Date of filing      : 02-05-2014

Date of Disposal : 29-01-2015

BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM

           :: NELLORE ::

Thursday, this the 29th day of JANUARY, 2015.

          PRESENT:  Sri P.V.Krishna Murthy, B.A., B.L., President

                                      Sri M.Subbarayudu Naidu, Member

                      C.C.No.28/2014

1. Pasam Sayamma,

    W/o.Late Venkataiah,

    Hindu, Widow, aged about 50 years

2. Pasam Ramesh,

    S/o.Late Venkataiah,                                                                                            … 

    Hindu, aged about 29 years,

3. Pasam Krishnaiah,

    S/o.Late Venkataiah,

    Hindu, aged about 25 years

    All are presently residing at

    H.No.4-8-251, Nawabpet, Nazeer Thota,

   Nellore – 524 002.                                                                … Complainants

                      Vs.                                                                                                                                                       

The Manager,

Andhra Bank,

Main Branch,

Brindavanam, Nellore.                                                            … Opposite party

This matter coming on  02-01-2015 before us for final hearing in the presence of Sri T.Gopal Reddy, Advocate for the complainants and  Sri K.Sesha Reddy, Advocate                                   

for the opposite party and having stood over for consideration till this day, this Forum passed the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

ORDER                                                                                                                                                                                                                          (BY SRI M.SUBBARAYUDU NAIDU, MEMBER ON BEHALF OF THE BENCH)

    This Consumer case is filed against the opposite party by the complainants to direct the opposite party to return the gold ornaments pledged towards surety to the gold loan account bearing No.038430100044825 to her immediately, to pay Rs.90,000/- towards damages for her mental agony, distress and financial loss caused due to deficiency in service and negligence of opposite party and also to grant costs of Rs.5,000/- and such other further relief or reliefs as deemed fit and proper in the interests of justice.

The factual matrix leading to filing of this consumer case is set out hereunder and it is as follows as:-

(a) It is the case of the complainants that the opposite party had canvassed its loan schemes in and around Nellore District and further it had stated that it will return the gold ornaments etc pledged immediately after the loan is discharged.  While so, attracted by its promises and assurances, the husband of the 1^st complainant and father of 2^nd and 3^rd complainants i.e., Pasam Venkataiah while he was alive, availed gold loan of Rs.1,70,000/- from opposite by pledging his gold ornaments.

(b) It is further submitted that in the same para of the complaint by the complainants that opposite party took gold ornaments 130 grams i.e., Sarudu, Nallapusala Danda, Plain gold Chain, ear hangings (Kammalu) Gold Ring with emerald green stone, Maateelu and brasslet etc. towards surety to the said loan amount of Rs.1,70,000/-. Under debit advice gold loan account No.038430100044825 on 06-12-2012,  the opposite party promised and assured them that as and when the said gold loan is discharged, the opposite party-bank will return the said gold ornaments immediately on the same day itself.

( c ) It is also further stated by the complainants in para – 2 of her complaint that the husband of the 1^st complainant had also availed home loan under home loan account No.038430100039850 by mortgaging their house.  The opposite parties had provided insurance coverage with India First Life Insurance Co., Ltd., to the said home loan after collecting Rs.56,926.74 from out of the loan amount in a single premium from the 1^st complainant’s husband.  The complainants had further submits that the said husband of the 1^st complainant is very hale and healthy and discharging his duties very effectively.  While so, on 24-05-2013, the 1^st complainant’s husband suddenly got pain in left ankle with fever and immediately he approached SVIMS, Tirupati which who diagnosed as cancer (Synovial Sarcoma) and joined as in-patient on 24-05-2013 and discharged on     31-05-2013 and finally he was died on 08-06-2013.  The 1^st complainant, who is the wife and nominee of late Venkataiah informed the same to the opposite party and submitted her claim for appropriation of the insurance amount to the said loan amount and to return the remaining amount.  But the said insurance company was repudiated the same without any basis and valid reasons.  So, the complainants had filed a separate complaint against the opposite party and insurance company and the same is pending before the Hon’ble Forum.

