State Consumer Disputes Redressal Commission
Bank Of Baroda vs Tarun Sethi on 20 September, 2019
FIRST ADDITIONAL BENCH
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB, CHANDIGARH
First Appeal No.680 of 2018
Date of Institution : 03.12.2018
Order Reserved on: 03.09.2019
Date of Decision : 20.09.2019
Bank of Baroda a body corporate with perpetual succession
constituted under the Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1970 having its registered office at
Mandvi at Baroda and one of its Branch Office Infront of Municipal
Council, The Mall, Ferozepur City through its Attorney Holder
Sh.Krishan Lal Narnol.
....Appellant/opposite party
Versus
Sh.Tarun Sethi aged 34 years son of Sh.Rajinder Kumar Sethi son
of Mela Ram. R/o Mohalla Dollian Wala, Ferozepur City now at Jai
Maa Laxmi Enclave #87, Block C, Near Vohra Colony, Ferozepur
City.
....Respondent/Complainant
First Appeal against the order dated
12.10.2018 of the District Consumer
Disputes Redressal Forum, Ferozepur.
Quorum:-
Mr. Rajinder Kumar Goyal, Presiding Member
Mrs. Kiran Sibal, Member
First Appeal No 680 of 2018 2
Present:-
For the appellant : Sh.C.S.Pasricha, Advocate with
Sh.Vishal Ahuja, Advocate
For the respondent : Sh.R.S.Sekhon, Advocate
RAJINDER KUMAR GOYAL, PRESIDING MEMBER
ORDER
The instant appeal has been filed by the appellant/opposite party against the order dated 12.10.2018 passed by District Consumer Disputes Redressal Forum, Ferozepur (in short, 'District Forum'), whereby the complaint filed by the complainant was allowed with a direction to the opposite party to return the sale deed in the name of Tarun Kumar Sethi and Rajinder Kumar Sethi deposited with them in security of loan of M/s New Pee Aar Tee Flex Printing and to issue No Due Certificate regarding the loan of the said firm.
It would be apposite to mention that hereinafter the parties will be referred, as have been arrayed before the District Forum.
2. Brief facts, as averred in the complaint are that the complainant is doing the business of Printing of Flex Board under the name and style of New Pee Aar Tee Flex Printing at Ferozepur City for earning his livelihood by means of self-employment. The complainant took a loan of Rs.8,50,000/- and also obtained a CC Limit of Rs.1,50,000/- total i.e. Rs.10,00,000/- from the opposite party, which was deposited in the Bank Account bearing No.10200400025958 in the year 2010. The opposite party took two First Appeal No 680 of 2018 3 original title sale deeds i.e. dated 01.08.2008 bearing Wasika No.2270 regarding property measuring 1.84 marlas belongs to Rajinder Kumar Sethi (father of the complainant) and sale deed dated 27.01.2010, registered on 28.01.2010, bearing wasika NO.6018, measuring 1.84 marlas belongs to the complainant for the purpose of security for repayment of loan amount along with interest. Sh.Rajinder Kumar Sethi is guarantor of the above said loan amounts. The opposite party took the signatures of the complainant as well as the father on various forms and blank papers. It was assured by the opposite party to the complainant that the original sale deeds and No Due Certificate will be issued immediately after repayment of loan amount. The complainant has paid the entire loan amount along with interest to the opposite party upto 17.05.2016. Thereafter, the complainant approached the opposite party with the request to issue No Due Certificate and to return the original sale deeds but they put off the matter on one pretext or the other. Thereafter, the father of the complainant received a letter bearing NO.BOB/FEROZP/ADV/2016 dated 22.09.2016 from the opposite party, thereafter, the complainant again approached the opposite party but they paid no heed. Again on 02.03.2017, the complainant approached the opposite party with the same request. In reply thereto, the complainant received a letter wherein intimating Rajinder Kumar Sethi had stood guarantor of M/s Shaktiman Biotouch, Village Ratol, Rahi, Talwandi Road, Zira, District Ferozepur at the time of taking of loan by the said firm. First Appeal No 680 of 2018 4 The said loan was obtained by M/s Shaktiman Biotouch through Narinder Singh and Davinder Kumar Nanda on 28.05.2008 who both submitted their properties as security for repayment of loan amount along with interest. The father of the complainant namely Rajinder Kumar Sethi stood oral guarantor in the said loan which was advanced to M/s Shaktiman Biotouch and being oral guarantor. The father of the complainant never submitted any document/title deed / sale deed/ property with the Bank at the time of loan taken by Narinder Singh and Davinder Kumar. This act and conduct of the opposite parties amount to deficiency in service and unfair trade practice on the part of the opposite party the complainant filed the complaint before the District Forum and sought the following reliefs:-
i) to return the original sale deeds as detailed in para 3 of the complaint;
ii) to issue No Due Certificate to the complainant in respect of his loan account;
iii) to pay Rs.80,000/- as compensation for mental agony and harassment; and
iv) to pay Rs.11,000/- as litigation expenses.
