SYNDICATE BANK Vs. BHARAT APPLIANCES CORPORATION

JUDGEMENT

(1.) This is an appeal against the order dated 15th June, 1993 passed by the State Consumer Disputes Redressal Commission, UttarPradesh at Lucknow by which it allowed the complaint filed by the present respondent No. 1 M/s. Bharat Appliances Corporation Ltd., against the present appellants and present respondent Nos. 2 and 3. By the impugned order the State Commission had held the Syndicate Bank (present appellant No. 1) guilty of negligence and ordered it to pay Rs. 25,000/- as compensation to the complainant. The present appellant Nos. 2 to 5 are the various Officers of the Syndicate Bank. The Bank and these Officers were arrayed as opposite party Nos. 1 to 5 in the complaint. Present respondent Nos. 2 and 3 herein are Reserve Bank of India and Ministry of Finance through Secretary, Banking Division respectively and they were arrayed in the complaint as opposite party Nos. 6 & 7. In fact they were only made proforma parties and no relief was claimed against them. The parties will be referred to as they were arrayed in the complaint.

(2.) The facts alleged by the complainant-firm are that it was constituted on 22nd April,1991 in which Mussaddi Lal and his son Ved Prakash were partners. The complainant runs a small scale industry unit at Ghaziabad which is managed by qualified engineers. It is manufacturing washing machines and in course of time it started manufacturing other electrical appliances. The complainant had been enjoying credit facility from the opposite party No. 1-Syndicate Bank since 1971. These limits were used to be renewed by the Bank every year. The last renewal of the loan facilities was to expire in March, 1990. Vide letter dated 27th March, 1990 the complainant applied for extension and enhancement of the limits. After detailed discussions with the Branch Manager a fresh proposal was submitted alongwith all the relevant documents. However, the proposal remained pending with the Bank for one year. Mussaddi Lal one of the partners died in May, 1991 and a new partnership was constituted and on the request of the Branch Manager a fresh proposal was submitted in June, 1991 along with complete papers. Even on this proposal no action was taken by the Bank for about seven months. Complainant was also not allowed to operate the account since January, 1991. The Divisional office of the Bank vide their letter dated 10th January, 1992 extended and sanctioned the limit on the terms as mentioned in the letter. On coming to know about the sanction the complainant approached the Branch Manager of the Bank for execution of necessary documents but they refused to get the documents executed on one pretext or the other. The main stress of the officers of the Bank was that before execution of the security documents the complainant must withdraw the complaint which had been filed with the Vigilance Department against the Assistant Manager of the Branch. The Bank started debiting the account of the complainant with quarterly interest just to penalise and victimise the complainant. According to the directions of the Reserve Bank of India interest is to be charged quarterly if the borrower is allowed to operate the account. The complainant approached the higher authorities of the Bank but they adopted bureaucratic attitude and did nothing. Aggrieved by the whimsical, arbitrary and mala fide action of the Bank's officials the complainant filed the complaint before the State Commission. It may be mentioned here that in the complaint it was also alleged that the Assistant Manager of the Bank had taken two articles costing Rs. 2,200/- from the complainant's factory and had not made the payment.

(3.) The case of the contesting opposite parties is that the renewal proposal was submitted by the complainant on 30th May, 1990 and on the same day the complainant was directed to submit the projected balance-sheet because the turnover of the complainant was very low. The earlier limit was sanctioned to the complainant with the condition that the entire sales and purchase proceeds shall be routed through the limit account but the complainant had failed to do so. The complainant did not submit the projected balance sheet inspite of asking for the same by the Bank whenever the complainant visited the Bank. Thus the Bank could not take decision due to the non-cooperation of the complainant. However, the complainant was allowed over draft limit account. In the meantime on 11th May, 1991 one of the partners i.e. Mussaddi Lal expired and the said firm was dissolved. The complainant submitted fresh proposal on their own for renewal of the limit on 21st June, 1991 based upon the newly constituted partnership firm consisting of two partners namely Ved Prakash Gupta and Sanjay Gupta. The said proposal was incomplete and the complainant was asked to submit the papers regarding the queries. The complainant did not comply the aforesaid requirements and ultimately again the complainant was requested to submit the same vide letter dated 21st October, 1991. The complainant replied on 21st November, 1991 but did not submit the required papers and on the other hand submitted the old valuation report dated 10th January, 1989. In case of dealing with the capital of late Mussaddi Lal the complainant was informed to have merged with Ved Prakash Gupta as per the Will of late Sh. Mussaddi Lal. The Will was unregistered one and required to be probated as he had left behind two sons namely Ved Praskash and Om Prakash Gupta. The complainant was himself responsible for the delay in renewal of their limit. It was denied that the complainant was not allowed to operate the account. On the other hand the appellants at every stage tried to help him. Ultimately the limit was renwed on 10th January,1992 on the condition, amongst other conditions, that the limit was to be released after getting fresh loan document from the complainant. Again there was a legal and genuine problem in execution of fresh documents as the Will executed by Mussaddi Lal could not be probated by the complainant. There was no complaint against the Assistant Manager till date of the sanction of the loan and thereafter the complaint was made by the complainant to the Vigilance Department which was found baseless. As per the rules of banking business of the Bank and the directions of the Reserve Bank of India any loan account which is irregular and overdue penal interest is to be charged from the defaulter. As the complainant was a defaulter penal interest was charged on the account. The interest was debited in the different loan account heads as per the loans. The Bank was not negligent in considering the fresh proposal and there was no deficiency in service.