State Consumer Disputes Redressal Commission
Sukhmanbir Singh S/O Late Sh. Balbir ... vs H.D.F.C. Bank Limited on 25 April, 2013
2nd Addl. Bench
STATE CONSUMER DISPUTES REDRESSAL COMMISSION, PUNJAB
DAKSHIN MARG, SECTOR 37-A, CHANDIGARH
First Appeal No. 622 of 2012
Date of institution: 17.5.2012
Date of decision : 25.4.2013
Sukhmanbir Singh S/o Late Sh. Balbir Singh, R/o H. No. 184, New
Jawahar Nagar, Jalandhar.
Second Address
Sukhmanbir Singh Director of M/s S.B. Saini Brothers (Elect) Pvt. Ltd.,
Jalandhar.
.....Appellant
Versus
1. H.D.F.C. Bank Limited, Civil Lines, Plot No. 911, 2nd Floor, G.T.
Road, Near Narinder Cinema, Jalandhar Loan against Property
Deptt. A/c No. 2849131 A/c No. 2349031 and Cash Credit Limit
A/c No. 3412790000036.
2. H.D.F.C. Bank Limited, Central Processing Unit, Naryana
Properties, 26-A, Chandivilli, Off. Saki Vihar Road, Saki Naka,
Andheri (E) Mumbai-400072.
3. H.D.F.C. Bank Limited, HDFC Bank House, Senapati Bapat
Marg, Lower Parel (West) Mumbai-400013.
.....Respondents
2nd Appeal
First Appeal No. 621 of 2012
Date of institution: 17.5.2012
Paramjit Kaur W/o Late Sh. Inderjit Singh, H. No. 184, New Jawahar
Nagar, Jalandhar.
Second Address
Paramjit Kaur Prop. of M/s Rajdeep Gensets, National Highway, Hatlimore,
Kathua (J&K).
.....Appellant
Versus
1. H.D.F.C. Bank Limited, Civil Lines, Plot No. 911, 2nd Floor, G.T.
Road, Near Narinder Cinema, Jalandhar Loan against Property
Deptt. A/c No. 2849095 and Cash Credit Limit A/c No.
3412790000019.
2. H.D.F.C. Bank Limited, Central Processing Unit, Naryana Properties,
26-A, Chandivilli, Off. Saki Vihar Road, Saki Naka, Andheri (E)
Mumbai-400072.
3. H.D.F.C. Bank Limited, HDFC Bank House, Senapati Bapat Marg,
Lower Parel (West) Mumbai-400013.
.....Respondents
First Appeal No. 622 of 2012 2
3rd Appeal
First Appeal No. 623 of 2012
Date of institution: 17.5.2012
Sukhmanbir Singh S/o Sh. Late Balbir Singh, R/o H. No. 184, New
Jawahar Nagar, Jalandhar.
Second Address
Sukhmanbir Singh Prop. of M/s Sainico Electronics, Bhikka Market,
Hamirpur Road, Una (HP).
.....Appellant
Versus
1. H.D.F.C. Bank Limited, Civil Lines, Plot No. 911, 2nd Floor, G.T.
Road, Near Narinder Cinema, Jalandhar Loan against Property
Deptt. A/c No. 2849131.
2. H.D.F.C. Bank Limited, Central Processing Unit, Naryana Properties,
26-A, Chandivilli, Off. Saki Vihar Road, Saki Naka, Andheri (E)
Mumbai-400072.
3. H.D.F.C. Bank Limited, HDFC Bank House, Senapati Bapat Marg,
Lower Parel (West) Mumbai-400013.
.....Respondents
First Appeal against the order dated 2.4.2012
passed by the District Consumer Disputes
Redressal Forum, Jalandhar.
Before:-
Shri Piare Lal Garg, Presiding Member
Shri Jasbir Singh Gill, Member Present in F.A. No. 622 of 2012:-
For the appellant : Sh. R.K. Bhatti, Advocate
For the respondents : Sh. Rahul Sharma, Advocate for
Sh. R.S. Bhatia, Advocate
PIARE LAL GARG, PRESIDING MEMBER
This order will dispose of following three appeals i.e. First Appeal No. 621 of 2012(Paramjit Kaur Vs. H.D.F.C. Bank Ltd. & Others), First Appeal No. 622 of 2012(Sukhmanbir Singh Vs. H.D.F.C. Bank Limited) and First Appeal No. 623 of 2012(Sukhmanbir Singh Vs. H.D.F.C. Bank Ltd. & others). The dispute between the parties was same and order passed by the District Consumer Disputes Redressal Forum, Jalandhar(in short the "District Forum") is also against the same orders in First Appeal No. 622 of 2012 3 all three appeals, as such, the three appeals are disposed of in a single order.
