Karnataka

Chitradurga

CC/65/2015

Smt. N.B.Shamshad W/o. N.B.T.Zameer - Complainant(s)

Versus

The Managing Director, Karnataka State Financial Corporation (KSFC) - Opp.Party(s)

Shri, S Syed Swaleha

12 May 2016

ORDER

COMPLAINT FILED ON : 01/08/2015

     DISPOSED ON: 12/05/2016

 

BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, CHITRADURGA

CC. NO. 65/2015 DATED:  12th May 2016

PRESENT :-     SRI. T.N. SREENIVASAIAH      PRESIDENT                                      B.A., LL.B.,

                        SMT.G.E.SOWBHAGYALAKSHMI,       

                                         B.A., LL.B.,                   MEMBER

COMPLAINANTS	1. Smt. N.B. Shamshad W/o N.B.T. Zameer, Proprietor, Hotel Eden Garden, A-1 Plot, Industrial Estate, Chitradurga.   2. N.B.T. Zameer, S/o Late Babu Sab, R/o I Main, Merchant Bank Road, Vidyanagar, Chitradurga.   (Rep by Sri. S.Syed Swaleha, Advocate for complainant No.1 and complainant No.2 in person)
OPPOSITE PARTIES	1. The Managing Director, Karnataka State Financial Corporation (KSFC)   2. The Executive Director, KSFC,     3. The General Manager, KSFC,   All are r/o No.1, Thimmaiah Road, Bangalore-52.   4. The Branch Manager, Karnataka State Financial Corporation, Chitradurga.   (Rep by K.N. Vishwanathaiah, Advocate)

SRI. T.N. SREENIVASAIAH. PRESIDENT.

ORDER

The complainants have filed a complaint U/s 12 of C.P. Act 1986 against the OPs for a direction to handover the original title deeds and other documents pertain to M/s Eden Garden, Plot No.A1, Industrial Area, Chitradurga, to issue clearance certificate, Rs. 19,00,000/- towards mental pain and agony and such other reliefs as this Forum deems fit to grant.

