- (1.) THIS appeal arises from order dated 27.8.2002 rendered by the learned Consumer Disputes Redressal Forum, Valsad, in Consumer Protection Case No. 217 of 2001, directing the opponent State Bank of India through its authorities opponent Nos. 1 and 2 to pay the complainant Rs. 2,55,585 wrongfully credited into the loan account of the complainant from complainant s Savings Bank Account No. 4996 and to pay interest @ 12% p.a. from 24.4.1999 over and above cost and compensation quantified at Rs. 1,000 and Rs. 2,000 respectively.
(2.) WE have gone through the impugned order. We have heard the learned Advocates for the parties. We have also gone through the written submissions made on behalf of the original complainant. The complainant had savings bank account in question with the opponent bank in its opponent No. 1 branch. He obtained a loan from opponent No. 2 branch of the same bank in the year 1994 for constructing a house. He had created security in the form of equitable mortgage on the house property described in the complaint. The opponent bank through its opponent No. 2 branch filed Special Civil Suit No. 62 of 1996 for recovery of outstanding amount of Rs. 1,57,391 and interest in the Court of Civil Judge (S.D.), at Valsad. The bank moved interim application for obtaining interim injunction restraining Cynamid India Limited, where the complainant was serving, from making payment of the terminal benefits upon the complainant retiring from that company. That application was dismissed on 12.2.99. Thereafter, the bank gave application Exh. 25 dated 25.4.1999 for obtaining interim injunction against the complainant from withdrawing his credit balance amount of Rs. 4,15,000 lying in his savings bank account with the opponent bank. That was dismissed after hearing on 15.4.1999. In the background of such facts, the complainant alleged that when he went to withdraw the credit amount of Rs. 4,20,000 lying in his aforesaid savings bank account, the opponent bank did not permit withdrawal of such amount. He, therefore, gave application to the Manager of opponent No. 1 branch of the bank. He informed the complainant that as he owed loan amount to the opponent bank, its opponent No. 2 branch was entitled to set off the balance amount against outstanding loan amount. The complainant, therefore, gave written complaint at the Valsad police station setting out aforesaid facts. Since the application which was moved by opponent bank in the aforesaid suit was dismissed by the Court on 15.4.1999, the opponent bank approached the High Court in Appeal No. 222 of 1999 but the same was withdrawn on 15.12.1999. On making inquiry, the complainant came to know that the opponent bank had adjusted the required credit balance amount from his savings bank account in question to his loan account and the loan account was accordingly settled and closed by the opponent bank. Such amount was Rs. 2,55,585. It was, therefore, the case of the complainant before the learned Forum that the action of the opponent bank in adjusting the portion of amount of credit balance in savings bank account with the loan account was without authority and amounted to deficiency in service particularly when the opponent bank had already taken security of equitable mortgage of the immovable property from which the opponent bank could have recovered its dues. The complainant, therefore, prayed for the said amount along with compensation and cost in aforesaid complaint filed before the learned Forum. The opponent resisted the complaint inter alia on the ground that it had authority to set off the required amount of credit balance of the complainant s savings bank account in question with the outstanding amount in his loan account with the opponent bank as per the agreement entered into by the complainant with the opponent bank. Thus, there was no deficiency in service on the part of the opponent bank in seeing that such amount of credit balance in savings bank account was set off against the outstanding amount of loan in the complainant s loan account. The loan was obtained not only for the purpose of house but also for purchase of a cow as asserted by the complainant. The learned Forum came to the conclusion that the opponent bank was not legally entitled to set off the credit balance from the savings bank account in question with the loan account in question and it was shame on the part of the opponent bank to do so even after the aforesaid legal proceedings in the form of injunction applications given from the side of the complainant came to be dismissed. The learned Forum has tried to distinguish the decision of the Hon ble Supreme Court in the case of Syndicate Bank v. Vijay Kumar and Others, 1992 2 SCC 330. The learned Forum has also distinguished other decisions cited by the opponent bank. In our considered opinion, the learned Forum clearly appears to have missed the agreed terms and conditions of the contract entered into between the parties. The agreement for hypothecation witnesses following relevant terms and conditions agreed upon by and between the parties: "VII. That the bank without being bound to do so or being liable for any loss on account thereof and without prejudice to the rights and remedies of suit or otherwise shall be entitled to (1) without notice to the borrower(s) and at the borrower(s) risk and expense enter any place(s) where the security may be and inspect, value, insure, superintend, disposal and/or take possession thereof; (2) without prejudice to the foregoing on default of the borrower(s) in payment of any money hereby secured or on the non -performance of an obligation on the part of the borrower(s) or on the occurrence of any circumstance in the opinion of the