MAJ.GEN.K.S.DAHIYA vs ROCKLAND LEASING LIMITED

BRIEFLY the facts arc that the complainants applied for a loan of Rs. 5 lacs to M/s. Rockland Leasing Limited-respondent, for purchasing a residential flat in NOIDA. It is alleged that before making an application for loan by the complainants the terms and conditions, under which the loan was to be advanced by the respondent, had been discussed by complainant No. 1 with Mr. Chawla; the Managing Director of the respondent and that the latter had assured that the loan would be given before 10th March, 1991.

IN accordance with the terms on which the loan was to be advanced, a qualifying reserve of Rs. 1,25,000/- alongwith processing charges of Rs. 10,000/- was deposited by the complainants with the respondent as detailed below : - (1) Rs. 50,000/- vide receipt No. 21076 dated 24th December, 1990. (2) Rs. 20,000/- vide receipt No. 21087 dated 9th January, 1991. (3) Rs. 65,000/- vide receipt No. 21097 dated 18th January, 1991.

It is pleaded by the complainants that the respondent did not give the loan before 10th March, 1991 between the parties, on the ground that the documents of title pertaining to the flat to be purchased did not meet their criteria for sanctioning the loan.

It is further pleaded by them that they requested the respondent to refund the said amount of Rs. 1,35,000/- but they did not do so inspite of service of notice on them. Ultimately they wrote to the complainants that they would refund the amount of Rs. 1,25,000/- after 25 months alongwith interest @ 12% per annum and that the amount of Rs. 10,000/- was taken by them as processing charges and as such that was not refundable. Consequently, it is prayed that the respondent be directed to pay Rs. 1,35,000/- alongwith interest @ 36% per annum.

THE complaint was contested by the respondent company. It is pleaded by them that the complainants were not consumer as defined in the Consumer Protection Act, hereinafter referred to as ''the Act'' and therefore, the amount cannot be claimed under the Act. On merits it is pleaded that the respondent is a Public Limited Non-Banking Financial Institution and is governed by the Reserve Bank of India Rules, hereinafter referred to as the Rules. According to the Rules, the complainants cannot get the refund of the amount of Rs. 1,25,000/- before 25 months. It is further pleaded that the company did not advance the loan, as the property which was offered as security, could not be mortgaged in favour of the company and therefore, the loan could not be advanced to the complainants. The amount of Rs. 1,25,000/- was deposited by the complainants according to the terms and conditions on the basis of which they could be advanced loan. In addition they were required to pay 2% of the loan amount as processing fee which was non-refundable. That amount was spent for verification of the title of the property, site inspection, obtaining valuation report etc. and therefore not refundable.

IN the first instance the complaint was filed by Maj. Gen. K.S. Dahiya alone. An objection had been taken in the written statement that both the complainants had applied to the respondent for the loan and, therefore, the complaint was not maintainable by Maj. Gen. K.S. Dahiya alone. IN view of the said objection an application for amendment of the complaint was filed on behalf of Maj. Gen. K.S. Dahiya stating that he did not make Mrs. Saroj Dahiya as a party through oversight. He prayed that she may be allowed to be impleaded as a co-complainant. After hearing the arguments on the application it was allowed vide order dated 3rd June, 1992. Consequently, the amended complaint was filed by the complainants. The first question that arises for determination is whether the complainants are consumers. The words ''Consumer'' and ''Service'' have been defined in Section 2(d) & Section 2(o) of the Act as follows : - 2(d)"Consumer" means any person who, - (i) (ii) hires any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payinent and includes any beneficiary of such services other than the person who hires the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person; 2(o) "Service" means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both, entertainment, amusement or the purveying news or other information, but does not include the rendering of any service free of charge or under a contract of personal service. From a reading of the definition of word ''Service'' it is clear that the service made available to a potential users in connection with banking and financing is covered by it. The complainants wanted a loan from the respondent and deposited an amount of Rs. 1,25,000/- qualifying reserve and Rs. 10,000/- as processing charges. They were liable to pay interest to the respondent on the amount of loan to be received by them and that would have been consideration for the service rendered by the respondent. A consumer according to the definition, is a person who hires services of another person for consideration. Consequently, in our view, the complainant''s are consumers as defined in the Act.