2.     The brief facts of the case of the complainants are that, complainant No.1 intended to start a Hotel industry in the name and style of M/s Eden Garden at A-1 plot, Industrial Estate, Chitradurga and obtained all the required license from the concerned authorities.  Being encouraged by the Government to assist and given priority to the women entrepreneur, complainant No.1 approached the KSFC for the financial assistance, in order to construct a hotel, she approached OP No.4 for financial assistance.  After perusal of project report and other documents, the OPs agreed to extend financial assistance to the complainant No.1 and sanctioned a sum of Rs.25,00,000/- in favour of complainant No.1 by its letter dated 23.07.1998 and after submission of all the documents, OP No.4 released a sum of Rs.6,75,000/- as first installment.  It is further stated that, complainant started the construction of building including her investment of Rs.11,00,000/-.  As the said amount was not sufficient for construction work, complainant No.1 submitted a letter with a request to release the loan amount several times but, the OP has not come forward to release the entire amount and the due non-releasing of remaining loan amount in time so, the construction of hotel building is delayed.  It is further stated that, for the surprise of the complainant No.1, on 07.06.2001, OP has issued legal notice to attend the meeting conducted by the OP No.4 on 12.06.2001 with regard to the repayment of loan amount, though the OP has got knowledge that the entire loan amount was not released for completion of construction of hotel building.  After receipt of the letter, complainant No.2 attended the meeting being a personal guarantor and explained the entire bottle neck problem to the OP which has been faced by the complainant No.1 due to non-releasing of loan amount within time for construction and completion of hotel building and requested to sanction additional loan and submitted fresh estimate and project to the OP as the OP letter which is available in the records of the KSFC, but the KSFC has not sanctioned additional loan, so the complainant No.1 requested the OP to re-schedule the loan repayment of Rs,25,00,000/- and reschedule the installment, the OP instead of considering the request of the complainant No.1, issued notice to the complainant No.1 and started harassing the complainant No.1 and caused injury in not releasing the loan amount in time and also not extending adequate/required financial assistance to the complainant on need based requirement to complete the project and caused injury to the complainant No.1.  It is further submitted that, though the adequate loan amount has been sanctioned in favour of the complainant No.1, the OP has not released the loan amount whenever he is required and due to delay in releasing the loan amount within time, the complainant No.1 was not able to complete the construction work within time even though she has invested more than Rs.60,00,000/- for construction work.  Furthermore, OP has deducted a sum of Rs.2,75,020/- as interest out of sanctioned amount of Rs.25,00,000/- and in the above context the complainant has given representation to OP that, she may be permitted to borrow loan from other financial institution and the OP No.4 has issued a permission and also no objection to approach any commercial Bank for availing financial assistance subject to clearing of the entire outstanding loan amount of KSFC with interest by its letter dated 14.06.2001.  Thereafter, complainant No.1 has made all efforts to get loan from any other financial assistance like schedule bank in Chitradurga and other places.  In the meantime, without granting time, OP has issued a show cause notice dated 19.07.2001 along with notice demanding repayment of loan amount.  Complainant requested time to arrange finance from other financial institution and for reschedule of the repayment of loan amount by letter dated 23.07.2001.  Being aggrieved by the notice given by the OP, complainant approached Hon'ble High Court in Writ Petition No.29700/2001 (GM) and the same was dismissed on 19.03.2002 with a direction that, since the impugned notice is only a show cause notice, I find it unnecessary to interfere in the said show cause notice and another prayer of the complainant is to consider the representation given by him.  On the date of order passed by the Hon'ble High Court, the unit/hotel industry itself was taken over by the OP under Sec.29 of KSFC Act, 1961 on 08.03.2002 stating that, complainant is in a due of Rs.35,17,678/- including loan balance as on 10.03.2002, which shows the OP trying to restrain the complainant No.1 from repayment of loan amount by obtaining loan from any other Bank or financial institutions.  It is further stated that, OP instead of assist and help the complainants to solve the problem, OPs are creating problems to the complainant No.1 one after the other, even after issuing no objection certificate for obtaining loan from other Banks or financial institutions.  After taking over the property and after notification in the news paper, obtained a tender for Rs.51,00,000/- from Dr. B.G. Vijayakumar and another tender from one Mr. Mansoor for Rs.1,50,00,000/- and accepted the tender of Mr. Mansoor and issued a letter to him to pay Rs.1,50,00,000/- subject to solve the pending litigation in the various courts.  Knowing the litigation, said Mr. Mansoor not paid the tender amount and the tender of Mr. Mansoor has been rejected.  After rejection of the tender of Mr. Mansoor issued confirmation letter to Dr. B.G. Vijayakumar to pay a sum of Rs.51,00,000/- towards cost of Hotel building subject to solve all the litigations pending in various court.  The said Dr. B.G. Vijayakumar has not paid the amount knowing the litigation with regard to the property.  The OPs have not credited confiscated amount of Rs.25,000/- + Rs.25,000/-, in all Rs.50,000/- i.e., the EMD amount paid by the renderers to the complainant No.1's loan account.  Complainant No.1 has approached the OPs to move her case under the scheme of "one time settlement" scheme and also submitted her prayer to consider the one time settlement to clear the liability of the OPs before the Hon'ble Prl. Civil Judge, Chitradurga and paid Rs.15,02,000/- in three occasions on different dates through banker's cheques and the OPs have consider the request of the complainant No.1.  Thereafter, the complainant No.2 who is the guarantor to the loan has cleared the loan on 29.03.2005 in three occasions and in the statement of account shows that, as on 29.03.2005 the balance was nil.  Thereafter, complainant No.1 gave a representation with a request to handover the possession of hotel building constructed in the A-1 Plot, Industrial Estate, Chitradurga and to issue loan clearance certificate along with all the title deeds such as Original sale deed, possession certificate, allotment letter with other documents which have been deposited with the OPs and the OP No.4 has handed over the land and hotl building on 08.04.2005.  It is further submitted that, for the surprise of the complainants, OP No.4 issued a letter dated 14.03.2008 stating that, complainant No.1 has to pay other debits of Rs.30,691/- and interest due of Rs.10,125/- towards legal/court charges as on 10.03.2008 to close the loan account.  Complainant No.1 contacted OP No.4 and enquired, for that, OP No.4 has not answered properly, being not satisfied with the same, complainant No.1 approached OPs 1 and the Deputy General Manager, KSFC, they have also not clarified.  Again on 16.07.2008 OP No.4 issued a letter to complainant No.1 to attend the meeting of debtor's on 24.07.2008 and the complainant No.1 attended the meeting and informed the details with regard to the loan account that, the same is already cleared by the complainant No.2 on 29.03.2005 and after got clarification complainants gave a representation requesting to handover all the original title deeds and other documents pertains to the loan account of M/s Eden Garden but, the OPs have not come forward to handover the original title deeds and other documents till this day and drag on the matter by one way or the other which caused deficiency in service and caused heavy loss and mental agony to the complainants and prayed for allow the complaint.

