THE DISTRICT CONSUMAR DISPUTES REDRESSAL FORUM No.419, Ist Floor,. H.N. Gowda Building, M.B.Road, Kolar-563101 consumer case(CC) No. CC/08/130
M/s M.I.Plywood Industries
...........Appellant(s)
Vs.
The Senior Branch Manager
...........Respondent(s)
BEFORE:
Complainant(s)/Appellant(s):
OppositeParty/Respondent(s):
OppositeParty/Respondent(s):
OppositeParty/Respondent(s):
ORDER
CC Filed on 29.12.2008 Disposed on 11.08.2009 BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, KOLAR. Dated: 11th day of August 2009 PRESENT: Sri. G.V.HEGDE, President. Sri. T.NAGARAJA, Member. Smt. K.G.SHANTALA, Member. --- Consumer Complaint No. 130/2008 Between: M/s. M.I. Plywood Industries, Near APMC Yard, Bangarpet, Kolar District. (Reptd., by its Managing Partner Mr. Mohammed Ibrahim) (By Advocate Sri. B.S. Sathyanarayana ) .Complainant V/S The Senior Branch Manager, Canara Bank, Bangarpet Town. (By Advocate Sri. N.G. Vasudev Moorthy) .Opposite Party ORDERS This is a complaint filed under section 12 of the Consumer Protection Act, 1986 praying for a direction against the opposite party to close O.C.C loan account No. 226 of the complainant with OP and to direct OP to release/return the documents of title related to the properties mortgaged in favour of OP by way of security and to issue no due certificate to complainant and to pay compensation of Rs.2,00,000/- for the hardship caused to him and also for a direction to return Rs.25,000/- deposited on 09.06.2008 by complainant under no lien account with OP with costs and interest, etc., 2. The material facts required for the disposal of this case may be stated as follows: That the complainant/M/s. M.I. Plywood Industry, a partnership firm said to be consisting of Mohammed Ibrahim and his wife as partners, with intend to carry on business in plywood industry, approached OP for loan. The OP sanctioned a sum of Rs.20,00,000/- on Open Cash Credit facility on 29.03.1995 and sanctioned a sum of Rs.10,00,000/- on Open Cash Credit facility by discounting the bills. Various securities were taken for repayment of the loan and interest. It appears the loan was repayable with interest at 17.5% p.a. with some other terms. The complainant also obtained huge loan from K.S.F.C for the business of said industry by mortgaging the immovable property on which the industry existed. The business was going smoothly. In the meantime there was a fire accident on 19.05.1996 in which the entire industry was reduced to ashes. The complainant was put to great financial difficulties. He could not repay the loan to the creditors. The effort for rehabilitation of the industry could not be materialized. A sum of Rs.10,19,000/- was paid directly to OP from fire insurance company towards the insurance claim for adjustment towards loan accounts. A sum of Rs.29,41,576/- was balance as on 31.12.1997 including interest up to that date in O.C.C/A/c. No. 234, after adjusting the insurance amount. It appears earlier to it, the complainant had paid Rs.4,00,000/- on different dates towards his loan accounts. It appears K.S.F.C had taken coercive steps for realizing the outstanding dues. The OP was also insisting for repayment of the balance amount. At that stage in the year 2002 the complainant approached for One Time Settlement (OTS) with OP which was introduced for speedy recovery of overdue amounts. What transpired subsequently may be summarized as narrated by OP for the sake of brevity and clarity. After the detailed discussion and considering the present status of the unit and the party, it was agreed to permit OTS for Rs.22.00 lacs. OTS amount was payable as under: 25% down payment and the balance amount within 90 days i.e. before 28.03.2002. Party accepted the OTS offer for Rs.22.00 lacs vide his letter dated 04.01.2002 and submitted a cheque for Rs.5.00 lacs dated 25.01.2002. Party vide their letter dated 18.03.2002 requested the Bangarpet branch to issue NOC for the release of 2 properties out of 6 properties mortgaged to the Bank on payment of Rs.10.00 lacs and extension of time for payment of OTS amount. Bangarpet branch vide their letter dated 23.03.2002 submitted recommendations and Circle Office, Bangalore permitted to accept Rs.10.00 lacs and release 2 properties as stated in the partys letter dated 18.03.2002 and permitted extension of time for paying the balance OTS amount within 31.05.2002 (Office Note dated 28.03.2002) and communicated to the branch vide letter dated 30.03.2002. As permitted by Circle Office, party was asked to file a Memo for consent decree before DRT, Bangalore and branch to inspect the mortgaged properties and submit separate recommendations for the release of the 2 properties after considering the further recovery chances. Also party to pay interest for the delayed OTS payment. Finally, party did not honour their commitment and OTS was cancelled vide Circle Office Letter dated 10.06.2002. Party approached Executives of Circle Office/Head Office/RBI and informed having paid Rs.19.90 lacs and sought permission for payment of Rs.2.91 lacs in full settlement of OTS Rs.22.00 lacs vide their letter dated 18.06.2002. Branch vide its letter dated 10.08.2002 clarified to the party that payments received before the discussion of OTS for Rs.22.00 lacs i.e. 02.01.2002 cannot be treated as OTS payments and withdrawn the OTS. Still party repeatedly submitted the distorted information