State Consumer Disputes Redressal Commission
M/S Nfb Ploymers Pvt. Ltd. vs Indian Overseas Bank on 11 October, 2017
FIRST ADDITIONAL BENCH
STATE CONSUMER DISPUTES REDRESSAL COMMISSION, PUNJAB
SECTOR 37-A, DAKSHIN MARG, CHANDIGARH.
First Appeal No.408 of 2017
Date of Institution : 01.06.2017
Order Reserved on: 09.10.2017
Date of Decision : 11.10.2017
M/s NFB Polymers Pvt. Ltd., Grewal Nagar, Hambran, Ludhiana
through Daljit Singh Grewal, Director.
.....Appellant/complainant
Versus
1. Indian Overseas Bank, Sunder Nagar Branch, through its
Branch Manager, Ludhiana.
2. Indian Overseas Bank, Fountain Chowk, through Senior
Regional Manager, Ludhiana.
3. Indian Overseas Bank, Central Officer 763, Anna Salai,
Chennai.
.....Respondents/opposite parties
First Appeal against order dated
03.04.2017 passed by the District
Consumer Disputes Redressal Forum,
Ludhiana.
Quorum:-
Shri J. S. Klar, Presiding Judicial Member
Smt. Surinder Pal Kaur, Member Present:-
For the appellant : Sh. Tribhuvan Singla, Advocate For the respondents : Sh. Ritesh Kumar Bansal, Advocate ............................................ J.S KLAR, PRESIDING JUDICIAL MEMBER :-
Challenge in this appeal by appellant is to order dated 03.04.2017 of District Consumer Disputes Redressal Forum First Appeal No.408 of 2017 2 Ludhiana (in short the 'District Forum'), dismissing the complaint of appellant of this appeal against respondents of this appeal. Appellant of this appeal is complainant in the compliant before the District Forum and respondents of this appeal are the opposite parties therein and they be referred as such herein after for the sake of convenience.
2. The complainant instituted complaint U/s 12 of the Consumer Protection Act, 1986 (in short, "the Act") against the OPs on the averments that it is a private limited company registered with the Registrar of Companies Regional Office Jalandhar and Daljit Singh Grewal is one of the share holders of the company and is duly authorized to file the complaint in the capacity of its Director. It was further averred that complainant applied for a term loan of Rs.4,70,00,000/- with OP no.1 to OP no.3, but Rs.1,00,00,000/- as credit facility was duly sanctioned by OPs, vide sanction letter dated 03.03.2010. Term loan amount was payable in 84 installments of Rs.5,59,524/- each along with interest @13.25% per month on each installment. At the time of sanction of loan facility, OPs charged Rs.5,18,410/-, Rs17,000/- and Rs.54,756/- from complainant. These amounts included the processing fee, upfront charges and L.C. opening charges. Total amount of Rs.5,90,166/- were charged by OPs from complainant. It was further averred that complainant had been paying the loan installments regularly. After adjudging the performance of the complainant, a new revised sanction letter dated 25.06.2011 was issued by OPs by enhancing the credit facility First Appeal No.408 of 2017 3 amount from Rs.1 crore to Rs.2.5 crore. OPs again put a clause to recover the processing charges of Rs.65,479/- and repeated upfront fee of Rs.4.20 lacs on the term loan, which was earlier sanctioned. The complainant contacted OP no.1 regarding charging of upfront charges repeatedly. OP no.1 disclosed that he has no role to play in it, because the same were levied as per the system operated by OP no.3. As decision was not taken on the request of the complainant and as such, he issued reminder dated 16.07.2011 through email. OP no.1 started pressurizing the complainant time and again to deposit at least 50% of illegal upfront charges. The matter was brought to the notice of OP no.1 and OP no.2 through registered letter dated 24.08.2011 and it was requested that if illegal upfront charges were not waived off, then the company would have no other option except for some other alternative arrangement. The OPs charged the processing fee on the enhanced amount of Rs.1.5 crore, as cash credit facility. It was further averred that OPs ignored the request of the complainant and again charged upfront charges on term loan by deducting Rs.4,20,000/- and Rs.65,479/- being recovered as processing charges. The OPs deducted the total amount of Rs.4,85,479/- from the account of the complainant on 13.09.2011 without any notice and against the provisions and instructions of cash credit facility, but on instructions of OP no.3, it was returned in the account of complainant on 14.09.2011, because of raising of protest by the complainant. Again on same day 14.09.2011, OPs charged Rs.2,75,479/- by deducting the same from First Appeal No.408 of 2017 4 the account of the complainant maintained in IOB Sunder Nagar Branch of OP no.1. Upfront charges can be recovered only one time after sanction of the loan or secondly at the time of fresh sanction of loan or in case of enhancement of the cash credit facility. Complainant protested against above deductions of Rs.2,75,479/- and thereafter, the amount of Rs.2,10,000/- were returned to the complainant on 18.10.2011, after deducting the processing fee on enhanced amount of cash credit facility. The complainant was harassed by OP no.1 to OP no.3. The complainant submitted request dated 16.09.2011 under the provisions of RTI Act, 2005. OP no.2 vide letter dated 14.10.2011 informed that request of the complainant is out of the purview of RTI Act, due to which, above record cannot be supplied to the