DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION,KOZHIKODE

PRESENT: Sri. P.C. PAULACHEN, M.Com, LLB: PRESIDENT

Smt. PRIYA.S, BAL, LLB, MBA (HRM) :  MEMBER

Sri.V. BALAKRISHNAN, M Tech, MBA, LL.B, FIE: MEMBER

Friday 29^th  day of December 2023

CC.02/2022

Complainants

1.           Raghunath. K.V,

S/o Balakrishnan Nair,

Sreemudra House,

Meloor Post,

Koyilndi, Kozhikode -673 306

2.           Sheeja. T,

W/o Raghunath. K.V,

Sreemudra House,

Meloor Post,

Koyilndi, Kozhikode -673 306

(By Advs Sri.Syampadman and Sri Navjyoth.S)

Opposite Party

                    State Bank of India,

Represented by its Chief Manager,

Koyilandy Town Branch,

Niyaz Building,

Main Road, Koyilandy,

Kozhikode – 673 305.

(By Adv. Sri.G. Praveen Kumar and Adv. Vinisha.P.P )

ORDER

By Sri. P.C. PAULACHEN  – PRESIDENT

          This is a complaint filed under Section 35 of the Consumer Protection Act, 2019.

2. The case of the complainant, in brief, is as follows:

              The first complainant was the sole proprietor of M/s Grace Auto World dealing in 3 wheeler vehicle and its spare parts. On 17-02-2016 the first complainant availed financial assistance to the tune of Rs.10,00,000/- as cash credit from the opposite party State Bank of India (erstwhile State Bank of Travancore),for meeting the working capital requirements of his business. As a security for the loan, the first complainant created an equitable mortgage over his 11.5 ares of land in resurvey number 53/1 E of Chengottkavu village, KoyilandyTaluk by depositing the original title deed No. 292/2003 of the Chemanchery SRO with the bank at Koyilandy.  The second complainant was the surety for the loan.