 

        3.     On service of notice, OPs appeared through Advocate Sri. K.N. Vishwanathaiah and filed version stating that, complainant No.1 acquired Plot No.A-1 in the KSSIDC and a loan of Rs.25,00,000/- was sanctioned by the OP Corporation vide letter dated 23.07.1998 to start hotel industry under the name and style of M/s Eden Garden are true which is subject to terms and conditions.  But it is not correct that the OP has not act on the guidelines of IDBI and RBI that, the Corporation has sanctioned only Rs.6.75 lakhs as first installment and the complainant started construction by investing her own amount of Rs.11,00,000/- and the OP did not come forward to release the same and due to non-releasing of the alleged remaining amount in time, the construction was delayed and thus there is a deficiency of service.  The allegations made in para 6 to 23 are all false, incorrect and imaginary.  It is further stated that, as per the complaint the OP has declined to handover the original title deeds and other documents when the possession of the financed unit was given to the complainant No.1 vide letter dated 08.04.2005 and further issued demand letter dated 14.03.2008 and further OP has not complied with the letter dated 24.07.2008 and thus, the complaint is not filed well in time and the same is liable to be dismissed.  It is further submitted that, the averments made in the complaint are very vague and only in order to overcome the payment of loan dues, the above complaint is filed.  The dues owned by the complainant No.1 to the OPs is in the nature of public money and unless the same is paid, the OP is not under the obligation to handover the title deeds and other documents relating to the primary security and also cannot issue loan clearance certificate and also not liable to pay the alleged damages.  It is further submitted that, after the term loan availed by the complainant No.1, she became chronic defaulter in paying the loan installment dues as agreed and thus, the OP had to initiate recovery proceedings as per law, after giving all possible opportunities to her.   The borrower also gave several representations to settle the dues payable by her under one time settlement and considering all the circumstances, the OP settled only the term loan dues for Rs.46,73,820/- waiving only the interest dues of Rs.15,57,310/- vide letter dated 04.02.2005 and addendum dated 23.03.2005 but, the dues under the head "other debits" did not include in the settled amount as the court cases were pending by that time and their expenses and incidental expenses had to be paid by the borrower herself as per term of the agreement and as per clause xxi of the loan agreement dated 25.07.1998, the complainant No.1 shall pay all costs, charges and other incidental expenses.  The complainants are very litigants and used to initiate unnecessary legal proceedings and used to give representations with no valid reasons and got postponed the sale proceedings relating to the secured property and for the same OP has filed timely caveat petitions in proceed with the recovery proceedings and when the settlement process was under process and after payment of the OTS amount, several court litigations were initiated relating to the secured property.  The complainants and their children tried to take undue advantage of their personnel law on the basis of the got up documents to deprive the rights of the OP by filing separate suits in O.S.No.111/2003 and 324/2003 on the file of Junior Civil Judge, Chitradurga against the OP and others.  There were also other Court cases relating to the secured property, filed by different persons against the borrower and OP claiming different reliefs.  Under the circumstances, all the legal fees and incidental charges relating to the above cases and other proceedings, are to be paid by  borrower with interest.  The complainants are only responsible for having not paid the due under "other debits" to the OP in all Rs.1,83,783/- including interest as on 09.09.2015 and the OP always ready and willing to return the documents relating to the secured property, provided the complainants discharge their dues of Rs.1,83,783/- as on 09.09.2015 with further interest.   Therefore, there is no deficiency of service on the part of OPs and prayed for dismissal of the complaint.

4. Complainants himself examined as PW-1 and  PW-2 by filing affidavit evidence and Ex.A-1 to Ex.A-22 documents are marked. 

