Orissa

Debagarh

CC/12/2015

Jashobanti Naik,aged about 50 years, W/O-Lt. Prahlad Naik - Complainant(s)

Versus

The Secretary Laimura S.C.S Ltd. - Opp.Party(s)

Self

05 Oct 2015

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM

DEOGARH

Shri P.K. Dash, President  and  Shri P. C. Mahapatra, Member

 

1. Jashobanti Nayak,

                     Aged  – 50 Yrs.

S/O – Late Prahalad Naik,

P.O.- Laimura,

Dist.- Deogarh.                                                  …        Complainant.

 

1. The Secretary,

Laimura S.C.S. Ltd,

At/PO- Laimura,

Dist – Deogarh.

2. The Branch Manager,

Sambalpur District Cooperative Central Bank Ltd,

Deogarh Branch,

At/PO/Dist – Deogarh.

3. The Veterinary Assistant Surgeon,

At/PO – Tileibani,

Dist. – Deogarh                                                 …        Opposite Parties.

 

CD Case No.09/2015

Date of Hearing : 21.09.2015 , Decided on 05.10.2015.

 

Counsel for the parties :

               For the Complainant      :     Nemo                                                       For the Opposite Party   :     Shri Sribatsa Mishra, Advocate & others

                                                                                                                                                                                  for OP1.

                                                         

O R D E R

 

Prabhat kant Dash:President: – Complaint was filed, inter alia, alleging that the complainant’s husband ,deceased Prahallad Naik , a permanent resident of  Panibhandar, PO.- Laimura, PS – Deogarh in the district of Deogarh, has not been paid the subsidy granted under the Scheme, illegally Collateral Security was demanded and Interest has been charged going beyond modalities set under the Scheme.

1. Succistinctly factual matrix of the case is as follows:

1. That complainant’s is husband ,deceased  Prahallad Naik, an educated un-employed in course of struggling for his independency and identification decided to set up a small dairy farm under Dairy and Pultry Venture Capital Funds - Dairy Enterprenureship Development Scheme (DEDS) laid down by National Bank For Agricultural and Rural Development (hereinafter termed as NABARD for short) being implemented through the Animal Husbandry Department, Government of Odisha for his livelihood and self-dependancy and identification. He applied to the OP3 in this context and being satisfied after going through all the relevant documents and examining feasibility etc., OP3 forwarded his Loan Application to OP2 namely Sambalpur District Cooperative Central Bank Ltd, Deogarh Branch, ( for short herein after mentioned as BANK ) who in response, agreed to provide a loan amounting to Rs.90,000/- (Rupees ninety thousand)  on mortgage of Land Documents and accordingly Secretary, Laimura Service Cooperative Society (SOCIETY in short to be mentioned hereinafter) issued a Loan Pass Book bearing No.1/218 detailing loan amount and repayment schedule in favour of the deceased Prahallad Naik.
2. Lonee Prahallad Nayak died on 2^nd August, 2012 to the effect of which the Death Certificate marked as Exbt.P23 has been attached .
3. It has been contended by the Complainant that during sanction of the Loan Proposal the OPs had assured to release 33.33% subsidy amount on the total cost of the project as per the guide line of NABARD vide his circular No.186/TSD-03/2010 observing all the instructions contained therein.
4. Deceased Prahallad Naik purchased two numbers of cows and OP3 after examining the cows issued the Fitness Certificate and forwarded to OP2.
5. Also it has been contended by the Complainant wife of deceased Prahallad Naik that the OPs maintained silence to his several requests and approaches on the matter of release of the subsidy amount of 33.33% of the total cost of the project .Out of the loan amount of Rd.90.000/- (Rupees ninty thousand) only an amount of Rs.12,800/- (Rupees twelve thousand and Eight hundred ) is yet to be repaid .
6. It has been further contended that deceased Prahallad Naik has long relationship with OP2 through SOCIETY and he never was a defaulter for any kind of assistance provided by it. OP3 also during identification process had clarified as to fact that no collateral security is to be made to financing bank for loan amount of Rs.1,00,000/- under DEDS of NABARD. But during sanctioning process, OP2 demanded Security and obtained Land mortgage of the land along with unfilled undated and signed cheques. The Complainant was forced to agree to it at the material time.

Concluding his petition, Complainant/deceased Prahallad Naik accusing the activities of BANK to be not for Public Interest, labeling to that of a Money Lender has submitted that for deficiency in service on the part of the OP1 & OP2 he has been suffering from financial loss, mental pain and agony and as such prays, after hearing both the parties, to pass orders against them (i) to release the subsidy amount of 33.33% of the total cost of the project; (ii) return the Khatiyans and signed undated unfilled cheques collected as collateral security; (iii) to refund the extra interest charged and collected contrary to Guideline of NABARD; and (iv) to pay Rs.5,00,000/- (Five lakhs) towards cost of compensation for mental agony and harassment along with Rs.50,000/-(Fifty thousand) as Litigation Cost.

The list of documents relied and adduced during different stages of the proceeding of the case by the Complainant is tabulated as follows :

