State Consumer Disputes Redressal Commission
Smt. M. Saraswathamma, vs 1.The Branch Manager, Karur Vysya Bank, on 20 October, 2023
1
BEFORE THE TELANGANA STATE CONSUMER DISPUTES
REDRESSAL COMMISSION:HYDERABAD
( ADDITIONAL BENCH)
C.C.21/2021
Between :
Smt.M.Saraswathamma,
W/o.late M.Suryanarayana Raju,
Aged: 70 years, Occ:Household,
R/o.27, 3 RT, S.R.Nagar,
Hyderabad.
7075 773527. ... Complainant
And
1.The Branch Manager, Karur Vysya Bank, Sanjeev Reddy Nagar Brach, S.R.Nagar, Hyderabad-500 036 040 - 29557907
2. The Managing Director & CEO, The Karur Vysya Bank Ltd., 20, Erode Road, Vadivel Nagar, LNS Karur - 639 002, Tamil Nadu.
3. The CVO, The Karur Vysya Bank Ltd., P.O.Box no.21, Erode Road, Karur - 639 002, Tamilnadu.
4. The Regional Manager, Karur Vysya Bank, 5-8-363 to 365 ( 2nd floor), Chirag Ali Lane, Abids, Hyderabad -5001. Opposite parties Counsel for the Complainant : M/s.Vamaraju Sri Krishnudu Counsel for the Opposite Parties: M/s.G.Ramesh Babu -
OPs.1, 2 & 4 CORAM : Hon'ble Sri V.V.Seshubabu, M ember (J), And Hon'ble Smt.R.S.Rajeshree, M ember (NJ) FRIDAY, THE TWENTIETH DAY OF OCTOBER, TW O THOUSAND TWENTY THREE .
Order ( Per Hon'ble Smt.R.S.Rajeshree, M ember (NJ) **** 2
01). The complaint is filed u/s.17(1)(a)(i) of the Consumer Protection Act, 1986 against the opposite parties to direct them jointly and severally as follows:
i. To pay a sum of Rs.1,50,00,000/- which is lying in the account no.1446175000000271 of the deceased husband of the complainant;
ii. To award a sum of Rs.10,50,000/- towards interest @ 12% p.a. from 19.9.2020;
iii. To award a sum of Rs.10,00,000/- towards
liquidated damages for causing mental agony,
inconvenience and hardship caused by the
opposite parties to the complainant; and
iv. To pay costs of Rs.50,000/-.
02). The case of the complainant is that her husband Sri
M.Suryanarayana Raju was maintaining S.B. Account bearing
no.1446175000000271 with opposite party no.1 branch wherein
she was the nominee for the said account and on 5.9.2020 her
husband died. After his death, she had made an application on 19.9.2020 to the bank claiming the balance amount lying in his account by submitting his Death Certificate and also relevant documents and the said application was duly acknowledged by opposite party no.1 bank and that she had approached several times to the bank requesting the payment of amount, but the opposite party had been postponing the same on one or the other pretext and it is more than a month that the opposite party had not acted upon her letter and that she being a senior citizen and having no other source of income is depending on the said deposit amount lying in her deceased husband's account.
