DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, PALAKKAD
Dated this the 10th day of February, 2023
Present : Sri. Vinay Menon V., President
: Smt. Vidya A., Member
: Sri. Krishnankutty N.K., Member Date of Filing: 04/05/2018
CC/62/2018
Devadas,
S/o. late Prabhakaran,
Residing at Vanuvampadam,
Nanniyode, Perumatti, Chittur,
Palakkad. - Complainant
(By Adv. T.N. Sabeesh)
Vs
The Manager,
The South Indian Bank,
Door No. 6/132,133
Main Road, Vandithavalam,
Palakkad – 678 534 - Opposite parties
(OP by G. Ananthakrishnan & K.B. Priya)
O R D E R
By Sri. Vinay Menon V., President
- In the facts and circumstances of the case, the basic question that forms the crux of this complaint is whether resort of opposite party bank to classify two agricultural loans availed by the complainant as NPA, while only the housing loan of the complainant was classified as NPA, is justified in the eyes of law? Answer to this question would decide the fate of the case.
- Necessary pleadings, to answer this question, made in complaint are that the complainant had availed two financial assistances as Agricultural gold loans from the opposite party. When the complainant approached the opposite party to settle one of the accounts, they turned hostile and did not permit the complainant to close the account. The sole attempt of the opposite party is to make unjust enrichment by selling off the gold ornaments granted as security. Pleas made by the complainant before the opposite parties to close the loan accounts went unheeded. Aggrieved thereby this complaint is filed.
- O.P.s denied the allegations of unfair trade practice and deficiency in service. Per version, the over and above the gold loans availed by the complainant, he had also availed two other loans, viz. a housing loan and another Kissan Credit Card. As repayment became irregular, the housing loan was classified as NPA. As one loan had become NPA, all other financial assistances availed by the complainant were also classified as NPA in accordance with the guide lines issued by the RBI. There is no irregularity whatsoever in the conduct of the opposite party.
- The following issues arise for consideration:
1 Whether the conduct of the opposite party in not permitting the complainant to close the loan accounts tantamount to deficiency in service?
2. Whether there is deficiency in service/unfair trade practice on the part of the opposite party?
3. Whether the complainant is entitled to any of the reliefs sought for?
4. Reliefs, if any?
4. (i) Complainant filed proof affidavit and marked Exts. A1 to A19. Eventhough cross of complainant was allowed, he failed to appear before this Commission even after repeated chances. Hence adverse inference can be resorted to as and when the need arises.
(ii) Opposite party filed proof affidavit and marked Exts. B1 to B5. Witness for the O.P. was examined as DW1.
Issue No.1
5. As already stated, the opposite party bank did not permit the complainant to settle the two gold loans availed by the complainant. This fact is not disputed. Bank’s contention is that they did not permit the complainant to close the loan accounts as he was already having a housing loan which was already classified as NPA. Classification of other loans availed by the complainant also as NPA was done in accordance with the direction provided by the RBI that classification has to be made borrower-wise and not facility-wise.
6. In order to ascertain the legality of the conduct of the opposite party, we need to answer the question that was raised supra, ie. Whether resort of opposite party bank to classify two agricultural gold loans availed by the complainant as NPA, while only the housing loan had become NPA is justified in the eyes of law?
7. Statement of the Bank that the Housing loan was classified as NPA is not objected to by the complainant. Ext. B1 is the statement of account pertaining to the Housing loan availed by the complainant. Said statement of account shows that the repayment had been erratic from the beginning itself and later on, by 2015, non-existent. It is a banking procedure to classify a loan NPA, once the repayment falters for 3 consecutive months.
8. The opposite party submitted RBI Master Circular bearing no. RBI/2015-16/101 dated 01/07/2015 applicable to all Commercial Banks. Even though this document was not produced and marked as an Exhibit, this Circular being guidelines issued by the Reserve Bank of India, we take judicial notice of the fact that this document is issued by a Statutory Body competent to issue guidelines having statutory validity in so far as banking operations are considered.