3. On 23-06-2017 the complainants received a notice issued by the opposite party under section13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SERFAESI ACT) calling upon them to discharge in full an amount of Rs.10,53,960/- being the outstanding liability due and payable to the bank as on that date. On receipt of the notice, the complainants decided to settle the outstanding liability as a whole and they approached the opposite party for one time settlement. They have even identified persons who were ready to advance money on the property. Their intention to close the loan account was informed to the opposite party and enquiries were made regarding the release of the original title deed. But the opposite party was protracting the matter under one pretext or other. The opposite party had assured that they would take steps to trace out the title deed without delay which was stated to be misplaced. The complainant at the instance of the opposite party left the loan account open as they were unable to close the same on account of the missing of the document. The opposite party had assured that no interest would be charged during the period since the fault was on their part. The complainants were rendered incapable of closing the loan account and had the document been available, they could have easily raised the funds and closed the accountthen and there. Knowing the fact of missing of the document, the prospective purchasers / investors were not ready to advance any amount to the complainants.
4. As there was no response from theopposite party even after one month, the complainant filed an application on 25-08-2017 under the Right to Information Act, 2005, to which, the opposite party issued a reply on 06-10-2017 stating that the title deed was misplaced during the renovation of the branch office and that they were trying to trace it out. To the second application filed on 21-11-2015, the opposite party again responded on 20-12-2017 repeating that they were still in the process of identifying and recovering the misplaced document. On 23-04-2018 the first complainant wrote a letter to the Hon’ble Chief Minister and Hon’ble Finance Minister of Kerala explaining his plight. In the reply letter received from the office of the Honourable Chief Minister, it was informed that his complaint had been forwarded to the convener of State Level Banker’s Committee. On 15-01-2018 the first complainant issued a demand letter to the opposite party for return of the document, but there was no response. Thereafter, he approached the Banking Ombudsman seeking a compensation of Rs.50,00,000/-. But the Banking Ombudsman expressed their inability to admit the complaint citing the reason that the amount claimed as compensation was beyond the pecuniary jurisdiction.
5. While so, on 22-06-2018 the complainants received a lawyer notice issued from the bank demanding repayment of the dues which was duly replied by them. The first complainant approached the Taluk Legal Services Committee on 10-08-2018, but there was no positive outcome from the mediations held.
6. On 12-11-2018 the opposite party filed OA 606/2018 before the Debt Recovery Tribunal – I, Eranakulam. For the first time,  the loss of the document was disclosed by the bank in that case. The opposite party again issued another demand notice under SERFAESI ACT on 18-12-2018 calling upon them to discharge in full an amount of Rs. 14,19,968/-. Thereafter they issued a possession notice on 19-03-2019 and thereby took symbolic possession of the property. Then the complainants approached the Hon’ble High Court of Kerala by filing Writ Petition No. 8797/2019 to settle the loan account by remitting the dues as on  23-06-2017ie, Rs.10,53,960/-.In that case also, the bank had admitted that the title deed has been lost and they are not in  a position to return the same. The Hon’ble High Court of Kerala disposed of the Writ Petition by granting liberty to the complainants to approach the appropriate Forum to peruse all remedies for the deficiency of service of the bank. However, the complainants were asked to pay the entire amount of Rs.15,68,608/-. Accordingly, the full amount was remitted in the bank and nil dues certificate was obtained. The complainants were forced to pay an extra amount of Rs.5,14,648/- only due to the careless attitude of the opposite party, which is liable to be refunded.