3. Upon notice, opposite party appeared before the District Forum and filed its reply taking preliminary objections that the present complaint is not maintainable as the transaction between the complainant and opposite party are commercial in nature. The complainant has not come to the Forum with clean hands and First Appeal No 680 of 2018 5 concealed the material facts. It is contended that M/s Shaktiman Biotouch Zira has also obtained the financial assistance from the opposite party-Bank where Rajinder Kumar Sethi has also stood as guarantor and executed continuing deed of guarantee in favour of the Bank in the said loan account. The said loan account is running highly irregular and declared as NPA and further declared as fraud account. The Bank then started recovery proceedings against the said firm and its guarantors including Rajinder Kumar Sethi, father of the complainant. Therefore, the opposite party retained the sale deed bearing wasika No.2270 dated 01.08.2008 in the name Rajinder Kumar Sethi being general lien of the Bank. The opposite party never refused to hand over the original transfer deed in the name of the complainant to him but he himself refused to accept the same. The opposite party under the provisions of Indian Contract Act has every right to retain the said property as per the terms of the deed of guarantee. The complainant has no locus standi to file the present complaint for return of the sale deed bearing wasika No.2270 dated 01.08.2008. On merits, it is admitted that the complainant has deposited the entire dues of the Bank. The opposite party reiterated all the contentions as detailed in preliminary objections. There is no deficiency in service on the part of the opposite parties. Rest all the averments as averred by the complainant in his complaint were denied and prayed to dismiss the complaint with costs.
First Appeal No 680 of 2018 6
4. The parties produced the evidence in support of their respective averments before the District Forum, which after going through the same and hearing learned counsel appearing on their behalf, allowed the complaint, vide impugned order. Hence, this appeal filed by the appellant/opposite party challenging the impugned order.
5. We have heard learned counsel for the parties and have carefully gone through the record.
6. Learned counsel for the appellant/opposite party vehemently argued that the order passed by the District Forum is erroneous, illegal, arbitrary and against the facts of the case. The appellant/opposite party invoked the provisions of Section 171 of the Contract Act in retaining the title deeds of Sh.Rajinder Kumar Sethi who was the Guarantor/ Mortgator in the account of M/s Shaktiman Biotouch, Zira. The District Forum has not considered the matter in the right aspect and there was no occasion for the Ld. District Forum to have given the directions for return of title deeds. The order passed by the District Forum is contrary to the settled position of law and position of Section 171 of the Contract Act, 1872. The District Forum is even beyond the pleadings and relief claimed by the complainant in its complaint. There is no deficiency in service or unfair trade practice on the part of the appellant/opposite party. The appeal filed by the appellant/opposite party be allowed by setting aside the order of the District Forum. First Appeal No 680 of 2018 7
7. On the other hand, learned counsel for the respondent/complainant argued that there is no illegality in the order passed by the District Forum and it needs no interference. No sale deed was deposited by Rajinder Kumar Sethi while giving guarantee against the loan taken by Shaktiman Biotouch, Zira. Both the sale deeds were deposited against the loan taken by Tarun Sethi. As the loan amount along with interest has already been paid. The opposite party has no right to retain the sale deeds. The District Forum has passed the order in favour of the complainant after going through the proper evidence on record. Also, the District Forum has not allowed the full claim as demanded by the respondent/complaint and passed the order as per record. There is no merit in the appeal and prayed to dismiss the appeal with costs.
8. We have given our thoughtful consideration to the contentions raised before us by the learned counsel for the parties and have carefully gone through the record.
