ORDER

BY SRI.H.R.SRINIVAS, PRESIDENT.

1.     This is the Complaintfiled by the Complainantunder Section 12 of Consumer Protection Act 1986, against the Opposite Parties(herein referred in short as O.Ps) alleging the deficiency in serviceand indulging in unfair trade practice and for compensation of Rs.3,00,000/- as damages for causing financial loss, mental agony and for deficiency in service and for cost and other relief as this forum deems fit.

2.     The brief facts of the complaint are that: OPsare the registered investment company under the Companies Act. The complainant during May 2018 approached representatives of OPs for getting loan against the securities.  He availed loan of Rs.16,00,000/- by creating lien on shares and mutual funds.  Master agreement for revolving working capital, demand loan was entered into on 29.05.2018 in order to avail loan against security was obtained.  He was having share worth of Rs.18,00,000/- of different companies and mutual funds worth Rs.40,00,000/- and pledged the same to obtain the loan. The OP though sanctionedRs.50,00,000/- loan against the said securities as per the loan sanction letter dated 27.06.2018, only disbursed Rs.16,00,000/-. He was making queries with NibedithaSaha of OP in this regard.  He also requested through email dated 29.06.2018 to specifically provide the loan agreement, break up charges, lien created against his equity and mutual funds holdings, and also the process involved in releasing of the pledge and documents signed by him. There was no reply from OPs and also did not provid the loan agreement, the break up charges, the lien created.  He  was made to sign on blank documents and provided the documents to the OP on several occasions.  Fedup with the attitude of the OP, and for having received repeated messages from the AMC’s regarding submission of invalid documents,he sent an email on 23.07.2018 requesting OP to cancel the loan against securities and mutual funds and shares and to return the documents given by him for making a lien. 

3.     OP continued to hold securities of shares and mutual funds worth of Rs.55,00,000/- even though he was paid only Rs.16,00,000/- as loan against the said security.  On 24.08.2018, he received email from one ShubankarHore, asking him to make interest payment towards the loan amount.  He was not at all informed earlier about the necessity to make monthly interest payment. He immediately sought clarification from OP regarding the payments demanded, and also the details of interest, computation and bank payment details such as IFSC, account Number. He made the payment of interest and requested to issue a debit advise, in advance, to avoid confusion. He made payments towards interest for the month of June 2018, July 2018 on 03.09.2018 and for the month of August on 06.09.2018 a sum of Rs.26,160/- in all . He was shocked to receive another email on 17.09.2018 from the Op in respect of the demand of interest of Rs.26,156/-.  There were several deficiency in service on the part of OP, though he has paid the amount as demanded. 

4.     The complainant made an email on 20.09.2018 intimating the OP that he has repaid the entire disbursed loan amount including updated interest and requested to release the securities as he needed the amount for his personal use. Op responded to the same on 27.09.2018 confirming the receipt of the amount and also informing him that they would release the mutual fund amount from the lien.  Though he repaid the entire amount of loan, OP failed to release the lien on the securities and mutual fund. Upon persistent follow-up, OP sent an email dated 31.10.2018 informing him that all the lien over mutual funds has been removed. The delay in releasing the same has caused him mental agony and substantial loss financially.  To his surprise, he receive an automated mail response stating that five workings days were required to do the needful. In spite of it, no action was taken and not compensated for the financial loss.

5.     He was under the impression that the lien on his mutual fund holding were removed but came know on 25.11.2018 that the said lien was not yet removed. When he tried to sell /redeem the mutual funds i.eKotak Select Focus Funds, regular fund growth on 25.11.2018, he was unable to redeem the same since lien was persisting.  After several persistent efforts, finally on 29.11.2018 the lien was released.  Hence he had to issue a legal notice on 20.11.2018.   Therefore, OPs are guilty of committing unfair trade practice and deficiency in service in not providing copy of the agreement signed the proportionality of lien made on shares and mutual funds inspite of seeking details,and maintaining the lien inspite of clearing the loan, failure to respond to the queries, demanding interest, providing incomplete and incorrect information to contact holding lien or charge over the securities worth more than three times the loan amount, delay in releasing the securities by removing the lien which existed till 29.11.2018. The act of OP is unprofessional and they were inefficient.  Hence the complaint.

6.     Upon the service of notice OP remained absent. Hence placed exparte. 

7.     In order to prove the case,complainant hasfiled hisaffidavit evidence andproduced documents. Arguments Heard.The following points arise for our consideration:-

1) Whether the Complainant has proved

deficiency in service on the part of the

Opposite Parties?

2)  Whether the Complainant is entitled to the

relief prayed for in the complaint?

8.     We answer:-

POINT NO.1 and 2: Partly in the affirmative.

                                For the following.

REASONS

POINT No.1& 2:-

9.     On perusing the complaint,evidence and documents filed by the complainant, it becomes clear thatthe complainant pledged/created lien on the shares and mutual funds in obtaining loan of Rs.16,00,000/- from the OPs bank. This is also admitted by the OPs in the various correspondences that has taken place between the complainant and OP.  It is quite usual that the banks usually lend money against securities. It may be on movable properties like share, debentures and mutual funds insurance bonds or on immovable properties. In this case, as per the say of the complainant, shares worth of Rs.18,00,000/- and mutual funds worth Rs.40,00,000/- lakhs have been pleadged / lien created to obtain loan.  Ops have sanctioned Rs.16,00,000/- only against so much security. 

