Complaint filed on:14-02-2022
Disposed on: 29-06-2022
BEFORE THE DISTRICT CONSUMER DISPUTES
REDRESSAL COMMISSION, TUMAKURU
#201, 202, 1st Floor, Indian Red Cross Building Complex,
Ashoka Road, Tumakuru-572 101.
CC.No.49/2022
DATED THIS THE 29th DAY OF JUNE, 2022
PRESENT
SMT.G.T.VIJAYALAKSHMI. B,Com, LLM, PRESIDENT
SRI.KUMARA.N, B.Sc.(Agri), MBA, L.L.B, MEMBER
SMT.NIVEDITA RAVISH, B.A., L.L.B, LADY MEMBER
Sri.Anand, M S/o Munibyrappa,
A/a 48 years, R/o. No 179,Behind TCB.
K.R Extension, Sira Town
Tumakuru District.
……….Complainant
(By Sri.T. Ramaiah. Advocate)
V/s
The Manager.
The Town Cooperative Bank Ltd.
Head Office. Main Road,
Sira Town. Sira taluk.
Tumkur District.
………. Opposite parties:
(By Sri. G.S.Shashidara, Advocate)
:ORDER:
BY SRI.KUMARA.N, - MEMBER
This complaint was filed under Section 35 of the Consumer Protection Act, 1986 to direct the Opposite party (hereinafter called as OP) to hand over the loan account statement and to receive balance / remaining loan amount from the complainant and issue No Due Certificate, Further prayed to pay a sum of Rs.5,00,000-00 to the complainant towards mental agony and mental torture caused by the OP for his negligent act along with interest @18% p.a.
2. It is the case of complainant that, he was a Member of OP,(Membership No 5215/2025 dated 30-06-1994) and complainant need of money, hence approached the OP for loan, accordingly by taking surety (Mortgaged) of the complainant’s residential sites bearing CMC Sira Assessment No 5708/5546,5708/A and 5546/A which were situated at sira town, the OP sanctioned CCL (Cash Credit Loan) bearing loan account No1001022000407 for Rs 2,25,000=00. Further complainant submits that said total loan EMIs of Rs 2,16,200-00 paid regularly to the OP up-to 18-11-2020. Complainant intended to pay the remaining loan amount to close the said CCL and approached the OP many times to issue said loan account statement, but the OP not responded. This act of OP leads to Complainant apprehension of OP to acquire mortgaged complainant’s residential sites and finally on 28-11-2020 complainant issued legal notice to the OP, but the OP neither replied nor given loan account statement to the complainant. Hence, this complaint.
3. The OP in response to the notice appeared through his learned counsel and filed version, admitting the fact of complainant was the member of the OP and sanctioned CCL (Cash Credit Loan) bearing loan account No1001022000407 for Rs 2,25,000=00 by taking surety (Mortgaged) of the complainant residential sites bearing CMC Sira, Assessment No 5708/5546, 5708/A and 5546/A, which were situated at sira town. Further submitted that the Complainant given the statement of account of said loan many times but the OP not able to provide proof / evidence of had given such statement of account to the complainant, after taking the said statement, the Complainant on 20-01-2021 and 19-05-2021 made payments to the OP, Rs 1,00,000-00 and Rs 3,00,000=00 respectively to the said loan account and further the complainant on 30-11-2021 gave false complaint against OP in this regard to the District Registrar of Cooperative Societies, Tumkur and at the time of enquiry, OP has given statement of account of the said loan to the complainant through authorities. The complainant intentionally making false allegation on OP and further OP counsel submitted that complainant not paid, nor operated (7–8 transaction per month) the said loan account as per the terms and conditions, said loan account declared NPA ( Non performing Assets) as per Bank rules and statement of account as follows.
1. Principal Amount is Rs 225000=00
2. Accumulated interest is Rs 641405=00
(Due up to 01-03-2022)
3. Interest from 02-03-2022 to 07-04-2022 is Rs2663=00
4. Other Miscellaneous Charges Rs 1281=00
Total amount due on 07-04-2022 is Rs 870349=00.
The OP counsel submits that OP is ready to receive the above said loan balance amount and accepted to release the mortgaged properties of complainant by giving No Due certificate, hence prayed to dismiss the complaint against the OP.
