BIOPOLYMER SYSTEMS Vs. HARYANA FINANCIAL CORPORATION

JUDGEMENT

(1.) M/s. Biopolymer Systems through its partner Dr. Mahesh C. Jain has filed this complaint under Sec.17 of the Consumer Protection Act, 1986 against Haryana Financial Corporation through his Managing Director, S. C. O. No.17-19, Sector 17a, Chandigarh and Branch Manager, Haryana Financial Corporation, House No.449, Sector 14, Sonepat (hereinafter to be referred in short as H. F. C.) praying that the respondents should be directed to levy interest at the rate leviable from time to time during currency of loan with half yearly rests. Interest tax should be levied as applicable and penal interest may be dispensed with. It has further been prayed that the respondents should bear the costs of delay in auction sale of the unit and should not penalize the complainant firm for its own fault. Refund of a sum of Rs.11,37,435/- along with interest at the rate of 24% to be compounded after every 6 months from the date this amount became due. A sum of Rs.50,000/- has also been claimed as compensation.

(2.) The complainant has made the following averments in the complaint case : the complainant M/s. Biopolymer Systems is a registered partnership firm having its office at C-4/18, Model Town, New Delhi and Dr. Mahesh C. Jain and Mr. Manish Mittal are its partners. Annexure P-l is the copy of the partnership deed and Annexure P-2 is the Certificate of Registration issued by the Registrar of Firm, Delhi. The complainant-firm decided to set up an industrial unit for manufacturing release paper at Village Ferozepur Bangur, Tehsil Kharkhoda, District Sonepat and applied before the respondent No.2 for grant of term loan which was sanctioned vide letter No. HFC/sltf/ 95 dated 27.11.1995 for a sum of Rs.19 lacs. The interest was chargeable @ 17.5% per annum repayable with half yearly rests. As per the stipulation contained in the letter of sanction, the rate of interest could be revised till the loan is adjusted by the Corporation. A copy of the sanction letter has also been enclosed as Annexure P-3 with the complaint. The complainant had deposited a sum of Rs.39,000/- as processing fee and to cover various other expenses. It was alleged that the respondents changed the rate of interest with effect from various dates. It was @ 19% in July, 1996 whereas the rate of interest w. ei.18.12.1996 was 18.5% which was enhanced again to 19% w. e. f.12.5.1997. It was reduced to 16.75% w. e. f.1.11.1997 and was further reduced to 16.5% on 18.12.1997. The rate of interest was enhanced to 17.5% on 19.1.1998 but was reduced again to 16.5% on 20.4.1998. The complainant alleged that the respondents could charge interest from the firm only on the basis of the revised interest rates' of H. F. C. The complainant has further averred that charging compound interest at enhanced rate is penal and contrary to law as contained in Sec.74 of the Contract Act and, therefore, the complainant firm should be relieved against payment of penal interest that has been levied @ 3% per annum with quarterly rests in addition to usual stipulation about the interest rate.

(3.) The complainant firm, however, was unable to manage the unit. It was on 4.8.1998 that the complainant firm transferred possession of the unit to H. F. C. for being sold by auction to settle the dues found outstanding against complainant firm. A copy of the letter sent in this regard on 4.8.1999 has been placed on record as Annexure P-4 with the complaint. The H. F. C. invited final bids on 1.2.1999 after a lapse of about 6 months since the date of possession of the unit and received highest offer of Rs.28,25,000/-. After a lapse of further 40 days, the H. F. C. executed mortgage deed in favour of the highest bidder and transferred possession of the unit. It was alleged that the H. F. C. has taken 7 months and 8 days to dispose of the unit by auction sale after having taken possession of the unit from the complainant firm way back on 4.8.1999. It has been urged that the complainant firm could not be held liable to pay interest for the period of 7 months and 8 days which the H. F. C. took to dispose of the unit by auction sale. The H. F. C. had charged interest till 17.3.1999 though the mortgage deed in favour of the highest bidder was executed on 12.3.19997 The complainant firm contended that as per the agreement and as per the prevailing rate of interest of the HFC. and outstanding balance amount with the H. F. C. was Rs.11,37,435/- as on 1.2.1999. The loan account was issued by the H. F. C. and the same has been annexed as Annexure P-5. This was done without any prejudice to the right of the complainant firm to relieve in expenses or the period or rates for which interest should have been leviable on the firm. The complainant firm wrote several letters for the refund of the outstanding amount along with interest but the respondents have not paid any heed to it. A copy of the letter dated 27.9.1999 in this regard was placed on record as Annexure P-6. Annexure P-7 is the copy of another letter dated 12.8.1999. It was after receipt of letter dated 12.8.1999 that the respondents admitted that they were liable to pay Rs.8,85,668/- being excess bid amount but they failed to refund this amount even after the lapse of eight months. A copy of the reply sent by the respondents regarding the aforesaid balance amount of Rs.8,85,668/- was also placed on record as Annexure P-8. The contention of the complainant is that the respondents cannot charge interest arbitrarily and illegally and beyond the terms and conditions of the sanction letter Annexure P-3 and the delay in payment of admitted surplus amount resulted in deficiency in service on the part of the respondents. The complainant also contended that the equity demanded that the complainant firm should be paid interest at the same rate at which the H. F. C. is charging from the complainant on advances. The interest tax till 1.6.1997 has been levied @ 3% and, thereafter, it has been levied @ 2% The basis for this needs clarification and adjustment. It was also claimed that the respondents should indemnify the complainant firm for any sales tax liability arising out of the auction sale of the unit. The complainant firm suffered due to the unfair trade practice and deficiency in service on the part of the respondents and claimed a sum of Rs.50,000/- as compensation for mental agony and harassment on this account.