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Bank Of Baroda v. Geeta Foods
Factual and Procedural Background
The revision petition arises from an interim order passed by the State Consumer Disputes Redressal Commission, Uttar Pradesh, which stayed a notice dated 02.06.2012 issued by Bank of Baroda for auction of the complainant's property. The complainant, M/s Geeta Foods, a proprietorship concern, had taken a loan from the Bank of Baroda but defaulted on repayments. Consequently, the loan account was classified as a Non-Performing Asset (NPA) under the SARFAESI Act, 2002. The bank issued a notice under Section 13(2) of the SARFAESI Act on 15.01.2010, followed by a public notice on 26.04.2010. The complainant filed an application under Section 17(1) of the SARFAESI Act before the Debts Recovery Tribunal (DRT) on 06.05.2010, which remains pending. The State Commission granted a stay on the bank's coercive action pending further hearing.
Legal Issues Presented
- Whether the State Consumer Disputes Redressal Commission had jurisdiction to stay the bank's coercive action under the SARFAESI Act, 2002.
- Whether the bank's action in initiating recovery proceedings under the SARFAESI Act could be restrained by the State Commission in absence of any deficiency in service alleged by the complainant.
- The extent of the State Commission's power vis-à-vis the Debts Recovery Tribunal in matters concerning recovery of dues under the SARFAESI Act.
Arguments of the Parties
Respondent's Arguments
- The respondent argued that in accordance with Reserve Bank of India (RBI) directions, a proposal was filed before the bank on 20.01.2009, which had not been answered.
- Relied on judgments of this Commission and other courts to support their contention.
- However, the respondent did not produce the RBI notification or the proposal filed before the bank to substantiate the claim.
Petitioner's Arguments
- The petitioner bank contended that the complainant defaulted on the loan repayment, leading to classification as NPA and initiation of recovery proceedings under the SARFAESI Act.
- The bank emphasized that the application filed by the complainant before the Debts Recovery Tribunal is pending and that the State Commission's order restraining the bank's action was not tenable.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Smt. Geeta Devi vs. Mahanagar Telephone Nigam Ltd. 1986-2006 CONSUMER 10453 (NS) | Consumer protection principles and reliefs | The court found this precedent inapplicable to the facts of the present case. |
| Deva Ram and another vs. Ishwar Chand and another AIR 1996 SC 378 | Consumer dispute and jurisdictional matters | The court held it irrelevant to the SARFAESI Act proceedings under consideration. |
| Ashok Kumar Yadav v. Noble Designs Pvt. Ltd. AIR 2006 CALCUTTA 237 | Consumer protection and deficiency in service | The court rejected its applicability due to absence of deficiency alleged here. |
| Bijedra Kumar and Ors. Vs. Basant Kumar AIR 1994 ALLAHABAD 81 | Consumer dispute jurisdiction | Not considered relevant by the court in the context of SARFAESI Act enforcement. |
| Shri Ram Tiwary and another vs. Bholi Devi and another AIR 1994 Patna 76 | Consumer protection and reliefs | The court noted this precedent did not apply to the facts before it. |
Court's Reasoning and Analysis
The court analyzed the scope of jurisdiction of the State Consumer Disputes Redressal Commission vis-à-vis the SARFAESI Act and the Debts Recovery Tribunal. It observed that the bank was acting within its legal rights under the SARFAESI Act, 2002, in initiating recovery proceedings due to the complainant's default. The court found no deficiency in service alleged by the complainant that could justify restraining the bank's coercive action. It emphasized that the State Commission cannot override or restrain the powers vested in the Debts Recovery Tribunal, which is the appropriate forum for disputes under the SARFAESI Act. The respondent's reliance on RBI directions and various precedents was found misplaced as no concrete evidence or relevant notifications were produced. Therefore, the court concluded that the interim stay granted by the State Commission was illegal and unsustainable.
Holding and Implications
The court set aside the interim order passed by the State Commission, vacated the stay on the bank's notice, and permitted the Bank of Baroda to proceed with coercive recovery actions as allowed by law.
The direct effect of this decision is that the bank may continue its recovery proceedings under the SARFAESI Act without restraint from the State Consumer Commission. The court clarified that no deficiency in service was found, and the appropriate forum for such disputes is the Debts Recovery Tribunal. The decision does not establish any new precedent but reinforces the limited jurisdiction of consumer forums in matters governed by the SARFAESI Act.
