RAJESH M. MANTANI Vs. BOMBAY MERCANTILE BANK

JUDGEMENT

(1.) Complainant, sole proprietor of M/s Paramount Import and Export Corporation, was in the business of trading/export of teak logs and cashews. According to the Complainant he came into contact with Opposite Parties 2 to 8, who were providing financial and collateral securities services. At the behest of Opposite Party No.2, he opened an account with Opposite Party No.1/Scheduled Bank. He took an overdraft facility for Rs.331.74 lakhs, against his own pledged deposits/collateral securities. As he got a deal from the Forestry Commission, Government of Ghana, for which credit facilities were required, he got his limits enhanced by an additional amount of Rs.150 lakhs, against the pledged deposits/collateral securities provided by Opposite Parties 2 to 8. In March, 2009 additional credit facilities were enhanced from Rs.150 lakhs to Rs.475 lakhs, apart from renewal of the earlier overdraft limit of Rs.331.74 lakhs. The grievance of the Complainant is that Opposite Party No.1 kept him in dark about the transactions in his account and did not provide any statement of accounts, all this in conspiracy/collusion with Opposite Parties 2 to 8, though he had repeatedly sought for the same. He was totally unaware of the fact that the securities pledged by the Opposite Parties No 2 to 8 for obtaining overdraft facility had already been pledged for their own credit facilities. Further, Opposite Party No.1, without informing him or taking his consent, made payments to Opposite Parties 2 to 8 by illegally breaking his pledged deposits. At the same time, cheques issued by him to other vendors were dishonoured. Credit facilities valid upto 31.05.2010 were prematurely withdrawn. Opposite Party No.1, issued letter seeking payment of Rs.2,64,44,996.19, as being the amount allegedly withdrawn from his account, beyond overdraft limits. Another letter was issued requiring payment of Rs.2,67,35,789.92, as being the amount of allegedly overdrawn from his account. On 01.10.2010, again another letter was issued recalling the loan and demanding payment of Rs.7,82,69,327.92. During the arbitration proceedings, the Complainant stated that to his utter surprise, he received a letter from Opposite Party No.1 seeking replenishment of the amount equivalent to the term deposit in respect of Singhanias and Mrs. Anju Rustogi. The Complainant was never informed nor was aware who Mrs. Rustogi was and had no dealings with her whatsoever. Mrs. Anju Rustogi initiated civil suit alleging that Opposite Party No.1 illegally utilized her pledged deposit for making advances/loans to the Complainant without her consent. The Complainant had also been made a party as Respondent in the civil suit.

(2.) Action was also initiated by Opposite Party No.1 against the Dy. Chief Officer/Manager Manager, Santacruz Branch for the irregularities committed by him, pertaining to various accounts, including that of the Complainant. A charge-sheet was issued to him on 22.12.2010. The Manager was dismissed from the Bank on 01.12.2011. Charge-sheet/final report under Section 173 Cr. P.C. was filed by EOW, Mumbai in the Court of Chief Metropolitan Magistrate consequent to FIR No.32/2014.

(3.) Despite the knowledge of fraudulent activities of the Branch Manager from at least 28.11.2008, he was allowed to continue with full powers by Opposite Party No.1. Opposite Party No.1 also pledged the deposits/collateral securities of Opposite Party No.9 for the credit facilities to the Complainant, about which neither the Complainant was informed nor his consent taken. Several illegal payments were made from his account. The conspiracy between Opposite Party No.1 and Opposite Parties 2 to 8 resulted in violation of contractual obligations and constituted deficiency in service and unfair trade practice. The Complainant faced several legal proceedings and suffered mental agony which seriously affected his business. Opposite Parties 2 to 8 being in hand in glove with Opposite Party No.1, jointly and severally put the Complainant to huge financial loss. The Complainant received notices under Section 13 (2) read with Section 13 (13) of SARFAESI Act, 2002. The Complainant also could not get any relief from the Arbitrator as the award was passed on 02.08.2014 against the Complainant, without taking into account his defense, based on fraud. The Complainant was forced to approach Hon'ble Bombay High Court challenging the arbitration award. Conspiracy between Opposite Party No.1 and Opposite Parties 2 to 8 led to illegal and unprompted overdrafts, finally declaring the Complainant's account as irregular and NPA.