JUSTICE J.M.MALIK 1. This case swirls round the question whether the Bank can charge more interest than the agreed between the parties. What can be the ulterior hidden motive to the plea that the petitioner or Loanee signed the blank papers. 2. Vijaya Bank, OP1 sanctioned the working capital facility to the complainant (Kaveri Telecoms Limited) at an interest rate of prime lending rate (PLR) + 2.5% + interest tax vide its sanction letter dated 18.12.1997, which was renewed on 18.05.1999 vide copies of these letters marked as Annexures-A and A1. It is alleged that the OP1 illegally debited the interest on the amounts drawn by the Company in the loan account for the period from 01.04.1997 to 31.03.2002 @ PLR + 4.5% + interest tax and in the process, for the period from 01.04.1997 to 31.03.2002. It is alleged that the OP Bank collected from the complainant excess amount in the sum of Rs.27,56,684/- as interest, in utter violation of the terms and conditions of the sanction letters. All these facts came to light when the audit of complainant’s accounts were taken up by their Auditors. The complainant immediately gave a representation dated 03.10.2000 to the Bank, copy of which is marked as Annexure-B. The OP1 did not take any action and thereafter reminders/ representations dated 22.01.2001 and 13.02.2001, marked as Annexures-C & D, respectively, were sent. The last one was sent through registered post and postal acknowledgment was produced as Annexure D1. Vide letter dated 22.01.2001, the OP informed the complainant that his requests were turned down as the interest was charged as per the guidelines and the circulars issued by Head Office, from time to time, copy of which is placed on record as Annexure-E. The complainant sent other representations on 15.02.2001, marked as Annexure-F and on 16.03.2001, marked as Annexure-G, to the Chairman and Managing Director, Vijaya Bank, OP2. Another representation was sent on 03.04.2001 to the 1st OP, copy of which has been produced as Annexure-H. 3. Ultimately, the OP1 wrote a letter dated 02.05.2001, marked as Annexure-I, to the complainant stating that OPs have taken a decision to entrust the rechecking on interest and other charges debited to the accounts of the complainant to an outside agency, but referred by the OPs as concerned agency. When, for a considerable time, the complainant could not get information about the present position and thus asked the OP, vide letter dated 11.07.2001 Annexure- J, to inform about the current position. Besides this letter and various communications, the OP did not respond though they acted against the RBI’s guidelines. The complainant is a small scale industry doing business with various organisations of Government of India. The illegal charging of the Trust amount crippled their financial position resulting in damage to the business and reputation of the complainant company. 4. As all the efforts made by the complainant did not ring the bell, therefore, they approached the Bank Ombudsman for the State of Karnataka at Bangalore, but it also did not take any action. The copies of complaint made to the Bank Ombudsman is annexed as Annexure-K. In the meantime, the complainant received another letter dated 08.12.2001 on 19.12.2001 stating that rechecking of interest debited during the years 1997-2001 was almost complete and they will submit the necessary report for verification and scrutiny of the complainant by 20.12.2001, copy of which was placed on record as Annexure-L. The complainant replied that even after the lapse of nearly seven months, the above said work could not be completed by the Independent Auditor and the complainant was waiting for it for a considerable time. Copy of the reply marked as Annexure-M and its postal acknowledgment, marked as Annexure-M1 were placed on record. 5. The complainant received a letter dated 19.12.2001 wherein it was stated that the Bank had received the report of the Auditor and according to that report, the Bank did not charge any excess interest, copy of which was marked as Annexure-N. The complainant was shocked to learn about this reply, vide Annexure-O, categorically stating that they did not receive the report of the Auditor though it was stated that his report was enclosed with the letter dated 19.12.2001. It was averred that the complainant is entitled to recovery of excess interest charged and collected by the OP Bank in the sum of Rs.27,56,684/- and the overdue interest thereon is Rs.18,89,306/- total being Rs.46,45,990/-. The overdue interest is calculated up to 30.06.2002 and the OPs are duty bound to pay the overdue interest till the date of discharge of their liability, i.e., till the date of actual repayment of all the dues to the complainant. The Bank’s Ombudsman did not take any action, therefore, the present complaint was filed before this Commission, on 06.08.2002, with the following prayers :- “i) to direct the respondents to forthwith pay to the complainant a sum of Rs.46,45,990/- (Rupees Forty-Six lakhs Five Thousand Nine Hundred and Ninety only) towards refund of excess interest charged and collected by the respondents from the complainant with overdue interest thereon, together with future interest on the sum of Rs.27,56,684/- from the date of the complaint till the date of actual payment/ realization. ii) to award costs and grant such other reliefs as this Hon’ble Commission deems fit and expedient in the circumstances of the case, in the interest of justice and equity”. 