CRP/2763/2026 of Federal Bank Ltd Vs Murthi Cotton Waste Company on 27 August 2026

ORDER

This revision petition has been filed to set aside the order dated 24.03.2026 made in E.A.No.118 of 2025 in C.C.No.49 of 2012 by the National Consumer Disputes Redressal Commission.

2. I have heard Ms.P.J.Anitha, learned counsel for the revision petitioner- Bank and Ms.SB.Madhura, for Mr.R.Bharathkumar, learned counsel for the respondent.

3. The respondent had filed a complaint before the Consumer Commission, alleging deficiency in service on the part of the petitioner-Bank, as well as the insurer. The matter went up to the National Consumer Disputes Redressal Commission (herein after called as NCDRC) in C.C.No.49 of 2012 and finally, the NCDRC directed the respondents jointly and severally to pay approximately Rs.1,20,00,000/-, payable equally by the petitioner-Bank and the Insurance Company.

4. The Insurance Company has complied with the order of the NCDRC, by transferring the said amount to the petitioner-Bank. However, the petitioner- Bank had appropriated the said payment that has come from the Insurance Company to the alleged loan account, under which, according to the petitioner-

Bank, the respondent is due more than Rs.2 crores. However, the said loan account, under which the petitioner-Bank seeks to adjust the amount that has come in, in compliance with the Consumer Commission order is disputed by the respondent. This was questioned by the respondent before the NCDRC and after enquiring into the said application, the NCDRC directed the amount to be transferred to the respondent’s alternative bank account and in default also, imposed a penalty as well. It is challenging this order that the present revision has been filed by the petitioner-Bank.

5. Ms.P.J.Anitha, learned counsel for the revision petitioner-Bank would state that the respondent has already agreed that the amounts that would be paid by the Insurance Company would also liable to be adjusted as against the dues of the respondent. In this regard, she has taken me through various clauses of the agreement of cash credit/over draft/demand loan dated 29.09.2008. The learned counsel for the revision petitioner-Bank, placing reliance on the said agreement, would contend that when the petitioner-Bank has already agreed that the petitioner-Bank can appropriate the monies paid by the Insurance Company under any claim made, there was no error committed by the petitioner-Bank in adjusting the amounts that were paid by the Insurance Company towards the loan dues of the petitioner-Bank, under the agreement dated 29.09.2008. The learned counsel for the revision petitioner further states that without noticing the relevant clauses of the said agreement, the NCDRC has mechanically directed re-transfer of the amount. She would therefore pray for the revision being allowed.

6. Per contra, the learned counsel for the respondent has also taken me through the agreement of cash credit/over drat/demand loan dated 29.09.2008. The learned counsel for the respondent also points out that there has been a change of the date from 25.02.2008 to 29.09.2008 and stamp papers have also been issued as early as on 03.03.2005 in the name of the respondent Company. The learned counsel for the respondent further states that when the said agreement itself is disputed, by no stretch of imagination, the petitioner-Bank can take unfair advantage and seek the amounts that have come in, in compliance with the Consumer Forum proceedings, to be adjusted against the amounts allegedly due by the respondent, towards the disputed agreement of cash credit/over draft/demand loan.

7. The learned counsel for the respondent also invites my attention to the letter dated 02.06.2011, issued by the petitioner-Bank to the respondent, where the petitioner-Bank has clearly asserted that the loan account has nothing to do with the insurance claim. This communication was before the consumer proceedings, which has now attained finality. However, after suffering an adverse order in the consumer proceedings, now the petitioner has changed colours and is now relying on Clause – 6 mentioned in the agreement dated

29.09.2008 (agreement of cash credit/over draft/demand loan). The relevant portion of the said clause is extracted hereunder for easy reference: “6th: ……...In case the Borrower(s) do(es) not take steps for insuring the security, Bank may at its discretion insure the same and the related charges / premium periodically payable, if not paid by the Borrower(s) on demand, can be paid by debiting the Borrower(s)’ loan account which shall form part of the moneys hereby secured. The Bank shall be entitled to lodge the claim / receive all monies payable under any such insurance or under any claim made thereunder and to issue a valid receipt thereof and that the amount so received shall be credited to any of the credit facilities and that the Borrower(s) will not raise any dispute with regard to the claim made / amount received and the balance outstanding in the account.”

