Full Judgment
A. Venkatarami Reddy, President:
1. The complaint CD 109/91, State Commission/ Hyderabad is filed by 8 individuals who were all teachers working in Devid Memorial High School at the time of occurrence of the event, against (1) The Manager, Vijaya Bank, Hyderabad, (2) Conwest Estates and Builders, Narayanguda, Hyderabad and (3) Sri Rajendrapal Reddy, Public Relations Officer, NCC Directorate, Secunderabad to direct the opposite parties jointly and severally (a) to waive the loan with interest upto date, (2) to direct the Conwest Estates and Builders and its agent Sri K. Rajendrapal Reddy to pay the loan amounts, (3) to pay to the complainants the difference in the prices of house plots during the past three years, and (4) to direct the opposite party No. 1 Bank to supply copies of sets of loan agreements together with enclosures like the pronote, receipts and letter of authorization to transfer the amounts to the builder with his name printed in them and to direct the Banki.e. first opposite party to freeze the current account No. 2804 or any other number operated by Conwest Estates and Builders of BMR Estates and Builders or by Shri B. Murari Reddy or Shri K. Rajendrapal Reddy, and also to direct the first opposite party Bank to furnish details of deposits and withdrawals effected opening in the name of the builder and the individuals of the respective accounts since the time of opening of the accounts, and to attach the properties of 2nd and 3rd opposite parties and their house bearing No. 3-4-632, Narayanguda, Hyderabad and to award costs of the petition and to pass any other order.
2. According to the complainants during the first half of April, 1988, the third opposite party then an unemployed youth, approached the complainants who were all working as teachers in Devid Memorial High School, Tarnaka and induced them to purchase house plots measuring 200 to 300 sq. yards at Narapalli or any other place nearabout or in Hyderabad and he also convinced the complainants that they could avail the Bank loan which he can arrange through Vijaya Bank i.e. first opposite party for purchase of these house plots. The third opposite party got the signatures on sets of different kinds of papers containing the loan agreement, promissory note, receipts, authorization for the transfer of sanctioned loan amount to the builder. But thereafter the third opposite party did not contact the complainants at all. But the complainants received a notice on 26.9.1990 from the first opposite party asking them to repay the total loan amount outstanding from the complainants in a sum of Rs.1,25,340/-with interest within/days. It is their further case that on enquiry at the Bank, they came to know that the Bank sanctioned the loans for the purchase of house plots in April, 1988 and that the sanctioned loans were credited to the current account No. 2804 of the Conwest Estates and Builders operated by Sri B. Murari Reddy i.e. second opposite party. According to the complainants the said amounts were withdrawn by the second opposite party and misutilised in collusion with the third opposite party as well as the staff of the first opposite party Bank. Thereupon they gave legal notices to all the opposite parties and also lodged a police complaint to the Station House Officer, Osmania University.
3. Alleging that all the three opposite parties hatched a conspiracy and committed commissions and omissions and fraudulently with a common design and object, cheated the complainants and did not pay them the loan amount or register the plots, and that the Bank was deficient, faulty, imperfect and inadequate in quality, nature and manner of performance and the Bank is not entitled to recover the so-called loan amount from the complainants; this complaint was filed for the reliefs mentioned above.
4. It was stated in the complaint that the Bank performance is negligent because, (1) it supplied blank sets of loan agreement forms to unauthorised brokers instead of supplying them directly to the applicants, (2) normally and usual practice required the introduction of the applicant by an old account holder to open account and the procedure for accepting the sets of loan applications forms was not followed as the complainant never went to the Bank and the Bank did not care to verify the existence or antecedents of the applicants with the institution in which they were working, (3) the Bank did not take care to know whether the complainants can repay the loan amount in instalments from the salaries of the complainants through school authorities, (4) the Bank kept quiet for years without informing the complainants the sanction of the loan or reminding them to repay the loan in instalments, (5) the Bank did not care to see whether the builder has taken any concrete steps to get the house plots registered in the names of the complainants, (6) that the Bank granted the loan in a hurry without proper scrutiny within a week or 10 days after the applications were submitted, (7) the Bank did not care to take hypothecation/ mortgage of the plots by deposit of all title deeds to secure repayment of the loan, (8) the supervisory staff of Bank failed in detecting the foul play engineered by the Bank officials and builder, and, (9) the Bank printed the name of the Conwest Estates and Builders of MBR Estates and Builders in the authorization forms, receipts etc., which form part of the set of loan agreement thereby facilitated the builder to cheat the complainants.
