State Consumer Disputes Redressal Commission
Sandeepkumar Ramgauda Patil & Anr. vs The Ratnakar Bank Ltd. on 3 April, 2008
CONSUMER DISPUTES REDRESSAL COMMISSION CONSUMER DISPUTES REDRESSAL COMMISSION MAHARASHTRA STATE, MUMBAI CONSUMER COMPLAINT NO. 262 OF 1999 Date of order : 03/04/2008 1. Sandeepkumar Ramgauda Patil R/o.385/2 Shahunagar, Jaisinghpur, Tal. Shirol, Dist. Kolhapur. 2. Shri Manojkumar Nabhiraj Ruge R/o. Samdoli, Tal. Miraj, Dist. Sangli. Complainants V/s. 1. The Ratnakar Bank Ltd. Branch 9th Galli, Jaisinghpur, Tal. Shirol, Dist. Kolhapur. 2. Chairman The Ratnakar Bank Ltd. Head Office Shaho Marketyard, Kolhapur. 3. Branch Officer Branch 9th Galli, Jaisinghpur, Tal. Shirol, Dist. Kolhapur. Opposite Parties Corum : Justice Mr.B.B. Vagyani, Honble President Smt. S.P. Lale, Honble Member
Present: Mr.A.J. Chougule, Advocate for the complainants.
Mr.R.K. Shinde, Advocate for the O.Ps.
- : ORDER :-
Per Justice Mr. B.B. Vagyani, Honble President The complainant Nos.1&2 are educated unemployed youths. The complainant No.1 wanted to start a Stone Crusher. It was a joint venture of the complainants. The complainant No.1 approached the O.P./Bank under National Equity Fund Scheme through District Industrial Centre, Kolhapur. After submission of all the relevant papers, O.P./Bank sanctioned following facilities on 03/09/1997 :-
1) Rs.2 Lakhs as Cash Credit.
2) Rs.1,66,000/- for building &
3) Rs.5,28,000/- for plant and machineries.
The O.P./Bank however did not disburse the facilities to the complainants. The complainants tried their level best to avail the facilities to start their own small scale industrial activity in the mofusal area by way of self employment. For considerable long time, the request for disbursement of the loan facility was kept in abeyance for no valid reason. O.P./Bank refused to disburse the loan facility on the ground that the adjoining land owners raised objection to the proposed Stone Crusher and approached the Civil Court for grant of permanent injunction. The complainants however incurred huge expenses on initial requirements. The water was made available by digging a Borewell. The light connection was taken. Deposit was kept with the M.S.E.D.Co. Fixed deposit receipts of the complainants and their family members were pledged with the O.P./Bank by way of security. Partial structure was also erected. Mortgage Deed was also executed in favour of the O.P./Bank. In spite of having done full compliance, the Bank refused to disburse the loan facilities and forced the young would be Entrepreneurs to approach the State Consumer Commission for grant of compensation.
The Ratnakar Bank Ltd., the main contesting party filed written statement and opposed the consumer complaint filed by the borrowers. The Bank raised following defences :-
1) The complainants have not approached the State Commission with clean hands and practiced a fraud on the Bank.
2) The complainant No.1 is not a consumer within the meaning of Section 2(1)(d) of Consumer Protection Act, 1986.
3) The loan was obtained for commercial purpose.
4) No consideration was paid for availing services of the Bank.
5) Loan was not disbursed because of Court litigation.
6) Complaint is false and vexatious.
We heard Mr.A.J. Chougule, Advocate for the complainants and Mr.R.K. Shinde, Advocate for the O.P./Bank.
