Andhra Pradesh

East Godwari-II at Rajahmundry

CC/26/2015

Jupudy Madhu Babu - Complainant(s)

Versus

The Manager, Axis Bank Ltd., - Opp.Party(s)

N.V.Suryanarayana Murthy

05 Aug 2016

ORDER

                                                                                                Date of filing:   17.04.2015

                                                                                                Date of Order: 05.08.2016

 

BEFORE THE DISTRICT CONSUMER FORUM-II, EAST GODAVARI

DISTRICT AT RAJAHMUNDRY

 

                           PRESENT:   Smt H.V. Ramana, B.Com., L.L.M.,   PRESIDENT(FAC)

                      Sri A. Madhusudana Rao, M.Com., B.L., MEMBER          

    

             Friday, the 5^th day of August, 2016

 

 

C.C.No.26 /2015

Between:-

 

Jupudy Madhu Babu, S/o. late Venkateswara Rao,

Hindu, aged 55 years, Advocate, T. Nagar,

Rajahmundry.                                                                                       …        Complainant

 

                                    And

 

1)  The Manager, Axis Bank Ltd., T. Nagar Branch,

      Jupudy Venkateswara Rao Street, Rajahmundry.

 

2)  Chairman, Axis Bank Ltd., 3^rd Floor, Gigaplex,

      Building No.1, Plot No.I.T.5, MIDC,

     Airoli Knowledge Park, Airoli, Navi Mumbai-400708.                         …        opposite parties

 

 

            This case coming on 20.07.2016 for final hearing before this Forum in the presence of Sri N.V. Suryanarayana Murthy, Advocate for the complainant and Sri E. Murali Sreedhara Babu, Advocate for the 1^st opposite party and the 2^nd opposite party having been set ex-parte, and having stood over till this date for consideration, this Forum has pronounced the following:  

O R D E R

[Per Sri A. Madhusudhana Rao, Member] 

This is a complaint filed by the complainant U/Sec.12 of Consumer Protection Act 1986 to direct the opposite parties to pay Rs.13,81,538/-; pay Rs.3,00,000/- towards damages and pay Rs.5,000/- towards costs of the complaint.

2.         The case of the complainant is that he is having SB Account bearing No.1070101000 55912 of the opposite party bank. He obtained a loan for Rs.1,00,000/- from the opposite party by executing registered mortgage bond and also obtained loan of Rs.35 lakhs on 3.3.32016. The first loan amount of Rs.1 lakh was disbursed on 27.2.2003 and paid the entire loan amount on 6.9.2013 towards full satisfaction. The second loan amount of Rs.35 lakhs was disbursed on 3.3.2006 and he cleared off the entire loan amount on 21.3.2014 and the opposite party bank also released the mortgage bond executed by the complainant. On 4.8.2014, he found in the statement of account, an amount of Rs.38,535/- was debited on 22.4.2014 and Rs.487/- debited on 30.4.2014 towards loan recovery amount and an amount of Rs.8,47,517/- was also debited from his SB Account on 26.7.2014 towards loan recovery. The complainant got issued legal notice dt.22.9.2014 to the opposite party and the opposite party received the same on 23.9.2014, but the opposite party bank neither issued reply nor obliged notice. Hence, the complaint.