The opposite party after several requests had informed that her deceased husband was the co-obligant to a housing loan availed by their son and daughter-in-law, Sri.M.Srinivas Raju and Smt.M.Nagamani. The complainant further submits that her husband was of 73 years of age at the time of alleged sanction of loan and that as per the guidelines, the Bank was not supposed to sanction any loan to her deceased husband considering his age as he did not have any earning capacity; that the Bank had violated the guidelines and circulars issued by RBI as they failed to pay the amount to the nominee immediately after the death of the account 3 holder. As such, she got issued a legal notice on 9.11.2020 to which the opposite party had replied on 4.12.2020 making all false and concocted allegations and further asked the complainant to submit family member certificate/legal heir certificate, no objection certificate from all the legal heirs etc. and also intimated that Rs.3,58,932.32 ps. has been debited from S.B. Account on 23.10.2020 and the said amount was adjusted towards the housing loan account and similarly another amount of Rs.6,91,359.37 ps. was debited and adjusted towards the housing loan account. This act of deducting the amount from the deceased husband's account is illegal and unethical act, as the said deductions are subsequent to the death of the account holder and when there is a nominee to the said account without there being any permission from such nominee. Such deduction amounts to unfair trade practice and that the loan account is not yet declared as NPA and that Sri Srinivas Raju and Smt.M.Nagamani who are borrowers are required to pay the loan instalments and in the absence of any ECS mandate given by either the account holder or his nomine e, the question of exercising of general lien by the Bank does not arise. Once the nomination is done, after the death of the account holder, the said nomination becomes operative and any money lying in the said account belongs exclusively to the said nominee and without there being any permission from such nominee, deduction of the amount from the said account is illegal.
Being aggrieved by such acts of the opposite party, the complainant had approached the Banking Ombudsman, but the opposite party had mislead and had not placed proper material before the Banking Ombudsman. The Banking Ombudsman without considering the claim of the complainant had closed the complaint by rejecting the same, but had clearly observed that the complainant is entitled to approach any other legal authority in accordance with law for redressal of her grievance. The complainant further submits that an amount of Rs.1.50 crores is lying in her husband's account as on date of his death and not paying the same to the nominee on a pretext of objection raised from Sri. N.Srinivas Raju and Smt. M.Nagamani clearly shows that they have colluded with the bank officials and hence they are liable to be prosecuted. The complainant submits that she is an old lady having no earning capacity and purely depending on 4 deposit amount lying in the bank and that her son and daughter- in-law neglected in maintaining her and with a fraudulent intention to harass her they are trying to take away the entire amount lying in the account of her husband, for which the opposite parties are also cooperating with them and have illegally stopped making payments to this complainant. This act of opposite party had not only caused financial loss but also severe mental agony to the complainant. Therefore, having no other alternative, the complainant is before this Commission seeking the amount that is lying in her husband's account along with interest, compensation and costs.
03). Opposite party no.1 filed written version and had also deposed on behalf of opposite parties 2 & 4. The opposite party while admitting that Mr.M.Suryanarayana Raju was holding S.B. account and also that the complainant is a nominee to the said account and also admitted that there was a letter addressed by the complainant claiming the amount lying in the account, but however disputed the date of such letter and had contended that the letter was addressed on 26.10.2020 and not on 19.9.2020 as claimed by the complainant. The opposite parties further opposed the complaint on the ground that they have received a letter from Sri.M.Srinivas Raju, S/o M. Suryanarayana Raju and Smt. M.Nagamani, daughter-in-law of the account holder stating that as M.Suryanarayana Raju is a principal borrower of housing loan vide account no.1446753000002816 has expired and requested to transfer and adjust the funds available in SB account of Mr.M.Suryanarayana Raju towards the housing loan account. Apart from that, they have also received a mail communication from Smt.Janaki who claims to be the daughter of Mr.M.Suryanarayana Raju who had stated that she is having right and interest in the S.B.Account of late Suryanarayana Raju along with other accounts such as HUF, Vivekananda Educational Society, Saraswathi Educational Society and Rajesh Educational Society and requested the bank not to effect any changes to the said accounts until and unless the family problems are solved. In view of receiving these communications from the son and daughter of late Suryanarayana Raju, the bank had remained silent and asked the complainant to produce the legal heir certificate, 5 succession certificate and no objection from other legal heirs of late Suryanarayana Raju.