4. The complainant and OP counsels filed affidavit evidences and OP counsel produced Exs.R1 to R3 documents.
5. We have heard the oral arguments of complainant and OP counsels and the points that would arise for determination are as under:
- Whether the complainant proves that there is deficiency in service on the part of OP?
- Is complainant entitled to the reliefs sought for?
6. Our findings on the aforesaid points are as follows:
Point No.1: In the affirmative
Point No.2: In the Partly affirmative for the below
:R E A S O N S:
Point No.1 and 2:
7. The learned counsel for the complainant argued that, the complainant being a Member of cooperative Society, i.e. the OP, complainant approached the OP for loan amount of Rs 225000=00,the OP without considering other loan products like Personal loan, Loan against property etc on 23-01-2008 sanctioned CCL (Cash Credit Loan) without giving specific instruction and terms and conditions of said loan. When complainant wants to repay and clear said loan the OP refused to give statement of loan account in spite of several personal visits and requests and even after served legal notice dated 28-11-2020 to the OP. Further complainant had paid total of Rs 400000=00 (on 20-01-2021 Rs 100000=00 and on 19-05-2021 Rs 300000=00) to the said loan account, but OP with malefic interest of acquiring mortgaged properties of the Complainant i.e. Residential sites bearing CMC Sira Assessment No 5708/5546 and 5708/A, 5546/A situated at sira town and the OP not given loan account statement to the complainant there by not allowing complainant to repay the said loan, which leads to deficiency of service and unfair trade practice of the OP. Complainant counsel produced copy of property mortgaged while availed said loan, copy of properties i.e. residential site of complainant, copy of complainant bank pass book, copy of legal notice and request letter of complainant dated 3-5-2021.
8. OP counsel argued that CCL loan sanctioned to the Complainant and terms & conditions of said loan explained before sanctioning. Further submits that loan statement of account given to the complainant several times but this OP unable to keep the evidence or proof of given. Loan statement of account given to the complainant when complainant made false complaint to the District Registrar of societies Tumkur on 30-11-2021 against this OP. The Complainant not repaid the said loan and said loan account considered as NPA (Non performing Asset) as per bank rules. OP counsel produced 3 documents, which were copy of the district Registrar of society’s letter, Said loan statement and abstract of loan account.
9. OP in his version in para-17 stated in the statement of account as follows.
1. Principal Amount is Rs 225000=00
2. Accumulated interest is Rs 641405=00
(Due up to 01-03-2022)
3. Interest from 02-03-2022 to 07-04-2022 is Rs2663=00
4. Other Miscellaneous Charges Rs 1281=00
Total amount due on 07-04-2022 is Rs 870349=00.
But the OP not given the details of payment made by the complainant and which was not accounted in statement of account, on contrary to this version /objection filed by the OP in para 12 stated as complainant made payments of Rs 1,00,000-00 on 20-01-2021, and Rs 3,00,000=00 on 19-05-2021 to the OP which reflects Unfair trade practice of the OP.
10. A cash credit is a working capital loan offered to a business entity to meet its working capital requirements. It is a short-term source of finance with tenure of up to 12 months, which can be renewed upon completion of the loan.
11. Cash credit loan allows businesses to borrow amounts from their bank account over and above their account balance, as many times as they want, up to the pre-specified borrowing limit. However, the interest is only charged on the amount borrowed and not on the entire borrowing (credit) limit.
The cash credit limit is based on the following factors
- Funds required
- Credit profile of the borrower
- Current assets and current liabilities of the business organization
- Past track record
- Collateral/security provided in exchange for a cash credit facility
- Repayment capacity of the borrower
Advantages of Cash Credit Loans
- A cash credit loan provides an excellent form of finance without the company worrying about liquidating their assets.
- The bank can easily arrange for a cash credit loan as long as the loan value is determined, and collateral security is pledged.
- You are given the flexibility to Withdraw as many times from your available cash credit loan up to its withdrawal limit.
- Deposit whenever you have excess funds to lessen the burden of interest.
- Interest paid on your credit cash loan is tax-deductible.
- You pay interest only on the amount you borrow.
Disadvantages of Cash Credit Loans
- Since it is a short-term (temporary) loan, a company cannot rely on it for an extended period of time.
- After the cash credit loan expires, it can be renewed, but the terms and conditions are re-evaluated.
- The interest rate applied to cash credit loan is very high.
