State Consumer Disputes Redressal Commission
Saber Hussain S/O. Gulam Hassain vs 1.Regional Manager, on 12 March, 2004
1 F.A. No. 844-08
MAHARASHTRA STATE CONSUMER DISPUTE REDRESSAL
COMMISSION, MUMBAI, CIRCUIT BENCH
AT AURANGABAD
Date of filing: 28.05.2008
Date of Order:12.03.2014
FIRST APPEAL NO.: 844 OF 2008
IN COMPLAINT CASE NO. 234 OF 2007
DISTRICT CONSUMER FORUM: PARBHANI.
Saber Hussain s/o. Gulam Hassain
Prop. Gulmarg Paint Industry,
C/o. Prabhat Agency, New-Busstand Road,
Parbhani, Tq. & Dist. Parbhani. ... Appellant
VERSUS
1.Regional Manager,
M. S. F. C. Aurangabad, Station Road,
Opp. Fire Office, Aurangabad.
2. Regional Manager,
State Bank of India, Divisional Office,
Mondha, Nanded. ... Respondents
Coram : Shri. S.M. Shembole, Hon`ble Presiding Judicial Member.
Shri. K. B. Gawali, Hon'ble Member.
Present: Adv. Shri. Jayant Chitnis, for appellant.
Adv. Shri. S. R. Deshpande for Respondent No.1.
Adv. Shri. S. D. Gore for Respondent No.2.
- :: ORAL JUDGMENT:: -
(Delivered on 12th March, 2014) Per Shri. K. B. Gawali, Hon'ble Member
1. This appeal is preferred by the original complainant against the judgment and order dated 10.04.2008 passed by District Forum, Parbhani in consumer 2 complaint No.234/2007 whereby the complaint is dismissed. The respondents are the original opponents. For better understanding the appellant is hereinafter termed as "complainant" whereas respondent No.1 which is Maharashtra State Finance Corporation is hereinafter termed as "opponent Finance Corporation"
and the respondent No.2 which is a State Bank of India is hereinafter termed as "the opponent bank".
2. The brief facts leading to the present appeal are that, complainant is a proprietor of M/s. Gulmarg Paint Industries situated in MIDC Area bearing Plot No.W-5 admeasuring 852 sq. mtrs. That, the complainant had obtained loan of Rs.1,36,000/- from opponent finance corporation. Out of this loan amount Rs.42,000/- was granted towards the cost of land including the built up shade whereas Rs.94,000/- was granted towards purchased of plant and machinery. Although the loan of Rs.1,36,000/- was sanctioned the amount of Rs.1,10,000/- was actually disbursed on 04.10.1981 and the balance amount of Rs.26,000/- was not disbursed. It was contended that out of this balance amount of loan Rs.26,000/- an amount of Rs.12,600/- was disbursed through cheque dated 03.10.1981 but instead of making payment of the same to the complainant the said amount was adjusted against the interest on the loan of Rs.1,10,000/- which was disbursed earlier and the amount of Rs.13,400/- was also adjusted against the installment of loan of Rs.1,10,000/- on 14.04.1982. It was further contended that for running the industry he had obtained cash credit loan of Rs.1,00,000/- from the opponent bank. It was further contended by the complainant that he was required shade for packing of the paints etc he had decided to construct additional shade and hence he approached to the opponent finance corporation for sanction of additional loan of Rs.70,000/-. Accordingly the additional loan of Rs.64,000/- was sanctioned on 01.08.1983 but no disbursement was made on the ground that the compliance of income tax clearance certificate u/s. 238 was not made by the complainant. He further submitted that on 26.12.1986 there was a 3 F.A. No. 844-08 cyclone occurred in the area of the Parbhani city in which his industry was damaged and he sustained the loss of Rs.2,05,000/-. That, against the insurance of the said industry the insurance company sanctioned compensation of Rs.91,363/- but out of the said compensation the opponent finance corporation got illegally deducted an amount of Rs.18,361/- and the opponent bank got the balance amount of Rs.73,000/- against the loan sanctioned by it. The complainant further submitted that he had repaid the loan amount of Rs.95,493/- till 29.04.1987 to the opponent finance corporation and further Rs.18,361/- were obtained from the insurance company as on 30.07.1996. However instead of recovery of the said amount the opponent Finance Corporation illegally attached the industrial shades of the complainant recovery the loan amount of Rs.1,10,000/- without following the due process of law. He therefore contended that the opponent finance corporation illegally recovered total amount of Rs.2,21,254/-. The complainant further submitted that due to the legal action by the opponent finance corporation he had initiated criminal proceedings against the respondent's officer of the seed corporation bearing RCS No.191/01.
