abovementioned circular is applicable to the loans granted in respect of nonfarm sector loans but failed to adduce relevant circular in support of their contentions. On perusal of records it is observed that the allegation of the complainant is sustainable and the objections of O.Ps irrelevant in this context and therefore rejected.
4. The O.Ps, in course of hearing, attracted the attention of the Forum to clause No. 18 & 19 where it is distinctly mentioned that the OP Bank has liberty to recover the loan in part or full or stop financial assistances at any stage without prior notice to the borrower which was strongly objected by the complainant. The complainant submitted in stating that this provision is applicable in case where the borrower is at fault for misutilisation of the loan amount or left the project half hazard as he has no interest to carry on and complete the project. But in this case the complainant was interested to proceed with project towards it’s completion and to start production for generation of income so as to pay back the loan together with agreed interest to the Banker. Therefore it is held that the OP Bank with some ulterior motive have stopped financing the loan inflicting financial sufferings to the complainant.
5. As submitted by complainant it is very essential to mention here that when the complainant has given an undertaking to the Bank for reduction of limit to Rs 4,00,000/-, the OP Bank had to cancel the earlier sanction order for Rs 17,00,000/- and could have issued a fresh sanction letter to the complainant for an amount of Rs 4,00,000/- which is not done by the OP Bank and clearly proves that the O.Ps have resorted to unfair trade practice.
6. During hearing the complainant drawn the attention of the Forum to the mortgage deed executed by third party guarantor-cum-mortgager wherein it is clearly mentioned at paragraph 2 that such limit has been sanctioned in favour of the mortgager for an amount of Rs 17,00,000/- which clearly proves that the OP Bank has hurriedly and intentionally have done mischief in the documents and also proves there is no loan liability against the borrower.
From the above analysis of facts with reference to materials available on record it is crystal that O.Ps have mischievously made the documents taking advantage of the ignorance and simplicity of the complainant. Further it is also observed that the O.Ps have issued notice upon the mortgager under the provisions of Sub Section 2 of Section 13 of SARFAESI Act under intimation to the borrower demanding the mortgager to pay the entire amount of loan outstanding in the loan account together with future interest and costs. But surprisingly the O.Ps have not proceeded with provisions of afore-mentioned Act rather went on serving repeated demand notices to the borrower/complainant which proves the O.Ps have somewhere committed mistake and are at fault.
In view of the above discussions the Forum is of unanimous opinion that the O.Ps have grossly neglected to provide adequate loan support to the complainant for completion of the project as a result of which said project remained incomplete due to under financing and caused irreparable loss to the complainant which need to be augmented by the O.Ps. Hence it is ordered;
- ORDER
The complaint be and the same is allowed against the O.Ps with cost and compensation. O.Ps are directed to exempt the loan outstanding against the complainant and to cancel the mortgage deed executed by the guarantor. The O.Ps are also directed to pay Rs 3,000/- as cost of litigation and Rs 5,000/- as compensation for mental agony and harassment. This order must be complied by the O.Ps within a period of 30 days from the date of receipt of this order failing which the O.Ps shall have to pay Rs 50/- per day as compensation till the date of compliance of this order.
This order is pronounced in the open Forum on this day of 27th December, 2019 under my hand and seal of the Forum.
