State Consumer Disputes Redressal Commission
Nitin Maroti Kale, vs State Bank Of Hyderabad, on 4 April, 2014
C.C.No. :03/2012
1
Date of filing :24.02.2012
Date of order :04.04.2014
MAHARASHTRA STATE CONSUMER DISPUTE REDRESSAL
COMMISSION,MUMBAI, CIRCUIT BENCH AT AURANGABAD.
COMPLAINT CASE NO.: 03 OF 2012
Nitin Maroti Kale,
R/o Nathapur,
Tq. & Dist. Beed. ...COMPLAINANT
VERSUS
1. State Bank of Hyderabad,
Main branch Rajuri Ves, Beed,
Through its Assistant Manager.
2. National Bulk Handling Corporation Ltd.,Beed,
M.I.D.C.Area, Beed,
Tq. & Dist.Beed. ...OPPONENTS
CORAM : Mr.S.M.Shembole, Hon`ble Presiding Judicial
Member.
Mr.K.B.Gawali, Hon`ble Member.
Present : Adv.Shri.C.V.Dharurkar for complainant, Adv.Shri.Ruturaj Patil for opponent No.1, Adv.Shri.Samir Joshi for opponent No.2.
O R A L JUDGMENT (Delivered on 4th April 2014) Per Mr.K.B.Gawali Hon`ble Member.
1. This complaint is filed by Shri.Nitin Maruti Kale against the opponent No.1 & 2 alleging deficiency in service against the opponents.
C.C.No. :03/2012 2
2. The brief facts of this complaint are that, complainant runs a business of ginning and pressing at village Nathapur, Tq. & Dist. Beed. That, he had obtained cash credit loan of Rs.4 crores against the receipt of 2300 cotton bales which were deposited with opponent No.2 i.e. National Bulk Handling Corporation Ltd., Beed (hereinafter referred as 'NBHC'). The terms and conditions of the loan were that the margin of the said loan was agreed up to 25%, rate of interest was fixed at @ 12% p.a. and period of repayment was 12 months as applied to cash credit loan. That, the complainant after availing loan had deposited amount of interest and loan with the opponent No.1 i.e. State Bank of Hyderabad to the tune of Rs.77 lakhs and thus loan account of complainant was regular. However, opponent bank started demanding entire amount of loan since month of September 2011. That, on 18.8.2011 issued legal notice stating therein that it had instructed opponent No.1 to dispose of the stock which was pledged against the said loan. That, the complainant on the same day paid Rs.5 lakhs towards interest with the opponent No.1 and assured to deposit further amount within a short period. However, on 22.8.2011 opponent No.2 issued another notice stating that the opponent bank received four tenders for disposal of pledged cotton and opponent has also stated highest rate at Rs.34,000/- per candy. In the said notice complainant was also asked to pay the opponent bank the outstanding dues up to 5.00 p.m. on the same day. It is contended by the complainant that on the receipt of notice, complainant had deposited Rs.7 lakhs on the same day with the opponent bank and requested opponent bank to grant him sometime for depositing the remaining entire loan amount.
3. Since however, opponent bank as well as NBHC were not giving time to deposit amount and therefore complainant filed civil suit challenging the legality of the action as proposed to be taken by the opponent bank, with the Civil Judge, Senior Division, Beed. However, C.C.No. :03/2012 3 opponent by filing their written statement contended that pledged cotton bales were already sold on 22.8.2011 therefore Civil Court declined to grant interim relief as the proceeding had become infructuous. Complainant further contended that opponent had disposed of the pledged cotton without following proper procedure i.e. tenders were not called by publishing in the newspaper, they were not opened in the presence of complainant etc.. That, even though the complainant was granted time up to 5.00 p.m. on 22.8.2011, opponents came with the theory that tender proceeding were completed on the same day. In fact there was no fair competition in the tender proceeding and said pledged cotton stock was sold at very low price causing the financial loss to the complainant. It was contended that market price of the cotton candy was Rs.38,800/-per candy and was likely to increase upto Rs.41,000/- per candy in two days. However, said candy was sold by opponent at Rs.34,000/- per candy. He had therefore calculated loss at Rs.51,18,627/- and contended that cause of action arose on 22.8.2011 and further on 9.9.2011 therefore he filed complaint before the Commission seeking direction to the opponent No.1 & 2 to pay him jointly and severally the compensation to the tune of Rs.56,68,627/- which included the loss of Rs.51,18,627/- towards sale of pledged cotton, Rs.5 lakhs towards mental agony and Rs.50,000/- towards cost of litigation. Complainant in support of his complaint filed various documents such as loan sanctioned letter, statement of account dated 29.10.2011, warehouse receipt issued by Maharashtra Warehouse Corporation, notice dated 29.8.2013 other correspondence made with the opponent, copy of RCS 374/2011, RCS 450/2011 filed before Civil Court, Beed, copy of written statement filed by both the opponents before Civil Court in respect of both RCS etc.