3.         The 1^st opposite party filed its written version and denied all the allegations made by the complainant and the complaint is not maintainable either under law or on facts. The opposite party submits that the present dispute is with regard to the two loans which were availed by the complainant, one is of Rs.1.00 lakh under A/c No.107010600005784 as per the understanding between the complainant and the opposite party, the complainant has to pay regular installments @ Rs.1428/- per installment per month in this account, and the account under which the complainant availed loan facility of Rs.35.00 lakhs under A/c.No.107010600021003, the installment per month amount payable by the complainant on regular basis is @ Rs.50,215/- per installment, but not @ Rs.47,491/- as is alleged by the complainant. This opposite party submits that the complainant never adhered to the payment schedule and used to pay amounts with intervals at his whims and fancies. It is further submitted that since the accounts of the bank are computerized, if any amount is due on the account of interest is automatically debited to the loan accounts regularly. It is pertinent to state that if the complainant fails to pay the installments and the interest dues as per the schedule, and fails to pay either installment amount or interest due there on within the given period, automatically the computer will show that the accounts have become NPAs. From that day onwards no interest will be debited to the accounts of the parties. Said procedure is followed by all the banks as per the guidelines given by RBI. The accounts will be regularized in the event of overdue installments payments are made to the bank, then the flag of NPA will be lifted and the accounts will be regularized. In this case, the complainant’s loan accounts became NPAs, one loan in the year 2008 and one loan in the year 2012, as the amount of interest which the complainant ought to have paid was not paid by him except payment of installment amounts. Since the interest and installment amounts as is fixed by the bank are not honoured property by the complainant, the loan accounts became NPAs and further interest is not charged to the accounts. Due to the above fact, the accounts which were maintained by the opposite party shows the installment amounts dues only, but not the interest due after the accounts became NPAs. This opposite party submits that the complainant had approached one of the wings of the opposite party i.e. Retail Banking (Asset sales center) wing seeking sanction loan to him in a sum of Rs.68,33,000/- and the complainant had offered same property which was given as security to this opposite party for availing the term loan facilities referred to above and in pursuance of the same the ASC Head of other wing had sought information from the opposite party for furnishing outstanding amount due by the complainant. Then this opposite party under its letter dt.19.9.2014 furnished information to the above Wing mentioned that the amount due is Rs.19,37,641.88ps (mentioned as the principal amount). By such mentioning of the amount in the loan statements, is only to facilitate the other wing of this opposite party to take over the documents from it. Further the act of the opposite party in giving such account statements to other wing of this opposite party, to accommodate the complainant to process his loan facility availed by him without any delay, since the availing of loan by the complainant is from its own wing, it has kept its right to recover the interest in abeyance. At this juncture, it is stated that when the accounts are declared as NPAs, the subsequent interest in respect of the accounts of the complainant are not debited to his account, due to that only the principal amount that was due by such date was given by this opposite party to ASC Department and also sent a Mail to the IT Help Desk on 24.3.2014 requesting to furnish the guidelines for calculating the interest from date of declaring the account as NPAs. Ultimately, the opposite party found that, an amount of Rs.38,535/- and Rs.487/- are due in respect of the loan account 5784 and Rs.8,47,517/- under loan account 107010600021003. This opposite party submits that by giving zero balance statement furnished by it to the complainant does not preclude this opposite party from claiming the amount from the complainant. The account statements shows that the interest is not debited from the date of NPA. The opposite party has every right to recover the amount even after closure of the accounts. The right of recovery of due amount either principal or interest is always with the opposite party and will subsists till the entire loan amount is cleared by the complainant, unless such recovery is barred by limitation, hence the right to recover the amounts from the complainant cannot be questioned by him. This opposite party submits that since it has a lien over on any amount lying with it in respect of the accounts of the complainant i.e. FDR, SB accounts, it has exercised said lien and collected the dues from the complainant from the SB account. There is no illegality or arbitrariness in collecting the amounts from by this opposite party and it is within its right and law. Hence, there is no deficiency of service on the part of this opposite party and the complaint is liable to be dismissed with costs.

4.         The proof affidavit filed by the complainant and Exs.A1 to A9 have been marked for the complainant. The proof affidavit filed by the 1^st opposite party and Exs.B1 to B4 have been marked for the 1^st opposite party.

