BEFORE THE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD.
FA 620 of 2010 against C.C. 862/2009 ,
Dist. Forum-III, Hyderabad.
Between:
1) E. Jayarama Rao
S/o. E.Krishna Swamy
Aged about 39 years,
H.No.12-2-823/A/56,
Santosh Co.Op Housing Society,
Mehdipatnam, Hyderabad.
2) E .Indira Priya Darshini
D/o. E.Krishna Swamy,
Aged 34 years,
Permanent Address:
12-2-823/A/56,
Santosh Co-op, Housing Society
Mehdipatnam, Hyderabad-500 028
Rep. by GPA E.Krishna Swamy *** Appellant/
Complainant
And
The ICICI Bank Limited,
ICICI Bank Towers,
Bandra – Kurla Complex
Mumbai 400 051 *** Respondent/
O.P.
Counsel for the Appellants: P.I.P.
Counsel for the Respondents: M/s. P. Ramachandran
CORAM:
HON’BLE SRI JUSTICE D.APPA RAO, PRESIDENT
SRI R. L. NARASIMHA RAO, MEMBER
&
SRI T. ASHOK KUMAR, MEMBER
WEDNESDAY, THE TWENTY FIFTH DAY OF JANUARY TWO THOUSAND TWELVE
ORAL ORDER: (Per Hon’ble Sri Justice D.Appa Rao, President )
***
1) Appellants are unsuccessful complainants.
2) The case of the complainants in brief is that M/s. Lloyds Housing Finance Ltd issued redeemable non-convertible debentures of Rs. 10,000/- and Rs. 5,000/- respectively. It has agreed to pay interest on 31st March and 30th September every year. They were redeemable in three instalments viz., on 1.3.2001 at Rs. 1,700/-, on 1.3.2002 at Rs. 1,700/- and on 1.3.2003 at Rs. 1,600/-. The respondent bank is the trustee for redemption of amount secured by a first mortgage and charge in favour of trustees on the company’s immovable properties. The debenture holders can exercise their rights and remedies against the company in respect of, arising out of, and incidental to debentures through trustees. The company defaulted in payment of interest from 1.4.1999 in respect of first complainant and from 1.10.1998 in respect of second complainant. Despite repeated requests it did not redeem the debentures. The respondent bank did not enforce the mortgage, though the Bombay High Court granted permission to dispose off the property. Therefore it amounts to deficiency in service. Complainant No. 1 claimed Rs. 27,709/- while complainant No. 2 claimed Rs. 14,280/- together with interest, compensation and costs.
3) Though the respondent bank engaged an advocate, did not choose to file written version, and therefore it was proceeded set-exparte.
4) The complainants in proof of their case filed their affidavit evidence, and got Exs. A1 to A11 marked.
5) The Dist. Forum after considering the evidence placed on record opined that there was no consumer relationship between the parties, and the complaint is not maintainable under the provisions of the Consumer Protection, Act, and therefore dismissed the complaint.
6) Aggrieved by the said decision, the complainants preferred the appeal contending that the Dist. Forum did not appreciate either facts or law in correct perspective. It ought to have seen that the respondent bank is appointed as ‘trustee’ which had agreed to protect the interests of debenture holders, and they being holders of non-convertible debentures were entitled to the amount as they stand as consumer-vis-à-vis bank. Non-payment amounts to deficiency in service, and therefore prayed that the respondent bank be directed to pay the amount covered under the debentures.
7) The point that arises for consideration is whether the order of the Dist. Forum is vitiated by mis-appreciation of fact or law?
8) It is an undisputed fact that M/s. Lloyds Housing Finance Ltd offered redeemable non-convertible debentures and allotted such debentures Rs. 10,000/- and Rs. 5,000/- in favour of complainant Nos 1 & 2 respectively vide Ex. A1 & A10. These debentures could be redeemed in three instalments wherein a sum of Rs. 1,700/- each on 1.3.2001 and 1.3.2002 and a sum of Rs. 1,600/- on 1.3.2003 are payable. The respondent bank is appointed as ‘trustee’ and these debentures are secured by first mortgage and charge in its favour on 31.5.1997. One of the terms reads: “All rights and remedies of the debenture holders against the company in respect of, arising out of, or incidental to the debentures shall be exercisable by the debenture-holders only through the trustees.”
