SYNDICATE BANK vs S Muniasamy S/O K Santhanam

THE complainants in these matters are husband and wife. Shri S. Muniasamy, the complainant in Revision Petition No.2675 of 2014 being the husband and Mrs. M. Palaniselvi, complainant in Revision Petition No.2676 of 2014 being the wife.

THE aforesaid complainants took loans from the petitioner bank against pledge of gold jewellery and executed separate applications cum letters of pledge for loan/overdraft against the said jewellery. Shri S. Muniasamy had taken an advance of Rs.1,84,400/ - at the rate of 7% per annum or at such rates plus penal rates and compounded at such intervals as stipulated by the bank from time to time, whereas his wife M. Palaniselvi had taken advance of Rs.1,76,000/ - on identical terms. The case of the petitioner bank is that in addition to the loan against pledge of jewellery several other commercial loans were taken by it by the aforesaid complainants. The details of the other loans taken by them are as under: JUDGEMENT_165_LAWS(NCD)1_2015.htm

THE husband had stood as guarantor for the loan taken by the wife. Similarly the wife had stood guarantor for the loan taken by the husband. This is also the case of the petitioner bank that both the complainants defaulted in payment of the aforesaid loans and as a result their accounts have been classified as non -performing assets. The complainants approached the petitioner bank for return of the jewellery pledged by them by repaying the loan which they had taken against the said jewellery. The petitioner bank, however, did not agree to release the jewellery and sought to retain the jewellery against the amount due in the other loan accounts of the complainants. Being aggrieved, the complainants approached the concerned District Forum seeking the following reliefs: 1. directing respondent No.1 to give the true details of loan account number 209759 maintained by the petitioner with respondent No.1,

directing respondent No.1 to accept the complete amount in terms of the above said account from the petitioner and return the gold jewelleries kept by the petitioner in the loan account number 209759 within the time limit to be specified by this honorable forum,

an order be passed against the respondents to pay damages of Rs.50,000/ - to the petitioner forwards the loss and damages caused to the petitioner because of deficiency of service and negligence of the respondents.

THE complaints were resisted by the petitioner bank inter alia on the ground that the complainants had not come forward to settle their respective loan accounts and it had also initiated proceedings under the procedure of SARFAESI Act. The petitioner bank claimed that it was entitled to retain the jewellery till the outstanding in all the loan accounts were repaid.

THE District Forum vide its order dated 30 -05 -2011 directed the petitioner bank as under: "Finally, this petition is allowed and it is ordered that the respondent No.1 bank to provide the statements containing the details of the gold loan account number 208759 and in case of the petitioner repays the entire loan amount on the basis of production of the statement by respondent No.1, respondent No.1 to return the gold ornament pledged by the petitioner on 09 -08 -2009 in the respondent No.1 bank. Further, it is ordered that the respondents to pay a sum of Rs.10,000/ - to the petitioner because of the deficiency of service of the respondents which caused mental tension, agony and the cost of the post of the petition. Time limit is two months."

BEING aggrieved from the order passed by the District Forum the petitioner bank approached the concerned State Commission by way of two separate appeals. Both the appeals were partly allowed by setting aside the direction relating to payment of compensation. Rest of the directions given by the District Forum were, however, maintained. Being still aggrieved the petitioner bank is before this Commission by way of these two separate revision petitions.

THE applications/letters of pledge for loan/overdraft against gold jewellery executed by the complainants, to the extent relevant read as under: "As security for repayment of the outstanding balance of the loan which you may grant to me, I hereby pledge with you gold jewellery as mentioned in the schedule herein below. You are entitled to hold this security also as security for any other liability payable by me in respect of any advance/financial assistance granted/to be granted hereafter and owing/that may be owing hereafter to the Bank at any office of the Bank on any account whatsoever whether solely or jointly with others and whether as principal debtor or surety."

IT would, thus, be seen that as per the agreement between the parties the gold jewellery which the complainant had pledged with the bank could be retained by the bank as a security not only for the repayment of the advance taken against pledge of gold but also for repayment of any other advance/financial assistance which had already been granted to the complainant or which could be granted to them after pledge of the jewellery. The aforesaid liability of the complainants could be either as the principal borrower or as the surety. Thus, it cannot be disputed that the petitioner bank had a lien against the jewellery pledged by the complainants and such lien extended also to the outstanding in other loan accounts irrespective of whether they were borrowers or the guarantors in the said accounts.