5. It is further alleged that apart from the entire transaction smacking of cheating, abatement and negligence, it also violates the provisions of Indian Contract Act, Sees. 10,14,16,17, 18,19-A and 23 and the loan agreement is also between un-equal parties and un-constitutional and is vitiated by fraud, misrepresentation and is opposed to public policy. It was further stated that the loan agreement being conditional on the allotment and registration of house plots to the complainants and the opposite parties are bound to fulfil the conditions jointly and severally and as they failed to do so, they are liable to pay compensation to the complainants and that the pronotes executed are also violative of provisions of Negotiable Instruments Act, particularly Sees. 10 and 47 of the said Act and also as the opposite parties failed to deliver the goods they are also liable under Sees. 57 of Sale of Goods Act for damages of non-delivery of plots.
6. Alongwith the complaint, notices sent from the Bank and its Counsel and legal notices issued to the Bank, to the builder and to the third opposite party, and the complaint given to the police were filed as annexures.
7. The first opposite party i.e. Vijaya Bank submitted that the complaint is liable to be rejected in limini on the ground that for recovery of the loan from each of the complainants, 8 civil suits were filed by the Bank against all the complainants and hence the complainants' rights and other question whether the Bank cannot recover the amount due to various reasons mentioned in the complaint are pending decision in the civil suit and secondly, the 8 complainants executed 8 different sets of loan documents and claimed compensation for mental agony Rs. 15,000/- for each of the complainants and as they have to file independent complaints and as the claim of each complainant does not exceed Rs. 1 lakh the common complaint filed by 8 complainants is not maintainable and even otherwise as the claim of each of the complainants is below Rs. 1 lakh the complaints should have been filed before the District Forum. They mentioned the details of the suit numbers in the couter against each of the complainants. On merits it was stated that the complainants are well educated and working as teachers and could not have signed the documents without verifying the contents. The complainants signed the papers after they are fully aware of the transactions and the implications and not on blank papers, that the Bank is in no way responsible for getting the house sites purchased by a borrower and see that the sale deeds are executed and registered in favour of the complainants and is not concerned with the real estate transaction between the parties. The complainants have executed the documents authorising the loan amount sanctioned to the complainants to be credited to the account of the builder and the Bank acted accordingly and is in no way concerned with the subsequent dealings between the complainants and the builder. It is for the complainants themselves to verify the title and secure the possession of house sites and that there is no negligence, default and deficiency of service on the part of the Bank and the allegations that there is mis-representation, fraud etc., are all denied. The promissory notes and other documents executed by the complainants in favour of the opposite parties are in order and that as the complainants failed to pay the loan amount, the Bank issued notices and thereafter filed the suits for recovery of the amount due by the complainants under the loan account. It is submitted that the terms and conditions which are part of the loan transactions are one and the same in thousands of accounts in which the people have repaid and closed the loan accounts and even in those cases, where the suits are filed, the loan accounts are being closed by repaying the amount in instalments. There is no deficiency of service on the part of the opposite party No. 1 in respect of its Banking transactions with the complainants.
8. The complainants filed a rejoinder stating that the complaint is not bad for mis-joinder of the complainants and that the State Commission has jurisdiction to entertain the complaint, that the suits were filed in the City Civil Court subsequent to the filing of this complaint and therefore they aresub judice and not the complaint before the State Commission, and the subject matter in the complaint mainly focussed on the deficiency of service of the Vijaya Bank and unfair trade practice of attracting customers through brokers for expansion of their business and it therefore cannot be said that pendency of suits is a bar for proceeding with the disputes in this complaint. The allegations regarding fraud, collusion and the dishonest activity of the Bank and cheating, abutment and common design and object, collusion, faulty and inadequate service are denied.
