State Consumer Disputes Redressal Commission
Jijau Commercial Co-Operative Bank ... vs Damodar Shivshankarsingh Tehare on 8 October, 2013
STATE CONSUMER DISPUTES REDRESSAL COMMISSION, MAHARASHTRA
STATE CONSUMER
DISPUTES REDRESSAL COMMISSION, MAHARASHTRA
CIRCUIT BENCH
AT NAGPUR
5 TH FLOOR,
ADMINISTRATIVE BUILDING NO. 1
CIVIL LINES,
NAGPUR-440 001
First Appeal
No. A/05/2217
(Arisen out
of Order Dated 19/09/2005 in Case No. cc/03/362 of District Wardha)
1. JIJAU COMMERCIAL CO-OPERATIVE BANK LTD., AMRAVATI
O/AT FIRST FLOOR, KHATRI COMPLEX, WALCUT COMPOUND,
AMRAVATI. THROUGH ITS MANAGER, MR. SHANKARRAO WAMNARAO RAUT.
AMRAVATI.
...........Appellant(s)
Versus
1. DAMODAR SHIVSHANKARSINGH TEHARE
R/O. BHAGYAKRUPA, 21, NARENDRA COLONY, DASTUR NAGAR,
ROAD, AMRAVATI.
AMRAVATI.
...........Respondent(s)
BEFORE:
HON'ABLE MR. B.A. Shaikh,
Judicial PRESIDING MEMBER
HON'BLE SMT.JAYSHREE YENGAL MEMBER
HON'BLE MR.N. ARUMUGAM MEMBER
PRESENT:
None
......for the Appellant
in person
......for the Respondent
ORDER
(Dated 08/10/2013) PER SHRI.B.A.SHAIKH, HON'BLE PRESIDING JUDICIAL MEMBER
1. This appeal is preferred against the order dated 19/09/2005 passed by District Consumer Forum, Wardha in CC No.362/2003 by which the complaint has been partly allowed.
2. Thecase of the complainant, as set out in the complaint, in brief is that he deposited with the Original Opposite Party (for short OP) Rs.1 lac on 1/2/2001 and Rs.2 lac on 30/10/2001 vide two separate receipts dated 1/2/2001 and 30/10/2001. The dates of maturity of payment were 1/4/2004 and 30/12/2003 respectively. However, after the date of maturity the OP refused to pay the amount due to the complainant. The Opponent has withhold the said deposits on the false ground that the complainant stood surety/guarantor for repayment of loan obtained from it by Mr.Dinesh Namdeo Ughade. The complainant had furnished his surety to the OP for repayment of loan of Rs.80000/- only by said Mr.Dinesh Ughade. The OP enhanced the loan facility without the consent of the complainant and, therefore, the complainant is not liable to make payment of enhanced loan amount. He therefore served legal notice dated 12/11/2003 to the OP. But despite of service of notice, the amount due on the date of maturity of the fixed deposit, was not paid. Hence the complainant prayed that direction be given to the OP to pay him the aforesaid maturity amount with interest and also to pay him Rs.50000/- towards compensation for mental harassment and Rs.10000/- towards cost of proceeding.
3. The OP filed written version and resisted the complaint. It raised objection about the maintainability of the complaint on the ground that the dispute related to banking business of the cooperative bank for which provisions are made under Maharashtra Co-operative Societies Act,1960 and Rules made thereunder, and, therefore, the District Consumer Forum has no jurisdiction to decide the complaint. The second objection raised by OP is that the complaint is bad in law for non joinder of necessary party namely another guarantor Dr.Sangeeta P.Kadu and the principal borrower Shri.Dinesh Ughade. It came with a case in brief that Shri.Dinesh Ughade had taken loan from it and the complainant and Dr. Sangeeta Kadu are the guarantors for repayment of that loan. The principal borrower has not made repayment of outstanding loan and committed default and, therefore, both the aforesaid guarantors are liable to repay the outstanding loan amount. But inspite of demand, they did not repay that loan. Therefore, the OP has got right to make recovery of that outstanding loan from the aforesaid guarantors and hence the action taken by it is legal. It therefore, submitted that the complaint may be dismissed.