6. The OPs have enumerated the following defences in their defence. It is contended that the complainant is a manufacturer and the credit facility availed by the complainant from the OPs is for working capital requirement for manufacturing and sale of goods which is a commercial activity. Consequentially, the complainant is not a consumer. It is explained that the complaint be dismissed in view of the authorities of this Commission reported in Special Machine Karnal Vs. Punjab National Bank, (1991) 1 CPR 52 (NC), Kraft Paper Mills Pvt. Ltd. Vs. New Bank of India, 1993 CCJ 7 (9, 10). Similar complaint has already been filed before the Banking Ombudsman, hence this complaint is not maintainable for the reason ‘double jeopardy’, as per the law laid down by this Commission in Rajendran Vs. Tamil Nadu Mercantile Bank Ltd., 1992 CPC 167. The complaint is frivolous, vexatious and not maintainable either in law or on facts and is liable to dismissed in limine. It is averred that OP is one of the leading Public Sector Banks and it is following the Guidelines issued by the Reserve Bank of India from time to time and is strictly implementing its directions. 7. Moreover, vide Sanction letter annexed as A & A1 to the complaint, OP1 has specifically stated that “The Bank is at liberty to alter the terms of the sanction to withdraw or cancel the limit partially or full, or to recall the advances at any time without any notice and without assigning any reason”. The complainant has accepted all these terms. It is further contented that as per Annexure D-1, the complainant has agreed to pay interest @ 3.82% p.a., over and above Vijay Bank Prime Lending rate and vide Annexure D-2 and D-3, agreed to pay interest @ 4.35% per annum over the Vijaya Bank Prime Term Lending rate. Consequently, their plea that they agreed to pay interest @ PLR + 2.5% + Interest Tax is not correct. It is contended that they charged interest as per the Loan Agreements executed by the complainant, marked as Annexures D-4 to D-9. The changes made from time to time in the Prime Lending Rate as per the terms of sanction, have been placed on record as Annexures D-10 to D-14. The complainant was informed vide Annexure-E, that “with reference to your request for reversing and re-crediting of interest charged on the BD and DBD limits, it has been turned down by our higher authorities, since the bank has charged interest as per guidelines and HO circulars issued from time to time”. The Bank has regularly charged interest that was PLR + 4% with the minimum of 16% p.a., and for the overdue bills @ PLR + 4% + 2%. It is contended that as per the Circulars issued by the HQ, the interest was charged. All the details and statements of account were furnished to the complainant. 8. Copy of the report of the Chartered Account was made available to the complainant and was repeatedly called for discussions to point out the discrepancies, if any, in the report of the Chartered Accountant so that the matter could be sorted out across the table. However, the complainant did not care to approach the Bank. OP1 informed the complainant that it did not receive the report of the Chartered Accountant till 08.12.2001 and assured that the report would be sent to them by 20.12.2001 for their scrutiny. FINDINGS AND SUBMISSIONS: Whether the complainant is a consumer? 9. We have heard the counsel for the parties. First of all, the controversy which revolves around the question is, “Whether, the complainant is a consumer?”. The counsel for the OP has placed reliance on Laxmi Engineering Works Vs. PSG Industrial Institute – 1995 (3) SCC 583, wherein, it was held that the Act provides for business to consumer disputes and not for business to business disputes. It was further held that if a firm purchases the goods, the Members of the Firm should themselves play, operate or use the goods purchased. Same would be the case of purchase by Hindu Undivided Family, a Co-operative Society or any other Association of persons. They will come within the category of ‘consumer’. The learned counsel for the OP stressed that the complainant is not a consumer because its dispute falls within the bracket of “business to business dispute”. 10. On the other hand, the counsel for the complainant has placed reliance on the following three authorities, reported in Lucknow Development Authority Vs. M.K. Gupta, (1994) 1 SCC 243, Standard Chartered Bank Ltd. Vs. Dr.B.N.Raman, (2006) 5 SCC 727 and Vimal Chandra Grover Vs. Bank of India, (2000) 5 SCC 122. She also made an attempt to clarify that Laxmi Engineering Works Vs. PSG Industrial Institute (supra), is a case in which the complainant had purchased machinery from the opposite party and therefore it was a case covered under Section 2 (1) (d) (i) for purchase of goods. The said case did not pertain to services. 