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28-3-2008, otherwise the subsidy would not be sanctioned. The respondent denied

to make a correspondence with NHB regarding expenditure of Rs. 5,00,000/- spent

by the complainants. On account of the respondent, the complainants had much

mental agony. Atlast after the period for subsidy was lapsed the respondent

sanctioned Rs. 2,00,000/- on 10-11-2008 by keeping the lands under simple

mortgage by spending Rs. 30,000/- as stamp duty. On 11-2-2009 the complainants

got issued a notice to which the respondent sent a reply on 16-3-2009. In reply

notice the respondent mentioned that the affidavit was not given and 1 (b) documents

was not furnished. The affidavit was given on Rs. 100/- stamp paper on 10-3-2008

through the legal adviser. The agricultural loan was sanctioned after 1 (b) was given.

Unless 1 (b) document was not delivered the loan should not be granted or

sanctioned. Therefore, the complaint was filed in person for Rs. 5,00,000/- towards

investment and Rs. 2,00,000/- towards loss of subsidy from NHB and Rs. 1,00,000/-

towards compensation for mental agony totaling Rs. 8,00,000/-.

5. The respondent filed a written statement denying the petition averments.

It was not correct that the respondent delayed to sanction the loan within the period

of LOI and submitted the documents within 2 or 3 days on the advice of the

respondent. The complainant did not submit the required documents within time.

The Bank had to follow certain rules and regulations while sanctioning of the loan.

The documents like mortgage deed, search report, sanction letters and legal opinion

had to be verified. There was no condition in between the complainant and the

respondent to sanction the loan within a certain period. The total cost of the unit

was Rs. 9,98,540/-. The promoter share was Rs. 6,98,540/- and the term loan was

Rs. 3,00,000/-. The subsidy of Rs. 1,99,708/- was to be availed from NHB, which

was a part of the promoters share. The loan was sanctioned under sanction letter

No. 135/RO:KDP/CRD/FLMT/BTPL/08, dt. 18-8-2008. As per terms and conditions

4

of the sanctioned letter the parties had to get renewal of LOI and undertake to repay

the loan irrespective of subsidy from NHB. Accordingly the complainants gave

willingness letter dt. 3-11-2008 expressing their willingness to get the LOI renewed

from National Horticulture Board. The complainants further agreed to repay the

loan even though the subsidy was not received from NHB. Basing on the letter the

respondent agreed to obtain registered mortgage. The registered mortgage was

executed on 3-11-2008 in favour of the respondent. They executed a consent letter

d t . 3 -11-2008 also. The respondent released Rs. 1,10,000/- towards land

development as first instalment and Rs. 80,000/- towards 2

charges and the 3

crop. The complainants availed short term loan for crop production from the

respondent bank. The complainants were eligible to avail 3

crop when the existing crops loans were repaid in full. As per Bank rules a borrower

was eligible for one short term crop production loan, but not two short term crop

production loans. The complainants were postponing for repayment of short term

loans. The respondent advised the complainants to discharge the crop loan so that

the 3

anticipating waiver of the loan by the Govt. and hence, refused to clear off the crop

loan. The complainants were even defaulters and irregular in repayment of crop

loan. The respondent gave a reply notice to the notice issued by the complainants.

Thus there was no deficiency of service on the part of the respondents but it was on

the complainants. In the simple mortgage deed the complainants undertook that the

property mortgaged was not subject to any charge but was free from any prior charge

and claims of any grant whatsoever, that the mortgagor had full powers to chare the

same. The other allegations of the complaint were false and created. Thus the

complaint may be dismissed with costs.

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6. On the basis of the above pleadings the following points are settled for

determination.

i. Whether there is any negligence and deficiency of service on the

part of the respondent?

ii. Whether the complainants are entitled to the relief as prayed for?

iii. To what relief?

7. On behalf of the complainant Ex. A1 to A20 were examined and on behalf

of the respondent Ex. B1 to B16 were marked.

8. Point No. 1 & 2 The first complainant was the father of the 2

complainant. Both complainants approached National Horticulture Board,

Hyderabad under Ministry of Agriculture, Government of India who issued a Letter of

Intent (LOI) under the scheme “Development of Commercial Horticulture through

Production and Post Harvest Management” under No. NHB/Hyd./LOI NO.H-13214,

dt. 26-3-2007 under Ex. A1. Under Ex. A1 it was informed to approach the

concerned bank and the LOI would be valid for one year from the date of issue i.e.

