State Consumer Disputes Redressal Commission
Hdfc Bank Limited Retail Asset Division ... vs 1. B.V. Narasimha Reddy, S/O. Late B. ... on 29 August, 2017
Cause Title/Judgement-Entry STATE CONSUMER DISPUTES REDRESSAL FORUM Telangana First Appeal No. FA/34/2014 (Arisen out of Order Dated 13/11/2013 in Case No. Complaint Case No. CC/64/2011 of District Hyderabad-III) 1. HDFC Bank Limited Retail Asset Division H.No.6-1-70, Ground Floor, Ashok Complex, Lakdikapool, Hyderabad. Rep. by its Manager-Legal Mr. A. Raja S/o. Narayana Rao, Age: 33 YrsOcc: Pvt Service R/o. Hyd. ...........Appellant(s) Versus 1. 1. B.V. Narasimha Reddy, S/o. Late B. Krishna Reddy, Aged about 67 Years, Occ: Practicing Advocate, R/o. H.No.2-2-1164/15/1, Tilaknagar, New Nallakunta, Hyderabad-500 044. 2. 2. Vijaya Bank Rep. by its Branch Manager, Door No.2/1/460/1, Nallakunta University Road, Hyderabad-500 044. ...........Respondent(s) BEFORE: HON'BLE MR. JUSTICE B. N. RAO NALLA PRESIDENT HON'BLE MR. Sri. PATIL VITHAL RAO JUDICIAL MEMBER For the Appellant: For the Respondent: Dated : 29 Aug 2017 Final Order / Judgement BEFORE THE TELANGANA STATE CONSUMER DISPUTES REDRESSAL COMMISSION: AT HYDERABAD F.A.No. 34 OF 2014 AGAINST C.C.NO.64 OF 2011 DISTRICT CONSUMER FORUM-III HYDERABAD Between HDFC Bank Limited Retail Asset Division H.No.6-1-70, Ground Floor, Ashok Complex, Lakdkapool Hyderabad, rep. by its Manager- Legal Mr.A.Raja S/o Narayana Rao Age 33 years, Occ: Pvt Service R/o Hyderabad Appellant/opposite party no.1 A N D B.V.Narasimha Reddy S/o late B.Krishna Reddy Aged about 67 years, Occ: Practicing Advocate R/o H.No.2-2-1164/15/1, Tilaknagar, New Nallakunta Hyderabad-500 044 Respondent/complainant Vijaya Bank Rep. by tis Branch Manager Door No.2/1/460/1, Nallkunta University Road, Hyderabad-500 044 Respondent/opposite party no.2 Counsel for the Appellant M/s Lotus Law Associates Counsel for the Respondent No.1 Served Counsel for the Respondent No.2 Served QUORUM : HON'BLE SRI JUSTICE B.N.RAO NALLA, PRESIDENT & SRI PATIL VITHAL RAO, MEMBER
TUESDAY THE TWENTY NINETH DAY OF AUGUST TWO THOUSAND SEVENTEEN Oral Order : (per Hon'ble Sri Justice B.N.Rao Nalla, Hon'ble President) *** This is an appeal filed by the opposite party No.2 aggrieved by the orders of the District Forum-III, Hyderabad dated 13.11.2013 made in CC No.64 of 2011 directing the opposite party no.1 to pay a sum of Rs.30,000/- and the opposite party no.2 to pay a sum of Rs.30,000/- towards compensation and both the opposite parties were directed to pay costs of Rs.1,000/-. It is also directed to the opposite party no.1 to send a report to the CIBIL requesting to remove the flat of the defaulter against the complainant if such repot is not sent already and if the name of the complainant has not yet been removed from the defaulter's list.