The opposite party further pleaded that late Suryanarayana Raju was the first borrower for the housing loan account and complainant was the guarantor for such housing loan who is equally liable after the death of her husband and that the loan was sanctioned in the name of Mr.Suryanarayana Raju along with other two purchasers and after the release of the amount, the property was mortgaged to the bank and the mortgage is still in existence and the complainant being the guarantor is very well aware of these facts and had never objected at the time of sanction of the loan with regard to the age of the account holder, late Suryanarayana Raju and that law is crystal clear that whenever any objections are raised for the claim over the deceased account, not acting on the nominee's request is very much justified in law and this act cannot be said to be violative of any circulars or guidelines. The opposite party further admitted that amount of Rs.3,58,932.32 ps. and Rs.6,91,359.37 ps. were debited from the S.B. Account of Sri M.Suryanarayana Raju and credited towards the loan account and the same was done in exercise of its power under general lien and also on the request letter given by the co-borrowers and that the Ombudsman after going through the facts and circumstances of the case has rightly dismissed the complaint based on merits.
The opposite party further stated that there is a balance of Rs.1,01,18,150.79 ps. as on 3.5.2021 in the account of M.Suryanarayana Raju, but not Rs.1.50 crores as claimed in the complaint and that not paying the amount to the complainant does not amounts to deficiency since the same was not done only due to the above two reasons and the amount lying in the account shall carry bank rate of interest until it is withdrawn and that deduction of amount towards the housing loan account is done as per law, as such the same cannot be termed as illegal and that the opposite party has not committed any illegal act or unfair trade practice and that the present complaint is filed only to gain sympathy and does not have any merits and the same be dismissed with costs.
604). The complainant filed Evidence affidavit and got marked Exs.A1 to A9. Sri Ratna Rajesh Chunduri, Senior Manager- Branch Head, Karur Vysya Bank Ltd. filed Chief Affidavit and got marked Exs.B1 to B7. Written arguments of complainant and opposite parties 1, 2 & 4 filed.
05). Now the points for consideration are :
i. Whether the opposite parties are deficient in their services?
ii. Whether the complainant is entitled for the reliefs sought for in the complaint?
iii. If yes, to what extent?
06). Heard both sides and perused the entire material on record.
07). The grievance of the complainant is that her deceased husband was an account holder in opposite party no.1 bank wherein she was shown as a nominee and after his death when she had approached the bank with required documents to release the amount lying in the account of her deceased husband, the opposite party instead of processing the claim had remained silent, as they have not responded on her repeated requests, she got issued a legal notice. The opposite party gave a reply to the said legal notice and asked her to submit family member/legal heir certificate and no objection from all the legal heirs and further informed that amount was deducted on two occasions from the said SB account and was adjusted towards home loan account;
that this act of opposite party of not giving the claim amount to her, though there is a specific nomination done in her favour and deducting the amount from the SB Account of her deceased husband without any permission being given by the nominee amounts to unfair trade practice and illegal act, as such, the complaint filed seeking the amount lying in the account of the deceased husband, as she is the nominee along with interest, compensation and costs. In support of her case, the complainant got marked Exs.A1 to A9.
On the other hand, the opposite party while admitting all the facts had opposed the complaint on the ground that since they have received written representation from Sri M.Srinivas Rao and Smt.M.Nagamani i.e. son and daughter-in-law of the account 7 holder requesting the bank to adjust the amount available in Sri M.Suryanarayana Raju account towards the housing loan account to which the complainant is a guarantor and also they have received mail communication from Smt.Janaki, D/o. Suryanarayana Raju requesting not to effect any changes in the other accounts maintained by their father and that in view of such representations, the bank had exercised the general lien and had deducted the amount on two occasions and also asked the complainant to submit the legal heir certificate and no objection from other legal heirs and that this act is as per the procedure, when there are some objections received and the same is followed by this opposite party , as such it cannot be termed as deficiency in service.
08). Undisputed facts are:
fact that the complainant is nominee to the account of
Mr. M.Suryanarayana Raju is not in dispute. the fact that the complainant is the guarantor to the housing loan availed by Mr.M.Suryanarayana Raju, M.Srinivas and M.Nagamani is also not in dispute. the fact that the complainant had claimed for the amount lying in the account of Mr.M.Suryanarayana Raju is also not in dispute.
similarly the fact that the opposite party had deducted amounts of Rs.3,58,932.32 ps. and Rs.6,91,359.37 p.s from the SB account of Sri M.Suryanarayana Raju on two occasions is also not in dispute.