bank endangering the security take possession or recover and/or sell by public auction or private contract or otherwise deal with the security and appropriate the proceeds to the outstanding loans (3) apply towards the outstanding loans any moneys in its hand belonging to the borrower(s) and to recover the balance, if any, of the loans notwithstanding that all or any of the security may not have been realised". The terms and conditions of the loan agreement are produced at pages 31 to 33 and relevant condition (h) reads as under: "(h) In the event of my ceasing to be in business/service of my employer whether by retirement, resignation, death or by operation of law or from any other reason or cause whatsoever and howsoever you shall be entitled at your discretion, to write to my employers to appropriate and set -off (i) any amount which may then be payable by my employers to me whether by way of salary, allowances, bonus, other remuneration or/and by payment (whether ex gratia or otherwise) whatsoever and (ii) any amount that may be standing to the credit of any account which I may have with my employers or with you, either singly or jointly towards repayment of the balance that may be remaining due and payable by me in my said loan account together with interest thereon at the applicable rates up to the date of such repayment. Any such appropriation made by you or my employers shall be conclusive and binding on me and my estate both in and out of Court". It would, therefore, clearly appear from the aforesaid admitted documents that the opponent bank had a right of set -off against the credit balance in the savings bank account of the complainant for the realisation of the outstanding amount in the loan account. It is in the background of these facts that reference needs to be made to the decision of Hon able Supreme Court in the case of Syndicate Bank v. Vijay Kumar and Others, . It has been observed that general lien of bank applies to FDR also when they are remitted to the bank by customer for collection. The general lien is a valuable right of a banker who has a further right to use the proceeds in respect of any balance that may be due for the customer by way of reduction of customer s debit balance. Such lien may arise from the specific letters of agreement executed by the debtor. This decision has been referred to by the Bombay High Court in the matter of the State Bank of India v. Javed Akhtar Hussain and Others, 1993 AIR(Bom) 87. That was a case where the defaulter had made fixed deposit in the joint account along with his wife in another branch of the same bank. While distinguishing the aforesaid decision of the Hon able Supreme Court, the Bombay High Court came to the conclusion that the bank could not create a lien on the said account unilaterally. In the present case, however, the facts clearly indicate that the parties specifically agreed about security in the form of lien and right of set -off created on the credit balance lying in the deposit accounts of the complainant, including the savings bank account in question for the purpose of repayment of the outstanding amount under the loan account. In that view of the matter, the decision of the Apex Court would squarely apply to the present case and the decision of the Bombay High Court will not be applicable.
(3.) THAT being the position of law, the opponent bank was clearly entitled to have set -off against the credit balance in the savings bank account in question. It has, however, been submitted that the bank had an occasion to file civil suit for recovery of outstanding amount in the loan account which suit came to be withdrawn after the bank failed to obtain interim injunction in the suit. It has, therefore, been submitted that the bank could not have set off the amount from the savings bank account against the outstanding loan amount. Here also that the complainant harboured an erroneous impression about the position of law. It is obvious that the bank could not have once again filed a suit for recovery of the amount, having withdrawn the suit unconditionally. However, filing of suit is relatable to availing of a remedy but that is apparently different and distinct from exercising the right which did not stand extinguished upon withdrawal of the suit. Thus, the bank was clearly legally entitled to exercise its rights under the aforesaid agreement between the parties. It was, therefore, obvious that the bank, during the pendency of or even after the withdrawal of the suit could legally and validly adjust the required amount of balance in the savings bank account against the outstanding amount of loan and interest. Such an exercise of right by the opponent bank was well within its authority and could not be said to be either improper or illegal. No deficiency in service, therefore, could ever have been alleged against the opponent bank in that case. As before the learned Forum, before us also the learned Advocate for the opponent bank has cited other decisions but in view of aforesaid settled position of law, we need not take ourselves to the same. What is important to be noted is that when parties enter into a specific agreement, unless the agreement is shown to be illegal or opposed to public policy or void in any other manner, parties are bound by the same. It might be noted that the required credit balance in the savings bank account in question was set -off against the outstanding loan amount in the loan account of the complainant on 24.4.1999, whereas the suit was withdrawn on 26.4.1999. Therefore, withdrawal of the suit being subsequent to the exercise of aforesaid right, would not in any manner affect the right of the opponent bank arising under the agreement in question.;