State Consumer Disputes Redressal Commission
M/S Telang Motors Pvt. Ltd., vs State Bank Of India, on 1 April, 2014
BEFORE THE HONBLE GOA STATE CONSUMER DISPUTES REDRESSAL COMMISSION, AT PANAJI Complaint No. 09/2010 Quorum : Honble Shri Jagdish Prabhudesai and Honble Smt. Vidhya Gurav, Members M/s Telang Motors Pvt. Ltd., having its Administrative Office at CD Countryside, Sunglow Apartments, A, No. 6, 3rd Floor, Fatorda, Margao, Goa, Through its Managing Director, Shri S. N. Telang Complainant V/s State Bank of India, Margao Branch, Near Municipal Garden, Margao, Goa and represented by its Asst. General Manager Opposite Party Ld. Adv. Shri A. J. Mendonca present for Complainant Ld. Adv. Shri Jose de Costa for the Opposite Party O R D E R Date : 1.4.2014 (Per Shri Jagdish Prabhudesai, Member) 1.
By this Order we shall dispose of the present complaint dated 5.6.2010 as presented before this Commission on 8.7.2010, filed by the Complainant herein against the Opposite Party herein u/s 12 of Consumer Protection Act, 1986.
The brief facts of the case are as follows :
I It is alleged in the complaint that M/s Telang Motors Pvt. Ltd. was the dealer of motorcycles manufactured by M/s TVS Motor Company Ltd. and also a dealer of vehicles manufactured by M/s Force Motors Ltd. M/s Telang Motors Pvt. Ltd. as dealers had showrooms and workshops located at Panaji and Margao in Goa respectively. While the showroom and workshop located in Margao were wholly owned by the Complainant Company, the Showroom and Workshop located in Panaji were rented premises taken by the said Company for running its TVS business .
II It is further alleged that as the business would be eventually unviable only because of high rentals amounting to Rs. 80,000/- per month at that time and it was felt that this enormous recurring expenditure could be saved by having its Companys own premises. After searching for a property the Company eventually located such a property of 1525 sq. mts. in Porvorim Goa, which was priced at Rs. 50 Lakhs.
III It is also alleged that Company then approached the Opposite Party at Margao Main Branch, Margao, Goa for a loan amount of Rs. 40 Lakhs towards the said purchase the remaining Rs. 10 Lakhs being the Complainants contribution in the form of equity.
IV The Complainant has stated that thereafter with the help of a Developer, who promised to give the Complainant a free showroom and workshop, the Company proceeded to develop the said land as per Complainants requirements. However the Complainant was shocked to learn that the Vendor of the land had a disputed title to the said land which the Advocate under reference had overlooked.
V It is alleged that due to the above situation, Developer backed out of the Project as a result of which the Showroom and workshop premises which the Complainant was to get free of cost from the developer did not materialize. In addition, the Complainant also lost a sum of Rs. 50 Lakhs being 50% of the value of the sale of the flats to be built by the developers above the proposed showroom and workshop which were to be divided and shared on a 50:50 basis between the developer and the Company. Instead the Complainant was tied up contesting a losing litigation by paying a fortune to its lawyers.
VI It is alleged that the Complainant had to continue paying rent of Rs. 80,000/- per month for the existing showroom and workshop. In this process the Complainant ended up paying rent for almost 27 months amounting to Rs. 24 Lakhs. Simultaneously, the Complainant had to pay interest of Rs. 40,000/- per month to the Bank on the Rs. 40 Lakhs loaned by the Bank for 20 months which amount to another Rs. 8 Lakhs of additional loss.
VII It is alleged the Opposite Party demanded that the property loan must be cleared and as the Complainant could not clear the amount of Rs. 56 Lakhs in one shot, the Complainant by its letter dated 10th June, 2008 explained to the Bank the entire circumstances leading up to its financial crisis which was due to the Opposite Partys Advocates total negligence. The Complainant was also willing to sell the said property and pay the Bank fully but in a one-time settlement and appealed to the Bank to extend an interest waiver.
VIII It is further alleged that instead of considering the Complainants Appeal sympathetically, the Opposite Party by its letter dated 14th July, 2008 arbitrarily chose to recall the entire loan, without even examining the Complainants case for a one-time settlement alongwith the interest waiver on the grounds that .in the light of available sufficient collateral security towards outstanding loan, we regret that we are unable to consider your request for one-time settlement.
