Chairman-cum-Managing Director, Rajasthan Financial Corporation vs Commander S. C. Jain (Retd. )

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2010 Supreme(SC) 269

2010 (2) Supreme 663
SUPREME COURT OF INDIA
P. Sathasivam and H.L. Dattu, JJ.
The Chairman-cum-Managing Director, Rajasthan Financial Corporation and Anr. — Appellants
versus
Commander S.C. Jain (Retd.) & Anr. — Respondents
Civil Appeal No.2774 of 2010
(Arising out of SLP(C) No. 16323 of 2006)
Decided on : 26-03-2010

Headnote:Consumer Protection Act,1986-Respondent applied for loan to appellant Corporation for setting up a manufacturing unit of plastic doors, windows etc.- The Corporation after considering the request made, had sanctioned term loan of Rs.18,000/- for machinery and also Rs.1,26,000/- as working capital limit for said business-Complaint alleging deficiency of service by respondent on appellant Corporation not disbursing loan amount- District Forum dismissed the complaint stating that there was no deficiency in service as the bills presented by the respondent were of a firm which was non-existent-Appeal- State Commission refused to entertain the appeal - Thereafter, review petition filed by respondent was also rejected by State Commission –Revision Petition-National Commission directed appellant - Corporation to pay compensation of Rs.1,50,000/- with interest at rate of 12 per cent from the date of filing of complaint. – Appeal- Plea of Appellant - Corporation that National Commission had erred in awarding compensation with interest, inspite of holding that there was no deficiency in rendering the service to the respondent- Appellant - Corporation had repeatedly requested the respondent to submit the bills of the purchase of the machinery of Wolf make, or from M/s Rally India Ltd. in order to disburse the amount sanctioned for the machinery -However, it was on record that respondent has constantly submitted wrong receipts- District Consumer Forum had observed in its order that Nita Udyogic Vastu Bhandar (P) Ltd from whom the respondent claimed to have purchased the machinery and the bills so produced was clearly fraudulent as this concern stood closed since March 1989- This fact was reiterated by State Commission in its order –Hence held that National Commission failed to appreciate that respondent had repeatedly acted fraudulently in providing the bills and receipts to the appellant–Corporation- The loss suffered by the respondent for the reason of not being able to start the unit could not be the basis for awarding compensation specifically when the respondent was at fault for non release of the balance loan amount- Hence when there was no deficiency found on the part of appellant - Corporation, it could not be asked to pay compensation-Impugned order of National Commission being unsustainable set aside- Appeal allowed. (Paras 13 to 15, 18, 19)
       Facts of the Case :
       Respondent herein in the instant case applied for loan to appellant Corporation for setting up a manufacturing unit of plastic doors, windows etc. The Corporation after considering the request made, had sanctioned term loan of Rs.18,000/- for machinery and also Rs.1,26,000/- as working capital limit for said business. Complaint alleging deficiency of service was filed by respondent on appellant Corporation not disbursing loan amount. District Forum dismissed the complaint stating that there was no deficiency in service as the bills presented by the respondent were of a firm which was non-existent. State Commission refused to entertain appeal against said order. Thereafter, review petition filed by respondent was also rejected by State Commission .On Revision Petition,National Commission directed appellant - Corporation to pay compensation of Rs.1,50,000/- with interest at rate of 12 per cent from the date of filling of complaint.
       2.Present appeal has been filed against said order of National Commission.
       Findings of the Court :
       Appellant - Corporation had repeatedly requested the respondent to submit the bills of the purchase of the machinery of Wolf make, or from M/s Rally India Ltd. in order to disburse the amount sanctioned for the machinery .However, it was on record that respondent had constantly submitted wrong receipts. District Consumer Forum had observed in its order that Nita Udyogic Vastu Bhandar (P) Ltd from whom the respondent claimed to have purchased the machinery and the bills so produced was clearly fraudulent as this concern stood closed since March 1989. This fact was reiterated by State Commission in its order .Hence held that National Commission failed to appreciate that respondent had repeatedly acted fraudulently in providing the bills and receipts to the appellant – Corporation. The loss suffered by the respondent for the reason of not being able to start the unit could not be the basis for awarding compensation specifically when the respondent was at fault for non release of the balance loan amount. Hence when there was no deficiency found on the part of appellant - Corporation, it could not be asked to pay compensation. Impugned order of National Commission being unsustainable was set aside. Appeal was allowed.

