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2025 Supreme(Online)(SCDRC) 1221
STATE CONSUMER DISPUTES REDRESSAL COMMISSION
AJEYA MATILAL, J, NITYASUNDAR TRIVEDI, Member
The Chief Regl.Mgr., State Bank of India – Appellant
Versus
Dhiresh Biswas – Respondent
FIRST APPEAL NO. SC/19/A/103/2023
For the Appellants/Petitioners: Ms. Deblina Lahiri
For the Respondents: Mr. Sonali Mazumder
Denial of loan disbursement after approval 'in principle' does not constitute deficiency of service if based on doubts about repayment capacity.
Headnote:(A) Consumer Protection Act, 2019 - Complaint against denial of loan - Denial of a loan sanctioned 'in principle' does not constitute deficiency of service or unfair trade practices by the Bank - The court reinforces that Banks cannot be compelled to disburse loans if repayment capacity is doubted. (Paras 8, 9)
Facts of the case:
The Respondent applied for a loan of Rs.7,36,000/- under the Mahatma Gandhi National Gramin Project. Although the loan was sanctioned 'in principle', the Bank later denied disbursement citing doubts over repayment capacity.
Findings of Court:
The legal obligation to disburse a loan is not binding solely based on approval 'in principle'. Decisions by the Bank regarding disbursement must consider economic viability. The denial of loan disbursement was ruled as not constituting an unfair trade practice.
Issues: The primary issue was whether the Bank was legally bound to disburse a loan once it was sanctioned 'in principle'.
Ratio Decidendi: The court concluded that no borrower can compel a bank to disburse a loan; doubts regarding repayment capacity are valid grounds for non-disbursement, demonstrating that even an incorrect denial does not amount to a legal challenge without proof of mala fide.
Result: Appeal allowed and impugned order set aside.
| Table of Content |
|---|
| 1. fact of the complaint against the bank for non-disbursement of loan. (Para 1 , 2 , 3 , 5) |
| 2. arguments regarding the bank's obligation to disburse the sanctioned loan. (Para 6 , 7) |
| 3. court's observations on bank's discretion in loan approval. (Para 8 , 9) |
| 4. court's reasoning validating the bank's decision. (Para 10) |
| 5. final decision on the appeal and setting aside of the previous order. (Para 11 , 14) |
Hon’ble Mr. Nityasundar Trivedi, Member
1. This Appeal No. A/103/2023 arises out of dissatisfaction and grievance of the two O.Ps in complaint case No.CC/9/2022 in which Chief Regional Manager, SBI was the O.P No.1 and Branch Manager, SBI, Gosaba Branch was O.P No.2.
2. The bone of contention of this dispute out of which this litigation has arisen was denial of loan amounting Rs.7,36,000/- to the Respondent/Complainant who applied for it under the Mahatma Gandhi National Gramin Project in the month of July 2021 on fulfillment of formalities (as per statement of the Respondent/Loan Applicant). It is stated by the Respondent/Complainant that in the month of August 2021 the Appellant/O.Ps informed the Respondent/Complainant that they had approved the said loan “in principle” following which the Respondent submitted necessary documents. But subsequently the Appellant/O.Ps did not disburse the loan due to their doubts as to the repaying capacity of the loanee relating to the Loan Scheme.
3. Due to this the Complainant at the District Level, (here the sole Respondent) Mr.
Dhiresh Biswas filed CC/9/2022 at the DCDRC, Baruipur, 24 Parganas(South) against the Chief Regional Manager, SBI as O.P No.1 and the Branch Manager Gosaba SBI as O.P No.2. After contested hearing, the DCDRC Baruipur ordered disbursement of the loan amount sanctioned “in principle” for Rs.7.36,000/- within 30 days from the date of the Order passed on 30.01.2023 along with Rs.15000/- as compensation for deficiency in service and unfair trade practice and also a litigation cost of Rs.10,000/-.
4. Being aggrieved by and dissatisfied with this Order of the DCDRC Baruipur, the O.Ps thereto have come up with this Appeal Petition within the limitation period, praying for setting aside that Order of the District Commission. Accordingly, necessary steps were taken for filing of the BNA. This case was contested and both sides put forward their arguments through their Ld. Counsels.
5. The main contention of the Respondent/Complainant is he was frustrated by the decision of the Bank which did not disburse the loan even after sanctioning it “in principle”. As per his version this has economically hit him hard. He prayed before this Hon’ble State Commission for passing Order of upholding the District Commission’s Order.
6. Countering this Ld. Advocate for the Appellant stated getting loan is not a matter of right. In support of his statement he submitted three citations:
(I) M.D, Maharastra Finalcial Corportaiton Vs. Sanjoy Shankarsa Mamarde Civil Appeal No.7189 of 2002, (II) II) Andhra Bank & Another Vs. Jaya Roy & Others Appeal No.526 of 2010 and (III) SHS India Ltd. Vs. Dolphin International Ltd. , Civil Appeal No.5759 of 2009.
7. The Respondent failed to give any citation in support of his argument that the Bank was legally bound to disburse the loan once it is sanctioned “in principle”.
8. Perused the above three Judgments of the Hon’ble Supreme Court. It is seen the Hon’ble Supreme Court has held in the matter of loan, none can compel the Bank to disburse a loan. Hon’ble Apex Court has held even a wrong decision of the Bank in denying a loan is not open to challenge, if any malafide intention of the Bank not proved in the denial of the loan.
9. It has also been held by the Hon’ble Apex Court that Banks are custodian of Public Money and when the Bank is not sure about the repayment of the loan from any particular borrower due to their doubt as to repaying capacity of the concerned loanee, economic viability and technical feasibility of a scheme, the Bank cannot be forc