5.         Heard both sides. The 1^st opposite party filed written arguments.

6.         Points raised for consideration are:

 

1. Whether there is any deficiency in service on the part of the opposite parties?

            2. Whether the complainant is entitled for the reliefs asked for?

            3. To what relief?

 

7.  POINT Nos.1 & 2:  On perusal of the record, it is observed that the complainant herein is a Savings Bank Account holder of the 1^st opposite party bank at Rajahmundry vide Account No.107010100055912 as per Ex.A1 account statement copy. The complainant obtained a loan of Rs.1,00,000/- on 27.2.2003 vide Loan account No.107010600005784 as per Ex.A2 account statement copy from the said bank branch on execution of registered mortgage bond under document No.1047/2003 and created a security of building with Door No.7-28-29 for the above said loan and also for Rs.35 lakhs for another loan obtained on 3.3.2006 vide Account No.1070101600021003 as per Ex.A4 account statement copy.

            The complainant alleged that after payment of some amounts in Rs.1 lakh loan amount A/c. vide No.107010600005784, the complainant paid Rs.10,000/- on 3.8.2012 and also paid balance due amount of Rs.20,759/- in the said loan account on 6.9.2013 towards full satisfaction and the Statement dt.6.9.2013 due amount is ‘nil’ as per the statement of account copy as per Ex.A2. Further, the complainant also paid some amounts to the bank with regard to the second loan amount of Rs.35 lakhs disbursed on 3.3.2006 vide A/c.No.1070101600021003 and after payment of Rs.47,491/- on 8.3.2014, the credit balance of the above second loan account is Rs.19,37,642/- and the same was paid on 21.3.2014 towards full and final satisfaction and the statement of account copy issued by the bank also revealed the balance amount due on 21.3.2014 is ‘nil’ as per Exs.A4 and A5. Thus, the complainant redeemed and paid the entire loan amount with interest as per the both loan account statements and so, the 1^st opposite party bank on 27.3.2014 vide document No.3660/2014 of SRO, Rajahmundry, released the mortgage bond executed by the complainant at the time of obtaining loans and issued the no encumbrance certificate over the property of the complainant is also issued under Exs.A6 & A7.

But, after sometime i.e. on 4.8.2014, the complainant found in his account statement that an amount of Rs.38,535/- is debited on 22.4.2014 and also Rs.487/- is debited on 30.4.2014 from the S.B. Account of the complainant towards recovery under loan account No.1070106 00005784 as per Ex.A3 account statement copy and also found that an amount of Rs.8,47,517/- is debited on 26.7.2014 as recovery under loan Account No.107010600021003 without any notice or demand in this regard. On that, the complainant got issued a legal notice dt.22.9.2014 to the 1^st opposite party bank under Ex.A8 and the same was acknowledged by the 1^st opposite party under Ex.A9, but no reply.

The 1^st opposite party in its version admitted that they disbursed loan amount of       Rs.1 lakh under loan account No.107010600005784 to the complainant on 27.2.2003 and the complainant paid Rs.10,000/- on 3.8.2012 and paid the an amount of Rs.29,759/- on 6.9.2013, but it is not the entire due amount payable towards loan amount of Rs.1 lakh obtained by the complainant, but the complainant is still to pay the interest due after the above said loan account became Non Performing Asset (NPA) as per Ex.B2. With regard to the second loan for Rs.35 lakhs under loan Account No.107010600021003 was disbursed on 3.3.2006 and after payment of Rs.47,491/- on 8.3.2014 to the credit of above loan by the complainant, the balance is Rs.19,37,642/- and the complainant paid that amount on 21.3.2014 is not the entire due amount payable towards full satisfaction of loan obtained by the complainant, but  the complainant still to pay the interest due after the above said loan account became Non Performing Asset (NPA) as per Ex.B3.

