KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION

VAZHUTHACAUD, THIRUVANANTHAPURAM

APPEAL No.726/2015

JUDGEMENT DATED: 05.07.2023

(Against the Order in C.C.No.82/2012 of CDRF, Kasaragod)

PRESENT:

APPELLANT:

(by Adv. S. Reghukumar)

Vs

RESPONDENTS:

JUDGEMENT

SRI. AJITH KUMAR D. : JUDICIAL MEMBER

This is an appeal filed by the 1^st opposite party in C.C.No.82/2012 on the file of the District Consumer Disputes Redressal Commission, Kasaragod (District Commission for short).  As per the order dated 24.03.2015, the appellant was directed to pay an amount of Rs.30,000/-(Rupees Thirty Thousand) as compensation and costs Rs.5,000/-(Rupees Five Thousand) to the complainant.  Impugned by the said order this appeal has been filed.

2.       The case of the complaint in brief is that he is an educated youth who had approached the 1^st opposite party for availing a loan under the self-employment scheme.  The scheme was intended to provide assistance to the educated unemployed entrepreneurs.  The loan application was sent to the Zonal Office of the 1^st opposite party only after expiry of the period of the scheme and hence the loan was not sanctioned.  Though on the basis of the assurance made by the opposite party, he had underwent training and processed all the necessary documents, loan was declined.  He incurred financial loss and mental agony on account of the deficiency in service on the side of the opposite party.

3.       The opposite party had filed a version by denying the allegations of deficiency in service.  According to him no consumer dispute is involved.  Since there were mistakes and omissions in some of the documents and in the application submitted by the complainant, the application was returned to be re-submitted after curing the defects.  The complainant had collected the documents from the bank promising to re-submit after rectifying the defects.  The opposite party never declined to grant loan to the complainant.  It was solely on account of the failure on the part of the complainant to resubmit the loan application after curing the defects that the loan could not be granted to him. 

4.       At the later stage of the proceedings, the General Manager, District Industries Centre, Kasaragod was also impleaded as the 2^nd opposite party. 

5.       The 2^nd opposite party had filed a version with the following contentions:  On 28.07.2011, the Government of Kerala had accorded administrative sanction for implementation of self-employment scheme for educated youth.  The scheme was intended to provide financial assistance to the unemployed, educated, technically skilled youth for starting new micro enterprises of a total project cost up to Rupees Five Lakhs.  As per the terms of the scheme, the promoter must contribute 10% of the project cost and the   bank has to provide 70% of the project cost and the remaining 20% will be contributed by the Government.  A Committee was also constituted at the district level headed by the General Manager, District Industries Centre, Manager or the representative of the lead bank and other two members and a convenor.  As per the scheme all the beneficiaries should undergo one day training.  The complainant had submitted an application, project report and connected documents for starting a unit in the name and style as M/s “Digital Survey”.  On 21.10.2011 the district level task force committee had considered his project and recommended the same with a total cost of Rs.3,00,000/-(Rupees Three Lakhs).  The application and connected documents were forwarded to the Federal Bank on 31.10.2011.  Later, on 08.12.2011 the Senior Manager, Federal Bank, Rajapuram informed him that the bank is ready to sanction a loan amount of Rs.2,80,000/-(Rupees Two Lakhs Eighty Thousand) to the complainant and requested him to undergo training.  But later as per a letter dated 25.01.2012, the complainant informed that the bank had refused to sanction the loan for want of approval of the scheme by the Head Office along with the copy of a letter dated 18.01.2012 issued by the Senior Manager of the bank. 

6.       The scheme was not in force in the financial year 2012-2013.  So the District Industries Centre was unable to extend the Government contribution to the beneficiaries of the loans sanctioned after 31.03.2012.

7.       The complainant filed proof affidavit and he was examined as PW1, Exhibits A1 to A4 were marked on his side.  The 1^st respondent also filed affidavit and marked Exhibits B1 to B7.  The appellant would attack the judgement of the District Commission on the ground that the District Commission went wrong in directing him to pay compensation as there was no deficiency in service on the part of the appellant.  The District Commission ought to have held that for sanctioning a loan and providing financial assistance, the bank is at liberty to insist for certain documents and to follow the prescribed procedure which does not constitute any deficiency in service.  The finding of the District Commission that there was delay on the side of the appellant in issuing Exhibit B7 is wrong. 

