VENKAT TUBE INDUSTRIES vs State Bank of India

THIS is a complaint under Section 17 read with Section 12 of the Consumer Protection Act.

THE complainant approached the opposite party for loan to the tune of Rs. 8.18 lakhs. But the opposite party sanctioned the loan in November 1988 in the sum of Rs. 4 lakhs consisting of cash credit to the tune of Rs. 2.5 lakhs and bill discounting Rs. 1.5 lakhs. In September 1990 the complainant applied to the opposite party for increasing the working capital limited to Rs. 7 lakhs and at the request of the opposite party he handed over the documents in respect of his Flat at Annanagar bearing Door No. 200/18, Asiad Colony. THE opposite party did not sanction additional loan and was dragging on the matter. When the complainant wrote to the opposite party to return the original document in respect of the residential Flat aforesaid, the opposite party claimed that this property was also offered as collatoral security for the original loan. This is disputed by the complainant who has filed this complaint for directing the opposite party to return the title deed for the Residential Flat No. 200/18, Asiad Colony and for damages in the sum of Rs. 50,000/-. The claim is resisted by the opposite party. According to the opposite party even for the original loan sanctioned, this residential fiat was offered as collatoral security and the deed would prove the same. At that time the Housing Board had not executed the Deed of Sale in favour of the complainant, because the entire sale consideration have not been paid to the Housing Board. The Housing Board requested the complainant to deposit a sum of Rs. 10,737/- towards the balance of the cost and at the request of the complainant, the opposite party bank issued the Demand Draft and only thereafter the Sale Deed was executed. The complainant applied for additional working capital to the tune of Rs. 7 lakhs but it was not sanctioned. The title deed in respect of the Residential Flat was not returned as this property had been offered as collatoral security for the original loan. The complainant has not repaid the loan amounts and the bank has been filed a suit in O.S. No. 28/93 on the file of the Subordinate Judge on the equitable mortgage of property which includes this residential flat. The total amount due is comes to Rs. 6,42,483.55. There is therefore no deficiency of service.

Exh. Al to A5 and Bl to B15 are marked by consent. Proof affidavits are filed. No oral evidence has been let in.

IT has been repeatedly held by this Commission as well as by the National Commission that in the matter of grant of loan by the bank, the question falls entirely within the discretion of the bank. The bank which deals in public funds has to take into consideration serveral factors including the viability of the unity, the honesty of the borrower, his capacity to refund etc., and the discretion exercised by the bank cannot be substituted of the judgment of the Forum under this Act. The complainant in the instant case applied for a loan of Rs. 8.18 lakhs but the opposite party has sanctioned a loan of Rs. 4 lakhs consisting of cash credit 2.2 lakhs and Bills discounting of Rs. 1.5 lakhs. This loan has been offered on the security of (1) Agricultural land to the value of Rs. 1 lakh; (2) A Fixed Deposit of Rs. 50,000/- and (3) The complainant''s Residential Flat No. 200/18 Asiad Colony, Aimanagar.

This is clear from Exh. B1 letter written by the complainant to the opposite party, Exh. B2 loan application and B3 sanction order. Subsequently the complainant has applied for enhancement of the loan facility to 7 lakhs which the opposite party has been unable to agree to. At this time the sale deed in respect of the Residential Flat has been handed over to the complainant by the opposite party in respect of Door No. 200/18 Asiad Colony, Annanagar. When this negotiation for the additional loan did not rectify the complainant asked for return of the sale deed. But the opposite party took this stand that this residential flat covered by the sale deed has already been offered as collatoral security for the original loan under Exh. B2 loan application and B3 loan order and the bank could not therefore return it. It remains to be this deed of sale was not secured by the bank at the time of the original loan. The reason is the complainant had not paid all the amount to the Housing Board and hence the Housing Board did not at that time execute the deed of sale. Subsequently, the Housing Board had demanded a sum of Rs. 10,737/- from the complainant as balance due and at the request of the complainant, the opposite party has paid this money under Exh.B8. The sale deed was then be executed by the Housing Board. The bank has come into the possession, at the time of negotiation of the additional Joan and as this property has already been mortgaged as collatoral security, it has retained the sale deed and refused to return it to the complainant, even though the negotiation for the subsequent loans has not materialised. We do not think that the opposite party is in any way guilty of deficiency of service and negligence in refusing to return the sale deed as the property covered thereby has already been offered by the complainant as collatoral security for original loan advance under Exh. B3. The complaint that the opposite party has illegally refused to return the deed of sale is therefore unsustainable.

IT may also be pointed out that the opposite party has since filed a suit against the complainant for recovery of the loan amount of Rs. 6,42,483/- in O.S. No. 28/93 on the file of Subordinate Judge, Tiruvallur on the security of the agricultural land as well as this house. No doubt the suit is subsequent to the complaint, but in view of the fact that this house has already been offered as security at the time of taking of the original loan, there is no question of deficiency on the part of the bank in with-holding the sale deed. In the result, the complaint fails and is dismissed, but without costs. Complaint dismissed.