State Consumer Disputes Redressal Commission
Dr. N. Prahald Kishore Mathur vs 1. M/S. Arms, A Division Of Asset ... on 17 February, 2017
Cause Title/Judgement-Entry STATE CONSUMER DISPUTES REDRESSAL FORUM Telangana Complaint Case No. CC/212/2015 1. Dr. N. Prahald Kishore Mathur S/o late nand Kishorem aged 72 years Occ. Doctor, R/o B-2, Usha Arun Apartments, banjara Hills, Hyderabad ...........Complainant(s) Versus 1. 1. M/s. Arms, A division of Asset Reconstruction Company Ltd India Ltd. Rep by its Manager, Flat No 207, 2nd floor, Bhuvana Towers, above CMR Exclusive, S.D Road, Patny, Secunderabad 500003 2. 2. M/s. Arms, A division of Asset Reconstruction Company Ltd India Ltd. Rep by its Managing Director, Having its Registered office, The Ruby, 10th floor, 29, Senapati Bapat marg, Dadar W, Mumbai 400028 ............Opp.Party(s) BEFORE: HON'BLE MR. JUSTICE B. N. RAO NALLA PRESIDENT HON'BLE MR. Sri. PATIL VITHAL RAO JUDICIAL MEMBER For the Complainant: For the Opp. Party: Dated : 17 Feb 2017 Final Order / Judgement STATE CONSUMER DISPUTES REDRESSAL COMMISSION OF TELANGANA : AT HYDERABAD CC NO.212 OF 2015 Between : Dr.N.Prahlad Kishore Mathur S/o late Nand Kishore, aged 72 years, Occ: Doctor, R/o B-2, Usha Arun Apartments, Banjara Hills, Hyderabad. Complainant And 1) M/s Arms, a Division of Asset Reconstruction Company (India) Limited, Rep. by its Manager, flat no.207, 2nd floor, Bhuvana Towers, above CMR Exclusive, S.D. Road, Patny, Secunderabad - 500 003. 2) M/s Arms, a Division of Asset Reconstruction Company (India) Limited, Rep. by its Managing Director, having its registered office at The Ruby, 10th floor, 29, Senapati Bapat Marg, Dadar (W), Mumbai - 400 028. Opposite parties Counsel for the Complainant : Sri Aadesh Varma Counsel for the Opposite parties : Sri S.Sainathan Coram : Hon'ble Sri Justice B.N.Rao Nalla, President & Sri Patil Vithal Rao, Member
Friday, the Seventeenth day of February Two thousand Seventeen Oral Order : (per Hon'ble Sri Justice B.N.Rao Nalla, President) *** The complaint is filed under section 17(1)(a)(i) of the Consumer Protection Act, 1986 by the Complainant against the Opposite parties praying to direct the Ops 1 and 2 jointly and severally to execute sale deed in his favour for the property bearing Flat No.1 in RHB Block, ground floor, Usha Arun Complex H.No.8-2-674/2 and 8-2-674/1, Road No.13, Banjara Hills, Hyderabad; to award damages of Rs.5,00,000/- towards agony suffered by the complainant; to award interest @ 24% p.a. from the date of receipt of money till the execution of document and handing over possession of the property, for using the money of the complainant and to award costs of the complaint.
2. The Complainant if a senior citizen and a doctor by profession. He got across the publication of auction notice made in daily newspaper as to the property bearing Flat No.1 in RHB block, Ground floor, Usha Arun Complex, bearing premises No.8-2-674/2 and 8-2-674/1, Road No.13, Banjara Hills, Hyderabad in as is where is condition for and on behalf of State Bank of India. Having seen the same, Complainant shown his desire to bid in the auction. The executives of OP No.1 guided the complainant to follow necessary procedures and complainant has bid an amount of Rs.41,20,000/- and paid an amount of Rs.4,00,000/- through cheque bearing No.001151 dated 14.09.2015 drawn on Axis Bank, Banjara Hills branch, Hyderabad.
3. After completion of formalities, the bids were opened on 15.09./2015 and the Complainant found to be highest bidder, which was intimated to him by letter dated 23.09.2015 asking to pay the balance amount as per schedule. The complainant paid the amounts as per schedule vide cheque No.001174, dt.28.09.2015 for Rs.6,30,000/- and another sum of Rs.30,90,000/- vide cheque bearing No.001191, dt.07.10.2015, which were acknowledged by the Opposite parties on 28.09.2015 and 08.10.2015 respectively informing the complainant that they would call him for registration within 7 days therefrom.