(d)  It is also further submitted by the 1^st complainant in para -3 of her complaint that on knowing the death of borrower, the opposite party demanded the complainants to discharge the entire gold loan amount with interest and promised and assured that the gold ornaments pledged  as surety will be returned as and when the entire gold loan with interest, is discharged.  Believing the assurances and promises of opposite party  and in view of urgency of gold ornaments, the complainants discharged the entire loan amount with interest  thereon by paying Rs.1,81,690/- under credit advise towards final payment of gold loan on              25-06-2013 and requested the opposite party to return the gold ornaments as opposite party bank promised and assured.  But, the opposite party requested the complainants to come on the next day to take back the said gold ornaments.  As promised and as per request of opposite party, the complainants approached the opposite party on 26-06-2013, but the opposite party has been postponing the same on some pretext or other and delaying to return the same illegally arbitrarily without any basis.  

( e ) It is also further submitted by the complainants that at page no.3 that they have discharged the entire loan amount with interest on 25-06-2013 and though the  opposite party–bank had collected huge amount as interest and though they are bound to return the gold ornaments as and when the entire loan discharged, the opposite party did not choose to return the same and postponing the same without any basis and kept the gold ornaments illegally and arbitrarily.  Though, the complainants are not liable to pay the home loan  instalments, since the same is covered under home loan insurance, and the insurance company is liable to pay the said insurance amount, as per request of the opposite party, the complainants have been paying the said home loan instalments also as a law abiding citizens without any default so far, though the complainants are not liable to pay the loan instalments, subject to realization of insurance claim amount, and the complainants are not in default in payment of instalments of home loan also after the death of the borrower also till today.   It is the legal and bounden duty of opposite party to return the gold ornaments as and when the entire gold loan discharged and the complainants had never defaulted in payment of the loan instalments in any loan.  But the opposite party did not choose to return the gold ornaments so far and failed to return the same so far.  Non-returning the gold ornaments in spite of discharging entire loan amount and keeping the same with them illegal and arbitrarily, constitutes gross negligence and deficiency in service.  Due to that the complainants had suffered a lot of financial loss, mental agony and inconvenience and for which the opposite parties are not only liable to return the gold ornaments besides paying compensation to the complainants.   Hence, the complainants had approached the Hon’ble Forum for  redressal of their grievance.

(f) There are causes of action as narrated by the complainants at page no.4 to file the complaint before this Hon’ble Forum and prayed for the reliefs and to allow their complaint with costs.  Hence, the complaint.

DEFENCE:

II The complaint was resisted by the opposite party by denying the allegations which are made in the complaint by the complainant, and filed a detailed counter/written version of opposite party on 07-08-2014.  First of all, as per the contentions of opposite party that  the complainant is not maintainable either in law or on facts.  It is submitted by the opposite party in its counter in para-3, that admitted that the husband of the complainant by name Pasam Venkataiah availed gold loan of Rs.1,70,000/- by executing necessary documents in favour of opposite party on 29-10-2012.  But, the opposite party had said that net weight of gold was 85 grams and the contention of the complainant about gold ornaments weighing 130 grams is not correct.  The particulars of gold ornaments which were pledged as a surety for gold loan and they are as hereunder and its description are namely:

       1.                                                     5.                                   

       2.                                                     6.

       3.                                                     7.  

       4.                                                     8.

                                                               9.

 (2)  It is also further submitted by opposite party in para 5 of its counter that the husband of the 1^st complainant and father of 2^nd and 3^rd complainants by name Pasam Venkataiah had availed loan of Rs.9,00,000/- from opposite party at the age of 56 years  in May, 2012 and liability insurance policy for the said amount of Rs.9,00,000/- is also issued to the said Pasam Venkataiah on collecting an amount of Rs.56,926.74 paisa towards insurance premium in 12-05-2012 by the India First Life Insurance Company Ltd. on making the proposal form by the said Pasam Venkataiah on 12-05-2012. 

