Sri.Siddegowda,<br /> President<br /> <br /> 1. This complaint is filed under section 12 of the Consumer Protection Act 1986, against the Opposite party for compensation of Rs.50,000/- with a direction to the Opposite party to transfer housing loan to the bank requested by the complainants.<br /> 2. The facts of the complaint are follows; <br /> The Complainants had borrowed housing loan of Rs.11,00,000/- from the Opposite party Bank in account No.230044, mortgaging their property situated at 1st Cross, Gandhinagar, Mandya City. For their business purpose, the complainant sought for over draft facility to the extent of Rs.15,00,000/- on the security of the house property, already mortgaged worth of Rs.30,00,000/-. The Opposite party was reluctant to provide over draft facility though it was feasible when compared to the value of the property mortgaged, since the complainants have started new business and since there is no proper response from the Opposite party Bank to provide over draft facility, they approached the banks and the State Bank of Mysore, Mandya expressed its willingness to take over the loan of the complainants and made correspondence with Opposite party Bank. The Opposite party in spite of request is not transferring the housing loan to other bank, intentionally though the complainants are ready to settle the housing loan. The Opposite party bank has not right to refuse the request to transfer the housing loan to some other bank. Due to the negligence of the Opposite party Bank, the complainants have sustained loss to the extent of Rs.2,00,000/-. To the legal notice dated 20.11.2007, the Opposite party sent reply dated 24.12.2007 creating false treasons to cover its negligence. The Opposite party bank, in order to cover its miss-deeds, had set up a false defence that the complainants have declared their properties as security for the alleged loans and they have got lien over those properties, which is obviously in-correct statement. Therefore, Opposite party has committed deficiency in service and hence, the present complaint.<br /> 3. The Opposite party has filed version admitting that the complainants are its customer and borrowed housing loan, but they have denied the other allegations made in the complaint. Further, the complainants have become guarantors to the loans borrowed by one M/s Maharaja Times, Proprietor, Rahmathulla Shariff in C.C.M.230026 and M/s H.R.Rice Mill, Proprietor, Rafiulla.R.M in C.C.M.230021. These two loan accounts are not regular and treated as non-performing assets on 10.04.2007. The Opposite party has taken steps for recovering the amount by issuing notice under securitization Act including the complainants. The complainants have executed the documents and declared that the security furnished by them for housing loan is also security for the above two loan accounts. Therefore, the liability of the guarantor is co-extensive with that of principal debtor. So Opposite party has inherent power to exercise right of general lien over all the securities as per Section 171 of the Indian Contracts Act and accordingly, the Opposite party has exercised general lien over the securities of the complainants and requested them to discharge the above two loan accounts. The Opposite party is not at all liable to pay any compensation or transfer of housing loan account to any other bank and has not committed deficiency of service and the complaint is liable to be dismissed with costs. <br /> 4. During trail, the 2nd Complainant has filed affidavit and one witness is examined and produced the documents Ex.C.1 to C.6. The Opposite party has filed affidavit and examined and produced documents Ex.R.1 to R.9.<br /> 5. We have heard both sides.<br /> 6. Now the points that arise for our considerations are:-<br /> 1) Whether the Opposite party has right of general lien over the property mortgaged to the housing loan?<br /> 2) Whether the Opposite party has committed deficiency of service in not transferring the housing loan and not sanctioning the over draft facility?<br /> 3) Whether the complainants are entitled to the relief sought for?<br /> 4) What order?<br /> 7. Our findings and reasons are as here under:-<br /> 8. POINTS No.1 to 4:- The undisputed facts borne out by the materials on record are that the complainants have borrowed housing loan to the extent of Rs.11,00,000/- from the Opposite party Bank mortgaging their property situated at 1st Cross, Gandhinagar, Mandya City. The 1st Complainant is also a guarantor to the business loan borrowed by M/s Maharaj Times, Proprietor Rahmathulla Shariff and Rafiulla, the Proprietor of Rice Mill. As per Ex.R.9 statement of accounts there is balance loan of Rs.7,48,551/- in respect of Rafiulla.R.M and Opposite party has issued a notice as per Ex.R.7 to Rafiulla and the complainant under the securitization Act to pay the loan and not to transfer their assets. Admittedly, there is exchange of notices between the complainants and Opposite party bank as per Ex.C.1 to C.4. The complainants sought for taking over the housing loan of the Opposite party Bank and also over draft facility from State Bank of Mysore, in view of the evidence of R.Venkatesh, the Chief Manager, State Bank of Mysore, Mandya and they addressed a letter Ex.C.5 to the Opposite party Bank to report confidentially about the position of two accounts, conduct of the accounts, whether the assets were standard for the last 3 years and also no objection to take over the loan and in this regard, the Opposite party has sent confidential letter as per Ex.C.6, stating that the account is regular one and the conduct of the account is satisfactory and asset is a standard asset, but one of the Co-borrower i.e. M/s Muneer Jan (1st Complainant) is a guarantor to two other liability which are presently NPA Account.<br /> 9. The contention of the complainants is that even though the Opposite party has refused to sanction the over draft facility for business started by them, but they failed to give a consent for taking over the housing loan by the State Bank of Mysore and return the title deeds of the mortgaged property and therefore they have sustained loss and Opposite party has no right to retain the title deeds of the mortgaged deed, when State Bank of Mysore is to ready to take over the housing loan.