The 1^st opposite party also admitted that the bank released the mortgage bond executed by the complainant by registering the receipt of the loan amount and registered the same on 27.3.2014 under document No.3660/2014 only to accommodate the other wing of this opposite party i.e. Asset Sales Center (ASC) accepted to sanction a sum of Rs.68,33,000/- as per Ex.B4 account statement dated 21.3.2014 to the complainant and as the complainant offered the same property which was given security to the 1^st opposite party bank for availing the term loan of Rs.1 lakh and Rs.35 lakhs earlier. Further, as the ASC Head sought information from the 1^st opposite party to furnish outstanding amount due by the complainant, this opposite party under letter dt.9.9.2014 informed that an amount of Rs.19,37,641-88ps mentioned as the principal amount in the loan statement only to facilitate the ASC to take over the documents and to accommodate the complainant for processing his loan facility without delay as the same is availed by the complainant from the opposite parties own wing and this opposite party kept its right to recover the interest in abeyance. As the loan account are declared as NPA, the subsequent interest in respect of the loan accounts of the complainant are not debited to his account and this opposite party requested the ASC department also sent mail to IT Helpdesk on 24.3.2014 as per Ex.B1 letters to furnish guidelines for calculation of interest from the date of declaring the accounts as NPAs. Ultimately, the opposite party found that an amount of Rs.38,535/- and Rs.487/- are due in respect the loan account No.107010600005784 and Rs.8,47,517/- under loan account No.107010600021003.         

The 1^st opposite party further submitted that issuing zero balance statement to the complainant does not preclude the opposite party from claiming the amount and the account statements shows that the interest is not debited from the date of NPA and the opposite party has every right to recover the amount even after closure of the accounts. The right of recovery of the due amount either principal or interest is always with the opposite party and will subsists till the entire loan amount is cleared by the complainant unless such recovery is barred by limitation, hence, the right to recover the amounts cannot be questioned. It is a fact that the opposite party has a general lien as per Section 171 of Indian Contract Act over the amounts lying with it in respect of the accounts of the complainant i.e. FDR, SB Accounts, which is a legal right and the bank exercised said lien and collected the dues from the complainant from the S.B. Account. There is no illegality or arbitrariness in collection of the amounts by the opposite party and it is within the four corners of its right and law.

We observed that the 1^st opposite party addressed Ex.B1 letter to their Mumbai office on 24.3.2014 stating that the LNTEQ account No.107010600021003 closed with pay of option and observed from the statement of account that interest was not applied from 1^st July, 2012 to till date and guide them amount to be collected towards interest and penal interest from the account holder. In reply to the said letter, the treasury wing advised that the banks Benchmark Prime Lending Rate was revised to 17.75% with effect from 6^th August, 2011 and the Benchmark Prime Lending Rate to 18.00% with effect from August 19^th 2013, therefore, the Branches are advised not to make any changes in the system as appropriate changes will be made in finacle at data center and accordingly, the 1^st opposite party branch collected the due interest amount on NPAs of the complainant. It is also observed that the opposite party submitted that after receipt of notice from the complainant, the bank officials approached the complainant and explained everything about the deduction. We further observed that the complainant suppressed the fact of obtaining a further loan of Rs.68,33,000/- from the ASC wing of the opposite party bank and the complainant is still maintaining loan account and relation with the other wing of the opposite party bank and so, the complainant might have knowledge of deduction of interest on the earlier loans obtained and declared as NPAs by the opposite party bank and cannot allege that he had no notice of deduction of dues from the S.B. Account.

The declaration of loan accounts of complainant as NPA is by strictly following the guidelines given by the R.B.I. and Non Performing Asset is an asset including a lease asset becomes Non Performing when it ceases to generate income for the bank where interest and/or installment of principal remained overdue for a period of more than 90 days in respect of term loan under 2.1.2(1) applicable to the present complaint. The declaration of NPA and keeping of interest in abeyance is based on the circular issued by R.B.I., mentioned supra and also the guidelines given by RBI, mentioned below –

“3.4 Interest application – On an account turning NPA, banks should reverse the interest already charged and not collected by debiting Profit & Loss A/c and stop further application of interest. However, Banks may continue to record such accrued interest in a Memorandum account on their books. For the purpose of computing Gross Advances, interest recorded in the Memorandum account should not be taken into account. Banks  are advised to compute at their Gross Advances, Net Advances, Gross NPAs and Net NPAs, as per the format in Annex.I.”  In the present case, we observed that the account statements of both the loan accounts of Rs.1 lakh and Rs.35 lakhs of the complainant under Exs.A2 and A4, though the complainant credited some amounts into both the above said loan accounts regularly, but the same is not enough as per the equated monthly installments which includes principal and interest amounts as scheduled by the opposite party bank and so, the loan accounts of the complainant were declared NPAs and the opposite party bank charged interest separately, more particularly, the interest rates were revised at 17.75% with effect from August, 2011 and 18% with effect from August, 19^th 2013 as per the instructions of their Head office basing on the R.B.I. Circular. 