2. In all the appeals, the dispute between the parties is regarding the charging of excess rate of interest, penalty charges as well as pre- closure charges upon the loan, which was availed by the appellants in all the three appeals against LAP i.e. Loan Against Property as well as cash credit loan limit from the respondents. The dispute in all the three appeals is the same. The pleadings of the parties are same as well as the orders passed by the District Forum is also on the same lines and all the three complaints were dismissed by the District Forum only on the ground that the appellants had availed the loan for commercial purpose, as such, the appellants do not fall under the definition of 'consumer' and the District Forum is not competent to try and decide the complaints, however, the appellants can approach the Civil Court for the redressal of its grievance. The facts are taken from 'First Appeal No. 622 of 2012' and the parties would be referred by their status in this appeal.
3. Brief facts of the case are that the appellant Firm approached respondent No. 1 to avail the loan facility. Respondent No. 1 sanctioned the loan under LAP loan facility (Loan Against Property) as well as cash credit loan limit vide letters dated 20.11.2006 and 27.6.2007, respectively. Under the LAP category loan of Rs. 1,19,40,000/- was sanctioned as well as cash credit loan limit of Rs. 25 lacs was sanctioned by the respondents. It was further pleaded that as per terms and conditions of loan, the appellant continuously paid the monthly installments for a period of 35 months. The appellant had raised the objections regarding the charging of interest above the agreed rate but all in vain. Then the appellant served a registered notice dated 25.7.2008 in respect of the loan case of the present firm as well as its sister concerns, namely, Sainico Electronics, Una (Himachal Pradesh) and M/s Rajdeep Gensets, National Highway, First Appeal No. 622 of 2012 4 Hatlimore, Kathua. Another notice dated 16.9.2009 was also served upon respondent No. 1 by the appellant but to no effect.
4. When the respondents did not bother the requests of the appellant then the appellant was left with no alternative but to seize the business relations with the respondents. The respondents charged Rs. 3,96,096.71p as excess interest and Rs. 52,229.86p as penalty charges from the appellant illegally.
5. There was no term and condition in the sanction letter for charging of pre-payment penalty and to charge pre-closure charges @ 4.5% on the balance amount of loan. The appellant objected the said claim of the respondents. However, the respondents ultimately charged pre- closure charges @ 0.5% of the pre-payment amount i.e. Rs. 52,229.86p. On perusal of the statement of account, the appellant came to know that respondent No. 1 had charged the excess amount at higher rate of interest and pre-payment penalty against the terms and conditions of the loan agreement. The amount in dispute was paid by M/s India Bulls, the subsequent financers on behalf of the appellant to the respondents.
6. The complaint was filed by the appellant alleging that Rs. 3,96,096.71p illegally charged by the respondent on account of higher rate of interest against the property loan, Rs. 52,229.86p on account of pre- payment penalty and Rs. 96,327/- on the basis of higher interest against cash credit limit. The respondents were not entitled to charge the same as per the terms and conditions of the loan agreement. It was prayed that the respondents may be directed to refund the above amounts which were charged in excess from the appellant and also prayed that Rs. 50,000/- as compensation on account of mental tension, agony and loss of business as well as Rs. 25,000/- as litigation expenses may also be awarded to the appellant.
First Appeal No. 622 of 2012 5
7. Upon notice, reply was filed by the respondents by taking preliminary objections that the complaint was not maintainable, the appellant had concealed the true and material facts, the appellant had availed the loan against property bearing A/c No. 2849031 and cash credit limit bearing A/c No. 3412790000036 from the respondents after agreeing with the terms and conditions of the loan agreement. The appellant was duly informed that interest on loan against property shall be charged at floating rate, which can be enhanced time to time as per the terms and guidelines issued by Reserve Bank of India. The appellant was further informed that in case the appellant failed to deposit EMIs of the loan then penal interest shall be charged from him. In case the appellant repaid the loan amount earlier than the schedule of repayment of loan then he will be liable to pay pre-payment charges as per prescribed rate of interest as per the terms and conditions of the loan agreement.