AS noted earlier, as on 14 -12 -2010 the total liability in the accounts other than the gold loan account far exceeds the value of the gold, net weight of which was 217 gms in the case of S. Muniasamy and 204.5 gms in the case of the M. Palaniselvi.

THE petition is opposed by the learned counsel for the complainant who justifies the view taken by the District Forum and the State Commission. The learned counsel for the complainants has drawn out attention to the para 8 of the order of the State Commission which to the extent relied upon reads as under: "Further, the opposite parties have also produced statement of account relating to other dues under Exhibits B3 to B6 and as well as the statements of account relating to the jewel loan which is not disputed in this case and under which is not disputed in this case and under ExB7 from these details and documents it is clear that the complainant availed other loan facilities from the opposite parties which are not settled and pending recovery for which the opposite parties have not taken steps for the same. Even though, the opposite parties alleged SARFAESI proceedings are pending and no documents relating to the same have been filed. No doubt, the opposite parties are having every right over the other assets to adjust by exercising their lien in view of the jewel loan obtained which was not properly exercised by the opposite parties by proving the same by filing any one of the documents to show that the complainant was informed in writing about the exercise of lien towards the jewel loan for the purpose of non -payment of dues of the other loans and no documents to show that the statement of accounts were produced to the complainant before issuing of legal notice and only by way of reply notice various dues are mentioned. In those circumstances, we are of the view that even though the District Forum approached the matter in different angle that the opposite parties have every right over the other assets to exercise their lien but not properly exercised the same in this case and thereby they are in deficiency in service and in the circumstances we are inclined to accept the finding of the District Forum regarding the direction to return the jewels on receipt for dues for the same from the complainant and also to furnish the statement of account and as far as compensation is concerned since the opposite parties refused to accept the jewel loan amount due to non settlement of other dues, we are inclined to delete the word compensation since the District Forum failed to note that the opposite parties already submitted statement of account relating to the jewel loan of the complainant under Ex B5 in which the dues towards jewel loan payable as on 25 -02 -2011 was furnished which can be treated as statement of account for the jewel loan of the complainant and as on date of the order and on perusal of the documents under ExB7, we find that the interest was worked out up to 22 -09 -2010 and subsequently only a sum of Rs.50/ - is added as notice charges on 15 -02 -2011 and thereby since the complaint is filed on August 2010, we can direct to collect the loan amount as per the statement under Ex B7 and accordingly we are inclined to allow this appeal in part modifying the order of the District Forum."

IT is, thus, evident that the petitioner bank had established, before the District Forum by producing Exhibit B3 to B7 and that the complainants had availed several other loan facilities from the petitioner bank which they had not paid. The State Commission, however, chose to uphold the order of the District Forum on the ground that the complainants were not informed in writing about exercise of lien by the bank towards gold loan for the purpose of payment of loan of other loans and no document was filed by the said bank to show that the statements of accounts were produced to the complainant before issuing the legal notice. In my view, the reasoning given by the State Commission for upholding the case of the complainants despite finding that there were outstanding in the other loan accounts and the bank had a right to adjust the jewellery in respect of the outstanding in those accounts is faulty. This was not either a contractual or a legal requirement to give advance intimation to the borrower before seeking to exercise a lien on the gold jewellery, in respect of the liability in other loan accounts of the borrowers. The complainants were not strangers to the accounts with the bank. It is they who had borrowed the money and/or stood as guarantors. They had willingly pledged their jewellery with the bank knowing it fully well that in the event of there being outstanding in other loan account the bank would be entitled to exercise a lien on the jewellery which they were pledging with the bank. Therefore, no such intimation was really required. As far as the statement of accounts is concerned there is no evidence of the complainants having approached the petitioner bank and the said bank having refused to provide the statement of accounts to them. Thus, from whatever angle we may see, no deficiency in the services rendered by the bank can be established on account the bank exercising lien over the jewellery due to outstanding in other loan accounts.

IN my opinion the view taken by the District Forum and the State Commission is perverse since in the face of the documents available to them no reasonable person could have upheld the grant of compensation or return of jewellery without payment of dues in the other loan accounts.

IN view of the foregoing, both the revision petitions are allowed and the complaints are dismissed. No order as to cost.