NADIRA LEATHER CO. vs Indian Overseas Bank

THIS is a complaint laid under Section 17 read with Section 12 of the Consumer Protection Act

THE complainant is a partnership firm engaged in the manufacture and export of finished learner and finished leather products. In January 1980, the , the Indian Overseas Bank, Purasawalkam Branch sanctioned to the complainant a loan of Rs. 44,00,000 comprising of packing credit loan of Rs. 25,00,000/- cash credit loan of Rs. 10,00,000/- and term loan of Rs. 5,00,000/-. According to the due to the non-payment by the foreign purchaser of Rs. 14,00,000/- out of goods worth Rs. 20,00,000/- sent to Portugal and recession in leather trade, diesel loans could not be discharged. He applied for a further loan and though the Assistant General Manager promised to sanction Rs. 50,00,000/- the was sanctioned a limit of only Rs. 10,00,000/-. He claims to have paid several amounts and interest. But the Bank, is still showing a balance of Rs. 82,00,000/- as old outstanding, while according to the , if proper accounts were taken he will be entitled to claim back from the Bank Rs. 1,18,00,000/-. Even for this old outstanding, he has given collateral security worth over Rs. 4,29,50,000/-. THE has also made two fixed deposits with the -one for Rs. 3,36,250/- on 24.12.1985 for a period of 4 years and the maturity value is Rs. 5,33,292.50 and another deposit for Rs. 2,26,128.10 on 31,8.1989 for a period of two years, the maturity value being Rs. 2,72,128. THE. total amount due to the complainant under these two fixed deposits comes to Rs. 3,05,420.50. On these two fixed deposits, the has taken two loans totally Rs. 2,86,234.30 THE fixed deposits have matured but the bank refused to pay the balance after deduction of the amounts borrowed on the security of these two deposits on the ground that the owes other amounts. According to the this amounts to deficiency of service and he had therefore filed this application for directing the Bank, to release the balance of these two fixed deposits after satisfaction of the two loans borrowed on their security. It is contended by the Opposite Party that the Complainant is only a borrower and he is not a consumer within the meaning of the Act. According to this opposite party there is an old outstanding of Rs. 1,72,00,185 and the allegation that the Complainant will be entitled to claim Rs. 1,18,00,000 from the Opposite Party is imaginary. The two fixed deposits made by the Complainant are not disputed. But it is contended that the complainant is not entitled to claim the balance without adjustment of the other outstanding on various other accounts.

Exhibit Al and A2, and B1 are marked. The point for consideration is simple. The Complainant has borrowed loans on various accounts such as cash credit loan, term loan, packing credit etc. According to the Opposite Party there is a balance of Rs. 1,72,00,185. The Complainant would aver that he has made several payments towards principal and interest and if proper accounts are taken and interest is charged only at 18% simple a sum of Rs. 1,18,00,000/- will be due to him. This is a matter which is foreign to the scope of the enquiry before this Forum. This complaint is based on the allegation that the Complainant had made two fixed deposits which have matured and the total sum due thereon is Rs. 8,05,420.50. On the security of these two fixed deposits, the Complainant had taken two loans totalling Rs. 2,86,234.30. He wants the recovery of these fixed deposit amounts after giving credit to these loans. The contention of the Bank is that the Complainant is not entitled to get refund of the balance of these fixed deposits without his adjustment of the other out standings. On a point of law, it is urged that the Bank is entitled in law to make such adjustments. This contention has necessarily to be upheld. The Bank is entitled to appropriate the amounts due to the debtor towards the amounts due from the debtor.

FURTHER Exhibit B1 is the agreement entered into between the Complainant and the Manager, Indian Overseas Bank where it is clearly stated as follows : "I/we hereby authorise you to hold the deposit(s) under lien to you as security for the repayment of moneys that may become due to you on account of balance in the loan/ overdraft/cash credit account and/or on account of the dues under the letter of Guarantor/Letter of Credit including interest, commission, cost, charges, expenses etc., thereon". Clause 2 further lays down that the charge created by the Complainant will be available as a continuing security even if the overdraft/cash credit runs into credit or the balance is reduced or extinguished at any time or from time to time. In the face of the undertaking given by the Complainant it is not open to him to contend that the amounts due on the fixed deposits must be refunded to him without being given credit to old out standings. There is thus no default or deficiency of service on the part of the bank. The complaint must fail. In the result, the complaint fails and is dismissed but without costs. Complaint dismissed.