09). In view of the above undisputed facts, the only three points that remain for consideration are :
i. Whether the opposite party bank was justified in exercising the general lien on the SB Account of the deceased husband of the complainant ?
ii. Whether the opposite party was justified in deducting the amount from the S.B.Account of the deceased account holder without intimating the nominee? iii. Whether it was unfair for opposite party to demand for Legal Heir Certificate and no objection from the legal 8 heirs of Mr.M.Suryanarayana Raju though the complainant was the nominee to his SB Account ?
10). It is the contention of the opposite party that as they have received written instructions from one Mr.Srinivas and Smt.M.Nagamani who are co-borrowers of the housing loan availed by them wherein Mr.M.Suryanarayana Raju is the principal borrower, stating that they are advised to deduct the sum of Rs.3,58,932.32 ps. and Rs.6,91,359.37 ps. from M.Suryanarayana Raju's account and since Mr.M.Sruyanaraya Raju is the principal borrower, the bank had exercised their general lien on the account of Mr.Suryanarayana Raju.
A perusal of Ex.B5 - Housing Loan Agreement reveals that Mr.M.Suryanarayana Raju, Mr.M.Srinivas Raju and M.Nagamani are the co-borrowers who are equally liable to repay the loan, as such the question that Mr.Suryanarayana Raju is the principal borrower does not arise. Just because in the series the name of Mr.Suryanarayana Raju is listed first, he does not become a principal borrower; all three are the co-borrowers of housing loan.
Now coming to general lien, Sec.171 of Contract Act deals with general lien. For the sake of clarity the same is being reproduced here under:
"S.171. General lien of bankers, factors, wharfingers, attorneys and policy-brokers - Bankers, factors, wharfingers, attorneys of a High Court and policy - brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them; but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect."
Strictly speaking the statute is silent about the lien by bank on deposits made by customers, such as current account and S.B.Account. It only says that the bank can retain as a security for any balance payable by the customer any goods bailed to them and in the instant case, the amount deposited by the deceased in S.B. Account cannot be treated as goods bailed to Bank. Since the term bailment defined u/s.148 of Contract Act refers to delivery of goods by one to another for some purpose, upon a contract that they shall when the purpose is accomplished be returned.9
In the instant case at no stretch of imagination, it can be inferred that the amount deposited by the account holder is to have been delivered, for some purpose, but the same is deposited in the Bank for his personal day to day use though there is a term used 'contract' in the definition of bailment but Sec.171 is a over rider to the said term and the bank can exercise lien even in the implied contract, but in the instant case, the lien has been exercised by the Bank for a housing loan which is already secured by deposit of title deeds and the said loan has 3 borrowers and the loan is still live not yet either declared NPA nor it had been defaulted. It is the argument of the opposite party counsel that since the complainant is guarantor to the said housing loan and who also happens to be the nominee to the account of one of the borrower, she is equally liable.
But the role of a guarantor starts when the principal borrowers have defaulted the payment and in the event when legal action is taken for such default only then the guarantor is equally liable for the loan amounts payable by the principal borrowers. That apart even if it is presumed that there has been a default of housing loan, the same is secured by the property, the Bank can as well initiate proceedings for the sale of the property and adjust the sale proceeds towards the housing loan account. It is not the case of the opposite party that the value of the property would be insufficient to appropriate towards the housing loan account.