IX It is alleged that by Opposite Partys letter dated 14th July, 2008 the Opposite Party goes to threaten the Complainant to the effect that if the Complainant does not pay the Bank the entire outstanding loan amount together with interest within 15 days the Bank will take steps to realize the security given by the Complainant to the Bank either by public auction or by private contract.
X It is stated that in a discussion with the Opposite Partys officials, obtained a verbal understanding and assurance that the Complainant would sell off this Porvorim property in a distress sale for Rs. 3 Crore to a party who was prepared to purchase it with the defective title. From the aforesaid Rs 1 Crore the Complainant would pay to the Bank of sum of Rs. 56 Lakhs only to clear the property loan while retaining the balance sum of Rs. 44 Lakhs in the Current Account to enable the Complainant to run his business.
XI It is stated that after the Porvorim property was actually sold for a paltry sum of Rs. 1 Crore as distress sale and the same was deposited with the Opposite Party, their Officials went back on the word and did not allow the Complainant to withdraw the remaining Rs. 44 Lakhs after adjusting the property loan amount of Rs. 56 Lakhs as it was then valued at.
XII It is alleged that the net result of this decision of the Bank was that the Complainant lost his Porvorim property in a Distress sale could not use the aforesaid balance amount of Rs. 44 Lakhs to save his business and due to the distress sale of the Porvorim property and on account of the constant pressure by the Bank to clear the loan against this Porvorim property, also lost Rs. 1.60 Lakhs by untimely liquidating the said property at a short notice and in distress sale.
XIII It is alleged that since May, 2008, the said Bank had started putting pressure to clear all the loans against the Complainants other units i.e. the above said running units and since the Complainant was already under severe financial constraints, the Complainant reluctantly decided in early June 2008 to close down all his operations by 30th June, 2008. The Complainant then wrote to the said Bank vide his letter dated 10th June, 2008 intimating the Bank of his decision that he would be liquidating all his business as well as business properties so as to clear the entire dues of the Bank plus interest upto date i.e. 30th June, 2008 and requested the Bank for a waiver of penal interest, other interest, etc. on account of One Time Settlement.
XIV It is alleged that the Bank turned down the request of the Complainant for one time settlement vide their letter dated 14th July, 2008.
XV Based on the said cause of action the Complainant has claimed the compensation on the following grounds :
1. Direct and proximate loss by way of rent for the Showroom and workshop at Panaji (after the property at Porvorim was purchased) 24,00,000/-
2. Legal expenses 5,00,000/-
3. Interest paid to SBI on loan of Rs. 40 Lakhs for purchase of Porvorim property. 8,00,000/-
4. Irreparable direct and proximate financial loss due to compulsory closure of business 27,00,000/-
5. Damages for mental torture 7,00,000/-
6. Interest @ 18% p.a. on Rs. 77 Lakhs for a period of one year ending 31.12.09 13,86,000/-
7. Costs 40,000/-
Total 85,26,000/-
========== XVI The Complainant has therefore prayed for the following reliefs :
It is therefore prayed that this Honorable Commission may be pleased to direct that :
i. The Opposite Party may be directed to pay to the Complainant a sum of Rs. 85,26,000/- as mentioned hereinabove and ii. Any other relief this Commission may deem fit.
2. The Opposite Party on receiving the Notice of this Commission has filed the written version dated 7.5.2011 inter alia objecting the complaint on following amongst other grounds :
I That the Complaint is bad in law and the Complainant has no valid cause of action.
II That the Opposite Party is not aware whether the Complainant Company realized that their business would be unviable due to high rentals involved amounting to Rs. 80,000/- (Rupees Eight Thousand only) per month as alleged. The Opposite Party is also not aware that the said rental premises were a stop gap arrangement and that the Company would save a recurring expenditure of Rs. 80,000/- by having its own premises to house its workshop and showroom in Panaji.
III That it is also false that the opposite party insisted that it was mandatory to appoint only an Advocate empanelled by the Opposite Party to do the necessary search report, etc. of the land in question.
It is also false that the Complainant Company relying on the Opposite Party s Advocate, proceeded with the deal as the banks Advocate had given a clean chit towards the title of the property.
The Opposite Party further states that it is true that Adv. Badrinarayan was empanelled by the Bank and was deputed to prepare the Search Report on behalf of the Bank. The Opposite Party further states that at no point of time has Adv. Badrinarayan been given the job of doing the title search for the Complainant. That Adv. Badrinarayan being empaneled with State Bank of India was given the work to do a search exclusively for the Bank. The Complainant was at no point of time prevented from appointing its own solicitors/lawyers to check on the title of the said property prior to its purchase.
