MANGAYARKARASI Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) The complainant in O. P. No.60/99 on the file of the District Consumer Disputes Redressal Forum, Cuddalore, is the appellant herein. Her grievance is that the first respondent Bank had not sanctioned the loan and, therefore, she had been put to loss and suffering which would entitle her to a compensation of Rs.50,000.

(2.) The District Forum held that there was no deficiency in service inasmuch as there was no sanctioning of the loan by the first opposite party though the same had been recommended by the second opposite party. As rightly pointed out by the District Forum, it was the discretion of the Bank in granting or refusing the loan application.

(3.) The learned Counsel for the appellant relied on the following judgments in support of her stand that the very non-sanctioning of the loan would amount to deficiency in service: (1) In Gujarat State Financial Corporation V/s. M/s. Lotus Hotels Pvt. Ltd., 1983 3 SCC 379, it has been held by the Supreme Court that arbitrary refusal to grant sanctioned loan by State Financial Corporation to an entrepreneur particularly when the entrepreneur had already started acting on the basis of sanction incurring expenditure and liabilities is wrong. Having regard to the facts of that case, the Supreme Court directed issuance of writ of mandamus to the State Financial Corporation. The case is clearly distinguishable inasmuch the loan had already been sanctioned. That is not the case here. The loan was not sanctioned but only recommended by the second opposite party. (2) In State Bank of Hyderabad, Raikal Branch V/s. Bairi Lingam, 1991 1 CPJ 362 the Bank had undertaken to perform the services as a lead Bank by providing facilities in connection with financing. The respondents in that case approached the appellant Bank for hiring its services for a consideration in the nature of interest. The Bank agreed to provide the services to the respondents by way of financial assistance. In such circumstances, the State Commission, Andhra Pradesh held that subsequent refusal to perform would amount to deficiency in service. (3) The next decision is the decision by this Commission in the case between The Regional Manager, State Bank of India and Another V/s. A. Periasamy,1992 2 CPR 395. In that case, the complainant applied for a loan from the Bank for purchase of Paddy thrashing machine for carrying on self-occupation and forwarded the application to TAHDCO. The TAHDCO recommended to the second opposite party Bank for the grant of loan. It was applied to the Government for sanctioning the subsidy of Rs.15,000 and margin money. The Government by G. O. Ms. No.876 dated 15.5.1990 accepted the recommendation of TAHDCO for a loan of Rs.40,000 and sanctioning a sum of Rs.15,000 and Rs.8,000 as margin money. The second opposite party refused to sanction the loan. The complaint was, therefore, filed for directing the second opposite party Bank to advance the loan. The District Forum directed the opposite party Bank to advance the loan and pay compensation. This decision of the District Forum was reversed by this Commission. In allowing the appeal and dismissing the complaint, this Commission observed as follows: As pointed out by the National Commission in Ramkripal Bargawa V/s. Union of India, 1991 1 CPJ 23 (NC), credit policy of the Government and the Reserve Bank are only guidelines and it is left to the Bank whether a particular case comes within the ambit of the guidelines and a particular party is eligible for loans as these matters are within the commercial judgment of the Bank, vide Krishna Conductors Pvt. Ltd. V/s. Andhra Bank, 1992 2 CPR 434. The decision of the second opposite party, Bank against the grant of loan to the complainant is not only based on a correct appreciation of facts, but is also not liable to be inferred by the Forums constituted under the Act. We do not, therefore, find any deficiency of service on the part of the opposite parties. The observation of the District Forum that if the loan had been granted, the complainant would have made a profit has no basis whatsoever. When the decison of the Bank not to grant the loan is not liable to be questioned, there is no scope for such a presumption. This decision instead of supporting the case of the complainant is against the complainant. (4) In the case between Jayasree R. Nair V/s. S. Haleefathudeen and Another, 2000 1 CPJ 166, loan was sanctioned and a portion of the loan was released as first installment. The balance amount was not released. In such a situation, it was held that the complainant was entitled for balance amount along with compensation. It was not applicable to the facts of the present case. (5) The last of the cases relied on by the learned Counsel is the order of the National Commission in O. P. No.154/96. That is also a case where the loan had been sanctioned but the same was not released to the complainant. In that context, the National Commission held that there was deficiency in service on the part of the Bank. In fact, the National Commission found fault with the attitude of the officers of the Bank in lending money. After having appraisal reports, Banks decided to sanction the loan. Thereafter, again, on verification of the allegations, the Banks decided to proceed ahead with the grant of land and the complainant was asked to proceed further in purchasing the lands as well as in proceeding ahead with the project. In such circumstances, the National Commission held that the complainant had suffered loss and for that loss, the Banks should compensate the complainant. This decision also has no application to the facts of the present case.