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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
K.S. Gupta, Presiding Member and Dr. P.D. Shenoy, Member
ICICI BANK LTD. - Appellant
Versus
K. VENKATAREDDY - Respondent
First Appeal No. 399 of 2008 from order dated 5.6.2008 in C. No. 39 of 2007 of the State Commission, Karnataka
Decided on : 03-11-2008
Mr. R. Anand Padmanabhan, Advocate, for the Appellant; None., for the Respondent
The main legal point established in the judgment is that the non-disbursement of a sanctioned loan by a bank can constitute a consumer dispute under the Consumer Protection Act, and the bank has a duty to release the remaining amount of the sanctioned loan to the borrower.
Headnote:
Consumer Dispute - Loan Disbursement - The court found that the bank had a duty to release the remaining amount of the sanctioned loan to the complainant for establishing a poultry farm. The court also held that the non-disbursement of the loan constituted a consumer dispute under the Consumer Protection Act, as the complainant, a farmer, was covered under the Act and had suffered a clear-cut deficiency in service by the bank.
Fact of the Case:
The complainant, a farmer, applied for a loan to establish a poultry farm. The bank released a portion of the loan but did not release the remaining amount, leading to financial loss for the complainant.
Finding of the Court:
The court found that the complainant had complied with the terms and conditions of the loan sanction and that there was a clear-cut deficiency in service by the bank in non-disbursing the sanctioned loan. The court dismissed the revision petition filed by the bank.
Issues: The issues involved the non-disbursement of the remaining loan amount by the bank and whether it constituted a consumer dispute under the Consumer Protection Act.
Ratio Decidendi: The court held that the bank had a duty to release the remaining amount of the sanctioned loan to the complainant for establishing the poultry farm. It also concluded that the non-disbursement of the loan constituted a consumer dispute under the Consumer Protection Act, as the complainant, a farmer, was covered under the Act and had suffered a clear-cut deficiency in service by the bank.
Final Decision: The court dismissed the revision petition filed by the bank, upholding the State Commission's order directing the bank to release the balance amount to the complainant and to utilize the same for the purpose of establishing the poultry farm for which the loan was sanctioned.
ORDER
Dr. P.D. Shenoy, Member - Being aggrieved and dissatisfied by the order of the Karnataka State Consumer Disputes Redressal Commission, Bangalore dated 5.6.2008 in Complaint No. 39/2007, the ICICI Bank (hereinafter referred to as the Bank for short) has filed this appeal before us.
2. Factual matrix of the case in brief are that Mr. K. Venkatareddy (hereinafter referred to as the complainant for short), a farmer residing at Ganjigunte Village of Kolar District, wanted to set up a poultry farm. Accordingly, he made an application to the Bank which sanctioned him a loan of Rs. 93,77,000 on 31.5.2006. An agreement was signed between the Bank and the complainant which stipulates releasing of the loan amount as per the Sanction Order depending upon the progress of construction of the poultry farm. Though the Bank released Rs. 55,95,554 on two occasions, the remaining amount was not released. The complainant alleges that he suffered financial loss due to this despite the fact that he had produced the Utilization Certificate fulfilling Bank's conditions.
3. On being noticed, the Bank submitted its version stating inter alia that as the complainant had not utilized the money already utilized for the purpose for which it was borrowed, is a breach of contract and the bank was not obliged to release the remaining amount. Further, non-releasing the amount to the complainant does not amount to a consumer dispute under the Consumer Protection Act.
4. The State Commission, after hearing the parties, allowed the complaint in part and ordered as under:
(a) The O.P. Bank is directed to release the balance amount to the complainant as per the sanction of loan within two months from today.
(b) The complainant on receipt of the said amount shall utilize the same for the purpose of establishing the poultry farm, for which the loan was sanctioned.
(c) The O.P. Bank is also directed to pay Rs. 5,000 to the complainant towards the costs of these proceedings.
5. Learned Counsel appearing on behalf of the Bank submitted that the complainant did not utilize the money properly and has not produced the Utilization Certificate, hence, the Bank is not duty-bound to release the balance amount of the sanctioned loan. Secondly, he submitted that non-disbursement of the loan does not at all constitute a consumer dispute.
6. We have had occasion to peruse the Utilization Certificate issued by Mr. S.N. Venugopal, Surveyor and Valuer on 24.4.2007. He has certified that construction of the poultry farm in Ganjugunte Village by Mr. K. Venkatareddy was inspected by him on 10.4.2007 and Rs. 51,02,500 has been utilized out of the loan amount released by the Bank. He further certified that during the time of inspection, the work was in progress. This certificate is not disputed by the Bank. Hence, it is very clear that the complainant has complied with the terms and conditions of the sanction of the loan.
7. Second limb of the argument advanced relates to whether this is a consumer dispute
8. It is clear from the records of the case that the complainant is a farmer/agriculturist living in a village and was interested in developing a poultry farm. Naturally, he had done so to enable him to earn a decent income to take care of his and his family's needs. It is not the case of the Bank that a private limited or a public limited company had approached it for sanction of the loan for a commercial purpose. Banking service is clearly covered under the Consumer Protection Act and anybody aggrieved by the deficiency in service by the Bank can file a complaint. In this case, one can imagine what would happen to a farmer if he does not get the required amount to complete the poultry farm for which construction was under progress and then he could not buy the chicks from the hatchery and rear them to be full grown birds which can lay eggs. The farmer's dream was shattered for abrupt non-disbursement of the loan by a giant private sector bank.
9. Hence, we conclude that there has been a cl