      While so, on receiving the death intimation of the said Pasam Venkataiah, it is advised to the complainants to submit the required papers to the India First Life Insurance Company Ltd. for preferring the claim.  On 23-08-2013 the said insurance company ltd. sent a letter to the 1^st complainant, repudiating the claim giving the following reasons: -

 “In proposal form for the said insurance the following information was given by the said Pasam Venkataiah.

 Question No.1 Are you suffering or have you suffered from any illness/disease ailment upto date of making his health declaration or suffer from any physical or mental condition? – NO.

Question No.2   Have you suffered in the past for symptoms of high blood pleasure, diabetes, heart attack or disease, stroke, chest pain, kidney disease, aids or positive HIV Test, cancer or tumor, asthma or respiratory disease, mental or nervous disease, liver disease, (including hepatitis B carrier), blood disease, digestive and bowel disorder, arthritis or deformities or any other not stated above? NO.

And further in said reply notice it is also stated by the India First Life Insurance Company Limited that the said Pasam Venkataiah/Life assured had undergone heart surgery prior to his proposal for insurance and that all the replies are false and in view of the same it is clear that the life assured has given false and misleading information to the said company and had the life assured replied to the above mentioned questions truthfully and correctly in the proposal form the company would not have issued the above policy at all/and or on existing  terms.  It is evident that the company had been led to issue the policy by suppressing material facts regarding his past medical history.  Hence repudiated the claim”.

(d) It is also further submitted by the opposite party in para – 6 of its counter that bank officials demanding  the complainant to pay the amounts due under the above said housing loan and also Gold loan.  But the complainants herein paid the entire gold loan amount with interest and failed to pay the housing loan amount due.  The allegations which were made by the complainants that the opposite party- bank collected huge amount of interest is not correct.

(e) It is further stated by the opposite party in para-7 of its counter that in the application for loan against gold ornaments dt.29-10-2012, it is agreed by the said Pasam Venkataiah in the following conditions also.

 “The bank is having right to hold and retain the ornaments for security for any other existing or future liability or liabilities payable by him to the bank as a borrower or as co-obligant or as guarantor”

(f) It is also further submitted by the opposite party in para 8 of its counter that the complainants have failed to pay  the agreed installments of housing and as such the bank officials demanded the complainants to clear of the said loan.  But, the complainants are failed to clear of  the same.  As such by exercising the bankers under section 171 of Indian Contract Act, the bank to hold and retain the said gold ornaments.

(g)  It is also further submitted by the opposite party in para 9 of its counter at page No.3 that in the said circumstances the allegations which are made by the complainants that the bank will return  the gold ornaments etc., pledged immediately after the loan is discharged and promised and assured that the gold ornaments pledged as surety will be returned as and when the entire gold loan with interest is discharged and promised to return the gold ornaments are not correct and the same are invented  one for the purpose of filing this complaint.  As of right as the amount due under the said housing loan transaction is due, the opposite party bank with hold said ornaments.

(h) The opposite party bank has submitted that in para 10 of its counter that there is no gross-negligence and deficiency in service on the part of the bank and as such the complainant suffered lot of financial loss, mental agony and inconvenience are not correct.  The other allegations against opposite party are hereby denied.

(i) It is not a consumer dispute and there is no cause of action to file this consumer case and the complainants are not entitled for the reliefs as prayed for.  Hence, the complaint is liable to be dismissed with exemplary costs.

III   The complainant has filed chief-affidavit on 29-10-2014 and on his behalf the documents which were marked as Exs.A1 to A7 on 11-11-2014, whereas the opposite party–bank has also filed an affidavit on 29-12-2014 through its manager one Mr.K.Ramachandra Rao and on behalf of the opposite party, the documents which were marked as Exs.B1 to B3 on 29-12-2014.  Both the respective parties have also filed their written arguments through their respective counsel.

IV    Basing on the material available on record, the following issues/points that arise for determination are:-

1. Is there any deficiency in service on the part of the opposite party towards the complainants?

2.  Whether the complainants are entitled to claim the reliefs as prayed for, if it is so, to what extent?

3.To what relief?