8. The appellant had not paid the loan amount as per the terms and conditions and become defaulter. The appellant always delayed to deposit stock statements and also failed to renew its credit facility from the respondents. The appellant closed the business concern of firm M/s Rajdeep Gensets since two years and also failed to deposit interest and installments of the said concern in time. The appellant had availed the cash credit limit from M/s India Bulls. The appellant himself deposited the demand drafts of the loan amount issued by M/s India Bulls to the respondents against its loan accounts. The approval was taken by the respondents for decrease of pre-payment charges from 4.5% interest to 0.5% interest as per the settlement with the appellant and now the appellant could not back from the settlement. No excess penal interest was charged from the appellant. The terms and conditions of the loan were accepted by the appellant itself and the interest was charged as per the First Appeal No. 622 of 2012 6 guidelines of the RBI and no excess amount was charged from the appellant.
9. Rs. 96,327/- were also rightly charged as the appellant was regular defaulter in repayment of loan, for non-compliance of norms/terms and conditions of the loan account, non-deposit of stock statement in time and for non-renewal of credit facility and no cause of action was arisen to the appellant to file the complaint.
10. On merits, the same stand was reiterated and dismissal of the complaint was prayed with costs.
11. After hearing the learned counsel for the parties and going through the record, the District Forum dismissed the complaint of the appellant being not maintainable as the loan was availed by the appellant for commercial purpose with no order as to costs.
12. The appeal is filed by the appellant on the grounds that the District Forum without going into the merits of the case dismissed the complaint only on the ground that the appellant may approach to the Civil Court to decide the dispute, the District Forum has not appreciated the fact that the pleadings before the District Forum were already completed and no objection was raised by the respondents in its reply regarding the maintainability of the complaint. There was dispute regarding the charging of higher rate of interest but the District Forum dismissed the complaint only on the ground that the appellant had availed the loan for commercial purpose. The findings of the District Forum is against the law laid down by the Hon'ble Supreme Court as well as by the Hon'ble National Commission in so many cases. The order of the District Forum is based on conjectures and surmises and on wrong presumptions, as such, the order of the District Forum is liable to be set-aside.
13. There is no dispute that the appellant availed the loan against property (LAP) and cash credit limit loan from the respondents for the First Appeal No. 622 of 2012 7 commercial purpose as it is fully proved from the pleadings of the complaint.
14. The only dispute between the parties was that the respondents were charging excess rate of interest than the agreed between the parties and, as such, the appellant had repaid the entire loan amount after taking the loan from M/s India Bulls. It is also the version that the respondents also illegally charged penalty charges and pre-closure charges against the terms and conditions of the policy which the appellant was not liable to pay.
15. The complaint of the appellant was dismissed only on the ground that the dispute between the parties regarding the loan, which was availed by the appellant for commercial purposes and, as such, the District Forum was not competent to decide the same as per the Section 2(1)(d) of Consumer Protection Act, 1986, which is reproduced.
"2. Definitions. - (1) (d) "consumer" means any person who--
(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or
(ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who 'hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person but does not include a person who avails of such services for any commercial purposes;
Explanation.-- For the purposes of this clause, "commercial purpose" does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment;
16. However, on the other hand, the version of the appellant is that there is dispute regarding the charging of excess interest, penalty charges as well as pre-closure charges and the District Forum was fully competent to decide the matter as per the law laid down by the Hon'ble National Commission and the Hon'ble Apex Court.
First Appeal No. 622 of 2012 8
17. The version of the appellant is that as per Section 13(4) of the Act, the District Forum have the same powers as are vested in a Civil Court under the Code of Civil Procedure 1908 while trying a Civil Suit in the following matter, namely:-
"13(4) For the purposes of this section, the District Forum shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matter, namely:-
(i) the summoning and enforcing the attendance of any defendant or witness and examining the witness on oath;
(ii) the discovery and production of any document or other material object producible as evidence;
(iii) the reception of evidence on affidavits;
(iv) the requisitioning of the report of the concerned analysis or test from the appropriate laboratory or from any other relevant source.
