Banks have the right to assess the borrower's ability to repay a loan before disbursing it, and non-fulfillment of formalities can justify the bank's decision not to disburse the loan.

Mr. Justice K.C. Bhargava, President—This is an appeal against the judgment and order dated 17.7.1992 passed by District Consumer Forum, Hardoi in Complaint Case No. 288/92.

2. The facts of the case stated in brief are that the complainant filed a complaint for recovery of Rs. 50,000/-. The facts have not been given in the judgment and are being taken from the other papers on record. According to the complainant, the Union Bank of India did not grant him loan on account of which he suffered economically and a loss of Rs. 52,675/-. It is further alleged that after the sanction of loan, an account was also opened in the Bank in the name of the complainant. As the loan was not disbursed the complainant suffered a loss.

3. On behalf of the opposite party, it is alleged that the complainant’s loan was sanctioned but on account of non-filling of the formalities, the loan was not disburshed. Suddenly the Branch Manager Mr. B.K. Sharma died and subsequent Branch Manager asked the complainant to complete all the formalities. As the formalities were not completed, the loan was not disbursed. It was also alleged that the loan was to be given for a period of seven years and a Patta in favour of the complainant was for 10 years. According to the Bank the term of the Patta was expiring on 25.5.1999, hence the complainant was not in a position to repay the loan. It is further alleged that the Bank was ever willing to advance the loan but on account of non-fulfilling of the formalities, the loan could not be disbursed. There is no deficiency in service on behalf of the opposite party.

4. The learned District Forum, after considering the case of the parties, dismissed the complaint.

5. Aggrieved against this order, the complainant has come in appeal and has challenged the correctness of the order passed by learned District Consumer Forum.

6. We have heard the learned Counsel for the opposite party as none was present on behalf of the appellant even inspite of service to the appellant on Service Postage Stamp.

7. The learned District Forum on the basis of evidence on record has come to the conclusion that it was necessary for the Bank to see whether the complainant was in a position to repay the loan or not. Naturally when the loan is taken by a person from the Bank, the Bank has to satisfy itself whether the person to whom the loan is being disbursed will be in a position to pay the same. Unless the Bank is satisfied about the recovery of its money which has been advanced it cannot be disbursed to the person concerned. In the present case the evidence on record suggests that the complainant did not fulfill all the formalities which were required by the Bank in order to see whether the complainant could be able to repay the loan or not. Thus in view of this matter, the learned District Forum was perfectly justified in dismissing the complaint. The similar view was taken by the National Commission in the case of Ram Kripal Bhargava v. Union Bank of India, II (1992) CPJ 429 (NC). Thus, we find that this appeal has no force and is liable to be dismissed.

ORDER

The appeal is dismissed. The judgment and order of the learned District Forum are confirmed.

There will be no order as to cost.

Appeal dismissed.

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