2. For the sake of convenience, the parties are referred to as arrayed in the complaint.
3. The case of the complainant , in brief, is that he availed an Auto Loan for Rs.3,10,000/- from HDFC Bank Ltd., which was repayable in EMIs of Rs.6,569/- commencing from January 2007 and ending on December 2012. The Complainant holds a Savings Bank Account with Vijaya Bank and the EMIs were paid to HDFC Bank through his cheques drawn on Vijaya Bank. While so, in the month of November 2008, an agent of HDFC Bank met him and submitted that his EMI cheque was dishonoured and hence a sum of Rs.450/- was levied as penalty. The Complainant refused to pay the same and demanded the first Opposite Party to furnish details of the dishonoured cheque. To his utter dismay the agent of the first Opposite Party continued to call him in the months of November, and December 2008 and January 2009 demanding the payment and harassing him through phone calls made at odd hours. The Opposite Party no.1 issued a computer generated letter dated 14.10.2008 demanding the payment of installment of October 2008 as the cheque was dishonoured and further directed the Complainant to clear the amount overdue by way of Pay Order or Demand Draft in favour of opposite party no.1., Loan A/c.No.11043283 along with charges of Rs.450/-. Consequently the Complainant approached opposite party no.1 and sought clarification regarding the dishonor of the cheque as there was sufficient balance in the Complainant's account. Subsequently the second Opposite Party issued a letter dated 05.12.2008 to opposite party no.1 Bank clarifying that the said cheque was dishonoured due to oversight by them and that there were sufficient funds in the account of the Complainant. Hence, the ocmplaint prayed to direct the opposite parties to pay compensation of Rs.2,00,000/-.
4. The opposite party no.1 filed its written version wherein it contended that the Complainant availed an Auto Loan and that the monthly installment payable was fixed for a period of 60 months. It is also admitted that a letter dated 14.10.2008 was sent to the Complainant informing about the dishonor of the ECS in the month of October 2008 and demanded a penalty of Rs.450/- as per the terms and conditions of the Loan Agreement. However, in the month of December 2008 the opposite party no.1 received a letter from opposite party no.2 intimating that the dishonor was caused due to oversight as they were in the process of centralizing ECS transactions at their end. There was no fault on their part and that dishonor of the cheque and non-payment of EMI is reflected in the Complainant's credit record until and unless the defaulted amount is paid and the account cleared. It is submitted that the Opposite Party no.1 is ready to waive the cheque dishonor charges of Rs.450/- but that the Complainant has to clear his installment due. The Opposite Party no.1 denies deputing their collection agents and harassing the Complainant for the payment. Hence, the opposite party no.1 prayed for dismissal of the complaint.
5. The opposite party no.2 also filed its written version contending that upon verification of the Complainant's account that the cheque dated 08.10.2008 was returned as dishonoured due to oversight and immediately on 11.11.2008 this Opposite Party wrote a letter to the Opposite Party no.1 informing them that the said ECS debit was returned inadvertently and by a bonafide mistake of this Opposite Party. It was requested that the Opposite Party no.1 refund the penalty collected from the Complainant as a special case. The same letter was sent to the Complainant regretting the inconvenience caused to him. This Opposite Party made a repeated requests to opposite party no.1 on 05.12.2008, but the opposite party no.1 did not waive the penal charges of Rs.450/- and insisted upon the payment of the same by the Complainant. The Opposite Party alleges that the Opposite Party no.1 was adamant in its attitude and complicated the matter. In response to the legal notice issued by the Complainant, this Opposite Party requested the Complainant to consider the fact that the services rendered by them till the happening of this unfortunate incident and settle the matter amicably. Hence, the opposite party no.2 prayed for dismissal of the complainant.
6. In proof of the complainant's case, he has filed his evidence affidavit and got Exs.A1 to A10 marked. On behalf of the opposite party no.1, the Legal Manager of the opposite party no.1 filed his affidavit and got Ex.B1 marked.
7. The District Forum after considering the material available on record, allowed the complaint bearing CC No.64 of 2011 by orders dated 13.11.2013 granting the reliefs, as stated in paragraph No.1, supra.
8. Aggrieved by the said decision, the opposite parties preferred the appeal contending that the Dist. Forum did not appreciate the facts in correct perspective. It is contended that there is no evidence to prove that the appellant has deputed collection agent and that he has harassed the complainant for payment of money. It is also contended that as per the guidelines of the RBI, the appellant informed the transactions to CIBIL and that there is no deficiency of service on its part and prayed to allow the appeal.
9. Counsel for the appellant present and was heard. No representation for the respondents no.1 and 2.
10. The point that arises for consideration is whether the impugned orders as passed by the District Forum suffer from any error or irregularity or whether they are liable to be set aside, modified or interfered with, in any manner? To what relief.