8. This agreement is admittedly not admitted by the respondent. In such circumstances, when the dispute is now at large before the Debt Recovery Tribunal, I am unable to accept the contentions of the learned counsel for the petitioner-Bank that the amounts that have been paid / deposited / adjusted, in compliance with the consumer complaint, can be deposited in the loan account of the respondent.

9. In fact, when the complaint was sought to be made, the respondent has intimated the petitioner-Bank about the alternate bank account, to which the deposit will have to be made. The said deposit was not made, which necessitated the present impugned proceedings, where the Consumer Forum has directed payment of the entire amount to the petitioner-Bank within three working days, besides also imposing a penalty of Rs.10 lakhs, for non compliance of the order. The petitioner-Bank has sought to adjust the amount due and payable to the respondent, only citing the agreement of cash credit/over draft/demand loan. Therefore, I cannot find it to be malafide intention or on the part of the petitioner-Bank to deny the fruits of the consumer complaint proceedings to the respondent.

10. However, at the same time, having taken a definite stand that the loan account of the respondent has nothing to do with the insurance claim, today, the petitioner-Bank cannot go back on the said stand taken in 2011 and contend that the insurance claim amount, which has been recovered, will also be adjusted from the loan account. In such view of the matter, I do not see any infirmity in the order passed by the NCDRC, directing transfer of the money already deposited as decreetal amount, within three days to the account details furnished by the respondent to the petitioner-Bank. The NCDRC has also provided a default clause to the effect that failing compliance of the above condition, a penalty of Rs.10 lakhs has to be paid to the decree holder. Admittedly, this order has been challenged by the petitioner-Bank, and in view of the impugned order also having been stayed at the time of admission, I am unable to countenance the arguments of the learned counsel for the respondent that the amount to be deposited, along with the penalty of Rs.10 lakhs.

11. In the light of the above, the Civil Revision Petition is dismissed, with the following directions:

(i) The petitioner-Bank shall transfer Rs.1,20,00,000/- to the DBS account of the respondent, within a period of three working days from the date of receipt of a copy of this order;

(ii) The interest for the said amount that would have accrued from September 2024 onwards, till the date of deposit not later than the three working days from the date of receipt of a copy of this order, shall be kept in a suspense account.

(iii) The payment of the said interest portion shall be subject to the result of the debt recovery proceedings pending in O.A.No.108 of 2011 before the Debt Recovery Tribunal, Chennai, which shall be disposed of by end of November 2026 and subject to the result of the said proceedings, the interest that would have accrued on Rs.1,20,00,000/- from September 2024 onwards, till date, shall be accordingly retained by the Bank or paid out to the respondent.

(iv) It is needless to state that since the three immovable properties that have already been secured for repayment of earlier loans by the respondent which are worth much more than the amount which is admittedly due and payable by the respondent to the petitioner-Bank as on date, in the event of the respondent suffering orders before the Debt Recovery Tribunal, then it shall be open to the petitioner-Bank to proceed against these properties for recovery of the amount due, under such agreement of cash credit/over draft/demand loan dated 29.09.2008.

(v) The penalty clause is set aside, only on the ground that the revision was entertained by this Court and an interim order was also granted. However, since the order of the NCDRC is being confirmed, it is needless to state that if the said amount of Rs.1,20,00,000/- is not transferred to the DBS account of the respondent within three workings from the date of receipt of a copy of this order, then the petitioner-Bank shall also be liable to pay the penalty of Rs.10 lakhs, as originally imposed by the NCDRC.

(vi) no costs. Connected Civil Miscellaneous Petition is closed. 27.08.2026 Index: Yes/No Speaking/Non-speaking order Neutral Citation: Yes/No ATA To The National Consumer Disputes Redressal Commission, Chennai.

P.B.BALAJI, J. ATA CRP No.2763 of 2026 27.08.2026