DR. INDER JIT SINGH, MEMBER

1.       The present Revision Petition has been filed by the Petitioner Bank against the Respondents as detailed above, under Section 21 (b) of the Consumer Protection Act, 1986, against the order dated 05.02.2013 of State Consumer Disputes Redressal Commission, Uttar Pradesh (hereinafter referred to as the ‘State Commission’), in First Appeal (FA) No. 2238 of 2012 in which order dated 31.08.2012 of District Consumer Disputes Redressal Forum, Shahjahanpur (hereinafter referred to as District Forum) in Consumer Complaint (CC) No. 223 of 2010 was challenged, inter alia praying for setting aside the order dated 05.02.2013 of the State Commission and 31.08.2012 of the District Forum.

2.         Briefly stated, Respondent No. 1 (M/s Sumitra D.S. Motors Pvt. Ltd.) and Respondent No. 2 (M/s Sumitra Sons) approached the Petitioner Bank for credit facilities. Credit facilities of Rs.2 Crores was sanctioned to Respondent No. 1 vide sanction letter dated 27.08.2009 of the Petitioner Bank and credit facility of Rs.2.5 Crores (cash credit Rs.1.5 Crores and term loan Rs.1.0 Crore) was sanctioned to Respondent No. 2 vide letter dated 27.08.2009 of the Petitioner Bank. Both the sanction(s) stated that the sanction limit would be disbursed only after completion of the documentation formalities and compliance of other terms and conditions as per annexure to the sanction letter(s). The said sanction letter(s) were accompanied with terms and conditions which inter alia include a processing fee @1.00%, which in case of Respondent No. 1 comes to Rs.2 Lacs plus applicable taxes (inclusive of login fee of Rs.5000/-) and in case of Respondent No. 2 comes to Rs.2.50 Lacs plus applicable taxes (inclusive of login fee of Rs.5000/-). One of the important pre-disbursement condition included obtaining of NOC/letter from Union Bank of India (UBI) (from where the Respondents have availed the credit facilities based on mortgage of the same security) and other documents as advised by advocate for proper mortgage action. As the Respondents could not obtain the requisite NOC/letter from the UBI Shahjahanpur and submit the same to the Petitioner Bank, the sanctioned loan amount could not be disbursed and the Respondents sought refund of the processing fee totalling to Rs.4,96,350/- (total in both the cases). As the Bank did not refund the processing fee as demanded by the Respondents herein, Consumer Complaint was filed before the District Forum. District Forum vide order dated 31.08.2012 allowed the complaint and directed the Petitioner Bank to pay a sum of Rs.4,96,300/- along with 9% interest with effect from 28.8.2009 and a compensation amount of Rs.11,000/-. Aggrieved by the order of the District Forum, the Petitioner Bank filed an appeal before the State Commission which was dismissed vide order dated 05.02.2013.

3.         The Petitioner Bank has challenged the order dated 05.02.2013 of the State Commission mainly on the following grounds:

(a)       The lower fora failed to appreciate that the Respondents had applied for credit facilities and the same were granted by the petitioner after putting its machinery like valuer, legal mechanism and other techno legal mechanism and hence the processing fee for sanction of loan and expenditure incurred in respect of the same was not refundable.    

(b)       The lower fora failed to appreciate that the non-disbursement of loan amount was due to non-submission of NOC from UBI, in whose favour the property was earlier mortgaged by the respondents and non-compliance of terms of sanction letter cannot be attributed as deficiency of service on part of the petitioner.

(c)       The processing fee means the fee charged for expenditure in sanctioning the loan and there is no refusal by the bank to disburse loan on its own and non-disbursement of loan due to inaction/non-compliance of terms by the respondent cannot be attributed as deficiency of service.