7. The opposite party was liable and responsible to keep the title deed in safe custody and ensure that the same is returned at the time of closing the loan. Failure to do so amounts to deficient rendering of service and entails the liability to compensate for the loss, injury, hardship and damages that was caused andoccasioned to the complainants. Providing a duplicate/registered copy will not suffice. No one would extend a loan unless the original titledeed is deposited. No one will purchase the property at the prevailing market price in the absence of the original document. Moreover, there is the possibility of misuse of the title deed. The property islocated in a prominent area.The complainant was put to substantial damage on account of the negligent, careless and deficient service rendered by the opposite party bank. Hence the complaint to direct the opposite party to refund a sum of 5,14,648/- additionally collected over and above the actual amount due and payable to the opposite party  with interest at the rate of 18% per annum and to pay a sum of Rs.50,00,000/- as compensation for the loss, injury, hardship, mental agony and damagecaused to the complainant on account of the negligence, deficiency in service and unfair trade practice on the part of the opposite party. 
8. The opposite party filed written version. The contentions, in brief, are as follows; The complaint as such is not maintainablesince the cash credit facility availed by the first complainant was for raising working capital for his business. The transaction was in the nature of a commercial transaction. The complaint is bared by the principles of res-judicata. The sanctioning of the loan and creation of equitable mortgage by deposit of title deed is admitted. It is also admitted that the bank had initiated recovery proceedings under the SERFAESI ACT. The complainants never intimated the opposite party their intention to close the loan. The opposite party had never assured that no interest would be charged on the loan account for any period. The complainants are not entitled to receive back the document deposited with the bank as security without closing the loan account. The statement that prospective investors/purchasers were reluctant to advance amountknowing the fact of missing of the document is not true. The so called prospective purchasers /investors will never get an opportunity to know such facts from the bank. The opposite party is not aware of the letter given to the Hon’ble Ministers by the complainants. The opposite party was constrained to issue lawyer notice to the complainants on account of the wilful default in repayment of the credit facility availed by them. The opposite party was constrained to take legal action against the complainant for recovery of the outstanding amount. As part of the recovery proceedings, the opposite party took possession of the property of the first complainant under due process of law by complying with the legal formalities. It is true that the complainants had approached the Debt Recovery Tribunal and the Honourable High Court of Kerala. The Hon’ble High Court of Kerala disposed of the Writ Petition with a direction to pay the entire amount of Rs.15,68,608/- as demanded by the opposite party. The averment that due to the inefficiency and careless attitude of the opposite party,the complainants hadto pay an extra amount of Rs. 5,14,648/-  is not true. The complainants were compelled to pay such an amount to the opposite party since they are legally liable to pay the amount on account of their default in repayment of the loan amount. The opposite party never showed any deficiency or careless attitude towards the complainants. It is true that the title deed deposited by the first complainant was misplaced and could not be traced out. The opposite party made publication in newspaper about the loss of title deed and issued certificate to the same effect. The bank has further obtained certified copy of the said title deed from the Sub Registrar Office at their expense. The steps taken by the opposite party was duly informed to the complainants also.The claim for compensation ofRs. 50,00,000/- is baseless and untenable. The property covered by the above title deed was deposited for a cash credit facility with a maximum limit of Rs.10,00,000/-  only. It show that the value of the property covered by the said title deed is only about Rs.10,00,000/-. In such circumstances, the complainants are not entitled to claim such an amount as compensation from the opposite party. There was no negligence, deficiency in service or unfair trade practice on the part of the opposite party. The opposite party has taken all necessary steps for the redressal of the grievances of the complainants. The opposite party has not disowned their responsibility. There is no cause of action for the complaint. The complaint is barred by the limitation. It is, therefore, prayedto dismiss the complaint with costs. 
9. The points that arise for determination in this complaint are;