to Circle Office / Head Office / RBI vide his letters dated 29.10.2002 (RBI 26.12.2002 (Chairman & Managing Director, Canara Bank). Finally, party approached Circle Office, Bangalore on 24.06.2003 and attended the Recovery Camp held at Circle Office and offered to pay Rs.10.50 lacs and deposited a cheque for Rs.5.00 lacs. In view of partys expressing his difficulties and inability to pay more than Rs.10.50 lacs, Recovery Committee accepted to submit the proposal to the Sanctioning Authorities. Accordingly, the proposal was placed to the General Manager vide ON 132/2003 dated 30.07.2003 and as permitted by General Manager, the proposal was submitted to the Chairman & Managing Director of the Bank on 30.07.2003. Considering the value of the mortgaged securities, C & M.D. vide orders dated 21.08.2003 informed as under : There is no justification for Rs.10.50 lacs when value of mortgaged properties is much higher. The proposal also gives us a negative impact of Rs.2.70 lacs. Proposal must be improved. (Recovery Section, Recovery Wing, HO letter dated 22.08.2003 enclosed). This has been communicated by Bangarpet Branch vide its letter dated 02.09.2003 to the party. Though OTS was not agreed, party submitted letter dated 02.07.2003 along with a postdated cheque for Rs.5.50 lacs and requested to consider his offer of Rs.10.50 lacs. His request was again forwarded to Head Office vide Circle Office letter dated 12.09.2003. However, Head Office had not accepted the recommendations and ordered Regret. Let the court case be pursued vigorously vide letter dated 09.10.2003. This has been informed to the party by Bangarpet branch vide letter dated 25.10.2003. Party did not submit improved offer. He approached again various authorities at Circle Office / Head Office several times finally Chairman & Managing Director vide orders dated 07.03.2004 informed as under: Minimum we must avoid negative impact of Rs.2.70 lacs and were asked to inform the party to improve the offer. However, party did not agree to pay Rs.2.70 lacs. He again approached various authorities at Circle Office / Head Office repeatedly. Finally on 14.08.2006, party remitted Rs.2.70 lacs. As there was considerable delay of 2 years and 5 months and also the value of the mortgaged securities, we were asked to obtain improved offer from the party. Party issued legal notice dated 30.04.2008 to our Chairman & Managing Director through his Advocate. On contacting the party regarding the complaint, he informed that he does not have liquid funds for submitting improved OTS offer. He again informed that he can pay Rs.25,000/- and requested Circle Office executives to help in the matter. Accordingly, he was informed to deposit Rs.25,000/- in no lien deposit and submit his offer to the Bank. Accordingly, his OTS proposal was submitted to Head Office vide Office Note 421/2008 dated 02.08.2008 considering the value of mortgaged properties (more than Rs.50.00 lacs) proposal was rejected vide HO letter dated 26.09.2008. On communicating the decision, party has filed complaint before the Honble Forum. Bank has responded to the request of the party promptly every time. Though reasonable OTS for Rs.22.00 lacs was permitted to the party during 2002, party did not honour the commitment. Later during 2004, Head Office permitted to accept Rs.2.70 lacs (CMDs orders dated 07.03.2004), party failed to pay the same immediately. Hence, there is no deficiency in services by the Bank. The complainant has alleged that the executives of OP at their Circle Office, Bangalore held negotiations and finally on 24.06.2003 they agreed to receive Rs.10,50,000/- towards full and final settlement of the loan amount due. Further he alleged that after making the payment of Rs.10,50,000/- again the OP sent letters stating to improve offer by Rs.2.70 lakhs. The main contention of the complainant is that after settlement of the amount in the meeting held on 24.06.2003 for Rs.10,50,000/- there could not have been any more demands by OP for improvement of the offer by him. 3. The parties filed affidavits and also documents. We heard the Learned Counsel for the parties and perused the records. 4. From the rival contentions the following points arise for our consideration. 1. Whether there is deficiency in service by OP? 2. If so, to which reliefs the complainant is entitled to? 3. To what order? 5. After considering the records and the submissions of the parties our findings are as follows: Point No.1: The main allegation of complainant is that he approached OP for one time settlement (OTS) and after several rounds of negotiations with OP in the meeting held on 24.06.2003 at Circle Office, Bangalore the OTS was settled for Rs.10,50,000/- and he paid the said amount and inspite of it the OP went on asking to improve the offer and did not return the original title deeds, kept with OP as security for repayment of the loan and interest. If this part of allegation is proved, one can say that the OP could not have asked for further improvement of the offer for OTS, after payment of the amount agreed. The said allegation of complainant is denied by OP. It has produced the copy of the substance of recovery meeting held on 24.06.2003. In this copy in the remarks column after narrating the difficulties stated by complainant, it is noted that with much persuasion they (party) offered Rs.10.5 lakhs