Sri.Siddegowda, President 1. This complaint is filed under section 12 of the Consumer Protection Act 1986, to direct 1st Opposite party to pay documentation charges of Rs.35,350/- with interest, Rs.50,000/- as conveyance charges, Rs.1,00,000/- towards the medical treatment, Rs.5,00,000/- compensation for mental agony and Rs.12,00,000/- for with holding the loan. 2. The facts of the complaint are as follows; The complainant, by borrowing the loan from the 2nd Opposite party and his funds available, started construction the building in his site Ashoknagara, Mandya City. But, he could not complete the construction and was forced to borrow loan to the tune of Rs.20 lakhs from others. Since, the loan becomes heavy burden, in order to discharge the loan due to 2nd Opposite party and over draft loan due to the 3rd Opposite party and other loans, the complainant was need of loan of Rs.75 lakhs. The complainant came across one Rajagopal, an agent of the 1st Opposite party. The complainant told said Rajagopal about his financial commitments and also bad need of loan and that said Rajagopal introduced the complainant to the 1st Opposite party. The 1st Opposite party personally made spot inspection of the building during March 2007. After inspecting the building and documents of the title, the 1st Opposite party agreed to advance the loan to the complainant and also to take over the loan due to the 2nd Opposite party. As per the instructions of the 1st Opposite party, the complainant raised loan and discharged the over draft loan of Rs.2 lakhs due to 3rd Opposite party. One Shivaramu had taken adjacent property on lease for 25 years on payment of Rs.6.50 lakhs. Since, the 1st Opposite party had insisted for offering the adjacent property also as security for the loan, the complainant was constrained to raise loan to the tune of Rs.6.50 lakhs and discharge the mortgage loan to Shivaramu and got the mortgage deed cancelled and in that connection, the complainant had spent Rs.1.50 lakhs. The complainant was repaying the loan due to the 2nd Opposite party regularly and the loan account was a standard loan account. Since, the 1st Opposite party had assured to sanction loan of Rs.70 lakhs including to take over the loan due to the 2nd Opposite party, the complainant failed to make payment to the 2nd Opposite party regularly and thereby the account became substandard account. The complainant had submitted necessary applications to the 1st Opposite party and 1st Opposite party also got the valuation report of the building and as per direction of 1st Opposite party, the complainant produced the stamp paper of Rs.34,250/- on 05.09.2007 and the complainant also spent Rs.1,250/- for franking charges and on the same day the 1st Opposite party obtained the signatures of the complainant to the bond paper and also the necessary loan papers. On 08.09.2007, the 1st Opposite party issued intimation regarding sanction of loan of Rs.68.50 lakhs including take over loan of the 2nd Opposite party. After informing the same to his creditors, the complainant also given copy of the intimation to the 2nd Opposite party, but to the utter shock on 09.10.2007, when the complainant went to bank of 1st Opposite party at Bangalore to draw the amount, he was informed that the loan has been withheld. No specific reasons were assigned by the 1st Opposite party for not releasing the loan. The pressure from the present creditors was mounted up and on account of this, the complainant developed B.P and Sugar and suffered heart pain and thereby the complainant was constrained to go for medical check up continuously and has spent Rs.1 lakh for medical and other incidental expenses. In view of the action of 1st Opposite party, the account of the complainant in 2nd Opposite party became substandard and thereby he was made to pay additional interest. On assurance of the 1st Opposite party to sanction the loan, the complainant made several visits to the 1st Opposite party Office at Bangalore and has spent more than Rs.50,000/- for conveyance charges. After following all formalities and then informing the sanction of loan, 1st Opposite party without any valid reasons has with held the release of the loan amount to the complainant and thus committed deficiency in service. 3. The notices were served on 1 to 3rd Opposite parties. 1st and 3rd Opposite parties have filed version and not 2nd Opposite party. 4. The 1st Opposite party disputing some averments made in the complaint, has pleaded that the complainant approached the 1st Opposite party for the financial assistance and also to take over the existing loan of KSFC (2nd Opposite party). The 1st Opposite party informed the complainant and to produce the loan account statement from 2nd Opposite party, but the complainant did not produce the statement till today, but produced the letter from 2nd Opposite party, but 1st Opposite party was not in the position to take over the loan which is substandard and this was one of the condition of the sanction ticket. The 1st Opposite party requested the 2nd Opposite party to produce the statement of account of the complainant. After seeing the statement it is clear that account was substandard and the complainant was over due of Rs.1,67,000/- as on 27.09.2007. The complainant with collusion of the 2nd Opposite party produced the letter dated 27.09.2007 stating that the account if standard one. The intention of the complainant is to defraud and to cheat the 1st Opposite party Bank. It is denied that the Rajagopal was an agent of 1st Opposite party. 