                       (1) Whether the complaint is maintainable?

                        2) Whether the complaint is barred by res-judicata?

                        3) Whether there was anydeficiency of service on the part of the opposite party, as alleged?

                       4) Whether the claim for compensation is allowable ?  If so, what is the quantum?

                      (5)Whether the complainants are entitled to get refund of any amount from the opposite party, as claimed? If so, what is the                              quantum?

                       6) Reliefs and costs.

10. Evidence consists of the oral evidence of PW1 and Exts A1 to A27 on the side of the complainants. RW1 was examined on the side of the opposite party. 
11. Heard both sides. Complainants have filed argument note.
12. Point No 1:  The learned counsel for the opposite party has argued that the complaint is not maintainable since the cash facility availed by the first complainant was for the purpose of raising working capital for his business and the transaction was in the nature of a commercial transaction. On the other hand, the learned counsel for the complainant has argued that a person whether or not a consumer or other activities meant for commercial purpose will always depend upon the facts and circumstances of each case and there is no straight jacket formula.   It was submitted that the loss of the original title deed at the hands of the opposite party is independent of whether or not the loan transaction was commercial or not and the loss of title deed is the key issue to be considered in this complaint. The attention of this Commission was also invited to the various authorities on this aspect.
13. As per section 2(7) of the Consumer Protection Act, 2019, a person who buys any goods or avails of any services for consideration is a consumer. But the word consumer does not include a person who obtains such goods for resale or for any commercial purpose, or who, in the case of service, avails of such services for any commercial purpose. The explanation to section 2 (7)  of the  Act says that ‘commercial purpose’ does not include use by buyer of such goods or person availing such service exclusively for the purpose of earning his livelihood by means of self-employment.  
14. In the case in hand, the complainants are alleging deficiency of service on the part of the opposite party bank for the reason that the original title deed of the property of the first opposite party, which was deposited in the bank in connection with the financial assistance availed for the working capital requirements of his business, was not returned even after closing the loan. It may be noted that the loss of the original title deed of the first complainant at the hands of the first opposite party bank is independent of whether or not the loan transaction in question is in connection with which the original title deed was deposited, was commercial or not. In other words, the loss of the title deed is the crucial point that arises for consideration in the case in hand. The opposite party is bound to keep the original title deed and return the same to the borrower on closure of the loan transaction. Failure to do so, undoubtedly, amounts to deficiency in service. A customer of a bank is a consumer and he is entitled to seek compensation for deficiency of service.
15. The question whether a person is a consumer or not and whether the buying of the goods or the availing of the service was for commercial purpose or not will depend upon facts and circumstances of each case and no straight jacket formula to determine as to whether the person/ company is engaged in commercial activities and the same has to be determined on the facts and circumstances of each case. The above position is supported by the decision of the Honourable National Consumer Disputes Redressal Commission inCity View Enterprises Vs Huda and Orsreported inII(2023) CPJ 648  (NC).
16. In National Insurance Co. Ltd VsHarsolia Motors and OrsreportedinII(2023)CPJ 33 (SC)  it has been held by the Honourable Apex Court that           “Complaint filed by the respondent insured has no close or direct nexus with profit generating activity and claim of insurance is to indemnify loss which respondent insured has had suffered- Commission has rightly held that respondent is “consumer” under section 2(1)(d) of the Act, 1986”.
17. In AD BEAUREU Advertising Pvt Ltd Vs Central Bank of India IV(2023) CPJ 332 (NC) the loan facility was availed for commercial purpose, but the incorrect reporting of the complainant’s credit standing after full payment of the loan amount was held to be deficiency in service.
18. Similarly, in HDFC bank Ltd and AnrVS SatheeshGuptha and Anrreported in IV (2023) CPJ 199 (NC)it was held by the Honourable National Consumer Disputes Redressal Commission that where a scheme devised  by  the bank required the complainant to deposit only Rs. 10,00,000/- and he was to earn return on it through purchase of KVP’s by the bank on his behalf, for which purpose the overdraft account was opened in his name,  State Commission has rightly held that the issue of interest charged is the key issue and has adjudicated on it finding the bank liable for deficiency in service.
19. The definition of ‘deficiency’ in section 2(11) of the Consumer Protection Act, 2019 states that any fault, imperfection, short coming or inadequacy  in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to a service would constitute deficiency of service. The loss of title deed deposited in the bankconstitutes deficiency of service. The loss of the title deed is the key issuefor consideration in this complaint and it is independent of whether or not the loan transaction was commercial or not. So according to us, the complainant is a consumer as defined under section 2(7) of the Consumer Protection Act, 2019.The cause of action has arisen within the local limits of the jurisdiction of this Commission and this Commission has ample jurisdiction to entertain the complaint. The complaint is perfectly maintainable. 
20. Point No. 2:-Another contention of the opposite party bank is that the complaint is barred by the principles of res-judicata as the subject matter of the complaint has been already been considered by the Debt Recovery Tribunal and the Honourable High Court of Kerala. The learned counsel for the opposite party pointed out that the entire amount was remitted by the complainant as per the judgment of the Honourable High Court in WPC No. 8797/2019 and the present complaint is barred by res-judicata. On the other hand, the learned counsel for the complainants submitted that the amount as demanded by the opposite party was remitted by the complainants without prejudice to their right to pursue remedies for the loss and damage caused on account of the loss of title deed at the hands of the opposite party.
21. In this context, it is worthwhile to refer to Ext A23 judgment of the Honourable High Court of Kerala in the WPC8797/2019 . In page 5 of the above judgment, it has been observed by the Honourable High Court of Kerala as follows;

“Taking note of the afore said submissions, I allow the petitioners to pay the entire amount of Rs. 15,68,608/- which is stated to be outstanding in the loan account as on today, along with all applicable charges and interest in four equal monthly instalments, commencing from 1/07/2019, so that the account will stand closed at the end of this term; and if the petitioners are not interested in accepting the certificate offered to be issued by the bank with respect to the documents of the mortgaged property, they will be at liberty to pursue all remedies based on the contentions raised in this Writ Petition, before the appropriate court or forum thereafter”.

So the complainantsare not prevented from pursuing the remedies available to them. That being so, the present complaint is not barred by the principles of res-judicataas contended by the opposite party.

