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CHANDIGARH CONSUMER DISPUTES REDRESSAL COMMISSION
K.C. Gupta, President, Maj. Gen. S.P. Kapoor and Devinderjit Dhatt, Members
KIRAN SURI - Appellant
Versus
STATE BANK OF PATIALA - Respondent
Appeal Case No. 125 of 2008
Decided on : 18-03-2008
Banking - Consumer Dispute - Contract Act - [Indian Contract Act, 1872, Section 171] - The court discussed the promissory note executed by the borrower in favor of the guarantor and the legal obligations of the guarantor. It highlighted that a promissory note without consideration is void and concluded that the appellant could not be considered as a guarantor for the repayment of the loan. The court held the bank unjustified in deducting the amount from the FDR and directed the respondent to credit the amount of FDR in the appellant's saving account with interest.
Fact of the Case:
The appellant deposited a sum of Rs. 70,000 in the form of FDR with the bank, which was to mature on 17.10.2004. The bank refused to honor the FDR and credited the amount in the appellant's saving bank account, citing the appellant's standing as a guarantor for another loan.
Finding of the Court:
The court found that the appellant was not a guarantor for the loan and that the bank was unjustified in deducting the amount from the FDR.
Issues: The main issue was whether the appellant could be considered as a guarantor for the repayment of the loan taken by another party.
Ratio Decidendi: The court held that a promissory note without consideration is void and concluded that the appellant could not be considered as a guarantor for the repayment of the loan.
Final Decision: The appeal was accepted, and the respondent was directed to credit the amount of FDR in the appellant's saving account with interest.
ORDER
K.C. Gupta, President - This appeal has been directed by the complainant against order dated 31.7.2007 passed by Consumer Disputes Redressal Forum-I, U.T. Chandigarh (hereinafter to be referred as District Consumer Forum), vide which her complaint was dismissed as meritless.
2. Briefly stated the facts are that appellant (complainant) Smt. Kiran Kalra had deposited a sum of Rs. 70,000 in the year 2000 with the State Bank of Patiala, Dadu Majra, U.T. Chandigarh in the shape of FDR and interest accrued thereon was received by her on monthly basis. The re-payment of this FDR was to take place on 17.4.2002. It was again got renewed with maturity date as 17.10.2004 on which date respondent was to pay Rs. 81,588 . The copy of the FDR is Annexure C-1.
3. It was next averred that the appellant presented the FDR for encashment to the respondent on 18.11.2004 and requested that the said amount be credited into her saving bank account No. 5404 but the respondent refused to do so. Later on appellant wrote letter to the respondent dated 18.11.2004 to detail the reason for not honouring the commitment but respondent replied that since, she stood as guarantor in one loan case of Smt. Tejinder Kaur and the said account had become NPA and as such the amount had not been paid. A copy of the letter is Annexure C-2.
4. It was further averred that appellant vide letter dated 9.12.2004 asked the respondent to honour its commitment and pay the amount of FDR but of no avail. Ultimately respondent vide letter dated 17.2.2005 sent a banker's cheque for a sum of Rs. 15,657 after retaining a sum of Rs. 67,155 out of the total amount of FDR of Rs. 81,588. However, appellant returned that banker's cheque to the respondent by stating that the same was illegal and unjustified.
5. Alleging deficiency in service, the complaint was filed.
6. The respondent contested the complaint and stated that loan amount was outstanding against Smt. Tejinder Kaur and appellant had stood as guarantor of Smt. Tejinder Kaur. Since, Tejinder Kaur had failed to repay the loan amount, so, the amount was deducted from the FDR of Smt. Kusum Kalra as she had stood guarantor for re-payment of loan which was taken by Smt. Tejinder Kaur. It was further stated that as per Contract Act the Bank had a general lien on the amount which was lying with the Bank. Therefore, it prayed that the complaint should be dismissed.
7. Parties adduced evidence by way of affidavits.
8. After hearing Counsel for the parties, District Consumer Forum vide order dated 31.7.2007 dismissed the complaint being merit less.
9. Dissatisfied with the said order, complainant has filed the present appeal.
10. None appeared on behalf of appellant as Counsel for appellant had sent an application for adjournment being away to New Delhi to attend some arbitration matter. Earlier also on 28.11.2007 there was an adjournment slip on behalf of the Counsel for the appellant on account of pre-occupation. Then on 5.2.2008 there was adjournment slip on behalf of Counsel for respondent.
11. We have heard Counsel for appellant Shri Kuldeep Singh and carefully gone through the file.
12. It is an admitted fact that appellant (complainant) had deposited a sum of Rs. 70,000 with the respondent Bank in the shape of FDR which was to finally mature on 17.10.2004 with maturity amount of Rs. 81,588. The copy of the FDR is Annexure C-1. The appellant had presented the said FDR for encashment on 18.11.2004 but respondent Bank had refused to honour the same and to credit the amount in her Saving Bank Account No. 5404. Later on vide Annexure C-2 respondent had given the reason that she had stood as guarantor to one Mrs. Tejinder Kaur against her loan amount and since her loan amount had become NPA and she had not paid the amount, so, the amount was deducted from her account. Ultimately respondent vide letter dated 17.2.2005 had sent Banker's cheque for a sum of Rs. 15,657 towards the balance proceeds of the FDR after deducting a sum of Rs.
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