10.   As per the documents produced, monthly interest has been paid by the complainant to OP.  Not satisfied with the services rendered by the Op, complainant wanted to preclose the loan and paid Rs.16,00,000/-to the OP on 20.09.2018. The bank documents, the email correspondences denotes the same. On that day, the complainant has transferred to the account of the Op a sum of Rs.16,08,230/- against the outstanding loan of Rs.16 lakhs and also requested to release the pledge/lien created against the security by OPs. 

11.   It is the specific case of the complainant that,inspite of writing the letter, after clearing the entire loan balance, OPs did not take action at the earliest in getting the shares and the mutual funds released from the pledge or from raising the lien on it.  The correspondences dated 31.10.2018 from OP to complainant reveals that, the mutual funds of Reliance AMC, Canara ROBECO Ltd., were released from the pledge / lien removed on 28.09.2018 and of L & T AMC on 01.10.2018, whereas, the mutual fund of SBI AMC , ICICI AMC and HDFC AMC were removed on 16.10.2018 . A clarification was also given by OP that there was delay in processing lien revocation from other AMC’s and hence they resubmitted fresh request on 16.10.2018 for the remaining AMC’s and further the lien on shares was also removed on 16.10.2018.

12.   Notice also issued by the complainant, to the OP which was served but not replied.

13.   When the above circumstances are taken into consideration, though on 20.09.2018, the complainant cleared the loan and requested OP to raise lien/pledge only as stated above lien on three mutual funds were raised whereas, the lien on other three mutual funds were raised only on 16.10.2018.   Further the lien on the shares were also lifted on 16.10.2018. Though in the letter it is stated they have again written letter that due to some technical problems, the lien were not raised, OPs have failed to place before the forum the effort made by it in attempting to remove the lien within a reasonable time. 

14.   Now a days, due to the improvement in the technology and internet facility things could be made within minutes-hours or within a couple of days.  As far as  the lien raised on 28.09.2018 and 01.10.2018, we see no deficiency in service on the part of the OP as the same has been done within 8 to 10 days whereas in respect of the other mutual funds and shares, another 16 days have been taken in getting the same released from the lien.  Since OP has not placed any materials to show that he has acted quickly or immediately after the payment of the entire loan amount to raise the lien in respect of the other mutual funds and shares, we are of the opinion that there is little deficiency in service on the part of the Op.

15.   The delay in raising the lien on mutual fund and shares acts like a double edged weapon.  If the NAV of the mutual funds and the share rates were down the day on which the complainant cleared the loan and assuming that the lien was raised on that day itself and had the complainant sold the same, he would have been under the loss.  On the other hand, the day on which the lien was raised in respect of mutual funds and the shares if at all, the value of the shares and NAV of mutual funds was on the raise, the complainant would have earned more profit.  The vice versa is also possible.  However, the complainant has not placed any materials to show that what was the actual NAV of the mutual funds, and value of the shares on the day on which he cleared the loan, and also the day on which the pledges were removed, to assess the loss if any or profit if any the complainant has suffered or gained. In view of this, we hold that there is little deficiency of service on the part of the OP and we quantify the same at Rs.25,000/- as there is no concrete materials placed to show that the complainant has suffered damage of Rs.3,00,000/- as claimed in the complaint. Further in view of the complaint filed by spending time, money and energy, we are of the opinion that if a sum of Rs.5,000/- towards litigations and other expenses if OP is ordered to pay to the complainant, would be just, reasonable and fair. Hence POINT NO.1 AND 2 PARTLY IN THE AFFIRMATIVEand pass the following:- 

ORDER

1. The Complaint is allowed in part with cost.
2. OP No.1 and 2 are jointly and severally hereby directed to pay a sum of Rs.25,000/- towards damages to the complainant and Rs.5,000/- towards cost of the litigation and other charges. If OPs fail to pay the above amount they are further liable to pay interest at 12% per annum on Rs.25,000/- from the date of the complaint i.e. 28.02.2019 till the date of payment of entire amountwithin 30 days.
3. O.Ps arehereby directed to comply the above order at within 30 days from the date of receipt of this order and submit the compliance’ report to this forum within 15 days thereafter.
4. Send a copy of this order to both parties free of cost.

Note:You are hereby directed to take back the extra copies of the Complaints/version, documents and records filed by you within one month from the date of receipt of this order failing which the same will be destroyed as per the C.P. Act and Rules thereon.

(Dictated to the Stenographer over the computer, typed by him, corrected and then pronounced by us in the Open Forum on this 14^th NOVEMBER 2019)

ANNEXURES

1. Witness examined on behalf of the Complainant/s by way of affidavit:

Copies of Documents produced on behalf of Complainant/s:

Ex P1 :Copy of the email correspondences.

Ex P2: Copy of the Certificate U/S 65B of the evidence Act.

Ex P3: Copy of the Bank Statement.

Ex P4: Copy of the Legal notice.

Ex P5: Copy of the postal track record.

2. Witness examined on behalf of the Opposite party/s by way of affidavit:

RW-1:-Nil-

Copies of Documents produced on behalf of Opposite Party/s

-Nil-

MEMBER                        PRESIDENT

A*