IN the aforesaid view, we are supported by the observations in State Bank, Hyderabad v. S.S. Hingani, 1991 (2) Consumer Protection Reporter 148 and M/s. Haryana Credit and Leasing Limited v. K. Munjal, I (1991) CPJ 93=1991 (4) Consumer Protection Reporter 467. IN State Bank of Hyderabad''s case, the bank had assured financial assistance to the weavers to install power looms which they failed to provide. The question arose whether the weavers were consumers. The State Commission Hyderabad held that the Bank had undertaken to perform the services as a leading bank by providing facilities in connection with the financing. The weavers approached the appellant bank for hiring its services for consideration in the nature of interest. Therefore the respondents were consumers within the meaning of the Act having hired to services of the bank in connection with the financing for a consideration. Similar observations were made by the Haryana State Commission in Haryana Credit Leasing Company''s case (supra).

THE learned Counsel for the respondent has made reference to Pondicherry Aerators v. Managing Director Pondicherry Industrial Promotion Development and Investment Corpn., I (1992) CPJ 33 (National Commission) Modern Mechanical and Electronics v. Chairman-cum-M.D. Raj Financial Corp., II (1991) CPJ 13 and M/s. Special Machines v. Punjab National Bank, I (1991) CPJ 78 (NC). All the aforesaid cases are distinguishable. In Pondicherry Aerators''''s case (supra) the financial institution refused to sanction the final aid in the bonafide exercise of its discretion to the complainant. THE complainant filed a petition against the financial institution for damages. THE National Commission held, that sanctioning of financial or other aid or continuing of the same, is a discretionary power on the part of the financier or the industrial development corporation and refusal to sanction the financial aid in the bonafide exercise of the discretion will not constitute a deficiency in service. In Modern Mechanical and Electronic''s case (supra) the opposite party No. 1 refused to give rehabilitation grant to the complainant and wanted to take possession of the unit as the complainant had not re-paid the loan. Some litigations were pending between the parties before the Civil Suit regarding these matters. THE complainant filed the complaint in the District Forum, where it was held that the complainant was not a ''consumer''. Consequently the complaint was dismissed. THEy went up in appeal before the State Commission which was dismissed. In Special Machine''s case the subject matter of the complaint was sub-judice in the Civil Court. THE National Commission refused to go into the matter on that ground. From the narration of the facts given above it is evident that all the aforesaid cases are on different facts and different types of reliefs have been claimed in them. Consequently the learned Counsel for the respondent cannot take benefit from the observations in these cases. The second question that arises for determination is whether there has been any deficiency in service by the respondents. It was made clear by the complainants at the time of applying for loan, that the target date on which the loan can be provided to them was 10th March, 1991. In this regard, reference may be made to two letters written by Major Genl. Dahiya to the respondent, one dated 22.2.91 (page 6) and the other dated 12.3.91 (page 9). In the former letter, it was specifically said that complainant hoped that the date of payment of loan fixed as 10.3.91, stood as agreed. In the letter dated 12.3.91 complainant No. 1 wrote that he had promised to pay to Mr. Anil Jain the amount by 28.2.91. After discussing the matter with Mr. Chawla, the Managing Director of the respondent he got the date extended from Mr. Anil Jain upto 20.3.91 for making the payment. It is further stated that the complainant was assured by Mr. Chawla that the loan would be paid by 10.3.91.

The aforesaid allegations were not specifically denied by the respondent in the correspondence. As the loan was not given to the complainants by 10.3.91, they could not pay the sale consi-deration to Mr. Anil Jain for purchasing the flat. Thus the purpose for which the loan had been applied for by the complainants stood frustrated. It is also evident from the affidavit dated 18.12.91 of Maj. Gen. Dahiya that the terms and conditions on which the flat was being purchased by them, were brought to the notice of Mr. Chawla. Even then he did not inform Maj. Gen. Dahiya that on the security of that flat no advance could be given by the respondent. When he came to know all the facts, it became his duty to inform Maj. Gen. Dahiya that the loan could not be given to him. On the other hand he assured him that the loan would be advanced to them. Taking into consideration all the circumstances we are of the view that there was deficiency in the service provided by the respondent.

