1.       This appeal has been filed by the financing bank that had extended a loan to the respondent no. 1 / complainant for the purchase of a flat in the project titled as Richmond Pride Phase-2 at Bangaluru, Karnataka. A loan of Rs.34,93,410/- was sanctioned to the respondent no. 1 / complainant and there was a tripartite agreement with the builder as well where the amount had to be disbursed as per the construction linked plan.

2.       The loan was disbursed but the respondent no. 1 / complainant failed to get possession of the flat and consequently, she filed consumer complaint no. 290 of 2018 praying for refund and damages.

3.       Notices were issued by the State Commission but the builder / respondent no. 2 herein remained absent and it is the bank, which contested the complaint by filing a written version. The builder / respondent no. 2 was, therefore, proceeded ex-parte. The State Commission came to the conclusion that it appears that the appellant bank was supporting the builder for reasons best known through a hidden agenda, which cannot be deciphered as the builder / respondent no. 2 herein had failed to appear and the appellant bank had failed to provide the documents. It may be noted that the bank had forfeited its right to file written version as the same was sought to be tendered after a lapse of 45 days. Thus, the appellant bank had only the opportunity to advance written submissions and arguments. The State Commission came to the conclusion that the complainant had been harassed and since the premises had not been delivered, she was entitled to refund of the entire amount from the appellant bank as well as from the builder, out of which, the bank was liable to refund a sum of Rs.28,27,632/-, being the entire amount of EMI plus amount recovered from the complainant altogether with interest. The builder was also directed to pay Rs. 5 lakhs towards liquidated damages as well as other emoluments indicated therein.

4.       The bank has come up in appeal contending that there is no deficiency on the part of the bank either with regard to the completion of the project or in the manner of disbursement of the loan, which was done under the instructions of the complainant. It is, therefore, submitted that there was no privity of contract between the complainant and the bank for the completion of the project which was the exclusive liability of the builder and therefore, any deficiency in the completion of the project or handing over the premises cannot be a deficiency at the hands of the bank for imposing any liability. It is alleged that the State Commission has erroneously diverted the liability on the bank on findings which are based on surmises and conjectures and against the evidence on record. It is further submitted that the loan was disbursed on the specific instructions of the complainant and the amount was released with the consent of the complainant as and when the request was received and consent given. These facts have been categorically stated by the bank contending that the complainant herself has stated and admitted these facts in the complaint itself. It is, therefore, submitted that even if no written version was filed on behalf of the bank, the evidence with regard to the disbursement on the instructions of the complainant being admitted in the complaint itself, there was on occasion for the State Commission to have made the bank also liable for reasons that are extraneous.

5.       Notices were issued to the builder, the respondent no. 2 herein, who has not responded and it is evident that the builder had not even appeared before the State Commission.

6.       It may be pointed out that the following order was passed by this Commission on 06.11.2023:-

“Learned Counsel for the Applicant/Appellant has filed an Application being I.A. No.14370/2023 for modification of the Order of this Commission dated 18.10.2023. In so far as the vacation of stay Order is concerned, he submitted that he has already deposited the entire decretal amount before the State Consumer Disputes Redressal Commission, Karnataka.

He has further filed an application for substitution of the name of the Appellant HDFC Ltd. by HDFC Bank Ltd. alongwith an amended memo of parties. In view of the submission made, the Application is allowed and the amended memo of parties is taken on record.

He further sought two weeks’ time to file an application for substituted service in so far as to the Respondent No.2 giving details of the two newspapers which would carry the publication, one being in vernacular and the other being in English, which have a good circulation in the area. Let him file the application.

In view of the submission made, the stay Order shall continue to be in operation.

List on 28.11.2023 as the date already fixed.”

7.       As per the aforesaid order, steps were taken for substituted service on the builder / respondent no. 2 herein, and the notices have been published in two newspapers, the proof whereof has been filed on record through an affidavit, in compliance of the order dated 28.11.2023, vide diary no. 8353 on 27.02.2024.