ORDER

H.L. Dattu, J. —

The petitioner has sought leave to appeal against the order passed by the National Consumer Disputes Rederessal Commission, New Delhi (for short ‘National Commission’) wherein and whereunder it has directed the appellant to pay compensation to the tune of Rs.1,50,000/- along with interest at the rate of 12 per cent from the date of filing of petition in favour of the respondent. Leave granted. FACTS:

2)The Respondent had applied for loan on 03.03.1990 to the Rajasthan Financial Corporation (in short ‘Corporation’) for setting up a manufacturing unit of plastic doors, windows etc. The Corporation after considering the request made, had sanctioned term loan of Rs.18,000/- for machinery and also Rs.1,26,000/- as the working capital limit for the said business. As per the sanction letter, the Corporation was to provide only 75 per cent of the purchase price to the respondent and the remaining share, i.e., 25 per cent was to be contributed by the respondent. The sanction letter also provided that if the concern has purchased machinery in accordance with the scheme and full payment has been made, 90 per cent of the admissible amount of loan will be released on the basis of the statement of account prescribed for the purpose, duly supported by bills and receipts and balance after valuation of machines. The period of repayment of the loan was eight years in quarterly installments. The first installment was to be due on the first day of 18th month reckoned from the date of first disbursement of loan against fixed assets. Further as per the terms of the sanction letter one of the important terms was that the machinery should be purchased from authorized dealer and of Wolf make or from M/s Rally India Ltd.

3)On 29.06.1990, the respondent requested the appellant -Corporation for more time to complete the formalities of submitting the loan documents in order to enable the appellant to disburse the loan amount. The loan document was, however, executed in favour of the appellant on 05.07.1990. The appellant -Corporation requested the respondent to submit bills and receipts of plant and machinery as well as raw material so that the parties could proceed with the loan agreement. Thereafter, in a short period, the bills were submitted and it was apparent from the bills submitted that the name of the firm in whose favour the bills were originally issued was struck off and the respondent firm’s name was inserted in its place. Thus the appellant - Corporation asked the respondent to submit correct bills.

4)Thereafter on 26.07.1990, the respondent again submitted the bills in the name of Kailash Udhyog and not in the name of his own business, i.e., Fauji Kutir Udhyog. The appellant - Corporation was forced to dishonor the bills as the name indicated in them were not as per the requirement and new bills were asked to be submitted. Later, on 04.05.1991 the respondent submitted a bill of Nita Udyogic Vastu Bhandar Private Limited dated 21.08.1989 for a sum of Rs.10,200/- representing the purchase price of drill machine etc., prior to the date of sanction of the loan and its disbursement. Another bill of Rs.17,800/- dated 29.12.1989 which represented saw machines with two HP motors with accessories etc. was also submitted. Due to repeated submission of wrong bills by the respondent, the appellant addressed a letter to the respondent stating that the bills were unacceptable for two reasons, firstly, Nita Udyogic Vastu Bhandar Private Limited is a family concern and the respondent is in gainful employment in the concern. Secondly, Nita Udyogic Vastu Bhandar Private Limited is not an authorized dealer for Wolf make machine or M/s rally India Ltd. The appellant also informed that the machines were old as per the internal checkup done by the appellant - Corporation. The respondent was given another chance as the appellant informed the respondent that though the loan agreement was time barred, his case could be considered favourably only if

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