1st Opposite party assured to sanction the loan including take over of the 2nd Opposite party loan on a condition that the loan of the 2nd Opposite party is regular and standard as per banking norms. Though, the loan was sanctioned on 08.10.2007 and the 1st Opposite party called the complainant to execute the documents and produce the statement of account from the 2nd Opposite party, since the complainant did not produce the statement of account, the 1st Opposite party has not disbursed the loan and no documents were executed by the complainant. It is false that the Opposite party directed the complainant to produce the stamp paper of Rs.34,250/-. There is no deficiency in service committed by 2nd Opposite party and therefore, the complaint is liable to be dismissed. The complainant is not maintainable as the cause of action arose at Bangalore where loan was sanctioned. 5. The 3rd Opposite party filed version admitting the loan borrowed by the complainant and discharge of the loan, it is not aware of other allegations and 3rd Opposite party is not a necessary party and therefore, the complaint is not maintainable against the 3rd Opposite party. 6. During trail, the Complainant is examined as CW.1 and got marked Ex.C.1 to C.21. On behalf of the 1st Opposite party, the Manager is examined as RW.1 and Ex.R.1 to R.5 are marked. 7. We have heard both sides. 8. Now the points that arise for our considerations are:- 1) Whether the 1st Opposite party has committed deficiency in service by not releasing the loan as assured? 2) Whether the 1st Opposite party is liable to pay the claim sought for by the complainant? 3) What order? 9. Our findings and reasons are as here under:- 10. POINT No.1:- The undisputed facts are that, the complainant approached the 1st Opposite party for loan and also take over the existing loan of 2nd Opposite party and 1st Opposite party assured to sanction the loan and obtained applications. The evidence of the complainant and the documents produced by the complainant clearly established that for sanction of the loan, the 1st Opposite party obtained several documents Ex.C.1 is the legal scrutiny report in respect of the property of the complainant and Ex.C.2 is the valuation report of the property of the complainant, After sanction of loan it obtained Ex.C.6 the agreement of the loan executed by the complainant in favour of the 1st Opposite party and it shows the payment of stamp charges of Rs.700/- as per the receipt Ex.C.6(a). But Ex.C.6 does not contain the date of execution, Ex.C.7 is the agreement of hypothecation of goods and assets and under this document stamp fee of Rs.34,250/- is paid by the complainant on 05.10.2007, but the date of execution of the document is not mentioned and this agreement of hypothecation and agreement of loan for Rs.68,50,000/- was obtained. As per Ex.C.8, the 1st Opposite party has written a letter dated nil to the Sub-Registrar, Bangalore to emboss the documents of Rs.700/- and Rs.34,250/-. The 1st Opposite party has obtained deed of guarantee dated 6th October 2007 as per Ex.C.9 and agreement of pledge of goods and assets as per Ex.C.10 without any date and form number C-5 as per Ex.C.11 without filling it and Ex.C.12 Declaration-A without filling it and empty letter signed by the complainant to the 1st Opposite party as per Ex.C.13, 14 and 15 about the deposit of title deeds. The complainant has also produced the account statement of 2nd Opposite party Bank as per Ex.C.16 printed on 09.10.2007 and also produced the encumbrance certificate as per Ex.C.18, affidavit of B.S.Veena as per Ex.C.19 to 2nd Opposite party, copy of the sale deed Ex.C.20 executed by Shivaramu and lease agreement between the complainant as per Ex.C.21. 11. It is admitted fact that the loan was sanctioned by the 1st Opposite party and thereafter it refused to release the loan on the ground that the loan of the complainant with 2nd Opposite party is substandard i.e. he was a irregular in payment of installments causing over due of principal amount and interest. According to the complainant, he was not informed the reason for non-releasing of the loan by 1st Opposite party, but 1st Opposite party has not at all produced any document having informed the complainant about the non-release of the loan giving reasons. 