9. An application CDIA 742/1993 was filed by the complainant stating that Sri B. Murari Reddy, the proprietor of Conwest Estates and Builders i.e. second opposite party expired some time back and therefore a petition filed to bring on record his son Sri B.M. Narasimha Reddy s/o B. Murari Reddy, 3-4-632, Narayanguda, Hyderabad on record. Notice to the proposed party was ordered. Subsequently the proposed LR of the second opposite party was present on 17.12.1993 and thereafter the learned Counsel Mr. M. Dushyanth Reddy filed appearance and reply to the petition stating that Murari Reddy died on 13.10.1989 and the present application to bring the legal representative on record is barred by time and that Murari Reddy has no son by name Narasimha Reddy and his son's name is Narender Reddy. It was further stated that there is no such firm to which the LR of K. Murari Reddy succeeded. Hence the application to bring on record the legal representative is not maintainable and is liable to be dismissed.
10. Having heard both the Counsels, we are satisfied that it is a fit case that legal representative should be brought on record.
11. The third opposite party filed a counter stating that he has nothing to do and was not aware of the entering of the agreements, execution of the promissory notes and letter of authorization for transfer of the loan amount to the account of the Conwest Estates and Builders. When the complainants approached him through Mr. Hanumantha Rao for getting the registration of the documents of their house plots, he helped the complainants in that regard and he is not concerned with other allegations. He further stated that he knew that all the complainants have got their respective house plots registered under sale deeds and the details of which were mentioned in his counter. The third opposite party is in no way involved in conspiracy, fraud, cheating or abutment of the same. It was further stated that all the complainants are facing civil suits and that in view of the various allegations of fraud, mis-representation, deceit, collusion made in the complaint and also the allegation of obtaining signatures on blank papers, a detailed enquiry has to be conducted involving adducing of lot of evidence and the same cannot be decided by these proceedings in a summary manner. He therefore submitted that the complaint may be dismissed.
12. Alongwith the complaint, the complainants filed the registered lawyer notice dated 16.1.1991 issued on behalf of the Bank demanding the first complainant to pay the outstanding loan amount of Rs. 20,838-75 ps. The documents 2 to 9 were letters dated 26.9.9.0 issued by the Bank to the complainants asking them to pay the outstanding loan amount. The document No. 10 is a legal notice issued on behalf of the complainants in reply to the Bank's demand for payment of the loan amount. Document No. 11 is a legal notice dated 1.3.1991 on behalf of the complainants to the opposite parties 2 and 3, and a copy of the FIR given to the SHO, Osmania University was also filed.
13. From the allegations in the complaints and in the counters and from the contentions of the Counsel for the complainants and opposite parties and also after going through the written arguments submitted by the learned Counsel for the complainants, it is noticed that the case of the complainants is that the opposite parties colluded among themselves and hatched conspiracy and pursuant to that conspiracy, the Bank handed over the blank sets of application forms, promissory notes, receipts and authorization letters for crediting the loan amounts into the current account of the second opposite party and thereby committed fraud and cheated the complainants. The complainants did not dispute their signatures on the applications and on the promissory notes. But according to them, their signatures were obtained on the blank papers and no loan was sanctioned to them and that no sale deed for any house plot was registered in their names.