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI
REVISION PETITION NO. 3499 OF 2012
(Against the Order dated 29/06/2012 in Appeal No. 24/2010 of the State Commission Uttar Pradesh)
1. BANK OF BARODA
Having its Head Office at Mandvi Baroda & Having Asset Recovery Management Branch Inter Ali ay 1st floor, V-23 Vibhuti Khand,Gomti Nagar
Lucknow - 226 010
U.P ...........Petitioner(s)
Versus
1. M/S. GEETA FOODS S/o Ved Prakash Choudhary R/o Village Gopal Kheda Mohanlalganj
Lucknow - 227305
U.P ...........Respondent(s)
BEFORE:
HON'BLE MR. JUSTICE J.M. MALIK, PRESIDING MEMBER HON'BLE MR. VINAY KUMAR, MEMBER
For the Petitioner : MR. ARUN AGGARWAL For the Respondent : Ms. Tahseen Naz, Advocate Dated : 08 Nov 2012
ORDER
JUSTICE J. M. MALIK, PRESIDING MEMBER
1. This order shall decide the revision petition filed in respect of an interim order passed by learned State Commission. The said cryptic order runs as follows:-
"Complaint presented against Bank of Baroda Narhi Branch Lucknow. The Learned Counsel for the complainant argued that the complainant had taken loan from the opposite party for self employment and he had from time to time been repaying the same. Present complaint the opposite party bank has already issued a notice dated 02.06.2012 for auction of the property.
Till further orders the notice dated 02.06.2012 is stayed with the directions that the opposite party bank would not take coercive steps against the complaint. The complaint be listed for hearing on 20.07.2012."
2. The complainant, M/s Geeta Foods is a proprietorship concern. It took loan from the Bank of Baroda, opposite party. The complainant waddled out of the commitments and did not pay off the loan. His account was classified 'NPA' under the provisions of SARFAESI Act, 2002. The opposite party bank issued notice under Section 13(2) on 15.1.2010. A sum of Rs. 2,09,01,253/- is
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due and recoverable in respect of the cash credit facility and Rs.41,96,331/- in respect of WCDL (Recession package) alongwith interest w.e.f. 1.1.2010. A copy of the notice under Section 13(2) of the SARFAESI Act, 2002 has been placed on record. The Bank further issued notice dated 26.4.2010 which was published in two newspapers. The respondent filed an application under Section 17(1) of SARFAESI Act, 2002 before the Debts Recovery Tribunal on 6.5.2010. The said application was replied by the petitioner which is still pending before the learned Debts Recovery Tribunal. It is contended that under the circumstances, the order passed by the State Commission is not tenable.
3. We have heard learned counsel for the parties. Learned counsel for the respondent vehemently argued that in accordance with the RBI directions, they had filed a proposal before the opposite party-Bank on 20.1.2009. The said proposal has not yet been answered. In support of her case, it is notworthy that she neither produced the notification issued by the Reserve Bank of India nor did she show to the court that the said notification was ever violated. She did not produce the copy of the proposal filed by the complainant before the opposite party-Bank. She has placed reliance on the judgments of this Commission reported in Smt. Geeta Devi vs. Mahanagar Telephone Nigam Ltd. 1986-2006 CONSUMER 10453 (NS), Deva Ram and another vs. Ishwar Chand and another AIR 1996 SC 378, Ashok Kumar Yadav v. Noble Designs Pvt. Ltd. AIR 2006 CALCUTTA 237, Bijedra Kumar and Ors. Vs. Basant Kumar AIR 1994 ALLAHABAD 81 and Shri Ram Tiwary and another vs. Bholi Devi and another AIR 1994 Patna 76.
4. We are of the considered view that these authorities have no application to the facts of this case. It is difficult to fathom as to why the bank was restrained from proceeding further in accordance with law. The Bank is acting under the SARFAESI Act, 2002. If the complainant has got any grouse, he can proceed and lodge a complaint with the Debts Recovery Tribunal. The State Commission cannot arrogate to itself the power already vested with the Debts Recovery Tribunal.
5. The State Commission cannot stay the SURFAESI Act as such. It is surprising to note how the banks would recover the money from their debtors if such like orders are permitted to prevail. In order to bring the case under the Consumer Protection Act, it is incumbent upon the
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complainant to show that there is deficiency on the part of the bank. No such deficiency in service has been alleged. The Bank is proceeding in accordance with law. Under the circumstances, the order passed that the bank would not take coercive steps against the complainant appears to be illegal. No deficiency on the part of the bank was ever alleged. The State Commission has got hardly any jurisdiction to try this case. It cannot restrain the Debts Recovery Tribunal from proceeding against the complainant as per law. Consequently, we set aside the order passed by the State Commission, vacate the stay and give the permission to the petitioner-Bank to take coercive methods against the complainant as permitted by law only. The parties are directed to appear before the State Commission on 3.12.2012 for further proceedings.
The revision petition stands disposed of.
......................J
J.M. MALIK
PRESIDING MEMBER
......................
VINAY KUMAR
MEMBER
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