THE third question that arises for determination is whether the complainants are entitled to the refund of the amount of Rs. 1,35,000/- as claimed by them. THE amount of Rs. 1,25,000/- was alleged to have been deposited by the complainant according to the scheme as qualifying reserve on the basis of which the loan was to be advanced to them by the respondent. According to the scheme the person applying for loan was required to deposit a prescribed amount with the respondent, called ''qualifying reserved''. THE qualifying reserve built by the applicant was to be off set against monthly payments during the loan period as given in a chart in the brochure. It is provided in the brochure that fur taking a loan of the amount of rupees five lacs the ''qualifying reserve'' of Rs. 1,25,000/- was required to be created by a loanee. THE total amount of the instalment which such a loanee was required to pay to the respondent was Rs. 7,500/- p.m. However, out of the reserve amount an amount of Rs. 2,000/- was off set from the instalment and he was required to pay Rs. 5,500/- p.m. Similarly in the scheme, for a loan of the amount of rupees one lac qualifying reserve of Rs. 25,000/- was required to be created and the loanee was required to pay instalment of Rs. 1,500/- p.m. After off-setting the amount of Rs. 400/- out of the qualifying reserve the loanee was required to pay Rs. 1,100/- p.m. Thus from the brochure it is clear that the amount deposited as qualifying reserve was not a deposit as alleged by the respondent, but a security, which was off-set in monthly instalments. The respondent is a non-banking company. In Section 58-A of the. Companies Act it is provided, that the companies can take deposits if the Central Government in consultation with the Reserve Bank of India (R.B.I.) prescribes the limits upto which and the conditions subject to which a company can take deposits. The deposits can be invited by a company after the sanction and subject to the conditions as laid-down by the Central Government. Rules have been framed under Section 58A by the Central Government in consultation with R.B.I. The company which is taking deposits has to comply with the said rules. It has not been shown to us by the respondent that it had obtained permission from the Central Government for raising loans under Section 58-A of the Companies Act. In view of the said section the amount deposited as qualifying reserve by the complainants cannot be said to be a deposit by them.

THE learned Counsel for the respondent referred to the rules framed by R.B.I, on 28.3.82 wherein certain restrictions have been put On the Housing Financing Companies to acceptor renew any deposit. It is submitted on behalf of the respondent that according to the said rules a complainant is not entitled to interest on any deposit in case the depositor withdraws the money before the period of 24 months from the date of deposit. It is further submitted that according to the rules the company can not accept or renew any deposit which is repayable on demand or on notice. It is true that the said rules prescribed same conditions for the companies to accept deposits. However, as already mentioned above the amount deposited by the complainants is not a deposit, as is now being alleged by the respondent. It was a security and was to be adjusted towards the monthly instalments as referred to above. In this situation in our view the notification of the RBI is not applicable to the present transaction. In view of the aforesaid discussions we are of the view that the complainants are entitled to the refund of Rs. 1,25,000/- from the respondent. The next question that arises is, whether the complainants are entitled to interest on the said amount. The respondents are utilising the amount of Rs. 1,25,000/- from the date of deposit and the complainants have been illegally deprived of its use. The complainants became entitled to recover the amount on 10.3.91. In the facts and circumstances of this case we allow to the complainants interest @ 12% p.a. The amount of interest to which the complainants are entitled from 10.3.91 till the date of filing of the complaint i.e. 4.10.91. comes to Rs. 8,527/-. Thus the total amount comes to Rs. 1,33,527/-. The amount is rounded to Rs. 1,33,500/-.

NOW the question that arises for determination is whether the complainants are entitled to the refund of Rs. 10,000/-.The amount was deposited by the complainants as processing fee. It is mentioned in the brochure that the amount in not refundable. It has been stated on behalf of the respondent that some investigations were got made by them and thus had to incur expenses for the same. In the brochure the processing fee has been mentioned as 2% of the ''intended loan amount''. The investigation which are required to be made by the respondent relating the title etc. of the property entail the same labour, whether the intended loan amount is rupees one lac or rupees five lacs. Taking into consideration, the circumstances of the case we are of the view that the respondent will be amply compensated if they are allowed to deduct Rs. 2,000/- as processing charges. The complainants are thus entitled to the refund of the amount of Rs. 8,000/- out of the amount of Rs. 10,000/-. On this amount, however, we are not inclined to grant any interest to the complainant upto the date of the complaint.

CONSEQUENTLY the complainants are entitled to the recovery of an amount of Rupees 1,41,500/- from the respondent. The complainants are further entitled to interest @ 12% p.a. on that amount from the date of the complaint till the date of the order. After the date of order the complainants shall be entitled to the interest @ 15% p.a. till the date of repayment of the total amount from the respondent. For the aforesaid reasons we accept the complaint with costs and direct the respondent to pay Rs. 1,41,500/- with interest @ 12% p.a. from the date of complaint till the date of the order and @15% p.a. from the date of order till the date of repayment, to the complainant. Costs Rs. 2,000/-. Complaint allowed with costs.