BHARAT APPLIANCES CORPORATION vs Syndicate Bank

THE complainant firm M/s. Bharat Appliances Corpn. Ghaziabad has lodged this complaint before us against the above stated seven Opp. Parties as mentioned in the complaint. THE case of the Complainant firm is that it runs a Small Scale Industrial Unit managed by qualified Engineers and that it had started manufacturing washing machines and that during course of time it started making other electrical appliances as mentioned in paragraph 1 of the complaint. It is stated that this small scale unit was started, after obtaining loan facility from the Syndicate Bank which was to expire in March 90 & in that regard they had executed loan documents in March 1989 & that they had applied for extention for which they had submitted fresh proposal with all related documents in May 90. THE Complainant firm had applied for extention of the facility was indicated in paragraph of the complaint alongwith documents relevant for the purpose of the case. THE complaint of the Complainant firm is that no action had been taken by the bank towards the proposal for extension facility inspite of several reminders. THEy have also stated that a new firm was constituted due to death of one of the partners and as such fresh proposal was submitted in June 91. It has been stated that earlier Late Shri Musaddi Lal & his son Sri Ved Prakash Gupta were the partners of the Complainant firm & that after death of Sri Musaddi Lal, Mr. Ved Prakash Gupta and his son Sri Sanjeev Gupta were the new partners of the Complainant firm. It has been stated that even during the period of 7 months the bank did not take any action. THE complaint has been filed in April 92 and that in January 92 their limits were renewed. THEy have stated that the delay of 7 months were with the bank.

IN paragraph 5 of the complaint it has been stated that the Bank is debiting quarterly interest after every quarter and in paragraph 6 of the complaint have stated, the other mistakes on the part of the Bank. IN paragraph 4 of the complaint it has been stated that although the Branch Manager Sri. S.K. Gupta has received the sanction letter from the Divisional Office of the bank but the branch office of the bank was showing their unwillingness to execute the fresh documents on some pretext or the other. IN para 7 of the complaint it has also been stated that the Asstt. Manager Sri. G.D. Gupta has taken 2 articles costing Rs. 2,200/- & has not made any payment. The case of the Complainant is that the bank without passing may orders on the application for extention of period of credit facility started debiting the account of the Complainant with interest in the manner indicated on paragraphs 5 and 6 of the complaint. The complaint of the Complainant is that the Bank without any reasons and without informing the Complainant started deducting interest etc. in the account which is illegal. They have also stated other harassment being made on their firm. The Complainant has also prayed that a sum of Rs. 50,000/- be awarded to them by way of compensation and have desired other 3 reliefs as indicated under para 11 to be given to them. The Opp. Parties one to five have filed a written statement in which they have admitted that the Bank had sanctioned and allowed ODH limit to the extent of Rs. 1.5 lacs and OSL loan of Rs. 40,000/- to the Complainant firm in March 89. It has also been admitted that afresh partnership had come into existence with Sri Ved Prakash Gupta and his son as partners. It is also stated that the earlier sanction was only for 12 months & that a fresh proposal was submitted in May 1990 which locked certain documents as stated in para 4 of the written statement. In regard to the new partnership the Opp. Parties raised objections which are mentioned in paragraph 4 of the written statement. It has been stated that the new partnership deed was executed on 13.5.1991 and a fresh proposal was admitted in June 1991. The Opp. Parties in para 4 of their written statement (page 3) have stated the shortcomings, of the new partnership deed of the firm. In para 5 of their written statement they have admitted that the Branch Office had received sanction letter from their Divisional Office and that the Complainant firm had been given full information regarding required documents and security. They have also stated that on the face of the improved Will of Late Sri. Musaddi Lal (original partner of the firm) the legal opinion was that probate had to be obtained from the Court.

The Complainant firm submitted their rejoinder in which they have denied the contentions of the Opp. Parties and have stated their case with copies of letters enclosed therein. We have seen the record of this case, and we find that in regard to the fresh proposal as was submitted by the Complainant firm to the Bank, the two sides have put up contradictory pleas whereas the Complainant firm has categorically stated that the fresh proposal as was submitted by them to the Bank was complete and that all the required papers were furnished by them to the bank and in this regard they have enclosed number of letters. On the other hand the bank has contended that the fresh proposal lacked certain documents. But we find that the Bank has not been able to put up before us any documentary evidence, which could have supported their stand and wherein they would have written to the complainant firm about the deficiencies in the fresh proposals. As such the bank has not been able to prove their stand before us in this regard. The bank has admitted having received the sanction from their Divisional Office and even then the branch office neither issued the concerned sanction letter nor inititated right then any deficiencies in the fresh proposal as submitted to them by the Complainant firm. We therefore find that the bank has been negligent in this regard.

IN their written statement the bank has also referred to the unproceed Will of Late Shri Musaddi Lal but on their behalf, it could not be shown to us as to when and how any deficiency in this regard was pointed out by them to the complaint firm at a point of time when the fresh proposal was under consideration with the Bank. The facts of the case also show that the Complainant complained to the bank about the refusal to permit him to operate the accounts as is clear from Annexure 10. The Complainant reiterated it''s demand by Annexure 18 that the interest debited is not correct.

ON this matter the question that arises is as to whether the bank is entitled to debit to the Complainant''s account the amounts of interest in the manner that has been done by the bank. From the facts setout above the question that arises is as to whether the bank is entitled to debit the interest in the manner it is doing now. In our opinion the action taken by the bank in debiting Complainant''s account with interest vitiates the principle of natural Justice. It has to be appreciated that the bank had extended the loan facility for running a Small Industrial Unit. It is also a fact that the Complainant applied for the extention of loan facility for an extended period. Instead of issuing any orders on the application for extention of period of the loan facility, the bank started debiting interest from the Complainant. We have gone through in vain and we find that bank at no stage had called upon the Complainant to explain as to why interest be not deoited from Complainant account. From the facts that have emerged, it appears that the bank did not indicate to the Complainant why the interest is being debited. This manner of dealing by a National Bank with it''s customers is highly objectionable. The proper course for the Bank was to have issued a show cause notice calling upon the Complainant why interest be not charged by the bank in the manner as has been done. After examining and considering the case of the Complainant the bank by a speaking order should have given it''s reasons & findings in regard to the being interest debited by them. In this way the Complainant would have given it''s reasons for not debiting interest to his account. By not obsering this procedure he has not been apprised why the interest is being debited in the manner that has been done by the bank. We accordingly allow the Complaint and quash the action of the bank debiting the Complainant''s account with interest in the manner the bank has been debiting interest. Our view is that the action taken by the bank without issuing show cause notice illegal. It was open to the said bank to pass any order which it thinks proper by making a speaking order giving for debiting or not debiting the account with the interest in quash.

ON account of the High handed action of the bank the Complainant has undoubtedly suffered loss which is clear from the facts. The prayer for extension of loan facility to the Complainant, has not been considered and instead of that the bank has started debiting a mounts in the Complainants account therefore hold the bank guilty of negligence in the manner indicated above and we assess the amount of the compensation to be payable to the Complainant at a sum of Rs. 25,000/-. (Twenty Five Thousand). The Complaint is decided in the manner indi-cated above. Complaint decided.