(v) Issuing of any commission for the examination of any witness; and
(vi) Any other matter which may be prescribed."
18. But the version of the appellant is not correct as per Section 2(d)(ii) of the Consumer Protection Act, 1986, the services of the respondents i.e. loans were availed by the appellant for commercial purpose which are not covered under the Consumer Protection Act, 1986.
19. The counsel for the appellant cited the judgment of Hon'ble Supreme Court titled as "Maharashtra State Financial Corporation & Ors.
Versus Sanjay Shankarsa Mamarde", III (2010) CPJ 33 (SC) but the same is not applicable to the facts of the case as in the above case, the appeal of the appellants was accepted against the loanee.
20. We have also perused the judgment of the Hon'ble National Commission titled as "U. Bhikamchand K. & B. Nirmal Kumar Jain Vs. HDFC Bank Ltd.", 2012(1) CLT 224 but this judgment is not applicable as per the latest judgment of the Hon'ble National Commission in case "M/s Citimake Builders Pvt. Ltd. Versus Samata Sahakari Bank Ltd.", 2012(4) CPR 376 (NC) in which number of judgments were discussed in which the same point was considered i.e.:-
"1. Synco Industries Vs. State Bank of Bikaner & Jaipur, 2002 (2) SCC 1 First Appeal No. 622 of 2012 9
2. Trai Foods Ltd. Vs. National Insurance Co. and others, (2004) 13 SCC 656
3. Bhupendrakumar R. Parikh NS Bank of India and others, II (2003) CPJ NC
4. Pratibha Pratisthan & Ors. Vs. Allahabad Bank & Ors., IV (2007) CPJ 33 (NC).
5. Bhagwanjit D. Patel & Anr. Vs. Indian Bank & Ors., III (2011) CPJ 175 (NC)
6. Sutlej Textile and Industries Ltd. Vs. Punjab National Bank, I (2010) CPJ 312 (NC).
7. Dr. J.J. Merchant and others v. Shrinath Chaturvedi, (2002) 6 SCC 635
8. CCI Chambers Coop. Hsg. Society Ltd. V. Development Credit Bank Ltd., (2003) 7 SCC 233"
and held in para No. 11 as follows:-
"11. Perusal of paragraph 4 of the complaint clearly reveals that most of the cheques have been encashed by way of overdraft, thus, it becomes clear that prima facie overdraft facility was provided by opposite party to the complainant. Complainant, in reply to the application submitted that overdraft facility was granted against fixed deposit receipt, but it is very much clear that complainant's current account was having facility of overdraft. As current account without overdraft facility was for commercial purpose, prima facie, complainant does not fall within the purview of consumer under the Consumer Protection Act and complaint is not maintainable."
21. It is also held by the Full Bench of Hon'ble Supreme Court in case "Economic Transport Organization Vs. Charan Spinning Mills (P) Ltd. & anr." I (2010) PJ 4 (SC) in which it was held in para No. 25 as follows:-
"25. We may also notice that Section 2(d) of Act was amended by Amendment Act 62 of 2002 with effect from 15.3.2003, by adding the words "but does not include a person who avails of such services for any commercial purpose" in the definition of 'consumer'. After the said amendment, if the service of the carrier had been availed for any commercial purpose, then the person availing the service will not be a 'consumer' and consequently, complaints will not be maintainable in such cases. But the said amendment will not apply to complaints filed before the amendment."
22. In the present case the loan was sanctioned by the respondents to the appellant vide letters dated 20.11.2006 and 27.6.2007 i.e. after the approval, as such, as per the law laid down by the Hon'ble Supreme Court, the complaint of the appellants was rightly dismissed by the District Forum.
First Appeal No. 622 of 2012 10
23. The orders passed by the learned District Forum are legal and valid and there is no ground to interfere with the same. The appeals being without any merit are dismissed and the impugned order of the District Forum are affirmed and upheld. No order as to costs.
24. The arguments in these appeals were heard on 9.4.2013 and the orders were reserved. Now the orders be communicated to the parties.
25. The appeals could not be decided within the statutory period due to heavy pendency of Court cases.
(Piare Lal Garg)
Presiding Member
April 25, 2013. (Jasbir Singh Gill)
as Member