All the relevant documents including Project Report are placed on record. The Project Report submitted by the complainant No.1 would go to show that he is an educated unemployed youth and not engaged in the field of manufacturing or any other employment. In the proposal, cost of project is shown as under :-
1) Land - Rs.25,000/- 2) Building - Rs.1,60,000/- 3) Plant & Machineries - Rs.3,75,450/- 4) Stone Crusher - Rs.1,52,250/- 5) Electrical materials - Rs.66,305/- ---------------- Total = Rs.7,79,005/- ==========
In the amended complaint, the complainant No.1 clearly stated in Para 5 that he is an educated unemployed person, who wants to have his own small scale industry. The loan was applied under the National Equity Fund Scheme. It is universally known fact that the Central Government and the State Government are trying hard to uplift the standard of life in mofusal area by introducing different schemes for the educated unemployed youths for their livelihood. The Government is trying hard to start small scale industrial activities in the mofusal area for the self reliance of the educated unemployed youths. In response to such schemes, some concessions are given to the persons. Loan is made available on low interest basis. Sometimes, margin money is also provided by the Central Government. In response to the said scheme, the O.P./Bank sanctioned the loan to the complainant No.1 to start his own small scale industrial activity in the mofusal area by way of self employment. If the aim and spirit of the scheme is taken into account, the defences raised in the written statement become insignificant. We will refer the decision of the Supreme Court in the case of Laxmi Engineering Works V/s. P.S.G. Industrial Institute, AIR 1995 SC 1428 at later point of time.
For obtaining loan, the complainant No.1 did not play any fraud on the Bank or its officials. The complainant No.1 supplied all the required documents. Not a single document is proved to be fabricated or defective. We fail to understand as to how the conduct of the complainant No.1 is unfair.
The Bank has refused to disburse loan amount on the ground that some of the neighbours had approached the Civil Court for permanent injunction. From the record, it is revealed that two persons from the neighbourhood had approached the Civil Court. It is material to note that both the suits filed by the persons from the neighbourhood stand dismissed. The application for temporary injunction was also rejected. This fact was brought to the notice of the officials of the O.P./Bank. The Bank however refused to release the loan amount on the ground that the conditions imposed by the Civil Court were impossible to comply. While rejecting application for temporary injunction, the Civil Court at Jaysingpur, no doubt imposed certain conditions. But, the Bank chose impractical condition for refusing to release loan amount. Option was given to the complainant No.1 either to erect a wall of sufficient height or to fix a curtain around the site selected for Stone Crusher to prevent the dust flowing from the stone crushing activity. The Bank with malafide intention considered the condition of erection of a wall to refuse to release the loan amount. A person who wants to comply the directions of the Civil Court can very well fix a curtain of a gunny bags to prevent the dust. In practice such a condition becomes useless. By erecting a wall around the stone crushing activity or by fixing a curtain of gunny bags, nobody can stop the blowing wind. Nobody can divert the running flow of wind to a particular direction. Moreover, the orders of the Civil Court, Junior Division are appealable. The Legal Advisor of the Bank can very well examine the correctness of the order of the Civil Court and would give proper and correct legal advice. Moreover, prayer for grant of temporary injunction was rejected by the Civil Court and the Civil Court allowed the complainant No.1 to proceed with erection of a Stone Crusher. The complainant has obtained no objection certificate from Pollution Board. It is seen from the record that number of Stone Crushers were functioning at Jaysingpur at the relevant time. The officers of the Bank failed to take into consideration that busy brain approached the Civil Court to stop similar kind of project to avoid competition. In our view, the Bank has adopted obstructive attitude. Moreover, there was no prohibitory order against the Bank.
The banking activities fall within the four corners of the provisions of Consumer Protection Act, 1986. The loan is obtained on condition of payment of interest. Under the circumstance, it cannot be said that no consideration is paid or promised for banking service. Under the Consumer Protection Act, 1986, consideration is not required to be paid well in advance. A consumer hiring banking service or any other service can make a payment in future. The payment of process money is also good consideration. We therefore hold that the complainants are consumers within the definition of Section 2(1)(d) of Consumer Protection Act, 1986.
