Heard learned counsel for both the sides.

2.              This appeal is  filed  U/S-15 of erstwhile  Consumer Protection Act,1986(herein-after called the Act). Hereinafter, the parties to this appeal shall be referred to  with reference to their respective status before the learned District Forum.

3.                   The  case     of  complainant,in nutshell  is that  OP No.2 has incurred loan of Rs.2,00,000/-  from OP No.1-Bank and the complainant  Kailash Chandra Mohanty became the guarantor. It is alleged inter-alia that  the guarantor’s land documents  and fixed deposits  were kept  on lien before the bank  towards payment of the loan amount in the event  of recovery of loan.  It is alleged that  OP No.1 without consent of complainant Kailash Chandra Mohanty, encashed the fixed  deposit of 1,32,850/- to satisfy the loan amount. Since, the action has been taken without the consent of the guarantor, the complaint case  was filed showing deficiency in service on the part of OP No.1.

4.            The OP No.1  filed written version  stating that   the case is not maintainable and  no power of attorney of Kailash Chandra Mohanty has been filed  and the complainant has no authority to file the complaint. Further it is averred that the Op No.2 was loanee whereas the complainant-Kailash Chandra Mohanty was guarantor who deposited   fixed deposit certificate  and  other documents  to secure loan amount sanction by the  OP-  bank so that    the loan in the event of non-payment of the loan can be satisfied.  When the OP No.2 did not  pay the loan amount, there is no option than  to encash  the fixed deposit of the complainant  to satisfy   the loan. There is no  deficiency in service on the part of the OP No.1.

5.        OP No.2 did not take step, for which he is  set-exparte.

6.                       After hearing both the parties, learned District Forum   passed the following order:-

               Xxxx              xxxx              xxxx

                  “   In the result, we allow the complaint in part against the OP No.1 and direct the OP No.1 to refund Rs.1,37,850/- to Kailash Chandra Mohanty with Bank’s rate of interest from 31.03.2004 till payment is made in full.The OP No.1  is also directed to pay litigation cost of Rs.1000/- to the complainant. The above payments are to be made available within a period of 30 days from the date of receipt of the order.”

7.                Learned counsel for the appellant submitted that   learned District Forum without considering the written version and other materials on record passed the impugned order which is illegal and improper. Further he submitted that since there is letter of OP No.2 states   that   he is  not able to pay  the loan because of his want of fund, steps were taken  against the complainant- guarantor. As per the agreement both the loanee and guarantor are equally responsible for payment of the loan amount. Moreover, U/S-171 of the Contract Act the OP No.1 has got lien over the property mortgaged  with the bank. Therefore,  learned District Forum ought to have considered all the facts and law. The impugned order should be set-aside  and the appeal be allowed.

  8.                      Learned counsel for the respondent submitted that the guarantee has kept the fixed deposit amount in the said bank but not as the security purpose and without the consent of the concerned complainant the encashment of the Fixed deposit amount is persay illegal.  Therefore, he supports the impugned order.

9.               Considered the submission of learned counsel for the  respective parties, perused the DFR and impugned order.

10.                    It is admitted fact that OP No.2 is the loanee has incurred loan of Rs.2,00,000/-  from OP No.1. It is also admitted fact that the complainant was the guarantee for his brother OP No.2. It is also admitted fact that the fixed deposit amount and some land documents  were kept in the custody  under the bank to secure the loan amount.  It is also available from the impugned order that OP No.2 has given in writing  that he has no money to pay  and same should be utilized from OP No.1.  Not only  this but also in the hypothecation deed  and condition No.21.5  which is as follows:-

                   “The Bank shall be at liberty  to give extension of time to the Borrower for repayment or to make any other arrangement with the Borrower as the Bank may think fit, without in any way discharging or affecting the liability of the Surety and the Surety shall not call in question such extension of time, compounding, compromise or settlement with the Borrower regarding the amount due and payable by the Borrower and the Surety’s liability shall remain absolute until  the Borrower is fully discharged of his liability under this Agreement.”

11.             The    aforesaid  agreement is clear to show  that the guarantee and the loanee both are equally responsible for liquidation of the loan amount before the OP No.1-Bank. But the learned District Forum has wrongly interpreted   the said agreement. Besides the money has already realized U/S-171 of the Contract Act given the power to the banker to keep lien over all the fixed deposit and other deposits  of the loanee and the guarantee. Therefore, we find that the impugned order  has not passed in the proper manner.  Therefore, the impugned order is persay illegal and it is set-aside.

                           Appeal stands allowed. No cost.    

                          Free copy of the order be supplied to the respective parties or they may download same from the confonet  or webtsite of this  Commission to treat same as copy of order received from this Commission.  

                           DFR be sent back forthwith.