MANAGER STATE BANK OF INDIA vs V.V.ABRAHAM

THESE appeals arise out of an order passed by the District Forum, Kottayam in O.P. 664/92. The Opposite Parties are the appellants in Appeal 356/93 and the complainant is the appellant in Appeal No. 401/93.

THE complainant approached the first Opposite Party for a loan of Rs. 1,05,000/- for working capital. According to the complainant the 1st Opposite Party promised to sanction the loan after consultation with 2nd and 3rd Opposite Parties. THE first Opposite Party is the Manager, State Bank of India, Kottayam Branch. THE loan requested was for putting up a manufacturing unit and marketing of small transformers of various categories and capacities and coils. THE Complainant is a qualified and experienced person with 15 years'' service in the Indian Airforce. THE Project Report was prepared by M/s. KITCO. THE District Industries Deptt. and M/s. KITCO found the project technically feasible and economically viable. THE Kerala State Financial Corporation sanctioned a loan not exceeding Rs. 5/-lakhs. THE original application filed by the complainant for Rs. 1.05 lakhs was not allowed and was rejected by letter dated 9.2.91. A new application was filed by the complainant on 15.11.91 requesting loan of Rs. 3.36 lakhs. He submitted all the records to show that the project was viable. THE unit of the complainant was started on 27.3.92. According to the complainant every document required by ''them was produced by him and he was under the impression that the loan required would be sanctioned. But ultimately the Bank refused to sanction the loan. It is in those circumstances the complaint was filed before the District Forum. The Opposite Parties filed a version stating that the subject-matter raised by the complainant will not fall within the purview of the Consumer Protection Act. In November, 1989 the complainant applied for advance facility of Rs. 1.05 lakhs but that facility was not granted. The enquiry and investigation conducted by the officers of the State Bank of India revealed that the Industrial Unit of the complainant was not economically viable. Again on 16.11.91 the complainant approached the 2nd Opposite Party with a revised application for advance facility of Rs. 3.33 lakhs. Fresh enquiries and studies were made and it was found that the unit was not economically viable and the proposal was a high risk proposition. It is in those circumstances the Opposite Parties informed the complainant that it was not possible for them to sanction the facility required by the complainant.

No oral evidence was taken. The District Forum came to the conclusion that "there is enough circumstantial evidence to believe that the Opposite Parties rejected the loan application due to the failure of the petitioner to heed the demand of the Opposite Parties of illegal gratification". In that view an order was passed directing the Opposite Parties to pay compensation of Rs. 20,000/- to the complainant. Feeling aggrieved by the said order the Opposite Parties have preferred Appeal No. 356/93. Contending that the compensation awarded is not sufficient and the District Forum has not granted the full reliefs claimed, the complainant has come up in Appeal No. 401 /93.

AT the outset we may like to mention that it is not proper for the Forum to make observations about Officers of the Bank without taking evidence and without necessary materials. We are unable to find any material except the bald allegations of the complainant in the complaint to show that there was demand for illegal gratification from officer of Bank and that the complainant request for loan was rejected for the reason of failure to provide such illegal gratification. The National Commission has considered the question of sanctioning the loan in a catena of decisions and has pointed out that the Bank has wide discretion in the matter of granting loans and advance and continuing disbursement of loans sanctioned and the Consumer Court cannot sit in judgment over the discretion exercised by them. In Ashok Prabhakar v. State Bank of India and Others, I (1993) CPJ 11 (NC), the National Commission observed as follows: "We have repeatedly held that it is for the Bank and Financial Institutions to decide whether to assist any industry with term and working capital loans. If in the judgment they find that a party is not creditworthy or the project proposed to be financed is unviable, it cannot be maintained that the refusal to finance the unit constitutes deficiency in the banking service to which the industry is entitled to from Banks and Financial Institutions."

The National Commission has gone to the extent of saying that even a case of withholding of the loan by the Bank cannot be considered as deficiency in service in Lakshmi Fabricators & Others v. Union Bank of India & Others, I (1994) CPJ 101 (NC). In that case, the Union Bank of India sanctioned loan for working capital but subsequently it revoked the provisional sanction and declined to give any financial assistance for "adverse reasons". In this case also the National Commission observed as follows: "It is entirely within the discretion of the bank to decide whether a particular project deserves financial assistance or not, keeping, in view the technical, commercial and financial viability of the project, the expertise and the financial soundness of the managers of the project. The refusal of the Opposite Party-Bank to provide financial assistance for the project, for the reasons given, therefore, cannot be deemed to be deficiency in service attracting the mischief of the Consumer Protection Act."

LEARNED Counsel appearing for the complainant vehemently contended that the Opposite Party told him that they would grant a loan as required and it is for this reason that though his initial application for Rs. 1.05 lakhs was rejected, happened to file a new application for providing loan of Rs. 3.36 lakhs. He also submitted that the complainant was required to produce various documents and certificates and all these directions were complied with. He also contended that the District Industries Centre as well as KITCO found that the project was economically viable and in these circumstances it cannot be said that there is no deficiency in service. He pointed out that there was considerable delay in disposing of the application and the complainant has spent a lot of time and money in his effort to comply with the requirements made by the Opposite Parties from time to time for the purpose of sanctioning the loan. It may be true that the complainant must have taken pain to spend a lot of time to comply with the demand made by the Opposite Parties for production of documents and certificates and to satisfy them that the loan required can be sanctioned. It may also be true that the complainant must have incurred some expenditure in that process. However we are not in a position to hold that these circumstances are sufficient to come to the conclusion that there was deficiency in service on the part of the Opposite Parties. The foregoing discussions would show that the order passed by the District Forum is unsustainable. We allow Appeal No. 356/93, set aside the order of the District Forum and dismiss the complaint. It follows that Appeal No. 401/93 is liable to be dismissed. In the peculiar circumstances of the case we direct the parties to bear their costs. Appeal No. 356/93 allowed. Appeal No. 401/93 dismissed.