8.       Thus, the service on the builder / respondent no. 2 shall be deemed to have been made as directed.

9.       We have heard learned counsel for the appellant bank and the learned counsel for the respondent no. 1 / complainant. It appears that the complaint was filed by the respondent no. 1 / complainant making clear allegations regarding the disbursement of the loan. In this regard, to appreciate the arguments on behalf of the learned counsel for the appellant bank, paragraphs 6 to 12 and no. 14 are extracted hereunder:-

“6. It is submitted that the 2^nd Opponent disbursed the first payment of Rs.22,55,000/- (Rupees Twenty Two Lakhs Fifty Five Thousand Only) from the sanctioned amount pertaining to the loan account of Complainant herein to 1^st Opponent on 13^th June 2014. It is further submitted that prior to the aforesaid disbursement the Complainant herein was also paid an additional initial down payment of Rs.2,00,000/- (Rupees Two Lakhs Only) on 9^th June 2014 by way of Cheque. In addition to this another additional down payment of Rs.2,20,000/- (Rupees Two Lakhs Twenty Thousand Only) paid by the complainant by way of Cheque in favor of 1^st Opponent as additional down payment. A copy of the Disbursement Details from the 2^nd Opponent to 1^st Opponent is herewith produced as Document No. 3 for the kind perusal of this Hon’ble Forum.

7. It is submitted that the Complainant herein paid total down payment of Rs. 8,20,000/- (Rupees Eight Lakhs Twenty Thousand Only) to the 1^st Opponent and 2^nd Opponent disbursed an amount of Rs.22,55,000/- (Rupees Twenty Two Lakhs Fifty Five Thousand Only) to the 1^st Opponent from the loan account of Complainant. Accordingly the 1^st Opponent was in receipt of amount of Rs.30,75,000/- (Rupees Thirty Lakhs Seventy Five Thousand Only) at this point of time towards the purchase of 3 BHK flat by the Complainant.

8.  It is submitted that on 30^th June 2014, 2^nd Opponent disbursed an amount of Rs. 53,410/- (Rupees Fifty Three Thousand Four Hundred and Ten Only) towards HDFC Standard Life Insurance Company Limited from the Complainant’s sanctioned loan amount. It is further submitted that the 1^st Opponent allotted the Flat No. A-116 at Richmond Pride Phase-II, to the Complainant. A copy of the mail dated: 27^th June 2014 pertaining to disbursement of enhanced loan amount towards insurance is herewith produced as Document No. 4 for the kind perusal of this Hon’ble Forum.

9. It is submitted that the 2^nd Opponent collected Rs.11,329/- (Rupees Eleven Thousand Three Hundred and Twenty Nine Only) on 30^th June 2014 and Rs. 60/- (Rupees Sixty Only) on 2^nd July 2014 as Pre E.M.I., from the account of Complainant. It is further submitted that the 2^nd Opponent deducted first installment amount of Rs.31,378/- (Rupees Thirty One Thousand Three Hundred and Seventy Eight Only) as EMI on 15^th July, 2014 towards the sanctioned loan amount obtained for the purchase of Flat from 1^st Opponent. Accordingly the E.M.I. of Rs. 31,378/- (Rupees Thirty One Thousand Three Hundred and Seventy Eight Only) regularly payable by the Complainant to the 2^nd Opponent. A copy of the statement of account for the Period 01-04-2014 to 31.03.2017 as Document No. 5 for the kind perusal of this Hon’ble Forum.

10.     It is submitted that the 1^st Opponent forward a formal demand letter dated: 09-10-2014 to the Complainant by way of mail attachment, wherein the demanded to release the payment of Rs.4,10,000/- (Rupees Four Lakhs Ten Thousand Only) in addition to this he also informed the Complainant that the plastering of the said building has been completed. Accordingly Rs. 4,10,000/- disbursed by the 2^nd Opponent to the 1^st Opponent on 21^st October 2014 from the loan account of complainant. A copy of mail dated:10^th October 2014 along with scanned copy of the formal demand letter (attachment) is herewith produced as Document No. 6 for the kind perusal of this Hon’ble Forum.

