NARAYANA EDUCATIONAL SOCIETY Vs. ING VYSYA BANK LTD

JUDGEMENT

(1.) The complainant an educational society filed this complaint u/s 17(a)(1) of the Consumer Protection Act against the opposite party ING Vysya bank for refund of Rs. 99,27,000/- with interest @ 18% p.a., collected towards take over charges and costs.

(2.) The case of the complainant in brief is that it is a society registered under Societies Registration Act. Its main object is to impart education by establishing educational institutions, achieved through substantial investments/expenditure. It has approached the opposite party bank for providing financial facilities like over draft (OD), bank guarantee, term loan etc. After satisfying with the security furnished by it the opposite party bank sanctioned term loan amounting to Rs. 86.25 lakhs as on 2.9.2009. However it has been collecting unconscionable, usurious interest amounting to Rs. 90 lakhs. In order to improve the growing investment demands of professional colleges it requested the opposite party bank to enhance the loan facility to Rs. 35 crores on which the bank expressed its inability. Since the priorities of investments cannot be postponed it has approached the Indian Bank, Nellore which has readily accepted subject to creation of Pari Passu in its favour. It has also agreed by its letter dt. 19.9.2009 not only to take over the liabilities but also enhance the financial assistance to the complainant to a tune of Rs. 170 crores. By its letter dt. 29.8.2009 the same was communicated to the opposite party bank. Contrary to the terms of the agreement, the opposite party by its letter dt. 2.9.2009 called upon to pay 2% on the sanctioned amount viz., Rs. 99,27,000/- as pre-closure takeover charges. This is illegal, and untenable. Taking advantage of its dominant position it was made to pay huge amount. It has issued legal notice for which a reply was given with false and untenable grounds. Bank guarantees were issued after taking commission and none of the bank guarantees was encashed by them. Therefore no liability arises in that regard. Alleging that this amounts to dishonest, and deficiency in service sought for refund of Rs. 99,27,000/- with interest @ 18% p.a., and costs.

(3.) The opposite party bank resisted the case. It alleged that the complainant cannot be termed as consumer carrying on commercial activity and that the Commission has no jurisdiction to decide the matter in a summary manner. Credit policy of the bank differs from bank to bank in sanction/enhancement of loans. Simply because another bank has come forward to enhance the loan limits it does not mean that it negated the request of the complainant. As it found the track record of the complainant in regard to repayment of the loan amounts is not satisfactory and as per repayment based classification made by the loan review department and the accounts of the complainant having verified shows irregularity more frequently it did not extend the facility of enhancement of loan limits. Clause-37 of the sanction letter dt. 9.1.2008 signed by the complainant along with guarantors clearly empowers the bank to collect 2% take over charges/interest. It is nothing to do with take over clause. The Indian Bank through its letter dt. 19.9.2009 not only confirmed taking over but also enhanced financial assistance to the complainant for a sum of Rs. 170 crores. It may be stated that the complainant has developed its business all over the country with the help of finance extended to it. As per the terms and conditions through its letter dt. 2.9.2009 it called upon the complainant to pay 2% on sanctioned loan which comes to Rs. 99,27,000/- towards takeover charges. In fact the complainant agreed to pay Rs. 90 lakhs exclusive of service tax towards full and final settlement of take over charges. Therefore the complainant is estopped from questioning the same. For the notice issued it has given correct and proper reply. More over it is a contractual obligation, and therefore it does not come under the provisions of the Consumer Protection Act. It has collected take over charges on over drafts, term loans etc. Since the bank guarantees were already given to the beneficiaries as per the requirement of the complainant it was under obligation to pay the amounts to the said authorities as and when demanded without any demur or protest. Therefore the allegation of the complainant that as they are not encashed it has no liability is not tenable. In fact the transferee bank gives counter guarantee to the transferor bank. It clearly establishes that the sanctioned limits under bank guarantees are also covered by liabilities. Therefore it was entitled to collect 2% towards take over charges besides exclusive services charges towards full and final settlement by virtue of letter dt. 2.2.2009. There was no cause of action for the complainant to file the complaint. Therefore it prayed for dismissal of the complaint with costs.