A Bengaluru court has ordered City Union Bank to repay Rs 16.42 lakh to a 65-year-old borrower and pay Rs 3 lakh compensation after finding it had overcollected funds through errors in calculating his loan account.
A Bengaluru civil court has ordered City Union Bank to return Rs 16.42 lakh to a 65-year-old borrower after finding that the lender had made errors in calculating his loan account, and it has also awarded him Rs 3 lakh in compensation. The dispute, which began more than a decade ago, stems from recovery action taken in 2009 over an overdraft facility and the auction of property linked to the borrower. According to The Indian Express, the case took more than nine years to reach judgment after being filed in 2017.
The borrower, P Mallikarjuna Chetty, argued that the bank had wrongly worked out interest and added amounts that were not properly due, including liabilities tied to a separate business run by his son. He also challenged the rates applied to the overdraft account and said the bank had not produced adequate records to support its claims. The court, presided over by Bengaluru LXIII Additional City Civil and Sessions Judge I P Naik, accepted his case in part and said the bank had failed to justify the excess amount it collected.
The judgment records a long-running fight over a mortgaged property in Chittoor, Andhra Pradesh. The bank issued a possession notice in July 2009 demanding Rs 21.57 lakh, and the property was later sold for Rs 75.01 lakh at auction. Chetty pursued relief before the debt recovery system in Bengaluru and Chennai and later before the Karnataka High Court. The court also noted that he paid Rs 38.84 lakh through four demand drafts in August 2012 during the course of the dispute.
During the trial, the bank’s assistant manager conceded that he had not checked key loan documents, including the sanction letter and the consent letter relating to the property, and said some statements had been prepared manually. The court observed that neither side produced the full loan agreement or sanction papers, and that the bank’s witness did not dispute several of Chetty’s calculations. On that basis, the judge concluded that the lender had overcollected Rs 16.42 lakh because of accounting mistakes.
The court did not accept Chetty’s separate argument that interest should not run during the litigation period, saying the sums involved were public money. It nevertheless awarded compensation of Rs 3 lakh for deficiency in service and unfair trade practices, and ordered the bank to refund the excess amount with 6 per cent annual interest from the date the suit was filed until payment. The judge also rejected the bank’s argument that the case was barred by limitation, noting that Chetty’s earlier complaint before a consumer forum had been dismissed for lack of jurisdiction and that the time spent there could be excluded.
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