Parkmen Polymers Industries vs BANK OF BARODA

M /s. Parkmen Polymers Industries/Complainant before the Maharashtra State Consumer Disputes Redressal Commission in CC No.177 of 1994, has filed this Appeal against dismissal of the Complaint by the impugned order of 10.12.2007. It was filed on 29.2.2008, with delay of which is computed by the Registry as 45 days. As no application has been filed on behalf of the Appellant explaining this delay, it is not possible for us to determine whether there could be any acceptable explanation for it. Considering that the law provides only 30 days to the Appellant for filing of the Appeal, we are of the view that the Appeal is liable to be dismissed on the ground of limitation alone.

COMING to merits, the case of the appellant/complainant was that as a Small Scale manufacturing unit, it had taken two term loans from OP -1/Bank of Baroda; one of Rs.8.27 lakh for Plant and Machinery and the other of Rs.12.83 lakh for Land and Building. Both were sanctioned on 22.7.1991. Disbursal was commenced in August and completed in December 1991. OP -4/SIDBI sanctioned refinance to the extent of Rs 16.11 Lakhs on 30.9.1991.

ALLEGEDLY , the Complainant learnt in December, 1992 that it was being charged very high rate of interest on the two term loans. Several letters were therefore addressed to OP -1/BOB from 15.12.1992, till 4.3.1993 when the OP/Bank informed in a letter that its case for lowering the interest rate from 19.5% to 14% had been taken up with the higher ups. However, when no relief came from OP -1, the matter was taken up with OP -4/SIDBI. In this behalf, it is stated in para 12 of the Complaint that "Under the circumstances, the complainant was forced to meet the Deputy General Manager Shri Jaguste, of the opposite party No.4 and discussed the said issue with the opposite part No.4 in their meeting on 2nd November 1993. At the said meeting the Complainant was informed by the D.G.M. Shri Jaguste, SIDBI that as the term loans to the complainant had been sanctioned and even disbursed prior to the issue of the SIDBI Circular dt. 9.10.91 the revised rates for refinance for interest would not have been made applicable to the Complainant if the Bank of Baroda had applied to SIDBI for granting re -finance for the loans advanced to the Complainant in time. The Complainant states that the Complainant understands that BOB infact approached SIDBI for re -finance only sometime in or around April, 1992 nearly nine months after commencement of disbursement of the loans. The opposite party No.4 inter alia mentioned that as the opposite party No.1 to 3 had failed to approach SIDBI in time for refinance, the revised rates of interest had been applied to the case of the complainant."

Thus, the basis of Consumer Complaint filed on 26.7.1994 is the assumption that if the Bank of Baroda had not delayed the application for seeking refinance from SIDBI, the revised enhanced rate of interest would not have been applied to the loans taken by the Complainant.

THE State Commission allowed the Complaint on 17.4.1996. Thereafter, the Appeal of Bank of Baroda was allowed by the National Commission and the matter was remanded for consideration afresh. In the order now challenged before us, the State Commission has observed that there was no privity of contract between the Complainant and OP -4/SIDBI. Nor was any relief claimed against it. Therefore, at the very outset, the Complaint was dismissed against OP -4/SIDBI.

AGAINST the remaining OPs i.e. Bank of Baroda the matter was heard and the State Commission dismissed the Complaint holding that "Nowhere in the sanction letter dated 22/7/91 Exhibit A, sent by Bank of Baroda to the complainant sanctioning loan that it was sanctioning the loan subject to terms and conditions that may be imposed or made applicable by O.P. no.4/SIDBI. It appears that by letter Exhibit A 22/7/91 independently term loans were sanctioned by Bank of Baroda to the complainant and subsequently, Bank of Baroda decided to avail refinance loan scheme of O.P. no.4, so that they could get finance from SIDBI to give in turn finance to the complainant company to whom Bank of Baroda had already sanctioned term loan to the tune of Rs.21 lakhs roughly. SIDBI''s sanction was not taken prior to the grant of term loan by Bank of Baroda/O.P. nos.1 -3 to the complainant. So on the day sanction letter was issued by Bank of Baroda i.e. 22/7/91 to the complainant, this was a pure contract between complainant industry on the one hand and Bank of Baroda on the other. SIDBI was not in picture at all. So as per the query raised by Hon''ble National Commission, we hold that loan sanctioned to the complainant was not under any financial scheme of Small Scale Industry Development Bank of India (SIDBI) as is sought to be made out by the complainant before us and also before Hon''ble National Commission."

WE have examined this finding with reference to the terms and conditions of sanction. As rightly observed by the State Commission, the Sanction letter of 22.7.1991 does not claim to be under any financial scheme of SIDBI. Even the quantum of loan sanctioned therein is much larger than the extent of refinance sanctioned later by SIDBI. Further, disbursal was not dependent upon sanction of refinance by SIDBI. Under the terms and conditions listed in the sanction letter, before disbursal of the loans to the Complainant, only the application for refinance had to be made by the Bank of Baroda. We therefore, agree with the above finding of the State Commission.

IN the Appeal before us, the case of the Appellant/Complaint has been argued by Shri Arvind Gupta , Advocate. Shri Pramod B. Agarwala, Advocate has represented the Bank of Baroda and Mr. Sarvesh Bisaria, Advocate has appeared on behalf of the SIDBI.

