Dated this the 27^th  day of July  2013

 

Present    : Smt.Seena H, President

A.Sachidanandan,

S/o.Late Arumugan,

Thachamada House,

Koduvayur, Ethanur (PO),

Palakkad                                                       -        Complainant

(By Adv.M.Rajesh)

V/s

 

The Manager,

State Bank of India,

Agricultural Development Branch,

Palakkad P.B.No.24,

Shoba Complex,

Opp.Town Railway Station,

Palakkad                                                        -   Opposite party

(By Adv.G.Ananthakrishnan)        

          By Smt.PREETHA G NAIR, MEMBER

 

The complainant had availed two loans from the opposite party for agricultural purpose. The complainant’s livelihood is dependend on agriculture. The loan Account No.32025154401, the complainant had deposited gold ornaments including the thali of the wife of the complainant for availing the loan. Opposite party is insisted the complainant to pay the amount in the other agricultural loan taken by him and refused to accept the amount in the gold loan only.

 

The complainant stated that now the turmeric will be sold, the opposite party will be got the money paying the loan amount with interest. But the opposite party had not taken steps to sell the turmeric. The opposite party is trying to sell the gold ornaments. The complainant is ready to pay the entire loan amount in the gold loan to recover the gold ornaments. But the opposite party bank had not agreed to pay the amount in the gold loan. The complainant received the notice from the opposite party bank intimating the auction of gold ornaments. The opposite party has insisted the complainant to pay the entire loan amount of the two loan accounts. The act of opposite party amounts to deficiency in service and mental agony. Hence the complainant prays an order directing the opposite party to  

 

 Opposite party filed version stating the following contentions. The complainant had availed a gold loan of Rs.1,00,000/- from the opposite party on 9/11/11. While availing the loan the complainant had executed necessary documents and had also pledged gold ornaments. The loan is repayable in a year. The complainant had also availed a produce marketing loan of Rs.9.57 lakhs against warehouse receipt of 190 bags / 11.40 MT of turmeric. While availing the loan complainant had executed necessary documents.

 

 The complainant did not repay any amount towards the loan and hence both the loan became  non performing assets. As the value of turmeric reduced the complainant did not repay the produce marketing loan inspite of repeated reminders by the opposite party instead the complainant was seeking time for payment stating that the value of turmeric has decreased. On 24/11/12 the opposite party issued notice seeking for repayment and legally wanted to auction the turmeric to liquidate the loan to the extent possible. The complainant and several others approached the Hon’ble High Court as per WP(C) 25070/2012. The Hon’ble High Court ordered not to sell the produce kept in the godown till the end of May on condition that the complainant shall produce security on or before 15/02/13. Meanwhile as the dues under the gold loan was not liquidated the bank had issued notice and was about to proceed to sell the gold whose value had also decreased. But auction was not conducted as per the orders of the Forum. There is a sum of Rs.1,07,451/- due as on 27/4/13 with interest applied upto 30/11/12 in the gold loan. Account and Rs.9,56,845/- is due as on 27/4/13 in the produce marketing loan with interest to be applied from 13/4/11.

 

Issues to be considered are

 

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

2.    If so, what is the relief and cost ?

 

We perused relevant documents on record.  Admittedly the complainant had availed a gold loan of Rs.1,00,000/- on 9/11/11 and a produce marketing loan of Rs.9.57 lakhs from the opposite party. According to the opposite party, the complainant did not repay any amount towards the loan and hence both the loans became non performing assets. According to the complainant when ever he went to the Bank to repay the gold loan, the opposite party had objected receiving the amount stating that only when the amount due under the produce marketing loan is paid they will receive amount under the gold loan. But the complainant has not produced evidence to show that he is ready to pay the gold loan. Later the complainant filed application seeking permission to deposit the loan amount before the Forum and for a direction to release the gold ornaments. The opposite party stated that the complainant along with others approached the Hon’ble High Court as per WP(C) 25070/2012.

