KISHAN LAL SHAM LAL SHELLER vs State Bank of India

M/s. Kishori Lai Sham Lai Sheller have filed this complaint under Section 17 read with Section 12 of the Consumer Protection Act, 1986 (for short ''the Act'') against the opposite-partyState Bank of India on March 2, 1994. In view of the conclusion to which we have arrived at, it is not necessary to state the facts in detail. Suffice it to state that the complainant firm and its partners were sanctioned cash credit limit to the extent of Rs. 10 lacs by State Bank of India, Sunam on 26.10.1987 and they enjoyed the cash credit facility from Rs. 10 lacs to Rs. 20 lacs from the said Bank for the years 1987-88. From January, 1989 however, the Bank stopped releasing the cash credit facility to the complainants. It is alleged that the attitude of the Bank however, changed and it put number of restraints on the cash credit facility despite several representations made by the complainants. In brief, the Bank filed a suit against the complainants for the recovery of the loan amount of Rs. 20,22,417/and the same was decreed in its favour on the statements made by the partners of the firm, admitting the whole claim of the Bank and undertook to pay the entire amount with interest through instalments and the Sub-Judge 1st Class, Sunam decreed the suit of the Bank on 11.11.1992 in the following terms:- "In view of all discussed above claim of the plaintiff bank stands proved. Accordingly, I pass a decree for the recovery of Rs. 20,22,417/with costs in favour of the bank and against the defendants. Defendants are directed to pay future interest @ 16Vi per annum with quarterly rest from the date of filing of the suit till the realisation of decretal amount. As per statement of Ram Gupal, Smt. Shalu Bansal and Mr. S.C. Goal, the learned Counsel for plaintiff bank dated 21.7.1992 in case application is moved by the defendants for issuance of the cash credit limit after showing fresh material under rules then application of the defendants is to be considered sympathetically and if the application is not accepted due to some unavoidable circumstances then rejection of the application would not affect the right of the bank to recover the decretal amount under rules. Decree sheet be prepared and file be consigned to the record room."

APPEAL filed by them has also been dismissed. The cryptic allegation of the complainants is that they could not fulfil their contractual obligations and suffered huge losses due to freezing of cash credit limit and a direction for the payment of Rs. 9,38,786/alongwith interest @ 18% p.a. has been claimed. The opposite-partyState Bank of India has raised preliminary objections as well as objections on merits to the claim of the complainants. The case set up is that the complainants were guilty of serious irregularity and breach of faith as they had failed to maintain the financial discipline expected from a borrower and the Bank after due consideration of all the aspects relevant to its duty to safeguard public funds, did not find it a fit case for advancing the cash credit limit to them and it was compelled to institute a suit against them for the recovery of the loan amount of Rs. 20,22,417/due to it under the cash credit limit scheme and that suit was decreed in its favour on the statements made by the partners of the firm. The firm stand of the Bank is that this Commission could not go behind the decree of the Civil Court dated 11-11-1992 and had no jurisdiction to re-open the matter which had been finally adjudicated. It is averred that the Bank had filed an application for execution of the decree dated 11-11-1992 and the same was still pending disposal in the executing Court and it being so this complaint was not maintainable. According to the opposite party, in the decree, recovery of Rs 31,14,034/includeing interest and costs upto 31-3-1993 was found due from the complainants and out of that amount, Rs 22,62,303/were deposited in the Bank by the guarantor, Sham Lai and the balance amount of Rs. 12,29,431 /was still outstanding against the firm along with further interest. The firm plea of the opposite party is that neither the complainants had complied with the decretal Court, nor had they complied with the terms and conditions laid down by the Bank in the case credit limit agreement and therefore, they could not avail the cash credit limit as per rules of the Bank. It is further submitted that in the circumstances, refusal to render service, is not a deficiency in service in any manner. The complainants filed the replication reiterating all the allegations made in the complaint.

In support of their case, the complainants rested themselves content with the documents Annexures C-l to C-59. No other evidence was adduced and no reason as to why the partners of the firm had chosen to refrain from appearing in the Commission was indicated. In rebuttal, the opposite-party put in its evidence by way of affidavits of Mr. Gurmukh Singh, Branch Manager, State Bank of India, Sunam and the documents Annexures R-1 to R-23.

THE question is whether a person can seek relief under the Act for the discontinuance of the cash credit limit. In other words, whether it is obligatory on the part of the Bank to allow the cash credit limit to a party. THE National Commission consistently took the view as stated below:- "It is in the discretion of the bank to determine whether credit has to be allowed to a party to the extent of sanctioned limits, keeping in view how the party is discharging his obligation towards the bank such as re-payment of the credit and interest thereon provision of adequate and acceptable security and the management of the scheme project or the activity for which credit has been agreed to be provided by the bank. Again the bank has to satisfy itself that the assets are offered as security are good and free from encumbrance, the title of the party in the goods or property is clear and that the valuation of trie assets is just and fair. It is for the bank to determine whether the party is credit worthy and if so the extent to which it should be allowed credit and against what security. THE refusal of the bank to enhance the existing sanctioned limits of credit or even to continue to grant credit to the extent of the limits already sanctioned cannot and does not constitute a breach of the Bank''s obligations towards its debtors. It is primary duty of the Bank to ensure that the money of the depositors which it invests in the form of credit is safe."

The aforesaid view has been taken by the National Commission in Essex Farms (P) Ltd, & Anr. v. Punjab National Bank & Anr. I (1991) CPJ 111 (NC). In our view, the aforesaid principle clearly applies to the facts of this case.

IN view of the decision of the National Commission on the point involved in this case, we are unable to allow the complaint of the complainants for the grant of reliefs claimed. Moreover, we find that the complainants had defaulted in payment of the loan borrowed under the cash credit limit scheme from the Bank and approached this Commission after filing of the execution petition by the Bank for recovery of the amount. Hence we are satisfied that this is not a fit case where the services rendered by the opposite party - Bank can be said to be deficient in any manner. The grievance of the complainants relates as far back as to the year 1989 when the cash credit facility was withdrawn by the oppositeparty. The argument advanced by the learned Counsel for the complainants is that it is a continuing cause of action as the opposite party had filed a suit for the recovery of its dues in 1990 and that suit was decreed on 11.11.1992, does not appeal to us as acceptable on sound reason. This complaint was instituted on 2.3.1994 for redressal of the complainants'' grievance arising out of the stoppage of the cash credit facility which took place in 1989, is clearly time-barred. Lastly, in 1990, the Bank had instituted a suit for the recovery of the amount allegedly due from the complainants under the cash credit account etc. in the Court of Sub -Judge 1st Class, Sunam and that suit was decreed on 11.11.1992 and an application for the execution of that decree filed by the Bank was still pending against the complainants in that Court. The complainants have not controverted this allegation of the Bank. The subject matter of the present complaint petition is identical with the one involved in the afore-mentioned execution application and the matter being sub-judice, the complaint petition brought on behalf of the complainants is not maintainable.

FOR the foregoing reasons, this complaint is not maintainable and is dismissed with costs of Rs. 1,000/to be paid to the oppositeparty Bank within 30 days from the receipt of the copy of this order. Our findings however, will not preclude the complainants from seeking redress in the executing Court if they so choose and are so advised. Complaint dismissed.