<br /> 10. But, the contention of the Opposite party is that the 1st Complainant is a guarantor to other two loan which are due and notices are issued and the property mortgaged for housing loan is also offered as security for the above two loans as guarantor and therefore they have right of general lien over those securities and hence without discharge of other two loans as a guarantor, the 1st complainant is not entitled to return of the title deeds of the mortgaged property, even if they are ready to clear the loan through the State Bank of Mysore.<br /> 11. Of course, the Opposite party has not taken special general lien form with regard to the mortgaged property for the other two loans. But, admittedly 1st complainant has executed Ex.R.1 letter of guarantee in respect of M/s Maharaj Times for the loan of Rs.3 lakhs and another letter of guarantee Ex.R.2 for the loan of Rs.4 lakhs in respect of Rafiulla.R.M, the Proprietor of H.R.Rice Mill and she has furnished assets and liabilities statement as per Ex.R.4. This Ex.R.4 is not denied by the complainants. It is not disputed that the property mortgaged for housing loan is also mentioned in the Ex.R.4. In this Ex.R.4, there is specific undertaking to the effect; “I hereby undertake not to encumber/alienate the properties/assets without intimation to you till all my obligations to the bank as a borrower/guarantor discharged”. So, in view of the Ex.R.4 declaration, the 1st Complainant who is a guarantor cannot alienate or encumber, the property mortgaged for housing loan till the obligation as a guarantor is discharged in respect of other two loans of Rahamathulla Shariff and Rafiulla. Merely because other two borrowers have also other properties is not a ground to say that the Opposite party has no right to proceed against the guarantor in respect of defaulting loans when admittedly 1st Complainant is a guarantor. Mere, delay in proceeding with the recovery of the loan against those two borrowers including the guarantor is not a ground to hold that the Opposite party has no right to retain the mortgaged property by accepting the housing loan, when already notice as per Ex.R.7 has been issued against Rafiulla and the guarantors for recovery of that amount.<br /> 12. The learned counsel for the complainant has relied upon the decision of the Hon’ble State Commission in Appeal No.1144/08 in case of Manager, India Overseas Bank –Vs- D.H.Narayana Gowda dated 13.06.2008 wherein the Hon’ble State Commission has held that “since the Opposite party has already obtained the decree it is open for the bank to recover the amount from the complainants by executing th5re decree. Though, they have got general lien over the gold articles and when the jewel loan has been discharged, therefore there is no reason for the Opposite party to retain the same”.<br /> 13. But, the said observation and finding of the Hon’ble State Commission is not applicable to the facts of the case, because the property mortgaged for housing loan is also offered as security as a guarantor by the 1st Complainant in respect of other two loans, which have become default. It is further contended that the Opposite party has released the title deeds of housing loan in respect of Rafiulla after discharge of the loan, though other credit loan is pending and therefore the Opposite party is not justified in not transferring the housing loan and release the title deeds of the mortgaged property. Merely, because in one case the then Manager of the Opposite party Bank has released the mortgaged property for housing loan of Rafiulla though there is credit loan due, we cannot accept the Opposite party to apply the same in respect of the complainant, because she is a guarantor to the two other loans. <br /> 14. In the decision reported in 2006 (3) CPR 59 (NC) in the case of M.Mallika –Vs- Managing Director, State Bank of India, the Hon’ble National Commission has held that notwithstanding the provision under section 60 of Transfer of the property Act, the Bank is entitled to exercise its right under general lien under section 171 of Contract Act so that in order to protect the interest of the bank by ensuring right to retain the documents of mortgage, so that other loan accounts that the bank are also cleared by borrowers or guarantor without forcing the bank to file suits. <br /> 15. Under these circumstances, the contention of the Opposite party that section 171 of the Contract Act is not applicable to the facts of the case cannot be accepted at all. The Hon’ble National Commission has gone to the extent of observing that the bank has power to exercise right of general lien over the securities offered in another branch of the same bank, though the loan of that bank is cleared. <br /> 16. Under these circumstances, the refusal by the Opposite party bank not to transfer the loan to SBM Mandya and releasing the title deeds by exercising the right of general lien over the mortgage property, cannot said to be unjustified and illegal. There are no reasons to hold that the Opposite party has committed deficiency in service in not sanctioning the over draft facility, because the power of sanction of loan is discretionary power of the bank. Further, we cannot attribute any deficiency in service in not releasing the mortgage property for the housing loan by transferring the loan to the SBM Bank in view of the right of general lien under section 171 of Contract Act over the same property which is a security for other two pending loans. Therefore, the complainants are not entitled to any relief sought for.<br /> 17. In the result, we proceed to pass the following order;<br /> ORDER<br /> The complaint is dismissed. However, there is no order as to cost. <br /> <br /> (Dictated to the Stenographer, transcribed, corrected and then pronounced in the open Forum this the 18th day of August 2008).<br /> <br /> (PRESIDENT)<br /> (MEMBER) (MEMBER)<br /> <br /> ctj<br />