BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM AT BANGALORE URBAN

 31^st DAY OF AUGUST 2015

O R D E R

SRI. P.V SINGRI, PRESIDENT

The complainant has filed this complaint U/s.12 of the Consumer Protection Act, 1986 by the complainant against the Opposite Parties (herein after referred as OP) with a prayer to direct the OPs to refund the surplus amount of Rs.12,24,547-75 together with interest @ 18% p.a from the date of auction till the date of realization with compensation and costs.

2. The brief averments made in the complaint are as under:

The complainant had availed a housing loan of Rs.25,00,000/- from OP-1 on 24.02.2009.  The said loan was obtained by creating in mortgage by deposit of title deeds of residential immovable property belonging to the complainant bearing No.35/1, 35/2, Southern portion in ward No.49, 1^st Cross, 6^th Main Road, Vinayaka Layout, Chamarajpet, Bangalore.  That due to various reasons, the complainant could not service the loan account and the OP-3 was pleased to term the account as a non-performing account and thereafter initiated proceedings for recovery of the dues payable by the complainant before the Debt Recovery Tribunal in O.A No.905/2011 which was decreed in favour of OP-3 by order dated 30.08.2013 permitting the OP Bank to recover the dues of Rs.32,91,216/- along with interest.  That the OP Bank subsequently resorted to sell the secured assets belonging to the complainant under the provisions of Securitization (SARFAESI) Act.  The OP Bank taking recourse to the provisions of Securitization (SARFAESI) Act, despite having obtained an order in Criminal Misc. No.2916/2010 from the Metropolitan Magistrate Court, they are unable to obtain vacant physical possession of the above mentioned property.  However sold the said secured assets on “As is where is basis” in a public auction to the highest bidder on 22.03.2014 for a sum of Rs.50,31,000/-.

Had the OP Bank obtained vacant physical possession of the secured asset, the same would have fetched a better price at the auction.  The complainant having accepted the fait accomplice being thrust upon him had approached the OP Bank to return excess surplus amount with interest available with them since the date of auction.  But the OP Bank refused to divulge the details of the costs.  The OP Bank gave a notice to the complainant stating that after appropriating the dues including miscellaneous charges amounting to Rs.38,06,452-25 a residual excess amount of Rs.12,24,547-75 remains with them.  Despite repeated visit and requests by the complainant the OP Bank failed to furnish details of the amount held by them and also release the surplus amount of Rs.12,24,547-75 which the complainant is entitled to be refunded.  The OP Bank on one or the other pretext are refusing to release the said amount in favour of complainant and have been making illegal and unlawful gain by utilizing the surplus amount to bolster their credit rating and their cost.  The complainant suffered loss by way of interest and other pecuniary benefits.  That the complainant could have enjoyed by investing the same in other business.

That the inaction of the OP Bank in not disclosing the details of the auction sale and charges that have been incurred in conducting the sale of the secured assets is by itself an act of deficiency of service as per the provisions of section 2(1) g and 2(1) o of the Consumer Protection Act, 1986.  Therefore, the complainant having no other option has approached this Forum for necessary reliefs.

For the aforesaid reasons, the complainant prays for an order directing OPs to refund the surplus amount of Rs.12,24,547-75 together with interest at the rate of 18% from 22.03.2014 the date of auction of the secured assets together with adequate compensation for the mental agony and stress and the cost of this proceedings.

3. In response to the notice, OPs.1 to 3 have appeared through advocate and filed their joint version contending in brief are as under:

          The complainant was sanctioned a housing loan of Rs.25,00,000/- by OP-1 on 24.02.2009 for the purpose of property bearing No.35, 35/1 and 35/2 presently 35/1, 35/2 PID No.49/4-35/4 measuring East to West 37 ft and North to South 13 ft with ground, 1^st and 2^nd floor building.  That the above property was mortgaged by complainant in favour of the Bank which he had purchased from one B. Padmavathi under registered sale deed dated 26.02.2009.  When the complainant committed default in repayment of the loan amount along with interest a case in O.A No.905/2011 was filed before the Debts Recovery Tribunal, Bangalore.  By the order dated 30.08.2013 the Debt Recovery Tribunal allowed the above case.  That even after the orders passed by the Debt Recovery Tribunal the complainant failed to make the payment of the amount therefore the Bank had initiated SARFIASI Act proceedings against the property mortgaged in favour of the Bank.  One Chethan Kumar claiming himself to be son of B. Padmavathi, who had sold the above said property in favour of complainant had filed suit for partition in O.S No.7020/2008 before the City Civil Court.  He had also filed an application Under Order I Rule 10 of CPC to implead OP-1 as Defendant No.6.

          That the Bank having initiated proceedings under SARFICI Act sold the said property in public auction but so far the possession of the property could not be taken as complainant and Chethan and his family members are objecting for taking possession of the property.  The said Chethan Kumar who is son of B. Padmavathi had also filed an application to implead the auction purchaser of the property and sought relief for temporary injection in respect of the said property.

          Because of the above referred litigation, Bank has suffered huge financial loss and still the auction purchaser could not take possession of the schedule property and auction purchaser is insisting the Bank to handover the possession of the property to him.  The property in question was auctioned for a sum of Rs.50,31,000/- and after deducting all the expenses a sum of Rs.12,24,547.75 is being kept in the Bank and the same has been intimated to the complainant.  That the Bank will pay the balance amount to the complainant after clearing the litigations pertaining to the mortgaged property.  There is no deficiency of service on the part of the OPs.  Therefore, the complainant cannot maintain the present complaint.

For the aforesaid reasons, the OPs prays for dismissal of the complaint with exemplary cost.

