INDO STEELS Vs. CENTRAL BANK OF INDIA

JUDGEMENT

(1.) This is an appeal arising out of the order of the State Consumer Disputes Redressal Commission, Tamil Nadu dated 23rd July, 1995 in O.P. No. 138 of 1994.

(2.) The contention of the appellant is that the appellant is a firm carrying on business of iron and steel apart from enjoying overdraft facilities with the respondent Bank since 1986. The Bank was also extending facilities of temporary overdraft from time-to-time and this facility of temporary overdraft at times went as high as Rs. 50 lakhs. While the facilities were being enjoyed by the appellant the respondent Bank on 5th June, 1992, without notice to the appellant locked the premises of the firm. It is alleged by the appellant that it all happened due to the change of the Manager. The appellant alleges that as a consequence of the above action, the reputation of the appellant suffered substantial damage and for this action the appellant claimed a sum of Rs. 15 lakhs by way of compensation. The grant of cash, credit facilities and overdraft was not disputed though the extent of Rs. 50 lakhs was in dispute. This was being granted subject to the appellant maintaining adequate stocks to cover the dues and was required to submit its periodic stock-statements as the appellant was overdrawing his account leading to a huge balance outstanding. The respondent insisted for adequate security and called upon the appellant to regularise the account. The respondent further points out that there was a overdue balance of around Rs. 40 lakhs, but when the surprise inspection by the officers of the Bank was conducted, they found stocks were hardly worth Rs. 15 lakhs. Therefore, it was, with a view to secure the Bank's interests that the Bank who was the hypothicatee of all movable stocks, converted the said hypothecation into pledge by exercising its rights in terms of hypothecation agreement. The relevant clauses of the said hypothecation agreement read as under :

(3.) It is also noticed that the Bank had been insisting on repayment of its dues and had already filed a suit for the recovery of Rs. 68,55,020/- before the High Court of Tamil Nadu at Madras.