4. Complainant received sale certificate through his e-mail asking him to pay the registration charges and complete the formalities for registration. As instructed, complainant obtained bankers cheque bearing No.001254, dated 17.11.2015 for Rs.2,56,720/- in favour of the joint sub-registrar, Hyderabad and also purchased non-judicial stamps worth Rs.800/- and got drafted the sale deed. When the complainant approached the Ops on 18.11.2015, to his shock and dismay, the OP no.1 refused to proceed with the registration disclosing that another prospective purchaser is offering more, as such, they are going to cancel the auction and put the property for re-auction.
5. In spite of trying to convince the Ops, they did not heed to the request of the Complainant and called the security personnel to neck the complainant out from their office. Complainant being old, frightened with the acts of the Ops, left the office. However, complainant got issued notice on 25.11.2015, to which, the Ops gave a reply with false and frivolous allegations. The OP No.1 played mischief by mentioning the sending of original cheque with the letter while only copy is placed. This conduct on the part of the Ops amounts to cheating. This is nothing but fraud played by the Ops and is a case of misappropriating money of innocent customers. The entire episode is representative example of cheating, manipulation, exploitation and laxity on the part of the Ops.
6. On account of harassment caused by the Ops, complainant suffered monetary loss and mental agony, hence, entitled for damages of Rs.5,00,000/- because of negligence and deficiency of service on the part of the Ops. Hence the complaint, with the reliefs as stated, supra, at paragraph no.1.
7. The Ops resisted the claim by way of written version contending that the complaint is not maintainable either in law or on facts. From the pleadings, it is clear that the complainant is seeking orders from this Commission against the 'security interest' which is mortgaged property of ARCIL being Asset Reconstruction and Securitization Company, which already invoked provisions of SARFAESI Act and for which no order shall be granted by any Civil Court as prohibited under Section-34 of SARFAESI Act, 2002, hence, liable to be dismissed on this ground alone. The complainant is not falling under the definition of 'consumer' as defined under Section 2(1)(d) of the Act as there is no service rendered to the complainant. The auction was conducted strictly under the provisions of SARFAESI Act, 2002.
8. The subject property was put to auction by Ops on its own and not on behalf of State Bank of India as the subject account was already assigned to ARCIL vide assignment agreement dt.29.01.2015 and all the rights and title and underlying security of the borrower Mr.VVV Satyanarayana Murthy vide loan account No.30012850316 was transferred to Arcil u/s-5 of SARFAESI Act. The auction was conducted under Section 13 (4) of SARFAESI Act, 2002. At the request of complainant, details of documents required for registration were mailed vide e-mail dt.09.11.2015. The Ops never informed him to arrange for registration charges but instead, complainant, on his own took bankers cheque to add fuel to the litigation.
9. On 18.11.2015, the Ops intimated complainant about cancellation of the auction as there is a technical error in the valuation report submitted by the valuer, who failed to consider the portion of the property i.e., 65 sq. yards of site which is in exclusive use of the borrower as per the sale deed. It is false to state that the Ops got another purchaser and offered more amount. There are no security officers posted at their branch office. To the notice got issued by the complainant, a reply dated 24.11.2015 was sent along with original bankers' cheque bearing No.003288 dt.20.11.2015 for Rs.41,20,000/- drawn on HDFC Bank Ltd.,
10. As the complainant denied to have received the original cheque, they issued instructions of "stop payment" to their banker and again obtained another draft bearing No.178608, dt.05.02.2016 for Rs.41,20,000/- drawn on Punjab National Bank in favour of the complainant and addressed a letter dated 17.02.2016 to the complainant to collect the draft from their branch. In spite of producing the demand draft/cheque on the last two occasions i.e., 24.02.2016 and 24.03.2016, the complainant is reluctant to receive the same, hence, filed along with the written version.
11. Whatever the sale proceeds received towards the sale of property, the same will be appropriated to the borrower's account and excess, if any, will be refunded to the borrower. There are no malafides can be attributed to the Ops. Even according to the terms and conditions of the auction, as a secured creditor, the Ops are having right to cancel the auction at any time if the same is not done in accordance with terms and conditions, which was also duly agreed by the complainant. In this regard, clauses-13 and 17 of the bid document are of vital importance. The Ops have already cancelled the auction and returned the sale consideration to the complainant, hence, there is no deficiency of service or negligence.