IV That it is false that before giving any title of any property, the prima facie and fundamental duty of any Advocate is to, in the least, publish a public notice in a daily newspaper inviting objections, if any, towards the sale of such property by any person having any lawful claim or a lawful interest in the property to enable the Advocate to satisfy himself and his client that the property has a clean title and that there are no lawful objections to the sale of the property. The Opposite Party further states that publication of a notice in a daily newspaper will not take away the right of any person who has a right to the property. The Advocate empanelled with the Opposite Party was not a lawyer of the purchaser. It is false that there was a breach of duty on the part of the Banks Advocate or there was a deficiency in service by the Advocate and in turn the Bank vicariously.
V That it is false that the Complainant lost a sum of Rs. 50,00,000/- being 50% of the value of the sale of the flats to be built by the developers above the proposed showroom and workshop which were to be divided and shared on a 50:50 basis between the Developer and the Complainant Company.
VI That the funds used by the Opposite Party are public funds and therefore in case the Opposite Party feels that any of its clients are not able to be regular in his payments, then it is but natural that the Opposite Party demand that the loan/advances should be cleared, even it means demand to clear the same immediately. That there is no question of any one time settlement or an interest waiver as a matter of course in all cases. One time settlement as well as interest waiver is at the sole discretion of the Opposite Party, which discretion has to be used by the Opposite Party as and when there is no sufficient security to the advances advanced by the Bank.
VII That it is false that the Bank turned down the request for one time settlement on grounds that in the light of available sufficient collateral security towards outstanding loan the Bank was unable to consider the request for one time settlement. It is false that the Bank Officials were actually threatening the Complainant about their intention to sell his family residence in Mumbai to recover the loan amount. It is totally false that the intention behind the whole exercise was to appropriate the Complainants Mumbai residence since that itself was worth substantially more than all the loans put together.
VIII The Opposite Party therefore prayed that since the complaint is not maintainable and is filed without any basis, the same be dismissed with exemplary costs.
3. The witness of the Complainant Shrimati Swati Pranay Athvankar (nee Swati Telang), the Director of the Complainant filed her Affidavit-in-Evidence dated 1.11.2011. The Witness No. 2 of the Complainant Shri A. J. Mendonca also filed his Affidavit-in-Evidence. Shri Ashok Gharkar, the Assistant General Manager of the Opposite Party filed his Affidavit-in-Evidence dated 6.8.2012. Written arguments were filed by both the parties.
We have heard oral submissions of Learned Counsels for both the parties. We have also perused the documents on record.
We now proceed to examine the issues involved in this case and also evaluate the evidence on record on merits of the case.
4. At the outset, it is observed that the Opposite Party has raised the objection to the filing of the complaint on the ground that the same is barred by limitation. In this regard, it is noted that cause of action under the facts and circumstances of this case has arisen on 14.7.2008 when the Opposite Party recalled the entire loan amount vide its notice whereas the present complaint is filed on 7.7.2010. Hence we hold that the complaint under consideration is filed within the time limit stipulated under the provisions of the Consumer Protection Act, 1986.
5. The Parties have argued on the question as to whether the Complainant is the consumer, within the meaning of the provisions of the Consumer Protection Act, 1986. It is true that the Opposite Party has not contested this point in their pleadings or Affidavitory evidence.
Since arguments are heard on this aspect, we are duty bound to observe that the Judgement dated 13.6.2008 passed by this Commission in Appeal No. 6/2007 as relied upon by the Complainant, cannot be applied to the facts and circumstances of this case as contended by the Complainant for the simple reason that this Commission has not decided anything on the aspect as to whether the Complainants Company in that case was or was not the consumer. That question was never argued and dealt with.
We are of the opinion that the question whether the services hired or availed of by the Company, are for commercial purpose or not, within the meaning of Section 2(1(d)(ii) of the Consumer Protection Act, 1986 vis--vis the amended explanation to the said Section by amendment to the Consumer Protection Act, 1986, such a question has to be decided on the basis of proved facts and circumstances of each case.
The Opposite Party herein cannot get any benefit out of this Commissions decision dated 3.9.2012 in R.P. No. 4/2009 in as much as this Commission has, after going through matter and evidence on record and merits of the case, held that the said complaint when read as a whole would show that the car was bought for the purpose of a Company and not for the benefit of any individual and the same was meant for commercial use, hence the Complainant would not be the consumer as defined under the Consumer Protection Act, 1986.
