DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, KOZHIKODE
PRESENT : Sri. P.C. PAULACHEN, M.Com, LLB : PRESIDENT
Smt. PRIYA.S, BAL, LLB, MBA (HRM) : MEMBER
Sri.V. BALAKRISHNAN, M Tech, MBA, LL.B, FIE: MEMBER
Tuesday the 28th day of February 2023
C.C. 34/2020
Complainant
Ummer. M.K, Moidu,
Theyipurath Meethal House,
Naderi (P.O),
Koyilandy -673 620.
(By Adv. Sri. Biju.M)
Opposite Party
The Chief Manager,
State Bank of India,
Koyilandy Town Branch, Niyas Building
Koyilandy.
(By Adv.Sri .G.Praveen Kumar)
ORDER
By Sri. P.C. PAULACHEN – PRESIDENT.
This is a complaint filed under Section 12 of the Consumer Protection Act, 1986.
2. The case of the complainant, in brief, is as follows:
The complainant is the owner of a house, which is not having a pucca roof. It is an uncompleted house and plastering work and other work including latrine work are not over. In the beginning of the year 2018, the complainant approached the opposite party for granting a loan of Rs.6 lakhs under the Pradhan Mantri Avas Yojana (PMAY). The bank had assured to grant him loan, after satisfying about his repaying capacity. He was issued a loan application form and was asked to obtain and produce all the necessary documents. Accordingly, he obtained and submitted all the documents, for which, he had to meet expenses at different stages amounting to Rs.40,000/-. Legal opinion was also obtained spending Rs.2,500/-. But the loan was not sanctioned and he was informed in November 2018 that he was owning a house and sufficient documents were not produced in proof of income. The reasons stated by the bank for not sanctioning the loan are not correct. The act of the opposite party has caused monetary loss, mental agony and hardship to the complainant. The complainant is entitled to get a compensation of Rs.3,00,000/- from the opposite party. On approaching the Taluk Legal Services Committee, Koyilandy he was directed to approach this Commission. Hence the complaint.
3. The opposite party entered appearance and filed written version denying and disputing all the allegations and claims made in the complaint. It is contented that the complainant is not a consumer as defined under the Consumer Protection Act, 1986 and as such the complaint is to be dismissed in-limine. It is true that the complainant had approached the bank for a loan of Rs.6 lakh under PMAY. The allegation that the bank authorities had informed him that he was eligible for the loan is not correct and hence denied. The further allegation that the bank was satisfied regarding the repayment capacity of the complainant and that assurance was given that loan would be sanctioned is not correct and hence denied. The loan applications are processed not in the branch, but by the Specialised Loan Processing Centres established by the bank to which the branch is linked. The loan application of the complainant was processed/ considered by the Retailed Assets Small and Medium Enterprises Centre (RASMEC) and found that the complainant did not satisfy the eligibility criteria for sanction of loan as per PMAY scheme. There was also no proof regarding the source of income and repayment capacity. Having found that the complainant did not satisfy the eligibility conditions, on 22-10-2018, the RASMEC returned the loan proposal to the branch and this was orally informed to the complainant and requested him to collect the title deed and relevant papers. Letters were issued to him and he had taken back all the documents on 14-03-2019. The petition preferred by the complainant was closed by the Legal Services Committee. It is for the bank to decide whether the loan is to be sanctioned or not taking in to account all the relevant aspects. When the bank in its discretion decides not to sanction loan, it cannot be said that there is deficiency of service. The allegation that the complainant had suffered mental agony, monetary loss etc on account of the irresponsibility of the bank and due to the delay is without any substance or merits. The complaint is bereft of bonafides and liable to be dismissed with costs.
4. The points that arise for determination in this complaint are;
(1). whether the complainant is a consumer or not?
(2). whether there was any deficiency of service on the part of
the opposite party bank, as alleged?
(3). whether the claim for compensation is allowable? If so, what
is the quantum?
(4). Reliefs and costs.
