ABDUL HAMEED vs M.D.,BIHAR STATE FINANCIAL CORPORATION

THIS Case and Case No. 79 of 92 have been filed by one and the same person and they arise out of the same cause. Therefore with the consent of the parties they have been heard together and are being disposed of by this common order. The complainant has filed these two cases alleging deficiency in service on the part of the Bihar State Financial Corporation (hereinafter called the B.S.F.C.)-the Opposite Party in Case No. 78 of 92 and the State Bank of India (hereinafter called SBI) and its Regional Manager at Muzaffarpurthe Opposite Party in Case No. 79/92 for not proving adequate and timely working capital and subsequently in not providing rehabilitation finance when the complainant''s unit became uneconomic and sick for lack of adequate and timely working capital.

THE complainant happens to be the proprietor of Green Foundary, Industrial Estate, Siwan a registered S.S.I. Unit which was planned and constructed by the complainant during 1979/ 81. THE case of the complainant may be briefly stated. THE B.S.F.C.-Opposite Party in Case No. 78 of 92 sanctioned a term loan to the complainant on 25.4.79 for Rs. 3.22 lacs. But the BSFC took more than two years to disburse only Rs. 2,56,800/- and refused to disburse the balance amount of Rs. 65,200/- Since during this period the prices of the materials and machines had gone up considerably, the complainant could not complete the Unit and applied for another loan of Rs. 3.95 lacs on 30.8.80 and the BSFC sanctioned only Rs. 55,000/-. But the BSFC adjusted that amount against the interest on the loan. Hence the unit remained incomplete. On 21st December, 1981 the complainant applied for another loan of Rs. 1.77 lacs to complete his project. But on 19.3.82 the BSFC sanctioned only Rs. 0.85 lacs against that and the complainant has to console himself with his half complete unit and started production. But due to want of adequate working capital the Unit was forced to run much below it "Break-even Point." On 15.11.80 the State Bank of India (the S.B.I.), Siwan Branch had sanctioned a working capital loan of only Rs. 56,000/- to the complainant''s unit, but allowed its Operation from 3.4.81. Inspite of the fact that the requirement of working capital for the unit was Rs. six lacs, the State Bank of India sanctioned a working capital limit of Rs. 2,00,000/- and consequently the unit continued to incur loss. The complainant was allowed to use this limit of working capital from February, 82 by the S.B.I. Due to tornado on 15.5.83 the unit was badly damaged and sustained a total loss of Rs. 2.32 lacs. On 31.5.83 the complainant applied to BSFC for loan of Rs. 2.57 lacs to meet the cost of repairs. But the B.S.F.C. refused to even look into the application of the complainant without their palms being greased. On 28.1.86 the B.S.F.C. sanctioned a Term Loan of Rs. 3.33 lacs which they disbursed on 20.2.86, out of which they deducted Rs. 2,00,000/- towards the interest etc. accrued in the preceding three years and paid only Rs. 1.33 lacs to the complainant.

On 17.7.85 the complainant applied to the State Bank of India for rehabilitation of the Unit under the RBI/SIDBI/RSR Scheme and a revised project report was submitted to the S.B.I, showing the working capital requirement of the Unit on the basis of 1985 prices as Rs. 10.42 lacs, out of which the SBI was to sanction a working capital limit of Rs. 7.30 lacs and the BSFC was to provide Rs. 3.12 lacs as Margin Money. The SBI Officer sat on the application of the complainant for four long years. Consequently the Unit remained practically closed and continued to incur loss. But the SBI continued to charge interest on its old dues. On 2.9.89 the SBI sanctioned working capital limit of Rs. 4.15 lacs against the Unit requirement of Rs 7.30 lacs though at 1989 prices this requirement was at least Rs. 15 lacs. But the SBI put a condition in the sanction letter that this sanction shall be implemented only after the B.S.F.C. gives clearance with regard to reschedulement of the entire old dues. The B.S.F.C sat tight for 1 years and in the mean time the SBI decided to cancel the limit sanctioned by it. On 4.2.89 the B.S.F.C. agreed to do the needful in the case and sent a draft of Rs. 62,000/- to the S.B.I, as the Margin Money against the limits sanctioned by the S.B.I, to the complainant. But the S.B.I., Siwan Branch refused to implement the Rehabilitation Package sanctioned by the S.B.I, on 2.9.89; did not credit the Margin Money received on 4.2.91 from the B.S.F.C. to the account of the complainant till 14th March, 1991 and permitted the complainant to draw the amount of Rs. 43,055/- only on 5.12.91 whereas the complainant required at least Rs. 3.55 lacs for paying the suppliers so that the Unit could get regular supply of raw materials. Moreover, the Manager, SBI took the date of the first disbursement of the first small amount as the date of the implementation of the package, i.e., January, 1992 and deducted Rs. 27,000/- towards the 1st instalment of the funded amount. The date of implementation of the package should be taken only when the final amount of the package is disbursed. All the specific directions of the Govt, of India & Reserve Bank of India have been ignored by the Bank Manager.

THE grievance of the complainant against BSFC is that the B.S.F.C. made wrong assessment of the project requirements, sanctioned Term Loan but delayed its disbursement, refused to disburse sanctioned amount in full, refused to tender timely help to reconstruct buildings etc. damaged by tornado and put hurdles in the rehabilitation of the complainant''s Unit by the S.B.I. The allegation of the complainant against the SBI is that there was inordinate delay on its part in the sanction of the Rehabilitation Package; also delay in its implementation; and repeated sanction of inadequate working capital and delay in the disbursement thereof.