4. The District Forum below, after going through the evidence brought on record came to the conclusion that the original cash credit facility granted to the principal borrower was increased from time to time and necessary fresh agreement were duly executed by the principal borrower in favour of OP and it amounts to variance in terms of original contract and no prior consent for the said variance of contract was obtained from the complainant who was the surety. The District Forum also referred to the provisions of Contract Act and various decisions in the impugned order and lastly concluded that the OP is entitled to withhold payment of fixed deposit amount of Rs.1 lac only which is made vide receipt dated 1/2/2001, but the OP is not entitled to withhold payment of second fixed deposit receipt for Rs.2 lac dated 30/10/2001 and withholding of payment of said second receipt amounts to deficiency in service on the part of OP. It, therefore directed the OP in impugned order to pay to the complainant an amount of Rs.2 lac with interest payble on fixed deposit receipt dated 30/10/2001 within 30 days of that order. It is further directed that OP shall pay to the complainant Rs.2000/- towards cost of proceeding within 30 days of that order.
1. Feeling aggrieved by that order, the Original OP Bank has preferred this appeal. The learned advocate of both the parties filed written notes of arguments. However, on the date of final hearing, none appeared for the appellant. Respondent in person was present, however, his advocate was not present. Therefore, we considered the written notes of arguments of both the parties as their oral arguments also. We thus proceed to decide the appeal on merits.
2. The learned advocate of the appellant in its written notes of argument submitted that the Forum below did not consider the aspect of the case that as per provisions of Section 46 and 49 of Maharashtra Cooperative Societies Act (for short MCS Act) under which the appellant is entitled to recover the outstanding loan from the principal borrower as well as guarantors who are the members of the Bank. He also submitted that the provisions of Indian Contract Act are not applicable to the present case and that the District Forum below has no jurisdiction to entertain and decide the dispute inview of provisions of MCS Act 1960 and that the District Forum below also has not considered that necessary party namely principal borrower and another guarantor are not joined to the complaint and hence the complaint is bad in law.
3. He also submitted that no proper opportunity of hearing was given by the Forum to the OP which resulted into erroneous impugned order. He thus requested to set aside the impugned order. He relied upon the observations made in the following cases.
a. Branch Manager, Bank of Maharashtra Vs. Manohar Sitaram Nandanwar II (1993) CPJ 158 (NC) wherein it is observed that when FDR is adjusted towards cash credit loan it does not amount to deficiency in service.
b. Roshan D.Chinoy & Ors. Vs. The Chairman & managing Director, Central Bank of India & Anr. II (1993) CPJ 657 APSCDRC,Hyderabad, wherein it is observed that exercise of general power of lienby the Bank is not illegal when the complainant failed to repay the loan.
c. S. Krishna Vs. Indian Overseas Bank, 1993 (II) CPR 45, APSCDRC, Hyderabad. In that case, complainant stood surety on behalf of the principal borrower and deposited his fixed deposit receipts as security with the Bank. In exercise of general lienon the maturity of fixed deposit, bank appropriated the amount towards loan. It was alleged by the complainant that bank failed to waive penal and regular interest as per directives of Central & State Govt. It is held that it can not be said to be a deficiency in service as it was for the Bank to decide whether the interest be waived or not.
d. M/s Sanjiv Textiles Pvt. Ltd. Vs. State Bank of India & Ors. 1992(I) CPR 238. In that case, on maturity of fixed deposit amount of the complainant, the Bank realized the amount and credited it in the cash credit account of the complainant invoking principal of general lien. It is observed that there is no deficiency in service on the part of Bank.