26-3-2007. The one year period would be completed by 25-3-2008. Further under

Ex. A1 it was disclosed that the bank should solely responsible for financial appraisal

of the project and the scope of LOI was limited and it would not in any way connote

endorsement or approval of the Project cost indicated in the application. The

financial expenditure would be required to be examined by the concerned bank as

per their norms while sanctioning the term of loan. Under Ex. A1 under condition

No. 5 it was mentioned that the project would not be eligible for NHB subsidy under

the scheme where seasonal / short duration horticulture crops were envisaged in

open field and under condition No. 6 it was noted that mere issuance of LOI would

not guarantee the grant of subsidy to the beneficiary. After receiving Ex. A1 the

complainants approached the respondent branch and submitted the application with

all relevant documents for grant of loan and requested to sanction the loan within

6

one year so that the subsidy from NHB would be received. The complainants

submitted the Xerox copies of the encumbrance certificates of their properties under

Ex. A2. The complainants contended that they applied for loan for raising Mango

garden and Amla garden and spent 50% expenditure by digging bore wells and

obtained certificates from Electricity Department. The documents were submitted in

June 2007. More over it was contended that the 50% expenditure was spent by

December 2007. But the loan was not sanctioned by the respondent and at last

Rs. 2,00,000/- loan was sanctioned on 10-11-2008 after executing a registered

mortgage deed by spending Rs. 30,000/- towards stamp duty. On account of

sanction of loan of Rs. 2,00,000/- on 10-11-2008 the complainants lost their subsidy

from NHB. Therefore, the complaint was filed for Rs. 5,00,000/- towards their

expenditure and Rs. 2,00,000/- loss of subsidy and Rs. 1,00,000/- for mental agony

totaling Rs. 8,00,000/-.

9. The respondent filed Ex. B1 Xerox copy of application for renewal of

agriculture credit dt. 29-8-2008 executed by the 1

of application forms along with copies of No. 3 Adangal extract. Both complainants

executed a simple mortgage deed on 3-11-2008. The Xerox copy of simple mortgage

deed was Ex. B3. The Ex. B4 was a Xerox copy of letter executed by both the

complainants dt. 3-11-2008 that the loan was sanctioned for Rs. 3,00,000/- and in

case the subsidy was not granted the loan amount would be repaid. Ex. B5 was

Xerox copy of encumbrance certificates of the 2

another mortgage on 30-8-2008 in favour of B.T Palli PACS. So the simple mortgage

to the respondent was on 3-11-2008, Under Ex. B3. Another mortgage was in favour

of PACS, B.T pally prior to Ex. B3. Ex. B6 was Xerox copy of affidavit on stamped

paper executed by 1

partitioned in oral partition in between the family. Ex. B7 was another Xerox copy of

stamped affidavit executed by the 1

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properties under survey Nos. 964 and 965 which were not disclosed in Ex. B6. Both

Ex. B6 and B7 were executed on the same day on 10-3-2008. Ex. B8 was Xerox copy

of valuation certificate. Ex. B9 was Xerox copy of stamped affidavit executed by 2

complainant and two others with regard to the properties in oral partition among the

family members.

10. After submitting the documents the respondent took legal opinion for

sanction of the loan. The Xerox copy of legal opinion on the properties of both the

complainants was Ex. A3, dt. 12-6-2007 and the supplementary legal opinion for the

first complainant was Ex. B10. It was Xerox copy with regard to the 1

Ex. B11 was Xerox copy of supplementary legal opinion regarding to the 2

complainant. Ex. B12 was Xerox copy of letter addressed from the respondent to its

Regional Manager, dt. 12-2-2008. Ex. B13 was Xerox copy of letter from the Regional

Office of the respondent dt. 21-2-2008. Ex. B14 was Xerox copy of village plan

regarding the survey Nos. of the complainants. Ex. B15 was Xerox copy of letter from

the respondent to its Regional office. Ex. B16 was another Xerox copy of letter from

Regional office to the respondent. The complainants filed a Xerox copy of search

report in respect of property of the 1

the respondent. The search report accompanied legal opinion of the first

complainant was Ex. A3. In Ex. A3 it was enclosed the Xerox copy of legal opinion of

the 2

Xerox copy of supplementary legal opinion on the property of 2

complainants also filed similar copies of Exs. B6 & B9 under Ex. A4. The

complainants filed Xerox copy of bills Ex. A5 towards their expenditure in the field.

The Ex. A6 was Xerox copy of quotation for drip irrigation issued by Gayatri Irrigation

systems, Kadapa with a total cost of Rs. 1,03,078-54Ps with regard to the 2

complainant and a similar quotation was issued to the 1

8

cost of Rs. 1,20,431-30ps. Ex. A7 was bills issued by Sairam Bore Wells and Sri

Sapthagiri Agencies, Kadapa for digging bore well and purchase of pump sets.

11. On 13-12-2007 the complainants wrote a letter to the respondent to

sanction the loan immediately. The copy of the letter was Ex. A8. On 20-3-2008

the complainants wrote another letter to the respondent for sanction of loan. So Ex.

A8 was two letters dt. 13-12-2008 and 20-3-2008. As the loan was not sanctioned

and the complainants had loss, they got issued a notice through their advocate on

11-2-2009 to the respondent. The office copy of the notice was Ex. A9. The

respondent filed the same copy as Ex. B2. The Ex. A10 was reply notice from the

respondent on 16-3-2009. Ex. A11 was Xerox copy of simple mortgage deed, dt.

