State Consumer Disputes Redressal Commission
Allahabad Bank vs Jasbir Singh Gulati on 10 June, 2016
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB
DAKSHIN MARG, SECTOR 37-A, CHANDIGARH.
First Appeal No.234 of 2015
Date of institution : 27.02.2015
Date of decision : 10.06.2016
Allahabad Bank, Zonal Office, Suryakiran Complex, Phase-II, 92,
The Mall, 2nd Floor, Rakhbagh Road, Ludhiana-141001, through
Law Officer, Allahabad Bank.
....Appellant/Opposite Party No.2
Versus
Jasbir Singh Gulati, Director/Principal, Guru Harkrishan Public
School, Sector 13, Extension-Urban Estate, Karnal-132001
(Haryana).
....Respondent/Complainant
First Appeal against the order dated
22.12.2014 of the District Consumer
Disputes Redressal Forum, Ludhiana.
Quorum:-
Hon'ble Mr. Justice Gurdev Singh, President
Mr. Vinod Kumar Gupta, Member
Mrs. Surinder Pal Kaur, Member.
Present:-
For the appellant : Shri Nakul Sharma, Advocate For the respondent : Shri Gaurav Gupta, Advocate JUSTICE GURDEV SINGH, PRESIDENT :
This appeal has been preferred by the appellant/opposite party No.2 against the order dated 22.12.2014 passed by District Consumer Disputes Redressal Forum, Ludhiana (in short, "District Forum"), vide which the complaint filed by Jasbir Singh Gulati, respondent/complainant, under Section 12 of the First Appeal No.234 of 2015 2 Consumer Protection Act, 1986, was allowed and the opposite parties were directed to pay the reasonable interest at the rate of 5% per annum from the date of deposit of the amount of Rs.45,00,000/- till the date of repayment of that amount, i.e. 26.04.2013, and to pay Rs.2,500/-, as compensation and litigation costs.
2. The complainant alleged, in his complaint, that opposite party No.2, Branch of opposite party No.1, gave advertisement in newspaper dated 25.11.2010 regarding the sale of immoveable property (House No.100-A, Sarabha Nagar, Ludhiana, measuring 330 square yards), through open auction. The complainant was in need of a residential house in good locality for his daughter; who was married in Ludhiana. Accordingly, he approached opposite party No.2 for the purchase of that property and believing the representation, made by it that M/s Atul Paints was the owner of that property and the same was mortgaged with it and on account of non-payment of the loan amount the same was being put to auction, he gave bid for Rs.1,80,00,000/-, vide letter dated 31.12.2010, and deposited the demand drafts of Rs.9,00,000/-, Rs.1,00,000/- and Rs.8,00,000/-; being 10% of the bid amount. His bid was confirmed by opposite party No.2, through its Authorized Officer, vide letter dated 03.01.2011. In pursuance of that letter, he deposited the drafts of Rs.5,00,000/-, 5,00,000/- and Rs.17,00,000/- (totaling Rs.27,00,000/-), as 25% of the bid amount. He accepted the offer, vide his letter dated 05.01.2011, with the condition that the balance amount would be deposited in three First Appeal No.234 of 2015 3 months, in case the physical possession of the house is given and the same is transferred in his name. He kept on meeting opposite party No.2 during the year 2011, with the request to give physical possession of the property and to get the Sale Deed registered; as he was ready to pay the balance amount. When he approached that opposite party with the same request in the Month of January, 2012 for doing the needful, he was astonished to hear that litigation was pending regarding that property and when he visited the site, he found a board fixed at that place; upon which it was written "Contact in person Mr. Sawaraj Sukhija, Advocate". On 15.02.2012, he sent legal notice, through his counsel, Sh. Deepak Bhandari, to opposite party No.2, stating therein that if physical possession of the property was not given and the Sale Deed was not executed within 15 days of the receipt thereof, the contract shall stand cancelled and it would be liable to refund the amount already deposited by him, along with interest at the rate of 18% and damages amounting to Rs.50,00,000/-. In response to that legal notice, he received letter dated 12.04.2012 to the effect that the possession of the property shall be given to him after vacation of the injunction order. Thereafter, he, vide his letter dated 07.09.2012, informed opposite party No.2 that the contract had become infructuous and asked it to refund his amount, along with interest at the rate of 18% per annum. Thereafter, he sent another letter dated 04.01.2013, mentioning that he was ready to deposit the balance amount of 75%, or the amount so deposited by him be refunded, along with interest at the rate of 18% per annum and First Appeal No.234 of 2015 4 damages to the tune of Rs.50,00,000/- be paid. In that month itself, he had come to know that the opposite party was not the owner of the property and, as such, had no right to enter into a contract with him and those facts were not disclosed to him, when his bid was accepted. Even thereafter, he wrote a number of letters to opposite party No.2 and it was only on 26.04.2013 that his amount of Rs.45,00,000/- was refunded, but no interest was paid. The non- payment of that interest, on account of the failure of the opposite parties to deliver the possession of the property, is illegal. He is entitled to be compensated by payment of interest, along with compound interest at the above said rate, from the date of deposit of the amount till the date of refund; which comes to Rs.14,00,000/- upto 26.04.2013. In addition to that, he is entitled to Rs.5,00,000/-, as compensation for the mental agony, harassment and monetary loss suffered by him.