4. On hearing complainant's counsel Shri.C.V.Dharurkar and on perusal of complaint it came to be admitted and notices were issued to C.C.No. :03/2012 4 both the opponents. Accordingly both the opponents appeared before this Commission and filed their written version. By way of it's written version opponent bank admitted to have sanctioned the cash credit loan of Rs.4 crores. However, it has denied other adverse contention of complainant. It is contended that complaint is not maintainable on various grounds i.e. non-joinder of necessary parties, such as guarantor of said loan, purchaser of cotton bales, complainant has filed this complaint in his personal capacity whereas the loan was sanctioned to the firm by name M/s Kale ginning and pressing factory. Thirdly, complainant being engaged in commercial activities and availed loan for earning of profit, he is not the consumer under Consumer Protection Act etc. It was contended that bank started demanding all the loan amount from the complainant because the complainant failed to keep margin as agreed between his firm namely M/s Kale Ginning and Pressing Factory and opponent bank since 26.7.2007. Hence, as per agreement opponent bank is empowered to demand entire loan amount. It further contended that borrower i.e. M/s Kale Ginning and Pressing Factory inspite of various request and demand for repayment of outstanding loan failed to make required transaction in overdraft loan facility and therefore finally opponent bank through opponent No.2 disposed of pledged cotton bales on 22.8.2011 at the highest bidder at rate of Rs.3400/- per bales. That, the sale proceeds amounting to Rs.3,23,26,541/-. It is also contended that complainant had filed civil suit bearing No.374/2011 and thereafter civil suit No.450/2011 in Civil Court, Beed. However, he could not succeed in any court and even thereafter complainant tried to threaten opponent to commit suicide along with his family etc. It is therefore contended by opponent bank that it has acted in disposing of the cotton bales as per the terms and conditions of the loan sanctioned and there was no any deficiency in service. It is also contended that even after sale of pledged cotton the complainant is yet to pay remaining balance amount of outstanding loan of Rs.42,34,438/-as on 31.12.2011 for C.C.No. :03/2012 5 which opponent bank has already filed recovery suit with D.R.T. That, just to avoid the said recovery proceedings, the complainant has filed consumer complaint in this Commission which requires to be dismissed.
5. Opponent No.2 i.e. National Bulk Handling Corporation Ltd. appeared before this Commission and filed its written version denying allegation made against it by the complainant. It is contended that at the outset complainant is not it's consumer and hence complaint is not maintainable against it. It is submitted that this opponent was appointed as Collateral Manager by opponent No.1. That, as per terms and conditions of the said agreement, opponent No.2 is responsible to maintain quality and quantity of cotton bales deposited in the warehouse by the complainant against which he obtained loan. It has also contended that loan transaction is in between complainant and opponent bank and thus opponent No.2 has no role in the transaction of said loan. It is further contended by this opponent that since complainant failed to pay margin money as per request of opponent No.1 vide letter dated 19.7.2011 and as per instruction received vide letter dated 26.7.2011 for making arrangement for disposal of said 2300 bales of cotton, opponent No.2 after giving due notice to the complainant disposed of the said cotton as on 22.8.2011 by following due procedure. It is therefore contended by this opponent that he had acted as per instruction of opponent bank and there was no any deficiency in service on its part. Therefore complaint filed by complainant be dismissed to its extent.
6. After having submitted the evidence by the parties and also after submitting written notes of argument we have finally heard complainant on 12.3.2014. Adv.Shri.C.V.Dharurkar for complainant, Adv.Shri.Ruturaj Patil for opponent No.1 and Shri.Sameer Joshi for opponent No.2 were present. We heard counsel for both sides finally and adjourned for judgment and order.
C.C.No. :03/2012 6
7. Learned counsel Shri.C.V.Dharurkar for complainant made almost the same averments as made in the complaint. He submitted that the complainant was always willing to pay dues and had substantially complied with the demand of opponent No.1 bank. However, without following due procedure it has disposed of cotton bales which were pledged with it by hastily and hurriedly at very low price compared to prevailing market rate causing huge loss to the complainant. He therefore contended that complainant is entitled for the claim made by him from both the opponents and therefore complaint be allowed. Learned counsel Shri.C.V.Dharurkar in support of his contention relied on following case law.
i) Vimal Chandra Grover -Vs- Bank of India, reported in AIR 2000 Supreme Court 2181,
ii) Kishori Lal -Vs- Chairman, Employees State Insurance Corporation, 2007(9) LJSOFT (S.C.) 128,
iii) Nahar Industrial Enterprises Ltd. -Vs- Hong Kong and Shanghai Banking Corporation, AIR 2009 SC(Supp) 2474,
iv) Madan Kumar Singh(D) Thr.LR. -Vs- Distt.Magistrate, Sultanpur & Ors. 2009(12) LJSOFT (S.C.) 328,
v) Prabhal Bank Ltd. and another -Vs- Babu Ram, AIR 1966Allahabad 134 ( V-53, C.36),
vi) Kerala Financial Corporation -Vs- Vincent Paul and Anr. AIR 2011 Supreme Court 1388.
