By Smt. Padmini Sudheesh, President:
The case of complainant is that the complainant had availed a loan of Rs.5,68,000/- from respondent Bank for purchasing Tata LP 709 bus. In the Registration Certificate of the vehicle there was hypothecation to respondent bank is entered. At the time of availing loan the respondent collected copy of title deeds of the property of complainant and his son Ashraf and also a blank signed stamp paper worth Rs.50/- and blank signed cheque leaves along with other documents. The complainant closed the loan account. But the respondent refused to delete the hypothecation entered in the R.C. book. The entrusted documents are also not returned. So the complainant was caused to send a lawyer notice dated 17.3.05 and the respondent sent a reply. In the reply notice it is stated that they will make necessary action. But there was no action taken and the complainant issued another lawyer notice on 2.6.05 and there was no reply from the respondent. Hence the complaint.
2. The counter of respondents is that it is admitted that a loan of Rs.5,68,000/-was granted to the complainant for the purchase of a brand new Tata LP 709 vehicle and one Ashraf had joined the loan documents as co- obligant. It is also admitted that the vehicle purchased out of the loan proceeds was hypothecated in favour of the bank as security for the due repayment of the loan granted. The allegation that the respondents have obtained the copies of title deeds of property owned by the complainant and Ashraf along with blank stamp paper worth Rs.50/- and blank signed cheque leaves is utter falsehood and denied. The respondents had not taken such documents. It is submitted that respondent Bank had entered into a tie up arrangement with M/s. Shriram Investments Limited (hereinafter referred to as SIL), a public limited company incorporated under the Companies Act. Only the tie up arrangement with SIL small road transport operators in the State of Kerala identified and recommended by SIL will be granted loan by the respondent bank for purchasing brand new Ashok Leyland /Tata/bus/ trailer and Eicher and Swaraj Mazda LCV vehicles. Apart from the security byway of hypothecation of vehicle SIL had issued a corporate guarantee in favour of the respondent for the aggregate amount of loan advanced under the tie up arrangement. The individual borrowers in turn will execute an irrecoverable power of attorney in favour of SIL to deal with the vehicle purchased out of the loan proceeds. In respect of loans granted under the tie up arrangement the repayment will be made by the borrowers concerned to SIL and they in turn will remit the amount collected by them to the respondent bank. In the event of repayment to any of the loan account is defaulted for more than two months, SIL will on its own close the subject loan account paying the entire amount due to the respondent bank and will take over the loan for pursuing the recovery with the borrower concerned. The complainant approached SIL for a loan under the tie up arrangement was one such borrower identified and recommended by SIL to the respondent bank and accordingly the loan for Rs.5,68,000/- was granted to him for purchasing the bus or vehicle. Since the complainant committed default in making repayment of the loan, SIL had taken over the loan account from the respondent bank by paying entire amount due to the bank. On closure of the loan in the name of complainant by SIL, respondent bank had handed over to SIL the form for terminating of lien noted in the RC book in favour of the respondent bank along with necessary request letter addressed to the R.T.O. authorities. It is false that the complainant had remitted the entire loan amount and interest. SIL had repaid the loan amount plus interest and as per the agreement the form of termination of lien in the RC book was handed over to the SIL. Hence SIL is a necessary party to this proceedings and the complaint is bad for non-joinder of necessary parties. The respondent had received the lawyer notice and immediately contacted with SIL and they assured the respondents that the matter will be amicably settled with the complainant. This respondent was under the belief that the matter has been settled. There is no deficiency in service from the Bank. Hence dismiss.
3. The points for consideration are:
(1) Whether there was any deficiency in service from respondents?
(2) Is the complaint bad for non-joinder of necessary parties?
(3) Other reliefs and costs.
