Case No. 21 of 2015. Case: Dhanvir Food Product Vs Bank of Baroda and Ors.. Competition Commision of India
| Case Number | Case No. 21 of 2015 |
| Counsel | For Appellant: Ravi Rajan and Gaurav Singh, Advocates |
| Judges | Ashok Chawla, Chairperson, S.L. Bunker, Sudhir Mital, Augustine Peter, U.C. Nahta and M.S. Sahoo, Members |
| Issue | Competition Act, 2002 - Sections 19(1)(a), 26(2), 3, 3(1), 3(3)(b), 4, 4(1) |
| Judgement Date | June 02, 2015 |
| Court | Competition Commision of India |
Judgment:
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The present information has been filed by M/s. Dhanvir Food Product (though its partner) (hereinafter referred to as the "Informant') against Bank of Baroda, Vadodara, Gujarat through its Chief Managing Director (OP-1) and Bank of Baroda, Nainital, Uttarakhand through its Chief Manager (OP-2) under section 19(1)(a) of the Competition Act, 2002 (the "Act") alleging, inter alia contravention of the provisions of sections 3 and 4 of the Act in the matter.
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As per the information, the Informant is a registered Partnership Firm situated at village Bhanga, Kichha, U.S. Nagar, Uttarakhand. It is submitted that the Informant availed a term loan of Rs. 7.25 crore @ 13.15% p.a. rate of interest from OP-2 for construction of factory building and also to purchase plant and machinery vide sanction letter dated 17.12.2013. The said loan was to be repaid by the Informant in 27 quarterly instalments. The total agreed door to door tenor for repayment was of 95 months.
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It is submitted that out of 27 instalments, 6 instalments were paid by the Informant. Subsequently, the Informant allegedly came to know about the term loan being offered by the Punjab National Bank (PNB) at the interest rate of 11.50% p.a. Considering PNB a better option, the Informant requested the OP-2 to foreclose its loan account.
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It is alleged that the OP-2 had agreed to foreclose the loan account of the Informant on condition of payment of foreclosure penalty of Rs. 18,86,711/- (@ 0.50% per annum) for the residual period of 65 months in terms of clause 25 of the sanction letter. The Informant is stated to have requested OP-2 to waive-off the foreclosure penalty and issuance of an NOC, which was allegedly rejected by the OP-2. The Informant is alleged to have made the foreclosure penalty of Rs. 18,86,711/- vide its letter dated 10/01/2015 under protest.
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It is alleged by the Informant that clause 25 of the sanction letter and the said foreclosure penalty as levied by the OP-2 are arbitrary, unreasonable and in violation of the provisions of the Act. It is also alleged that the conduct of the OP-2 is also in violation of the guidelines issued by the Reserve Bank of India (RBI).
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It is further alleged that the conduct of OPs is detrimental to competition amongst the banks in the market. It is against the interest of the borrower as it prevents the borrower from switching over to other bank and other financial institutions who offer better options. It is submitted that...
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