8. On the other hand learned counsel Shri.Ruturaj Patil by way of his argument submitted that the complaint is not at all tenable in the eyes of law as the services of opponent No.1 & 2 are availed for commercial purpose. He submitted that complaint is filed without joining necessary party & authorities and also it is filed in individual C.C.No. :03/2012 7 capacity instead of M/s Kale Ginning and Pressing Factory which is a firm. He further submitted that the loan was not repayable within 12 months but was repayable on demand. He specifically contended that M/s Kale Ginning and Pressing Factory is borrower, has failed to keep the account regular. Therefore opponent bank had demanded the total repayment of loan from month of July 2011. That, inspite of continuous demands and requests the borrower M/s Kale Ginning and Pressing Factory failed to maintain loan account regularly and to pay interest etc. as per agreement. Therefore finally opponent bank had to proceed for selling out the pledged cotton bales through opponent No.2. It is also submitted by learned counsel Shri.Ruturaj Patil that there was no condition for disposing the cotton by way of calling tenders hence tenders were not called. Therefore the question of opening tenders in presence of complainant did not arise. That, opponent No.2 was fair enough and transparent in providing quotes amount obtained to the ginning and pressing factory well in advance. That, the borrower knew about the quotes amount and accordingly he could have objected to the amount quoted as alleged to have been lower than market rate. However, it neither orally took any objection nor in writing and lateron after thought filed this complaint. It is further contended that complaint is not tenable as it is purely commercial transaction and hence complainant being not consumer under Consumer Protection Act, complaint itself is not tenable. He also contended that complainant did not succeed in the Civil Court also. Learned counsel also submitted that opponent bank is entitled to recover outstanding due amount of Rs.42,34,438/- and accordingly has filed application bearing No.451/2012 in the D.R.T. Aurangabad. He thus contended that complaint filed by complainant being not tenable and having no merit be dismissed with cost of Rs.10 lakhs. Learned counsel Shri.Ruturaj Patil relied on the following case laws.
C.C.No. :03/2012 8
i) Gangar Opticians Pvt.Ltd. -Vs- HDFC Bank Ltd. 2012(3) CPR 516 (NC),
ii) M/s Ashiana Inn Limited -Vs- Punjab & Sind Bank, IFB, Bank, 2013(3) CPR 136(NC),
iii) M/s Citimake Builders Pvt.Ltd. -Vs- Samata Sahakari Bank Ltd., 2012(4) CPR 376(NC),
iv) Vijay Kumar -Vs- Indusind Bank , 2012(3) CPR 242(NC),
v) PDC Marketing Private Limited -Vs- Axis Bank Ltd., 2013(3) CPR 164 (NC).
9. Learned counsel Shri.Sameer Joshi appearing for opponent No.2 also submitted that complaint is not maintainable as it is commercial transaction. It is further submitted that opponent No.2 is company engaged in providing national level warehouse and supplying chain management system and accordingly opponent No.1 had appointed it to manage commodity of cotton bales pledged with it by the complainant and against which loan was sanctioned in favour of M/s Kale Ginning and Pressing Factory. It is specifically submitted that transaction of loan is in between complainant and opponent bank and hence this opponent has no role to play and it has acted as per instruction issued by opponent No.1. That, the disposal of cotton bales has been done by following due procedure and after giving proper information to the complainant and therefore there is no deficiency in service on it's part and complaint be dismissed against it.
10. We have carefully gone through the papers containing complaint, written version filed by opponents, documents supplied by both the parties, evidence affidavit as submitted by parties to the dispute, written notes of argument and other documents.
C.C.No. :03/2012 9
11. Considering the facts of the case and evidence on record, first and foremost issue arises for our consideration is as given below. We have also recorded our findings against it on the basis of reasons given there under.
ISSUE FINDING.
Whether complaint is legally maintainable? ....No.
R E A S O N S
12. There are two major grounds on the basis of which complaint do not stand as maintainable.
i) Complainant is not proper 'person' to file complaint, and
ii) Complainant did not fall within the ambit of term 'consumer' as defined under 'Consumer Protection Act'.