        5. OPs have examined one Sri. H.B. Rajamudi, the Branch Manager of OP No.4 as DW-1 by filing affidavit evidence and Ex.B-1 to B-6 are marked. 

 

        6.     Arguments heard.

 

7. Now the Points that arise for our consideration for the decision of the complaint are that:

Point No.1:- Whether the complainants prove that, complainant No.1 obtained loan from the OP Corporation for the construction of hotel building and repaid all the dues and the OPs failed to return the original title deeds and thereby complainants have sustained financial loss and mental agony and OPs have committed deficiency of service and entitled for the relief as prayed in the complaint?

 

Point No.2:- What order?

 

        8. Our findings on the above points are as follows:

 

        Point No.1:- Affirmative.

        Point No.2:- As per the final order.

 

                                        ::REASONS::

9. Point No. 1:- It is not in dispute that, being encouraged by the Government to assist and given priority to the women entrepreneur, complainant No.1, in order to construct a hotel, approached OP No.4 for financial assistance and after perusal of project report and other documents, the OPs agreed to extend financial assistance to the complainant No.1 and sanctioned a sum of Rs.25,00,000/- in favour of complainant No.1 and OP No.4 released a sum of Rs.6,75,000/- as first installment.  Complainant No.1 started the construction of building including her investment of Rs.11,00,000/-.  As the said amount was not sufficient for construction work, complainant No.1 submitted a letter with a request to release the loan amount several times but, the OP has not come forward to release the remaining loan amount  and for the surprise of the complainant No.1, on 07.06.2001, OP has issued legal notice to attend the meeting conducted by the OP No.4 on 12.06.2001 with regard to the repayment of loan amount, though the OP has got knowledge that the entire loan amount was not released for completion of construction of hotel building.  The complainant No.1 requested the OP to re-schedule the loan repayment of Rs,25,00,000/- and reschedule the installment.  But, the OP instead of considering the request of the complainant No.1, issued notice to the complainant No.1 and started harassing the complainant No.1 and caused injury in not releasing the loan amount in time and also not extending adequate/required financial assistance to the complainant on need based requirement to complete the project.  The complainant No.1 was not able to complete the construction work within time even though she has invested more than Rs.60,00,000/- for construction work.  Furthermore, OP has deducted a sum of Rs.2,75,020/- as interest out of sanctioned amount of Rs.25,00,000/- and in the above context the complainant has given representation to OP that, she may be permitted to borrow loan from other financial institution and the OP No.4 has issued a permission and also no objection to approach any commercial Bank for availing financial assistance subject to clearing of the entire outstanding loan amount of KSFC with interest by its letter dated 14.06.2001.  In the meantime, without granting time, OP has issued a show cause notice dated 19.07.2001 along with notice demanding repayment of loan amount.  Thereafter, the complainant No.2 who is the guarantor to the loan has cleared the loan on 29.03.2005 in three occasions and in the statement of account shows that, as on 29.03.2005 the balance was nil.  Thereafter, complainant No.1 gave a representation with a request to handover the possession of hotel building constructed in the A-1 Plot, Industrial Estate, Chitradurga and to issue loan clearance certificate along with all the title deeds such as Original sale deed, possession certificate, allotment letter with other documents which have been deposited with the OPs and the OP No.4 has handed over the land and hotel building on 08.04.2005 but, for the surprise of the complainants, OP No.4 issued a letter dated 14.03.2008 stating that, complainant No.1 has to pay other debits of Rs.30,691/- and interest due of Rs.10,125/- towards legal/court charges as on 10.03.2008 to close the loan account.  Complainant No.1 contacted OP No.4 and enquired, for that, OP No.4 has not answered properly. Complainant No.1 informed the details with regard to the loan account that, the same is already cleared by the complainant No.2 on 29.03.2005 and after got clarification complainants gave a representation requesting to handover all the original title deeds and other documents pertains to the loan account of M/s Eden Garden but, the OPs have not come forward to handover the original title deeds and other documents till this day and drag on the matter by one way or the other which caused deficiency in service and caused heavy loss and mental agony to the complainants and therefore filed a complaint.

