A.N. SHARMA vs DIVISIONAL MANAGER, SYNDICATE BANK

THIS appeal was filed against the order dated 8.4.1991 of the State Commission, Union Territory of Chandigarh.

IN this case the respondent-bank had not sanctioned the loan under the Rural INdustrialization Scheme to the complainant. According to the complainant he was entitled to this loan under the credit policy laid down by the Government of INdia and the guidelines in regard to the credit issued by the Reserve Bank of INdia. The State Commission took the view that the adjudication of this dispute would necessitate recording of elaborate oral evidence, apart from adducing extensive documentary evidence by both the parties. It cited the Order of this Commission in M/s. Special Machines, Karnal v. Punjab National Bank & Ors. (Original Petition No. 32 of 1989)=I (1991) CPJ 78 (NC). decided on 22.12.1989 that the Consumer Forums should exercise powers only in cases where the issues involved are simple, such as defective quality of the goods purchased or deficiency of service to be performed for consideration and further held that elaborate scrutiny and settlement of accounts can be satisfactorily undertaken and performed only in a regular Civil Court and not under the Consumer Protection Act.

We are afraid that the State Commission has misunderstood the scope and significance of our Order of 22.12.1989 in Special Machines, Karnal v. Punjab National Bank & Ors., I (1991) CPJ 78 (NC). We reproduce below para 22 of the said Order: - 22. "In the present case the crux of the grievance of the complainant is that the Hindustan Commercial Bank Limited arbitrarily failed to provide the complainant financing facilities which were badly required for his small-scale industrial unit, that the Bank arbitrarily insisted on ''bifurcation'' of the petitioner''s accounts from one head to several heads, insisted on margins, insisted on ''daily drawing powers'' and compelled the complainant to divert money from the working capital to F.D. Rs. in alleged violation of all the Banking Laws and norms and in contravention of the guidelines issued by the Reserve Bank of India and the Government of India from time to time. The Petitioner also alleges that there has been fraud and misappropriation by the Bank in respect of maintenance of accounts and set-off and transfer of accounts and it is as a result thereof that a huge debit has been shown as outstanding in his account The complainant has the further grievance that in addition to the financial problems and losses caused to him by the aforementioned acts and omissions on the part of the Hindustan Commercial Bank Ltd., the said bank also caused enormous losses to the petitioner by refusing to extend the requisite financial assistance to him for lifting the basic raw material namely, M.S. Rimming Quality Steel from Steel Authority of India. Tata/Iron and Steel Company Ltd. and a result thereof the Petitioner was forced to buy the raw-material at open market rates which were very much higher when compared to the rates of SAIL/TISCO, thereby causing huge losses. The failure of the Hindustan Commercial Bank Ltd. to raise the working capital limit sanctioned to the petitioner and its refusal to accommodate the petitioner as per his enhanced requirement and the heavy drain caused by the rising prices of raw-material has again been mentioned by the petitioner as the main reason for the petitioner suffering huge losses and as a ground for making the bank liable for compensating the petitioner for all those losses. Such being the thrust of the complainant in the complaint-petition, we are clearly of the view that this case is fully covered by the principles laid down by us in our earlier orders referred to above and that the petitioner should seek his remedy before the Ordinary Civil Court and not before this Commission."

IT would be evident from the above that the case of M/s. Special Machines was not a case of mere refusal by the bank to provide financing facility required by a small scale unit. There were a host of other issues involving adjudication in that case viz. arbitrary ''bifurcation of the petitioner''s accounts with the bank, insistence on margins, insistence on ''daily drawing powers'' compelling the bank client to divert money from the working capital to F.D.Rs., fraud and misappropriation by the bank in respect of maintenance of accounts and set-off the transfer of accounts irregularly, refusal of the bank to extend financial assistance to the party for lifting raw-material from the SAIL etc., failure to raise working capital amount and refusal to accommodate the bank client as per his enhanced requirements etc. IT is therefore, not correct that every case of complaint against the bank necessarily has to be referred to the Civil Courts for adjudication. In fact it is the responsibility of the Consumer Forums to entertain bonafide complaints of deficiency in service by the Banks and financial institutions keeping, however, in view the limitations of the Consumer Forums whether it would be possible for the Forums to render justice in such complaints or it would be expethent to leave the parties to seek redressal in the Civil Courts keeping in view the questions of facts and law and the time frame within which the Forums have to dispose of the complaints. IT was never our intention that the Consumer Forums should refuse to entertain complaints and for-bear adjudication on the plea that oral and documentary evidence has to be taken and examined. So far as this case is concerned, the State Commission has observed in the opening paragraph of its order that the loan applied by the Appellant had not been sanctioned by the bank because the unit was not considered economically viable on account of certain reasons.

THE bank has to be the sole Judge of the credit-worthiness of a party : whether the unit proposed to be assisted by credit is considered by them economically viable or not We have repeatedly pointed out that the policy laid down by the Government of India and the guidelines of the Reserve Bank of India in the matter of bank credit are mere guidelines and the responsibility for taking decision vests with the Bank or Institution which has to give the credit eventually. In this connection attention was invited to this Commission''s Order dated 10.12.1991 in M/s. Tropical Food & Pharmaceuticals Ltd. etc. v. State Bank of Hyderabad & Ors. (Original Petition Nos. 35,36,37 & 38 of 1991). We therefore, dismiss the appeal on the grounds given above. Appeal dismissed.