3. As regards the loan amount of Rs.1,00,000/- sanctioned by the opponent bank the complainant contended that he had repaid a lump sum amount of Rs.60,000/- till the year 1996 but again opponent bank received Rs.73,000/- directly from the insurance claim as sanctioned by the insurance company on 20.09.1996. In addition of the said amount he further deposited Rs. 95,413/- on cash towards loan amount. Thus he contended that the amount of Rs.2,03,300/- was paid against the loan amount of Rs.1,00,000/- sanctioned by the opponent bank till 31.03.2001.
4. Complainant further submitted that as the opponent finance corporation initiated legal recovery proceedings he approached to the civil court by filing civil suit bearing RCS No.500/86 at Parbhani for restraining the opponent 4 corporation from taking forceful possession by legal reference on the factory of complainant. Accordingly status quo was granted by the civil court till 09.06.2008. However said status quo order was vacated, the opponent corporation took the possession of his shade and along with the land and machinery on 15.06.1988. He submitted that the total valuation of the said property as he had obtained from ONE PLUS Architect Nanded was of Rs.8,15,767/- However the entire property was sold out by the opponent corporation for the meager amount of Rs.1,08,000/-. He also submitted that he had admitted to declare his industrial unit as sick unit and for getting the benefit of the same but he could not succeed. He had therefore filed writ petition before the High Court Bench at Aurangabad for issuing direction to the District Industry Centre. However said writ petition was required to be withdrawn due to unavoidable circumstances.
5. The complainant therefore alleging deficiency in service and unfair trade practice against the opponent finance corporation as well as opponent bank had filed complaint before the District Forum seeking directions against the opponent finance corporation to pay him the total compensation of Rs.8,15,767/- towards cost of property which was illegally sold by it along with interest at 18% p.a. since 15.06.1988 till its realization. He also sought direction against opponent corporation for giving him liberty to deduct the lawful amount as per agreed rate of interest i.e. 8.5% p.a. on the loan to Rs.,1,36,000/- advanced by it. The complainant further sought directions against opponent corporation as well as opponent bank jointly and severally to pay a sum of Rs.3,95,000/- against loss of earnings and Rs.10,000/- towards mental harassment and Rs.5000/- as cost of the complaint etc.
6. The opponent finance corporation appeared before the Forum and resisted the claim. It has admitted to have sanctioned the loan of Rs.1,36,000/- towards purchase of plot and the built-up shade along with plant and machinery. 5 F.A. No. 844-08 However it has denied the other adverse allegations made against it. It was averred that the loan was sanctioned to the complainant at the annual interest of 14.5% and not of 8.5% as alleged by the complainant. It was contended by the opponent corporation that in addition to the loan of Rs.1,36,000/- the complainant was also sanctioned loan of Rs. 64,000/- for additional shade and machinery. However since the complainant could not comply with the terms of the said loan i.e. producing the required income tax certificate, the said loan amount was not disbursed and finally the sanction was cancelled. It was further contended that the complainant was not regular in the repayment of the loan disbursement in spite of regular persuasion and therefore considering the default in the repayment of loan a notice u/s.29 was issued to the complainant on 09.10.1986 for taking over the possession of the said industrial establishment. However, the said proposed action was challenged by the complainant in the civil court through civil suit No.500/1986 the said suit was contested by the corporation and the same was ultimately dismissed on 09.06.1988. Therefore the complainants industry was taken in possession on 15.06.1988. That, after taking over the possession of the property its valuation was obtained from Shri. S.S. Nandapurkar the approved architect of panel of the corporation. That, as per the valuation report of the said architect the value of building including land was reported at Rs.47,125/- and for following machinery the report of Shri. Z. A. Chudiwal, the Chartered Engineer was obtained and submitted his report on 28.07.1988. That, as per the report of Shri. Chudiwal the valuation of the plant and machinery was worked out to Rs.74,850/-. Thus the total valuation of the asset work out to Rs.21,975/-.
