State Consumer Disputes Redressal Commission
The Hongkong And Shanghai Banking ... vs Manohar Kishandas on 15 April, 2009
CONSUMER DISPUTES REDRESSAL COMMISSION CONSUMER DISPUTES REDRESSAL COMMISSION MAHARASHTRA STATE, MUMBAI FIRST APPEAL NO. 1326 OF 2008 Date of filing : 08/10/2008 @ MISC. APPL. NO. 1862 OF 2008 Date of order : 15/04/2009 IN CONSUMER COMPLAINT NO. 242 OF 2002 DISTRICT CONSUMER FORUM : SOUTH MUMBAI The Hongkong and Shanghai Banking Corporation Ltd., Main Branch, HSBC Building, M.G. Road, Mumbai 400 001. Appellant/org. O.P. V/s. Manohar Kishandas 7/98, Amrut Villa Road No.7, Wadala, Mumbai-400 031. Respondent/org. complainant Corum : Justice Mr.B.B. Vagyani, Honble President Shri S.R. Khanzode, Honble Judicial Member
Present: Mrs.Anita Marathe, Advocate for the appellant.
Mr.Sujit Kurup, Advocate for the respondent.
- : ORDER :-
Per Justice Mr. B.B. Vagyani, Honble President We heard Mrs.Anita Marathe, Advocate for the appellant/org. O.P. and Mr.Sujit Kurup, Advocate for the respondent/org. complainant.
We examined the correctness of the judgement dated 01/08/2008 passed by South Mumbai District Consumer Forum in the light of terms of the contract with regard to overdraft facility. The respondent herein, who was complainant before District Consumer Forum had pledged his shares and obtained overdraft facility. The limit of overdraft facility was attached to the value of the shares. The value of the shares always fluctuates. Therefore, the borrower as per contract is required to maintain the liquidity. In case of increase in valuation, the borrower gets overdraft facility proportionate to the increase in valuation of shares. In case of decrease of value of shares, limit of overdraft facility automatically comes down. In such a situation, the borrower has to deposit surplus to maintain liquidity. We are inclined to reproduce the relevant clauses of the agreement for overdraft/loan against pledge of stock shares :-
3. The Bank may at any time or times whether before or after default by me/us in such payment, pledge sub-pledge or re-pledge or (on giving me/us reasonable notice in that behalf) sell the said securities, or any part thereof, and may buy in or rescind contracts for sale and re-sale without being accountable for any loss or diminution in price, and may, out of the sale moneys, retain all moneys owing on this security, with all costs and expenses incurred in relation thereto, the surplus (if any) to be paid to me/us and if there be any deficiency, it shall be made good by me/us.
4. We shall at all times so long as any monies shall remain due to the bank on the account keep up the value of the securities so as to provide sufficient margin so that the balance at any time due to the Bank does not exceed such percentage of the value of the securities, as the Bank may from time to time by notice prescribe, such value to be assessed at the market value for the time being of the securities. In the event of any reduction in the margin we shall immediately on demand pay in to the credit of the said overdraft or loan such sums as may be required to reduce the account to a figure which the Bank may consider as providing sufficient margin or in the alternative provide additional approved security to adjust the position.
It is seen from the demand letters issued by the HSBC Bank to the respondent that on 15/03/2002 portfolio value of shares was to the tune of Rs.6,07,255.50. The overdraft limit was to the tune of Rs.3,94,716.08. Therefore, the Bank issued notice on 18/03/2002 to the respondent/borrower and asked him to arrange forthwith to regularize the excess of overdraft limit of Rs.9,849.75. In the letter dated 18/03/2002 the Bank informed the respondent that on failure, Bank would constrain to proceed for an immediate sale of pledged securities without any further intimation. It is an admitted fact that the respondent did not regularize the excess overdraft limit by depositing requisite amount in the account nor he pledged additional acceptable security in order to cover the shortfall in the account.
The position as on 28/03/2002 was also important. The Bank informed the respondent by letter dated 01/04/2002 that as on 28/03/2002 the portfolio value of the securities was to the tune of Rs.5,81,844/- whereas overdraft limit was to the tune of Rs.3,78,198.60. The Bank therefore asked the respondent to regularize excess of overdraft limit of Rs.42,537.93 immediately. By the said letter, Bank warned the respondent that on failure to regularize excess of overdraft limit by 03/04/2002, the Bank would constrain to sell the securities to regularize the account. It is an admitted fact that the respondent in spite of intimation, did not regularize the excess of overdraft limit by depositing requisite amount of Rs.42,537.93 in the account nor he pledged additional approved security in order to cover up the shortfall.
The Bank therefore sold all the pledged shares. The District Consumer Forum tried to re-write the terms and conditions of the contract, which is not permissible in law. Both the parties to the contract are bound by the terms and conditions of the contract. By contract, the Bank was authorized to sell the pledged shares. The District Consumer Forum cannot introduce its own view and interpret the clauses of the contract out of context. The District Consumer Forum cannot extend the time limit prescribed by the Bank for regularization of excess of overdraft limit. The District Consumer Forum wrongly taken into consideration that the respondent was liable to pay only Rs.9,849.75 and Rs.42,537.93. In fact the entire overdraft facility was due and payable from the respondent to the Bank. The Bank therefore is entitled to recover its entire loan amount by selling the pledged securities. The reasons assigned by the District Consumer Forum are erroneous. The District Consumer Forum failed to take into account real crux of the matter and has been completely swayed away by the demand made by the Bank in the matter of regularization of excess of overdraft limit. The consequence of failure to regularize the excess of overdraft limit is completely ignored by the District Consumer Forum. The Bank had made it clear to the respondent by letters dated 18/03/2002 and 01/04/2002 that in case of failure to regularize excess of overdraft limit, Bank would constrain to sell immediately all the pledged securities without any further intimation. The judgement under challenge suffers from illegality. In the result, we pass the following order :-
-: ORDER :-
1.
Appeal is allowed with cost of Rs.3,000/-.
2. The impugned order under challenge is quashed and set aside. The complaint stands dismissed.
3. Amount deposited if any be returned to the appellant after appeal period is over.
4. Misc. Appl. No.1862/2008, which is for stay stands disposed of.
5. Copies of the order be furnished to the parties.
(S.R. Khanzode) (B.B. Vagyani) Judicial Member President dd.