3. The complaint was contested by the opposite parties- Bank, who filed joint written reply before the District Forum; in which it did not dispute that the property, in dispute, was mortgaged by M/s Atul Paints, who was the owner thereof and he failed to pay the loan amount; as a result of which that property was put to auction and that the complainant gave bid of Rs.1,80,00,000/- and deposited 10% of the bid amount by means of three demand drafts and that that bid was accepted, vide letter dated 03.01.2011, and thereafter he deposited further amount of Rs.27,00,000/-, by means of demand drafts; thereby paying 25% of the bid amount. They also admitted that the complainant, vide his First Appeal No.234 of 2015 5 letter dated 05.01.2011, accepted the offer, subject to the condition that the balance amount would be paid by him in three months, in case the physical possession of the property was given and the same was transferred in his name. They denied the other allegations made in the complaint and averred that M/s Atul Paints had availed certain credit facilities from the Bank, by equitably mortgaging the property, in dispute, and other properties, as security for repayment of the amounts due from him. His account became "NPA" and the Bank, through its Authorized Officer, started the proceedings, under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short, "the Act"), by serving notices under Section 13 (2) and (4) of that Act upon the borrowers/guarantors/mortgagers; who, in-spite of receipt of those notices, failed to adjust the amount. It was only thereafter that the Bank put the property to auction under the Act. For obtaining physical possession of the property, the Authorized Officer applied to the District Magistrate, Ludhiana, under Section 14 (1) of the Act and in the meantime, the borrower filed Securitization Appeal No.297 of 2011 and 312 of 2011 before D.R.T.-II, Chandigarh; which stayed the further proceedings under the Act. These facts were duly conveyed to the complainant as well as to his counsel, Deepak Bhandari, vide letter dated 12.04.2012. The complainant himself requested for the refund of Rs.45,00,000/-, vide his letter dated 22.04.2013, and the same was refunded by means of five demand drafts of Rs.9,00,000/-, each. The pendency of the proceedings before the D.R.T. was well within First Appeal No.234 of 2015 6 the knowledge of the complainant. They never intended to pay interest on the amount, so deposited by the complainant, and they never indulged in any deficiency in service or unfair trade practice. They cannot go against the orders passed under the Act and are not liable to pay any interest or compensation to the complainant; who does not fall under the definition of the "consumer". They also averred that the District Forum has no jurisdiction to entertain and try the complaint, as per Section 34 of the Act and the same is not maintainable. The complaint is bad for non-joinder of Authorized Officer of the Bank, with whom the amount was deposited, and is also bad for their mis-joinder. The complainant in his letter dated 22.04.2013, never demanded the payment of interest on the amount, so deposited by him and, as such, is estopped from filing this complaint by his act and conduct. The amount, so deposited by him, was never used by the Authorized Officer for any commercial purpose and the sale in favour of the complainant never became final, on account of the stay granted by the D.R.T., Chandigarh. They prayed for the dismissal of the complaint, with special costs.
4. Both the sides produced evidence in support of their respective averments before the District Forum, which after going through the same and hearing learned counsel on their behalf, allowed the complaint, vide aforesaid order.
5. We have heard learned counsel for both the sides and have carefully gone through the records of the case. First Appeal No.234 of 2015 7
6. It was submitted by the learned counsel for the appellant-opposite party No.-2-Bank that the District Forum committed an illegality, by not adjudicating upon the question raised before it by the opposite parties that its jurisdiction was specifically barred under the Act. Though that point was duly discussed, but it failed to record any finding thereon, for the reasons best known to it. Without first adjudicating upon its jurisdiction, it was not competent to give finding on merits and allow the complaint. It is now well settled that where the proceedings are pending before the D.R.T. under the Act, the complaint before the Fora under the Consumer Protection Act, 1986 is not maintainable. It stands proved that the borrower initiated the proceedings before the D.R.T.-II, Chandigarh; in which the stay was granted. Once the case is covered under the Act, the complaint by the complainant is not competent, as the remedy was only before D.R.T. In support of his submissions, he referred to Sections 13, 17, 34 and 35 of the Act and relied upon the following judgments:
i) State Bank of India Vs. M/s Anurag Textiles and Anr.
(2015) (3) CPJ 86 (NC);
ii) Indo Pacific Housing Finance Ltd. and Another Vs. Gopala Shetty 2014 (2) CPJ 638 (NC);
iii) India Overseas Bank Vs. P.S. Bawa and Anr. (2013) (1) CPJ 31 (NC); and
iv) Chief Manager/Authorized Officer, State Bank of Mysore Vs. G. Mahimaiah (2015) (4) CLT 488.First Appeal No.234 of 2015 8
7. On the other hand, it was submitted by the learned counsel for the complainant that the District Forum did not commit any illegality, while allowing the complaint, by discarding the argument raised by the Bank that it had no jurisdiction to entertain the complaint. The complainant is not covered under the definition of the "Borrower", as contained in the Act, and it cannot be said that his remedy for claiming the interest and compensation lies before the D.R.T. By purchasing the property, he availed the service of the opposite parties and in case of non-delivery of the possession of that property and the transfer thereof in his favour, he was entitled to the refund of the amount; which was refunded, but no interest was paid on that amount from the date of deposit till the date of refund. The complainant was entitled to that interest and was also entitled to compensation for the deficiency in service on the part of the opposite parties in not paying the interest. Therefore, no illegality or infirmity was committed by the District Forum, while awarding the interest and the compensation, and there is ground for upsetting that well reasoned order.