complainant. OP no.1 to OP no.3 on 28.09.2012 again deducted amount of Rs.3,44,903/- as the repeated upfront charges. The complainant raised objection vide letter dated 03.10.2012 and subsequently through reminders dated 08.11.2012 and 16.01.2013, but no action was taken by OPs. On 21.03.2013, a fresh sanction letter enhancing the cash credit limit from Rs.2.5 crore to Rs.3.5 crore was issued on account of better dealing and goodwill of the complainant. Processing fee of Rs.71,400/- again was deducted on 25.03.2013 from the account of complainant, due to which, complainant again submitted request letters dated 25.06.2013 and 19.07.2013 with request to stop the practice of recovering the repeated upfront charges. The complainant wrote detailed letter dated 19.07.2013 to OP no.1 to OP First Appeal No.408 of 2017 5 no.3 for not taking any action on its earlier letters, granting one month to OPs for refunding the amount of Rs.3,44,903/-, but no action was taken by OP. The complainant again sent request letters sent on 25.10.2013 and 30.01.2014 to OP no.1 to OP no.3. It was further averred that complainant never committed any default in payment of loan installments. Term loan and credit facility were returned to OP no.1 to OP no.3 on 21.10.2013 by returning the amounts of Rs.2,50,87,418/- plus Rs.20,18,517/-. No Due Certificate was issued to the complainant on 11.11.2013. Thereafter, the account of loan was shifted to OP no.4, who claimed Rs.1,41,832/- as processing fee, Rs.3000/- as ROC charges, Rs.5500/- as valuation charges, Rs.5000/- as legal charges and Rs.11,236/- as valuation charges. Totally an amount of Rs.1,66,568/- was charged from the complainant by OP no.4. The complainant alleged deficiency in service in payment of loan and deducting upfront charges etc. The complainant prayed that OPs be directed to refund amount of Rs.3,44,903/-(deducted on 28.09.2012); Rs.2,46,193/- (deducted as pre-closure charges on 21.10.2013) and Rs.19,807/- (deducted as pre-closure charges on 21.10.2013), besides to refund an amount of Rs.1,41,832/- (recovered as processing fee on 01.10.2013 by OP no.4); Rs.3000/- (recovered as ROC charges by OP no.4), Rs.5500/- (recovered as valuation charges by OP no.4); Rs.5000/- (recovered as legal charges by OP no.4) and Rs.11,236/- (recovered as valuation charges by OP no.4). The complainant First Appeal No.408 of 2017 6 further prayed for litigation expenses of Rs.11,000/- and interest @18% per annum from 28.09.2012 till recovery of the amounts.
3. Upon notice, OP no.1 to OP no.3 appeared and filed joint written reply. It was admitted that loan was sanctioned and enhancements of credit facilities were provided to complainant and the all amounts were charged from the complainant, as per the Extant Guidelines of the bank. Schedule of financial charges levied available on the website of the bank as a public document. OP bank being a scheduled commercial bank is strictly following the guidelines of Reserve Bank of India regarding levying of service charges. The complaint is alleged to be deceptive. Processing fee, upfront charges and L.C. opening charges were levied as per Bank's Circular. Processing charges of Rs.65,749/- and upfront fee/financial charges of Rs.4,20,000/- were levied on the term loan as per the circular of the bank. Acknowledgment of the sanction dated 14.09.2011 was submitted by the borrower/guarantor of the account for stating that they were fully satisfied and accept the terms and conditions of the sanction of credit facilities. It was denied that charges were levied against the provisions and instructions, rather they were levied as per the guidelines and instructions. An amount of Rs.4,85,479/- was returned to the complainant and only less amount of Rs.2,75,479/- was deducted from the account of complainant to maintain good customer relations. It was denied that the upfront charges leviable once only at the time of sanction of loan or secondly at the time of fresh sanction of loan or in case of enhancement of the First Appeal No.408 of 2017 7 cash credit facility. Amount of Rs.2,10,000/- was refunded to the complainant with intention to maintain good customer relations. Public Information Officer of OP bank rightly claimed that information request of the complainant was out of the purview of the Right to Information Act, 2005. Information request was in the form of seeking redressal of the grievance of the complainant, which did not fall within the purview of the Right to Information Act, 2005. Complainant was informed that details of charges for loans are available on the website of the Bank as a public document. It was further averred that Rs.71,400/- were levied on the term loan as per OP Bank's Circular and an acknowledgement of the sanction dated 25.03.2013, which was given by the borrower/guarantor of the account, wherein it was stated that they were fully satisfied with the terms and conditions of the sanction of credit facilities. It was further averred that complainant's loan account was shifted to OP no.4 as per his choice and OP no.1 to OP no.3 was not held responsible for that shifting. Charges levied by OP no.4 is a matter of their internal policy, for which, relief cannot be claimed from OP no.1 to OP no.3. OP no.1 to OP no.3 controverted the other averments of the complainant and prayed for dismissal of the complaint.
