IMPORTANT POINT
Non-release of loan occasioned by complainant’s own conduct, does not amount to deficiency in service by the Corporation.

JUDGMENT

D.K. Jain, J. —

1.Challenge in this appeal, filed under Section 23 of the Consumer Protection Act, 1986 (for short “the Act”), by the Maharashtra State Financial Corporation (hereinafter referred to as “the Corporation”), is to the final order, dated 7th January, 2002, passed by the National Consumer Disputes Redressal Commission, New Delhi (for short “the Commission”) in Original Petition No. 9 of 1995. By the impugned order, the Commission has accepted the complaint preferred by the respondent (hereinafter referred to as “the complainant”) against the Corporation and has directed the Corporation to pay to the complainant an amount of Rs.4,84,457/- as compensation, within a period of two months from the date of the order and in case of default, to pay interest at the rate of 18% per annum from the date of order till actual payment.

2.Succinctly put, the material facts giving rise to the present appeal are as follows:

The complainant approached the Corporation for sanction of loan for his hotel project at Amravati. As per the project report, the capital outlay was of Rs.74.45 lakhs. The means of finance envisaged in the project report were as follows:

i) Proprietor’s capital : Rs.16.80 lakhs ii) Term loan from : Rs.30.00 lakhs Corporation

iii) Special Capital : Rs.21.30 lakhs Incentive from SICOM

iv) Unsecured loans : Rs. 6.35 lakhs Total : Rs.74.45 lakhs

3.The Complainant’s loan proposal was approved by the Executive Committee of the Corporation on 27th May, 1992, sanctioning a term loan of Rs.30 lakhs to the complainant. Accordingly, a sanction letter along with terms and conditions of the loan was issued to the complainant on 2nd July, 1992. The material conditions of loan were as follows:

“(a) The loan shall be utilised exclusively for the project as per the scheme approved by MSFC and the specific purposes for which the same is sanctioned.

(b) The loan shall be disbursed by MSFC in one lump sum or in instalments as and when the said purposes are fulfilled or at the entire discretion of the Corporation or may be refused if in the opinion of the Corporation, the purpose for which the full loan has been sanctioned are not properly fulfilled.

(c) The loan will be disbursed either for acquisition of fixed assets under the said scheme or for reimbursement of funds utilised for acquisition of fixed assets taken for security under the said scheme.

(d) A minimum margin of 55% over all on fixed assets shall be maintained during the currency of the loan.

(e) The loan shall be repaid within a period of 8 years by 13 half yearly instalments commencing from the end of 2nd year of disbursement of the first instalment of the loan. The amount of each instalment repayable being about 1/13 of the amount sanctioned regardless of the amount disbursed.

(f) The interest shall be charged @ 22% p.a. and the same shall be payable quarterly on the total loan and the same shall be charged from the date of disbursement of first instalment of the loan.”

Additionally, it was also agreed that the loan amount would be disbursed depending on the progress of the work in accordance with a set time schedule. The progress of the construction work was required to be evaluated by the valuer approved by the Corporation.

4.The said conditions were accepted by the complainant. Pursuant to complainant’s request vide his letter dated 2nd September, 1992, undertaking to bring entire 100% capital; filing his banker’s confirmation for grant of bridge loan against subsidy i.e. (SCI) and load sanction letter from MSEB, before availing of the next disbursement, the first instalment of the loan of Rs.2,90,000/- was released by the Corporation to the complainant. On the same day, the complainant issued a cheque in the sum of Rs.30,000/- towards up-front fees to the Corporation. However, the said cheque of Rs.30,000/- was dishonoured when presented for payment. By their letter dated 15th December, 1992, the Corporation intimated the complainant that despite the release of first in