MANAGER, STATE BANK OF INDIA vs P.KARUPPIAH

THE respondent/complainant in this action, despite service of process had chosen to remain absent. We are inclined to dispose of the appeal on merits after hearing arguments of learned Counsel Mr. Shahul Hameed representing P. Deivasigamani & Associates appearing for the appellant/2nd opposite party Bank and on perusal of the materials placed on record.

THE complainant is an Adi Dravida. He applied for the sanction of a loan to the tune of Rs. 50,000/- to develop his furniture mart. THE 1st opposite party Manager, Tamil Nadu Adi Dravidar Housing Development Corporation Ltd., (TAHDCCO) had actually recommended the sanction of the loan by the 2nd opposite party State Bank of India, Devakottai Branch. If the loan of Rs. 50,000/- is sanctioned, the 1st opposite party TAHDCCO would grant a subsidy of Rs. 15,000/- and margin money of Rs. 10,000/- and the balance amount of Rs. 25,000/- is to be sanctioned by way of a loan by the 2nd opposite party State Bank of India, Devakottai. THE proposal as submitted by the 1st opposite party was not acceptable to the 2nd opposite party State Bank of India. THEy had taken into account the credit needs of the complainant, the marketability of the product, the repaying capacity of the complainant and other relevant factors in assessing the quantum of loan to which the complainant was entitled. After taking all those factors into consideration, they came to the conclusion that the complainant was eligible to get a loan of Rs. 20,000/- inclusive of the subsidy and the margin money. THE complainant also gave a letter to the 2nd opposite party State Bank of India accepting the loan of Rs. 20,000/- inclusive of the subsidy and margin money. This was duly intimated by the 2nd opposite party State Bank of India to the 1st opposite party TAHDCCO. THE 1st opposite party in turn intimated the 2nd opposite party that they are having a policy to sanction subsidy and margin amounts only to persons who have been sanctioned loan to the minimum of Rs. 35,000/- and consequently they expressed their inability to sanction subsidy and margin money for the sanction of loan of Rs. 20,000/- by the 2nd opposite party State Bank of India. In such a situation, the Bank was unable to sanction even the loan of Rs. 20,000/- inclusive of the subsidy and margin money to the complainant. The aggrieved complainant knocked at the doors of the Forum below that the non-sanctioning of the loan amount by the 2nd opposite party State Bank of India on the facts and in the circumstances of the case would tantamount to deficiency in service on their part and consequently he is entitled to compensation for the mental agony and anguish he has suffered as a consequence of the non-sanctioning of the loan by the 2nd opposite party State Bank of India.

The Forum below after taking into consideration the materials placed on record, recorded a finding that there was deficiency in service on the part of the 2nd opposite party and consequently directed the 2nd opposite party to pay to the complainant a sum of Rs. 5,000/- by way of compensation for the mental agony and anguish suffered by him and to pay a sum of Rs. 500/- towards costs. The Forum below also issued a direction to pay interest @ 12% p.a. and the amount of compensation of Rs. 5,000/- on and from the date of the filing of the complaint till realisation. However, no costs had been awarded by the Forum below.

LEARNED Counsel Shahul Hameed would urge with all force and vehemence that sanctioning of loan by Banks like the opposite party State Bank of India are matters within their exclusive discretion depending upon the viability of the project, the creditworthiness of the borrower, his sense of honesty in repaying the loan etc., and it is not open to the Forums constituted under this Act to substitute its judgment for the decision of the Bank. In support of such submission, he relied upon the decision of this Commission in the case of R.M., State Bank of India & Another v. A. Periasamy, I (1993) CPJ 22. The passage relevant appears in paragraph 5 of the judgment and it gets reflected as under : "It has been repeatedly pointed out by the National Commission as well as by this Commission that the sanctioning of loans by the Banks are matters within their exclusive discretion depending upon the viability of the project, the creditworthiness of the borrower, his sense of honesty in repaying the loan etc., and it is not open to the Forums constituted under this Act to substitute its judgment for the decision of the Bank. Vide Ramkripal Bargawa v. Union of India, 1991-1-CPJ-NC and A.R. Narayanan v. Manager, UCO Bank, 1991-1-MWN-CP-143-TNSCDRC."

The decision so referred to above by the said learned Counsel is applicable in all fours to the facts of the present case. The 2nd opposite party Bank Manager in the instant case on hand taking all factors into consideration before ever the loan was to be sanctioned to the respondent/complainant. It is not as if the 2nd opposite party State Bank of India was not amenable for sanctioning any loan to the respondent/complainant. As already indicated, the 2nd opposite party State Bank of India was prepared to sanction a loan of Rs. 20,000/- inclusive of the subsidy and margin money. Unfortunately, the 1st opposite party TAHDCCO refused to sanction even the subsidy and margin money and consequently the 2nd opposite party State Bank of India was unable to sanction any loans to the complainant.

THE Forum below did not at all take into consideration the relevant factors which ought to have been taken into consideration and that perhaps was the reason it had rendered an erroneous order now impugned in this action. For the reasons as above, the appeal as such deserves to be allowed. In fine, the appeal is allowed; the order of the Forum below is set aside and the complaint itself is dismissed. We make no order as to costs on the facts and in the circumstances of the case. Appeal allowed.