22. Points3 and 4:-As already stated, the complainants have approached this Commission alleging deficiency of service on the part of the opposite party bank for the reason that the original title deed of the property of the first complainant which was deposited in the bank for creating an equitable mortgage in connection with the financial assistance of an amount of Rs. 10,00,000/- as cash credit for meeting the working capital requirements of his business, was not returned by the bank even after closing the loan.
23. The first complainant got himself examined as PW1, who has filed proof affidavit and deposed in terms of the averments in the complaint and in support of the claim.  The documents produced by the complainants were marked as Exts A1 to A27 through PW1. The Chief Manager of the opposite party was examined as RW1 and he has deposed supporting and reiterating the contentions in the written version. RW1 has admitted that the original title deed was misplaced and could not be traced out and returned to the complainants.
24. Thus there is no dispute to the fact that the original title deed of the first opposite party which was deposited in the bank was misplaced and could not be traced out and returned to him. It was the bounden duty of the bank to keep the title deed deposited by the complainants in safe custody and to return the same at the time of closing  the loan. Undoubtedly, failure to do so amounts to gross deficiency of service. The opposite party is bound to compensate the complainants for the loss, injury, hardship and damages that were caused to them.
25. The deficiency of service arising from the loss of documents by the bank has been dealt with and discussed in detail in the decisions reported in State Bank of India &Anr. Vs K. RamalingeshwarRao IV (2014) CPJ 22 (AP),A.Farouk &OrsVs Syndicate Bank, Melamury Palakkad &Anr. II(2015) CPJ 44 (Ker.), Bank of InidaVsMusthafa Ibrahim Nadiawala I(2017)CPJ 180 (NC), Mayyanad Regional Co-operative Bank VsEbrahimkutty III(2017) CPJ 156 (NC),SheelSohal&Anr. VsAxiz Bank Limited III(2018) CPJ 122 (NC) and KanyakaParameshwari Co-operative Bank Limited Vs K. InayathAhamed&Anr. IV (2021) CPJ 88 (Kar.).
26. It cannot be disputed that the value of the property will be affected adversely if the original title deed is not available. Ordinarily, no one will come forward to purchase the property at the prevailing market value if the original title deed is not available. The possibility of misuse of the title deed also cannot be ruled out. The complainants may not be able to avail loan facility by deposit of the title deed of the property. Even a bank may not be willing to give a loan against an immovable property without original title deed deposited with it.   The complainants are entitled to be compensated adequately.
27. The complainants in this case have claimed Rs. 50,00,000/- as compensation. The claim appears to be excessive. The extent of the property is 11.5 ares of land in Re-survey No. 53/1E of Chengottukavu village of Koyilanditaluk, Kozhikode district. By mortgaging the said property a cash credit facility of Rs. 10,00,000/- was sanctioned to the complainants. Considering the entire facts and circumstances, we are of the view that an amount of Rs. 8,00,000/- will be reasonable compensation in this case. The complainants are also entitled to get Rs. 8,000/- as cost of the proceedings.
28. Point No. 5 :-Now the point to be considered is as to whether the opposite party bank is liable to refund any amount to the complainant. According to the complainants, they were constrained to pay an extra amount of Rs. 5,14,648/- due to the negligence and deficiency  of service of the opposite party. The case of the complainants is that on receipt of the notice under section 13(2) of the SERFAESI Act issued by the bank asking to pay an amount of Rs. 10,53,960/- in discharge of the full loan liability as on 23/06/2017, the complainants decided to close the loan and approached the bank for one time settlement. They decided to close the loan by selling the property and since the documents were missing, the prospective purchasers were not ready to advance money.It is also the case of the complainants that the bank had assured that no interest would be levied as the latches were on their part.
29. The above allegations are stoutly denied by RW1. The definite case of the bank is that the complainants were never ready to close the loan account and the bank had never assured that interest would be waived for any period.
30. In this context, it may be noted that the entitlement of the complainants to get back the title deed deposited arises only on closure of the loan. Till then the complainants cannot make any claim for return of the title deed. The complainants are not entitled to receive back the document deposited with the bank as security without closing the loan. There is absolutely nothing in evidence to indicate that the complainants have ever approached the bank with a desire to close the loan transaction in full. Equally, there lack of   evidence to show that the complainants had negotiated with the prospective purchasers and they were dissuaded from advancing money to the complainants as the title deed of the property was missing. The so called prospective purchasers were not examined as witnesses before this Commission. Similarly, the case of the complainants  that the bank had agreed to waive interest for the period is not supported by any evidence. It is hard to believe that the bank authorities would have given such an assurance to waive interest for the loan. The absence of the original titled deed is not a bar for the complainants for closing the loan by remitting the dues. There is absolutely no evidence to show that the complainants had to pay an extra amount of Rs. 5,14,648/- due to the latches and deficiency of service of the opposite party. For the aforesaid reasons, we are of the view that the complainants are not entitled to get refund of any amount from the opposite party.
31. Point No.6 :- In the light of the finding on the above points, the complaint is disposed of as follows;

                  a)  CC.02/2022 is allowed in part.