This takes use to consider the defence plea with regard to commercial purpose. The Learned Advocate Mr.Shinde has placed heavy reliance on the ratio in the case of Laxmi Engineering Works V/s. P.S.G. Industrial Institute, AIR 1995 SC 1428. The Supreme Court has clearly observed in the case of Laxmi Engineering Works that the question whether purpose for which the person had bought goods is a commercial purpose within the definition of consumer is a question of fact and it is required to be decided in facts and circumstances of each case. The Supreme Court has also made it clear that the person who buys goods and uses them himself, exclusively for the purpose of earning his livelihood by means of self employment falls within the definition of expression Consumer. The observations of the Supreme Court would go to show that the commercial denote pertaining to commerce. Commerce means financial transactions especially buying and selling of merchandise on a large scale. The activity must be on large scale and activity must be for the purpose of earning profit. If the activity is on the large scale for earning profit, then the transaction is outside the purview of Consumer Protection Act, 1986. It is not the value of the goods that matters, but the purpose for which the goods bought are put to.
The activity of the complainant No.1 is not on the large scale and not initiated with the sole object to earn profit. It is made clear in the original complaint and amended complaint that the complainant No.1 is an educated unemployed person, who wants to start a small scale industrial activity for his livelihood. Initiation of such a scheme by the Central Government makes it clear that the small scale industrial activities are encouraged in the mofusal area to provide self employment. A distinction will have to be made between the large scale activities with a sole aim of earning profit and an activity on a small scale for bare subsistence. The activity proposed by the complainant No.1 is not on large scale and not with a main aim to earn profit on large scale. In the case in hand, the complainant No.1 has approached the Bank for loan. Therefore, the complainant No.1 does not want to earn profit by directly using loan amount. We are therefore of the view that the objection raised by the Bank must fall to the ground.
This takes us to consider whether there is deficiency in service. The Bank after processing the loan proposal and after going through the Project Report thought it fit to sanction loan to the complainant No.1. We are aware that it is exclusive privilege of the Bank either to grant or refuse loan to a borrower. Simple refusal of a loan proposal may not be a deficiency in service. In this particular case, number of things are made to comply by the Bank. The Bank got executed a Mortgage Deed from complainant No.1. For this purpose, complainant No.1 spent some amount. Both the complainants were forced to pledge deposit receipts of their family members by way of security. As a part of the project, the complainant No.1 dug a Borewell in the land. The complainant No.1 approached the M.S.E.D.Co for light connection. He is required to deposit Rs.36,470/-. He is required to spent Rs.27,500/- for digging a Borewell. The complainant No.1 spent practically Rs.40,000/- on erection of a structure. The receipts are placed on record. The complainant No.1 is also required to pay stamp duty to the extent of Rs.4,000/- on the Mortgage Deed. He is required to incur expenditure of Rs.2,145/- on registration of Mortgage Deed. Number of receipts are placed on record to show how the complainant No.1 spent substantial amount of money. The correspondence would also go to show that the complainant No.1 asked the Bank to return the papers so as to approach another Bank. The complainant No.1 sent a letter on 02/02/1999 to the Bank and requested the Bank to issue No Objection Certificate so that he may approach another Bank. But, the O.P./Bank did nothing. The papers were not returned. The complainant No.1 did not approach any other Bank. In spite of dismissal of the suits and in spite of rejection of application for temporary injunction, O.P./Bank withheld the loan amount without any valid reason and justification. The negative approach of the Bank permanently caused damage to the spirit of complainants, who wanted to become young entrepreneurs. Their hopes are completely destroyed. Number of schemes introduced by the Central Government are frustrated because of obstructive attitude of the Banks. After having obtained number of things from the borrowers by way of security for the loan, refusal to release the loan amount is a deficiency in service. Failure to remove charge is also deficiency in service. Therefore, the complainants are entitled to get compensation. The complaint of the complainants is a genuine complaint and cannot be branded as a false and vexatious complaint. In the result, we pass the following order :-
-: ORDER :-
1.
Complaint is partly allowed.
2. O.P./Bank is directed to pay Rs.5 Lakhs to the complainants by way of compensation with interest @ 10% p.a. from 02/02/1999 till the date of realization.
3. O.P./Bank is directed to pay Rs.10,000/- to the complainants by way of cost of the litigation.
4. Copies of the order be furnished to the parties.
(S.P. Lale) (B.B. Vagyani) Member President