5. Evidence consists of oral evidence of PW 1 and Exts A1 to A5 on the side of the complainant. RW 1 was examined and Ext B1 and B2 were marked on the side of the opposite party.
6. Heard both sides. Brief argument note was filed by the complainant.
7. Point No.1: The opposite party has taken a contention in the written version that the complainant herein is not a consumer as defined under section 2(1) (d) of the Consumer Protection Act, 1986.The specific contention is that the complainant had not hired or availed of any service for consideration from the bank.
8. The learned counsel for the complainant argued that the complainant is a consumer in the context of section 2 (1) (d) (ii) read with section 2(1) (0) of the Act. The complainant applied for a loan facility from the opposite party bank under PMAY scheme. Availing a loan from the bank could be treated as service within the meaning of Section 2(1) (0) of the Act, as the said definition defines service to include the provision of facilities in connection with banking, financing, insurance etc. and also provides that the service means service of any description which is made available to potential users. Since the complainant wanted to avail the service of the bank, even at the initial stage, he would be a potential user. As per the definition of section 2 (1) (d) (ii) which defines ‘consumer’ it is not necessary that actual consideration should pass to the opposite party simultaneously with the availing of the service. The said section says that consumer is a person who hires or avails of any service for consideration which has been paid or promised or partly paid or partly promised. When the loan applied for is sanctioned and availed by the complainant, the same would carry interest. The same should be treated as consideration for the service rendered by the bank by providing the loan. The above position is supported by the decision in T.A Abraham V Manager, Reserve Bank of India – (2001) 3 CPJ 293. Further it may be noted that the service done by the bank is not free. The bank would charge its services after sanctioning the loan and thus there is an inherent promise and acceptance from the part of the complainant and the bank that the charges of processing the loan will be paid later. From the foregoing discussion, we are not inclined to accept the contention of the opposite party that the complainant had not hired or availed of any service of the opposite party for consideration. The complainant is a consumer as defined under the Act and the present complaint filed by him alleging deficiency of service is perfectly maintainable.
9. Points 2 and 3: The complainant has approached this Commission with a grievance that the opposite party did not sanction the loan of Rs.6 lakh applied by him under the PMAY scheme and there was deficiency of service which has resulted in monetary loss and mental agony to him, for which, he has claimed compensation of Rs. 3 lakh.
10. In order to substantiate his case, the complainant got himself examined as PW1. PW 1 has filed proof affidavit in terms of the averments in the complaint and in support of the claim. Ext A1 is the copy of the title investigation report, Ext. A2 is the copy of the certificate of the title, Ext A3 is the copy of the acknowledgement letter dated 14-03-2019, Ext A4 is the copy of the letter dated 12-11-2018 and Ext A5 is the copy of the letter dated 28-11-2018.
11. The contention of the bank is that the complainant did not satisfy the eligibility criteria for sanction of loan as per PMAY scheme and that he had not satisfied the repayment capacity and hence the complainant was not eligible for the loan. The branch manager of the bank was examined as RW1, who has filed proof affidavit and deposed supporting and reiterating the contentions in the written version. Ext B1 and B2 are the copies of the letters dated 12-11-2018 and 28-11-2018 respectively issued by the bank to the complainant.
12. The learned counsel for the complainant argued that there is deficiency of service on the part of the opposite party in refusing the loan to the complainant without observing the proper procedure and the intention of the opposite party was to avoid granting subsidy to the complainant. Per contra, the learned counsel for the opposite party argued that the matters concerning the eligibility of a person for credit assistance, viability of a project, assessment of repayment capacity etc are matters within the discretion of the bank and no deficiency of service can be attributed if the said discretion is exercised and a loan application is not sanctioned.