However, the facts in the present case are totally different in as much as the Opposite Party has sanctioned the loan to the Complainant for the purpose of purchasing landed property and the said transaction was a separate, distinct dealing which has nothing to do with the business or any other activity of the Complainants Company. Availing of the loan for the distinct purposes of going for a land deal has no connection whatsoever with the objectives of the Company for which the same was registered under the law.
We seek guidance from Laxmi Engineering Works V/s P.S.G. Industrial Institute (1995) 3 SCC 583 where the two Judge Bench referred to the amended definition of consumer contained in Section 2(d) and observed as follows :
Now coming back to the definition of the expression consumer in Section 2(d), a consumer means in so far as is relevant for the purpose of this appeal, (i) a person who buys any goods for consideration; it is immaterial whether the consideration is paid or promised, or partly paid and partly promised, or whether the payment of consideration is deferred; (ii) a person who uses such goods with the approval of the person who buys such goods for consideration;
(iii) but does not include a person who buys such goods for resale or for any commercial purpose. The expression resale is clear enough. Controversy has, however, arisen with respect to meaning of the expression commercial purpose. It is also not defined in the Act. In the absence of a definition, we have to go by its ordinary meaning.
Commercial denotes pertaining to Commerce (Chambers Twentieth Century Dictionary); it means connected with, or engaged in commerce, mercantile, having profit as the main aim (Collins English Dictionary) whereas the word commerce means financial transactions especially buying and selling of merchandise, on a large scale (Concise Oxford Dictionary). The National Commission appears to have been taking a consistent view that where a person purchases goods with a view to using such goods for carrying on any activity on a large scale for the purpose of earning profit he will not be a consumer within the meaning of Section 2(d)(i) of the Act. Broadly affirming the said view and more particularly with a view to obviate any confusion the explanation large scale is not a very precise expression Parliament steeped in and added the explanation to Section 2(d)(i) by Ordinance/ Amendment Act, 1993.
We therefore take the view that in the present case, the well accepted general proposition of the law that the Company hiring/availing of the services for commercial purpose does not become the consumer as defined under the Consumer Protection Act, 1986, does not hold good in the light of peculiar facts and circumstances of this case since the Opposite Party has availed its service of sanctioning the loan to the Complainant for the purchase of certain areas of land having no connection or nexus whatsoever with the objectives of the registered Company and therefore does not amount to commercial purpose.
The said dealings are private financial transactions of distinct and separate nature. Hence we hold that the Complainant herein is the consumer as defined under Section 2(d)(i) of the Consumer Protection Act, 1986.
6. Now, reverting to the merits of the case, the evidence on record reveals that the witness of the Complainant Mrs. Swati Athvankar, the Director of the Complainant in her Affidavit-in-Evidence dated 1.11.2011 has deposed as under :
After registering the Company, we contacted and negotiated with various Automotive Manufacturers to obtain an Agency Dealership and finally struck a deal with the TVS Motor Company Ltd. to become an Authorized Dealer for Sales and Services of their TVS Motorcycles in North Goa to be based in or around Panaji area.
7. The said witness for the Complainant has further deposed :
The then Managing Director Shri S. N. Telang, myself and another Director Shri Pranay Athvankar, visited the State Bank of India, Margao Branch on several occasions and discussed this proposal with the then D.B.D. Manager, Mr. Kamat. Mr. Kamat studied our proposal and found it to be quite viable and said that the said Bank would be willing to release Rs. 40 Lakhs subject to Title Clearance and the said Company investing Rs. 10 Lakhs as margin money.
This was acceptable to us and hence Mr. Kamat agreed to sanction the loan and necessary documents were prepared by the Bank for this purpose and we in turn completed the formalities required from our side. With this Agreement in place, the stage was set to go forward on the land deal.
8. The said deponent thereafter has affirmed in her Affidavit categorically vide paras 7 and 8 of the said Affidavit as under :
7. It was at this point of time that the D.B.D. Manager, Mr. Kamat, stated categorically in my presence, that the Bank would not release money on certification by any solicitor, but that the Bank had its own team of lawyers, duly empanelled for this purpose and that were obliged to choose any one from the list of the empanelled lawyers only and no other lawyer or solicitor. He further stated that we would have to pay the professional fees of the Banks lawyer.