12. Ops reserve their right to initiate defamation case against the false allegations raised by the complainant. The registration charges is not paid to the Ops. Cancellation of auction is not to harass the complainant but for technical error in valuation of property. The complainant can still participate in re-auction after revaluation and no prejudice is caused to him. For the sake of complainant, the Ops cannot sell the property for less valuation by causing loss to the borrower. There is no deficiency in service on their part. No cause of action arose to file the complaint. Hence prayed to dismiss the complaint with exemplary costs.
13. On his behalf, the Complainant filed the evidence affidavit and the documents, Exs.A1 to A13. The counsel on behalf of the Opposite parties submitted that they are not inclined to file the affidavit evidence as this Commission has no territorial jurisdiction since the matter falls under the SARFAESI Act and to that extent relied on citations.
14. Heard both sides.
15. The points for consideration are :
i) Whether the Complainant is a 'consumer' as defined under the Act and whether there is any negligence and deficiency in service on the part of the Opposite parties and whether the Complainant is entitled for the reliefs as prayed for?
ii) To what relief ?
16. POINT NO.1 : It is not in dispute that the Opposite parties offered the subject property in e-auction and the Complainant had participated in the bid and the bid was knocked down in favour of the Complainant for a sum of Rs.41,20,000/-. It is also not in dispute that in pursuance of the payment schedule as per the terms and conditions of the bid, the Complainant paid the monies to the Opposite parties. The only dispute is that even after making payment of registration and stamp duty charges by the Complainant, the Opposite parties refused to convey the subject property in favour of the complainant on the ground that the auction was cancelled.
17. In support of his claim, the Complainant got marked Ex.A1 to A13. Ex.A1 is the copy of public notice-auction cum sale of properties, wherein the subject property finds place at serial number with loan account No.30012850316. Ex.A2 is the letter addressed by Ops dated 23.09.2015 informing the payment schedule and terms and conditions to the complainant. Ex.A3 is the original receipt for Rs.4,00,000/-. Ex.A4 is the original receipt for Rs.6,30,000/-. Ex.A5 is the original receipt for Rs.30,90,000/-. Ex.A7 is the copy of statement of encumbrance on property, which is the subject matter of the complaint in dispute. Ex.A8 is the copy of e-mail, dated 09.11.2015. Ex.A9 is copy of sale certificate along with enclosures thereon. Ex.A10 is the copy of demand draft bearing No.001254, dated 17.11.2015 for Rs.2,56,720/-. Ex.A11 is the office copy of legal notice dated 21.11.2015 got issued by the complainant to the Ops. Ex.A12 are the original postal receipts. Ex.A13 is the original postal acknowledgement. We may state here though Ex.A6 referred to above in the complaint as well as in the affidavit evidence, however, the same does not find place in the case bundle.
18. We may state that there is no quarrel as to the procedure being followed by the opposite parties in conducting of auction and receipt of money from the complainant. The only quarrel is that the dispute do not fall within the ambit of Consumer Protection Act, 1986. To that extent, the Opposite parties filed IA No.203/2016 seeking to dismiss the complaint along with interim orders dated 02.12.2015 in IA No.493/2015 with exemplary costs as the same is not maintainable. In IA No.493/2015, this Commission passed orders on 02.12.2015 granted interim direction against the Opposite parties restraining them from conducting re-auction of the property or creating third party interest in any manner, pending disposal of the complaint.
19. As against the same, M/s Asset Reconstruction Company (India) Limited (Arcil), the parent company of the Opposite parties filed WP No.44706 of 2016 before the High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh, wherein, vide orders dated 22.12.2016 the Hon'ble High Court directed this commission to dispose of IA No.203/2016 as expeditiously as possible and not later than, one month from the date of receipt of copy of the order. The copy of order is received by this Commission on 17.01.2017. Since the Commission sought it necessary to dispose of the complaint on merits, the question of considering the IA No.203/2016 may not arise.