11. The facts not in dispute are that the Complainant availed an Auto Loan of Rs.3,10,000/- from opposite party no.1 and the same was payable in EMIs of Rs.6,569/- commencing from January 2007 for a period of 60 months. The Complainant had authorized ECS clearance from his Savings Bank A/c. held with opposite party no.2 vide A/c.No.401601010010652. It is also not in dispute that the installment of the month of October 2008 was not cleared through the ECS transaction due to oversight by opposite party no.2 who is the Banker of the Complainant. Opposite party no.1 has levied penal charges of Rs.450/- upon dishonoring of the cheque for the month of October 2008 and the resulting non-payment of the installment. There is no deficiency of service on the part of the opposite party no.1 in so far as levied the penalty of Rs.450/- since the cheque issued by the complainant for the month of October 2008 was dishonoured. When the cheque was dishonored though there are sufficient funds, the complainant immediately sought clarification from the opposite party no.2 and the opposite party no.2 clarified that it was by oversight and inadvertent mistake and admitted the same only in the month of November 2008. The same was informed by the opposite party no.2 to the opposite party no.1 also vide letter dated 11.11.2008 and again on 05.12.2008 that there was a bonafide mistake on their part and requested to waive the penalty charges. It is contended by the opposite party no.2 in its written version that the opposite party no.1 was adamant in its attitude and complicated the matter in not waiving the penal charges of Rs.450/-. Although there was no fault of the first Opposite Party since non-payment of an installment would automatically reflect the Complainant as a defaulter and attract penal charges as the first Opposite Party was not in the know of the fact that the dishonor of the cheque was caused due to the negligent action of the Opposite Party no.2 until the month of November and December 2008 by which time the installment of the month of October 2008 remained unpaid. The appellant contended that there is no evidence to prove that the appellant has deputed collection agent and that he has harassed the complainant. It is evident from Ex.A8 a complaint given by the Complainant to the SHO, Police Station Nallakunta, alleging that his peaceful living is being disturbed by the Opposite Party no.1. Therefore, the said allegation of the appellant does not hold water in view of the fact that the complainant ought not to have given complaint to the police if the opposite party no.1 not deputed any collection agent and harassed him.
12. It is pertinent to mention here the judgement of Hon'ble Supreme Court in Icici Bank vs Shanti Devi Sharma & Ors decided on 15 May, 2008 wherein the Hon'ble Supreme Court held:
11. The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI") and the Security Interest (Enforcement) Rules, 2002 ("SIER") framed thereunder provide some of the procedures by which security interests may be recovered. In addition to SARFAESI and SIER, the Reserve Bank of India ("RBI") has promulgated Guidelines on the subject. The RBI Guidelines on Fair Practices Code for Lenders dated 5.5.2003 provides at (v)(c) that: "In the matter of recovery of loans, the lenders should not resort to undue harassment viz. persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans, etc." 7
12. A more comprehensive version of these Guidelines was recently released on April 24, 2008. The Guidelines expressly reference the 5.5.2003 Guidelines at (i)(x) with regard to the methods by which recovery agents collect on security interests. In addition, the April 24, 2008 Guidelines further referred paragraph 6 of the "Code of Bank's Commitment to Customers" (BCSBI Code) pertaining to collection of dues. The BCSBI Code at para 6 inter alia provides:
"All the members of the staff or any person authorized to represent our bank in collection or/and security repossession would follow the guidelines set out below:
1. You would be contacted ordinarily at the place of your choice and in the absence of any specified place at the place of your residence and if unavailable at your residence, at the place of business/occupation.
2. Identity and authority to represent would be made known to you at the first instance.
3. Your privacy would be respected.
4. Interaction with you would be in a civil manner.
5. Normally our representatives will contact you between 0700 hours and 1900 hrs, unless the special circumstances of your business or occupation require otherwise.
8 6. Your requests to avoid calls at a particular time or at a particular place would be honored as far as possible.
7. Time and number of calls and contents of conversation would be documented.
8. All assistance would be given to resolve disputes or differences regarding dues in a mutually acceptable and in an orderly manner.