13. There are some admitted facts in this case. That the complainant had approached the opposite party bank for a loan of Rs.6 lakh under the PMAY scheme is admitted. He had submitted necessary documents to the bank. Ext A1 title investigation report and Ext A2 certificate of title were obtained and the same are in favour of the complainant. The loan application was considered by the RASMEC and found that the complainant did not satisfy the eligibility criteria and valid income documents were not produced and accordingly the loan application was returned to the branch. This was informed to the complainant as per Ext A4 letter dated 12-11-2018. Two reasons are stated for the return of the loan proposal by RASMEC. The first reason is that valid income documents were not submitted. The second reason is that there is an existing residential building in the property owned by the complainant and hence not eligible for loan under PMAY.
14. In this context, it may be noted that the decision of the bank not to grant loan would not constitute deficiency of service. Such matters are within the exclusive discretion of the bank depending on the norms. It may be noted that the complainant has no vested right of being granted the loan applied for. It is the discretion of the bank to decide whether the loan should be sanctioned considering all the aspects including the norms and viability. It is for the bank to satisfy itself whether the applicant for the financial assistance is credit worthy and the project to be financed is technically feasible and economically viable. The decisions reported in Smt. Asha Sharma V Union of India and Ors-1991 (1) CPR 575(NC) and B.M Suresh kumar V Branch Manager, Indian Oversers Bank- CPR 1995 (1) 747 support the case that there is no deficiency in service where the bank did not provide loan to a customer. In the instant case, after considering the application, the bank found that the complainant did not satisfy the eligibility criteria and he did not produce valid income documents to prove his repayment capacity and hence the loan was not sanctioned. That being the position, no deficiency of service can be attributed against the bank in the matter of not sanctioning in the loan.
15. But at the same time, it may be noted that there was inordinate delay on the part of the bank in processing the proposal. It has come out in evidence and is admitted by RW1 in the cross examination that the process prolonged nearly 10 months. It cannot be disputed that the PMAY scheme is intended for the welfare of economically weaker sections and low income group of the society. Ext A1 would indicate that the complainant had submitted various documents from March 2018 onwards to comply with the demands made by the bank. It took nearly 10 months to process the loan and to inform him about the non-sanctioning of the loan. The inordinate delay in the matter by itself constitutes deficiency of service on the part of the bank. Though the bank cannot be found fault with for not sanctioning the loan and such acts cannot constitute deficient service, the delay as stated above amounts to deficiency of service. Undoubtedly, the complainant was put to mental agony and hardship due to the delay. The complainant is entitled to be compensated adequately. Considering the entire facts and circumstances, we are of the view that a sum of Rs.20,000/- will be reasonable compensation in this regard.
16. Point No.4: In the light of the finding on the above points, the complaint is disposed of as follows;
a) CC.34/2020 is allowed in part.
b) The opposite party bank is hereby directed to pay a sum of
Rs.20,000/- (Rupees Twenty Thousand only) as compensation
to the complainant.
c) The payment as aforestated shall be made within 30 days of
the receipt of copy of this order, failing which, the amount of
Rs.20,000/- shall carry an interest of 6% per annum from the
date of this order till actual payment.
d) No order to costs.
Pronounced in open Commission on this, the 28th day of February, 2023.
Date of Filing: 21/01/2020.
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PRESIDENT
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MEMBER
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MEMBER
APPENDIX
Exhibits for the Complainant :
Ext. A1 – Copy of the title investigation report.
Ext. A2 – Copy of the certificate of the title.
Ext. A3 – Copy of the acknowledgement letter dated 14-03-2019.
Ext. A4 – Copy of the letter dated 12-11-2018.
Ext. A5 – Copy of the letter dated 28-11-2018.
Exhibits for the Opposite Party
Ext. B1 – Copy of the letter dated 12-11-2018.
Ext. B2 – Copy of the letter dated 28-11-2018.
Witnesses for the Complainant
PW1 – Ummar M.K
Witnesses for the opposite parties
RW1 – Kevin Edvin Nettar, Branch Manager
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PRESIDENT
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MEMBER
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MEMBER
Forwarded/ By Order
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Assistant Registrar