20. From the advertisement in respect of the auction of the said property and also from the information provided to the participants of auction, it was very clear that auction was on "as is where is" basis. Therefore, it is the contention of the counsel for Opposite parties that the complainant who had participated in the auction of the subject property on "as is where is basis" is not a consumer as defined under Section 2 (1) (d) of the Consumer Protection Act, 1986 particularly when there is no element of service hired or availed by the complainant or promised to be rendered by the opposite parties. In support of his contention, learned counsel for the opposite parties has relied upon the following judgments
i) High Court of Kerala at Ernakulam, in WP (C) No.5957/2011 (T), in the matter of Punjab National Bank Vs. The Consumer Disputes Redressal Forum and others, decided on 29.07.2011, wherein it had been held that the "Consumer Disputes Redressal Forum has no jurisdiction to entertain any complaint in respect of any measures taken by a Bank or a Financial Institution under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002).
ii) Orissa High Court at Cuttack in WP (C) No.688 of 2011, decided on 04.02.2011, in the matter of Central Bank of India & another Vs. Ram Chandra Sahoo & others.
iii) National Consumer Disputes Redressal Commission, New Delhi in RP No.721/2013, in the matter of Standard Chartered Bank through its Authorised Officer vs. Virendra Rai, decided on 01.04.2013, wherein the Hon'ble Commission discussed various aspects and accordingly quashed the proceedings pending before the District Forum consequently dismissing the complaint.
The above referred Judgments squarely applies to the facts in the case on hand.
21. Admittedly, the property which is sought to be purchased by the Complainant is none other than the auction property under the SARFAESI proceedings. In this regard, we may state that the Consumer Protection Act, 1986 is a general enactment and the SARFAESI Act, 2002 is a special enactment. Section 34 of the SARFAESI Act, provides that "no civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any Court or other authority in respect of any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993."
22. In the recent past, the Hon'ble National Commission in the matter of Chief Manager/Authorized Officer, State Bank of Mysore vs. G.Mahimaiah, decided on 30.10.2015 in FA No.483/2014 reported in CDJ 2015 (Cons) case No.685 while allowing the appeal and dismissing the claim of the Complainant as against the SARFAESI proceedings, in crystal clear terms observed that auction purchaser is not a consumer. Again in CC No.145/2012, in the matter of Society for Consumers & Investors Protection (SCIP) & Others Versus Haryana State Industrial & Infra. Development Corporation Ltd., decided on 26.07.2016, reported in CDJ 2016 (Cons), 379 took the same view. We are fortified with the above findings rendered by the Hon'ble National Commission.
23. We are not impressed with the submissions made by the counsel on behalf of the Complainant. We find that the Complainant is before a wrong forum. In view of our discussions supra, we answer the point No.1 framed for consideration at paragraph No.15, supra, against the Complainant and in favour of the Opposite parties. In the result, the point No.1 is decided in negative and consequently, the complaint deserves to be dismissed.
24. POINT No.2 : In view of answering the point No.1 against the Complainant, the point No.2 needs no consideration.
25. In the result, we dismiss the complaint but in the circumstances, parties to bear their own costs. The interlocutory applications, if any, shall also stand dismissed.
PRESIDENT MEMBER Dated: 17.02.2017 APPENDIX OF EVIDENCE WITNESSES EXAMINED For Complainant : For Opposite parties : Affidavit evidence of Dr.N.Prahlad -none- Kishore Mathur as PW1. EXHIBITS MARKED
Ex.A1 is copy of public notice-auction cum sale of properties, issued by the Ops, wherein the subject property is listed at serial number 5.
Ex.A2 is the letter dated 23.09.2015 addressed by the Ops to the Complainant.
Ex.A3 is the original receipt bearing No.4340, dated 23.09.2015 for Rs.4,00,000/-.
Ex.A4 is the original receipt bearing No.4348, dated 28.09.2015 for Rs.6,30,000/-.
Ex.A5 is the original receipt bearing No.6732, dated 08.10.2015 for Rs.30,90,000/-.
Ex.A7 is the copy of statement of encumbrance on the subject property.
Ex.A8 is the copy of e-mail dated 09.11.2015 addressed by Ops to the complainant.
Ex.A9 is the copy of sale certificate along with enclosures.
Ex.A10 is the copy of demand draft for Rs.2,56,720/- favouring Joint Sub-Registrar Hyderabad South of Axis Bank Ltd., Ex.A11 is the office copy of legal notice, dated 21.11.2015 got issued by the complainant to the opposite parties and bank.
Ex.A12 are the original postal receipts dated 21.11.2015 and original postal acknowledgement.
Ex.A13 is the letter dated 25.11.2015 addressed by the Ops to R.C.Varma, counsel for the Complainant.
PRESIDENT MEMBER Dated: 17.02.2017 [HON'BLE MR. JUSTICE B. N. RAO NALLA] PRESIDENT [HON'BLE MR. Sri. PATIL VITHAL RAO] JUDICIAL MEMBER