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Harichand Rupchand Badera resident of Parbhani is businessman and Proprietor of Firm M/s. Vijay Trading Company. Appellant being a Bank sanctioned the cash credit facility to the petitioner to the tune of Rs. 15,00,000/- as a working capital. The complainant was working as dealer of Parle products and agency of the same. In the month of February, 2001 the complainant was sanctioned loan facility of Rs. 15,00,000/- and accordingly he issued demand draft of Rs. 4,04,000/- in the name of Parle Products from the loan amount. Thereafter he came to know that accounts of the complainant towards Parle products are not settled. Thereafter during the regular course of the petitioners business petitioner issued one cheque of Rs. 2,60,000/- in the name of Shetki Bhandar, Kalamnuri. Though he was having credit facility of Rs. 15,00,000/- his cheque was dis-honoured and returned unpaid on the count that complainants account is out of order. Complainant immediately approached to opponent and inquired about the facts. It was informed to him that his account was closed on account of less stock appeared in his shop and his cash credit facility was cancelled. As the cheque was returned unpaid his reputation in the market was lower down and he suffered huge loss. He approached to District Forum by demanding the compensation.

4. After hearing both the parties District Forum held that, Bank has committed deficiency in service while conducting the operation of the cash credit facility and damaged the reputation of the complainant. Therefore, District Forum directed appellant to pay Rs. 10,000/- for mental agony.

5. Being aggrieved by the said judgment and order Bank came in appeal.

6. Notices of final hearing were issued to both the parties. Adv. Shri. K. D. Agrawal, appeared for appellant and Shri. R. K. Bhakde, appeared for respondent. It is submitted by Adv. Agrawal, that respondent proprietor of the firm M/s. Vijay Trading Company was sanctioned the cash credit limit since the year 1999 to the tune of Rs. 15,00,000/-. The respondent was working as dealer of Parle Products and having agency of the same. The cash credit facility was sanctioned against the stock of Parle product and financial assistance was also given to do the business of Parle products. But, as there was a dispute of agency between the respondent and Parle Company his agency was terminated in the year 2001. On the inspection of the godown by the officer of the Bank it was found that, there was stock of worth of Rs.5,00,000/- only when the cash credit facility was to the tune of Rs.15,00,000/-. It also revealed that, there was outstanding amount in the account of firm to the tune of Rs. 11,70,000/-, therefore notice was issued to the respondent on 12th March, 2001. Even after notice complainant did not change the position of stock. Cash credit facility was given to run the business of Parle Products but the cheque in question was issued in favour of Shetki Bhandar therefore said cheque was dishonoured as it was against the terms and conditions of the sanctioned limit. Complainant was in default of paying the loan amount therefore legal action was also taken against him. The appellant did not commit any deficiency in service as complainant was already in default of payment of loan and he committed breach of condition of cash credit facility.