V  Point Nos.1 and 2: In view of the inter-dependence of these two points for discussion to arrive at a decision, we have taken up together for our determination.

       The learned counsel for the complainant Sri T.Gopal Reddy has vehemently argued that the point that issue in question is that the husband of the 1^st complainant had availed gold loan of Rs.1,70,000/-  from opposite party by pledging his gold ornaments on 06-12-2012 under debit advice gold loan account bearing no.038430100044825 as per (Ex.A1) document filed herewith.  Thereafter, the said learned counsel has further argued that the complainants had discharged the entire gold loan amount with interest thereon by paying Rs.1,81,690/-  under credit advice as per (Ex.A3) document but till today the opposite party had been postponing to deliver the said gold ornaments on some pretext or other and delaying to return them and retaining the same illegally and arbitrarily without any reason whatsoever.

      The said learned counsel for the complainants has also stressed much on the point that in fact the husband of the 1^st complainant had also availed housing loan account no. 038430100039850 by mortgaging his house.  Both the loan accounts which are different in nature and security pledged for the loans are also different.

        He has also further argued that under home loan said account the opposite party had provided insurance coverage with India First Life Insurance Co. Ltd. to the said home loan after collecting Rs.56,926-74Ps. from out of the said loan amount in a single premium from the husband of 1^st complainant on 12-05-2012 itself (Ex.A6).  The 1^st complainant’s husband died on 08-06-2013.  She submitted insurance claim.  But, the said insurance company Ltd. repudiated the same without any basis and valid reasons.  That is different altogether from existing gold loan affair which is discharged 25-06-2013.  The said learned counsel has further contended that the complainants had never committed any default in the said house loan and if really they are in default, the opposite party can choose separate remedy i.e., by selling the said mortgaged property as per rules and in accordance with the law.  The problem also does not arise because the complainants have been paying the installments regularly without any default till today.  Retaining the gold ornaments till such long period till house loan is discharged is not tenable in law.  The condition stated  by opposite party that they have right to retain gold ornaments only applicable in case of default in other loan, but not housing loan which is secured by mortgaging house property.  The opposite party is already having mortgaged property and when the house property is mortgaged the said condition is not bind on the complainants.  So, the opposite party cannot escape from their liability in not returning the gold ornaments to the complainants. 

   Finally, the said learned counsel for the complainant has urged that it is the legal and bounden duty of the opposite party to return the gold ornaments as and when the entire gold loan is discharged and the complainants had never defaulted in payment of the loan instalments in any loan including the housing loan so far.   But, the opposite party did not choose to return the gold ornaments so far and failed to return the same so far.  Non-returning the gold ornaments in spite of discharging entire loan amount and keeping the same with them illegally and arbitrarily, constitutes gross negligence and deficiency in service.  Due to that they suffered lot of financial loss, mental agony and inconvenience-for which the opposite party is not only liable to return the gold ornaments besides paying compensation to the complainants.  So, he has prayed that the Hon’ble Forum may be pleased to allow the complaint with costs in the interests of justice.

   On the other hand Sri K.Sesha Reddy, the learned counsel for the opposite party has also vehemently argued that the opposite party bank officials demanding the complainants to pay the amounts due under the above said housing loan and also gold loan.  But the complainants herein paid the entire gold loan amount with interest and failed to pay the housing loan amount due.  The allegations made by the complainants that the opposite party  bank collected huge amount of interest is not correct. 

      In this context, the opposite party bank submitted that in the application for loan against gold ornaments dated 29-10-2012, it is agreed by the Pasam Venkataiah, the following conditions also:- (in Ex.B1). 

      “The Bank is having right to hold and retain the ornaments for security  for any other existing or future liability or liabilities payable by him to the Bank as a borrower or as co-obligant or as guarantor”.