8. On finding this procedure a bit odd and illogical, I told Mr. Kamat that this does not stand to reason, since we are investing Rs. 50 Lakhs (i.e. Rs. 10 Lakhs Margin money plus Rs. 40 Lakhs loan) for which we (the Directors) were the only persons who would be responsible and for which., we should have the liberty of choosing a Solicitor/lawyer of our choice, since there is a lot of risk involved and we want to ensure that there is no problem after purchasing the said land.
Shri S. N. Telang the then Managing Director of the said Company, also protested that this was not fair and that we and not the Bank should choose our Lawyer/Solicitor since we have to pay his fees. To this Mr. Kamat replied that is a service that the Bank gives to its customers, even though it is a paid service.
9. The case of the Complainant is that the Bank Official Mr. Kamat kept insisting that only their empanelled lawyers Certificate of clear title would be the basis for sanctioning of the loan. In this connection the witness of the Complainant Mrs. Athvankar has deposed in her Affidavit-in-Evidence that since the said Mr. Kamat assured that the said Mr. Badrinarayan would do an efficient job as the lawyer/solicitor from the Banks empanelled list, the Complainant were left with no option but to accept the said suggestion.
10. The grievance of the Complainant is reflected at para 12 and 13 of the Affidavit-in-Evidence of the aforesaid witness of the Complainant where it is deposed as under :
12. The charges of Mr. Badrinarayan were then debited from our account with the Bank and later we received a Certificate of Clean Title from Mr. Badrinarayan. Only then, was the loan for purchase of the said property, sanctioned to us by the Bank.
13. I am also fully aware of all facts of this case after the loan was sanctioned by the Bank including the pressure tactics adopted by the Bank Officials, to compel us to clear this and other loans, once they discovered that the said land in question, had a defective title which forced us into unnecessary litigation and loss.
11. In this connection, it is to be noted that the stand taken by the aforesaid witness is substantiated further in the evidence of another witness of the Complainant Shri Anthony Joseph Mendonca, the Managing Consultant of the Complainant from 2003 to 2008, when he deposes in his Affidavit-in-Evidence dated 13.3.2012, as under :
That it is within my knowledge that the Directors of the said Company and particularly the then Managing Director, Mr. S. N. Telang were very upset with the insistence of the Bank Oficials to assign the task of title verification of the land being purchased to one of the Banks lawyers (from the Banks empanelled list) who would then submit a Certificate of Title and Search Report instead of engaging a lawyer of the Companys choice, as the Directors wanted to do. That the Bank Officials stated that the Directors of the Company should engage an Advocate by the name of Mr. Badrinarayan and that his fees for doing this work, would have to be paid by the said Company. That it is also within my knowledge that the Directors of the said Company were forced to agree to this arrangement since they were clearly told by the Bank Officials that no other Certificate of Title would be accepted by the Bank for sanctioning of the Companys loan.
That I had advised the then Managing Director of the said Company, Mr. Telang, to the effect that an Advertisement should be released in the newspapers to find out if there were any other claimants to the said property, as is normally the practice in property purchasers and I was present when he (Mr. Telang) made the suggestion to the said Advocate Badrinarayan but he (Adv. Badrinarayan) declined the suggestion.
That I am aware that thereafter, the said Adv. Badrinarayan submitted a Certificate of Title and Search Report dated 28.3.2006 which in effect, gave a clean chit to the property being purchased and as a result of which, the said Bank sanctioned the loan of the said Company.
That., at that time, the Bank debited the amount of fees to be paid to the Banks Advocate mentioned hereinabove, from the said Companys Bank Account held in the said Bank.
That inspite of the Banks Advocate stating in his Report that the said property at Porvorim had a clean title., in actual fact the said property had a defective title since there were other claimants to the said property, as a result of which the said Company was involved in unnecessary and expensive litigation, which has continued over the years.
12. It is observed that alleged inconvenience, hardship and injustice caused to the Complainant, is evidenced in the aforesaid Affidavit of the aforesaid witness when he categorically deposes that as a consequence of the aforesaid circumstances, the Complainant could not build its workshop and showroom in the said land at Porvorim but it had to continue paying rent at the existing premises taken on lease for the same purpose and in addition it had to clear the Banks loan and interest taken by the said Company for purchase of the said land at Porvorim thereby causing great financial loss. It is also evidenced from the deposition of the aforesaid witness of the Complainant that the Company was seriously worried about the Bank Officials authority pressurizing the Directors of the Complainant to clear all the then existing loans even though there was sufficient collateral security to cover all the works put together.