THE main ground in the memorandum of Appeal is that the State Commission has failed to appreciate that it was failure on the part of Respondent/Bank to approach SIDBI in time for refinance, which was the cause for the problem. Had the Bank obtained refinance facility at 11% rate of interest, the Appellant/Complainant would have been charged only 14.5% interest and not 19.5% as was actually levied on it.

LEARNED counsel for the Appellant/Complainant argued his case with reference to the correspondence on record. He pointed out that in the letter of 30.9.1991 address to the OP/Bank SIDBI had in principal agreed to provide refinance in the case of the Complainant to the extent of Rs.16.11 lakh at 11% rate of interest. According to learned counsel it was fixed rate of interest at 11%, which is an apparent misreading of the letter. The letter clearly states that SIDBI shall have the right to revise the rate of interest payable for refinance, at such other rates as may be fixed by it from time to time. Therefore, we find no merit in this argument of the Appellant/Complainant.

THE next ground of challenge is based on the communication of 9.10.1991 in which SIDBI did announce an upward revision in the rate of interest for refinance. For loans to SSI units above Rs.2 lakh, the rate of interest was enhanced to 15%. In the complaint before the State Commission as well as argument advanced on behalf of the Appellant/Complainant, it has been contended that this enhancement in the rate of interest by SIDBI would not be applicable to its case as disbursal of the loan to the Appellant/Complainant had already commenced in July, 1991. We do not find any merit in this argument, in view of the fact that the admitted case of the Appellant/Complainant is that disbursals of the loan sanctioned to it was completed by the Bank of Baroda only by 31.12.1991.

IN its circular of 4.5.1992 addressed to all Banks, SIDBI announced further increase in the interest rate of refinance to 16%. Here, the case of the Appellant/ Complainant is that having completed disbursals of the loan by 31.12.1991, Bank of Baroda had no justification to delay the application for refinance. But, it was actually sent to SIDBI on 21.4.1992. Learned counsel for the Appellant argued that had the application been sent before 4.5.1992, when SIDBI increased the interest rate to 16%, the Appellant would not have been liable to repay at the enhance rate of interest. This has been specifically denied in para 15 of the written statement of the OP/Bank before the State Commission. The relevant part read as follows: - "I submit that the complainant is well aware of the fact that Opponent No.4 was first approached by these Opponents when these opponents had applied for sanction of refinance to Opponent No.4 on 1st August 1991 and Opponent No.4 was reapproached in April 1992 only for the drawl of refinance. I therefore state that there was no delay in approaching Opponent No.4 for seeking refinance, it may be further noted here that in pursuance to sanction of refinance letter dt. 7.10.1991 these opponents could have approached Opponent No.4 at any time during the period of 24/6 months for the drawl for refinance from the date sanction of refinance whereas in the present case these opponents approached Opponent No.4 for the drawal to refinance only in the month April 1992 i.e. just within a period of about six months from the date of sanction of refinance. Thus there was no delay whatsoever nor there was any dereliction in services tendered by these Opponents to the complainant as alleged by the complainant."

LEARNED counsel for the Respondent/Bank of Baroda also argued that the Bank issued the loan sanction letter on 22.7.1991 and followed it up with application for refinance by SIDBI, which was made on 1.8.1991. SIDBI sanctioned the refinance in its letter of 30.9.1991. Therefore, refinance for the entire loan to the complainant having already been sanctioned on 30.9.1991, the fact that application for seeking disbursal of refinance was actually sent on 21.4.1992, would not make any difference at all.

IN our view, the above argument runs counter to the contents of the SIDBI circular of 4.5.1992, brought on record by OP Bank of Baroda as Annexure -R/2. Para 3 (iii) therein clearly stipulates that revised rates of refinance would also apply to cases of "refinance sanctioned prior to May 1, 1992 but not disbursed so far." Even the Written Statement filed by OP -4/SDBI in para 12 has clarified that OP -1/Bank of Baroda applied for disbursal of refinance on 21.4.1992. It was disbursed on 13.5.1992 but at revised rates of interest. This would also explain why OP/Bank of Baroda wrote to the complainant on 4.3.1993 that its case for reduction of interest rate, from 19.5% to 14%, had been taken up (Annexure 6 to the Memorandum of Appeal). Thus, it is evident that enhanced rates of interest would not have applied to this case if the refinance had been not only claimed but also disbursed before 4.5.1992. Therefore, we do hope that OP/Bank of Baroda would keep these facts before it while pursuing the request for remission in rate of interest with the concerned.

BE that as it may, we find no reason to disagree with the finding of the State Commission, mentioned earlier in this order that sanction of refinance by SIDBI was not taken prior to the grant of term loan by Bank of Baroda/O.P. nos.1 -3 to the complainant. On the day sanction letter was issued by Bank of Baroda i.e. 22.7.91 to the complainant, it was a direct contract between the complainant on the one hand and Bank of Baroda on the other. Its operation was not conditional upon sanction of refinance by SIDBI. Therefore, the terms and conditions of the loan have to be given effect independently of the arrangement for refinance from SIDBI. Any other interpretation would amount to re -writing the terms of the contract between the borrower/appellant and the lender/respondents. In this view of the matter, the question of any ''deficiency of service'' within the meaning of Section 2(1)(g) of the Consumer Protection Act, 1986 would not arise.

FOR the reasons detailed above, we hold that the impugned order is based on correct appreciation of the evidence on record. Consequently, the appeal is dismissed on the ground of limitation as well as merit. No orders as to cost.