The Bank has discretion in sanctioning loans and can consider credit worthiness, past performance, and conduct of the applicant. A complainant who defaults on loan repayment cannot accuse the Bank of deficiency in service.

Thiru Justice A. Raman, President—Both the appeals arise out of an order passed by the lower Forum. We are of the view that the appeal preferred by the Bank against the order of the lower Forum in A.P. No. 508/1999 has to be accepted and the appeal preferred by the complainant against the same order in A.P. No. 376/1999 is liable to be dismissed.

2. The lower Forum has thoroughly failed to appreciate the important aspects involved. First of all, the complaint has become stale. From the very allegations made in the complaint, it is obvious that the cause of action arose even in the year 1989. The complainant has chosen to approach the lower Forum only on the year 1996. Thus on the face of it, the relief is barred by limitation. Apart from the legal aspects of it, on facts, the lower Forum has erroneously concluded that there is deficiency in service. The complainant has applied for loan facility to the Bank in a sum of Rs. 2,00,000/- for the project he proposed to start. A sum of Rs. 1 lakh was sanctioned as a term loan and a Rs. 50,000/- under cash credit scheme was also sanctioned for his unit known as K.R.N. Industries for manufacture of plastic kundams and cans. The Bank also released a sum of Rs. 21,000/- for purchase of electric motors and starters and Rs. 30,000/- for the supply of plastic moulding machinery. The complainant had entered into an agreement with M/s. Sundar Engineering Developments for the supply of the said machinery. Admittedly the machinery was not supplied in time with the result that the complainant could not commence the unit and could not start production of the plastic cans and plastic kundams. On account of the same, he has suffered financially. The unit was declared as sick unit. The electricity was also cut off. M/s. Sundar Engineering Developments supplied the machinery, only after 6 years by which time the amounts due to the Bank had accumulated considerably. The complainant did not take steps at all to make any payment to the Bank. The interest was creeping up. It was also found on inspection that the complainant had not purchased 2 units of 15 HP motors but only one 10 HP motor and one 15 HP motor in the place of 2 units of 15 HP motors. On an application by the complainant to the District Industry and at their instance, the opposite party made a visit and they found that they cannot consider release of further loan as the machinery had not been erected and the project was not a viable one. The sanction of loan either in part or in full is within the discretion of the Bank. It is for the bank to decide whether a particular party is eligible for credit. The Bank has to take into consideration the credit worthiness, the history of past peformance, the conduct of the applicant and loan liabilities. In this case, admittedly after sanction of the initial sum, the complainant has not started the industry nor has chosen to make any repayment of the loan. As held by the National Commission in I (1991) CPJ 23, that it will not be open to the Commission to substitute its judgments for the decisions to be taken by the Banks for giving bank credit. The Commission cannot overlook the fact that the financial viability of the Banks would be seriously affected and the whole credit system will collapse, if it is not ensured that the amounts advanced would be recovered in overwhelming majority of the cases and defaults are kept to the minimum. Therefore, it will be for the Bank to decide the risks it should undertake balancing its interests and the need for promotion of agriculture or industry, as the case may be.

3. In the facts and the circumstances of the case where it has to be held that the Bank was justified in refusing to sanction remaining balance of the loan. The loan was availed of for starting a unit for production of plastic cans and kundams. After nearly period of 6 years, the unit was not started. In fact, the Electricity Board also disconnected the service. Meanwhile, the liability of the com