4. OP no.4 filed separate written reply by averring that the complaint is not tenable, because the allegations leveled in the complaint are not true and correct. The complainant did not mention any reason qua deficiency in service on the part of OP no.4 and OP no.4 is not responsible for any loss suffered by the complainant. It First Appeal No.408 of 2017 8 was denied that there is any relationship of consumer and supplier of service between the complainant and OP no.4. The complainant has no cause of action against OP no.4 to file the present complaint. It was denied that there was any deficiency in service on the part of OP no.4. OP no.4 prayed for dismissal of the complaint.
5. The complainant tendered in evidence affidavit Ex.CA along with documents Ex.C-1 to Ex.C-17 and closed the evidence. As against it, OP no.1 to OP no.3 tendered in evidence affidavit Ex.RA1 along with documents Ex.R-1 to Ex.R-5 and closed the evidence. OP no.4 tendered in evidence written reply of OP no.4 and closed the evidence. On conclusion of evidence and argument, the District Forum dismissed the complaint of the complainant. Aggrieved by above order, the complainant now appellant has directed this appeal against the same.
6. We have heard the learned counsel for the parties and have also examined the record of the case. The foremost point canvassed before us during arguments is whether complainant is consumer of OPs or not. The District Forum has not found the complainant to be the consumer of OPs and even touching the merits of the case proceeded to dismiss its case. We are mainly concerned to decide this point at the threshold as to whether the complainant is consumer of OPs or not. Section 2(1)(d) of Consumer Protection Act, 1986 defines the consumer, which is reproduced as under:-
"(d) "consumer" means any person who,--First Appeal No.408 of 2017 9
(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) 12 [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 12 [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 13 [but does not include a person who avails of such services for any commercial purpose];
Explanation- For the purpose 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 purpose of earning his livelihood by means of self-employment."
It is, thus, evident from the explanation to Section 2(1)(d) of the Act introduced by the Legislature vide amendment Act, 62 of 2002, for the purpose of this clause, commercial purpose does not include user by a person of goods bought and used by him and services availed by him exclusively for the purpose of earning his livelihood by means of self-employment. It is essential for the consumer to prove that he bought the goods or availed the services (i) exclusively First Appeal No.408 of 2017 10
(ii) for the purpose of earning his livelihood (iii) by means of self employment. We have to examine this case on the touchstone of explanation of Section 2(1(d) of the Act on the record. These ingredients are essential to be met by the complainant before it can be held to be consumer. These two ingredients emerge from the explanation for making a person as consumer in case of commercial services one is, he must be earning his livelihood exclusively therefrom. Second ingredient is that it must be for the purpose of his self employment. We have examined the pleadings of the parties and evidence adduced on the record in this case as well. Admittedly, the complainant is a private limited company registered with the Registrar of Companies Regional Office Jalandhar. As per Memorandum and Articles of Association of complainant company Ex.C-1, the main object of complainant company is to carry on all or any the business as manufacture, producer, processor, purchaser, seller, importer, exporter, mixer, refiner, packet, stockiest, distributor, dealer, extractor, manipulator, formulator, commission agent, sales and marketing representative and organizer, of all types of polymers, polymic compounds and copolymers required as source materials for pet perform, pet bottles and plastics caps like bottles and jars for pharmaceutical, customized pet bottled, pet bottles for edible oil, pet bottles for shampoo etc. of all kinds, shapes and size thereof, and any or all kind of products of which any of the foregoing constitute an ingredient or in the production of which any of the foregoing is used and to utilize end waste and by products arising out of the foregoing First Appeal No.408 of 2017 11 products. The other objects of the complainant company are to carry on the business of broker, agent and manufacturer's representative and indenting agents for Indian and foreign customers. The complainant company is private limited company and it has minimum paid-up capital of Rs.1,00,000/- or such higher paid-up capital as may be prescribed by articles within the meaning of section 3(1)(iii) of the Companies Act, 1956. The complainant company applied for terms loan with OP no.1 to 3 of Rs.4 crore 70 lakhs, whereas term loan of Rs.1 crore as cash credit facility was sanctioned by OP no.1 to 3, vide sanction letter dated 03.03.2010. The term loan was payable in 84 installments of Rs.5,59,524/- each with interest @13.25% per month on each installment. The complainant is aggrieved by the charges imposed by OPs including processing fee, up front charges and L.C. opening charges etc. Similarly, the complainant also assailed foreclosure charges imposed by OP no.1 to 3 upon it, vide letter dated 21.10.2013.