b) The opposite party bank is hereby directed to pay a sum of Rs. 8,00,000/- (Rupees Eight lakhs only) as compensation to the complainants with interest @ 6% per annum from the date of the complaint that is  4/01/2022 till actual payment.

c)  The opposite party is directed to pay a sum of Rs. 8,000/- (Rupees Eight thousand only) as cost of the proceedings to the complainants.

d)  The order shall be complied with within 30 days of the receipt of the copy of this order.

Pronounced in open Commission on this, the 29^thday of December, 2023.

Date of Filing: 04.01.2022

                        Sd/-                                                                Sd/-                                                           Sd/-

               PRESIDENT                                                    MEMBER                                                  MEMBER

APPENDIX

Exhibits for the Complainant :

      Ext A1 –Copy of Sanction letter dated 17/02/2016.

Ext A2 -Copy of demand notice dated 23/06/2017.

Ext A3 - Copy of the replydated 6/10/2017 given by the Public Information Officer.

Ext A4 –Copy of reply dated 20/12/2017given by the Public Information Officer.

Ext A5 – Letter dated 23/04/2018 sent by the first complainantto the Hon’ble Chief Minister of Kerala.

Ext A6 – Postal receipt dated 23.04.2018.

Ext A7 – Postal receipt dated 23.04.2018.

Ext A8 – Copy of the reply received from the office of the Hon’ble Finance Minister, Kerala.

Ext A9 – Copy of the noticedated 11/05/2018 issued to the opposite party Manager.

Ext A 10 – Letterdated 15/05/2018 issued by the Banking Ombudsman.

Ext A11 – Copy of Legal notice dated 22/06/2018 from the opposite party.

Ext A12 – Copy of the reply notice sent by the complainant.

Ext A13 – Copy of the reply dated 06/07/2018sent by the first complainant to the opposite party.

Ext A14 – Copy of the Complaint dated 10/8/2018 filed before the Taluk Legal Services Committee,Koyilandy.

Ext A15 – Notice dated 14/8/2018 issued by the Taluk Legal Services Committee, Koyilandy.

Ext A16- Notice dated 3/10/2018 issued by the Taluk Legal Services Committee, Koyilandy.

Ext A17 – Copy of OA No. 606/2018 filed before DRT–IErnakulum.

Ext A18 –Copy of notice dated 22/11/2018 issued by the Taluk Legal Services Committee,Koyilandy.

Ext A19 – Notice dated 18/12/2018 issued under Section 13(2) of SERFAESIAct.

Ext A20 -Copy of theWritten statementdated 26/02/2019 in OA 606/2018.

Ext A21 – Copy of the Possession notice dated 19/03/2019 issued by the opposite party.

Ext A22 – Copy of the Writ Petition (C) No. 8797/2019 filed before the Hon’ble High Court of Kerala.

Ext A23 –Certified copy of Judgment dated 6/6/2019 in WP(C) 8797/2019.

Ext A24 –Copy ofLetterdated 30/08/2019 of SBI.

Ext A25 – Copy of RTI Application dated 16/04/2021 filed by the complainant.

Ext A26 – Copy of the reply dated 19/05/2021 by SBI to the RTI Application.

Ext A27 – Copy of the Appealdated 24/10/2021 filed under RTI Act by the complainant along with postal acknowledgment card, postal receipt and postal order receipt.

Exhibits for the Opposite Party

Nil

Witnesses for the Complainant

       PW1 -     Raghunath. K.V(1^stComplainant).

Witnesses for the opposite party

RW1 – Kevin AdvinNettar (Chief Manager, SBI).

                                     Sd/-                                                                    Sd/-                                                 Sd/-

                            PRESIDENT                                                        MEMBER                                       MEMBER

True Copy,      

                                                                   Sd/-

                                                                    Assistant Registrar.