3-11-2008 in favour of the respondent with regard to certain properties executed by

both the complainants. Ex. A14 and A15 were Xerox copies of simple mortgage deeds

executed by the complainants in favour of Bank with regard to some other properties.

Under Ex. A12, dt. 17-12-2008 the 1

that the loan was sanctioned and 50% of share was spent under impression that the

loan would be sanctioned and subsidy also from NHB, so that the project would be

completed and hence subsidy may be sanctioned. Ex. A13 was Xerox copy of letter

dt. 01-8-2007 from Regional Office to the respondent with regard to loan proposals.

12. The complainants filed Ex. A16 Xerox copy of letter from respondent to

the State Bank of India, B.T. Palli, and PACS to issue no due certificate, dt.

28-5-2007. Ex. A17 was Xerox copy of letter from respondent to its counsel to give

supplementary legal opinion dt. 5-2-2008. Ex. A18 was loan proposal of the

complainants from Regional Office of the respondent dt. 18-8-2008. Ex. A19 was

Xerox copy of registered mortgage discharge deed, dt. 29-5-2007 executed by the

Secretary, PACS, B.T. Palli in favour of the complainants. Ex. A20 was Xerox copy of

9

letter dt. 22-8-2007 from 2

written arguments the complainant mentioned that he filed a copy of letter from

credit department of the respondent in Ref.No. 802/RO/Kadapa/BTPL/07, dt. 01-8-

2007. But it was not filed with written arguments. However, it was filed already and

was marked as Ex. A13.

13. The case of the complainants was that the Bank had not sanctioned the

loan within stipulated period and hence, they lost subsidy amount from NHB. At this

juncture it would be relevant to say that the sanctioning of the loan was the

discretion of the bank and it was not mandatory. With regard to the allegations of

the complainant that adequate amount of the required loan were not advanced at

right time and hence they had not received the subsidy and they had much loss,

due to deficiency of service and negligent Act on the part of the respondent. But the

decision of the sanctioning the loan was only a power of discretion of the Bank. It

was reported in II (1993) CPJ 147 (NC) Jagannath Meher Vs. The Branch manager,

State bank of India and others. It was held that “with regard to the allegations of the

complainant that adequate amounts as required were not advanced at the right time,

we cannot sit in judgment upon the decision taken by the Bank as this is a power of

discretion of the Bank”. In I (1993) CPJ 238 Haryana Financial Corporation of

Chandigarh Vs. M/s Jamna Dass Cotton Mills of Hansi, it was held that “a subsidy

is not in terms one of the many services expressly incorporated in the definition. It is

surely neither banking, or financing or insurance etc., Nor can one even remotely

bring such a central bounty or concession within the concept of a service as such. It

is true that the word ‘service’ is a wide-ranging one and cannot be easily put in a

strait – jacket. However, it needs no great erudition to hold that a central subsidy

intended for the development of the backward areas and granted as an incentive and

concession to industry cannot be labelled as the hiring out of a service by either the

10

State or the Central Government”. In the same decision it was further held “However,

assuming at the highest in their favour it is again necessary for them to show that

they had hired any services for a consideration to come within the ambit of the

definition of a consumer as laid out in section 2 (1) (d) (ii). Plainly enough little or no

question of hiring any subsidy or paying a consideration for such hiring can possibly

arise in the fact situation. It is significant that barring strained attempt made

through subsequent corrections, it was not even the specific case in the complaint

that the Central subsidy was a service nor is there any pleading worth the name to

the effect that there was any hiring of all alleged services of a subsidy or a paid or

promised consideration, therefor. The conclusion is inevitable that the respondent

cannot, therefore, pretend to come within the ambit of the definition of either being a

consumer and equally as already held the Central subsidy is not a service which is

capable of being

such a service can arise nor can any relief be afforded in the consumer jurisdiction”.

It was for financial institutions to decide whether to provide loan to any incumbent

after taking into consideration of all factors. Non sanction of the loan by the bank or

financial institutions was not deficiency of service. So the bank had power of

discretion to grant loan to the borrower. The subsidy was not a guarantee to the

beneficiary and the projects would not be eligible for NHB subsidy under the scheme.

It was mentioned in Ex. A1 that the Project would not be eligible to receive subsidy

under NHB schemes, in case the benefit of subsidy from other agencies of Govt. of

India had been availed or proposed to be availed. So in the present case the

respondent sanctioned the loan. But the complainants had no opportunity to get

subsidy. As discussed earlier grant of loan or sanction of loan was discretionary

power of the bank. The central subsidy was not a service. The NHB, Hyderabad was

under the Ministry of Agriculture, Government of India. There was no hiring of

service for grant of central subsidy. Subsidy did not come under the deficiency of