14. So far as the allegations against the Bank are concerned, subsequent to the filing of the complaint, the Bank filed eight suits, (1) OS 5973/91 VI Asstt. Judge's Court, Hyderabad against the first complainant, (2) OS 5993/91 VII Asstt. Judge's Court, Hyderabad against second complainant, (3) OS 6034/91 VIII Asstt. Judge's Court, Hyderabad against third complainant, (4) OS 5995/91 VII Asstt. Judge's Court, Hyderabad against fourth complainant, (5) OS 5979/91 VI Asstt. Judge's Court, Hyderabad against fifth complainant, (6) OS 5971/91 VI Asstt. Judge's Court, Hyderabad against sixth complainant, (7) OS 5998/91 VII Asstt. Judge's Court, Hyderabad against seventh complainant, and (8) OS 6037/ 91 VIII Asstt. Judge's Court, Hyderabad against eighth complainant, for recovery of the amount due under the loan account, and the same are pending. The question whether the Bank is entitled to recover the amounts and whether the promissory notes, applications, and other suits documents were vitiated by fraud, undue influence coercion and misrepresentation are all the matters which can be pleaded by the opposite parties in defence and have to be decided in the Civil Courts.
Prima facieas the Bank has sanctioned the loans as is evidenced from its loan ledgers and the documents filed in the suits, it cannot be said that there is any deficiency of service on the part of the opposite parties, unless and until the allegations of fraud, mis-representation, coercion, conspiracy etc., are established. Since the scope of the enquiry in this complaint is very much limited and it being summary and as the suits are pending against the complainants, it is not possible or desirable to decide these allegations of fraud, conspiracy and undue influence etc., with the meager evidence adduced before us and the decision on these issues involves adducing voluminous evidence and determination of the complicated questions of fact and law. We are therefore of the view that since the suits are pending, the complainants have to thrash out these controversies in the suits. Hence it is not necessary for us to go into the questions whether the Bank has committed any fraud, mis-representation or any irregularity in processing and sanctioning the loans to all the complainants.
15. The third opposite party on notice given by this Commission in IA 1664/94 in CD 109/1991 filed by the complainants to direct the third opposite party to produce the registered documents relating to the sale of house plots, produced before this Commission, the original sale deeds seven in number executed in favour of the complainants 2 to 8. The recitals in the sale deeds refer to the loan sanctioned by Vijaya Bank for purchase of schedule mentioned property by way of personal loan and payment of consideration, delivery of possession of those plots. It is therefore clear that the case of the third opposite party is that the sale deeds were executed in favour of the complainants, possession of the plots were delivered to them. But according to the third opposite party the original sale deeds were not handed over to the complainants, as they will have to pay some balance of consideration. In these proceedings, it is not necessary for us to go into the question whether balance of consideration payable or not, but it is clear as contended by the third opposite party that the sale deeds were executed and registered in favour of the complainants. If according to the complainants, the possession was not delivered to them or the sale deeds were not handed over to them, it is open to them to seek appropriate remedy in a Civil Court.
16. The complainants also filed IA 223/1991 to direct the first opposite party to freeze the current account No. 2804 pending disposal of the CD, and IA 225/1991 to attach the properties of the second respondent and third respondent and their house bearing No. 3-4-632, Narayanguda, Hyderabad pending disposal of the above CD. Since the complaint is dismissed, these applications are also dismissed.
17. The complainants also filed another application IA 1704/95 to permit them to amend the complaint claiming the reliefs that the loan amounts of Rs. 9,000/- and Rs. 12,500/- were specifically for the purpose of the house plots, but the actual sale deeds reveal that the price of the plots registered is only Rs. 4,000/- and Rs. 6,000/-, (b) interest on these loan amounts would be commenced from the date of the Hon'ble Commissioner order, (c) compensation for mental agony for the long period of 8 years, (d) a further sum of Rs. 2.000/- may be granted towards the costs of litigation to each of the complainant, and (e) u direct the Bank to supply copies of loan agreements together with promissory notes, receipts and letters of authorization to transfer the amounts to the builder, and (f) to furnish the entire record pertaining to the details of all deposits and withdrawals made in A/c No. 2804 by the builder.
18. A counter is filed by the Bank opposing the application.
19. Since the suits filed by the Bank for recovery of the loan amounts are pending, it is open to the complainants to agitate for these reliefs, if so advised in the suits. Hence we are not inclined to allow this petition for amendment.
20. In the result, the complaint is dismissed. There shall be no order as to costs in this complaint.
21. The office is directed to return the original sale deeds to the third opposite party after due notice to him.
Complaint dismissed.