| Final Order / Judgement | Date of filing: 21.12.2018 Date of Disposal:28.02.2024 BEFORE THE KARNATAKA STATE CONSUMER DISPUTES REDRESSAL COMMISSION, BENGALURU (PRINCIPAL BENCH) DATED: 28th DAY OF FEBRUARY 2024 PRESENT Mr. K. B. SANGANNANAVAR: Pri. Dist. & Session Judge (R)- JUDICIAL MEMBER Mrs.M.DIVYASHREE : LADY MEMBER CONSUMER COMPLAINT NO.626/2018 ORDER BY Mr. K. B. SANGANNANAVAR: Pri. Dist. & Session Judge (R)- JUDICIAL MEMBER - This is a complaint filed U/s 17 of CPA, 1986 to direct OP to compensate at Rs.99,99,000/- to the complainant as damages sustained towards loss in purchase of raw materials, in paying rents, in paying salaries to workers, in paying fees to authorities, mental agony, sufferings, humiliation, loss of time, deprivation of opportunities, interest, etc., in view of deficiency of service rendered by it and to direct OP to co-operate with complainant in repayment of loan only after full pledged production in the complainant’s industry.
- The Brief facts of the case of the complainant would be:
He having experience in catering and hotelier business, in order to establish his own business by way of self-employment in order to eke his livelihood intend to start a restaurant and a small-scale unit to prepare sweets and savorage required for the said purpose in the name and style of “Sukh Sagar Sweet House”.Accordingly, he had approached OP for assistance sought for loan and OP agreed to sanction MSME Loan of Rs.1,50,00,000/- and disbursed an amount of Rs.66,80,000/- towards term loan and Rs.50,00,000/- as OCC on 30.10.2017 and assured to release the balance amount as soon as possible. However, OP deducted and collected more than Rs.8,00,000/- from complainant towards insurance premium and interest plus loan installment towards loan of Rs.1,50,00,000/-.The OP has not disbursed remaining balance loan of Rs.30 Lakhs to the complainant despite repeated request on request letters, resulting thereby suffering loss in purchase of raw materials, in paying rents, in paying salaries to workers, in paying fees to authorities, mental agony, sufferings, humiliation, loss of time, deprivation of opportunities, interest, etc.Had OP released Rs.30 Lakhs, complainant would have spend it in his business and on sale of the products derived there from, would have realized substantial amount which would havehelped him in payment of rents, salaries, discharging the loan, etc.The complainant sustained loss to the tune of Rs.1.25 Crores and he has restricted his claim to Rs.99,99,000/- only to file the complaint before the State Commission.The OP has rendered deficiency of service for which complainant is entitle for compensation of Rs.99,99,000/-. - OP has contested the complaint and filed version to the case, contending that loan being considered under Credit linked Capital Subsidy Scheme (CLCSS) of MSME (Scheme) for purchase of machinery and working capital requirements. The term loan component is Rs.120 Lakhs subject to meeting the margin stipulations as per applicable norms contemplated under the MSME Scheme formulated by Government of India. The working capital component is Rs.30 Lakhs. The loan sanction is “In Principle Sanction” issued, based on the representations made and documents produced, cannot be construed a regular loan sanction order. The Bank reserves the right to cancel/modify the sanction order, if at a later date observed that there are discrepancies in the details furnished/documents submitted. The terms and conditions of sanction are subject to changes from time to time. This “In principle” sanction does not vest right in complainant to claim damages against the Bank for any reason whatsoever. The OP Bank without any delay expediently scrutinized the loan application and assessed the admissible loan component basing on the financial paper, quotations and invoices and arrived at the eligible loan amount duly taking into consideration the margin requirements stipulated under MSME Scheme and sanctioned a term loan limit of Rs.70 Lakhs and working capital limit of Rs.50 Lakhs. This sanction was duly communicated to the complainant vide a Regular Sanction Memorandum dated 31.10.2017 just after one day from the date of the complainant submitting the financial papers and the said sanction and the terms and conditions were duly accepted by the complainant, the salient features of which are mentioned under Sanction Memorandum. The contention of complainant that OP did not disburse the remaining of Rs.30 Lakhs working capital limit as agreed is not true facts. In fact a higher working capital limit of Rs.50 Lakhs was sanctioned taking into account the estimated quantum of raw materials that were indicated in the financial papers, even though in the In-Principal Sanction Letter, a lesser amount of Rs.30 Lakhs was projected. The OP released a sum of Rs.66,80,000/- towards purchase of machinery equipment basing on the final invoices produced by the complainant duly insisting for 25% margin amount that was required to be invested by the complainant as stipulated in the sanction letter. Entire working capital limit of Rs.50 Lakhs was made available to the complainant. Notice U/s 13(2) of SARFASEI Act along with possession notice issued under the said account and paper publication was made wherefore, complaint filed by complainant is deserve to be dismissed, since filed to stall the recovery proceedings.