12. According to the contention of the Opposite party after sanction of the loan, the complainant was informed to produce the statement of account with 2nd Opposite party, but he did not produce but it obtained the statement of account as per Ex.R.4(a) and found that the complainant is not regular in payment of installments and the account is a substandard one and as per the condition of the sanction loan, the account with the present banker should show satisfactory dealings and the account should be standard one and hence loan was not released. 13. Now, we have to consider whether the 1st Opposite party is right in not releasing the loan. The evidence clearly proves that in order to sanction the loan, the 1st Opposite party secured some documents and after sanction of loan, documents were obtained wherein some are filled up and without date. Particularly agreement of loan and agreement of hypothecation as per Ex.C.6 and C.7 which are stamped by the department on the basis of letter of 1st Opposite party as per Ex.C.8. It is pertinent to note that as per Ex.C.3 dated 08.09.2007, the 1st Opposite party informed the sanction of loan of Rs.68,50,000/-, undertaking to take over the loan of 2nd Opposite party, subject to conditions pertaining term loan. The condition was referred is that for release of the loan, the complainant should satisfy that the account with 2nd Opposite party is a standard one and he was not a defaulter in payment of installments and he was not over due of principal and interest. The 1st Opposite party has produced a confidential letter Ex.R.2 dated 18.06.2007 sent by the 2nd Opposite party and in this letter, the over due principal and interest is shown apart from loan balance and it is stated that the category of the asset at present is standard. It is not stated that operation of loan account is standard. In spite of this letter, though it is apparent in Ex.C.R.2 that the complainant was in over due of principal and interest apart from the loan balance, the 1st Opposite party sanctioned the loan on 08.09.2007 as per Ex.C.3. As per Ex.C.4 on 10.09.2007 1st Opposite party has written letter to 2nd Opposite party stating that the loan has been sanctioned and to intimate outstanding loan of the complainant to enable them to issue a draft in favour of the 2nd Opposite party and original title deed may be handed over to the Authorised Official of Bank after accepting our draft. In this letter it did not sought for statement of account and whether there is satisfactory operation and standard one. In reply, the 2nd Opposite party sent letter Ex.R.3 dated 27.09.2007 stating that the outstanding loan is Rs.36,00,000/- as on date. But as per Ex.R.4 dated 20.05.2008 on the basis of letter dated 14.05.2008 and telephonic conversation 2nd Opposite party sent account statement of the complainant as per Ex.R.4(a). 14. But, it is pertinent to note that the present complaint is filed on 03.04.2008 and the 1st Opposite party was served on 02.05.2008, thereafter only 1st Opposite party has written a letter on 14.05.2008 and further telephonic conversation, 1st Opposite party has secured account statement of the complainant from 2nd Opposite party. The complainant has pleaded and deposed that without any reason the Opposite party has failed to release the loan without giving any reason. It cannot be said that after sanction of the loan, the complainant did not produce the account statement because there is no such letter addressed to the complainant. On the other hand, on the basis of letter of 1st Opposite party dated 10.09.2007 as per Ex.C.4, 2nd Opposite party informed the outstanding loan of the complainant. As per the conditions of the sanction of the loan before releasing the loan 1st Opposite party should get the account statement from the present banker to see the satisfactory dealings of the loan account to maintain the standard loan. But specifically in Ex.C.4 1st Opposite party informed the 2nd Opposite party to inform the outstanding loan alone, so as to send the DD and to handover the title deeds to the authorized official after accepting the draft. In this letter Ex.C.4, 1st Opposite party did not sought for statement of account, but only sought for total outstanding amount and accordingly as per Ex.R.3 2nd Opposite party sent the reply dated 27.09.2007 that the outstanding loan is Rs.36 lakhs. If actually 1st Opposite party was assertive about the standard loan account, when Ex.R.2 the letter of 2nd Opposite party was received confidentially and when it shows that the complainant was over due in respect of principal and interest apart from the loan balance, it would not have sanctioned the loan. In Ex.R.2, it is not stated that the account statement of loan is standard one, what made the 1st Opposite party to sanction the loan in spite of Ex.R.2 is not explained, when it is cleared that the complainant is a defaulter to 2nd Opposite party in payment of principal and interest and it reveals that statement of account is substandard. In spite of it 1st Opposite party has sanctioned the loan. It is true that at the time of releasing the loan also it can insist upon to establish that