Punjab National Bank vs L.N.NAVETIA

THIS revision petition is directed against impugned order passed on 27th August. 2003 by the Punjab State Consumer Disputes Redressal Commission in Appeal No. 472/2005, dismissing the appeal of Punjab National Bank, opposite party.

THE complainant/respondent had taken a cash credit limit of Rs. 5,00,000 on 26.9.1992 on hypothecation of goods. THE agreement provided for interest at the minimum rate of interest @ 22.75%. THEreafter an application was moved for increasing the limit on 10.10.1994 to Rs. 10,00,000 and agreement was signed on 18.10.1995 providing for interest @ 2.5% p.a. over the Reserve Bank of India rate with minimum of 15.5% p.a. THE case of the complainant/respondent is that the Branch Manager of the Bank assured to the complainant that interest would be charged only at the same rate as was being charged by other nationalised bank. It is claimed by the complainant that its representative Mr. Laxmi Narain highlighted the difficulties of the traders in a Customer Relation Programme organised by the Punjab National Bank to the annoyance of the officials of the Opposite Party - Bank. THEreafter the opposite party Bank started charging interest at the enhanced rate @ 18.75% p.a. It was further raised to 19.25% p.a. w.e.f. March 1996 despite protest and the fact that the State Bank of Patiala was charging interest @ 17.75% p.a. on the limit upto Rs. 25,00,000. Again the similar complaint was made to the Regional Manager Shri Arora for ignoring the rights of the traders in the Customers Relation Programme. THE interest was enhanced to 21.25% p.a. THE complainant/respondent ultimately closed its account and obtained a clearance certificate but subsequently filed a complaint for recovery of Rs. 16,792 on account of excess interest charged and a sum of Rs. 15,000 on account of Guarantee Fee under the DICGC Guarantee, thus in all Rs. 31,792 + Rs. 10,000 as compensation for physical and mental harassment. The Bank contested inter alia on the ground that the opposite party Bank was to charge interest on the amount of loan advanced under the Cash Credit Limit @ 21.25% p.a. but inadvertently interest was charged at lesser rate and this fact was pointed out in the Revenue Audit Report conducted by the concerned Inspector of the Punjab National Bank for the year 1995-1996 with the consequence that the complainant was later on charged interest at the agreed rate of interest. As per the directions of the Reserve Bank of India, interest at different rates could be charged by the Banks depending on fulfilment of the conditions by borrowers. Accordingly, the complainant was put in the category and interest @ 21.25% p.a. was, therefore, chargeable. No amount was paid as 50% of the excess charge on interest. There was no deficiency in service on the part of the Bank. It was also contended that the complainant was not a consumer and the matter was not entertainable by the Consumer Fora.

Having heard both the parties, we take first the contention about the complainant being consumer and matter being entertainable by the Consumer Fora, it is mentioned that banking and financial services are covered by the term "service" in terms of Clause (O) of Section 2(1) of Consumer Protection Act, 1986. Since the complainant has availed banking services, the complainant would be a consumer in terms of definition of the term ''Consumer'' provided in Clause (d) of Section 2(1) of the Consumer Protection Act, 1986. As such there does not appear any substance in this contention.

AS regards the rate of interest which could be charged under the agreement one have to take a note of the fact that while there was no dispute that in the earlier agreement dated 26.9.1992, the rate of interest was mentioned @ 22.75% p.a., the Bank is obviously has not claimed interest @ 22.75% p.a. There is general clause, however, in the first agreement as well as in the second agreement. In second agreement it is Clause 29. It reads as under: "This agreement shall be in continuation of and supplemental to any previous agreement/s of hypothecation, if any, executed by the borrowers in favour of the Bank."

One could not rely on the earlier agreement insofar as the rate of interest is concerned, for there is apparent inconsistency in the rate. Such general clauses would not eclipse specific and inconsistent conditions provided in subsequent agreement. The conditions in earlier agreement insofar as the rate of interest is concerned, could not be deemed to have been incorporated in the subsequent agreement while other conditions could be so deemed to have been incorporated in view of the novation of the contract. This agreement provided interest @ 15.5% p.a. There could not be any doubt that in terms of the agreement this right should be modified from time-to-time and this variation was agreed to by the complainant particularly in terms of Clause 10. In this regard, in support of his contention the learned Counsel for the appellant referred to the judgment of 2005 (2) ISJ (Banking) 91 "Syndicate Bank v. R. Veerana", that the rate could be charged @ 20.15% p.a. in view of the earlier agreement. It has already been mentioned that it is not so possible in this case in view of the novation of the contract. In the case of Syndicate Bank v. R. Veerana (supra) there were two aspects -the rate was mentioned in the relevant agreement itself and in addition to the rates mentioned, there was an acknowledgement of liability of the amount due and the amount due calculated on the basis of enhanced rate of interest. Here, there is no such acknowledgement.

AS regards circular dated 18.11.1995 issued by Punjab National Bank, there was sudden upward revision. But two things are notable in this regard. Firstly, in terms of Syndicate Bank v. R. Veerana (supra), the Bank''s circulars about instructions given by H.O. are only for their guidance and to safeguard their interest. These instructions cannot be deemed to modify the terms of agreement between the parties. Secondly, this very circular provided that the upward revision of rate of interest should be intimated to the borrowers without fail as per the draft letter enclosed as Appendix A. Undisputedly, no such intimation was sent to the borrower. Thirdly, question of charging interest @ 21.25% even under this circular, would not arise for the petitioner has not led adequate evidence to prove that the complainant/respondent had not complied with any of the parameters to justify charging interest @ 21.25%. For the aforesaid reasons, we feel that there is no legal infirmity in the impugned order to justify any interference in the order. The revision petition is dismissed accordingly. Revision Petition dismissed