and paid Rs.5 lacs (by cheque) and agreed to pay the balance within 30.09.2003. It is submitted by the Learned Counsel for OP that the appropriate authority in the present case, for accepting the proposed amount towards OTS recommended by the committee is the Chairman and Managing Director of Canara Bank and further he submitted that as per the guidelines the top officials sitting in the recovery meeting is to persuade the party for settlement and the committee only makes recommendation to C& M.D. for acceptance of the proposal. Therefore he submitted that in the present case the offer to pay Rs.10.5 lacs for OTS made by complainant is only in the nature of proposal to be placed before C & M.D. of Canara Bank. The OTS guidelines for the relevant period are not produced before the Forum by any of the parties. One Mr. Shenoy, a Senior Manager of Canara Bank working in Recovery Section was present before the Forum during the argument. On his instruction the Learned Counsel made the submission that in the present case C& M.D. was the competent person to accept the proposal for OTS. Therefore we believe that the final authority is C& M.D. of Canara Bank to accept the proposal for OTS. Therefore we can say that the claim of complainant that in the OTS meeting held on 24.06.2003, the Canara Bank reached an agreement with complainant for OTS on receipt of Rs.10.5 lacs, may not be correct and it can be said that it was yet to be accepted by C& M.D. and till that time there cannot be a binding agreement between parties. On the basis of the recommendation of Recovery Committee with regard to the offer made by complainant for Rs.10.5 lacs, R & L Section (Recovery-I) Circle Office, Bangalore -01 wrote a letter dated 25.02.2004 to the General Manager, Canara Bank, Recovery Section, Head Office, Bangalore for moving the matter before C&M.D. In the said letter after narrating the preliminary facts, it is stated in the concluding paras as follows: Now, Branch has forwarded a representation dated 19.02.2004 received from the party and recommended to consider the request of the party. A copy of the representation is enclosed for your perusal and records. It is informed that Mr. Mohammed Ibrahim has already sold the property standing in his name (except house) and paid OTS amount of Rs.15.40 lakhs pending registration (Rs.4.90 lacs on 16.01.2002 and Rs.10.50 lacs now). Now the persons who have bought the property and other guarantors are pressurizing Mr. Mohammed Ibrahim for getting back the title deeds / registration of the property. As the party has lost due to fire accident and considering the present state of the affairs, we may accept the offer of the party to pay another Rs.50,000.00 in full settlement of the account. Thus there will be slight change in the total sacrifice amount. It appears the General Manager in the Head Office placed the proposal with relevant documents before C& M.D. On consideration of the records C & M.D. passed order dated 07.03.2004 which reads as follows Minimum we must avoid negative impact of Rs.2.70 lacs. This order of the C & M.D. was communicated to OP in proper channel by letter dated 13.03.2004 issued by R & L Section, Circle Office, Bangalore. Both parties have not produced any letter issued by OP intimating the order of C & M.D., soonafter the receipt of letter dated 13.03.2004 sent by R & L Section, Circle Office, Bangalore. The only letter available on file is letter dated 03.02.2006 issued by OP to complainant stating that he should improve his offer by Rs.2.70 lacs to further pursue the case with higher authorities. Referring some other letters of complainant the Learned Counsel for OP submitted that soon after the receipt of letter dated 13.03.2004 issued by R & L Section, Circle Office, Bangalore, the OP had intimated the complainant to improve the offer by Rs.2.70 lacs and that letter is not available for the present. We may assume that OP had immediately intimated the result of the decision of C & M.D. soonafter the communication dated 13.03.2004 from R&L Section, Bangalore. It appears the complainant in response to such letter did not come forward to offer Rs.2.70 lacs within reasonable time. The complainant went on making offer for lesser amount than Rs.2.70 lacs. Finally he paid Rs.2.70 lacs only on 14.08.2006. The contention of the OP is that as there was considerable delay of two years and five months in paying the said amount of Rs.2.70 lacs and also there was increase in the value of the mortgaged securities, the Canara Bank did not agree for OTS and the complainant was asked to improve offer for final settlement. On consideration of the development of the case, we think the step adopted by OP (Canara Bank) again calling for improvement of offer, appears to be clearly unwarranted for the following reasons: Before passing the order dated 07.03.2004 by C & M.D. there were many efforts for OTS and it is said 3-4 proposals made earlier were not accepted by the competent authority namely C & M.D. Finally C & M.D. held that minimum we must avoid negative impact of Rs.2.70 lacs. Therefore this order in the background of the case and also the background of the recommendation letter dated 25.02.2004 stated above clearly implies that if Rs.2.70 lacs was agreed to be paid by party the settlement could be arrived at. However the order of C & M.D. does not speak the time