the statement of account of the loan is standard one and the operation is satisfactory, but 1st Opposite party itself has written letter Ex.C.4 seeking for only outstanding loan to enable them to send the draft and also requested to handover the title deeds of the complainant property to the official after receiving the draft. In this Ex.C.4, 1st Opposite party did not sought for statement of account and whether the operation of the loan account is satisfactory and standard one. Nothing prevented, 1st Opposite party to seek for these details in this letter Ex.C.4. After this Ex.C.4 letter dated 10.09.2007, 1st Opposite party secured the agreement of loan Ex.C.6 and agreement of hypothecation Ex.C.7 and wrote a letter to Sub-Registrar to stamp it. So, the 1st Opposite party after Ex.C.4 dated 10.09.2007 collected the stamped documents wherein the complainant spent the amount mentioned by the complainant and 1st Opposite party obtained the signatures to some of the empty documents. Under these circumstances, it can be safely said that only after filing the complaint and receipt of the notice. 1st Opposite party has written letter to 2nd Opposite party seeking for the statement of account and has taken a stand now that the loan account statement is substandard and therefore the loan was not released and only to defend the complaint this stand is taken or not at the time of obtaining the documents spending amount by the complainant for collecting the documents and executing the documents. 1st Opposite party has not acted upon as per Ex.C.4 at all and since the complainant filed the present complaint alleging deficiency in service as he was not informed the reasons of not releasing the loan, the 1st Opposite party made up his mind to take a stand that the loan statement of account is substandard and obtained a letter of account extract just to take a defence. The step taken by the 1st Opposite party after filing of the complaint is not helpful at all and these documents cannot be looked into. Because even earlier to sanction of the loan, the loan statement of account with 2nd Opposite party was not satisfactory as he was over due of principal amount and interest and apart from balance loan. In spite of it, 1st Opposite party sanctioned the loan and intimated the 2nd Opposite party to inform the outstanding loan without seeking for the statement of account and whether the loan statement of account is standard one or not. Under these circumstances, we cannot find fault with the complainant at all and 1st Opposite party has committed deficiency in service in not releasing the loan in spite of procuring all the documents from the complainant and therefore, we answer point No.1 in the affirmative. 15. POINT NO.2:- The complainant has sought for Rs.35,350/- as the amounts spent for documentation charges with interest on 05.10.2007. On perusal of the documents Ex.R.6, 7, 9 to 12 it is clearly established that the complainant has spent stamp charges of Rs.35,350/-, only on the basis of the letter of the Opposite party as per Ex.C.8, after sanction of the loan and also obtained the particulars of outstanding loan from 2nd Opposite party as per Ex.R.2. Therefore, the 1st Opposite party is liable to reimburse the expenses spent by the complainant for documentation stamp charges. The complainant sought for conveyance allowance of Rs.50,000/- for visiting 1st Opposite party Office at Bangalore and compensation of Rs.5 lakhs for mental agony, Rs.1 lakh spent for medical treatment and further compensation of Rs.12 lakhs for with holding the loan. Of course, the complainant has suffered mental agony and shock for not releasing the loan by 1st Opposite party in spite of all efforts. The complainant has not produced any document for having spent Rs.1 lakh for medical treatment. So, considering these aspects, it is reasonable to award compensation of Rs.35,000/- for the conveyance charges, mental agony and totally 1st Opposite party is liable to pay Rs.70,350/- to the complainant on account of deficiency in service on the part of the 1st Opposite party. 16. POINT NO.3:- The 1st Opposite party has pleaded that the cause of action has arisen at Bangalore and the complaint is not maintainable before this Forum, but 2nd & 3rd Opposite party are within jurisdiction of this Forum. Therefore, the present complaint is maintainable as per Section 11(2)(b) of Consumer Protection Act, 1986. 17. In the result, we proceed to pass the following order; ORDER The complaint is partly allowed directing the 1st Opposite Party to pay Rs.35,350/- towards the documentation charges and compensation of Rs.35,000/- with cost of Rs.2,000/- within 4 weeks, failing which 1st Opposite party is liable to pay interest at 9% p.a. from the date of complaint on the said amounts. The complaint against 2nd & 3rd Opposite party is dismissed. (Dictated to the Stenographer, transcribed, corrected and then pronounced in the open Forum this the 18th day of July 2008). (PRESIDENT) (MEMBER) (MEMBER)