In Ext.B8 the Hon’ble High Court ordered not proceed with the sale of the produce kept in the godown till the end of May 2013 provided the appellants furnish further security, equivalent to the amount due by them including the security already offered to the respondent Bank, on or before 15/02/2013. In case the appellants are not able to satisfy the payment of dues by 31/5/2013, the Bank is at liberty to sell the produce and so also the security if the value of the produce is not sufficient. But the complainant has not produced evidence to show that further security furnished to the bank on or before 15/2/2013. According to the opposite party there is a sum of Rs.1,07,451/- due as on 27/4/13 with interest applied upto 30/11/2012 in the gold loan account. Further a sum of Rs.9,56,845/- is due as on 27/4/13 in the produce marketing loan with interest to be applied from 13/4/11. The complainant stated that if the turmeric is sold now the loan liability and interest can be liquidated. The opposite party stated that they had tried to sell the turmeric of other borrowers. But was unsuccessful as there were no bidders quoting the floor rate mentioned in the auction notice dated 9/2/12.

In the Ext.B3 and B4 shown that the opposite party had executed letters dated 9/11/11 with the complainant to sanction the loan of Rs.1 lakh. Ext.B10 shows that the complainant has not repay any amount towards the loan account and both the loans became non performing assets. Section 2(1)(o) of the Consumer Protection Act deals that banking comes under the definition of service. Hence the complaint is maintainable.

 

The Bank has the right of general lien under the contract Act to withhold the gold ornaments till all the liabilities of the complainant is discharged. The complainant has not provided security as directed by the High Court. The dues under the gold loan was also not repaid, the bank had issued notice and was about to proceed to sell the gold the value of which had also diminished. According to the complainant he is ready to pay entire loan amount in the gold loan.  At the time of filing the complaint I.A.110/13 filed by complainant to stay the auction proceeding till the disposal of the case. The I.A.allowed with a direction of opposite party to restrain from proceeding with the auction sale for a period of two months. The opposite party has not produced evidence to show that they had taken steps to sell the produce of another loan. As per Ext.B2 the complainant had availed a gold loan of Rs.1,00,000/- from the  opposite party.

 

As per Ext.B5 the complainant had also availed a produce marketing loan of Rs.9.57 lakhs against warehouse receipt of 190 bags of turmeric as total market value of Rupees Thirteen lakhs sixty eight thousand. The Hon’ble High Court ordered not to sell the produce kept in the godown till the end of May on condition that the complainant shall produce security on or before 15/02/2013. Thereafter the opposite party had not taken steps to sell the turmeric. According to the complainant the gold loan and the produce loan were availed different deposits. The opposite party has not produced evidence to show that   the deposit of turmeric is not enough to close the produce loan availed by the complainant.

In Haridas Shenoy Vs.Canara Bank and Others in W.P.(C).No.5670 of 2013 dated 11/03/13  the Hon’ble High Court held that  the Bank  had no right to extend the lien over the security offered for the gold loan for realizing dues of another loan.

 

In the above discussions we are of the view that there is deficiency in service on the part of opposite party. In the result complaint partly allowed. We direct the opposite party to release the gold ornaments   after accepting the loan with due amount in the Account Number 32025154401 and pay Rs.1,000/- (Rupees One thousand only) as cost of the proceedings. Complainant directed to pay the gold loan amount with due amount to opposite party bank   within 15 days from the date of receipt of order.

 

        Order shall be complied within  one month from the date of receipt of order, failing which complainant shall entitled to get 9% interest for whole amount from the date of order, till realization.

 

Pronounced in the open court on this the 27^th  day of July 2013.

   

  Sd/-

Seena H

President

Preetha G Nair

Member

Bhanumathi.A.K.

Member

 

Ext.A1 – Photocopy of loan A/c pass book

Ext.A2 – Auction letter dated 15/3/13 issued by opposite party to the

 

 

Ext.B1 –  Photocopy of letter dated 12/10/11 issued by opposite party to the

Ext.B2 – Photocopy of sanction letter dated 9/11/11 issued by opposite party

Ext.B3 – Photocopy of arrangement  letter dated 9/11/11 issued by opposite

Ext.B4 – Photocopy of Demand Promissory Note and delivery letter dated

Ext.B5 – Photocopy of application form Central Ware House dated 10/10/11

Ext.B6 – Photocopy of Promissory Note and delivery letter dated 12/10/11

Ext.B7 – Photocopy of letter dated 12/10/11 issued by opposite party to the

Ext.B8 – Photocopy of High Court Judgement in W.A.52/2013

Ext.B9 –  Photocopy of registered notice dated 15/3/13 issued by opposite

Ext.B10 – Photocopy of statement of account A/c Nos.32025154401 &

Rs.1,000/- (Rupees one thousand only) allowed as cost of the proceedings.