- In view of rival contentions of respective parties, Commission held an enquiry by receiving affidavit evidence of complainant Mr.B.H.Gowdru alias B Hanumanthappa and evidence of Mr.T.K.Sai Kumar, the Chief Manager of OP Bank. The Commission also received documentary evidence on either side and after closure of enquiry having heard learned counsels on record. Now the point that arises for consideration of this Commission would be:
Whether complainant is entitle for relief as sought for rendering deficiency of service on the part of OP Bank in not disbursing Rs.30 Lakhs which was the remaining loan amount resultant to suffer loss in purchase of raw materials, in paying rents, in paying salaries to workers, in paying fees to authorities, mental agony, sufferings, humiliation, loss of time, deprivation of opportunities, interest etc.? - The Findings on this point would be record in the Negative for the following :
Reasons - At the very outset, Commission to make mention of the fact from record of this case, an IA came to be filed U/o 39 Rule 1 and 2 R/w Sec.151 of CPC, wherein complainant had sought for an ad-interim order of injunction restraining OP to initiate any type of recovery proceedings against the complainant for recovery of amount pending disposal of this complaint, however this IA came to be rejected by an order of this commission dated 09.09.2020. The Commission ordered to reject the IA as barred U/s 34 of SARFAESI Act, 2002. The Commission held S. 34 of SARFAESI Act bars the jurisdiction of Civil Court including Consumer Courts for entertaining any suit or proceedings in respect of any matter which a Debt Recovery Tribunal (DRT) or the Appellate Tribunal empowered by the said Act would determine. As such held, as OP Bank had already initiated proceedings under SARFAESI Act, complainant has to approach the proper authority as contemplated under the said Act and this order is still in force.
- Though complainant has placed voluminous of documents, but sum and substance of his grievance would be – balance working capital of Rs.30 Lakhs as assured by the OP Bank initially, ‘in In-Principle Sanction Letter dated 28.07.2017’ was not released or disbursed and this is the only grievance urged in his complaint. It is not in dispute that in Ex.C2 loan was sanctioned is “In-Principle Sanction for MSME Loan” dated 28.07.2017. And in this sanction letter the loan amount of Rs.1,50,00,000/- was sanctioned pursuant to complainant application dated 25.07.2017. In this letter terms and conditions embedded would play vital importance. In other words “In-Principle” sanction does not vest right with complainant to claim damages against Bank for any reason whatsoever. Since Bank may revoke in part or in full or withdraw/stop financial assistance at any stage without any notice or giving any reason, whatsoever, this binds complainant. As such complainant cannot enforce either through a complaint under CPA or in a suit seeking disbursement of remaining Rs.30 Lakhs in his favour on the ground “In-Principle Sanction for MSME Loan” was Rs.1,50,00,000/-.
- We could also found from enquiry from the documents placed on record by OP, a higher working capital of Rs.50 Lakhs was sanctioned taking into the account the estimated quantum of raw materials that were indicated in the financial papers even though in the In-Principal Sanction Letter, a lesser amount of Rs.30 Lakhs was projected. It was the contention of OP Bank, the loan component of Rs.120 Lakhs was reduced to Rs.70 Lakhs as complainant had provided quotation for a reduced amount for purchase of machinery equipments as compared to the amount shown in initial project report. In such circumstances, complainant cannot stick on to Ex.C2 In-Principle Sanction for MSME Loan of Rs.1,50,00,000/- to enforce for disbursement of Rs.30 lakhs. As already stated sanction letter does not vest a right in complainant to claim damages against the Bank for his mental agony and on he sustaining loss in purchasing raw materials, in paying rents, in paying salaries to workers, in paying fees to authorities, sufferings, humiliation, loss of time, deprivation of opportunities, interest etc.
- In the above circumstances, this Commission found considerable force in the contention of learned counsel for OP Bank Ex.C2 In-Principle Sanction for MSME Loan cannot be construed as a regular loan sanction. If this loan in the said document would have been a regular loan sanction letter, matter would have been different. We have also to notice from the said document, OP Bank reserves the right to cancel/modify In-Principle Sanction if at a later date it is observed that there are discrepancies in the details furnished by the OP, since complainant was eligible within the sanction limit of Rs.70 Lakhs towards purchase of machinery equipments basing on the financial invoices produced by the complainant duly insisting for 25% of margin amount that was required to be invested by the complainant as stipulated in the Sanction Letter, entire working capital limit of Rs.50 Lakhs was made available to the complainant, yet he went on alleging against OP for release of remaining Rs.30 Lakhs on the basis of Ex.C2 which he did not vest with right to claim damages against OP for any reason whatsoever. As already opined complainant is bound by terms and conditions of Ex.C2 cannot allege against OP that they rendered deficiency of service and cannot contend that non release of Rs.30 Lakhs towards working capital amounts to unfair trade practice.
- Even if we accept all the documents placed on record by the complainant and OP Bank as they are, since an amount of Rs.66,80,000/- disbursed towards term loan and Rs.50,00,000/- as OCC on 30.10.2017 as against In-Principle Sanction Loan of Rs.1,50,00,000/-, viewed from any angle OP Bank cannot be held rendered deficiency of services as alleged by the complainant. In such conclusion we proceed to dismiss the complaint with no order as to cost.
- Furnish free copy of this order to both parties.
Lady Member Judicial Member *GGH* | |