8.       The records from the District Commission were called for and perused.  Heard the counsel for the appellant and the contesting respondent.  The complainant would allege deficiency in service on the part of the appellant in processing the loan application.  Exhibit A1 is the letter dated 06.12.2011 issued by the 1^st respondent expressing the readiness of the bank to sanction the loan to the 1^st respondent under the Self Employment Scheme with request to provide training as contemplated in the scheme sought to be implemented by the District Industries Centre.  In view of this letter the complainant had underwent a training.  Exhibit A2 is the certificate dated 29.02.2012 issued by the General Manager, District Industries Centre to the effect that the complainant had underwent the training at Entrepreneurs Development Programme for the period from 13.02.2012 to 29.02.2012.  Exhibit A3 is the second letter issued by the Senior Manager of the appellant dated 08.03.2012 requesting the complainant to cure certain defects in his application.  Four documents were issued by the bank.  Exhibit A4 is the agreement executed by the complainant and the land lord of the premises in which the project was sought to be started.  Exhibit A5 is the copy of the pass book issued by the bank in favour of the complainant.  The complainant had also caused production of the guidelines on Fair Practices Code of money lenders issued to the Scheduled Commercial Banks dated 05.05.2003.  He had also caused production of the letter produced by the General Manager of the District Industries Centre dated 27.10.2011 regarding the recommendation of the loan applied for by the complainant.  According to the complainant there was delay on the part of the bank in processing the application and hence the complainant was unable to avail the financial assistance ordered by the Government.

9.       As against the evidence tendered by the complainant, the 1^st appellant had filed an affidavit in lieu of chief examination and caused production of Exhibits B1 to B7.  B1 is the order issued by the appellant to the Chief Manager on 20.12.2011 by forwarding the credit proposal of the complainant for according sanction.  On 22.12.2011 the Regional Manager had sought for certain clarifications in the documents filed in support of the application.  On 28.12.2011, the appellant had forwarded the necessary details to the Chief Manager as sought for in the letter, Exhibit B3.  On 18.01.2012 the appellant had also issued a letter to the complainant that the bank had not received an approval from the Head Office and hence the loan could be considered only after getting approval from the Head Office.  On 29.02.2012 the appellant had sent another e-mail to the Credit Control Department of the appellant to provide guidance in respect of the loan application.  Exhibit B6 is a letter dated 05.03.2012 issued to the appellant regarding the procedure to be followed in respect of sanctioning of the loan.  On 08.03.2012, the appellant had issued Exhibit B7 to the complainant to cure four defects contained in the documents filed in support of the loan application.  Since the complainant did not cure the defects contained in the documents filed in support of the loan application, the bank was not in a position to sanction the loan.  The version given by the 2^nd opposite party would show that the Government contribution could not be disbursed since the loan was not sanctioned prior to 31.03.2012 for the reason that the loan was not extended to the next financial year.  From the version of the 2^nd opposite party it is evident that the scheme was in force up to 31.03.2012.  But, the evidence let in by the complainant as PW1 would show that he had refused to cure the defects noted by the appellant in the letter dated 08.03.2012.  The bank is at liberty to scrutinise the required documents and seek for clarification or correction in them which was done by the bank as per Exhibit A3.  The complainant was not ready to cure the defects and to rectify the application and to re-submit the application after rectification.  His explanation is that he had never corrected the application and re-submitted as the period of the loan had elapsed.  This particular aspect is incorrect in view of the version filed by the General Manager, District Industries Centre.  A banking institution is having ample authority to verify the loan application and the connected records.  It is the prerogative of the bank to advance loan or not to advance it.  It is up to the bank to decide the necessary documents required for sanctioning the loan.  The bank has got considerable discretion in the matter of sanctioning loans and providing credit facilities.  The learned counsel for the appellant has placed reliance on the following precedents:
Somasekhar G. Vs. ICICI Bank & others II (2013) CPJ 577 (NC), Griffan Masih Vs. Punjab National Bank & Others IV (2006) CPJ 16, M/s Bunny’s Gift & Novelty Centre Vs. Punjab & Sind Bank III (1993) CPJ 322 (NC), Ashok Prabhakar Vs. State Bank of India & Others I (1993) CPJ 11 (NC) and submitted that nobody can impose restrictions on a banking institution in the matter of granting loans. 

10.     The evidence on record would show that there was no laches on the part of the appellant in processing the application for loan.  The appellant had promptly forwarded the loan application and the connected documents to the Head Office and in view of the directions of the Head Office, the complainant was instructed to rectify the mistakes contained in the collateral documents filed in support of the application for loan.  The complainant was not ready to rectify the mistakes and re-submit the loan application when it was returned on 08.03.2012.  There was ample time for the complainant to rectify the mistakes and re-submit the application as the sanctioning period for the loan expired only on 31.03.2012.  So there was no deficiency in service on the part of the appellant in processing the application for loan presented by the complainant.  The District Commission has miserably failed in appreciating the evidence in its correct perspective.  The District Commission had found fault on the appellant by believing the version of the complainant that the period of loan had expired on 08.03.2012.  But the version of the Manager of the District Industries Centre would prove that the scheme was in force till 31.03.2012.  The finding of the District Commission is against the true state of affairs.  Therefore, we are inclined to reverse the finding of the District Commission by setting aside the order.

In the result, the appeal is allowed.  The order passed by the District Commission is set aside.  The complaint shall stand dismissed.  Parties shall bear their respective costs.

The statutory deposit made by the appellant at the time of filing the appeal is ordered to be refunded on proper acknowledgement.

SL