 

10.  In support of his contentions,  complainants have relied on his affidavit evidence in which they have reiterated the contents of complaint.  Complainants have also relied on documents like copy of order passed in W.P. No.29700/2001(GM) dated 19.03.2002 by the Hon'ble High Court of Karnataka marked as Ex.A-1, copy of Possession u/S.29 of KSFC dated 08.03.2002 marked as Ex.A-2, copies of Tender Forms marked as Ex.A-3 & 4, copy of tender confirmation letter dated 24.07.2003 marked as Ex.A-5, copy of letter to Mr. Mansoor dated 01.12.2003 marked as Ex.A-6, Copy of letter to Dr. B.G. Vijayakumar informing forfeiture of tender amount marked as Ex.A-7, copy of letter dated 08.04.2005 issued by KSFC to complainant No.1 informing handing over of building marked as Ex.A-8 copy of letter dated 14.03.2008 to complainant No.1 demanding payment to close the loan account marked as Ex.A-9, copy of letter dated 16.07.2008 to complainant No.1 to attend the meeting marked as Ex.A-10, copy of letter dated 24.07.2004 by the complainant No.1 to OP No.4 requesting to handover the original deeds and documents marked as Ex.A-11, copy of demand notice marked as Ex.A-12, copy of entire loan account statement of M/s Eden Garden marked as Ex.A-13, copies of letters dated 20.05.2013, 21.01.2015 and 03.06.2015 to handover the original title deeds marked as Ex.A-14 to 16, summary statement of account of M/s Eden Garden marked as Ex.B-17, copy of plaint in O.S.No.37/2004 marked as Ex.A-18, copy of plaint in O.S.No.74/2004 marked as Ex.A-19, copies of pay-in-slip dated 29.03.2005 marked as Ex.A-20 to 22.

         

11.  On the other hand, it is admitted by the OPs that, complainant No.1 acquired Plot No.A-1 in the KSSIDC and a loan of Rs.25,00,000/- was sanctioned by the OP Corporation vide letter dated 23.07.1998 to start hotel industry under the name and style of M/s Eden Garden are true which is subject to terms and conditions but, denied that, OP has sanctioned only Rs.6.75 lakhs. As per the complaint, the OP has declined to handover the original title deeds and other documents when the possession of the financed unit was given to the complainant No.1 vide letter dated 08.04.2005 and further issued demand letter dated 14.03.2008.  In order to overcome the payment of loan dues, the above complaint is filed.  The dues owned by the complainant No.1 to the OPs is in the nature of public money and unless the same is paid, the OP is not under the obligation to handover the title deeds and other documents relating to the primary security and also cannot issue loan clearance certificate and also not liable to pay the alleged damages.  The complainant No.1, became a chronic defaulter in paying the loan installment dues and thus, the OP had to initiate recovery proceedings as per law, after giving all possible opportunities to her.   The borrower also gave several representations to settle the dues payable by her under one time settlement and considering all the circumstances, the OP settled only the term loan dues for Rs.46,73,820/- waiving only the interest dues of Rs.15,57,310/- vide letter dated 04.02.2005 and addendum dated 23.03.2005 but, the dues under the head "other debits" did not include in the settled amount as the court cases were pending and as per clause xxi of the loan agreement dated 25.07.1998, the complainant No.1 shall pay all costs, charges and other incidental expenses.  The complainants are only responsible for having not paid the due under "other debits" to the OP in all Rs.1,83,783/- including interest as on 09.09.2015 and the OP always ready and willing to return the documents relating to the secured property, provided the complainants discharge their dues of Rs.1,83,783/- as on 09.09.2015 with further interest.   Therefore, there is no deficiency of service on the part of OPs.

12.   In support of his contentions,  OPs have relied on their affidavit evidence in which they have reiterated the contents of version.  OPs have also relied on documents like copy of loan agreement dated 25.07.1998 marked as Ex.B-1, copy of loan account statement marked as Ex.B-2, copy of order passed in O.S.No.328/1998 by the Hon'ble Prl. Civil Judge (Jr.Dn) marked as Ex.B-3, copy of order sheet in O.S.No.377/2000 marked as Ex.B-4, copy of requesting letter dated 30.08.2004 by the complainant No.1 for one time settlement marked as Ex.B-5 and copy of summary extract of repayments of loan marked as Ex.B-6.