Eligibility for Cash Credit Facility; A cash credit facility is a loan offered to any individual over the amount available in their account at interest charged on the funds borrowed. The following are eligible for a cash credit loan
- Individuals
- Private limited Companies
- Partnership Firms
- Sole Proprietors/Professionals
- Registered Trusts
- Limited Liability Partnerships
- Public Limited Companies
- Co-operative Societies
Cash Credit Loan Procedure; Once the cash credit application is submitted, the bank or the lender assesses the current assets and liabilities of the business and approves a cash credit limit. The stronger the business financially, the higher is the cash credit limit approved. Businesses can withdraw from this cash credit facility as many times as they want. The interest is charged only on the borrowed amount and not on the credit limit approved. The interest rate applied for withdrawing from the cash credit facility depends on the creditworthiness and the collateral submitted by the company.
(https://www.moneytap.com/blog/what-is-a-cash-credit-loan-and-how-does-it-work/)
12. Cash credit/Overdraft (CC/OD) account is classified as NPA if it is ‘out of order’. In cases where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing power, the extant instructions, inter alia, stipulate that the account should be treated as ‘out of order’ if there are no credits continuously for 90 days as on the date of Balance Sheet or credits are not enough to cover the interest debited during the same period. In order to avoid any ambiguity regarding determination of ‘out of order’ status of CC/OD accounts on a continuous basis, it is clarified that an account shall be treated as ‘out of order’ if:
1.The outstanding balance in the CC/OD account remains continuously in excess of the sanctioned limit/drawing power for 90 days, or
2. The outstanding balance in the CC/OD account is less than the sanctioned limit/drawing power but there are no credits continuously for 90 days, or the outstanding balance in the CC/OD account is less than the sanctioned limit/drawing power but credits are not enough to cover the interest debited during the previous 90 days period.
(https://www.rbi.org.in)
13. Deficiency of Service; Section 2 (11) of Consumer Protection Act, 2019 defines Deficiency of Service as “any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service and includes (a) any act of negligence or omission or commission by such person to the consumer and (b) deliberate withholding of relevant information by such person to the consumer.”
14. An unfair trade practice means a trade practice, which, for the purpose of promoting any sale, use or supply of any goods or services, adopts unfair method, or unfair or deceptive practice.Section 2(47) of the Consumer Protection Act, 2019 defines the term ‘unfair trade practices’ which include:
- Manufacturing spurious goods or providing defective services.
- Not issuing cash memos or bills for the goods purchased or services rendered.
- Refusing to take back or withdraw the goods or services and not refunding the consideration taken for the purchase of the goods or services.
- Disclosing the personal information of the consumer.
15. In this case when complainant need of Rs 2,25,000=00, approached the OP for loan. The OP having several loan products like Personal loan, Small business loan, loan against property etc, but the OP selected and sanctioned CCL (Cash credit loan) to the complainant, who had SB account with the OP, even though CCL (Cash credit loan), which was mainly for business / commercial firms and the terms and conditions of the CCL (Cash Credit Loan) and NPA of said account not supplied to the Complainant by the OP. It was the duty of the OP to bring all the terms and conditions of the CCL (Cash Credit Loan) and NPA declaration to the specific note of the Complainant, in the absence of which same cannot be enforced upon the Complainant. From the above discussion we observed that, the OP not given services to the complainant and avoided to furnish the proper loan account statement to the complainant, even though complainant intended to pay the entire loan amount with interest, which leads to deficiency of service and unfair trade practices, the act of the OP results in the complainant to suffer. The complainant prayed to direct the OP to hand over statement of account of said loan, as complainant intended to pay the entire loan amount along with interest and to award Rs. 5,00,000=00 towards compensation. In the above discussion this commission is in the opinion of it is appropriate to award Rs.2,50,000=00 compensation. Accordingly, we proceed to pass the following;
:ORDER:
The complaint is partly allowed with cost.
The OP is directed to provide the updated loan account statement (CCL) to the complainant and further ordered to Pay Rs.2,50,000=00 to the complainant within 30 days from the date of this order, along with 9 % interest per annum on the said amount from the date of complaint i.e. 14-2-2022, otherwise it carries interest @ 10% per annum from the date of complaint till its payment.
Further directed the OP to Collect dues from complainant towards the said loan account and furnish No due certificate to the complainant.
It is further directed to the OP to pay litigation cost of Rs.10,000/- to the complainant.
Furnish the copy of order to the complainant and opposite parties at free of cost.