7. After taking over the possession and getting the valuation of the said asset the opponent corporation had advertised for sale of the same on 09.07.1988. However the complainant again filed the suit in the civil court bearing RCS No.619/88 for restraining the corporation for calling tenders and disposing the 6 said assets which was mortgaged with the corporation. However, the said suit was withdrawn by the complainant on 29.03.1990 and hence the property was re- advertised for sale from March,1990 to August,1992. That, as per the said advertisement the land and building was sold to the higher bidder at Rs.88,000/- on 06.02.1992 and the plant and machinery was sold for Rs.20,000/- i.e. total assets were sold at Rs.1,08,000/- by following due procedure. As regards the balance amount of Rs.26,000/- out of the sanctioned loan of Rs.1,36,000/- it was contended that since there was a default in the repayment of installment as per the procedure and powers of the corporation, said amount of Rs.26,000/- was adjusted against the repayment of loan of Rs.1,10,000/- which was earlier disbursed in two installment i.e. Rs.12,600/- and Rs.13,400/-.
8. It was thus contended that the action taken by the corporation was as per process of law. However the complainant filed civil suit in the civil court as well as writ petition in the Hon'ble High Court and complaint before the Minorities Commission, but every time he had to lost and therefore the complaint filed before the District Forum, which is false and baseless be dismissed.
9. The opponent bank also appeared before the Forum and resisted the claim of the complainant by way of filing written version. It had admitted to have granted a cash credit facility of Rs.1,00,000/- in the year 1980 on certain terms and condition as agreed by the complainant. That, the bank had also enhanced the cash credit limit upto Rs.2,00,000/- in the year 1983. However the complainant failed to utilize the said credit facility properly. It was also contended that the complainant was irregular in repayment of loan and hence there was a breach of terms and conditions, on the basis of which he was sanctioned the cash credit loan. It was further alleged that instead of repeated request by the opponent bank, complainant failed to regularize the loan amount and therefore the opponent bank had to file a special suit No.78/98 on 07.03.1998 in the Civil Court, 7 F.A. No. 844-08 Parbhani which was decreed in favour of the opponent bank. It was further contended that since the complainant had made default in payment the insurance claim amount of the complainant was adjusted against the loan amount as per the procedure and hence it was contended that there was no any deficiency in service on the part of opponent bank and the complaint being false and baseless be dismissed against it.
10. The District Forum after considering the evidence on record as placed before it by parties to the dispute and after hearing them has dismissed the complaint by way of its impugned judgment and order. It is observed by the District Forum that although there was a rebate agreed at 6% over the interest of 14.5% it was subject to regular repayment of loan installment. It is further observed by District Forum that as agreed upon by the complainant and the opponent corporation the loan was to be repaid from 20th October,1981. However the complainant has not produced any cogent evidence to show that he had paid the regular installments and hence there was nothing wrong in adjusting the amount of Rs.26,000/- i.e. Rs.12,600/- against the loan amount Rs.1,10,000/- already disbursed. It is also observed by the District Forum that although additional loan amount of Rs.64,000/- was not sanctioned by the opponent corporation it was only because of failure on the part of complainant to submit the required income tax certificate to the opponent corporation in spite of various correspondence as made by the opponent corporation with the complainant. It is further observed by the District Forum that the possession of the property in dispute was taken by the opponent corporation by following due procedure of law and also its disposal was done after giving advertisement in the 'Daily Lokmat' newspaper on various dates. Hence it is held by the District Forum that although the possession of the property was taken on 15.06.1988 the actual sale proceeding were completed in the year 1994 and therefore though the complainant had sufficient opportunity to repay the loan and to get the auction 8 proceeding cancel he did not avail the same and hence there was no any deficiency in service on the part of opponent finance corporation. It is also observed by the District Forum that various civil suits filed in the civil court and also writ petitions filed in the High Court were either dismissed or withdrawn by the complainant. It is further held by the District Forum that the amount of insurance claimed Rs. 73,000/- were rightly recovered by the District Forum as there was a default in the repayment of loan which was disbursed by the opponent bank by the complainant. It is thus in keeping with these observations the District Forum by relying on the citations of the Hon'ble National Commission and the Hon'ble Apex Court has dismissed the complaint discharging both the opponents from the charge of deficiency in service and unfair trade practice by way of its impugned judgment and order.
11. Feeling aggrieved by the said judgment and order the present appeal is filed in this Commission by the complainant. This appeal came to be finally heard on 25.02.2014. Adv. Shri. Chitnis was present for the appellant. Adv. Shri. S. R. Deshpande for opponent finance corporation and Adv. Shri. S. B. Gore for opponent bank. All the three counsel have also submitted their written notes of arguments. We heard them finally and adjourned the appeal for judgment.
12. The learned counsel Shri. Chitnis for the appellant/complainant submitted that although loan of Rs.1,36,000/- was sanctioned the amount of Rs.1,10,000/- was actually disbursed and the remaining amount of Rs.26,000/- was illegally shown to be adjusted against the repayment of loan of Rs.1,10,000/- in two installment i.e. Rs.12,600/- as on 03.10.1981 and Rs.13,400/- on 14.04.1982. He further submitted that although the additional loan of Rs.64,000/- was sanctioned, it was not actually disbursed. In addition he submitted that complainant could run his unit till 26.12.1986 only as due to natural calamity of cyclone which took place on 26.12.1986 damaged the industrial shade and also the machinery etc. The loss of about Rs.2,05,000/- was sustained by the 9 F.A. No. 844-08 complainant. As against the said loss the insurance company settled the claim for only Rs.91,361/-. However out of this amount of insurance claim the opponent finance corporation obtained Rs.18,361/- and remaining amount Rs.73,000/- was directly adjusted by the opponent bank against the loan sanctioned by it to the complainant. The learned counsel Shri. Chitnis further submitted that as against the actual valuation of the assets of complainant at Rs.8,65,000/-, the opponent corporation disposed of this asset only for the total amount of Rs.1,08,000/-. He thus contended that the action of the opponent No.1 in taking over the possession of the property of the complainant and disposing the same at throw away price was sufficient to treat deficiency in service as well as unfair trade practice. Whereas the opponent bank also got insurance amount Rs.73,000/- adjusted directly to the loan account of the complainant without the complainants consent. He therefore contended that the claim of the complainant is quit just and proper. However the District Forum without appreciating the evidence on record placed by the complainant has wrongly dismissed the complaint by way of its impugned judgment and order, which requires to be set aside by allowing the present appeal filed by the complainant.
13. On the other hand, the learned counsel Shri. S. R. Deshpande appearing for the opponent finance corporation submitted that it is only because of the default committed by the complainant in making repayment of the loan the opponent finance corporation was constrained to take the possession of the said industrial property which was mortgaged by the complainant with the said corporation. He further contended that it is only because of the default made by the complainant the opponent finance corporation had adjusted the balance loan amount of Rs.26,000/- against the loan of Rs.1,10,000/- which was actually disbursed to the complainant. He further contended that the additional loan amount of Rs.64,000/- though sanctioned it could not be disbursed only because of failure of the complaint in submitting required income tax certificate instead of 10 repeated correspondence. It is further submitted that after taking over the possession on the said property on 15.06.1988, the valuation of the land and building and also machinery obtained from the authorized valuer and accordingly the property was disposed by publishing advertisement to the highest bidder and hence there was no any deficiency in service or unfair trade practice either taking over the possession of the said property or in its disposal. The learned counsel also contended that the complainant had filed different civil suits and also writ petitions in the Hon'ble High Court. However these civil proceedings either were decided in favour of the opponent finance corporation or they were withdrawn by the complainant which undertakes that the action taken by the corporation was quit just and proper. He therefore contended that the appeal filed by the complainant is being devoid of any merit be dismissed.
