1. Heard Mr. Chandrachud Bhattacharya, Advocate, for the complainants and Mr. Pallav Saxena, Advocate, for the opposite parties. 2. Kantilal Jamnadas and Mrs. Vibhuti Jamnadas have filed above complaint for directing The Jammu & Kashmir Bank Limited and another (the opposite parties) to pay (i) Rs.44963377/-, as the maturity amounts of FDR No.0301998/04 dated 31.03.2004 (being Rs.32864313/-) and FDR No.933740/04 dated 05.05.2004 (being Rs.12099064/-) with interest, at the same rate as payable on FDR from March, 2006 and May, 2006, respectively, till actual payment, (ii) Rs.50/- lacs, as the compensation for deficiency in service, (iii) Rs.one lac, as the costs of the litigation and (iv) any other relief, which is deemed fit and proper, in the facts and circumstances of the case. 3. The facts, as stated in the complaint and emerged from the documents attached with the complaint, are as follows:- (a) The complainants had FDR No.0398625, of maturity value of Rs.16957925/- on 26.03.1998 and FDR No.0398640 of maturity value of Rs.6431354/- on 03.03.1998, in their joint names with Vysya Bank Limited, Mumbai. The complainants wrote letters dated 25.03.1998 and 27.03.1998, respectively to Vysya Bank Limited to transfer aforesaid FDRs to, The Jammu & Kashmir Bank Limited, branch at Fort Chambers, Homi Modi Cross Lane-2, Fort Mumbai-400023. The complainants further get these FDRs transferred to The Jammu & Kashmir Bank Limited, branch at Jaipur (hereinafter referred to as the bank), where they renewed FDR No.0398625, for the period up to 28.03.1999 (renewed No.30573) and FDR No.0398640, for the period up to 05.05.1999 (renewed No.30613). The complainants deposited Rs.1164461.52 in each in two new FDR Nos.30582 and 30583 on 18.02.1998, with the bank, of which, maturity dates were 18.07.2001. The bank issued Cash Certificates in respect of these FDRs. (b) A firm M/s. Sommerville Farms Pvt. Ltd., registered office at Metro House, 2nd Floor, M.G. Road, Mumbai-400020 applied for “Cash Credit Facilities”, to the bank, for which, the complainants agreed to furnish their above FDRs as the security. The bank sanctioned loans to M/s. Sommerville Farms Pvt. Ltd. and tripartite agreements were executed between M/s. Sommerville Farms Pvt. Ltd., the complainants and the bank. The bank also took the papers i.e. (i) NRNR account opening forms signed by the complainants, (ii) Undertakings, signed by the complainants, (iii) Advance to be signed by the borrower and the complainants and (iv) Demand promissory note, from the borrower and the complainants by way of guarantees to the loans. The bank disbursed loans of Rs.15074613/- in Loan Account No.241 on security of FDR No.30573 on 27.03.1998, Rs.2158082/- in Loan Account No.246 on security of FDR Nos.30582 & 30583, on 18.04.1998 and Rs.5563191/- in Loan Account No.250 on security of FDR No.30613 on 04.05.1998 to M/s. Sommerville Farms Pvt. Ltd. (c) On maturity of FDR Nos.30573 and 30613, the complainants invested the amounts of maturity for further period of one year. The bank wrote a letter dated 18.05.1999 to M/s. Sommerville Farms Pvt. Ltd. that owing to renewal of FDR No.30573 (new No. 323463) w.e.f. 31.03.1999 to 31.03.2000 and FDR No.30613 (new No.323475) w.e.f. 05.05.1999 to 05.05.2000, new sets of loan documents were required. On the request of the borrower, the complainants again stood as the sureties for the loans and furnished the documents, as required in the letter dated 18.05.1999, including FDRs Nos.323463 & 323475. The loan amounts were also changed as Rs.17197700 in Loan Account No.241 and Rs.6516500/- in Loan Account No.250. On maturity of FDR No.323463, the complainants again invested its maturity amount in FDR No.323709 w.e.f. 31.03.2000 to 31.03.2002 and FDR No.323463 in FDR No.323742 w.e.f. 05.05.2000 to 05.05.2002. The bank again wrote a letter dated 18.05.2000 to the borrower that owing to renewal of FDR Nos.323709 and 323742), new sets of loan documents were required. On the request of the borrower, the complainants again stood as the sureties and furnished the documents, as required in the letter dated 18.05.2000, including FDR Nos.323709 and 323742. The bank adjusted maturity amounts of FDR Nos.30582 & 30583, in Loan Account No.246 on 06.08.2001 and informed the complainants, vide letter dated 03.05.2002. (d) The complainants again invested maturity amounts of FDR No.323709 w.e.f.10.04.2002 to 31.03.2003 (New FDR No.301946) and FDR No.323742 w.e.f. 15.05.2002 to 05.05.2003 (New FDR No.301948). On maturity of these FDRs, the complainants did not stood as the surety for the borrower for its loans nor submitted fresh guarantees as submitted earlier. The complainants again invested maturity amounts of FDR Nos.301946 and 301948, for a period of one year and again for a period of two years i.e. till 31.03.2006 and 05.05.2006 respectively. (e) The bank wrote a letter dated 02.05.2005 to the borrower that loan amounts had aggregated to Rs.37110896/- in Loan Account No.241 and Rs.13311992/- in Loan Account No.250, as on 30.04.2005 and the borrower was requested to deposit interest amount of Rs.20741760/- or at least Rs.10000000/-. A copy of this letter was also forwarded to the complainants. (f) The complainants, vide letter dated 08.03.2006, requested the bank to transfer the amounts of FDR Nos.323709 & 323742, along with its maturity benefits in their account No.001801078043 with ICICI Bank Ltd., Borivali Branch, Mumbai. The bank did not respond to the aforesaid letter. The complainants then gave legal notice dated 27.09.2006 to the bank for transferring the aforesaid amount to their account. The bank again did not respondent. The complainants then wrote a letter dated 24.11.2006 to Chief Manager of the bank but request was not accorded. Then this complaint was filed on 31.03.2008, alleging unfair trade practice, in adjusting the amounts of FDR Nos.323709 & 323742, along with its maturity benefits towards outstanding dues of Loan Account Nos.241 & 250, on 25.03.2006 although the complainants never stood a sureties after 18.05.2000 and their guarantees were discharged on maturity of their aforesaid FDRs on 10.04.2002 and 15.05.2002, respectively. 4. The opposite parties filed written reply on 07.08.2008 and contested the matter. The material fact relating to loan advanced to M/s. Sommerville Farms Pvt. Ltd. on 04.05.1998 and subsequent dates have not been disputed. The bank stated that the complainants had also signed application dated 04.05.1998 for sanction of the loans to M/s. Sommerville Farms Pvt. Ltd. and voluntarily stood securities for the loans amount and signed various documents and deposited the cash certificates, discharged voucher as a guarantee for the loans. It has been denied that any tripartite agreement was signed between the parties. The terms of the guarantee/undertaking was not limited till the maturity of the fixed deposit nor there was a contrary intention of the parties for limiting the guarantees upto maturity of the fixed deposits. FDRs were continuing guarantees and had never been revoked by the complainants before its adjustment by the banks towards outstanding dues on 08.03.2006. New set of the documents was required vide letter dated 18.05.1999 and 18.05.2002, but it has been denied that the guarantees were limited till the date of maturity of the FDRs. In spite of the notice given by the bank dated 02.05.2005, M/s. Sommerville Farms Pvt. Ltd. Failed to deposit the requisite amounts in the loan accounts then the FDRs of the complainants were liquidated and adjusted in the loan accounts on 08.03.2006. Even after adjusting the FDRs amount balance of Rs.5916062/- remained in the loan accounts of M/s. Sommerville Farms Pvt. Ltd. The complainants have malafidely lodged FIR against the officers of the bank on the basis of an order passed by Chief Judicial Magistrate Jaipur, in the application of the complainants under Section 156 (3) Cr.P.C.1973, although various officers had no concerned with the complainants. The notices as issued by the complainants have been duly replied. The complaint has no merit and is liable to be dismissed. 5. The complainants filed Rejoinder Reply on 30.09.2008 and Affidavit of Evidence of Kantilal Jamunadas. The opposite parties filed Affidavit of Evidence of SS Natiyal. Both the parties have filed their written submissions. 6. The counsel for the opposite parties raised preliminary objection that the complaint was time barred and no application for condonation of delay was filed, as such, it is liable to be dismissed as time barred. He relied upon judgment of Supreme Court in Civil Appeal No.4962 of 2002 Kandimalla Raghavaiah and Co. Vs. National Insurance Company and Ors., (decided on 10.07.2009). He relied upon notice dated 02.05.2005 and submitted that limitation started from the date of service of this notice while the complaint was filed on 31.03.2008. But I do not find any substance in this argument. A perusal of the notice dated 02.05.2005 shows that the bank informed the borrower that an amount of Rs.37110896/- and Rs.13311996/- respectively were due as on 30.04.2005 in the loan accounts and requested to deposit the amount of Rs.20741760/- or at least Rs. One crore immediately. A copy of this letter was also sent to the complainants. There is nothing in this notice that in case, the borrower commits any default then FDRs would be liquidated. The complainants were not given any notice that their FDRs would be liquidated or had been liquidated nor the complainants were asked to insist the borrower to clear its dues. There was no cause of action to the complainants to challenge any action of the bank on service of letter dated 02.05.2005. It is only in the notice dated 27.09.2006, the complainants mentioned that FDRs had been adjusted in the loan accounts. As such the complainants came to know about adjustments of the FDRs on 25.03.2006, only on 27.09.2006 and the complaint was filed on 31.03.2008 and it was not barred by limitation. The case law relied by the counsel for the opposite parties have no application in the fact of the case. 7. Another preliminary objection has been raised by the counsel for the opposite parties that the loans were taken for commercial purpose, as such, the complainants are not a “consumer”. He relied upon the judgment of Supreme Court in Shrikant G.Mantri Vs. Punjab National Bank (2022) 5 SCC 42. The complainants are not the borrower of the loans rather guarantors. The complaint has been filed for encashment of FDRs. The complainants are depositors of FDRs. Purpose of the FDRs cannot be said to be a commercial purpose. This objection has also no merit. 