KARNATAKA STATE FINANCE CORPORATION vs GANESH FLOUR MILLS

THIS revision petition has been filed by the petitioner Karnataka State Finance Corporation (KSFC) against the order of State Commission dismissing appeals filed by petitioner and the 1st respondent against the order of the District Forum which allowed the complaint qua the petitioner only.

BRIEF facts of the case are that the 1st respondent took a Term Loan from the petitioner for installing a flour mill for which working capital limits were also sanctioned by the 2nd Respondent, State Bank of India. When the re-payments became irregular, while the 1st respondent proceeded under Section 29 of the State Finance Corporation Act and seized the factory comprising the machinery for which the loan had been taken from the 1st respondent and the shed had been taken on lease from an agency of the State Government, the 2nd respondent moved the Court for recovery of its dues. The complainant moved the District Forum alleging several deficiencies and claiming several reliefs from the petitioner and the 2nd respondent - Bank who after hearing both the parties directed the petitioner above to pay Rs. 1 lakh as damages. Rs. 5,000/- for mental agony and Rs. 1,000/- as costs. Complaint was dismissed qua the 2nd respondent. Two separate appeals were filed by the petitioner and the 1st respondent, which the State Commission dismissed after hearing both the parties, hence this revision petition by the petitioner KSFC. It is argued by the learned Counsel for the petitioner that there has been no deficiency on their part. They had proceeded against the complainant as per law, and when the repayment shedule became irregular, only then they seized/took over the unit as empowered by law. Four points were raised by him. First, that the complainant is not a consumer as their relationship is that of debtor and creditor; secondly, KSFC pursued his remedies in exercise of the statutory duties provided in the State Finance Corporation Act, hence complaint filed under CPA is not maintainable; thirdly the complaint was time-barred and fourthly, the order of the State Commission is one-sided as the petitioner could not be present before the State Commission on account of personal reasons.

We have heard the arguments and perused the material on record. We see that taking over of the Unit by the petitioner is smaller of the issue, the main area of deficiency in service is the inability of the petitioner to dispose of the unit in spite of getting offers every time they called for the bids through newspapers. We also see lot of weight and substance in the allegation of the complainant that no notice was given to him before taking over the unit. The party wishes us to rely on the letters dated 22.9.1991 and of 8.11.1991. We have seen those letters. There is not a word about paying the outstanding amount and non-payment of which by a certain date shall lead to taking over of the unit as per Section 29 of the S.F.C. Act. One is a letter inviting him to meet the petitioner and second is a copy of the proceeding of the default Review Committee. We see no "Notice " for taking over the unit. We also see the conduct of the petitioner - ever after taking over of the unit - to be suspect. Bids are invited by the petitioner. Bid of Rs. 1 lakh is accepted, advance taken, then it is cancelled; one Mr. Joshi pays Rs. 5,000/- as advance, sale is cancelled Machines are sold for Rs. 30,000/- this sale is again cancelled and then the complainant is pressurized to get a better bid. We see nothing on record or in the Memo for Revision Petition to tell us the ground of these cancellations. This, in our view, is a clear deficiency in service. It cannot be denied that any machinery lying unattended for years will fetch a lower price which is to the detriment of the complainant. Had the first bid been accepted then after retaining the money required by them which was in the vicinity of Rs. 30,000/- the rest would have been given back to the complainant. For four years and more unit is not disposed of -depriving the complainant of residuary benefits. We are unable to sustain the plea of the petitioner that the complainant is not a consumer. Section 2(1)(o) defines "Service" which includes his institution rendering services with field of "banking, financing...." irrespective of the fact whether they are functioning under a statutory cover. Loan was given and subsequent action taken under the provisions of S.F.C. Act but non-disposal of the unit in spite of getting bids and yet not disposing it off is neither provided nor covered by any statutory provisions of law. The question of the complaint being time-barred has been ably gone into by the District Forum and we are in full agreement with the reasoning on the point. The grounds of revision advanced also speaks of the petition not getting an opportunity at the level of State Commission. He had notice, he knew the case was fixed for a certain date-but if he could not be present for personal reason in spite of knowledge of the date of hearing then State Commission cannot be faulted. We are Consumer Forums and have a statutory obligation to dispose of the cases within a time-frame. We see no merit on this ground either. Keeping in view the conspectus of the case as discussed above, we find no ground to interfere with well-reasoned orders of both the Forums. The revision petition is dismissed. No costs. Revision Petition dismissed.