     It is further submitted that the complainants failed to pay the agreed installments of housing loan in time also, i.e., for the months of July, 2012, June, July, September, 2013 and as such the Bank officials demanded the complainants to clear of the said loan.  But the complainants failed to clear of the same and further the amount due under the said housing loan transaction is also due and subsisting (Ex.B2).  As such, by exercising the bankers lien under section 171    of the Indian Contract Act, the bank holds and retains the said gold ornaments (AIR 1992,  Supreme Court P.1066).

            In the said circumstances, it is submitted that the allegations made by the complainants that the bank will return the gold ornaments, etc. pledged immediately after the loan is discharged and promised and assured that the gold ornaments pledged as surety will be returned as and when the entire gold loan with interest is discharged and promised to return the gold ornaments are not correct and the same are invented one for the purpose of filing of this complaint.  As of right as the amount due under the said housing loan transaction is there, the opposite party bank withhold the said ornaments.  The said learned counsel for opposite party has cited a decision of our Apex Court (AIR 1992 S.C.1066) (Supreme Court) to apply to the facts of this complaint and ratio laid down in that case is applicable to the case on hand.

    Finally, the said learned counsel has prayed that the Hon’ble Forum may be pleased to dismiss the complaint with exemplary costs.

Forum’s Findings and observations

    We have heard the arguments of the learned counsel for the parties and perused the record very carefully. We have also heard the oral arguments of the respective counsel.

     Both the respective counsel has advanced their oral arguments on behalf of the parties concerned and submitted their documents which are marked on their side in support of the case.  Parties led their evidence by way of affidavits.  It is the cardinal principle of law that one who makes an allegation is required to proved it beyond doubt.  Complaint against deficiency in service is one of the crucial aspects of C.P.Act, 1986.  Each case has to be judged on its own facts.

    The complaint is based on and against deficiency in service on the part of opposite party towards the complainants, is the main issue to be determined, relying on the alleged declarations of the husband of the 1^st complainant to the bank in his application  for loan against gold ornaments for agricultural signed by him on 29-10-2012 (Ex.B1) that the bank is having right to hold and retain the ornaments, as security for any other existing or future liability or liabilities payable by the husband of the 1^st complainant to the bank as a borrower or as co-obligant or as guarantor.  In case of failure to repay his loan or loans due from the husband of 1^st complainant to the bank as borrower or as co-obligant or guarantor the bank is authorized to dispose of the ornaments pledged, by the public or private sale as deemed fit and appropriate the sale proceeds for adjustment of his or such other loan or loans.  The husband of 1^st complainant had agreed to repay on demand the short fall if any, on such sale of ornaments for adjustment of the loan or loans.   In case of loss of gold ornaments for the reasons beyond the control of the bank, the bank shall be liable to the appraised the value of the ornaments only and shall not be liable to replace the ornaments.  We have carefully considered the relevant contentions of the parties.

        In view of the above contentions of the parties,  now, we are confined to the issue of gold ornaments loan and return them to the customer after repayment of loan or can opposite party is entitle to retain the ornaments be kept them by the bank for security for other existing loans of the husband of the 1^st complainant, irrespective of security pledged by mortgaging of title deeds to the house loan under section 171 and 174 of Indian contract Act?  The answer to this simple question is that under section 174 of  the Indian Contract Act, the Pawnee shall not, in the absence of a contract to the effect, retain the goods pledged for any debt or promise other than the debit or promise for which they are pledged.

2) It is presumed clearly that the gold loan was for a specific purpose and there was no agreement that it should be utilized for  other loans also.

3)  It is strongly argued on behalf of the complainants that the security of the gold was strictly for the loan taken for the amount of Rs.1,70,000/- only termed as gold loan.

4)  Moreover, a separate and independent security was given by the husband  of the 1^st complainant for loan relating to his house loan account in this case by pledging and mortgaging his title deeds relating to house.

5) It is not stated that the said security has been rendered insufficient in any way.  There is also no mention of the gold loan as collateral security to be available for subsequent loan or house loan.

6) We are of the opinion that retaining the gold on the basis of sections 171 and 174 of the Indian Contract Act is not lawful in this case.

7) The two accounts in our opinion are for two different purposes taken at two different times.

