State Consumer Disputes Redressal Commission
Hdb Financial Services Ltd vs Vishnubhai M Patel on 9 August, 2023
Details DD MM YY
Date of disposal 09 08 2023
Date of filing 21 03 2018
Duration 19 04 05
BEFORE THE CONSUMER DISPUTES REDRESSAL COMMISSION
GUJARAT STATE AHMEDABAD.
COURT NO: 03
APPEAL NO. 385/2018
1. H.D.B Financial Services Ltd
603, 6th Floor, 21st Century Building,
Near World Trade Centre, Ring Road,
Surat.
2. Branch Manager Shree
H.D.B Financial Service Ltd
603, 6th Floor, 21st Century Building,
Near World Trade Centre, Ring Road,
Surat. ...Appellants
(Original Respondents)
Vs.
Vishnubhai Motibhai Patel
Address- 199, Gopal Nagar Society,
Pandesra, Surat. ...Opponent
(Original Complainant)
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BEFORE: Mr. I. D. Patel, Judicial Member
Ms. A. C. Raval, Member
APPEARANCE: Mr. K.R. Patel L.A. for the appellants,
Mr. S.G. Shah L.A. for the opponent.
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ORDER BY MS. A. C. RAVAL, MEMBER
JUDGMENT
1. The appellants - original respondents have filed this appeal under section 15 of the consumer protection Act being aggrieved by and dissatisfied with the order dated 31.01.2018 passed by the learned District Consumer Disputes Redressal Forum (Additional), Surat Kushal A/385/2018 Page 1 of 10 (hereinafter referred to as "learned District Forum") in Consumer Complaint No.266 of 2017.
2. Heard learned advocate Mr. K.R. Patel for the appellants - original respondents and also heard learned advocate Mr. S.G. Shah for the opponent - original complainant.
Case of the complainant:
3. It is the case of the complainant that the complainant had purchased one transport vehicle i.e., TATA Hyva Tipper bearing registration no.GJ-05-AV-6536 in the year 2012 and availed the loan of Rs.20,75,000/- from the opponent - financial company and hypothecated the vehicle with the opponent - financial company. As per the payment schedule, the complainant has to pay loan amount in total 42 installments of Rs.57,430/-. The complainant paid the entire amount on 18.08.2016 and requested to give No Objection Certificate (NOC) letter. The NOC was not given by the opponent, hence, the complainant gave legal notice on 09.09.2016, which was served upon the opponent - financial company on 12.09.2016. The legal notice was neither replied nor complied with. Therefore, the complainant preferred Consumer Case No.266 of 2017 before the learned District Consumer Disputes Redressal Forum (Additional), Surat, which was partly allowed vide order dated 31.01.2018.
Arguments of the Appellants:
4. The learned advocate appearing for the appellants - financial company argued that the learned District Forum has erroneously allowed the complaint by erroneously coming to the conclusion that as the documents produced by the complainant are not disputed by the appellants - financial company without appreciating the fact of the appellants - financial company that the appellants - financial Kushal A/385/2018 Page 2 of 10 company was not heard at all and the matter was proceeded ex- parte. The conduct of the appellants - financial company is as per the RBI guidelines. The complainant had signed the loan agreement, hence, the terms and conditions of the loan agreement are binding to the complainant. the loan taken by the complainant is fully paid. That fact is not in dispute, but the loan by another person namely Jitendrakumar Patel, where the complainant was a guarantor has not paid the loan and the execution is filed against the original borrower - Jitendrakumar Patel (deceased) and Vishnubhai Patel i.e. the present complainant. Hence, the NOC is withheld by the bank as per the clause-20 of the loan agreement. Clause-20 is about the set-off and lien. The bank is having the general lien over the properties of the complainant hypothecated and lying with the bank, hence, under the provisions of general lien, the complainant is not entitled to get the NOC for his paid-up loan. The order passed by the learned District Forum is against the principles of natural justice and against the facts and law, hence, the same is required to be quashed and set aside and the present appeal may be allowed.