within which the said amount of Rs.2.70 lacs is to be credited to OP Bank. We think the other top officials could have fixed a reasonable time to pay this amount for arriving at OTS as directed by C & M.D. If this offer is accepted by complainant, we think the OP bank could not have gone back and stated that still the offer should be improved for any reason unless on the ground of fraud or mistake, etc. Therefore it was required for the OP to clearly state in its letter communicating the order of C & M.D. to complainant that if he made payment of Rs.2.70 lacs within a particular time his offer for OTS stood accepted. It is very clear from the communication made by OP to complainant that the matter was not properly communicated and simply it was stated to improve the offer by Rs.2.70 lacs to consider the request for OTS. When such was the communication the complainant came forward to pay lesser amount for certain time and finally he paid Rs.2.70 lacs on 14.08.2006. There was a delay of more than two years in paying the amount from the date of the order of C & M.D. This was the reason for the delay and for it the complainant cannot be blamed. The OP could have avoided the offer for OTS if it had clearly prescribed the time limit in which Rs.2.70 lacs is to be paid and that direction was not complied with by complainant. But that was not done by OP. We can also note that in any of the letters OP has not stated within which time Rs.2.70 lacs is to be paid. If that time limit is not prescribed, it may not be possible to hold that the payment of Rs.2.70 lacs on 14.08.2006 is a delayed payment for which reason the OP can withdraw from its offer. The complainant has deposited Rs.25,000/- on 09.06.2008 with OP under non-lien account as a final offer for acceptance of OTS on the condition that if this offer was not accepted, the complainant should be permitted to withdraw the said amount. We say at best for compensating the delay in payment of Rs.2.70 lacs, the OP may be directed to appropriate Rs.25,000/- towards OTS. Therefore we think that OP bank has committed deficiency in service by going back from the offer for OTS on the grounds that there was delay in payment of Rs.2.70 lacs and that the value of mortgaged security is increased. The Learned Counsel for the OP contended that the order of C & M.D. that minimum we must avoid negative impact of Rs.2.70 lacs is only in the nature of invitation and not as a binding offer and that even if the party had agreed for it, the C & M.D. was at liberty to consider that offer either to accept or reject it. We think this contention of the Learned Counsel for OP cannot be accepted for two reasons: First we say it is an unconditional offer and once it is accepted by other party, the party making the offer cannot go behind it. Second ground is that the party was made to believe from time to time that there will be OTS on payment of certain amount. The observation in the recovery committee meeting dated 24.06.2003 that with much persuasion they offered Rs.10.5 lacs and paid Rs.5.00 lacs and agreed to pay balance within 30.09.2003 shows that the complainant was advised to pay that much of amount and only on such advice the complainant paid the amount. The complainant has also made such allegations in his complaint and that part of the allegation appears to be true. It appears for that reason alone he also paid Rs.2.70 lacs on 14.08.2006. Admittedly the complainant had paid Rs.10.5 lacs as suggested by the Recovery Committee. We believe the guidelines for OTS may not provide for such tactics of recovery by a defaulter on the guise of OTS. We say the guidelines must have contained the provision that both parties after considering their respective interest should come to a figure for settlement of dues and then if that offer is accepted by the debtor, the creditor should accept that offer if it is as per the terms agreed between parties. Persuading a debtor to make part payment before arriving final terms of OTS may not be a proper step, during OTS proceedings. In this sense the OP bank is estopped from going behind the offer made by it. If at all it does not want to accept the OTS, after receipt of certain amount, it has to return the entire amount received under pretext of OTS proceedings. Therefore the contention of the Learned Counsel for the complainant cannot be accepted. For the above reasons we hold Point No.1 in affirmative. Point No.2: As point No.1 is held in affirmative, the complainant is entitled to the benefit of OTS and return of original title deeds given by him to OP. In the circumstances of the case, we may direct the parties to bear their own costs. Point No.3: Hence we pass the following: O R D E R The complaint is allowed. OP shall close Open Cash Credit Account No. 226 relating to complainant as fully settled, after crediting Rs.25,000/- deposited on 09.06.2008 by complainant and further OP shall return the documents of title deeds and such other securities that may be now available with it to complainant and shall issue No Due Certificate to complainant if required to redeem any mortgage or other encumbrances. The parties shall bear their own costs in this proceeding. Dictated to the Stenographer, corrected and pronounced in open Forum this the 11th day of August 2009. MEMBER MEMBER PRESIDENT
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