 

13.   On hearing the rival contentions of both the sides and on careful perusal of the entire records, it clearly goes to show that, complainant No.1 approached OP No.4 for sanctioning the loan for the construction of her hotel by pledging her property documents i.e., Plot No.A-1 in industrial Area, Chitradurga and complainant No.2 stood as a guarantor to the loan obtained by complainant No.1. The complainants have cleared the loan obtained by them from the OP Corporation has been cleared and there is no due to the OPs from them.  Such being the case, OPs have no obligation to return the documents to the complainants which are pledged at the time of obtaining the loan to the construction of hotel building.  Accordingly, this Point No.1 is held as affirmative to the complainants.

 

14.  Point No.2:- For the foregoing reasons, we pass the following:

 

ORDER

 

The complaint filed by the complainant u/Sec. 12 of the C.P. Act, 1986 is allowed.  The OPs are hereby directed to handover/return the original title deeds and other documents pertains to M/s Eden Garden, Industrial Area, Chitradurga.   

Further the OPs are hereby directed to pay a sum of Rs.5,000/- towards mental agony and Rs.5,000/- towards costs of the proceedings. 

Further, the OPs are hereby directed to pay the above amount to the complainant within 60 days from the date of this order. 

 

        (This order is made with the consent of Members after the correction of the draft on 12/05/2016 and it is pronounced in the open Court after our signatures.)         

 

MEMBER                                                         PRESIDENT

 

-:ANNEXURES:-

Complainants by filing affidavit evidence taken as PW-1 and Pw-2.

Witness examined on behalf of complainant:

                                                -Nil-

On behalf of OPs H.B. Rajamudi, the Branch Manager of OP No.4 by filing affidavit evidence taken as DW-1:

 

Witnesses examined on behalf of OP:

-Nil-

Documents marked on behalf of complainant:

01	Ex-A-1:-	Copy of order passed in W.P. No.29700/2001(GM) dated 19.03.2002 by the Hon'ble High Court of Karnataka
02	Ex-A-2:-	Copy of Possession u/S.29 of KSFC dated 08.03.2002
03	Ex-A-3 & 4:	Copies of Tender Forms
04	Ex-A-5:	Copy of tender confirmation letter dated 24.07.2003
05	Ex.A-6:	Copy of letter to Mr. Mansoor dated 01.12.2003
07	Ex.A-7:	Copy of letter to Dr. B.G. Vijayakumar informing forfeiture of tender amount
08	Ex.A-8:	Copy of letter dated 08.04.2005 issued by KSFC to complainant No.1 informing handing over of building
09	Ex.A-9:	Copy of letter dated 14.03.2008 to complainant No.1 demanding payment to close the loan account
10	Ex.A-10:	Copy of letter dated 16.07.2008 to complainant No.1 to attend the meeting
11	Ex.A-11:	Copy of letter dated 24.07.2004 by the complainant No.1 to OP No.4 requesting to handover the original deeds and documents
12	Ex.A-12:	Copy of demand notice
13	Ex.A-13:	Copy of entire loan account statement of M/s Eden Garden
14	Ex.A-14 to 16:	Copies of letters dated 20.05.2013, 21.01.2015 and 03.06.2015 to handover the original title deeds
15	Ex.A-17:	Copy of summary statement of account of M/s Eden Garden
16	Ex.A-18:	Copy of plaint in O.S.No.37/2004
17	Ex.A-19:	Copy of plaint in O.S.No.74/2004
18	Ex.A-20 to 22:	Copies of pay-in-slip dated 29.03.2005

 

Documents marked on behalf of OPs:

01	Ex-B-1:-	Copy of loan agreement dated 25.07.1998
02	Ex-B-2:-	Copy of loan account statement
03	Ex-B-3:	Copy of order passed in O.S.No.328/1998 by the Hon'ble Prl. Civil Judge (Jr.Dn)
04	Ex-B-4:	Copy of order sheet in O.S.No.377/2000
05	Ex-B-5:	Copy of requesting letter dated 30.08.2004 by the complainant No.1 for one time settlement
06	Ex.B-6:	Copy of summary extract of repayments of loan

 

 

MEMBER                                                         PRESIDENT

Rhr.