The opposite party relied on the following decisions –

1. Bharat Electronics Ltd. and another Vs. M/s. American Export Isbrandsen Lines Inco., Madras: AIR 1979 Madras 267,
2. Mahabir Kishore and others Vs. State of Madhya Pradesh: AIR 1990 Supreme Court 313,
3. Keshab Kishore Narain Saraswati Vs. State of Bihar and another: AIR 1971 Patna 99 (V 58 C 19),
4. Thomas Abraham and others Vs. The National Tyre and Rubber Co. of India Ltd. : AIR 1974 Supreme Court 602 (V 61 C 114),
5. Bank of India Vs. Anil Raveendran: II (2015) CPJ 696 (NC),
6. Tarun Kumar Banerjee Vs. Bank of India & Anr.: III (2015) CPJ 13 (NC),
7. Bank of India Vs. Sudershan Kumar Mittal: III (2015) CPJ 136 (NC),

 

All the above cited decisions are applicable to the facts of the present case on hand. Further, in the present case, the opposite party bank acted upon the guidelines issued by the RBI in calculation of interest on NPAs as per Banking Regulation Act being the Banker to the banks in the country. So, the action taken by the opposite party bank in the facts and circumstances not amounts to deficiency in service or unfair trade practice as there is no fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance as per Section (1)(g) of C.P.Act, 1986.

            With the discussion held supra, under the facts and circumstances of the case and after going through the above decisions relied upon by the opposite party bank, we are unable to attribute any kind of deficiency of service or unfair trade practice on the part of the opposite party bank authorities. 

 

8.   POINT No.3:  In the result, the complaint is dismissed, without costs.

 

 

Typed to dictation, corrected and pronounced by us in open Forum, on this the 5^th day of August, 2016.

    

                  Sd/-                                                                                              Sd/-

              MEMBER                                                                              PRESIDENT(FAC)

         

 

 

 

APPENDIX OF EVIDENCE

WITNESSES EXAMINED

 

FOR COMPLAINANT: None.                                         FOR OPPOSITE PARTIES: None.

 

DOCUMENTS MARKED

 

FOR COMPLAINANT:

Ex.A1    Statement of SB account copy of complainant issued by the Bank dt.4.8.2014.

Ex.A2    State of account copy of loan account No.1070600005784 dt.22.3.2014.

Ex.A3    Statement of account copy of loan account No.1070600005784 dt.4.8.2014.

Ex.A4    Statement of account copy of loan account No.1070600021003 dt.21.3.2014.

Ex.A5    Statement of account copy of loan account No.1070600021003 dt.4.8.2014.

Ex.A6    Photocopy of mortgage release deed dt.27.3.2014.

Ex.A7    Photocopy of registration of payment receipt under document No.3660/2014

             dt.27.3.2014 of SRO, Rajahmundry.

Ex.A8    Office copy of registered notice dt.22.9.2014 issued to the opposite party bank.

Ex.A9    Postal acknowledgement of the opposite party bank.

 

FOR 1^st OPPOSITE PARTY:-  

 

Ex.B1    Mail sent by the opposite party to its central office dated 22.3.2014.

Ex.B2    Statement of account in respect of loan account No.1070600005784.

Ex.B3    Statement of account in respect of loan account No.1070600021003.

Ex.B4    Attested copy of the Statement of account in respect of the loan account bearing

             No.PCR 010700968384.

 

 

                   Sd/-                                                                                         Sd/-

              MEMBER                                                                              PRESIDENT(FAC)