11). Now coming back to the lien exercised by the Bank the Hon'ble High Court of Chattisgar, Bilaspur in W.P.No.375/2017;
between Dr.Achinto Chakraborthy vs. Chairman & M anaging Director, State Bank of India, M umbai and others, had discussed in detail the Sec.171 of Contract Act and the right of the Bank with regard to general lien and set off and relying on the Hon'ble Supreme Court's order in Anumati vs.Punjab National Bank had held that it was unjustified on the part of bank to deduct the amount from S.B. account of the petitioner without notice and directed the Bank to remit back the amount into the account of the petitioner with interest. In the instant case also the bank inspite of a claim being made by the complainant and while keeping the claim pending had unilaterally without issuing notice to the complainant/nominee, the bank had deducted the amount 10 from the S.B.Account of the deceased which certainly amounts to unfair trade practice. That apart in the instant case, the Bank had not put forth any set legal position to show that they can exercise general lien on S.B.Account.
Based on the foregoing discussion, we are of the emphatic view that it was unjust on the part of opposite parties to exercise general lien on the S.B.Account of the dead account holder so also to deduct the amount from the account of Sri M.Suryanarayana Raju to which the complainant is a nominee without intimating her which amounts to deficiency of service.
12). Now coming to the release of the amount lying in the account of Mr.M.Suryanarayana Raju in favour of the complainant/nominee.
The law is very clear in this aspect. Sec.45ZA (2) Banking regulations Act,1949 makes it clear that the bank is bound to make the payments to the nominee for the sake of clarity the relevant clause is reproduced here under "Notwithstanding anything contained in any other law for the time being in force or in any disposition, whether testamentary or otherwise in respect of such deposit, where a nomination made in the prescribed manner purports to confer on any person the right to receive the amount of deposit from the banking company, the nominee shall, on the death of the sole depositor or, as the case may be, on the death of all the depositors, become entitled to all the rights of the sole depositor or, as the case may be, of the depositors, in relation to such deposit to the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner.
That apart in 2005 the RBI in order to simplify the procedure to release the amount from the account of deceased persons had issued a circular wherein it has instructed the banks to make the payments to the nominees without insisting for production for any legal heir certificate or succession certificate in cases where nomination is done but however suggested certain precautions. For the sake of clarity the relevant clause of the circular is reproduced here under 2.ACCESS TO BALANCE IN DEPOSIT ACCOUNTS (A) Accounts with survivor/nominee clause 2.1 As you are aware in the case of deposit accounts where the depositor had utilized the nomination f acility 11 and made a valid nomination or where the account was opened with the survivorship clause ("either or survivor", or anyone or survivor , or "f ormer or survivor or "latter or survivor") , the payment of the balance in the deposit account to the survivor(s) nominee of a deceased deposit account holder represents a valid discharge of the bank's liability provided:
(a) The bank has exercised due care and caution in establishing the identity of the survivor(s)/nominee and the fact of death of account holder through appropriate documentary evidence;
(b) there is no order from the competent court restraining the bank from making the payment from the account of the deceased; and
(c). It has been made clear to the survivor(s)/nominee tha t he would be receiving the payment form the bank as a trustee of the legal heirs of the deceased depositor, i.e. , such payment to him shall not affect the right or claim which any person may have against the survivor(s)/nominee to whom the payment is made.
2.2. It may be noted that since payment made to the survivor(s)/nominee, subject to the foregoing conditions, would constitute a full discharge of the bank's liabil ity insistence on production of legal representation, it superfluous and unwarranted and only serves to cause entirely avoidable inconvenience to the survivor(s)/nominee and would, therefore, invite serious supervisory disapproval. In such case, therefore, while making payment to the survivor(s)/ nominee of the deceased depositor, the banks are advised to desist from insisting on production of succession certificate, letter of administration or probate, etc. or obtain any bond of indemnity or surety from the survivor(s) nominee, irrespective of the amount standing to the credit of the deceased account holder.
What is manifest from the above clause is that when there is a nomination to the account and until and unless there is any order from any competent court restraining the bank from making the payment from the account of the deceased the bank is bound to make the payments to the nominee. In the instant case, merely based on the representation given by the co-borrowers of the housing loan account, the bank had acted upon it without there being any order from any competent court.