9) The complainants allege that M/s. Lloyds Housing Finance Ltd did not carry on any housing finance business since about 1997-98 and changed its name into ‘M/s. Europe Enterprises Ltd.’ which was not informed either by the company or by the trustees, and they were not privy to this development. Later M/s. Europe Enterprises Ltd., Bombay entered into a scheme of compromise by an application under Company Law, and diverting the responsibility of the trustees to the debenture-holders, and a sum of Rs. 2,500/- in respect of complainant No. 1 and Rs. 1,500/- in respect of complainant No. 2 was made by way of cheque payable at Mumbai. It was received under protest. However, they failed to pay interest and redemption value despite several notices. On his letters the respondent bank by letter 8.12.2005 intimated “ICICI bank has filed a suit in the Bombay High Court in the capacity as debenture trustees. The court has granted permission to sell and dispose off the suit flat. We are taking steps to sell the said property.” However, the bank neither sold the property nor paid the amounts covered under the debentures.
10) The appellants/complainants enclosed the ‘Investors’ guide to the Capital Market’ published by Ministry of Corporate Affairs, Govt. of India in order to impress on this Commission as to the role of intermediary pertaining to shares of debentures. It was observed “Shares of debentures after they have been issued are regarded as goods. In case of deficiency of service by an intermediary or company, an investor can approach the Consumer Forum.”
11) The learned counsel for the complainants relied on debenture certificates wherein it was categorically mentioned that “ all rights and remedies of the debenture holders against the company in respect of arising out of or incidental to the debentures shall be exercisable by the debenture holders only through the trustees.”
12) It is an undisputed fact hat the respondent bank did not enforce the mortgage nor paid interest/redemption money to the debenture holders though it has promised under various letters. The respondent bank did not dispute that
M/s. Lloyds Housing Finance Ltd did not carry housing finance and changed its name into M/s. Europe Enterprises Ltd. on 18.1.2002, it has permitted the respondent bank to dispose of the secured/mortgaged property with objects other than housing finance. It seems M/s. Europe Enterprises Ltd., filed a suit before the Bombay High Court for obtaining the consent of the debenture holders for a scheme of compromise. The applicant states that the Hon’ble High Court of Bomay by its order dt. 6.11.2001 had ordered sale of suit flat. However, the suit flat was still not been sold by the ICICI Bank. No doubt the said scheme is only applicable to those debenture-holders who had agreed, not to proceed with any other proceedings before any court or forum during the pendency of the scheme. Whatever be the proceedings the fact remains that the respondent bank did not enforce the mortgage or paid the amounts to these debenture holders. As trustees it had agreed to carry out the responsibility of paying these amounts. We may state that the respondent bank did not respond to any of the notices or even filed its written version in order to state as to why it did not carry out the responsibility entrusted to it.
13) Even in the appeal while advancing arguments as well as in written arguments they did not give any reasons as to why their services would not attract definition of ‘service’ defined under the Consumer Protection Act. Their contention is contrary to the instructions given under ‘Investors’ Guide to the Capital Market’ which we have already adverted to.
14) Yet another contention was that M/s. Lloyds Housing Finance Ltd ought to have been made as a party. The respondent bank did not dispute that the said company has been changed under the name and style of ‘M/s. European Enterprises Ltd’., and therefore there is no meaning in impleading M/s. Lloyds Housing Finance Ltd. At any rate, in view of the fact that the respondent bank has agreed to act as ‘trustee’ and discharge its duties, and agreed to pay the amounts covered under the debentures and non-payment of amounts without any valid reason would amount to deficiency in service. They are bound to pay the said amount.
15) The respondent bank did not contest the matter before the Dist. Forum. They preferred not to contest, thus agreed to suffer decree. Even in the appeal except stating that M/s. Lloyds Housing Finance Ltd is a necessary party and the dispute does not come under the provisions of Consumer Protection Act contrary to the instructions issued by Ministry of Corporate Affairs, Govt. of India, no other contention was raised. We are unable to accede to the contention of the respondent bank in view of the instructions by the above authority.
16) In the result the appeal is allowed setting aside the order of the Dist. Forum. Consequently the complaint is allowed in part directing the respondent bank to pay Rs. 34,588/- to complainant No. 1 and Rs. 19,473/- to complainant No. 2 with interest @ 9% p.a., from the date of complaint viz., from 14.9.2009 till the date of realization together with costs of Rs. 5,000/-. Time for compliance four weeks.
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
3) ________________________________
MEMBER
25/01/2012
*pnr
UP LOAD – O.K.