Arguments of the Opponent:
5. The advocate appearing for the opponent argued that the appellants
- financial company has chosen not to appear before the learned District Forum though the notice was served, hence, there is no infirmity in proceeding ex-parte in the complaint. The complaint has paid-up his loan as per the loan schedule on 18.08.2016, hence, is entitled to the NOC from the appellants - financial company. The appellants - bank cannot withhold the NOC against the paid-up loan taking shelter of the clause-20 of the loan agreement. The appellants - financial company has produced the loan agreement of Jitendrakumar Patel alongwith the documents Kushal A/385/2018 Page 3 of 10 attached with the said loan agreement and two proposal forms, one of the Jitendrakumar Patel and another of the complainant. These documents are produced without any application for filing additional evidence before this appellate forum, hence, may not be considered by this Commission. Even otherwise, the appellants - financial company has not produced the loan agreement of the complainant before this Commission. The title deed of the hypothecated property or the NOC cannot be considered as a property lying with the bank, which can attract the provisions of general lien. The complainant has not mentioned his hypothecated vehicle under the guarantee given for the loan agreement of Jitendrakumar Patel. If, special mentioning of property is not there in the guarantee clause, the bank cannot retain the title deed or NOC in the paid-up loan of the complainant. Hence, the order passed by the learned District Forum is just, proper and valid and may not be interfered and the present appeal may be dismissed.
Merits of the case:
6. For deciding the present appeal, certain facts are undisputed. That the complainant has purchased the truck and availed the finance from the appellants - financial company for Rs.20,75,000/-. As per the repayment schedule, the complainant has to pay total 42 installments of Rs.57,430/- on or before 18.08.2016. The loan is completely paid-up by the complainant on 18.08.2016. The complainant was a guarantor for the loan availed by Mr. Jitendrakumar Patel, who could not pay the loan. The appellants - financial company refused to give the NOC to the complainant after completion of the payment of loan amount on the ground of general lien on the complainant's property as per clause-20 of the agreement. The appellants - financial company have produced the list of documents alongwith the appeal, which are as under:
Kushal A/385/2018 Page 4 of 10(i) Loan agreement of Jitendrakumar Patel with terms and conditions of the agreement;
(ii) Execution application no.566 of 2018 in the arbitration proceedings no.571 of 2014 against Jitendrakumar Patel and the present complainant;
(iii) Loan application of Jitendrakumar Patel; and
(iv) Loan application of Vishnubhai Motibhai Patel.
The appellants - financial company have not appeared before the learned District Forum though the notice was served. The appellants - financial company have produced the documents without any application for additional evidence to be taken on record. The documents have been taken on record, but as there is no application for additional evidence under Order-41 Rule-27, admissibility of the documents have not been contested or decided. Even otherwise, except the loan application, none of the documents are relating to sanction of loan of the complainant. The documents produced are related to the loan sanctioned to Jitendrakumar Patel, where the complainant was shown as guarantor. The terms and conditions produced are in the case of loan agreement to Jitendrakumar Patel and not to the complainant. Those terms and conditions cannot be read for deciding the case of the complainant.
6.1 The main ground taken by the appellants - financial company for non-issuance of NOC is general lien over the property of the complainant as the complainant has stood as a guarantor in the loan granted to Jitendrakumar Patel and Jitendrakumar Patel could not pay the loan. The appellants - financial company have relied upon clause-20 of the Kushal A/385/2018 Page 5 of 10 agreement. The clause-20 is about the set-off and lien. The bank is having general lien over the property of the complainant lying with the bank. The documents produced and taken on record is of Jitendrakumar Patel and not of the loan granted to the complainant, hence, these conditions cannot be said to be conditions to be imposed in the case of the complainant. Even otherwise, if we see the provisions of general lien under Section 171 of the Contract Act, which reads 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.1 --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."
