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MAHARASHTRA STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, MUMBAI
Hon’ble Mr. Justice B.B. Vagyani, President;
Mrs. Anjali Karadkhedkar & Mrs. S.G. Nagarale, Members
WAHIDA IMTIAZ SHAIKH—Appellant
versus
PUNE CANTONMENT SAHAKARI BANK LTD.—Respondent
Appeal No. 1352 of 2005—Decided on 1.9.2005
Counsel for the Parties :
For the Appellant :Mr. Sreepad Deshmukh @ Mr. V.B. Pandit, Advocate.
For the Respondent:Mr. Rahul Gandhi, Advocate.
A guarantor can be considered a consumer under the Consumer Protection Act, 1986, and the merits of a complaint should be considered before rejecting it based on jurisdiction.
Headnote:
Consumer Complaint - Jurisdiction - Maharashtra Co-operative Societies Act, 1960, Section 101; Consumer Protection Act, 1986, Section 2(1)(d); Civil Procedure Code, Section 9-A - The court held that the complainant, as a guarantor, is a consumer under the Consumer Protection Act, 1986. The court also discussed the jurisdiction issue under Section 9-A of the Civil Procedure Code and emphasized the need to consider the merits of the complaint before rejecting it based on jurisdiction.
Fact of the Case:
The appellant, a guarantor, filed a consumer complaint against a bank for deficiencies in service. The bank challenged the complaint, arguing that the appellant was not a consumer under the Consumer Protection Act, 1986.
Finding of the Court:
The court found that the appellant, as a guarantor, is a consumer under the Consumer Protection Act, 1986. The court also held that the lower forum erred in rejecting the complaint based on jurisdiction without considering the merits.
Issues: Jurisdiction under Section 9-A of the Civil Procedure Code, definition of consumer under the Consumer Protection Act, 1986, and consideration of the merits of the complaint.
Ratio Decidendi: The court emphasized that the appellant, as a guarantor, is a consumer under the Consumer Protection Act, 1986. The court also highlighted the need to consider the merits of the complaint before rejecting it based on jurisdiction.
Final Decision: The appeal was allowed, the order of the District Consumer Forum was quashed, and the matter was remanded back to the forum with a direction to decide the matter on merits.
Mr. Justice B.B. Vagyani, President—This appeal filed by the Guarantor/unsuccessful complainant is directed against the order dated 11.7.2005 passed by the District Consumer Forum, Pune.
2. In brief facts giving rise to this appeal are as under :
3. Respondent/org. O.P. is a Bank known as Pune Cantonment Sahakari Bank Ltd. The appellant/org. complainant is a member of the Bank. One Mr. Ayub Azgar Khan and Mrs. Shabana Ayub Khan availed credit facility from the respondent bank somewhere in the year 2001 for an amount of Rs. 85,000/- which was to be repaid on or about August, 2008 together with contractual rate of interest @ 16.5% p.a. The present appellant stood as a Guarantor. Principal borrowers failed to pay instalments. Therefore, the respondent bank initiated the proceedings under Section 101 of Maharashtra Co-operative Societies Act, 1960 for recovery of the amount against the borrowers and the Guarantor. Assistant Registrar of Co-operative Societies issued a certificate for recovery of the amount of Rs. 80,740/- along with interest @ 16% p.a.
4. The borrower has made very serious grievance about the service rendered by the Bank. Deficiencies alleged to have been committed by the Bank are mentioned in para 35 of the consumer complaint filed by the present appellant. The consumer complaint was seriously challenged by the respondent bank mainly on the ground that the complainant is not a consumer within the meaning of Section 2(1)(d) of Consumer Protection Act, 1986.
5. Respondent bank moved the Forum under Section 9-A of Civil Procedure Code by application for framing and hearing of preliminary issue with regard to jurisdiction. The prayer of the respondent was allowed. The Forum below framed and heard preliminary issue with regard to jurisdiction.
6. Forum below heard the Counsels of both the sides and came to the conclusion that the complainant is not a consumer within the meaning of definition of Consumer as defined under Section 2(1)(d) of Consumer Protection Act, 1986. For want of consideration adverse finding is recorded against the complainant. Consequently, the Forum held that Forum has no jurisdiction to try and entertain the complaint.
7. Feeling aggrieved by the order passed by the Forum below, the original complainant has come up in appeal.
8. We heard the learned Advocates Mr. V.B. Pandit for the appellant and Mr. Rahul Gandhi for the respondent.
9. The liability of a Guarantor is co-extensive with the borrower, in case of default of repayment of loan amount, the Bank can legitimately proceed against the principal borrower and the Guarantor. Therefore, the Guarantor can be treated as beneficiary of service. It is not necessary for the beneficiary to pay consideration to the service provider.
10. West Bengal State Consumer Disputes Redressal Commission, Calcutta in the case of UCO Bank v. Dr. Sisir Kumar Kar, II (2000) CPJ 326, has dealt with similar kind of question. West Bengal State Commission has held that the liability of a Guarantor being co-extensive with the principal borrower, the borrower comes within the definition of the consumer.
11. Punjab State Consumer Disputes Redressal Commission, Chandigarh has also taken a similar view in the case of Morinda Co-op. Sugar Mills Ltd. v. State Bank of Patiala, II (1995) CPJ 387. Punjab State Commission has held that the Guarantor is a consumer as defined under Section 2(1)(d) of Consumer Protection Act, 1986 and entitled to invoke jurisdiction of the Forum.
12. It is further held by the Punjab State Commission that charging of higher interest is a deficiency in service.
13. Learned Advocate Mr. Gandhi drew our attention to the decision of Bihar State Consumer Disputes Redressal Commission in the case of Ugra Mohan Jha v. Dighra, Zonal Manager, Central Bank of India & Ors., II (1994) CPJ 513, wherein the Guarantor is held not a Consumer under the Consumer Protection Act, 1986.
14. The liability of the Guarantor is the same as that of principal borrower. If the borrower