8. As per Section 13 of the Act, which deals with the "Enforcement of Security Interest", where a "borrower", who is under a liability to a "secured creditor" under security agreement, makes any default in the repayment of the secured debt, then the "secured creditor" may require the "borrower" by notice in writing to discharge in full his liabilities to the "secured creditor" within sixty days from the date of notice, failing which "secured creditor"
becomes entitled to exercise all or any of the rights under sub- First Appeal No.234 of 2015 9 section (4). Under that sub-section, the "secured creditor" can take possession of the "secured asset" of the borrower, including the right to transfer by way of lease, assignment or sale for realizing the "secured asset". These are admitted facts that the appellant/opposite parties-Bank was the "secured creditor" and M/s Atul Paints was the "borrower" and the property, mortgaged by it with the Bank for securing the repayment of the loan, was put to auction and the respondent/complainant had given bid in that auction; which was accepted and in pursuance thereof he had deposited 25% of the bid amount. That sale of the property was by virtue of the right conferred upon the Bank, under said Section 13 (4). According to Section 17 of the Act, any person, aggrieved by any of the measures referred to in Section 13 (4) taken by the "secured creditor", may make an application, along with such fee, as may be prescribed to the Debt Recovery Tribunal, having jurisdiction in the matter. Section 34 of the Act excludes the jurisdiction of the Civil Court in such like matters. In addition to that, there is Section 35, according to which the provisions of the Act shall have the effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force.
9. The question arises, whether the additional remedy provided, under Section 3 of the Consumer Protection Act, 1986, is available to the consumer, where the "secured creditor" has invoked the provisions of the Act. This matter came up for consideration before the Hon'ble Kerala High Court in Punjab National Bank Vs. Consumer Disputes Redressal Forum (2011) First Appeal No.234 of 2015 10 (6) R.C.R. (Civil) 2148. By invoking Section 35 of the Act, it was held as under:
"The SARFAESI Act is a later Act than the Consumer Protection Act. The SARFAESI Act is a special enactment and the Consumer Protection Act is a general enactment. It is settled law that the provisions of a special enactment would override the provisions of a general enactment. The SARFAESI Act provides for specific remedies to aggrieved persons for challenging proceedings under the said Act. Therefore, if it is to be held that CDRF has also jurisdiction to entertain challenge against proceedings under the SARFAESI Act, that would be hit by Section 34 in so far as that would be inconsistent with the provisions of the SARFAESI Act."
After taking into account different judgments on the subject, it was held that the Consumer Disputes Redressal Forum has no jurisdiction to entertain any complaint in respect of any measures taken by the Bank under the Act and has no jurisdiction to give any relief whatsoever against the same. This proposition of law was followed by the Hon'ble National Commission in the cases of M/s Anurag Textiles; Gopala Shetty; and P.S. Bawa (supra).
10. The position has been made crystal clear regarding the "auction purchaser" in an auction of immovable property by the Bank, in G. Mahimaiah's case (supra). In that case, the appellant- Bank auctioned a property, which was mortgaged against a loan First Appeal No.234 of 2015 11 and the respondent was the highest bidder in the auction; which was confirmed by the competent officer. The total amount was deposited by the purchaser and the registry before the Sub- Registrar was also done. However, the possession of the property could only be given on 07.03.2011 and he filed consumer complaint before the State Commission, claiming that there was deficiency in service, as the possession of the property was given to him, after roughly five years. After a thorough discussion, it was held by the Hon'ble National Commission that the auction purchaser in the auction of immovable property by a Bank is not a "consumer". This ruling fully applies to the facts of the present case. Therefore, it cannot be held that respondent/complainant is a "consumer" and, as such, the complaint filed by him was not maintainable.
11. Accordingly, the appeal is allowed, the order passed by the District Forum is set aside and the complaint filed by the complainant is dismissed, without prejudice to his right to seek his remedy under the Act before the D.R.T.
12. The sum of Rs.25,000/- deposited at the time of filing of the appeal, along with interest which has accrued thereon, if any, shall be remitted by the registry to the appellant, by way of a crossed cheque/demand draft after the expiry of 45 days of the sending of certified copy of the order to them.
13. The arguments in this case were heard on 03.06.2016 and the order was reserved. Now, the order be communicated to the parties.
First Appeal No.234 of 2015 12
14. The appeal could not be decided within the statutory period due to heavy pendency of court cases.
(JUSTICE GURDEV SINGH) PRESIDENT (VINOD KUMAR GUPTA) MEMBER (MRS. SURINDER PAL KAUR) MEMBER June 10, 2016.
(Gurmeet S)