State Consumer Disputes Redressal Commission
1. Mr.Ghouse Pasha S/O Amjad Ali And ... vs Andhra Pradesh Grameena Vikas Bank on 5 March, 2014
BEFORE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD F.A.NO.576 OF 2013 AGAINST C.C.NO. 47 OF 2012 DISTRICT FORUM MEDAK AT SANGAREDDY Between: 1. Mr.Ghouse Pasha S/o Amjad Ali Aged about 42 years, Occ: Business 2. Smt Shahnaz Sulthana W/o Mohd Pasha Aged about 35 years, Occ: House Wife Both are R/o H.No.11-63, Khaji Street Narsapur, Medak District-313 Appellants/complainants A N D Branch Manager Andhra Pradesh Grameena Vikas Bank H.O. Warangal, Branch at Narsapur Medak District-313 Respondent/opposite party Counsel for the Revision Petitioners M/s V.V.Patil Counsel for the Respondents M/s Y.V.Narasimhacharyulu QUORUM: HONBLE SRI JUSTICE GOPALA KRISHNA TAMADA, PRESIDENT SRI R.LAKSHMINARASIMHA RAO, HONBLE MEMBER
& SRI THOTA ASHOK KUMAR, HONBLE MEMBER WEDNESDAY THE FIFTH DAY OF MARCH TWO THOUSAND FOURTEEN Oral Order (As per Sri R.Lakshminarasimha Rao, Honble Member) ***
1. The unsuccessful complainants are the appellants. The brief averments of the complaint are that the appellants borrowed a loan of Rs.4 lakhs from the respondent bank for construction of a house on their open plot bearing No.30 in Sy.Nos.267 and 268 situated at Narsapur (V) & (M) by mortgaging the house plot as security. The respondent sanctioned a sum of `3,90,000/- to the appellants and they commenced the construction and could not complete the same due to escalation of construction material charges. The appellants requested for sanctioning of additional loan of `2,50,000/- and the respondent bank instead of sanctioning the loan issued demand notices and initiated recovery proceedings under SARFESI Act.
2. The respondent resisted the case contending that the appellants failed to repay the loan amount as per agreed terms and conditions and as such the respondent issued demand notice. The appellants instead of repaying the loan requested for additional loan of `2,50,000/- and the bank could not sanction the additional loan for want of sufficient income and their poor repaying capacity. When the loan became overdue the respondent bank initiated steps under SARFAESI Act, the appellants to avoid repayment of the loan amount sent reply notice.
3. The appellant no.1 was examined as PW1 and they filed the documents, Exs.A1 to A15.
The Branch Manager of the respondent bank was examined as RW1 and the respondent marked Exs.B1 and B2.
4. The District Forum has dismissed the complaint on the premise that it is the exclusive decision of the bank whether or not to sanction additional loan to the borrower and that the District Forum accepted the plea of the respondent bank that the known income source of the appellant and the banking norms do not permit to extent additional loan facility to the appellant.
5. Aggrieved by the order of the District Forum, the complainant filed the appeal contending that the District Forum has not considered the documentary evidence in correct perspective and that the respondent bank had not produced any documentary evidence showing the norms for sanctioning of loan and recovery of the loan amount and also that the appellant has contended that the respondent bank initiated proceedings under SARFESI Act for recovery of the loan amount which is against the law and principles of natural justice.
6. The learned counsel for the respondent-bank has filed written arguments.
7. The points for consideration are:
1.
Whether there was any deficiency in service on the part of the appellants?
2. To what relief?
8. PONTS NO.1 & 2: The appellant applying for loan and the respondent bank accepting for sanction of the loan subject to terms and conditions of the sanction letter are not disputed. It is to be noted that the sanction of the loan is not an absolute right for the appellant to demand for release of the loan amount. The respondent applied for sanction of loan to the tune of `4 lakhs and the respondent bank sanctioned the same amount and it had released a sum of `3,90,000/-.
9. The appellant requested the respondent bank to sanction additional loan of `2.50 lakhs on the premise that the loan amount earlier sanctioned, `4 lakhs is not sufficient to complete the construction of his house on account of escalation of construction material charges. The respondent bank rejected the appellants request for sanction of additional loan on the premise that the appellant failed to repay the loan amount as per the repayment schedule and his income source and repaying capacity do not satisfy the requirement of sanction of additional loan amount.
10. The respondent having failed to repay the loan amount on account of his failure to stick to the terms and conditions of the loan agreement, approached the respondent bank again for sanction of additional loan amount of `2,50,000/-
which the respondent bank declined to grant as per the banking norms and the financial condition of the respondent to repay the loan amount.
11. Sanction of the loan and release of the loan amount in terms of the sanction letter is dependent on several parameters of which the security of the repayment of the loan amount is the prime factor governing the release of the loan amount. The interest of the bank or finance corporation to secure repayment of the loan vis--vis the loan amount to be released is within the domain of the discretion of the Bank or the Finance Corporation. Unless the Bank or the Finance Corporation exercise mala fide intention in not sanctioning or refusing to release the sanctioned loan amount, there cannot be any deficiency in service on the part of the Bank or the Finance Corporation.
12. The Honble Supreme Court in Maharashtra State Finance Corporation vs Sanjay Shankarsa Mamarde reported in III(2010)CPJ 33 (SC), held that unless there is mala fide intention on the part of the Bank or Finance Corporation, there must not be deficiency of service on its part. The Supreme Court held:
We also find substance in the contention of learned Counsel for the Coporation that unless the action of a financial institution is found to be mala fide, even a wrong decision taken by it is not open to challenge, as the wisdom of a particular decision is normally to be left to the body authorized to decide. In U.P.Financial Corporation & Ors.v.Naini Oxygen & Acetylene Gas Ltd & Anr.(supra) this Court had observed that a Corporation being an independent autonomous statutory body having its own constitution and rules to abide by, and functions and obligations to discharge, in the discharge of its functions, it is free to act according to its own right. The views it forms and the decisions it takes would be on the basis of the information in its possession and the advice it receives and according to its own perspective and calculation. In such a situation, more so in commercial matters, the Court should not risk their judgments for the judgments of the bodies to which that task is assigned. It was held that: (SCC p.761, para 21) Unless its action is mala fide, even a wrong decision taken by it is not open to challenge. It is not for the Courts or a third party to substitute its decision, however more prudent, commercial or business like it may be, for the decision of the Corporation.
Hence, whatever the wisdom (or the lack of it) of the conduct of the Corporation the same cannot be assailed for making the Corporation liable.
13. Apart from the discretion of the respondent-bank whether or not to grant additional loan to the appellant, the respondent-bank initiated proceedings for recovery of the loan amount.
Section 13.2 of the SARFASI Act reads as under:
(2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-section (4).
14. Section 34 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 reads as under:
10. Section 34 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 reads as under:-
34. Civil Court not to have jurisdiction.-No Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
15. The Honble National Commission in Shiv Shanker Lal Gupta Vs Kotak Mahindra Bank Ltd., and other, held that civil court mentioned in Section 34 of SARFESI Act includes tribunals and commissions dealing with civil matters and the National Commission proceeded to hold that consumer forum cannot entertain such complaint.
16. In the aforementioned circumstances, the respondent bank was right within its limits in refusing to sanction additional loan amount in favour of the appellant. We do not find any deficiency in service on the part of the respondent-bank in rejecting the request of the appellants to sanction additional loan. The appeal is devoid of any substance and is liable to be dismissed.
18. In the result, the appeal is dismissed confirming the order of the District Forum. There shall be no order as to costs.
PRESIDENT MEMBER MEMBER Dt.05.03.2014 కె.ఎం.కె.*