The opposite party asserts that they have acted in accordance with this circular. They rely on Clause 4.2.7. to justify their conduct. Said clause is reproduced herein below:
“4.2.7. Asset Classification to be borrower-wise and not facility –wise.
i) It is difficult to envisage a situation when only one facility to a borrower/one investment in any of the securities issued by the borrower becomes a problem credit/investment and not others. Therefore, all the facilities granted by the bank to a borrower and investment in all the securities issued by the borrower will have to be treated as NPA/NPI and not the particular facility/investment or part thereof which has become irregular. “
A reading of this clause makes it clear that the RBI has directed banks to classify all the financial assistances granted to one person as NPA, even if only one of the facilities granted alone has been classified as NPA.
9. It goes without saying that the circulars issued by the RBI is binding on the O.P. Bank. Thus we find that the Bank has acted in accordance with the guidelines provided in the Master Circular.
10. Be as it may, during the pendency of this case, the O.P. Bank initiated proceedings under SARFAESI Act. Aggrieved thereby, the complainant herein had filed a Writ Petition before the Hon’ble High Court of Kerala as W.P. (C) 16733/2019. The Hon’ble High Court has refused to interfere with the proceedings initiated by the O.P. bank, granting time to the complainant to pay off the overdue amount.
Issue No.2 to 4
11. Consequent on the findings in Issue 1, we hold that there is no deficiency in service on the part of the opposite party. The complainant is not entitled to any of the reliefs sought for. Resultantly, the complaint is dismissed.
12. In the facts and circumstances of the case, the parties are directed to suffer their respective costs.
Pronounced in open court on this the 10th day of February, 2023.
Sd/-
Vinay Menon V
President
Sd/-
Vidya.A
Member
Sd/- Krishnankutty N.K.
Member
APPENDIX
Exhibits marked on the side of the complainant :
Ext.A1 – Original gold loan token bearing No.26503
Ext.A2 – Original gold loan token bearing No.26343
Ext.A3 – Original of communication dated 21/2/2018 pertaining to GL No.26503
Ext.A4 – Original of communication dated 21/2/2018 pertaining to GL No. 26343
Ext.A5(series) – Lawyers notice dated 26/3/2018 along with postal receipt
Ext.A6 – Original Postal acknowledgment
Ext.A7 – Certified copy of order dated 19/6/19 in WP(C) No. 16733 of 2019
Ext.A8 – Copy of Housing loan application
Ext.A9 – Copy of Sanction letter dated 23/05/2013
Ext.A10 – Copy of Agreement of Guarantee 23/05/2013
Ext.A11 – Copy of Housing Loan Agreement
Ext.A12 – Copy of letter confirming deposit of title deeds.
Ext.A13 – Copy of application for agricultural credit.
Ext.A14 – Copy of Sanction letter for KCC facility dated 24/01/2014
Ext.A15 – Copy of DPN dated 24/01/2014
Ext.A16 – Copy of Agreement of Guarantee 24/01/2014
Ext.A17 – Copy of agreement of Hypothecation dated 24/01/2014.
Ext.A18 – Copy of Deposit of title deeds dated 24/01/2014
Ext.A19 – Copy of gold pledge form
Exhibits marked on the side of the opposite party:
Ext. B1: Copy of statement of account for housing loan
Ext. B2: Copy of statement of account for KCC loan
Ext. B3: Copy of statement of account for Gold loan No.26343
Ext. B4: Copy of statement of account for Gold loan No.26503
Ext. B5: Copy of communication dated 25/4/2018
Court Exhibit: Nil
Third party documents: Nil
Witness examined on the side of the complainant: Nil
Witness examined on the side of the opposite party:
DW1 – Sreekumar N.K., Branch Manager of OP
Court Witness: Nil
NB : Parties are directed to take back all extra set of documents submitted in the proceedings in accordance with Regulation 20(5) of the Consumer Protection (Consumer Commission Procedure) Regulations, 2020 failing which they will be weeded out.