9. During visits to your place for dues collection, decency and decorum would be maintained.
10. Inappropriate occasions such as bereavement in the family or such other calamitous occasions would be avoided for making calls/visits to collect dues.
As noted above, this Code as well as others has been incorporated into the April 24, 2008 Guidelines:
"(ix) A reference is invited to (a) Circular DBOD.Leg.No.BC.104/ 09.07.007 /2002-03 dated May 5, 2003 regarding Guidelines on Fair Practices Code for Lenders (b) Circular DBOD.No.BP. 40/ 21.04.158/ 2006-07 dated November 3, 2006 regarding outsourcing of financial services and (c) Master Circular DBOD.FSD.BC.17/ 24.01.011/2007- 08 dated July 2, 2007 on Credit Card Operations.
Further, a reference is also invited to paragraph 6 of the 'Code of Bank's Commitment to Customers' (BCSBI Code) pertaining to collection of dues. Banks are advised to strictly adhere to the guidelines / code 9 mentioned above during the loan recovery process."
[emphasis supplied].
13. RBI has expressed its concern about the number of litigations filed against the banks in the recent past for engaging recovery agents who have purportedly violated the law. In the letter accompanying its April 24th, 2008 Guidelines on Engagement of Recovery Agents, RBI stated: "In view of the rise in the number of disputes and litigations against banks for engaging recovery agents in the recent past, it is felt that the adverse publicity would result in serious reputational risk for the banking sector as a whole." RBI has taken this issue seriously, as evidenced by the penalty that banks could face if they fail to comply with the Guidelines. The relevant portion of the Guidelines formulated by RBI is set out as under:
"3. Banks, as principals, are responsible for the actions of their agents. Hence, they should ensure that their agents engaged for recovery of their dues should strictly adhere to the above guidelines and instructions, including the BCSBI Code, while engaged in the process of recovery of dues.
4. Complaints received by Reserve Bank 10 regarding violation of the above guidelines and adoption of abusive practices followed by banks' recovery agents would be viewed seriously. Reserve Bank may consider imposing a ban on a bank from engaging recovery agents in a particular area, either jurisdictional or functional, for a limited period. In case of persistent breach of above guidelines, Reserve Bank may consider extending the period of ban or the area of ban. Similar supervisory action could be attracted when the High Courts or the Supreme Court pass strictures or impose penalties against any bank or its Directors/ Officers/ agents with regard to policy, practice and procedure related to the recovery process.
5. It is expected that banks would, in the normal course ensure that their employees or agents also adhere to the above guidelines during the loan recovery process."
14. We deem it appropriate to remind the banks and other financial institutions that we live in a civilized country and are governed by the rule of law".
13. In view of the above judgment of the Hon'ble Supreme Court, the Opposite Party no.1 ought not have deputed collection agents and harass the Complainant, as it is evident from the material placed on record, that the Complainant has been very regular in the payment of the EMIs and has never defaulted, except in October 2008, albeit due to the mistake of Opposite Party No.2. We are of the considered view that Opposite Party No.1 was high handed in its conduct in deputing collecting agents and informing CIBIL with regard to the default of one EMI, which in reality was not the Complainant's mistake. Undoubtedly the Complainant was put to severe mental agony and harassment for no fault of him.
14. It is pertinent to mention here that the opposite party no.2 filed a memo dated 04.03.2014 wherein it stated that while the matter is pending for adjudication before this commission, the matter has been settled between the opposite party no.2 and the respondent/complainant mutually and to that effect it had filed a compromise letter dated 06.02.2014 received from the complainant wherein the complainant stated that he had fully satisfied with the arrangements made by the opposite party no.2 and that he had no claim against it.
15. Therefore, we do not find any infirmity in the order passed by the Dist. Forum, and consequently, we do not see any ground to interfere with the order of the Dist. Forum. Hence, the point framed at para No.9, supra, is answered accordingly.
In the result the appeal is dismissed confirming the order of the District Forum. There is no order as to costs.
PRESIDENT MEMBER 29.08.2017 [HON'BLE MR. JUSTICE B. N. RAO NALLA] PRESIDENT [HON'BLE MR. Sri. PATIL VITHAL RAO] JUDICIAL MEMBER