As regards ground No.1 as argued by learned counsel for the opponent, it is observed that opponent No.1 bank had sanctioned cash credit loan to the M/s Kale Ginning and Pressing Factory which is a firm. But the present complaint is filed by Shri.Nitin Maruti Kale in his individual capacity. Therefore legally speaking he is not proper person to file complaint under provision of Consumer Protection Act. Hence, as contended by learned counsel Shri.Ruturaj Patil for opponent bank, complaint is not tenable on this ground.
C.C.No. :03/2012 10
13. As far as second ground is concerned, the opponent bank challenged complainant's status as 'consumer' in the light of definition of term 'consumer' as given in the Consumer Protection Act. As per the definition of term 'consumer' as provided U/s 2(1)(d) means any person who buys goods and avails services for consideration is consumer but does not include a person who buys goods for resale and avails such services for any "commercial purpose". Admittedly, complainant is engaged in business of ginning and pressing factory by name and style as "M/s Kale Ginning and Pressing Factory" for which the cash credit loan of Rs.4 crores was obtained from the opponent bank by mortgaging 2300 cotton bales as security for the said loan. Very purpose of the said loan is obvious i.e. for earning profit out of the said business of ginning and pressing of cotton.
14. Explanation given to the definition of the 'consumer' i.e. Section 2(1)(d), provides further that "commercial purpose" does not include use by a person of the goods bought and services availed by him exclusively for the purpose of earning livelihood by means of self-employment. Now the question is whether activity of ginning and pressing of cotton falls within the ambit of said explanation given U/s 2(1)(d) of Consumer Protection Act. Reply is certainly negative for the reasons that nowhere in the complaint there is a whisper that this commercial activity is being carried for earning complainant's livelihood by means of self employment. Even if we presume that complainant has so mentioned in his complaint, it cannot be sustained as the extent of his business is on such a large scale wherein complainant has obtained overdraft facility of Rs.4 crores. Therefore considering this fact complainant cannot be said as consumer under the provision of Consumer Protection Act and hence complaint itself is not maintainable.
C.C.No. :03/2012 11
15. Learned counsel Shri.C.V.Dharurkar for the complainant has argued that even though the complainant is engaged in the commercial activity, still he is "consumer". In support of his contention he has referred to the case laws at serial No.1 to 3 above. However, perusal of the judgments given by Hon'ble Apex Court at serial No.1 to 3 above, reveals that, all these case laws for one or other reasons are not applicable to the present case. Case laws at serial No.1 which pertains to the case of "Vimal Chandra Grower -Vs- Bank of India(Supra)" is of the year prior to the amendment of the Act that became effective from 15.3.2003. After that amendment, person availing services for any commercial purpose is excluded from the definition of consumer U/s 2(1)(d)(ii). Hence this case law cannot help to the complainant. The second case law in respect of "Kishori Lal Chairman, Employees State Insurance Corporation(Supra)", this case pertain to medical negligence against ESI hospital. The point involved in this case whether medical services given by hospital to the members of complainant's family as free of charge and hence complainant was not consumer. However, it was held by Hon'ble Apex Court that medical services rendered cannot be held as gratuitous as expenditure of medical services rendered would be borne from contribution made to the insurance scheme by employer. Therefore observation made by Hon'ble Apex Court in this case as "services hired for consideration even for commercial purpose are not excluded", are in different context. Facts and circumstances of the case under citations are totally different from the present case and hence this case law also does not support the contention of learned counsel Shri.Dharurkar for the complainant. Third citation pertains to the case of "Madan Kumar Singh(D) through LR -Vs- Dist.Magistrate and Others", there is issue involved as regarding purchase of truck in auction by complainant, whether he was a consumer. It was said to be purchased for earning livelihood of the complainant by means of self-employment and hence complainant was treated as consumer under Consumer C.C.No. :03/2012 12 Protection Act. Thus fact and circumstances of this case also do not match with the present case and hence ratio given in this case does not also support to the case of complainant.
16. On the other hand citations as referred by learned counsel are quite applicable to the present case. All these citations are pertained to the judgments as delivered by Hon'ble National Commission where there is ratio "that person who avails services for consideration for any commercial purpose was not covered under the definition of 'consumer'".
17. In view of the aforesaid facts and observations we find that complaint itself is not maintainable. On the above said grounds we find no need to go into merit of the case.
In the result, we pass the following order.
O R D E R 1. Complaint is dismissed. 2. No order as to cost.
3. Copies of the judgment be supplied to both the parties.
Sd/- Sd/- K.B.Gawali, S.M.Shembole, Member Presiding Judicial Member Mane