HARRY AND JENNY (EXPORT INTERNATIONAL) vs Syndicate Bank

THE opposite parties in this complaint have filed an application with a prayer to hear on the maintainability with a prayer to hear on the maintainability of the complaint as a preliminary issue. THE complainant has filed its objection to the application. On due appraisal of the reasons advanced on either side, we decided to hear the matter on the issue of maintainability and accordingly arguments of either side were heard.

THE factual matrix of the case as set out in the complaint centred round the failure of opposite party-3 - Syndicate Bank, Sadashivanagar Branch, Bangalore, to sanction requisite finance towards working capital for a project envisaged by the complainant to manufacture and export Hawai slippers and rubber Hawai chappals. It is the case of the complainant that the opposite parties had approved the project report of the complainant which assessed the working capital requirement at Rs. 60 lakhs; but later, when the complainant invested substantial sums of money on infrastructure on the basis of an assurance of necessary loan facility towards further working capital, the opposite parties refused to release any assistance beyond a mere 5.5 lakh rupees overdraft facility. This has resulted in wrecking the entire project, thereby spelling disaster to a highly lucrative export venture. It is stated that once having accepted the project report, the opposite parties are guilty of reneging on their contractual obligations when they did a turn-about by holding that the project was not viable as the complainant''s assets were non-performance assets. It is emphasised that such an volte-face amounted to deficiency in service on the part of the opposite parties. Mr. M.C. Ravikumar, learned Counsel for the complainant contended before us that the opposite parties have not come out with any reason in their objection as to the circumstance in which they went back on a facility promised to the complainant while approving the project report. It was submitted that the doctrine of promissory estoppel comes to the aid of the complainant in such a circumstance as per the ratio of the decision of the Hon''ble Supreme Court, reported in AIR 1983 SC 848. The learned Counsel also relied on the following further decisions in support of the case of the complainant : 1. AIR 1993 SC 935 2. 1992 (1) CPR 442 (NC) 3. III (1992) CPJ 61 (NC)

Iii (1992) CPJ 48 (NC)

III (1998) CPJ 54 Ii (1991) CPR 148 (NC)

III (1993) CPJ 1327 Iii (1992) CPJ 231 I (1995) CPJ 214

III (1994) CPJ 389. 4. Mr. K.S. Bhashyam, learned Counsel for the opposite party emphasised per contra that opposite party-3 had sanctioned an overdraft facility of Rs. 3 lakhs to the complainant, followed by a further facility of Rs. 2.5 lakhs. However, the complainant had failed to regularise the facility on account of default in repayment of the loan. The learned Counsel submitted that the opposite parties have absolute discretion in advancing loans towards working capital of any project and in that behalf the viability assessment of such a project by the Bank is not susceptible to question under the Consumer Protection Act. The learned Counsel also stated that since this is the settled position of law as enunciated by the National Commission in a catena of cases, the complaint is liable to be thrown out at the threshold as not maintainable. In support of such a contention, the following decisions were cited by the learned Counsel.

1993 (3) CPR 388 (NC) 2. 1993 (1) CPR 103 (NC) 5. The only issue that needs to be examined vis-a-vis the rival contentions is whether the refusal of the opposite parties to provide loan facilities to the extent required by the complainant towards working capital constitutes deficiency in service within the meaning of that expression under the Consumer Protection Act. Incidental to such an examination, there is a requirement to see whether the opposite parties had entered into the realm of a concluded contract with the complainant to finance the scheme to the optimum level and if so whether the principles of promissory estoppel ensures to the benefit of the complainant. The doctrine of promissory estoppel emerges when there is a clear and unequivocal promise which is intended to create legal relation to arise in the future, knowing or intending that it would be acted upon by the party making such promise. The promise would be binding on the party making it and he would not be entitled to go back on it. In the instant case we find that the complainant has not placed any material on record to show that the opposite party had undertaken to finance the project by releasing loan to the full extent of the working capital requirement. In fact, no material has been placed on record by the complainant to show that their project report had been accepted by the complainant in toto as claimed, in order to draw an inference, even remotely, that the opposite parties had entered into an implied contract that optimum loan facility would be made available to the complainant.

In Gujarat State Financial Corporation v. M/s. Lotus Hotels Pvt. Ltd., reported in AIR 1983 SC 848, cited by the complainant, the Hon''ble Supreme Court has observed that the appellant Corporation had entered into a solemn agreement in performance of its statutory duty to advance the loan of Rs. 30 lakhs to the respondent Company. On its solemn promise as evidenced by two documents, the respondent incurred expenses and suffered liabilities to set up a hotel. The Hon''ble Supreme Court observed that in the backdrop of this incontrovertible fact situation, the principle of promissory estoppel would come into play.

In the instant case, it is significant to note, there is no such incontrovertible fact situation. The real situation apparent from records is a singular absence of any semblance of an unequivocal promise by the opposite parties to extend loan facility to the extent required by the complainant. What we see instead is an overdraft facility provided by the opposite parties to a cumulative extent of Rs. 5.5 lakhs which they declined to augment when the complainant failed to make repayment as agreed upon.

We have gone through the various case laws cited by the complainant and find that they do not directly address the issues relevant in the context of this complaint and hence we are of the considered view that the complainant has no scope to take shelter under the ratio set out in them.

Incidentally, the complainant has averred that the opposite parties have unjustifiably entered an assessment of non-viability against the assets of the complainant, terming it as non-performance assets and on that basis tightened the screws on the complainant. In the context of such an allegation, it is relevant to observe that the Bank authorities are better placed to read risk factors surrounding loan transactions and hence it is not for the Redressal Agencies under the Consumer Protection Act to tinker with their evaluation. If such evaluation of the Banking authority is violative of any rights (as contended in the complaint) the remedy for the complainant lies elsewhere. In fact, in Ashok Prabhakar v. State Bank of India & Ors., reported in I (1993) CPJ 11 (NC)=1993 (1) CPR 103 (NC), the National Commission has observed in no uncertain terms that no deficiency in service could be attributed to the viability assessment of an industry arrived at by the Bank in matters of advancing loans to such an industry. In Vishnu Agencies v. The Chairman, Indian Overseas Bank, reported in III (1993) CPJ 362 (NC)=1993 (3) CPR 388 (NC), the National Commission has further elaborated on this point, holding that Banks have considerable discretion in sanctioning and, thereafter, in releasing loan amounts and hence Consumer Forums cannot sit in judgment on the decisions of the Banks as to how much amount has to be sanctioned. In the light of these decisions, the complainant has no justifiable ground to contend that the opposite parties in the instant case have perpetrated deficiency in service within the meaning of that expression under the Consumer Protection Act.

In this view of the matter, the complaint is liable to be dismissed at the threshold on the preliminary issue of maintainability. In the premises, the complaint is dismissed in limine as not maintainable.

The complainant is entitled to seek his remedy in a Civil Court, if so advised, in which case the time spent on this complaint will ensure to his benefit for the purpose of limitation. Complaint dismissed.