11. We have also come across a judgment recently, reported in Kishore Lal Vs. Chairman, Employees’ State Insurance Corporation, (2007) 4 SCC 579, wherein, at para 7 of its judgment, the Hon’ble Apex Court, observed as under :- “7.The definition of “consumer” in the CP Act is apparently wide enough and encompasses within its fold not only the goods but also the services, bought or hired, for consideration. Such consideration may be paid or promised or partly paid or partly promised under any system of deferred payment and includes any beneficiary of such person other than the person who hires the service for consideration. The Act being a beneficial legislation, aims to protect the interests of a consumer as understood in the business parlance. The important characteristics of goods and services under the Act are that they are supplied at a price to cover the costs and generate profit or income for the seller of goods or provider of services. The comprehensive definition aims at covering every man who pays money as the price or cost of goods and services. However, by virtue of the definition, the person who obtains goods for resale or for any commercial purpose is, excluded, but the services hired for consideration, even for any commercial purposes are not excluded. The term “service” unambiguously indicates in the definition that the definition is not restrictive and includes within its ambit such services as well which are specified therein. However, a service hired or availed, which does not cost anything or can be said free of charge, or under a contract of personal service, is not included within the meaning of “service” for the purposes of the CP Act”. 12. It must be clarified that the judgment of Laxmi Engineering Works Vs. PSG Industrial Institute – 1995(3)SCC 583 was authored by two-Judges’ Bench of Hon’ble Supreme Court, but Kishorelal case (Supra) was authored by a three-judges’ Bench. In view of the three-Judges Bench’s judgment, it has to be held that the complainant is a ‘consumer’. Rate of Interest 13. The learned counsel for the complainant vehemently argued that as per Sanction letters dated 18.12.1997 and 18.05.1999, the rate of interest and other charges are stated to be PLR + 2.5% + interest tax. The Circulars dated 12.09.1996, 19.05.1997 and 23.12.1997 state about the rate of interest at PLR + 2.5% + interest tax. However, the Circulars dated 22.02.1998, 03.03.1998, 27.03.1998, 22.04.1999, state that the rate of interest at PLR+3% interest + interest tax. Sanction letter dated 18.05.1999, clearly and unequivocally mentions that the rate of interest would be PLR+2.5% + interest tax. It was submitted that the loan sanction at a particular rate of interest subsequent to circulars pertaining to the OP, pale into insignificance. Those cannot over-ride /affect the rate of interest agreed between the parties. The OP has also charged over and above PLR @ 4.5% instead of agreed amount of 2.5%. 14. The third connected submission made by the counsel for the complainant is that the OPs have already filed written statement on 30.11.2002. They have produced Exs. D-1, D-2 and D-3 alleging that the complainant had agreed to increase rate of interest at 3.82% p.a., over and above PLR, unilaterally, vide letter dated 28.04.1999 and the complainant further agreed to pay interest @ 4.35% p.a., over and above the PLR unilaterally vide letter 31.03.2000. The complainant objected through various letters, explained above, and as such, the matter was referred to Chartered Accountant by the Bank for verification of accounts. Those documents, D1 to D3 were not provided to the Chartered Accountant for verification. The Chartered Accountant came to the conclusion that Circulars would override the sanction conditions regarding rate of interest and not that the complainant agreed for the same. For the first time, documents D1 to D6 (Xerox copies) were produced along with the written statement. The said documents bear the signature of Sh. Shiva Kumar Reddy, Director, vide affidavit dated 23.11.2010. However, subsequently, another affidavit was filed on 16.03.2011 alleging that the said documents were signed by R.H.Kasturi and not by Sh. Shiva Kumar Reddy. 15. It was also mentioned in the synopsis that the complainant had filed two applications, one seeking permission to cross examine two witnesses of the O.P. because it is a specific plea of the complainant that the signatures of Director were obtained on several blank papers at the time of sanction of loan and the 2nd application was filed with a direction to OP-1 to disclose the name of the Senior Branch Manager at the time of sanction of loan. However, at the time of final arguments, the counsel for the complainant withdrew the said applications. Those applications were not pressed. It was however, contended that the original documents Ex.B-1 to D-4 on 8.8.2010 are got up documents on the blank sheets obtained at the time of sanction of loan or disbursement of loan. 16. All these arguments have left no impression upon us. We have thoroughly perused Ex.D-1 to D-4. These are signed by Managing Director of the complainant and bear stamp of Karvy Telecom Limited. First of all, there is no inkling that the papers bearing signatures of the complainant on blank papers was signed subsequently nor there is an iota of evidence in this regard. The signatures on Ex.D-1, D-2, D-3 are affixed at the foot of the document but the signature on D-4 running in three pages are at the center of page No.1 and page No.3. Page No. 2 is fully written and the signatures appear on the foot of the document. There is document Ex.D-5 which is in a prescribed form and is singed by the Managing Director for Kaveri Telecoms Ltd. where it is specifically and unequivocally mentioned that the rate of interest is 16.13%. Likewise, supplementary agreement also bears the signatures of the complainant. 