Not only banks, employees too liable for deficiency in service

Background: Officials of banks and PSUs fail to improve their attitude and are not perturbed by litigation, as they feel that it is the organization which will be held liable while they will go scot-free. Dealing this complacent attitude a major blow, the South Mumbai Consumer Forum has held bank officials liable jointly with the bank of deficiency in service and unfair trade practice.

Case Study: The Greater Bombay Co-operative Bank had acquired a flat in a building at Murbad in Kalyan under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance. In its advertisement issued in a local newspaper, the bank announced the auction sale of this flat, representing that the built-up area was 360 sq ft and the expected price as Rs 3,29,000. Sanjay Pendurkar successfully bid for the flat, which was then sold to him for Rs 3,29,000. The bank’s authorized officer executed a sale deed in Sanjay’s favour and handed over all the relevant documents to him on November 30, 2010.

Soon after taking possession, Sanjay had the flat measured and found that its carpet area was only 195 sq ft, while its built-up area was 234 sq ft, not 360 sq. ft as advertised by the bank. He promptly sent a letter on December 8, 2010, requesting the bank to cancel the sale and return the amount paid by him. The bank ignored Sanjay’s letter.

A few months later, on March 6, 2011, Sanjay came across an advertisement in Nav Shakti newspaper for the auction sale of the same flat which had been sold to him. The only difference was that the built-up area of the flat was stated to be 222 sq ft, for which the expected price was Rs 2,22,000. Sanjay was shocked because he was in possession and occupation of this flat which had already been sold to him.

Sanjay had a legal notice issued to the bank for the intentional misrepresentation of flat’s area, thereby inducing him to pay Rs 1,07,000 more, under the wrong impression that the size of the flat was larger. The bank ignored the notice as well as a subsequent reminder.

Apprehensive that the bank would continue with the auction and evict him forcibly so that it could hand over the flat to whoever would succeed in the fresh auction, Sanjay filed a consumer complaint before the South Mumbai District Forum, against the bank, the manager of its Bhuleshwar branch and its authorized officer. The forum served a notice, yet the bank and its officials did not care to appear or file their reply.

The forum compared the two advertisements issued by the bank for the auction of the same flat. In its ex parte order of June 29, 2013, delivered by presiding officer S M Ratnakar on behalf of the bench, along with S S Patil, the forum observed that the first advertisement stated the built-up area to be 360 sq ft, while the subsequent one stated it was 222 sq ft. The forum concluded that the bank had made a misrepresentation about the area and had over-charged Sanjay. Comparing the expected price advertised by the bank in the two advertisements, the forum found the difference to be Rs 1,07,000. It held that the bank as well as its officials were guilty of deficiency of services and unfair trade practices.

Accordingly, the forum held the bank, its Bhuleshwar branch manager Karadikar and authorized officer Rajesh Gujar jointly liable to a refund Rs 1,07,000, along with 9% interest from the date of the sale certificate till its refund. Additionally, costs of Rs 5,000 were awarded to Sanjay. The forum also held that the issuance of a notice for a public auction without cancellation of the sale certificate would constitute an encroachment on Sanjay’s right and title to the flat. It, therefore, permanently restrained the bank and its officers from dispossessing Sanjay from the flat.

Impact: The forum judgment holding the officials liable should shake up complacent officials and hopefully bring about an attitudinal change.