Chandigarh

StateCommission

CC/49/2019

Agrum Foods India Private Limited - Complainant(s)

Versus

IDBI Bank limited - Opp.Party(s)

Khushwany Singh Mann & Rakesh K Kaundal Adv.

28 Feb 2022

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION, U.T. CHANDIGARH

============

Consumer Complaint No.	:	CC/49/2019
Date  of  Institution	:	05/03/2019
Date   of   Decision	:	28/02/2022

 

 

 

 

 

Agrum Foods India Pvt. Ltd., Village Phaguwala, Tehsil Bhawanigarh, District Sangrur, Punjab – 148 026, through Sh. Supreet Singh (Director).

…. Complainant

 

Vs.

 

IDBI Bank Limited, Sector 72-73, Sector 17-B, Bank Square, Chandigarh – 160017.

…… Opposite Party

 

 

BEFORE: JUSTICE RAJ SHEKHA ATTRI      PRESIDENT

MRS. PADMA PANDEY                   MEMBER

                MR.RAJESH K. ARYA                     MEMBER

 

PRESENT	:	Sh. Khushwant Singh Mann, Advocate for Complainant.
	:	Sh. Tejinder K. Joshi, Advocate for Opposite Party.

 

PER PADMA PANDEY, MEMBER

 

 

 

                In brief, the facts necessary for the disposal of the instant Consumer Complaint are, the Ministry of Agriculture and Farmer's Welfare implemented financial assistance scheme through National Horticulture Board "NHB" namely "Scheme II - Capital Investment Subsidy Scheme for construction/ expansion/ modernization of Cold Storages of Horticulture Products”. The said Scheme was credit linked back ended Subsidy Scheme of NHB and in order to be eligible for the Scheme the person must avail a term loan from a financial institution. The complainant decided to set up a new cold storage facility at Village Jhaneri, District Sangrur, Punjab with the financial assistance from the NHB and hence approached the  Opposite Party/ Bank for availing credit facility in the form of  term loan. The complainant applied for the total financial assistance of Rs.11.42 Crore including a term loan of Rs.7.92 Crore for the said project and the loan was sanctioned by vide letter dated 29.09.2017. The Complainant paid a sum of Rs.11,41,060/- towards up front Rs.70,800/- for processing and Rs.13,82,000/- stamp duty for mortgage deed.  The Complainant applied to NHB for seeking “In Principle Approval” (IPA). The NHB asked the Opposite Party (who was lending Bank) to furnish a copy of the Bank Appraisal Note which formed the basis of sanction of the Term Loan. In response to the said letter of the NHB, the Opposite Party vide its letter dated 13.03.2018 deliberately furnished the incomplete copy of the Appraisal Note. Thereafter, both the Complainant and the NHB made several requests to the Opposite Party to furnish the complete set of the Appraisal Note to enable the NHB to process the application of the complainant for issuance of the IPA. In the meantime, the Complainant required additional working capital funds to finance its commercial operations and thus, approached the OP-Bank for additional funds. However, the Opposite Party conveyed its in-capacity to meet the additional fund requirement of the Complainant due to regulatory directives and its internal guidelines and asked the complainant to approach another Bank for the purpose.  Under duress, the Complainant changed the Bank and got fresh sanction from the HDFC Bank to meet its total funds requirement to finance its activities and the Bank also charged pre-payment charges and legal fees for closing the loan account. The complainant was forced to re-incur all the expenditure for takeover of the total loan by the HDFC Bank. On 31.08.2018, the Opposite Party informed the NHB that the complete Bank Appraisal Note can be shared upon payment of applicable fee and asked the complainant to pay Rs.25,77,120/- plus applicable taxes vide email dated 05.09.2018.  Due to change of Bank prior to the grant of the IPA, the NHB rejected the application of the complainant for subsidy. The Complainant has suffered a loss of Rs.2,83,33,420/- due to deficiency in service of the Opposite Party.  Alleging that the aforesaid acts amount to deficiency in service and unfair trade practice on the part of the Opposite Party, the Complainant has preferred the instant Consumer Complaint claiming compensation of Rs. 35,33,420/- for financial loss incurred for takeover of loan facilities to another bank, Rs.25,00,000/- for mental agony and Rs.1.10,000/- towards litigation expenses.