4. On the rival contention of the parties, the points that arise for our determination in this case are as under:

        5. The complainant filed his affidavit evidence to substantiate the allegations made in the complaint.  The OPs filed affidavit evidence of their manager in support of the contentions raised in their version.  Both parties have submitted their written arguments also.

6. Perused the allegations made in the complaint, the averments made in the version filed by OPs.1 to 3, the affidavit evidence filed by respective parties, the written arguments and various documents relied upon by both the sides.

7. Our answer to the above issues are as under:

REASONS

8. The sanction of housing loan of Rs.25,00,000/- in favour of complainant by the OPs is admitted, so also the mortgage of the title deeds of the property bearing No.35, 35/1 and 35/2 presently 35/1, 35/2 and PID No.49/4-35/4 measuring East to West 37 feets and North to South 13 feets.  It is also an admitted fact that the complainant failed to repay the loan in terms of the loan agreement therefore the loan account of the complainant was treated as NPA.  It is also not in dispute that the OPs approached the Debts Recovery Tribunal, Bangalore in O.A No.905/2011 for recovery of loan arrears from the complainant and after hearing the Debts Recovery Tribunal, Bangalore allowed the application filed by the Bank in O.A No.905/2011 by its order dated 30.08.2013 directing the Defendants therein jointly and severally pay a sum of Rs.32,91,216/- along with current and future interest @ 13.50% p.a compounded with monthly rests from the date of the application till the date of realization.  Further the Debts Recovery Tribunal also permitted the OPs to sell the schedule property in question and appropriate the sale proceeds, in the event the Defendants therein failed to pay the money as directed by Tribunal.

9. Admittedly the complainant failed to pay the amount as directed by the Debts Recovery Tribunal.  Therefore, the OPs initiated proceedings under SARFICI Act and auctioned the mortgage property for a sum of Rs.50,31,000/-.  As stated in the version of the OPs after deducting the amount payable by the complainant in terms of the order passed by the Debts Recovery Tribunal in O.A No.905/2011 Rs.12,24,547-75 being surplus  is kept in the Bank and the same is intimated to the complainant.  Thus according to the OPs, the complainant is entitled to a sum of Rs.12,24,547-75 being the surplus amount after adjusting the principal, interest, cost etc., after proceedings before the Debts Recovery Tribunal.

10. The OPs contended that one Chethan Kumar claiming himself to be son of B. Padmavathi, the vendor of complainant filed a suit for partition in O.S No.7020/2008 on the file of City Civil Court, Bangalore seeking partition in the mortgaged property and arrayed the OP Bank as well as the auction purchaser as the Defendants.  It is further contended by the OPs that despite the proceedings initiated under the SARFICI Act, the OPs could not take possession of the mortgaged property as the same is being resisted by the above said Chethan Kumar.  Therefore, it is contended by the OPs that they have suffered huge financial loss due to the said litigation initiated by the said Chethan Kumar.  Therefore, surplus amount to which the complainant is entitled is kept in the Bank and the same will be paid to him after deducting the litigation expenses incurred by the Bank.

11. The Learned Advocate for the complainant argued that the complainant cannot be held responsible for the Civil Suit filed by the above stated Chethan Kumar and he cannot be made to pay the litigation expenses incurred by the OPs in defending themselves in the said civil suit.  Admittedly there was no litigation in respect to the mortgage property at the time of the loan transaction and only after verifying the title of the complainant the OPs have sanctioned him housing loan of Rs.25,00,000/-.  In the given circumstances the complainant cannot be held responsible for the suit filed by Chethan Kumar on the file of Civil Court seeking partition in the mortgaged property.  It is also not the case of the OPs that the complainant has instigated the said Chethan Kumar to file the said civil suit.  Therefore, we are of the opinion that the OPs cannot withheld the surplus amount of Rs.12,24,547-75 which the complainant is entitled to receive.  Admittedly in terms of the order passed by the Debts Recovery Tribunal in O.A No.905/2011 dated 30.08.2013 the OPs have recovered the principal, interest amount and other expenses including the cost from the amount secured from the auction sale.  Therefore, the OPs Bank has no right to retain the surplus amount with them merely because a civil litigation is pending in respect of the said property.  As already stated above, the complainant is not responsible for the said civil litigation and said litigation is also not at the instance of the complainant.  Therefore, the OPs cannot with-hold the said surplus amount with them on the pretext of the said civil litigation.  The conduct of OPs in with holding the said amount payable to the complainant certainly amounts to deficiency in service on their part.  Therefore, we are of the considered opinion that the OPs shall be directed to pay the said amount together with interest @ 9% p.a and adequate compensation for the hardship, inconvenience and mental agony undergone by the complainant.

12. For the foregoing reasons and having regard to the facts and circumstances of the case, we feel that the following order is sufficient to meet the ends of justice.       

  O R D E R

The complaint filed by the complainant U/s.12 of the Consumer Protection Act, 1986 is allowed in part.  OPs.1 to 3 are directed to pay a sum of Rs.12,24,547-75 to the complainant together with interest @ 9% p.a from the date of auction sale i.e., 22.03.2014 till the date of realization.

Further the OPs shall pay a compensation of Rs.25,000/- to the complainant for the hardship, inconvenience and mental agony suffered by him for the deficiency in service on their part together with Rs.5,000/- towards cost of this proceedings.

The OPs shall comply the order passed by this Forum within six weeks from today.

Furnish free copy of this order to both the parties.

(Dictated to the Stenographer, got it transcribed and corrected, pronounced in the Forum on this 31^st day of August 2015)

MEMBER                            MEMBER                    PRESIDENT

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