9. Admittedly, the respondent complainant availed a term loan of Rs.8,50,000/- and also obtained Cash Credit Limit of Rs.1,50,000/- from the appellant-Bank in the year 2010. At the time of availing the said loan, the complainant mortgaged two original Title Sale Deeds i.e. Sale Deed dated 01.08.2008 bearing Wasika No.2270 regarding the property measuring 1.84 Marlas which belongs to Rajinder Kumar Sethi, father of the complainant. Along with another sale deed dated 27.01.2010 registered on 28.01.2010 First Appeal No 680 of 2018 8 bearing Wasika No.6018 of Property measuring 1.84 Marlas, which belongs to the respondent-complainant, Tarun Sethi. The above sale deeds were mortgaged as security for repayment of loan amount along with interest and in the loan case, in question, Rajinder Kumar Sethi, father of the complainant was the guarantor. The respondent-complainant deposited his entire loan amount with interest upto 17.05.2016 which has been admitted by the appellant- Bank in their reply and after repayment of the loan amount the respondent-complainant requested the appellant-Bank to return the above said Title Sale Deeds submitted as security for repayment of the loan amount with interest. However, the Bank vide letter dated 02.03.2017, Ex.C-7, informed the respondent-complainant that in the year 2008, a loan of Rs.25 lacs was guaranteed in the name of M/s Shaktiman Biotouch. In that, Rajinder Kumar Sethi, submitted himself as one of the guarantor and a document of guarantee was duly signed by Mr.Sethi. The said account gone bad. Under the circumstances while exercising the clause jointly and severally, the Bank has detained the title deed which was deposited by Rajinder Kumar Sethi as Security in another loan account.
10. Now the issue is to decide whether the appellant-Bank can hold the title deed mortgaged in a loan account of the respondent- complainant, which has already been cleared, against the another loan account in which the father of the complainant was guarantor without mortgaging any title deed.
First Appeal No 680 of 2018 9
11. Learned counsel for the appellant-Bank during arguments argued that as per Section 171 of the Indian Contract Act, 1972, the Bank has a general lien upon the securities. Section 171 of the Indian Contract Act, 1972 is reproduced as under:-
"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."
Further, the Hon'ble Apex Court in the case of "Syndicate Bank Vs. Vijay Kumar & Ors." reported in AIR 1992 SC 1066 held as under:-
"By Mercantile system the Bank has a general lien over all forms of securities or negotiable instruments deposited by or on behalf of the customer in the ordinary course of banking business and that the general lien is a valuable right of the banker judicially recognized and in the absence of an agreement to the contrary, a Banker has a general lien over such securities or bills received from a customer in the ordinary course of banking business and has a right to use the proceeds in respect of any balance that may be due from the customer by way of reduction of customers debit balance."
12. Therefore, in the present case, the appellant-Bank was well within its right to exercise its right of general lien over the First Appeal No 680 of 2018 10 securities/ title deed deposited by Rajinder Kumar Sethi against guarantee given against loan account of M/s Shaktiman Biotouch, Zira, which has gone bad. Also, as per the guarantee given by Rajinder Kumar Sethi placed at Ex.OP-2, Section 8, the guarantor has agreed that in respect of my liability hereunder the Bank shall have a lien on all securities belonging to me/us now or hereafter held by the Bank and all moneys now or credit with the Bank on my current or any other account.
13. We are further fortified by the judgment passed by the Hon'ble National Commission, reported in 2006(4) C.P.J. 1 titled as "M.Mallika Vs. State Bank of India and Anr." wherein the Hon'ble National Commission has relied upon the judgment passed by the Hon'ble Apex Court in the case of Syndicate Bank Vs. Vijay Kumar & Ors. (Supra) and held as under:
"20. For the aforesaid reasons in terms of Section 171 and in the light of judgment in the case of Syndicate Bank V. Vijaya Kumar (supra), we feel that the bank was absolutely justified in feeling inhibited in returning the documents/title deeds. M/s Bava Trading Corporation, M/s Cauvery Knitting Co. and K.R. Krishnamurthy & Sons and suit guarantor for all the credit and loan facilities sanction to the said firms. As such, in all the three cases, notwithstanding the provisions under Section 60 of the Transfer of Property Act, the bank was entitled to exercise its right of general lien under Section
171. The mortgagors right to get back title deeds under Section 60 is right of general nature. Provisions of the Contract Act under Section 171 carves out an exception to the said general rule in order to protect the interest of the bank by ensuring right to retain the document so that other First Appeal No 680 of 2018 11 loan accounts of the bank are also cleared by borrowers or guarantor without forcing the bank to file suits."
14. The District Forum has erred by not considering the right of the appellant-Bank in exercising the general lien under the provisions of Indian Contract Act as discussed above.
15. Sequel to the above discussion, the appeal filed by the appellant is hereby allowed and the order passed by the District Forum is set aside.
16. Arguments in this appeal were heard on 03.09.2019 and the order was reserved. The certified copies of the orders be communicated to the parties, as per rules.
17. The appeal could not be decided within the statutory period due to heavy pendency of court cases.
(RAJINDER KUMAR GOYAL) PRESIDING MEMBER (KIRAN SIBAL) MEMBER September 20,2019 parmod