13. On the other hand, the evidence on record reveals that Shri Ashok Gharkar, Asst.
General Manager of the Opposite Party appears to be wholly in denial mood when he files his Affidavit-in-Evidence dated 6.8.2012. The said witness for the Opposite Party has denied the contents of the complaint in his written version as well as Affidavit-in-Evidence, almost mechanically. It is noted that the said witness of the Opposite Party in his Affidavit-in-Evidence, after denying that prior to the purchase of the said property the Complainant requested the Opposite Party to permit the Complainant to appoint its own Solicitors to inspect and confirm the marketable title of the said property, has further deposed as under :
It is also false that State Bank of India insisted, at any time, that it was mandatory to appoint only an Advocate empanelled by the Bank to do the necessary search report of the land in question. I say that it is false that the Complainant Company relying on the Banks Advocate proceeded with the deal as the Banks Advocate had given a clean chit towards the title of the property. The statement that Banks Advocate has given clean chit towards the title of the property is not correct.
14. In our considered opinion, the evidence on record supports our view that it is difficult to agree with the contentions of the Opposite Party that purchase of a property by the Complainant is a separate activity and it cannot be clubbed to the availing of loan. The transactions involved in the facts and circumstances of this case clearly indicate that the purchase of property and the availing of loan, are inter-linked and the same cannot be separated. However it is true that the object of taking search and making inquiry through empanelled lawyer is to discover any encumbrances affecting the title of the property not disclosed by the borrower.
However it is also true that the Borrower, i.e. the Complainant in the instant case, goes by element of good faith that the Banker would be fair enough to take his suggestions into confidence before contemplating the Bankers choice or option to appoint and to act on the report of the empanelled Advocate as regards the verification of the title of the property offered by the Borrower towards security to the Bank.
15. We are also of the opinion that it is difficult to agree with the contention of the Opposite Party that the Opposite Party has no role in giving opinion about the title of the property and that it has only relied upon the Title Search Report for taking a commercial decision. The fact is that the Bank has acted upon the said report without taking any resort to precautionary measure.
16. It may further be noted that the Opposite Party has deposed in their evidence that there was no duty cast on the Complainant to act upon the opinion of empanelled Advocate since there was no restriction imposed by Opposite Party on the Complainant to engage services of lawyer of its choice and on behalf of the Complainant. The Opposite Party has further contended that the Complainant ought to have exercised due diligence to protect his own interest. In our considered opinion, however, the documentary evidence does support the view that the Complainant in this particular case has acted diligently and has taken due care to protect his own interest.
17. We find every substance in the contention of the Complainant to the effect that the Managing Director of the Complainant Mr. Telang had insisted that a notice to be released in daily newspaper to find out whether there were any other claimants of the said property but the suggestion was not accepted. The defence of the Opposite Party in this regard is not acceptable. The Complainant has rightly contended that if the Opposite Party were to disagree with their Advocates breach of duty and careless attitude in rejecting a well-established practice to find out whether there were any other owners, claimants or encumbrances of the said property, he would not have made the mistake he did in certifying a disputed property as one having a clean title, thereby putting a liability on the Bank.
18. We now turn to the documentary evidence produced on record by both the parties and record our observations as under :
I We have perused Certificate of Title and Search Report dated 28.3.2006 by Banks Advocate Shri Badrinarayan and have taken into consideration the attending circumstances under which the report was prepared.
II Vide letter dated 18.6.2007, the Complainant brought to the notice of the Opposite Party, the following facts :
Vis--vis the Porvorim Project we have to state that our Principals namely TVS Motor Company Ltd. had earlier insisted on us opening a 3S facility (Sales, Service and Spares) on the NH17 so that we could effectively serve customers, both, from Mapusa as well as Panjim.
Accordingly, the land admeasuring 1525 sq. mts. on the NH17 was purchased and the bank granted Term Loan of Rs. 39 Lakhs towards purchase of the said land on March 28th 2006.
Eventually, as an afterthought, the Principals, namely TVS Motor Company Ltd. decided that the location is not viable for business even after much discussion and opposition from us and finally instructed us to continue the present set up in Panjim and Mapusa as it is and to locate and finalize some other spot in Panjim City proper instead. Now we are left with no other alternative other than disposing of this piece of land purchased and to repay and clear the said Term Loan of Rs. 39 Lakhs entirely from the proceeds of sale of this land. Since, the plot of land is mortgaged as security for Rs. 39 Lakhs term loan being the amount paid by the Bank. We earnestly request you to release the said security to enable us to clear the said Term loan of Rs. 39 Lakhs against it. As it is the Bank has more than the requirement of other securities for the rest of the loans sanctioned to us by the Bank.