4. The evidence consists of Exts. P1and P14 and Exts. R1 to R15. No oral evidence adduced by both.
5. Points: It is the case of complainant that the loan availed from the respondent Bank was closed and even after closing the loan account the respondent did not take steps to raise the hypothecation noted in the R.C. Book. So this complaint is filed to get the relief. The respondent Bank appeared and filed counter and contended that there was tie up arrangement with Shriram Investments Limited and the loan account was closed by SIL and not by complainant. According to them, as per the tie up arrangement if borrower committed defaults SIL will close the account and further actions will be taken by SIL. So according to the Bank it is the duty of SIL to delete the hypothecation.
6. The complainant filed a detailed argument note and in which it is stated that as far as the respondent bank is concerned the loan account is closed. So according to the complainant it is their duty to inform the R.T.O. authorities that the hypothecation has ceased to exist. Ext. R3 is a letter from the respondent bank to the Registering Authority, Ponnani requesting the termination of hypothecation. In this letter it is stated that they had extended financial assistance to Sri Mohammed.K.D. the complainant herein and the party has repaid the loan amount fully and as such the hire purchase agreement entered into stands cancelled. So they requested to cancel their lien in the R.C. book. From Ext. R3 it is clear that the financial assistance was provided to complainant by the respondent bank itself and the party had closed the account. If SIL had closed the account, they should point out it in Ext. R3. The entire defence of respondent bank would fail with this letter. So the complainant’s version that the loan account was closed by him is seen fully correct. It is their duty to return the documents entrusted with them and also to raise the hypothecation noted in the Registration Certificate.
7. Ext. R11 is the copy of security bond executed by complainant in favour of respondent bank. There is nothing with regard to the role of SIL. If there was a tie up agreement as alleged by the Bank with SIL it should be mentioned in such documents. As stated by complainant there is no privity of contract between the complainant and SIL. Ext. R12 the copy of hypothecation agreement also does not contain anything with regard to SIL. Ext. R13 is the copy of form of guarantee entered into between the Bank and Shriram Investments Limited and it doesn’t contain even the signature of complainant. It is seen signed by authorized signatory of SIL and the manager of respondent Bank, Thrissur.
8. Ext. R14 is the copy of Irrevocable Power of Attorney executed dated 10th April 2001. The power of attorney is executed by complainant and Ashraf in favour of SIL. It can be seen that the stamp paper was purchased in the name of respondent bank. If a power of attorney was executed genuine in favour of the SIL, there is no need to purchase the stamp paper in the name of respondent bank. So it can be realized that it was an understanding with respondent bank and SIL and the complainant is totally a stranger with SIL. The copy of Munsiff Court order is produced in which it is pointed out that this power of attorney was a forged document and it was not actually signed by the parties and Ashraf was out of India at that time. Any way as discussed above the necessity of purchasing stamp paper in the name of Bank is not mentioned by respondent.
9. The complainant produced Exts. P1 to P14 documents and there are no documents to show the privity of contract between the complainant and SIL. There is no evidence at all to prove that SIL had paid the amount for and on behalf of complainant. Ext. R3 is a very good evidence in favour of complainant. So the respondent bank is bound to issue termination letter to complainant. There was deficiency in service from the respondent bank. Since there is no privity of contract between complainant and SIL, there is no necessity of making SIL as a party. So the complaint is not bad for non-joinder of necessary parties. It is to be noted that in the Munsiff Court case SIL was a party and there is no appeal from that order. It is also to be noted that if any grievance has to SIL, they can very well file application to make them as a party in this complaint. They did not do so. So it is clear that SIL has not at all any role to play in this matter.
10. In the result, the complaint stands allowed and the respondent bank is directed to raise the hypothecation entered in the Registration Certificate and further directed to return the entire documents and cheque leaves to the complainant and pay Rs.5000/- (Rupees five thousand only) as compensation with cost Rs.500/- (Rupees five hundred only) within two months from the date of receipt of copy of this order.
Dictated to the Confidential Assistant, transcribed by her, corrected by me and pronounced in the open Forum, this the 12th day of October 2010.