The learned advocate of the appellant also submitted in his written notes of arguments that the observations made in the impugned order against the counsel of the Opponent/Appellant are uncalled for and the same may be expunjed. He relied upon observations made in the following case.
e) Sonibai Nathu Kuwar Vs. State of Maharashtra & Ors. 2005 (3) MHLJ 1100. In that case, it is observed by Hon'ble Bombay High Court that Courts and Tribunals must refrain from making any observation regarding personal characters of individuals.
4. On the other hand, learned advocate of the Respondent in his written notes of arguments supported the impugned order and submitted that appeal may be dismissed.
5. As regards maintainability of the complaint before the Forum below, the Forum below has relied upon the observations made in the case of Secretary Thirumurugan Co.Op. Agricultural Credit Society Vs. M.Lalitha 2004 (2) SBR (Supreme Bound Reports) 324 wherein it is observed by the Hon'ble Supreme Court that the Forum constituted under the Consumer Protection Act,1986 has jurisdiction in respect of matter in issue i.e. matter related to cooperative societies. In view of the said decision, we find no substance in the submission of learned advocate of the appellant that Forum below has no jurisdiction to entertain the complaint.
6. As regards the objection about non joinder of the principal borrower and the another guarantor in respect of loan facility obtained by Shri. Dinesh Ughade, we find that they are not the necessary partes in the complaint. Since the complaint is related to withholding of the fixed deposit amounts of the complainant, who is one of the guarantor, hence we find no merits in the said objection raised by learned advocate of the appellant.
7. The complainant has made specific averment in the complaint that initially, cash credit facility granted to the borrower Dinesh Ughade was of Rs.80000/- only for which he stood surety and the cash credit limit was thereafter enhanced by the Opponent Bank from time to time without his consent. This pleading of the complainant is not specifically denied by the Opponent Bank. The appellant has not come with any specific case as to what was the initial cash credit facility sanctioned by it and as to when and how, it was enhanced from time to time. Moreover, it is not the case of the appellant that cash credit facility was enhanced with the written consent of the complainant. Therefore we hold that Forum below has rightly held that as there was variance in the contract of cash credit facility, without the consent of the complainant, the complainant is not liable to pay the amount beyond the initial cash credit facility of Rs.80000/- for which he stood surety. The provisions of Section 133 of Contract Act are applicable to the present case, which provides that the surety is discharged when variance is made in the terms of contract without suretie's consent.
Hence the Forum below has rightly observed that the complainant is liable only to pay Rs.1 lac and, therefore, withholding of the amount of Rs.1 lac by the appellant Bank is proper but withholding of Rs.2 lac vide second receipt is not legal.
8. The provisions of Section 46 and 49 of Maharashtra Cooperaive Societies Act,1960 refered to in the written notes of arguments filed by the appellant Bank, are not applicable to the present case since there is no evidence to show that the complainant being the surety/morgager is the member of the appellant Bank. As per provisions of Section 46 of the said Act, the appellant bank is entitled to set off in respect of the share or interest of the members towards the amount due. The provisions of Section 49 are relating to deduction from salary to meet societie's claim.
9. We thus hold that the case of the complainant is not covered under the provisions of Section 46 & 49 of MCS Act. We also hold that the aforesaid decisions relied upon by learned advocate of the appellant are not applicable to the present case since the facts and circumstances of the present case discussed above are totally different from which are discussed in the said cases. We also find that proper opportunity of hearing was given by the Forum below to the appellant. Thus we find that the Forum has rightly appreciated the matter brought on record and rightly came to the conclusion that withholding of amount of second fixed deposit receipt dated 30/10/2001 by the Opponent/appellant amounts to deficiency in service and also Unfair Trade Practice. The impugned order is, thus, legal and correct and needs no interference. Appeal deserves to be dismissed. Hence the order.
ORDER i. The appeal is dismissed.
ii. No orders as to costs.
[HON'ABLE MR.
B.A. Shaikh, Judicial] PRESIDING MEMBER [ HON'BLE SMT.JAYSHREE YENGAL] MEMBER [ HON'BLE MR.N. ARUMUGAM] MEMBER