14. Whereas learned counsel Shri.S. D. Gore for opponent bank submitted that the initially cash credit loan of Rs.1,00,000/- was sanctioned to the complainant and subsequently the said cash credit was enhanced to Rs.2,00,000/- with the expectation that the business of the complainant would grow. However the complainant was come to be irregular in repayment of the said loan amount and therefore the insurance amount of Rs.73,000/- out of the total sum which was sanctioned by the insurance company against the loss sustained by the complainant towards damages due to cyclones was adjusted as per procedure against the loan amount. Therefore in adjusting the said amount in loan account of the complainant, there was no any deficiency in service or unfair trade practice as alleged by the complainant. It was also contended that since there was a default made by the complainant in making the repayment of loan the bank had rightly filed Spl. Civil Suit bearing No.SCS No.7/88 in the Civil Court, Parbhani on 07.01.1988. He thus contended that it is only failure of the part of complainant the opponent bank had to take steps for filing civil suit. It is averred that action taken by the opponent bank are quit just and proper and there is no deficiency in 11 F.A. No. 844-08 service or unfair trade practice as rightly be held by the District Forum. Therefore the appeal filed by the complainant be dismissed.
15. We have carefully gone through the papers such as the copies of complaint, written version filed by the opponents, impugned judgment and order, the other correspondence made by the opponents with the complainant, appeal memo, the written notes of arguments filed by the respective counsel and the case laws referred by them etc. The main question before us is whether the appellant/complainant has proved the deficiency in service as well as unfair trade practice against the opponent finance corporation as well as the opponent bank. The grounds on the basis of which the complainant has alleged deficiency in service against the opponent finance corporation are that though loan of Rs.1,36,000/- was sanctioned only the amount of Rs.1,10,000/- was disbursed and the remaining loan amount of Rs.26,000/- was later on illegally adjusted against the repayment of loan. That, additional loan of Rs.60,000/- though sanctioned the same was not disbursed. That although the loan installments were paid to the opponent finance corporation it had illegally forfeited the assets i.e. the industrial premises including the plants and machinery and further the same was sold at the very low price causing the financial loss to the complainant. It was further alleged that due to natural calamity there was damage to his industry for which he had received insurance sum of Rs.91,361/-. But the opponent corporation directly received the amount of Rs.18,361/- and remaining amount of Rs. 73,000/- was adjusted by the bank against the loan without his consent. On these grounds the complainant has alleged the opponent finance corporation and the bank for deficiency in service.
16. However perusal of the record and also the written notes of arguments we find that although the loan of Rs.1,36,000/- was disbursed on 04.10.1981 as the first installment. The second installment of loan Rs.12,600/- and third installment of loan Rs.13,400/-though were adjusted they were sanctioned through cheque 12 No.310981 and 148982 respectively. Both these amounts were adjusted against the repayment of earlier loan of Rs.1,10,000/- as there was a default in the repayment of loan. As observed by the District Forum as per the agreement the opponent finance corporation was empowered for taking the said action as there was default made by the complainant in repayment. As regards the additional loan amount of Rs.64,000/- which was sanctioned to the complainant the same could not be disbursed because of the failure on the part of the complainant himself to provide the income tax clearance certificate which was required as per Sec.230 of Income Tax Act. It is pertinent to note that opponent finance corporation by way of its letters dated 07.03.1984, 20.07.1984, 04.09.1984 and 22.09.1985 had continuously persuaded to comply the terms of the sanctioned of the said loan but the complainant neglected the same and therefore the opponent finance corporation was compelled to cancel the said loan of Rs.64,000/- on 12.11.1985. Therefore for not making disbursement of the said loan of Rs.64,000/- the opponent finance corporation cannot be held responsible.