 

2.         Notice of the complaint was sent to Opposite Party seeking its version of the case. 

 

3.         Opposite Party contested the Consumer Complaint and filed its reply, inter alia, admitting the basic facts of the case. It has been pleaded that the Complainant was seeking to earn profits by undertaking its business activities with the help of the loan taken by it from the answering Opposite Party. The credit facilities were sanctioned as per the terms & conditions of the Bank which were duly accepted by the Complainant. The upfront fee and other charges were recovered from the Complainant as per the Policy of the Bank for sanctioning of credit facilities which has no linkage with sharing of Bank Appraisal Note. While admitting that the NHB asked the answering Opposite Party to furnish a copy of the Bank Appraisal Note, it has been asserted that the same is a property of the Bank prepared mainly for internal credit decision and the same could be shared if felt necessary by the Bank at its sole discretion on payment of a stipulated fees and levies. However, to maintain good customer relations, the Opposite Party sent the relevant pages of the Bank Appraisal Note (which were related to the Complainant) to the NHB. Admitting that the complainant has approached the answering Opposite Party for additional working capital funds in the month of July, 2018, it has been asserted that at that time, the IDBI Bank was under Prompt Corrective Action (PCA) framework since 05.05.2017 imposed by the Reserve Bank of India. Keeping in view the PCA framework, the Bank has issued guidelines vide its circular dated 09.03.2018 imposing regulatory restriction for taking further exposure. For this reason the bank was not in a position to take additional exposure and accordingly informed the same to the complainant vide email dated 19.07.2018. The bank further informed the complainant that the IDBI Bank would consider the request for ceding the charge on the mortgaged assets in case the company takes additional exposure from other bank. However, the complainant for the reasons best known to it instead of taking additional loan from different bank, prematurely paid the entire loan availed from the opposite party by arranging loan from HDFC Bank. As the loan was taken over by the HDFC Bank so the answering opposite party rightly charged a sum of Rs.9,39,560/- as pre-payment charges and legal fee for closing the loan account as per the terms and conditions of the loan agreement and the policy guidelines of the bank. The answering Opposite Party has asked the complainant to take the additional loan from some other bank but the complainant for the reasons best known to him changed the whole loan from IDBI Bank to HDFC Bank. It has been pleaded that as per the policy of the bank, the answering Opposite Party vide e-mail dated 31.08.2018 rightly demanded the merchant fee of Rs. 25,77,120/- as the Appraisal Note being the property of the bank can only be shared on payment of the requisite fee. For requirement of submission to the Govt. departments for claiming subsidies, grants etc., Bank issues a separate appraisal note which is called as merchant appraisal note and the said note is a paid service of the bank and charges for sharing the merchant appraisal note are purely based upon banks internal guidelines. It has been asserted that perusal of letters issued by NHB rejecting the claim of the complainant shows that the IPA was rejected due to the reason that the complainant has shifted the loan from IDBI Bank Ltd. to the HDFC bank and this was the independent decision of the complainant. It is totally denied that there is any deficiency in service or unfair trade practice on the part of the opposite party. Pleading that there was no deficiency in service or unfair trade practice on its part, a prayer has been made for dismissal of the complaint.

 

4.         Controverting the allegations contained in the reply and reiterating the pleadings in the Complaint, the Complainant filed the replication.

       

5.         Parties led evidence by way of affidavits and documents.

 

6.         We have heard the learned counsel for the parties and gone through the record of the case, including the written arguments advanced on behalf of both the parties.

 

7.         After scanning of record, including written arguments, our findings are as under:-

 

8.         The key controversy swirls around the short question, “whether the OP-Bank was deficient in rendering proper services to the Complainant or not”?

 

9.         Having bestowed our anxious consideration to the matter, we are of the concerned opinion that in the light of the material on record, answer to the question posed has to be in the negative.

