RAM KRIPAL BHARGAVA vs Union Bank of India and others

-THIS is an appeal against the order dated 25th September, 1989 of the Consumer Disputes Redressal Commission, Rajasthan, Jaipur. The State Commission has while setting out the facts of the case stated that the complainant had sought assistance from the respondent Bank in the form of a long term loan under banking norms, the short- term loan sanctioned in September 1987 be converted into mid-term loan and its repayment rescheduled, and that afresh short-term credit limit be sanctioned for the ensuing crops. The State Commission has cited the orders of this Commission passed in the cases of M/s. Jayal Iron and Steel v. State Bank of India & Ors., dated 31st August, 1989, The Society of U.P. Consumers for Education and Action v. Bank of Baroda, Lucknow, dated 23rd August, 1989, M.L. Joseph v. State Bank of India, dated 23rd August, 1989, and in the light of these precedents, the State Commission has held that no relief, as prayed for by the complainant, can be granted to him under the Consumer Protection Act.

FOR considering the appeal, it may be worthwhile to set out, briefly, the facts of the case, as alleged by the complainant, in sequence :- (i) A short-term (crop) loan of Rs. 25,000/- was sanctioned to the appellant in September, 1987. This was disbursed in three instalments; Rs. 10,000/- in September, 1987, Rs. 10,000/- in October, 1987 and Rs. 5,000/- in April, 1988.

(ii) The mustard crop grown by the appellant (in Kharif) was a total failure in September, 1987 due to drought conditions and famine, failure of rains in 1987 and consequent lack of moisture in the soil.

(iii) The land for which the crop loan was obtained was Barani land. In October, 1987, the appellant asked for a "mid-term loan" for the erection of a ''bore'' and installation of diesel pump-sets to provide irrigation.

(iv) While this application of the appellant was under the consideration of the Alwar Branch of the Bank in consultation with the Regional Manager, Jaipur, the appellant went ahead with the bore well and installation of pump-sets etc. with his own resources.

(v) The appellant sowed his fields in the last week of December, 1987 with wheat, barley and coriander. According to the appellant the crop was very bad, its yield meagre due to very late sowing. Hence, he incurred a loss; even the expenses incurred on the Rabi, 1987 farming could not be met.

(vi) According to the appellant, the Government of India and the Reserve Bank of India had sanctioned a package programme of agricultural credit assistance to the farmers hit by prolonged drought which inter-alia, included:- (a) suspension of the recovery of loans for two years on merits (case by case analysis of borrowers accounts) (b) non-levy of compound interest on the outstanding loans and non-levy of penal interest for defaults. (c) conversion of short-term (crop) loan into medium term loans and rescheduling the recovery thereof. (d) grant of fresh short-term crop loans.

(vii) In May/June, 1988, the appellant applied for the conversion of the short-term loan of September, 1987 of Rs. 25,000/- into mid-term loan as the December, 1987 crop also failed due to late sowing (earlier Kharif crop of mustard had failed in September due to lack of rains.)

The appellant has contended that the failure of the bank in providing him with a loan for construction of a bore and installation of pump-sets and its failure to convert his short-term loan of September, 1987 into mid-term loan and also to grant him a fresh short- term loan in May/June, 1988 is in violation of the policy for giving credit to the agricultural sector laid down by the Government of India and the Reserve Bank of India and this has put him to enormous loss.

It is observed from the letter of 1st February, 1988 addressed by the appellant to the Branch Manager, Union Bank of India, Alwar that the conversion of Barani land into irrigated land was ''a grand success'' and that even though he was late in his Rabi sowing (wheat, dhania, barley and tara), the crops were standing. In this letter, he had asked for a long-term of Rs. 35,000/- for the expenses incurred by him for seed, manure, diesel, construction of bore, installation of engine and pumps and for making permanent construction in the Kui. There is no mention or even a suggestion in this letter that the Rabi crop had been damaged due to late sowing as claimed by the appellant now in his appeal. To repeat, he has stated in the appeal that "the sowing of the aforesaid crops was too late which resulted in very bad crop, yield of the crop was very meagre and even the expenses incurred on Rabi, 1987 farming were not met out".

AGAIN, the farm was inspected in the presence of the appellant by the Bank officials on 24th February, 1988 wherein it was recorded that wheat and sarson crops were standing "in good condition" and that the loanee Shri Bhargav had been advised to discharge his loan by selling the crop so that further credit could be provided to him. The respondent Bank has maintained that the appellant did not repay any part of the loan availed of by him in September, 1987 even though he had sold the crop garnered by him in the Rabi of 1987- 88 and that this has driven the Bank to file a suit for recovery of the amount. It has, further, been maintained that the appellant was not eligible for a loan for the construction of a pucca room to cover the tubewell already installed at his farm. The Bank also cannot sanction loan for a purpose which has already been executed. Further, the Bank has held that the appellant was a wilful defaulter and hence ineligible for credit from the Bank. It is for the Bank to decide whether a particular party is eligible for credit within the framework of the credit policy laid down by the Government of India and the Reserve Bank of India viz. whether the project to be financed is viable, the would-be-borrower is creditworthy, the history of his past performance as a borrower in honouring his obligations for repayment of his loan liabilities. The obligation of the Bank to provide credit where improvement works are undertaken by a farmer from his own resources even though such items or works may be eligible for Bank credit, entitlement of a farmer to credit where there is admitted delay on the part of the farmer to undertake the sowing operations in time. More importantly, for providing further credit it is for the bank to satisfy itself whether there has been a bona fide crop loss due to vagaries of weather and whether a borrower is a defaulter or not. It will not be open to the Commission to substitute its judgment for the decisions to be taken by the Banks for giving bank credit. If there is any evidence of proved abuse of exercise of their authority for giving credit by Bank officials, redress has to be sought from the officers of the Bank in their higher echleons. The Reserve Bank of India and the Government of India who have laid down the guidelines and norms for Bank credit. The Commission cannot overlook the fact that the financial viability of the Banks would be seriously affected and the whole credit system will collapse if it is not ensured that the amounts advanced will be recovered in overwhelming majority of the cases and defaults are kept to the minimum. It will be for the Bank to decide the risks it should undertake balancing its interests and the need for promotion of agriculture.

THE Commission is, therefore, of the view that the appellant has failed to establish that there has been any deficiency of service rendered by the Bank and hence the appeal is dismissed with costs of Rs. 500/- to be paid to respondents within thirty days from today. Appeal dismissed.