PARMANANDA TRIPATHY Vs. CANARA BANK

JUDGEMENT

(1.) The complainant, Shri Parmananda Tripathy after retirement from Government service started a printing unit styled as Tilottama Security Printers with financial aid from Orissa Financial Corporation. In the complaint he alleged that according to the rules, the said Corporation sanctioned loan for machinery provided a Bank agreed to provide working capital. The Laxmi Commercial Bank, Buxi Bazar branch, Cuttack agreed to provide working capital. Thereafter the said Corporation advanced a loan of Rs. 2.00 lakhs to the complainant for buying machineries. The complainant purchased the machineries and installed them. He approached Laxmi Commercial Bank for the sanction of the working capital loan. In the meantime the complainant got his unit registered as a small scale industry with the different Government Departments. Laxmi Commercial Bank sanctioned a loan of Rs. 50,000/- for the purchase of raw material like papers etc and forwarded the application of the complainant for working capital loan to its Head Office. The Government Departments recommended the complainant to various universities to allot the job of printing of their question papers as the complainant was registered as a security printer. The complainant approached the said institutions and secured jobs. However, before issue of formal orders in that respect the institutions required the complainant to intimate them the consent of his bankers to provide necessary working capital which would be required for the purpose. The complainant started working the press by purchasing of materials consumables etc. amounting to about Rs. 20,000/-. from out of the advance allowed by the Laxmi Commercial Bank pending sanction for the working capital loan applied for. The Secretary, Bihar Board of Secondary Education inspected the press of the complainant and suggested to have more suitable machineries to handle the job of the universities. The complainant again requested the Orissa State Financial Corporation for sanctioning a further loan of Rs. 4.75 lakhs for buying more machineries and equipment which were essential for printing and processing of question papers and the said loan was sanctioned. The complainant installed the required machinery and equipments. The complainant approached the Deputy Secretary, Board of Secondary Education, Orissa, Cuttack in charge of examinations to ascertain the amount of working capital involved in executing the printing of question papers of the three institutions for which his name had been recommended and he was intimated vide letter dated 7th October, 1982 that the working capital requirement would be about Rs. 15 lakhs. He was also intimated that the parties would not pay the printing bills unless the connected examinations results were announced and as such the capital investment would be idle for a period of six months. The complainant intimated these facts to the Laxmi Commercial Bank vide letter dated 7th October, 1982. The complainant also requested the Bank to impress upon its Head Office about the importance and urgency of the loan. However, from subsequent approaches to the said Bank the complainant could know that they were playing dilatory tactics in the matter with some difficulty at their level which the Bank did not disclose. Thus, Laxmi Commercial Bank was guilty of shortcomings or inadequacy in the quality, nature and manner of performance of their legitimate bank services as required to be maintained by them under the Banking Regulations and directive of the Reserve Bank of India for providing working capital loan to the small scale industries, particularly, when the said Bank had committed to the Orissa State Financial Corporation to provide working capital loan to the complainant and the complainant having fully complied with the requirements of the Bank for getting the working capital loan.

(2.) The said Laxmi Commercial Bank was facing some disciplinary proceedings in 1983-84 and ultimately it was superceded by the Reserve Bank of India and the assets and liabilities of the said Bank were transferred to and amalgamated with Canara Bank which took over and started functioning in the same premises at Buxi Bazar, Cuttack where the erstwhile Laxmi Commercial Bank was existing. The Divisional Manager of the Canara Bank (who has been arrayed as Opposite Party No.3) visited the unit of the complainant in the first week of March, 1986 along with the Branch Manager of the Buxi Bazar branch of the Bank. The complainant explained to them all the details and acute sickness of the unit on account of laches of the erstwhile Laxmi Commercial Bank. The Divisional Manager expressed his keen interest in the complainant and had sympathy for him and the complainant was also advised to file a fresh application in the prescribed form for the working capital loan. The complainant submitted fresh proposal for working capital loan vide letter dated 9th April, 1986. However, the Divisional Manager and the Branch Manager of the Buxi Bazar branch appeared to have changed their mind and suggested to the complainant that he should furnish audited balance sheet for the past years and if those accounts would justify a fresh loan they would consider his application. The complainant explained to them that his unit was running in acute sickness during the last three years and he could not bring out promising balance-sheets to be attractive to the Bank for sanctioning further loan. However, the Bank vide letter dated 4th June, 1986 insisted on submission of actual financial papers duly audited. When the complainant could not submit the audited balance-sheets, the Buxi Bazar Branch, vide letter dated 5th August, 1986 asked the complainant to clear the outstanding loan with interest which the complainant had availed of from the erstwhile Laxmi Commercial Bank. The complainant wrote letters to the Senior Officers of the Bank as well as to the Union Finance Minister, Government of India narrating the entire facts. The complainant received a letter dated 26th November, 1986 from the Divisional Manager of the Canara Bank declining to finance any loan to the complainant on the ground that he (i.e. complainant) had preferred to file a suit against the Buxi Bazar Branch for not providing working capital. The complainant replied that he had not filed any suit against the Bank. The complainant wrote to the senior officers of the Bank that he expected some foul play. According to the complainant the Canara Bank is also guilty of imperfection, shortcomings in the quality, nature and manner of their performance of the 'service' which they are required to maintain and act upon according to the banking laws and directives of the Reserve Bank of India in dealing with matters pertaining to small scale industries and more so in overriding the contract with erstwhile Laxmi Commercial Bank made with the complainant to provide the necessary working capital loan. In the meantime, the Canara Bank had also filed a suit in the Civil Court against the complainant for recovery of the amount outstanding against the complainant amounting to Rs. 72,146.23. The complainant has filed this complaint dated 23rd March, 1992 claiming Rs. 56.00 lakhs as damages on account of the losses accruing to him on the various counts.

(3.) The complaint was contested by the Canara Bank and its various senior officers who had been arrayed is Opposite Parties. It was pleaded by them that Laxmi Commercial Bank never intimated its consent to the Orissa State Financial Corporation for providing working capital loan to the complainant. While operating the account the complainant failed to pay the amount to the Laxmi Commercial Bank and a notice was issued to him in 1981 to liquidate the loan amount. Instead of liquidating the loan, the complainant wrote a letter dated 16th May, 1981 to Laxmi Commercial Bank, Buxi Bazar Branch with a copy to the General Manager, Head Office. The Bank served a notice through a lawyer upon the complainant. Upon receipt of the notice the complainant deposited Rs. 10,000/- and also filed suit bearing 317 of 1983 in the Court of First Munsif, Cuttack praying therein for a direction to the Laxmi Commercial Bank to give working capital cash credit loan assistance to him. The said suit was dismissed on 27th November, 1986. The complainant had not made any application in the prescribed form to the Canara Bank for loan. He also did not submit audited balance-sheet approved and verified by Chartered Accountant as per norms of the Bank. When the complainant did not make the payment of the loan in time and the account became sticky in spite of notices the Bank had no alternative but had to file a suit in 1986 for recovery of the amount due from the complainant. To delay and avoid the hearing of the suit the complainant has filed the present complaint before this Commission suppressing the material facts.