4.         The main issue for consideration in the present case is whether the processing fee charged by the Petitioner Bank was for sanction of the loan or disbursement of the loan or both and whether on account of non-disbursement of the sanctioned loan, Respondents are entitled to refund of the said processing fee. The Petitioner Bank has contended that as per Reserve Bank of India guidelines, they are entitled to charge processing fee while sanctioning/disbursing loans. While it is not in dispute that the Banks, like the Petitioner in the present case, are empowered to charge processing fee from its customers approaching them for credit facilities, the question here is whether such processing fee is refundable or not. The Petitioner Bank has not placed on record any guidelines of Reserve Bank of India or its own internal guidelines which would clearly state whether such processing fee is refundable or not. Moreover, a perusal of the terms and conditions of sanction attached with the sanction letter also shows that there is no mention of any condition with respect to refund of such processing fee or otherwise. Loan Agreement signed also do not contain any condition regarding processing fee to be non-refundable. Here, it is important to note that as per reply filed by the Petitioner Bank before the District Forum both the sanction of loan/credit facilities were issued on 27.08.2009 and the processing fee was paid vide cheques on 28.08.2009 i.e. after the said sanctions were issued. Complainant in its complaint also stated that processing fee were paid through cheques dated 27.08.2009. This lead us to believe that no processing fee was charged by the Bank till the stage of the sanction and the same was possibly demanded after sanction and was to be deposited before disbursement. Hence these were with respect to the services to be rendered towards disbursement of the credit facilities which would include verification of various documents to be submitted by the respondents herein. As the sanctioned credit facilities could not be disbursed, respondents contend that no services were rendered by the Petitioner Bank hence they are not entitled to charge any processing fee. Further, it was contended that the Petitioner Bank asked for a NOC/letter from the UBI, Shahjahanpur from whom the Respondents have availed certain credit facilities against the mortgage of the same properties. Without settlement of the dues with the UBI they could not have issued NOC/letter and release their mortgage. The right course of action for the Petitioner Bank could have been to obtain NOC from UBI for the Petitioner Bank to disburse credit facility subject to settlement of their (UBI) dues from out of the disbursed credit facilities from the Petitioner Bank. The Respondents have also contended that the said Revision Petition has been filed after the satisfaction of the execution proceedings in compliance of the impugned order of the State Commission/District Forum and hence the same is not maintainable. The Respondents admitted having already received the said processing fee in pursuance to the order of the lower fora. While we are not in agreement with this contention of the Respondents about maintainability of Revision Petition only on the ground that the Petitioner have satisfied the decree of the lower fora, as the legal rights of the Petitioner Bank herein to contest the case at the next level continue despite having satisfied the decree to avoid any punitive action under the law. It is the contention of the Petitioner Bank that as the Bank has already sanctioned the credit facilities and its disbursement was subject to production of no objection certificate from the UBI in respect of the mortgage properties, but such NOC was not submitted despite repeated letters. It is the case of the Bank that sanctioning of the loan involves efforts for large number of days on the part of the Bank/officials, which also involves personal visits, valuation reports, legal search reports and many other techno-legal assessment for grant of financial assistance, hence if the disbursement does not take place on account of Respondents’ inability to fulfil the terms and conditions of the sanction, which in the present case were in terms of non-submission of NOC/letter from UBI, the Bank is entitled to charge the processing fee for the complete process, including sanction and disbursement, and the processing fee once charged is not refundable.

5.         We have carefully gone through the orders of the State Commission, District Forum and other relevant records and rival contentions of the parties. In the absence of any specific guidelines of RBI or Bank’s own guidelines containing provisions relating to the processing fee not being refundable and the terms and conditions of the sanction in both the cases, being silent about the processing fee being non-refundable, and the Petitioner Bank insisting on a letter/NOC from the UBI with respect to mortgage of the property etc. without settling their dues, we are of the considered view that on account of failure of the Bank to disburse the loan, the Petitioner Bank is not entitled to retain the processing fee charged in both the cases. As has been held by Hon’ble Supreme Court in catena of judgments^[1] that revisional jurisdiction of the National Commission is extremely limited, it should be exercised only in case as contemplated within the parameters specified in the provision i.e. when State Commission had exercised a jurisdiction not vested in it by law or had failed to exercise jurisdiction so vested or had acted in the exercise of its jurisdiction illegally or with material irregularity.  It is only when such findings are found to be against any provisions of law or against the pleadings or evidence or are found to be wholly perverse, a case for interference may call for at the second appellate (revisional) jurisdiction. In exercising of revisional jurisdiction, the National Commission has no jurisdiction to interfere with concurrent findings recorded by the District Forum and the State Commission, which are on appreciation of evidence on record. In view of the foregoing, we find no illegality or material irregularity of jurisdictional error in the orders of the State Commission or District Forum in ordering refund of the said processing fee. Accordingly, we uphold the order of the State Commission, hence the Revision Petition is dismissed.

6.         The pending IAs in the case, if any, also stand disposed off.