II The Asst. General Manager of the Opposite Party vide letter dated 19.11.2007 writes to the Complainant that the outstanding in the Term Loan account No. 11065651661 for purchase of Porvorim property is Rs. 40,52,903.68 plus interest upto 25.11.2007 (Rs. 37,308.92). The total amount is Rs.
40,90,212.60. The documents held by the Bank in respect of the mortgage are Deed of Sale dated 17.4.2006 registered on 19.4.2006 in favour of M/s Telang Motors Pvt. Ltd. under Sr. No. 1730/69. Vide the said letter dated 19.11.2007, it is informed to the Complainant that the Opposite Party have taken up the matter with their Controlling Authority regarding release of the property once the account is closed.
III Vide letter dated 10.6.2008 the Complainant intimated the Opposite Party that they would be liquidating all their business as well as business properties so as to clear the entire loan of the Bank with due interest and requested the Bank for a waiver of penal interest etc. on account of One Time Settlement.
IV The Opposite Party vide letter dated 14.7.2008, turned out the request for one time settlement on the ground that .in the light of available sufficient collateral security towards outstanding loan, we regret that we are unable to consider your request for one-time settlement.
V The Complainant issued a legal notice to the Opposite Party dated 16.1.2010 inter alia voicing their grievances against the Opposite Party as under :
Instead of giving a helping hand at this critical juncture, the Bank was unfair and discriminate enough to turn a Nelsons Eye to our plight and demanded that the property loan must be cleared. Since we could not clear this amount of about Rs. 56 Lakhs in one shot, we, by our letter to the Bank dated 10th June, 2008, explained to the Bank, the entire circumstances leading up to our financial crisis which was a Direct consequence of the Bankss Advocates total negligence and lack of due diligence in giving a clean chit to the said Porvorim property and on the basis of which the Bank sanctioned the property loan to us. Further, we also stated that we were willing to sell property and pay the Bank fully but in one time settlement and appealed to the Bank to extend an Interest waiver as normally extended by the Bank in normal circumstances. But our situation was a case of more than normal circumstances, since the Banks Advocate was entirely culpable in clearing a property having a defective title as one having a clean title and the Bank in turn, was also culpable for sanctioning a loan against the property with a defective title.
However, instead of considering our appeal sympathetically, the Bank, by its letter dated 14th July, 2008, arbitrarily chose to recall the entire loan without even examining our case for a one time settlement along with interest waiver. This is a ridiculous and mischievous argument by any and all standards and no one, not even you, will buy this argument of the Bank.
VI The said Legal Notice dated 16.1.20010, also serves the reminder in following terms :
Therefore, if the Bank had agreed for a one time settlement, it would not have compensated our losses altogether but would have only mitigated our hardships to some extent. However, the Bank chose to arbitrarily disregard our request by all the devious means at their disposal. Nevertheless what remains is the culpability of the Bank in creating a financial crisis for us resulting in closure of running units, financial losses, litigations, costs and sheer negligence on the part of the Bank amounting to deficiency in service towards customers and mental torture, for which the Bank has to compensate us and our Company.
19. In the light of the aforesaid documentary evidence, we are duty bound to observe at this stage that the Complainant in the present complaint has proved with cogent and convincing evidence that the aforesaid acts on the part of the Opposite Party, in effect, constitute deficiency in service thereby exposing the Complainant to great hardship and inconvenience.
20. In this respect, it is observed that the Complainant vide letter dated 10.6.2008 addressed to the Opposite Party has clearly set out the nature and the consequence of the alleged deficient acts on the part of the Opposite Party at page 2 and 3 thereof on terms as follows :
We requested the Bank that we shall appoint our own Solicitors to inspect and confirm marketable title. But the Bank insisted to appoint Advocate empanelled by the Bank only to do the necessary Search Report etc. of the land in question. Accordingly, Adv.
Badrinarayan was deputed by the Bank to scrutinize and inspect the title deed etc. and make the Search Report for which we paid him his legal fees.
Relying on the Banks Advocate we proceeded with the deal that cost us Rs. 55 Lacs (including stamp duty, registration fees, etc.). The Advocate had given a clean chit towards the title of the property.
With the help of a Developer who promised to give us a free showroom and workshop, we proceeded to develop the land to our specifications. But to our dismay we were surprised and shocked to learn that the vendor of the land which we had purchased from, had a disputed title to the land which the Advocate under reference, had overlooked. The result was out entire dream, project and exercise of having our own showroom and workshop came to a grinding halt.