13). Based on the foregoing discussion, we are of the view that it was unjust and unfair on the part of opposite party to exercise general lien on the SB account of the deceased and to deduct 12 certain amount from the account without intimating it to the complainant/nominee. Inspite of a claim pending by the complainant and in view of the RBI circular dt.`9.6.2015 it was unfair on the part of opposite party to insist the complainant/nominee to produce legal heir certificate, no objection certificate etc. Therefore, we feel that the opposite parties are liable to make the payments to the complainant/nominee that are lying in the S.B.Accout of deceased Mr.M.Suryanarayana Raju by remitting back the amount that was deducted without the permission of the complainant.
With regard to liability of opposite parties 1 to 4, the opposite party nos.1,2 & 4 have specifically contended that there does not exist and such post/person as CVO, to which the complainant has to give the explanation as to how is opposite party no.3 liable or what is the role of opposite party no.3. But the complainant failed to give any such clarification, as such no liability can be cast upon opposite party no.3.
14). In the result, the complaint is allowed in part directing the opposite party nos.1,2 & 4 jointly and severally :
i. To remit back the amount of Rs.3,58,932.32 ps. and Rs.6,91.359.37 ps. to the account of deceased Mr.M.Suryanarayana Raju;
ii. After effecting such remittance, as directed above to pay all that balance lying in the S.B.Account of Mr.M.suryanarayana Raju to the complainant along with the bank rate of interest that is applicable to S.B. Account amount;
iii. To pay costs of Rs.25,000/-;
iv. Complaint against opposite party no.3 stands
dismissed.
v. Time for compliance is one month from the date of
receipt of this order.
Sd/- Sd/-
M EMBER (J) MEMBER(NJ)
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Dated : 20. 10.2023.
13
APPENDIX OF EVIDENCE
W itnesses Examined
For the complainant For the opposite parties
Complainant filed evidence Sri Ratna Rajesh Chunduri ,
Affidavit . Senior Manager of Opp.party
No.1 filed Chief Affidavit.
Exhibits marked on behalf of the complainant:
Ex.A1 : Photostat copy of Application for deceased claim Dt. 19.9.2020 from complainant to the Branch Manager, opp.party Bank. Ex.A2 : Photostat copy of lr.dt.26.10.2020 from complainant to opposite party bank.
Ex.A3 : Photostat copy of legal notice dt.9.11.2020 issued on behalf of the complainant to opposite party. Ex.A4 : Reply notice dt.4.12.2020 issued by opposite party. Ex.A5 : Photostat copy of lr.dt.19.12.2020 from complainant to opposite party .
Ex.A6 : Photostat copy of Death Certificate of Sri M.Suryanarayana Raju.
Ex.A7 : Photostat copy of legal notice issued on behalf of the complainant to opposite parties. Ex.A8 : Photostat copies of postal receipts. Ex.A9 : Reply letter dt.20.4.2021 issued by authorized signatory of opposite party to the counsel for complainant.
Exhibits marked on behalf of the opposite parties: Ex.B1 : Photostat copy of letter dt.19.10.2020 from Mr.M.Srinivasa Raju and M.Nagamani to the opposite party bank.
Ex.B2 : Photostat copy of lr.dt.6.11.2020 from Smt.P.Janaki to the opposite party bank.
Ex.B3 : Mail correspondence .
Ex.B4 : Statement of account of Mr.Surya Narayana Raju Mantena issued by opposite party bank. Ex.B5 : Photostat copy of lr.dt.28.7.2014 from opposite party Bank to Mr.Suryanarayana Raju and others. Ex.B6 : Photostat copy of reply notice dt.4.5.2021 issued on behalf of the opposite party .
Ex.B7 : Photostat copy of Power of Attorney issued by opp.party Bank.
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MEMBER(J) MEMBER(NJ)
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Dated: 20.10.2023.