 

10.         The Complainant in order to set-up a new cold storage facility at village Jhaneri, Tehsil Bhawanigarh, District Sangrur (Punjab) and to avail the financial assistance from the NHB approached the OP-Bank for availing credit facility in the form of term loan. The Complainant was sanctioned total financial assistance of Rs.11.42 Crore including the term loan of Rs.7.92 Crore (sanction letter dated 29.09.2017). The Complainant also paid a sum of Rs.11,41,060/- towards upfront and Rs.70,800/- for processing and Rs.13,82,000/- stamp duty for mortgage deed. The Complainant then applied to the NHB for financial assistance, but NHB demanded a copy of the appraisal note prepared by the OP-Bank for the sanction of its term loan. The Complainant alleges that the Bank supplied incomplete copy of the appraisal report beginning from Page No19; whereas, the Bank confirmed to the Complainant that Page No.19 be treated as Page No.1 and the appraisal note in that manner is a complete one.

 

11.         The Complainant further required some additional working capital funds to finance its commercial operations and approached the OP-Bank for additional funds. However, the OP-Bank showed its inability to sanction the same. Due to this denial of additional funds, which was due to regulatory directions and internal guidelines of the OP-Bank, the Complainant approached another Bank namely, HDFC Bank in order to meet its total fund requirement and in this process, the Complainant had to re-incur all the expenses for taking over of the total loan by the HDFC Bank. In the meantime, the OP-Bank informed the NHB that the bank appraisal note can be shared upon payment of applicable fees and desired the Complainant to pay an amount of Rs.25,77,120/- plus applicable taxes as per the rules of the Bank and the same was paid by the Complainant in order to avail complete bank appraisal note. Further, it is borne on record that the Complainant had to make payment of Rs.9,39,560/- as pre-payment charges and legal fees for closing the loan account with the OP-Bank.

 

12.         The main grouse of the Complainant is that the OP-Bank was deficient in services by not providing complete copy of the appraisal note, also demanding Rs.25,77,120/- under the garb of additional margin fees for furnishing the complete bank appraisal note to NHB and charging pre-payment charges of Rs.9,39,560/-, which this Commission, per material on record, is not inclined to accept. Charging of requisite fees for sharing the appraisal note is a policy of the bank. No bank does this kind of professional jobs without charging the requisite fees from the customers. In the present case, the Complainant itself chose to change the bank because of non-availability of more term loan from the OP-Bank. In that event, there was no other option except to pay the pre-payment charges and close the account with the OP-Bank. Further, this Commission observes from the document dated 01.11.2018 placed at Annexure C-15 issued by the NHB to the Complainant that since the Complainant has changed the bank without intimating the NHB while its application for loan was under consideration, the said application has been found to be not eligible for any facility from NHB. Therefore, we find that there is no deficiency in service on the part of the OP-Bank since the money demanded by the OP-Bank by way of pre-payment charges, charges for detailed appraisal note are mandatory.

 

13.         It is apt to note, that the Complainant took credit facilities from the OP-Bank for the purpose of its business activities. The Complainant was seeking to earn profits by undertaking its business activities with the help of the loan taken by it from the bank. Therefore, it can hardly be disputed that the services of the bank were hired or availed by the Complainant for a commercial purpose.  The Complainant approached the OP-Bank for a term loan for setting up a new cold storage. The cold storage was being constructed by the Complainant for earning profit and not for earning livelihood. As such, the Complainant is not a consumer as per Section 2(1)(d) of the Consumer Protection Act, 1986.

 

14.         In these set of circumstances, it can safely be concluded that there has been no deficiency in service on the part of Opposite Party and the whole gamut of facts and circumstances leans towards the side of the Opposite Party. The case is lame of strength and therefore, liable to be dismissed.

 

15.         Taking into consideration all the facts and circumstances of the case, we have no hesitation to hold that the Complainant has failed to prove that there has been any deficiency in service on the part of the Opposite Party or that the Opposite Party adopted any unfair trade practice. As such, the Complaint is devoid of any merit and the same is hereby dismissed, leaving the parties to bear their own costs.

 

16.         The certified copies of this order be sent to the parties free of charge. The file be consigned.

 

Pronounced

28^th February, 2022                                                          

Sd/-

(RAJ SHEKHAR ATTRI)

PRESIDENT

 

Sd/-

                                                        (PADMA PANDEY)

MEMBER

 

Sd/-

                                                        (RAJESH K. ARYA)

MEMBER

 “Dutt”