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IF one were to analyse the complaints filed before the banking Ombudsmen, a large percentage of them pertain to credit facilities or loans given or not given by banks. Consumer courts may not have had so many complaints on this particular topic in the past, but in recent years, there have been a considerable number of cases. And the complaints range from refusal to grant a loan to inordinate delay in taking a decision and releasing only part of the sanctioned loan amount. There are also allegations of misuse of the sanctioning power by officials and demands for "speed money" or "sanctioning money". In the initial years, consumer courts did not entertain complaints pertaining to loans. Subsequently there was a slight change in the way the courts looked at loans. In the case of The Branch manager, State Bank of India, and Others vs Sunderlal Kela (R.P.No 267 of 1994), for example, the National Consumer Disputes Redressal Commission said it had repeatedly held that it was for the bank to decide whether a particular party was eligible for the grant of credit within the framework of the credit policy laid down by the government of India and the Reserve Bank of India. It was thus not open to the consumer courts to substitute their judgement for the decision to be taken by the banks for giving credit. However, if there was any evidence of abuse of exercise of their authority for giving credit by the bank or financial institutions, then the forum constituted under the Consumer Protection Act could grant relief to a consumer. In this case however, it held that there was no such case made out. In the case filed by Mr C. Gopi Chettiar against the Federal Bank (FA No 20 of 1993), the national commission considered whether there was merit in the allegation of the complainant that the bank had taken an unduly long time to process the application and eventually denied the loan facility unjustly. However, after examining the facts and evidence placed before it, the commission came to the conclusion that there was no deficiency on the part of the bank in declining to sanction the loan advance in as much as the complainant had failed to provide the collateral security as demanded by the bank. In the case of Mike’s (P) Ltd vs State bank of Bikaner and Jaipur (original petition no 139 of 1992), where the complainant, a garment exporter, could not execute the orders received from foreign buyers and was eventually financially ruined because of the bank’s failure to honour its credit commitment, the national commission awarded a compensation of Rs 10 lakh. The commission held that the action of the bank in freezing the credit facilities given to the complainant without prior notice and dishonouring two cheques issued by the complainant without any justification constituted negligence and deficiency in the service rendered by the bank. Here, the branch manager, Mr Verma, had asked the complainant for a bribe of Rs 50,000 to sanction a loan of Rs 60 lakh and on his refusal to give the money, had begun to harass him. When the regional manger too did not take cognisance of his complaint, the consumer approached the CBI, which laid a trap and caught him. The bank’s managing director was apparently very upset, not with the behaviour of the branch manager or regional manager, but with the complainant’s action and ordered stoppage of all funds to him, thereby completely ruining his business. In the case of Mrs Viswalakshmi Sasidharan and Others vs the Branch Manager, Syndicate Bank, Belgaum (SLP no 4077 of 1997), the Supreme Court made it clear that if a person suffered loss on account of the failure of a bank to disburse the loan amount as contracted, it would give the consumer the right to complain of deficiency and seek redress under the Consumer Protection Act. Then in 2004, in the case of Aquadev India Ltd vs State Bank of Hyderabad and others, where a consortium of banks promised the loan, asked the consumer to go ahead with his project and then after two years withdrew the offer, the apex consumer court held that even though the banks were entitled to repudiate the contract (for the loan) for justifiable reasons, the delay in taking such a decision thereby causing the consumer loss, constituted deficiency in service. It therefore asked the banks to pay the consumer, damages. More recently, the
consumer court has held that failure to return or delay in returning the
pledged documents (by the bank) after the customer had repaid the loan,
constituted deficiency in service. ( C.L.Khanna Vs Dena Bank, OP No
70/2002) In the case of Thukaram Anandha Shet vs The Manager Karnataka
Bank (Rp No 255/2001) too it emphasised this point once again. |