17. It is further observed from the letter dated 04.07.1986 issued by the opponent finance corporation that due to failure on the part of the complainant to make the regular repayment of the installment of loan the amount of loan which was outstanding against the complainant was more than 50%. It is further observed that even after issuing notice u/s.30 of the MSFC Act,the complainant did not repy the same. Therefore the opponent corporation had to take steps for issuing notice dated 20.10.86 u/s. 29 for taking possession of the mortgaged property of the complainant. However, the complainant filed a civil suit bearing No.500/86 for restraining the opponent corporation to take possession of the said property. But the said suit came to be dismissed by the order of court on 01.06.88 and therefore the property was taken in possession on 15.06.88. 13 F.A. No. 844-08
18. It is further observed that the disposal of the said property for recovery of the outstanding loan amount appears to have been done by following the due process of law. It is revealed that for sale of the said property the opponent corporation had given notice in the 'daily lokmat' dated 09.07.88, 10.03.1990, 20.07.1990, 27.10.1990, 10.01.1991, 31.05.1991, 01.02.1992, 13.08.1992 and 21.04.1993. It is also revealed that before giving advertisement for sale of the property the valuation of the same was obtained from the authorized architect and chartered accountant who were on the panel of the corporation. Thus following the due procedure for auction of the property, the opponent corporation has sold out the same and therefore the complainant's allegation that it was sold out at low price cannot be accepted. In fact the complainant had sufficient opportunity to participate in the said auction procedure and to purchase the same. However if doing so he has simply made allegations that the same was sold at the very low price causing financial loss to the complainant.
19. It is further to be noted that even for restraining the auction of property the complainant had filed Spl.Suit No.619/88 and writ petition No.750/88 in High Court. However both the Spt. Suit as well as writ petition was withdrawn by the complainant. It is further observed that the complainant had also made a complaint No.30/4197 to the Minority Commission but the same complaint has also dismissed. Thus the dismissal of his civil suit by the Civil Court and withdrawing of the suits and writ petition and further the decision of the Minority Commission etc. supports the action taken by the opponent corporation.
20. As regards the allegations against the opponent bank we also do not find any force in the said allegation and admittedly a loan of Rs.1,00,000/- as working capital was sanctioned and disbursed by the opponent bank to the complainant. However he was not regular in the payment of the said loan and therefore had gone in arrears. That due to natural calamity the complainants industry has 14 sustained damages, therefore he had filed insurance claim to the insurance company for the compensation towards loss of Rs.2,05,000/- However, insurance company settled the claim as full and final settlement as Rs.91,361/-. That out of this amount the opponent corporation has adjusted Rs.11,361/- towards outstanding loan and Rs.73,000/- by the opponent bank sanctioned by it. It is further revealed that due to default made by the complainant in repayment of the loan as disbursed by the bank, it had to file a Spt. Civil Suit bearing No.7/88 for recovery of the same.
21. In view of the aforesaid facts and observations it can be concluded that the complainant has failed to prove the deficiency in service or unfair trade practice against opponent finance corporation as well as opponent bank. In fact, it appears that it is the complainant who made every attempt to avoid the recovery of loan as sanctioned by the opponent finance corporation as well as opponent bank. We find that the District Forum has considered all these aspects thoroughly and has rightly passed the well reasoned impugned judgment and order. The appeal being devoid of any merit therefore requires to be dismissed by confirming the impugned judgment and order.
22. In the result we pass the following order.
ORDER
1. The appeal is dismissed.
2. No order as to cost.
(K. B. Gawali) (S.M. Shembole)
Member Presiding Judicial Member
Kalyankar