7. From hearing the respective submissions of learned counsel for the parties and perusal of evidence and pleadings of the parties, we find that complainant is a private limited company and it applied for terms loan with OP no.1 to 3 of Rs.4 crore 70 lakhs, whereas term loan of Rs.1 crore as cash credit facility was sanctioned by OP no.1 to 3, vide sanction letter dated 03.03.2010. The OPs imposed certain charges including process fee, upfront charges and L.C. opening charges etc. The complainant challenged the same. We find that complainant is not a consumer in this case. First Appeal No.408 of 2017 12 There is no question of hiring or availing the services of OPs by complainant for the purpose of earning its livelihood exclusively by means of self employment. A private limited company rather provides employment to numerous other persons instead of earning its livelihood by means of self employment. It is not natural person and it is only a juristic person. The National Commission has held in Unisource Trading (India) Pvt. Ltd. Vs. Continental Airline Cargo and Anr., reported in 2017(2) CPR 354 (NC) that private limited company is not a natural person and it is not consumer. It is not a case of self-employment by private limited company, but is a case of giving employment to several other persons by it, being a private limited company and further to earn profits from the business. There is no question of earning its livelihood exclusively by private limited company by means of self-employment. The private limited company has no locus standi to file consumer complaint before the Consumer Forum, as adumbrated in Section 2(1)(d) of CP Act. Self employment has been defined by Apex Court in "Cheema Engineering Services Vs. Rajan Singh" 1996(11) CPSC-1776, wherein it has been held that manufacture and sale of bricks in a commercial way may also be to earn livelihood, but "merely earning livelihood in commercial business", does not mean that it is not for commercial purpose. Self employment connotes altogether a different concept, namely, he alone uses the machinery purchased for the purpose of manufacture by employing himself in working out or producing the goods for earning his livelihood. He includes the First Appeal No.408 of 2017 13 members of his family. There is no question of self-employment by a private limited company, as it is a corporate body. We are further fortified by law laid down by the National Commission in case titled as "Shivom Projects Private Limited Vs. Toyota Kirloskar Motor Pvt. Ltd. & others" 2015(II)CPJ-422(NC). In this authority, the Hon'ble National Commission has held that the vehicle was not purchased exclusively for purposes of earning livelihood by means of self employment for Director of Company. It is not for livelihood of Director or personal use of director. He has to use the car for commercial purposes, therefore, complainant is not the consumer. The remedy of the complainant does not lies before Consumer Forum under C.P. Act, but lies before competent Civil Court only. In this case, the complainant company is a private limited company, which obtained term loan from OPs for expanding its business solely.
8. As a consequence of our above discussion, we find that complainant now appellant is not proved to be consumer in this case, because complainant company availed the terms loan and cash credit limit from OPs for the sole purpose of expanding its business. The case of the complainant dehors the parameters of consumer, as defined in Section 2(1)(d) of C.P. Act. Once a private limited company not held to be consumer and hence the Consumer Forum is not competent to look into the matter of the case because it has no jurisdiction to deal with the matter.
First Appeal No.408 of 2017 14
9. Consequently, the appeal is without merit and the same is hereby dismissed and complainant now appellant is at liberty to seek its remedy before the competent Forum of law.
10. Arguments in this appeal were heard on 09.10.2017 and the order was reserved. Certified copies of the order be communicated to the parties as per rules.
11. The appeal could not be decided within the statutory period due to heavy pendency of court cases.
(J. S. KLAR) PRESIDING JUDICIAL MEMBER (SURINDER PAL KAUR) MEMBER October 11, 2017 MM