17. First of all, there is no objection from any authentic quarter that these documents were not produced before the Chartered Accountant. Secondly, in case the petitioner had these documents with blank papers, there could have been no hesitation to produce the same with written material before the Chartered Accountant. 18. This is an indisputable fact that the case of the complainant is that at the time of obtaining loan it had signed the blank papers. Even if it is so, he now cannot turn back and complain that it was made to sign the blank documents with seals at that time. It is clear, that it must have signed the papers with eyes wide open. The complainant did the same at its own peril. It should have refused to take the loan facility and should not have signed the blank papers. Once you trust the bank, you should not complain about its breach. Moreover, it must be borne in mind that it is the complainant and nobody else who has to carry the ball in proving that it was made to sign the blank papers, fraudulently or under coercion. It is apparent that the complainant had signed the papers on its own volition. We have come across few authorities which go a long way to embolden the case of Bank. See, Mrs. Margret Lalita Samuel Vs. Indo Commercial Bank A.I.R. 1979 SC 102, Syndicate Bank Vs. Vijay Kumar A.I.R. 1992 SC 1066, Kuldeep Singh Versus Nanak Singh 2008 IV PLR 276, and Grasim Industries Vs. Aggarwal Steel 2009 Part IV SCC 598. 19. There is no inkling on the evidence on the record that the above said rates were charged in violation of any notification issued by the Reserve Bank of India. 20. Moreover, there is an inordinate delay in filing the complaint. The complainant should have insisted at the very first moment. A business man is quite aware, how much interest is being charged at his loan amount. The borrower gets statement of accounts every month. 21. Again, the loan document clearly goes to show that the Bank was at liberty to alter the terms of sanction to withdraw or cancel the limit partially or in full or to recall the advances at any time without any notice and without assigning any reason. 22. Vide letter dated 22.01.2000, the complainant wrote to the Bank that your Bank was charging interest at PLR+4.5%+interest Tax for the period 1.4.1997 to 31.3.2000. Again this fact was brought to the notice of the Bank on 3.10.2000. This complaint was filed in this Commission on 6.8.2002. 23. In D-1 to D-4, the complainant has agreed to pay the interest @ 4.35% above the term lending rate of interest. 24. We have also perused the report of Karashett and Co., Chartered Accountant dated 14.12.2001. The Chartered Accountant came to the following conclusion:- “10. That the above named Chartered Accountant, vide page 191 para 3 stated that “According to sanction letter rate of interest payable is PLR+2.5% +Int. Tax. But if we go by circulars the Applicable ROI is PLR+3% or 4%+Int. Tax as the case may be from time to time. Our calculations are based on interest spread as per circulars except after 17.4.2000 which is based on PLR+2.5% as appearing in sanction letter. In other words it is assumed that circulars override the sanction conditions regarding rate of interest. 11. That the above named chartered accountant (vide page No. 246, last chart) disclosed that CC interest excess collected was Rs.1,44,442/-; BD interest short collected was Rs.1,99,514/- and DBD interest excess collected was Rs.25,798/- and ultimately a sum of Rs.29,274/- was short collected by the bank. This amount was debited to the account of the Complainant under intimation to the complainant (page 484) and a copy of the report was also sent. The same was challenged by the Complainant vide letter dated 26.12.2001 (page 52). The interest claimed as per calculation sheet submitted by the Complainant vide page 53 to 63 is not as per the terms of sanction. 12. From the above it is proved beyond doubt that the interest charged by OP No.1 to the various borrowal accounts of the Complainant is as per terms of sanction and hence the allegation of the Complainant that the OPs have charged excess interest of Rs.27,56,684/- from 1.04.1997 to 31.02.2002 is totally wrong.” 25. The complainant has made a vain attempt to make bricks without straw. The precious time of the Commission as well as the Bank has been wasted for this frivolous and vexatious litigation. We, therefore, dismiss the complaint with costs of Rs. 10,000/- U/s 26 C.P.Act, which be deposited with Consumer Legal Account of this Commission, within a period of 45 days from the receipt of this order, otherwise, it will carry interest @ 10% per month. Ld. Registrar to see that the order stands complied with, as per Law. |