8. I have considered the arguments of the counsel for the parties and examined the record. It is not in dispute that the complainants agreed to stand as securities against the loans, sanctioned to M/s. Sommerville Farms Pvt. Ltd. Mumbai and deposited their FDRs with signed discharge vouchers by way of guarantee and executed other papers and authorised the bank to encash the FDRs either before its maturity or after its maturity. The first set of document relating to the guarantees were submitted by the complainants on 18.05.1998. Thereafter, the bank issued letter dated 18.05.1999 that owing to renewal of the FDRs against which credit facilities were granted, new sets of loan documents were required. In compliance of this letter, the complainants again submitted its guarantees and all other papers including the discharge voucher of FDRs. Thereafter the bank again issued letter dated 18.05.2000 in the same terms that owing to renewal of FDRs, new sets of loan documents were required. The complainants submitted new sets of documents including the guarantees demand of promissory note discharge voucher separately for the two loan accounts which are now in dispute. According to the complainants this guarantees were discharged on the date of maturity of the FDRs and its further investment for new periods. According to the bank it was continuing guarantees and never revoked prior to its liquidation on 25.03.2006. 9. The guarantees as submitted by the complainants on issue of letter dated 18.05.2000 read as follows: “Dear Sir, I/We shall be grateful if you kindly allow me/us M/s. Sommerville Farms Pvt. Ltd. an advance of Rs.19356200/- (Rs.one crore ninety three lakhs fifty six thousand two hundred) by way of Demand Loan/Cash Credit/Overdraft against the security of my/our Fixed Deposit Receipts/Cash Certificate/Monthly Yield No.323709 dated 31.03.2000 due on 31.03.2002 for Rs.21506895/- 2. In consideration of your allowing me/us the above advance facility against the security of above noted Deposit receipt for the purpose of…………………...I/We hereby authorise you to adjust the outstanding loan along with interest accrued thereon from the proceeds of the above said Fixed Deposit/Cash Certificate/Monthly Yield-Receipt rendered to you duly discharged as security on its maturity if not otherwise adjusted. The bank may at any time at its sole discretion adjust the said loan account by crediting the proceeds of the deposit even before maturity and without any prior notice to me/us.” Guarantee in same terms was given against FDR No.323742 dated 15.05.2000 due on 05.05.2002 for Rs.8149428/-. 10. The contention of the complainants that the guarantee stood revoked on the maturity of the FDRs which were placed by way of guarantee up to 31.03.2002 and 05.05.2002 respectively. The complainants relied upon the judgment of Supreme Court in Jammu and Kashmir Bank Ltd. Vs. Attar-Ul-Nissa & Ors., AIR 1967 SC 540. In this case, the money was credited in the account under mistake by the bank. Supreme Court held that for withdrawal of the amount even if it was credited under some mistake, the account holder had to be given notice of it. This contention is not liable to be accepted. Section 129 of the Contract Act, 1872 defines “continuing guarantee” as follows: “Section 129.- Continuing guarantee - A guarantee which extends to a series of transactions, is called a ‘continuing guarantee’. Illustrations (a) A, in consideration that B will employ C in collecting the rents of B’s Zamindari, promises B to be responsible, to the amount of 5,000 rupees, for the due collection and payment by C of those rents. This is a continuing guarantee. (b) A guarantees payment to B, a tea-dealer, to the amount of £100, for any tea he may from time to time supply to C. B supplies C with tea of above the value of £ 100, and C pays B for it. Afterwards, B supplies C with tea of the value of £ 200. C fails to pay. The guarantee given by A was a continuing guarantee, and he is accordingly liable to B to the extent of £100. (c) A guarantees payment to B of the price of five sacks of flour to be delivered by B to C and to be paid for in a month. B delivers five sacks to C. C pays for them. Afterwards B delivers four sacks to C, which C does not pay for. The guarantee given by A was not a continuing guarantee, and accordingly he is not liable for the price of the four sacks.” 11. The complainants stood as guarantee for a loan accounts and there is nothing on record that the guarantees were for limited period till the maturity of the FDRs. The terms used are “we hereby authorise you to adjust the outstanding loan along with interest accrued there on from the proceeds of the above said fixed deposit/cash certificate/ monthly yield-receipt tendered to you duly discharged as security on its maturity if not otherwise adjusted.” From this term, it is clear that the guarantee can be utilised at any time before the maturity date or after maturity date, but guarantee were not limited till the date of maturity. The bank under the authorities created by the complainants in the guarantee letters, signed discharged voucher and other papers has rightly utilized the maturity amounts of FDRs towards the loan, which were overdue against the borrower. ORDER I find no merit in complaint. The complaint is dismissed. |