THE complainant alleges to have sustained loss of Rs. 6.94 lacs due to illegal actions of B.S.F.C. and has sought for a direction by this Commission for adjustment of this amount against the dues payable by him to B.S.F.C. He has alleged loss of Rs. 8.78 lacs due to unfair trade practice adOPted by the S.B.I. On being noticed the B.S.F.C. and the S.B.I, appeared and filed written version in the respective cases. The B.S.F.C. controverting the allegations made by the complainant has averred inter alia that a term loan of Rs. 3.22 lacs was sanctioned to the complainant by its Executive Committee on 29.3.79 and the sanction was communicated to the complainant on 20.4.79, but because of failure on the part of the complainant to complete the formalities, more than two years time was consumed in disbursing the loan and that the entire sanctioned loan of Rs. 3.22 lacs was disbursed to the complainant and the allegation by the complainant that Rs. 65,800/- out of the sanctioned loan was not disbursed to him is baseless. It has been further averred by the B.S.F.C. that the complainant''s application for additional term loan of Rs. 3.95 lacs on 30.8.80 was considered by it and taking into consideration the totality of the circumstances, the BSFC sanctioned Rs. 55,000/- only on 30.3.81 which was adjusted towards the interest due from the complainant with the consent of and as agreed to by the complainant. The BSFC has further averred that the subsequent applications by the complainant for term loan were also considered by its functionaries and the amount found justified was sanctioned and the delay in sanction or disbursement of the sanctioned amount was due to non-submission of the required papers by the complainant. As regards application of the complainant for providing Rs. 3.12 lacs as margin money for rehabilitation of the Unit of the complainant, it has been averred that it was the estimate by the complainant himself and the delay with regard thereto was occasioned due to failure on the part of the complainant to comply with the requirement putforth by the BSFC. The allegation of demand of bribe has been denied by the BSFC and it has been averred that the officer making such demand not being named clearly falsifies the charge and indicates that the charge is baseless. The BSFC has also challenged the maintainability of the case under the Consumer Protection Act (hereinafter called the Act) and sought the dismissal of the complaint.

THE S.B.I has also denied the allegations made by the complainant and has challenged the maintainability of the case under the Act. It has been averred inter alia that for the loss suffered by the complainant the Bank cannot be held responsible as the same has been incurred by the complainant due to his own fault and recalcitrant attitude because he had diverted the sanctioned loan amount towards his other requirement/need and did not invest the same for the purpose for which it was granted. It is further averred that the complainant was not allowed to avail the working capital limit sanctioned on 15.11.80 till execution of the loan document, but as soon as the documentation formalities were completed, the loan was disbursed to the complainant within a reasonable possible time. THE Bank has denied the allegation of the complainant that it sat over the application for the rehabilitation of the unit for four years and averred that the complainant himself remained inactive for these four years and practically closed his factory as a result of which he had to incur losses. According to the decision taken by the Bank the rehabilitation package was to be implemented only after transmission of the margin money by the BSFC which was sent by BSFC on 4.2.91 and the unit was allowed to use the fund from 5.12.91 after execution of the loan documents and the period between 4.2.91 to 2.12.91 was consumed by the complainant for required documentation. It has been stautly averred by the Bank that the examination of the Balance Sheet of the Unit and the assessment of the performance of the Unit, clearly indicate that the complainant not only defaulted in his obligations rather also erected the basic spirit of the Bank''s and Government''s efforts lying behind nursing of a sick S.S.I. Unit and the complainant has failed in running the Unit smoothly, honestly and efficiently, and in repayment programme of the loan as promised by him from time to time.

IN both the cases it has been submitted by the learned Counsels for the Opposite Party that the complaint requires extensive evidence including examination of numerous documents beginning from 1979 which cannot be done in a proceeding under the Act which is of summary nature. There is substance in this submission. The nature of the contentions raised in the case is such that they can be satisfactorily adjudicated upon only after an elaborate evidence which is not possible in a summary proceeding under the Act. Moreover, it is for the Bank and financial institutions to take their own decisions with regard to the extent of assistance to be given to any industry with term and working capital loans. If there is any evidence of proved abuse of exercise of their authority by the Bank officials in taking decision with regard thereto within the frame work of the credit policy laid down by the Government of India and the Reserve Bank of India, redress has to be sought from the officers of the Bank in their higher echlons. But it is not open for this Commission to substitute its judgment for the decision to be taken by the Bank. The Bank and financial institutions have to see whether particular party is eligible for further assistance. If a borrower is a defaulter, it is open to the Bank and financial institutions not to sanction any further assistance to him and refusal to finance a unit does not constitute deficiency in service. We are fortified in our view by the observations of the National Commission in Ram Kripal Bhargava v. Union of India & Others (First Appeal No. 23/1989 decided on 16.3.90 1991 BRLJ 14 Consumer), Parmananda Tripathy v. Canara Bank & Others -I (1993) CPJ 14 (NC)= (1993) 1 CTJ 123 (NCDRC).

For these reasons we are constrained to dismiss these two cases.

THERE is no order as to cost. Complaints dismissed.