6.2 Looking to the aforesaid provision of Section 171 of the Contract Act, when any property is shown as security under the guarantee term, that can be retained or detained by the financial institution. The appellants - financial company have failed to demonstrate from any of the documents that the Kushal A/385/2018 Page 6 of 10 vehicle in question is shown as a security under the guarantee term. The complainant has given a personal guarantee and not the special or specific guarantee in the loan agreement of Jitendrakumar Patel. The appellants - financial company have taken the recourse of arbitration proceedings for settlement of account with Jitendrakumar Patel and have taken the recourse of civil execution for the same. Once the civil execution petition is filed, it is discretion of the court to decide how the due amount of loan in the case of Jitendrakumar Patel can be recovered. In the gist of the pending proceedings, the appellant - financial company cannot withhold the NOC of the vehicle loan of the complainant. The complainant has paid his loan as per the repayment schedule, hence, is entitled to the NOC on completion of the loan schedule. The account statement is produced by the complainant, where the following columns are required to be considered:
Total installments overdue(Rs): 0.00
Total LPP O/S Charges(Rs): 0.00
Total CBS O/S Charges(Rs): 0.00
Other Charges(Rs): 0.00
Net Receivable: ` 0.00
Status of Loan: Closed
Loan Stage: REGULAR
The detail of payment schedule is also attached. From those documents, we can see that the complainant has paid-up his loan. The loan status is closed. Hence, the complainant is entitled to the NOC as sought by him.
Kushal A/385/2018 Page 7 of 106.3 We have considered the judgment passed by the Hon'ble Madras High Court in the case of M. Shanthi Vs. Bank of Baroda dated 09.08.2017, wherein, the Hon'ble Court, in paragraph nos. 28, 31 and 32 has observed as under:
"28. In the judgment of Division Bench of this Court, reported in 2011 (2) CTC 465, in the case of State of Bank of India vs. Jayanthi and others this Court has held that the mortgage deed has to be considered as a contract to the contrary referred to in Section 171 of Contract Act and that therefore the bank cannot claim the documents of title deed deposited to create equitable mortgage invoking power of general lien under Section 171 of Indian Contract Act.
31. Hence this Court is of the firm view that the respondent bank cannot exercise right of lien to secure any other liabilities of the mortgagor by retaining the documents of the mortgagor or guarantor, which are deposited with an intention to secure a particular loan transaction. Lien is primarily considered as a right to retain security. It is doubtful whether in exercise of such right to retain the title deeds the mortgagee can bring the property for sale for recovery of some debt which is due from the mortgagor in connection with a different transaction, which is not covered by the mortgage.
32. Any agreement conferring a right upon anyone to bring the property which is offered as a security for a loan transaction is considered to be a transaction creating a right in immovable property and such Kushal A/385/2018 Page 8 of 10 agreement namely mortgage can be executed by way of a registered instrument. The right of lien, under Section 171 of the Indian Contract Act, will be contrary to the provisions of Transfer of Properties Act, if Section 171 is also made applicable to the title deeds, which are offered as a security in relation to a particular transaction. Considering the scope of Section 60 of the Transfer of Property Act, and the scope and object of Section 171 of the Indian Contract Act, this Court is of the firm view that the respondent Bank cannot retain the title deeds or proceed with the properties which were offered as security in relation to an independent loan transaction, even after the borrower discharged the entire liability of borrower in connection with the loan which is secured by deposit of title deeds."
The aforesaid judgment is not binding to this Commission, but the case of the complainant is squarely covered by the aforesaid judgment and we are agree with the ratio laid down by the Hon'ble Madras High Court.
7. We are of the considered view that the order passed by the Learned District Forum is legal, proper and correct in the eye of law. Therefore, it does not require interference. As a result, the appeal is required to be dismissed. Hence, in the interest of justice, following order is passed.
ORDER
1. The Appeal No.385 of 2018 filed by the appellants - financial company namely H.D.B Financial Services Ltd is hereby dismissed.
Kushal A/385/2018 Page 9 of 102. The impugned order dated 31.01.2018 passed by the passed by the learned District Consumer Disputes Redressal Forum (Additional), Surat passed in Consumer Complaint No.266 of 2017 is hereby confirmed.
3. No order as to costs.
4. Office is directed to verify the amount deposited by the appellants in appeal No.385 of 2018 and if found deposited, refund the same with interest, if any, accrued on deposit to the appellants by RTGS after following due procedure and verification. For this purpose, the appellants have to file an application with details to the account branch of this Commission.
5. Registry is hereby instructed to send a copy of this order in PDF format by E-mail to the learned District Consumer Disputes Redressal Forum (Additional), Surat for taking necessary action.
Pronounced in the open Court today on 9th_August, 2023.
[A. C. Raval] [I. D. Patel]
Member Judicial Member
Kushal A/385/2018 Page 10 of 10