NOAH INDUSTRIES vs Karnataka State Financial Corporation

ON the date of hearing, the Appellant submitted that his Counsel was suffering from fever and confined to bed, and therefore, prayed for the adjournment of the case to some other date for filing reply to the objections filed by the respondent. Having gone through the record and considering the fact that no complicated questions of facts and law were involved, we did not think it expedient to adjourn the case. We, therefore, welcomed the Appellant to argue his appeal before us. After hearing, the orders were reserved.

THE appellant here was the Complainant before the State Commission of Karnataka. Its complaint was that on 14th August, 1989 his industry for manufacturing of wafers, which had been given a term loan of Rs. 90,000/- by the Respondent - Karnataka State Financial Corporation, was declared sick and it applied for rehabilitation assistance to the Respondents. THE latter agreed on 25th of October, 1989 to give a term loan of Rs. 26,000/- for the rehabilitation of the sick unit subject to the I.D.B.I. refinancing the term loan. THE I.D.B.I., however, did not agree to refinance the said term loan and consequently the Respondent - Karnataka State Financial Corporation, withdrew its sanction to the grant of rehabilitation loan. The State Commission in its Order pointed out that the Respondent - Karnataka State Financial Corporation was justified in revoking the sanction to the rehabilitation term loan on the refusal of the I.D.B.I. to refinance it. It further pointed out that by merely filing an application for rehabilitation loan the complainant would not become a ''Consumer'' under the Consumer Protection Act. Consequently, it dismissed the complaint No. 42 of 1991.

The appellant has come in appeal against the Order of that State Commission. At the hearing, the appellant submitted that the Respondent - Karnataka State Financial Corporation did not produce the original communication of the I.D.B.I. refusing to refinance the rehabilitation term loan and that this should now be called for.

IT is quite clear from the sanction letter of 25th of October, 1989 issued by the Respondent - Karnataka State Financial Corporation, that the rehabilitation assistance term loan of Rs. 26,000/ - was sanctioned "subject to sanction of refinance from the I.D.B.I. to the Corporation". In other words, the sanction of 25th of October, 1989 was conditional and cannot give rise to a claim against the Respondent - Karnataka State Financial Corporation so long as the sanction to refinance was not accorded by the I.D.B.I. The communication of 22nd of February, 1991 from the Respondent - Karnataka State Financial Corporation to the appellant informing it that I.D.B.I. had not sanctioned the refinance is quite categoric and we have no reason to doubt its authenticity in appeal. IT should also be noted that the I.D.B.I. had sent a copy of this letter to the Slate Commission in response to letter''s summary. It is observed from the communication of 25th of October, 1989 from the Respondent - Karnataka State Financial Corporation to the appellant that the drawal of the first installment of the term loan of Rs. 26,000/- was conditional, inter alia, upon the furnishing proof of having obtained need based working capital from the Canara Bank, Bidar. In fact, according to the appeal memorandum, the unit became sick mainly because of deficiency of working capital and therefore, it was vital for the appellant to obtain working capital credit from the Canara Bank. It is seen from the reply of the Respondent - Karnataka State Financial Corporation that it did not get the working capital loan from the Canara Bank as the Bank was unwilling as it had misutilised the loan granted earlier and he was unable to give additional security. For this reason also it could not have got the additional term loan from the Karnataka State Financial Corporation.

WE have, therefore, no doubt that the appellant has failed to establish any deficiency in service on the part of the respondent or any error in the Order of the State Commission. In the result, the Order of the State Commission is confirmed and the appeal is dismissed. No Order as to costs. Appeal dismissed.