21. At this stage we are duty bound to point out that we are not at all impressed by the contention of the Opposite Party based on the reply dated 27.1.2010 by the Opposite Party addressed to the Complainant in response to their aforesaid letter dated 16.1.2010 to the effect :
Opinion/Search report from Banks empanelled Advocate is required for our perusal and processing of loan application and the borrowers are free to engage their own additional Advocate to verify the genuineness & title deed for their perusal and record.
We fail to understand as to how the Opposite Party can escape its liability at law and obligation that it owed to the customer like the Complainant so as to justify their stand that no Public Notice is necessary while determining the point of free and marketable title on the part of their empanelled Advocate.
22. It may also be noted that Mrs. Swati Athvankar, the Director of the Complainant in her Affidavit-in-Evidence dated 1.11.2011 has specifically deposed at para 7 that the D.B.D. Manager Mr. Kamat of the Opposite Party stated categorically in her presence, that the Bank would not release money on certification by any solicitor, but that the Bank had its own team of lawyers, duly empanelled for this purpose and that we were obliged to choose anyone from the list of the empanelled lawyers only and no other lawyer or Solicitor. He further stated that we would have to pay the professional fees of the Banks lawyer.
There is also other correspondence on record which indicates that the then DBD Manager was in the know-how of the alleged facts. We are duty bound to observe that the Opposite Party herein has failed to file Affidavit-in-Evidence of the said DBD Manager, Mr. Kamat on the aspect of the aforesaid alleged facts. In the absence of such Affidavit of the said DBD Manager, we are inclined to go by the truth in the aforesaid evidence of the witness of the Complainant.
23. We are not also satisfied with the defence taken by the Opposite Party as regards the aspect of rejecting the Complainants offer for one time settlement and instead recalling the entire loan amount vide their letter dated 14.7.2008 on the solitary and the cryptic ground that there was sufficient collateral security available to guarantee the outstanding loan.
24. On the whole, in the light of our aforesaid observations, we have no alternative but to arrive at the conclusion that the Opposite Party herein has been negligent and deficient in offering the aforesaid services to the Complainant as the service provider in the aforesaid manner. The Opposite Party is found guilty of deficiency in service on account of its vicarious liability vis--vis negligence of their empanelled Advocate in not taking certain precautions while preparing the report and not recognizing the right of the customer to have the report of the Advocate of his choice, for which services the Complainant has paid consideration in the form of fees to the said empanelled Advocate. In our opinion, the Complainant for no fault on their part, was made to suffer hardship and inconvenience because of the aforesaid deficient act on the part of the Opposite Party.
We are also duty bound to record our finding that the whole attitude and approach of the Opposite Party in rejecting the Complainants offer of one time settlement, is discriminatory, unreasonable and unjustifiable.
25. However, we are also of the considered opinion that the Complainant has not come forward with convincing and cogent documentary evidence so as to substantiate their grounds for claiming the damages, as stated at para No. 3 of their complaint. Hence we are unable to grant the relief as claimed at page No. 19 of the complaint in its entirety.
It is however, our finding that the aforesaid deficient acts on the part of the Opposite Party which do constitute deficiency in service as defined under the Consumer Protection Act, 1986, does entitle the Complainant to get some amount by way of damages/compensation though not to the extent to which the relief is claimed in the complaint. In our opinion, ends of justice would be met with if we partly allow this complaint by granting consolidated amount of Rs. 3,00,000/- (Rupees Three Lakhs only) as compensation on the ground of hardship, injustice, inconvenience suffered by the Complainant, with costs.
26. We therefore pass the following :
O R D E R It is hereby ordered that the present complaint dated 8.7.2010 filed by the Complainant herein against the Opposite Party herein is hereby partly allowed. Accordingly the Opposite Party herein is hereby directed to pay to the Complainant the amount of Rs. 3,00,000/- (Rupees Three Lakhs only) towards the damages/ compensation on the grounds of hardship, injustice, inconvenience suffered by the Complainant. If the Opposite Party fails to pay the aforesaid amount within 30 (thirty) days, then the amount shall carry interest @ 7% per annum from the date of this Order till actual payment. The Opposite Party is also directed to pay costs of Rs. 7,000/-
(Rupees Seven Thousand only) to the Complainant.
Smt. Vidhya Gurav Shri Jagdish Prabhudesai (Honble Member) (Honble Member)