Document No.	Description	Number assigned in the Case Record.
1	Copy of the NABARD Circular No.186/TSD-03/2010 of dtd.21/09/2010.	Exbt. – P/1
2	Copy of the Web Portal of  Registrar of Co-operative Societies, Odisha – Mission & Objectives.	Exbt. – P/2
3	Copy of the Web Portal of Orissa State Co-operative Bank Ltd – Network Details.	Exbt. – P/3
4	Copy of the Loan Application of the Complainant addressed to OP2 submitted through OP3.	Exbt. – P/4
5	Served copy of the Written Version of OP3 dtd.15.04.2015.	Exbt. – P/5
6	Copy of the letter No.1254 of dtd 06.01.2012 of OP2 to OP1 on sanction of Loan to Complainant.	Exbt. – P/6
7	Copy of the Loan Pass Book No.1 of Page 21 issued in favour of the Complainant by LSCS showing disbursal particulars on 15.12.2011 and 29.05.2012.	Exbt. – P/7
8	Copy of Written Version of OP2	Exbt. – P/8
9	Copy of the letter dtd.26/07/2015 of OP2 to Secretary on submission of Subsidy Claim of the Complainant.	Exbt. – P/9-1
	Copy of Claim Form from the bank branches for release of capital investment subsidy in respect of promotion of Dairy Entrepreneurship (PDE)	Exbt. – P/9-2
	Copy of claim form from the controlling office of the Bank for release of Capital Subsidy in respect of DEDS	Exbt. – P/9-3
10	Copy of Receipt –cum- alleged subsidy indemnity.	Exbt. – P/10
11	Copy of the RBI Circular No.85/05.04.02/2009-10 of dtd 18.06.2010	Exbt. – P/11
12	Copy of the NABARD Circular No.135/DPD-FS 04/2010 of dtd.23.07.2010.	Exbt. – P/12
13	Copy of the communication received from RBI under RI Act, 2005 in response to querry under Ref.No. RBIND/R/2015/02226.	Exbt. – P/13-1
14	Copy of letter No. RPCD.Plan.BC.No.87/04.09.01/2003-04	Exbt. – P/13-2
15	Copy of letter No.2057 of dtd.11.08.2015 of NABARD, Regional Office, Odisha under RTI Act, 2005.	Exbt. – P/14
16	Copy of CM Bond Document No.10491100945/2011.	Exbt. – P/15
17	Copy of the letter of dtd.10.01.2012 of the Complainant addressed to OP1 sent Under Certificate of Posting.	Exbt. – P/16
18	Copy of the letter of dtd.10.01.2012 of the Complainant addressed to OP2 sent Under Certificate of Posting.	Exbt. – P/17
19	Copy of the letter of dtd.23.01.2012 of the Complainant addressed to OP1 sent Under Certificate of Posting.	Exbt. – P/18
20	Copy of the letter of dtd.23.01.2012 of the Complainant addressed to OP2 sent Under Certificate of Posting.	Exbt. – P/19
21	Copy of Post Dated Blank Cheques	Exbt. – P/20
22	Copy of Benchmark Valuation of pledged land	Exbt. – P/21
23	Copy of Chattered Accountant’s Report on Deemed Loss.	Exbt. – P/22

 

The complainant has also relied on the following citations.:

1. Copy of the Judgment of Supreme Court of India in the case “Standard Chartered Bank Ltd Vrs. Dr. B.N.Raman.[III(2006)CPJ 1(SC)]
2. Copy of the Judgment of National Consumer Disputes Redressal Commission (NCDRC for short), NewDelhi in the case of  Orissa Khadi and Village Industries Board Vrs. Abhimanyu Sahoo & Ors. [ I (2010) CPJ 59(NC)]
3. Copy of the Judgment of NCDRC in the case of M/s-Robinson India Vrs.Rajsthan Financial Corporation & Anr. [VII-1995(2) CPR 513(NC)]
4. Copy of the Judgment of Odisha High Court, Cuttack in the case of Birtunga SCS Ltd (Mini Bank), represented by its Secretary, Birtunga Vrs. Sangram Keshari Pati & Two Ors.[2006 (Supp.-I) OLR -336]
5. Copy of the Judgment of Odisha State Consumer Disputes Redressal Commission in the case of Rajendra Prasad Dash Vrs. Upali Surajita Dhal
6. Copy of the Judgment of Odisha State Consumer Disputes Redressal Commission in the case of Kunirani Bhanja Vrs. Secretary, Odisha Khadi & Village Industries Board & Ors.
7. Copy of Supreme Court of India Judgments
8. Copy of the judgment of NCDRC, New Delhi in the case Neela Basant Raje Vrs. Amogh Industries & Anr.

1. Written Version of OP1: Following is the content of the Written Version of OP1(SOCIETY):

1. While admitting averment made in Paragraphas 1,3 of the Complaint OP1 has preferred not to make any comment on Paragraphs 2 , 5 and 6.
2. As regards averment in Paragraph 4 of the petition, it has been submitted that OP1 never had assured to pay any subsidy to the complainant and Since subsidy is being paid by NABARD, it is false that OP1 assured complainant to pay subsidy. Also OP1 uses to apply release of subsidy amount to NABARD through OP2 and in the instant case it has been done. In the instant subsidy being received from NABARD, it will be paid to the complainant.
3. Averment in Paragraph 7 of the complaint is false. Subsidy is a Governmental provision and there exists no reason to request OP1 in this context. It is a fictitious story.
4. Answering to averment in Paragraph 8 and 9  of the petition of the complainant it has been submitted that at no instance OP1 had asked the complainant to repay the total loan amount rather had advised  to repay the same excluding the subsidy amount.
5. In the context of averment in Paragraph 10 of the Petition it has been contended that as per norms of the Society Loan is sanctioned to Loanee only after mortgage of Land documents or Fixed Deposit. Besides as to the allegation of not returning the mortgaged Land Documents it has been submitted that on the same title deed complainant’s husband in C.D.Case No.09 of 2015,  deceased Prahallad Nayak has availed loan from SOCIETY, who has not yet repaid the loan amount in full and final. Hence it was/is not possible to return the pledged title documents and cheques. Since OP1 has not committed any deficiency in service and the case against him has to be dismissed.

The list of documents relied and adduced during different stages of the proceeding of the case by the Complainant is tabulated as follows :

Document No.	Description	Number assigned in the Case Record.
1	Copy of judgement of Hon’ble Orissa State Consumer Disputes Redressal Commission, cuttack in C.D.Appeal N0.828 of 1997	Exbt. – D-1/1

 3.   Written Version of OP2 : OP2 in his Written Version has submitted as hereunder :

1. At the out set, OP2 has challanged that the instant case is not maintainable against him :

1.   As it has no independent entity as it is a branch of SDCC Bbnk Ltd., Bargarh and is a cooperative Society under Odisha Cooperative Societies Act. Also, the complaint suffers from Non-Joinder of necessary party to the case since Chief Executive Officer of SDCC Bank Ltd, Bargarh has not been impleaded as a party.
2.   That, OP1 borrows money from SDCC Bank Ltd. at its own risk and gives loan to its members. OP2 is simply an intermediary linking NABARD and OP1 and Profit/Loss liability if any is only linked with OP1

2. It is further contended that borrowing money from BANK, OP1 provides Loan to its members and repayment of loan, non adjustment of subsidy amount etc. are the look out of the OP1. As per guide line of NABARD financing society should submit proposal to the Branch Bank within one month from the date of first installment paid to the borrower. Within the statutory period the OP1 has not submitted the proposal before the OP2 for which borrower was debarred to get the subsidy amount. OP2 had made no delay in forwarding the subsidy proposal to proper quarter after it received the same from OP1. Thus deficiency in service on the part of OP2 does not arise.
3. Also it has been submitted by OP2 that as per guide line of Sambalpur District Central Cooperative Bank Ltd.(for short SDCC), while disbursing loan amount to members of Service Cooperative Societies, they have to do so after obtaining proper security. In the instant case OP1 has acted accordingly. So allegation against him in regards to obtaining Security is baseless and is denied. It has been stated the borrower has to follow the agreement for hypothecation and other security documents as prescribed by the SDCC to the SOCIETY.

Concluding his version OP2 has submitted since on the agreed term and conditions with OP1, the complainant’s husband deceased Prahallad Nayak has availed the loan and he is not a borrower of BANK question of deficiency in service on the part of OP2 does not arise. All the allegations labeled against him by the complainant are denied and as no case exists against him, the complaint is liable to be dismissed.     

4.    Written Version of OP3 : OP3 in his Written Version has submitted :

(i)    Consequential to the Block Level Bankers Committee ( in short BLBC) Meeting presided by  AGM, NABARD held at Tileibani wherein stress was given upon endeavors to popularize the Subsidy based ‘DEDS’ scheme and the fact to sponsor applications under the Scheme to different Banks through Animal Husbandry Department of the Government of Odisha by AGM, NABARD, the complainant’s husband deceased  Prahallad Naik was informed about the subsidy based dairy loan and his application was forwarded to BANK vide his office letter No.223/Dated 05.10.2011/ VAS.

(ii)   After purchase of cows, the health of the animals were examined and a certificate to the effect was forwarded to BANK vide letter No.209/Dated 26.08.2012/VAS for the purpose of Insurance of the animals.

(iii)  As per Guide-Line of NABARD vide their Circular No. 186/TSD-03/2010 the liability of claim of Subsidy have been cast upon the financing bank and OP3 has no role to play in it.

Concluding his version OP3 under the premises above , has denied any of the responsibility/liability towards payment of claimed compensation by the complainant/deceased Prahallad Naik  by him and has prayed to exclude VAS, Tileibani as an Opposite Party.

5. In response to filing of the written gist of arguments duly served on OPs by the complainant/deceased Prahallad Naik Learned Advocate for OP1 filed his written argument and so also OP2 on the date of hearing i.e. on 21.09.2015.

1. During hearing of the case learned advocate for OP1 submitted that authority to sanction subsidy lies with NABARD  and  BANK & SOCIETY are not vested with such power. They only intimate the fact to NABARD, the subsidy sanctioning authority, which OP1 and OP2 have done in the instant case. On the other hand complainant/deceased Prahallad Naik by not impleading NABARD, the present complaint is liable to be dismissed. With reference to Exbt. – P/10 adduced by complainant it has been stated that in view of the fact that sanction of subsidy usually being delayed by authorities competent to sanction, OP1 has  obtained a declaration to the effect to immune himself from liability thereof, from the complainant/deceased Prahallad Naik - a common practice with OP1.
2. Learned Counsel for OP1 has put stress upon the fact that the instant case cannot be agitated before the Forum as it relates to sanction of subsidy in view of the finding of  Hon’ble State Consumer Disputes Redressal Commission, Odisha in the C.D. APPEAL NO.828 OF 1997 .
3. As regards Collateral Security learned counsel for OP1 submitted that neither NABARD nor Reserve Bank of India have issued any mandatory instruction not to go for collateral Security at the time of sanctioning any Loan in any of their circulars filed by the complainant/deceased Prahallad Naik vide Document marked as Exbt.- P/11, as Exbt.- P/12 &  Exbt.- P/18. Rather the use of the word ‘may’ very clearly and distinctively affirms waiving of Collateral Security is discretionary with the financing authority.
4. Since the complainant wife of lonee deceased Prahallad Nayak has yet not fully repaid the loan amount and the fact that still an amount of Rs.12.800/- is out standing against the said loan accounts, question of payment of excess interest or receipt of excess interest can not be attributed upon O.P.1 .Hence , allegations as regards payment of excess interest is false and baseless .

With this learned advocate for OP1 concluded his argument.

6. OP2 adopting the statement of learned advocate for the O.P.No.1 during hearing in full concluded his version .
7.  OP3 submitted that he has nothing to state anything beyond his written version and thus concluded his part of argument.
8. Before delving any further, in our opinion, some vital questions that have emerged out of pleadings of parties to the dispute and on perusal of documents adduced, have to be dealt first. They are

1. Whether the instant case is maintainable since it relates to subsidy?
2. Is complainant a consumer of SDCC Bank Ltd?
3. Is the complaint liable to be dismissed since Chief executive of SDCC Bank Ltd has not been impleaded in the instant case?
4. Is the complaint liable to be dismissed since NABARD has not been impleaded in the instant case?
5. Whether OP1 have applied for sanction and release of the subsidy amount? Whether OP2 for any lapses on this regard has issued any instructions to OP1?
6. Whether non-return of impledged title documents after repayment of loan amount by OP1 is deficiency in services? Whether OP2 for any lapses on this regard has issued any instructions to OP1?
7. Has excess interest been received by OP1?
8. Does there exists joint liability between OP1 & OP2 ?
9. Is complainant,  wife of deceased Prahallad Naik entitled to compensation ?

Now we deal each individual question.

1. Whether the instant case is maintainable since it relates to subsidy?

Learned advocate for OP1 has put reliance on the finding of Hon’ble State Consumer Disputes Redressal Commission, Odisha in the C.D. APPEAL NO.828 OF 1997 as hereunder:

“5. It has been held by National Commission in Himachal Weavers Pvt. Ltd. Vrs. Himachal Pradesh Financial Corporation [1993(3)CPR 285] and M/s- Sawheny Export House Pvt. Ltd Vrs. Noida [1993(3)CPR 407]- subsidy offered to be paid is not service defined in Section2(1)(o) of the Consumer Protection Act, 1986. Therefore non-disbursement of 100% subsidy as claimed by the appellant is not cognizable by the fora created under the Consumer Protection Act, 1986. The District Forum has therefore rightly not passed any order with regard refund of Rs.3,805/- as the 25% subsidy.”

 

Section 2(1)(o) defines service as under:-

service means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service;

While in law it is well settled that   providing subsidy is not in terms of one of the many services expressly mentioned in the definition of CP Act,1986, it is surely neither banking nor financial or insurance, etc. Nor can one even remotely bring such a central bounty or concession within the concept of a service as such, even if, the word service is a wide ranging one and cannot be easily put in a straitjacket. Hence the matter of non-payment of subsidy by the authority empowered to sanction and release such subsidy, since not fitting in to the scaffold of Sec.2(1)(o), cannot be agitated under C.P.Act,1986 against such authority. In the case cited by learned counsel for OP1 and  in the cases relied upon in that cited case, authority competent/empowered to sanction and release subsidy have been sued. Since providing subsidy is not within the ambit of Services, such authority empowered to sanction/release/Pay/allow/disallow related to subsidy can not be sued for the reason of deficiency of services under the Consumer Protection Act,1986 ( here in after mentioned as Act) and hence such matter can not be agitated in Consumer Fora. Also it needs no great erudition to say that a central or state subsidy intended for the development of the backward areas, etc., and grant of incentive for that or any concession, be turned down on saying that subsidy does not fit to the scaffold of ‘service’, if it is denied due to deficient service on the part of any third party, who as such, is empowered to have such subsidy sanctioned and released by competent authority to sanction and release subsidy, is ultra-virus to law. Refusal of subsidy by NABARD in the event of just service rendered by OP1 & OP2 would have curtailed/prohibited the present adjudication.

Further, from the decision of Hon’ble National Commission while adjudicating the Revision Petition No.3279 of 2008 on 29/04/2014 downloaded from http:// 164.100.72.12/ ncdrcrep/ judgement/00140429112413673RP327908.htm [Exbt. – C/1] it is observed that the complaint filed by Shri Bijay Karlekar, Proprietor, M/s. New Keerthi Garments, Near Bharat Studio, M.G.Road, Kolar, Karnatak & Anr has not been dismissed by either learned District Forum or by Hon’ble Karnatak State Consumer Disputes Redressal Commission, Bangalore even if allegation is made interalia as to the fact that Rs.13,000/- payble as subsidy by the Government ought to have been drawn by the OP has neither drawn subsidy nor adjusted towards liability of the complainant. Also Hon’ble National Commission has not inclined to say the petition is barred to be agitated as it relates to subsidy interalia other allegations, wherein also the authority competent to sanction and release the subsidy has not been sued.

In the instant case NABARD is the competent authority to sanction and release the subsidy and he has not been sued.Thus we hold that the complaint in the instant case although relates to sanction of subsidy can be agitated in this forum and hence maintainable.

2. Is complainant a consumer of SDCC Bank Ltd?

We quote here the case  Orissa Khadi and  Village Industries Board vrs. Abhimanyu Sahoo & Ors [I(2010) CPJ 59(NC)] , while deciding Revision Petition No.231, Hon’ble National Commission   in has observed as hereunder:

“ xxxx  As per by now well settled law by this commission, once a loan is sanctioned then the loanee shall come within the definition of ‘Consumer’. Xxxx”- (para – 4)

It is undisputed that Branch Manager, BANK in his letter No.1254 of dated 06.012012 addressed to the Secretary, SOCIETY, who evidently can not be the loan sanctioning authority, have sanctioned the loan of Rs.90,000/-(Ninty thousand)[ Exbt. – P/6 ]. This evinces the fact that complainant is a ‘Consumer’ BANK.

3. Is the complaint liable to be dismissed since Chief executive of SDCC Bank Ltd has not been impleaded in the instant case?

As regards to not impleading Chief Executive of SDCC Bank Ltd, Bargarh we would like to take in to discussion the case cited by the complainant. In the cited case i.e. C.D.Appeal No.573 of 2003 and C.D.Appeal No.1399 of 2003 arising out of an order dated 18.02.2002 passed by the DCDRF, Jaipur in C.D. Case No.73 of 2003, Hon’ble State Commission have observed as hereunder:

“ 7. As per his two written versions, opposite party No.1 does not admit the complaint, a consumer under him. He has challenged the maintainability of the complaint as the Union of India represented through its Secretary, Dak Bhawan, New Delhi and C.P.M.G., Orissa Circle, Bhubaneswar have not been made parties in the case. So also, as the Superintendent of Post Offices, Cuttack, North Division, Cuttack - 1 and Deputy Postmaster in short D.P.M.,Jajpur Head Post Office, who has to sanction withdrawal of more than rupees 1,000/- have not been made parties, the C.D.Case against him and opposite party No.2 is not maintainable. xxxxxx”          

Such challenge of OP1 has not been looked in to and so in the instant case. Also there exists no privity of contract between complainant and the Chief Executive, SDCC Bank Ltd., Bargarh. He  is not a necessary party. Hence in the premises of aforesaid observations we hold that the instant complaint is maintainable and needs to be adjudicated.

4. Is the complaint liable to be dismissed since NABARD has not been impleaded in the instant case?

We refer to [Exbt-P/1], copy of NABARD circular No.186/TSD – 03/2010 of dated 21.09.2010 according to which, a pilot scheme titled “Venture Capital Scheme for Dairy and Poultry”  launched by Department of Animal Husbandary, Dairying and Fisheries (DAHD&F), Government of India in the year 2005-06 in order to extend assistance for setting up small dairy farms and other components to bring structural changes in the Dairy Sector was renamed to “Dairy Entrepreneurship Development Scheme(DEDS)” which came in to effect 1^st.September 2010. We quote the following from NABARD’s Circular No.186/TSD – 03/2010 of dated 21.09.2010 :

“Para 8. Elligible Financial Institutions

1. Commercial Banks
2. Regional Rural Banks.
3. State Cooperative Banks.
4. State Cooperative Agriculture & Rural Development Banks; and
5. Such other institutions, which are eligible for refinance from NABARD.

Para 9. Sanction by Banks

The Entrepreneurs shall apply to their Banks for sanction of the project. The Bank shall appraise the project as per their norms and if found eligible, sanction the total outlay excluding the margin, as the Bank loan. The loan amount is then disbursed in suitable installments depending on the progress of the unit. After the disbursement of the first installment of the loan, the Bank shall apply to the concerned Regional Office of NABARD for sanction and release of subsidy in the format given in Annexure I.

Para 11. Release of Subsidy

11.1. After sanction of the subsidy by the PSC, the regional office of NABARD shall release the subsidy amount after confirming the availability of funds from NABARD Head Office. The subsidy shall be released on first come first serve basis subject to availability of funds.

11.2.  xxxxxxx

A plain reading of the paragraphs cited supra very clearly summarizes - capital subsidy of 25% of outlay (33.33% for SC & ST Entrepreneurs), for sanction and release of which, the financing bank has to apply to NABARD after release of the first installment of the loan amount. Although DEDS is launched by NABARD, there exists no privity of contract between complainant/deceased Prahallad Naik and NABARD. No document has been substantiated by either OP1 or OP2 as to the fact that NABARD has negated to sanction and release subsidy in favour of the complainant/deceased Prahallad Naik. In that case it was necessary to sue NABARD. Hence NABARD  is not a necessary party. Hence in the premises of aforesaid observations we hold that the instant complaint is maintainable even if NABARD is not impleaded.

5. Whether OP1 have applied for sanction and release of the subsidy amount? Whether OP2 for any lapses on this regard has issued any instructions to OP1?

As regards to apply for sanction and release of subsidy amount OP1 in his written statement has contended he uses to apply release of subsidy amount to NABARD through OP2 and in the instant case it has been done. This has not been substantiated with documents. The vital element in dealing this aspect is when such application has been made by OP1? OP2 in his written version has admitted that as per guide line of NABARD financing society(OP1) should submit proposal to the Branch Bank within one month from the date of first installment paid to the borrower. Within the statutory period the OP1 has not submitted the proposal before the OP2 for which borrower was debarred to get the subsidy amount. OP2 had made no delay in forwarding the subsidy proposal to proper quarter after it received the same from OP1. Thus deficiency in service on the part of OP2 does not arise. It is observed on perusal of documents and submissions during hearing that as per guideline of NABARD, after the disbursement of the first installment of the loan, the Bank shall apply to the concerned Regional Office of NABARD for sanction and release of subsidy in the format given in Annexure I. In the instant case first installment of the loan was disbursed to the complainant/deceased Prahallad Naik as evinced from the loan Pass Book [Exbt. – P/7] on 07.01.2012. On 26.07.2013 OP2 has written a letter to Secretary, SDCC Bank Ltd. HO Bargarh under intimation to AGM, NABARD, Budharaja, Sambalpur under the caption “ Submission of subsidy Claim Dairy DED/PED Loan”- wherein stated to have enclosed the Subsidy Claim in CLAIM FORM FROM THE BANK BRANCHES FOR RELEASE OF CAPITAL INVESTMENT SUBSIDY IN RESPECT OF PROMOTION OF DAIRY ENTREPRENEURSHIP(P.D.E). Exbt. – P/15-3 evinces to have submitted another claim for release of Capital Subsidy under DEDS for Rs.33,330/-. ( attested true copy furnished to complainant by OP2, filed before the forum marked as Exbt. – P/9-1,Exbt.P/9-2,Exbt.P/9-3) . Neither in the exhibited three letters of the OP2 by the complainant relating to subsidy claim nor in any other document adduced by either OP1 or OP2 it has been established that subsidy claim in the instant case was being initiated by OP1. Hence submission of OP2 that he had made no delay in forwarding the subsidy proposal to proper quarter after he received the same from OP1 is based on false hood. Also submission of OP1 that he uses to apply release of subsidy amount to NABARD through OP2 and in the instant case it has been done is just an casual statement far away from truth. Also there is no trace of OP2 urging OP1 to furnish subsidy claim application within stipulated time. So far as the stipulated time,which is not according to OP2 – within one month from the date on which 1^st. installment of Loan is disbursed, it is, as it appears to us, soon after 1^st.installment of loan disbursed i.e. soon after 07.01.2012 since NABARD in their guide line have made it very clear to sanction and release subsidy on first come first serve basis.

More over applying for sanction and release of subsidy by financing bank is not a free service as evinced and well settled in law in the case of Amiya Kumar Mondal  Vrs. West Bengal Financial Corporation & Others in course of deciding the complaint Hon’ble State Commission, West Bengal have held :

“7.  xxxxxx the relation between the company and the opposite party No.1 is of borrower and lender in view of grant of loan of Rs.50 Lakhs @ 16.5% of interest per annum to the company by the opposite party No.1 as such the company pays interest and the opposite party No.1 receives interest in consideration thereof. xxxxxxxxxxxxxxx It is therefore cannot be said that the collection of the Central Subsidy by the OP1 is free Service or without any charge particularly in view that the sanction letter dt.18.08.86 where payment of consideration by way of interest is stipulated condition and collection of Central Subsidy is another condition stipulated there in and thus the company definitely hired services of the OP1 and falls within definition u/section 2(d)(ii) of the CP Act, 1986. Xxxxx” – (para 7)

In the instant case SOCIETY acting under the instructions of BANK is the lender and complainant is the borrower  for an loan amount of Rs.90,000/- subject to payment of  stipulated normal interest @ 13.5%  per annum/ @15.5% per annum in case of default to OP1 and as such complainant paid interest and OP1 received interest in consideration thereof. Further as per guide lines of NABARD, OP1 and OP2 both are bound to duty to apply for the sanction and release of the Subsidy amount after disbursement of the first installment of the loan amount i.e. after 15.12.2011 which in no instant is a free service.

6. Whether non-return of impledged title documents after repayment of loan amount by OP1 is deficiency in services? Whether OP2 for any lapses on this regard has issued any instructions to OP1?

As evident from [Exbt. – P/15] – Continuation Mortgage Deed executed by the complainant  and another, deceased Prahald Nayak, husband of the complainant in the CD Case No.09/2015 alongwith title holder of land documents,their father Shri Balaram Nayak reveals the fact that executants had mortgaged one khatiyans  i.e. Khata  No.40 of  mauza – Panibhandar, PS/Tahsil – Deogarh  along with five undated/unfilled but signed ( undated blank cheques).

Neither complainant is husband deceased Prahallad Naik nor complainant herself had repayed the loan amount in full. Hence there is nothing wrong in not to have returned the impledged land documents to the complainant/deceased Prahallad Naik in the instant case. No deficiency appears to have been committed by the OP1/OP2.

 

7. Has Collateral Security is obtained contrary to RBI provision ?

It has been alleged that Collateral Security/ Land Mortgage obtained from the complainant is contrary to the instructions of RBI and NABARD and in order to substantiate the allegation, complainant has drawn our attention to [Exbt.- P/11], [Exbt.- P/12],[Exbt.- P/13] which learned advocate for OP1 and by adoption, OP2, have strongly protested saying that no where RBI and or NABARD has stated waiving of collateral surety is mandatory/binding compulsorily, rather it is wide open to be discretionary by use of the term ‘may’. Extracts of the aforesaid exhibits are reproduced here under:

[Exbt.- P/11] – RBI Circular - RPCD PLFS BC No.85/ 05.04.02/2009-10 Dated 18.06.2010              

“xxx

2. On the basis of representations received seeking enhancement of limits, it has been decided that banks may waive margin/security requirements for agricultural loans from the existing level of Rs.50,000/- to Rs.1,00,000/- with immediate effect. Para 3 of our above circular therefore stands suitably modified.”;

[Exbt.- P/2]- NABARD Circular No.135 / DPD – FS 04/2010 of Dated 23.07.2010                        “In this connection we advise that on the basis of representations received  seeking enhancement of limits, RBI has reviewed the security/margin money norms to be followed by banks for agricultural advances and it has been decided that banks may waive margin/ security requirements for agricultural loans from the existing level of Rs.50,000/- to Rs.1,00,000/-.”

[Exbt.- P/13-2]- Copy of RBI Circular No. RPCD. Plan. BC. No.87 /04.09.01/2003-04 of dated 18.05.2004 enclosed in RBI Letter No.DCBR.CO.RIA Cell/ 881 / 09.39.003/2015-16 of dated 31.07.2015.

“ xxxxxx

Please refer to our circular RPCD. No. PLFS. BC.123/05.05.18/1997-98 dated May 20,1998 wherein banks were advised to use their discretion on matters relating to margin/security requirements for agricultural loans above Rs.10,000/-                               

2.In this connection, please refer to paragraph No.83 of the Governor’s annual policy statement for the year 2004-05 dated May 18, 2004 (copy of the paragraph enclosed)

3. Keeping in view the importance of flow of credit to agriculture, in particular to the smallest borrowers, it has been decided that the banks may waive margin/security requirements for the agricultural loans up to Rs.50,000/- and in the case of agri-business and agri-clinics for loans up to Rs.5 lakh with immediate effect.

4. We shall be glad if you please implement the above decision and issue necessary instructions to your controlling offices/branches for appropriate action.

xxxx”

paragraph No.83 of the Governor’s annual policy statement for the year 2004-05 dated May 18, 2004

“ Agricultural Loans – Waiver of Margin/Security Requirements

83. At present, in the case of agricultural loans above Rs.10,000/-, banks are free to keep margin and security. Keeping in view the importance of flow of credit to agriculture, in particular to the smaller borrowers who may not have the necessary assets as collateral, it is proposed that:

Banks may waive margin/security requirements for agricultural loans up to Rs.50,000/- and in the case of agri-business and agri-clinics for loans up to Rs.5 lakh.”

[Exbt.- P/13-2]- Copy of RBI Circular No. RPCD. Plan. BC. No.87 /04.09.01/2003-04 of dated 18.05.2004   unambiguously states/provides that Banks were free to exercise their discretion on matters relating to margin/security requirements for agricultural loans above Rs.10,000/-        prior to 18.05.2004 and after this date i.e. 18.05.2004, use of the word ‘may’ if construed to be discretionary contention of the next paragraph of the said circular is jeopardized as well as the importance of flow of credit to agriculture, in particular to the smallest borrowers,     It will defeat the view laid down in paragraph 83 of  RBI Governor’s Annual Policy Statement of dated 18^th May 2004 which is aimed for more credit flow to weaker farmers/ agri-business & agri-clinic sector.  Here we would prefer to reproduce some of the meanings & implications of the word ‘may’ as mentioned in Law Lexion Dictionary compiled by Vol-2( L – Z), 1989 at page 126 at 126,

1. “ It is a well-settled rule of interpretation that prima-facie the word “may” imports a discretion and it is to be construed as discretionary unless there is something in the nature of the thing empowered to be done something in the object for which it is done, something in the conditions under which it is to be done or something in the title of the person for whose benefit the power is to be exercised, which may couple the power with a duty and makes it a duty of the person in whom the power is reposed, to exercise the power – Naba Kumar Vrs. West Bengal State. [AIR.1952 Cal.870 at 873]
2. It is well settled that ordinarily the word “may” is always used in the permissive sense, but there may be circumstances where this word will have to be construed as having been used in a mandatory or compulsory sense. In otherwords, where the word “may” has been used as implying a requisite condition to be fulfilled, the court will and ought to exercise the powers which it should and in such a case, the word “may” will have a compulsory force. – Premananda V The State, [AIR 1959 J&K 110 at 111]
3. The word “may” occurring in Sec.6 of the Jammu & Kashmir Administration of Evacuee Property Act, Smvt. 2006 has the force of must - Ali Naqbi Vrs. Noor Ashrof, [A.I.R. 1968 J&K. 79 at 83].
4. It is true that the word “may” appears before the word “be registered”. But it is unthinkable that after the collector had come to a decision under sec.42(1), the Sub-Register should question that decision by refusing to register the document. The word “may” in this context has same force as “shall” – Sensmal Vrs. Rajsthan State [AIR1957 Raj. 211 at 213]
5. The word “may” occurring in Order XX, Rule2, Civil Procedure Code has a compulsory force and the succeeding judge is under an obligation to pronounce the judgement that was written by his predecessor and it is not competent for him to re-hear the appeal – Union of India Vrs. R.Satyanarayana, [AIR 1959 A.P. 16 at 17]
6. It is true that the word “may” sometimes has the force of “shall” but in the context it does not appear to have an imperative force – A.Satyanarayana Vrs. P.Krishna, [AIR 1957 Orissa 121 at 124]

On plain reading of the aforesaid meanings and implications it is quite evident that the word “may” is not necessarily discretionary always. Sometimes its implications hold the force of “must” or “shall”. We hold, taking in to consideration the fact not to defeat the view and spirit of paragraph 83 of  RBI Governor’s Annual Policy Statement of dated 18^th May 2004 which is aimed for more credit flow to weaker farmers/ agri-business & agri-clinic sector and not to jeopardize intention of the RBI Circular No. RPCD. Plan. BC. No.87 /04.09.01/2003-04 of dated 18.05.2004  in the present context the word “may” carries  an inherent force of “shall”. This view is very well acknowledged, reasoned and accepted by the  Government of Odisha in Cooperation Department as evident from their circular No. I-CR-144/2013/8326/Coop, Date: 17-10-2013 downloaded from Govt. of Odisha Web Portal (e-Despatch) [Exbt. – C/1] where in paragraph (4)(ii) & (6) of the  Loan Policy for the District Central Cooperative Banks in Odisha reads as under:

“4.      Collaterals :

1. Xxxxx
2. For investment credit both under farm and non-farm sector, at least 50% of the loans advanced should be secured by way of collateral in shape of National Savings Certificates/ Term Deposits/ surrender value of LIC policies/ marketable immovable properties. However, this will not be applicable to the Government sponsored schemes in case of individuals up to a limit of Rs.3.00 lakhs and in case of group loans up to a limit of Rs.5.00 lakhs.
3. Xxxxx”

Also it is apparent from the affidavit to the C.M.Bond in para-3 it is specific stated that O.P.2 has urged C.M.Bond to the executed before availing loan amount (Ext.P/15). Hence Collateral Security obtained from the complainant is contrary to RBI Circular - RPCD PLFS BC No.85/ 05.04.02/2009-10 Dated 18.06.2010.

8. Has excess interest been received by OP1?

Since outstanding balance of Rs.12,800/- (Rupees twelve thousand and eight hundred ) only is yet to be repaid out of the loan amount it can not be said that excess interest has been realised at this stage . We are of opinion that ,  such allegation is not maintainable .

 

9. Does there exists joint liability between OP1 & OP2 ?

[Exbt.- P/14]  distinctly brings out the fact that SDCC Bank Ltd. was eligible for availing refinance from NABARD during the material period i.e. 2011-2012 and [Exbt. – P/13-1]  states the fact that on the date the Loan Application was received by OP2 from OP3 in this case, OP2 was a Bank duly licensed for the year 2011-2012 and its competency to make finance under DEDS was unchallenged as Para 8(c) of [Exbt. – P/] NABARD recognizes Orissa State Cooperative Bank under whose network SDCC Bank Ltd. finds its existence [ Exbt.- P/ 1]. Although,OP2 has not made it clear when the Loan Application of the complainant/deceased Prahallad Naik upon receipt from OP3 was forwarded to OP1 had forwarded the said loan application form to OP1 for necessary action. From the Loan Sanction Order  addressed to OP1 on 06.01.2012 it can be very well perceived that OP2 is the authority who sanctioned the loan to complainant/deceased Prahallad Naik and forwarded it to OP1 to execute follow up action subjected to stipulations spelled by him like:

 

4      The loan will be repayable in 5 years in yearly installments.

 

In other words,  it may not be wrong to construe that OP2 acting as Principal has hired the services of OP1, an agent acting on his behalf. Had it been as per contention of the OP2 i.e. borrowing money from BANK, OP1 provides Loan to its members and repayment of loan, non adjustment of subsidy amount etc. are the look out of the OP1 as stated by OP2 in his version, OP2 would not have issued  specific Sanction order of loan in favour of the complainant to OP1, simply would have allotted funds to OP1. This view is very much clear in the  C.D. Appeal No.729 of 2003 arising out of order dated 11.03.2003 passed by the DCDRF, Sambalpur in C.D.Case No.168 of 2002. Honourable State Consumer Disputes Redressal Commission, Odisha have held :

“ 7.         The main ground of challenge of the aforesaid orders in this appeal is that the complainant having taken loan from the opposite party No.1, all other opposite parties are  no way connected with the dispute relating to payments of maturity value of the aforesaid certificates and money under the savings bank and R.D. accounts. The Mini Bank – opposite party No.1 is an independent entity having its own constitution and management. Said Mini Bank is only affiliated to the other opposite parties, whose only responsibility is to part instructions and guidelines for running of the Mini Bank. Thus the opposite party Nos.2 and 3 having no role to play in the deal between the complainant and opposite party No.1, the aforesaid orders of the District Forum holding them jointly and severally liable in causing deficiency of service as such is illegally and arbitrary. Therefore, the appellant had prayed to set aside the impugned orders of the District Forum.

9. The said Mini Bank – opposite party No.1 has not challenged the impugned orders of the District Forum. Opposite party No.3 has filed this appeal to protect his intrest as well as the interest of opposite party No.2 for the plea as stated above. But at the same time, the appellant has not drawn our attention to any materials produced to be satisfied that except sponsoring the Mini Bank – opposite party No.1, and except giving instructions and guidelines for running the Mini Bank, the appellant has no other responsibility and liability for any act done by the opposite party No.1 – Mini Bank. When the appellant admits that it is its sole responsibility to give instructions and guidelines for smooth running of the Mini Bank, it should have advised to the Mini Bank how to release the maturity amount and amount under the S.B. account and R.D. account in favour of the complainant when he is in need for the treatment of his parents and marriage of his sister.        xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx         the District Forum is justified by holding that for the internal affairs of the Bank in taking action against the faulted Secretary of the Mini Bank, the complainant should not suffer and the other opposite parties who have failed to give proper instruction to the Mini Bank to release the aforesaid amount in favour of the complainant in holding all the opposite parties liable jointly and severally in respect to the amount, the complainant is entitled for. In this end of the view, we are agreeable with the findings of the District Forum that the opposite parties are liable to the complainant for causing deficiency in service in not releasing the maturity value of the certificate and deposits under his savings bank account.”

Although the factual matrix is different than the instant case, we are inclined to the spirit underlying and end of the adjudication and deriving thereof, we are of the view, OP1 and OP2 though have different entity as managed by different bodies, but for business purpose they act from a common platform of joint liability, as Agent and Principal, since OP1 has no independent choice but to act as per instruction/advice and guidelines of OP2 as evident from the stipulation made in the [Exbt. – P/16] i.e. Is complainant entitled to compensation ?

Now moving on to the allegation of loss sustained by the complainant/deceased Prahallad Naik owing to Collateral Security it has been stated that he is deprived of utilizing the land to go for other entreprenural activities in general and in particular to enhance capital investment in the little Kerana Shop he is running in his village to generate more amount aiding to his livelihood. This he had communicated to OP1 & OP2 in many occasions and at different stages during the period from the date of executing the mortgage deed to the date he finally repaid the loan amount vide his representations filed through Exbt.P/16 to Exbt.P/19 OP1 and OP2 have not denied as to they have received any such communication nor they have denied the complainant/deceased Prahallad Naik had a small Kerana Shop in his village. Hence we have to believe the fact that he had a small kerana shop in his village and for furtherening its business he could have utilized the said land to get finance from any other financing sources. Also complainant/deceased Prahallad Naik had filed a report prepared by one Chartered Accountant to the effect the amount of profit the mortgaged property would have generated, if not pledged, [Exbt. – P/22] basing upon which claim of compensation has been prayed. The report prepared by the Chartard Accountant reveals as under:

Loss of Profit for the year 2011-12            Rs. 24,930.00

Loss of Profit for the year 2012-13             Rs.27,421.50

Loss of Profit for the year 2013-14          Rs.1,01,157.50

Loss of Profit for the year 2014-15          Rs.1,39,661.75

Loss of Profit for the year 2015-16          Rs.1,81,492.75

                                                                  Rs.3,35,001.75

Add interest charged on subsidy amount                        

25,000/- from 15.12.2011 to 02.01.2013     Rs.14,235.75

                                                                                              Rs.3,49,236.75

As the property is jointly owned with Late Prahallad Naik (brother of Baidyanath Naik) and the new loan would have been a joint loan so he is eligible for 50% claim of loss .

Financial loss of Baidyanath Naik

Loss of profit (1/2 share )                                   1,67,500.88

Add: interest charged on subsidy amount

33300 from 07/01/2012 to 06/03/2015                  14.235.75

                                                                           1,81,736.63

 

Financial loss of Late Prahallad Naik (Claimant Wife- Jashobanti Naik)

Loss of Profit (1/2 share)                                   1,67,500.88

Add: Interest charged on subsidy amount

33300 from 07/01/2012 to 21/02/2015                  14,048.44

                                                                           1,81,549.31

 

While quantifying the sustained loss one has to take in to consideration of the fact that consequent upon pledging the land he has not been barred to cultivate the land as OP1 has not taken the physical possession over the land. 

 

Under afore stated premises we hold the view that,O.P.1 OP2 though have separate and independent entity derived from Orissa Co-operative Societies Act,1962, but for the purpose of their usual functioning O.P1 has no independent choice but to act as per instruction of O.P.2. Opposite Party No.3’s role is too much restricted like examining viability of the project under DEDS/ Sponsoring to Bank/ Examining health of the cows and has no role to play in any matter related to financing. As such he is freed of any liability towards loss  sustained by the complainant/deceased Prahallad Naik. OP2(two) solely  suffer from deficient service (i) as he has failed to apply for the Sanction and release of the subsidy from NABARD as per its guide line causing thereby direct financial loss to the beneficiary, the complainant; (ii) by urging him to provide margin/security contrary to the circulars in force of RBI & NABARD who happen to be Apex Bodies in Banking .I, therefore order as below:

O R D E R

The complaint is partly allowed. The Opposite Party No.2 (two) is solely  liable to pay Rs.1,50,000/- ( Rupees one lakh fifty thousand  ) as  compensation and Rs.2,000/- ( Rupees two thousand ) as litigation expenses to be paid to the petitioner as the wife of the beneficiary ,deceased Prahallad Naik within 45 ( Forty five) days of receipt of this order failing which the O.Ps are liable to pay in addition, an interest of 9% per annum for the first year and @ 15% thereafter on the above amounts to the petitioner as the wife of the beneficiary deceased Prahallad Naik till it is realized in the due process of law .

 

Office is directed to supply the first copies of the order to the parties free of costs receiving acknowledgement of the receipt thereof.

 

Order pronounced in the open court today i.e. on 5^TH. day of October, 2015 under my hand and seal of this forum.

 

I agree,

 

(SRI P.C.MAHAPATRA)                                            (SRI P.K.DASH)

      MEMBER                                                                PRESIDENT.

 

Dictated and corrected

            by me.

 

    PRESIDENT.