11.     It is submitted that the 2^nd Opponent has been adjusted Rs.1,272/- (Rupees One Thousand Two Hundred and Seventy Two Only) on 3^rd December 2014 from the loan account of Complainant and the same was conveyed by way of mail on 9^th December 2014 and its attachment. A copy of the said mail and attachment is herewith produced as Document No. 7 for the kind perusal of this Hon’ble Forum.

12.     It is submitted that the Complainant visited the flat premises which was allotted by the 1^st Opponent during the month of December 2014 and thereby she came to know from the 1^st Opponent that the occupancy of the flat would be hand over by March 2015 without fail. Under the assurance and promise of 1^st Opponent, Complainant herein was regularly paid EMI’s to 2^nd Opponent.

          ….

14. It is submitted that the Complainant was received a mail message on 17^th January 2017 from the 1^st Opponent wherein he intimated that by March 2017 they are planning to give physical possession of flats and also admitted their mistakes for delay to give the possession. In addition to this 1^st Opponent requested to Complainant to disburse (contribute) amount of Rs. 3,00,000/- (Rupees Three Lakh Only) towards developments of Electrical Transformers, Lifts, Generators etc. It is further submitted that again on 28^th February 2017 1^st Opponent requested all including Complainant to release the part of the amount and also assured in writing that by 10^th March 2017 they will complete 100% work and give physical possession of the flat by end of March 2017. A Copy of the said mails are herewith produced as Document No. 8 & 9 for the kind perusal of this Hon’ble Forum.”

10.     A perusal of these paragraphs would clearly demonstrate that the disbursement of the loan as well as its further disbursement details were as per the instructions of the complainant from the loan account of the complainant that has been admittedly made on the instructions of the complainant. This is evident from the paragraph 6 extracted hereinabove that the loan amount has been disbursed periodically and not in one go. It is, thus, correct on the part of the learned counsel for the appellant bank to contend that the disbursement by the bank was not in collusion to help the builder / respondent no. 2 herein and, therefore, the inference drawn by the State Commission that the appellant bank had some hidden agenda is conjectural and cannot be sustained. The admissions in the complaint itself were, therefore, sufficient to demonstrate that there was a consent and instructions of the complainant for the disbursal of the loan and consequently, the refund, as directed, from the bank does not seem to be justified. As a matter of fact, the entire liability was of the builder, who has been rightly held liable by the State Commission to that extent.

11.     Learned counsel for the appellant bank has also cited the judgment of Delhi High Court in Writ Petition (C) No. 9550 of 2019 dated 13.03.2023 to urge that the bank is not supposed to guarantee the completion of the project nor is its responsibility to get the project completed. The Delhi High Court has opined that the bank cannot assume the role of the builder to complete the project. The contention of the learned counsel appears to be correct inasmuch as the deficiency in service is not on the part of the bank as it had no obligation to complete the project. It is not the case of the complainant nor is there any proof to that effect that the bank had deliberately disbursed the loan knowingly and in collusion with the builder. There is no evidence to that effect and the conclusion of a hidden agenda inferred by the State Commission is mere ipse dixit.

12.     In the background above, there seems to be no liability of the bank and the builder seems to be absconding and not attending to the grievances of the complainant or even attempting to appear before the State Commission or this Commission. The builder has clearly absented from the proceedings and, therefore, the decree against the builder does not call for any interference.

13.     It is urged by learned counsel for the appellant bank that a review application was filed, which was also rejected on 02.12.2021.

The prayer is to set aside the orders dated 02.11.2021 as well as the order dated 02.12.2021 passed in the review application referred to above.

14.     For the reasons stated hereinabove, the Bank cannot be saddled with any liability. Therefore, this appeal is allowed only in so far as the appellant bank is concerned and the impugned order dated 02.11.2021 as well as the order dated 02.12.2021 passed on the review application are set aside to the extent that the impugned order shall not be executed in so far as the appellant bank is concerned.

15.     The builder has nowhere contested the matter till now and consequently it shall be open to the complainant to realise the entire decretal amount from the builder / respondent no. 2. The order and decree of the State Commission shall stand modified accordingly.

16.     The appeal is, therefore, allowed on the aforesaid terms.