The National Commission had held that in the case of SBI and others Vs.Ananda Mohan Saha II(1999) CPJ 13(NC) that the State Commission correctly analyzed the provisions of sections 171 and 174 of the Contract Act and the revision petition is devoid of merit and dismissed.

  The Apex Courts decision (AIR 1992 S.C.1066) is clearly not applicable to the facts of the case on hand.  The facts of the case referred above by the opposite party are entirely different facts and circumstances of the case.  It is not a suitable decision.  The gold loan account is entirely different from house loan availed by the husband of the 1^st complainant. It cannot be clubbed together as he availed at different dates with different amounts and he had discharged his gold loan.  So, it is envitable for the bank-opposite party to return gold ornaments to the complainants herein without any further delay whatsoever.  

Relevant case-law:

   Consumer Forum is primarily would function on the principles of natural justice, equity and good conscience.  The C.P.Act is for the protection of the consumers and matters are required to be decided by having rational approach and not technical one.  This is made clear/ in the case of Indian photographic Co.Ltd., Vs. H.D.Shourie (1999) 6 SCC 428.  Consumer Forums can grant compensation for mental agony/harassment where they find misfeasance in public office.  Such compensation is a recompense for the loss or injury and it necessarily has to co-relate with the amount of loss of injury – 2005 CTJ(SC)(CP) page No.130.  Let us  develop an equitable Consumer jurisprudence de-hors of all technicalities affecting the basic Consumer rights.  Section 14 which provides for adequate compensation would certainly mean that the complainant who is deprived of the benefit which was entitled for years together, he should be adequately compensated.  A quasi-judicial authority (District Consumer Forum) must record reasons in support of its conclusions – 2011 CTJ(SC)(CP) P.135.  The policy of courts is to stand by precedents and not to disturb the settled issues.  This principle is based on judicial comity – 2010 CTJ 413 (NC).

Bank’s obligation on repayment of the loan:

  In the light of the case law on the present subject and issue involved that the appropriate and suitable citations of the Hon’ble National Commission, New Delhi, are namely that the reported decisions that (i) 2003(1) CPT, 214 (NC) (2) 1999 (2) CPJ, 13(NC) = 1999 CPR 18 (NC) and (3) 2006 (2) CPJ, 197 (NC).

       Law will assist those who are vigilant.  Realization of justice is the ultimate function of law.  Justice is rendered in accordance with law.

         The above said learned counsel for a complainant has placed relevant material and we have considered the arguments of complainant.  The opposite party has miserably failed in its attempt  to put forth the valid reasons to consider its case.    The mental agony of the complainants cannot be measured in terms of money.  There is a lot of deficiency  in service and negligence on the part of the opposite party towards the complainants.  Hence,  these two points are held in favour of the complainants and against the opposite party, accordingly.

 Point No.3:  In the result, the complaint is  allowed ordering the opposite party to refund the pledged gold ornaments covered by the gold  loan account bearing No.038430100044825 to the complainants along with damages of Rs.10,000/- (Rupees ten thousand only) and costs of Rs.2,000/- (Rupees two thousand only)

Typed to the dictation to the stenographer and corrected and pronounced by us in the Open Forum this the 29th day of  JANUARY, 2015.    

              Sd/-                                                                  Sd/-                                                                                     

         MEMBER                                                                  PRESIDENT

  APPENDIX OF EVIDENCE

 WITNESSES EXAMINED FOR COMPLAINANTS:

WITNESSES EXAMINED FOR OPPOSITE PARTY:

EXHIBITS MARKED FOR COMPLAINANTS:

 EXHIBITS MARKED FOR OPPOSITE PARTY:                   

                                                                         Id/-              

                                                                      PRESIDENT

Copies to:

1) Sri T.Gopal Reddy, Advocate, 402, Sahithi Enclave, Behind TTD  

    Kalyanamandapam, Sujathamma Colony, Dargamitta, Nellore-3.

2) Sri K.Sesha Reddy, Advocate, Balaji Nagar, Nellore.

Date when order copies are issued: