Karnataka

Gadag

CC/194/2010

Husensab P Bagali - Complainant(s)

Versus

The Syndicate Bank, Mundargi - Opp.Party(s)

Ameer Ahmed

31 Aug 2010

ORDER

Judgment by Smt G.Shyamala, Lady Member.

 

 

ORDER ON ADMISSION

 

The complainant filed this complaint U/s 12 of the Consumer Protection Act, 1986 against the Respondent-Bank. According to the Complainant, he owns agricultural land of 4 acres and 16 guntas in R.S. No.8/2. The Complainant has approached the Respondent Bank with a proposal for establishment of Rigzen Industry. The Respondent Bank suggested the Complainant to convert the land into non-agricultural purpose and also secure recommendation letter from the concerned Department. Then the Complainant has converted his land for non-agricultural purpose and approached industrial center at Mundargi for recommendation and then approached the Respondent for grant of loan. But, the Respondent rejected the Application without any reason. Later on several request by the Complainant, the Respondent has stated the reasons for the rejection of the loan Application that the population of Mundargi was crossed more than 20,000. Then the Complainant approached Municipality and obtained a Certificate about the population of the town and produced the same before Respondent. But, again the Respondent-Bank rejected the request of the Complainant on the ground that project is crossed more than 10,00,000. Then the Complainant has modified his project and submitted the documents before Respondent i.e. Project limit is below 10,00,000. Again Respondent Bank rejected the Application on the ground that the converted land is developed or non-developed no documents is available. Then the Municipality has issued Certificate that it is developed land and JD of Industrial Department also recommended the Complainant’s Application. But again the Respondent Bank rejected the Application on the ground that industry is not eligible for a new loan. The Complainant has spent lot of money for collection of documents and approached several departments and thereby sustained loss and also suffered mental agony for the negligence and deficiency of service on the part of Respondent. Therefore, the Complainant has filed this case seeking compensation of Rs.1,00,000=00 for conversion of land to non-agricultural purpose and Rs.50,000=00 for mental agony and Rs.50,000=00 for physical strain and court cost.

  

          2.    The Complainant has also filed list with the documents like record of rights, copy of letters issued by Industrial Department and other letters and Certificate, copy of G.O. and copy of Bank Passbook in the name of the Complainant etc.

 

          3.     Heard the advocate for the Complainant on admission. Now the points that arise for our consideration are as under:

 

1. Whether on the available materials and

Pleading, Complainant made -out case for admission under C.P. Act?

 

                   2.      What Order?

 

4.      Our findings on the above points are as under;

 

1. Negative,
2. As per order below.

 

R E A S O N S

 

          5.      Point No.1:  In this case, the Complainant alleging deficiency of service on the part of the Respondent for non-sanction of Industrial Loan to the Complainant though all the relevant documents and recommendation letter filed by the Complainant before Respondent. It is the specific case of the Complainant as per his pleading in the Complaint that he being an agriculturist by profession own 4 acres 16 guntas in R.S. No.8/2 and intend to start Rigzen Industry in this land. Hence, he has approached Respondent for loan. It is the case of the Complainant that as per the suggestion of the Respondent Bank from time to time he has collected documents and recommendations of the Industrial Department and obtained certificate from the Municipality and converted his land into non-agricultural purpose and submitted all the necessary relevant documents with Loan Application and also approached 4 to 5 times but the Respondent flatly refuse to sanction the loan with one or the other grounds. Therefore, the Complainant filed this case for seeking compensation from Respondent for non-sanction of Loan despite all formalities complied.

 

          6.      In this behalf question arose before us; whether the sanction or rejection of loan to a particular consumer of the Bank is a discretionary power of the Bank or it is compulsory on the part of the concerned Bank to sanction loan to the Consumer when all the necessary documents are available. In this behalf, in the commentary by P.K.Majumdar in the Law of Consumer Protection in India, 5^th Edition, Page 731, 732 relying on the decision on the Krishna Conductors Pvt. Ltd., V/s Andhra Bank, 1991 (1) CPR 434 (435), it is stated as under:

 

                  “The Complainant had failed to establish precisely how and in what respect the Opposite Party Bank failed to discharge its obligations to the Complainant. One thing, however, was clear that the Government of India has laid down the credit policy and the Reserve Bank of India has also laid down guidelines and the norms for the Banks in the matter of credit facilities to industries in general and the small scale industries in particular. These are all in the nature of guidelines and it was left to the Banks to decide whether a particular case comes within the ambit of the guidelines of the R.B.I., whether a particular party was eligible for concessions recommended by the RBI as those are matters in the commercial judgment of the Banks and the RBI cannot interfere with their judgment. It was the Bank which has to take decisions as to the type and the volume of the credit facility to be extended, whether the security offered was adequate, whether a unit continues to be viable or has the potential for rehabilitation and therefore deserves credit assistance etc., from the Bank.”

 

          7.      In Para 16 of the said commentary of the P.K. Majumdar relying the decision of Ram Kripal Bhargava V/s Union Bank of India, I (1991) CPJ 23 it was stated as under:

 

                 “Obligation of Loanee – The appellant has contended that the failure of the Bank in providing him with a loan for construction of a bore and installation of pump-sets and its failure to convert his short-term loan of September, 1987 into midterm loan and also to grant him a fresh short-term loan in May/June, 1988 is in violation of the policy for giving credit to the agricultural sector laid down by the Government of India and the Reserve Bank of India and this has put him to enormous loss.

        

                   It was held that it was for the Bank to decide whether a particular party is eligible for credit within the frame-work of the credit laid down by the Government of India and the Reserve Bank of India viz., whether the project to be financed is viable, he would be borrower in honouring his obligations for repayment of his loan liabilities. The obligation of the Bank to provide credit where improvement works are undertaken by a farmer from his own resources even though such items or works may be eligible for Bank credit, entitlement of a farmer to credit where there is admitted delay on the part of the farmer to undertake the sowing operations in time. More importantly, for providing further credit, it is for the Bank to satisfy itself whether there has been a bonafide, crop loss due to vagaries of weather and whether a borrower is a defaulter or not. It will not be open to the Commission to substitute its judgment for the decisions to be taken by the Banks for giving Bank credit. If there is any evidence of proved abuse of exercise of their authority for giving credit by Bank officials, redress has to be sought from the officers of the Bank in their higher echelons. The Reserve Bank of India and the Government of India who have laid down the guidelines and norms for Bank credit. The fact cannot be overlooked that the financial viability of the Banks would be seriously affected and the whole credit system will collapse if it is not ensured that the amounts advanced will be recovered in overwhelming majority of the cases and defaults are kept to the minimum. It will be for the Bank to decide the risks it should undertake balancing its interests and the need for promotion of agriculture. Therefore, the appellant has failed to establish that there has been any deficiency of service rendered by the Bank”.     

 

          In view of these facts and circumstances and decision referred above and the pleading and documents submitted by the Complainant and the submission of advocate for Complainant, we are of the clear opinion that the Complainant utterly failed to make-out a case against the Respondent Bank. Therefore, it is not a fit case to registered and proceed with further. Because, in this case though 3 to 4 times, the Respondent Bank has rejected the Loan Application of the Complainant on several grounds, but lastly it has rejected on dated: 03.11.2001 on the ground that the project is not viable and this was intimated to the Complainant and also the Industrial Officer. That such being the intention of the Respondent Bank, naturally, the rejection of the Application of the Complainant is not coming under the purview of the deficiency of service. Because the Bank has vide dis-creation powers to grant or reject such loan application as per the guidelines of R.B.I. Hence, we have answer Point No.1 in negative and proceed to pass the following:  

 

 

O R D E R

 

          The complaint is dismissed at the admission stage itself. Return the documents to the Complainant. No order as to cost.

 

 

(Dictated to the Stenographer, transcribed by him, corrected and then pronounced by me in the Open Court  31^st day of August, 2010)

 

 

 

 

 

 

Sri F.P.Laxmeshwarmath       Sri S.G.Palled,        Smt. G. Shyamala,

          Member.                        District Judge (R)            Member.

                                                       President