ESSEX HARMS (P) LTD vs Punjab National Bank

DURING the relevant period the Complainant had various accounts in the Hindustan Commercial Bank Ltd. which was merged with Respondent (Punjab National Bank) in December, 1986. Before this merger, Government of India imposed a moratorium over the Hindustan Commercial Bank on the 23rd of May, 1986.

ACCORDING to the Complainant, his company suffered due to the freezing of his accounts, as a result of the moratorium declared by the Government of India over the Hindustan Commercial Bank. The Complainant could not fulfill its contractual obligations because of the said freezing of accounts. The grievance of the Petitioner is that when he approached the Punjab National Bank for the continuance of the credit facilities, the Respondent (Bank) insisted that the Complainant should reduce the outstanding balances in his accounts by a sum of Rs. 17 lakhs which was later on raised to Rs. 22 lakhs. The freezing of the accounts resulted in the complainant going to "the verge of irrecoverable disability" which was further aggravated by the condition imposed by the Punjab National Bank that the outstanding balance in cash credit accounts be reduced substantially. Even though the Complainant faced great difficulty in depositing Rs. 22 lakhs to reduce his outstandings, the Respondent Bank did not permit them to operate their accounts and "availment of the running facilities" (see Paras 16 to 19 of the complaint).

The Complainant further alleges that the bank unreasonably and unjustifiably fixed the value of the stocks of birds at Rs. 3 lakhs as against their value of Rs. 39.39 lakhs fixed in May, 1986. Subsequently, as a result of their representations, the stocks were assessed at 21 lakhs, 33 lakhs and eventually in June, 1989 at Rs. 72.01 lakhs. The Bank also insisted upon the Complainant getting the parent stocks of birds insured against mortality. The denial of credit against the stock of birds also deprived them of the vital credit necessary for the running of his concern.

TO further establish that the Bank had unreasonably denied them credit, the Complainant has emphasised that at the end of June, 1986 they were availing of a total credit of Rs. 52.40 lakhs on account of the cash credit, bills discounting, term loan and working capital, even though they were holding stocks worth Rs. 39.39 lakhs and other assets worth Rs. 77 lakhs as per the Bank''s own valuation. In addition the bank was holding the Complainant''s securities worth two and a half times more than the amount shown as due from the complainant to the bank in May, 1986. Apart from the above they had also certain assets like Kundli Factory as well as the plant and machinery of the Factory at Mehrauli. But the bank did not give adequate finance to run their concern. In short the complainants have charged that "the Respondent Bank, with some ulterior motive, however, did not grant availment of the said facilities by the petitioners to the extent of sanctioned limits, not to speak of enhancement thereof and wilfully failed to grant the services to the Complainants/Petitioners." In the result, the Bank committed breach of his obligations towards the Complainant. From a perusal of complaint as well as from the facts cited above it would appear that the Complainant has mixed up the provision of credit by the Bank to the extent of sanctioned limits in various accounts with the enhancement of the credit limits thereof and grant of additional credit facilities. It is in "the discretion of the bank to determine whether credit has to be allowed to a party to the extent of sanctioned limits, keeping in view how the party is discharging his obligations towards the bank such as repayment of the credit and interest thereon, provision of adequate and acceptable security and the management of the scheme/project or the activity for which credit has been agreed to be provided by the Bank. Again the Bank has to satisfy itself that the assets which are offered as security are good and free from encumbrance, the title of the party in the goods or property is clear and that the valuation of the assets is just and fair. It is for the bank to determine whether the party''s credit worthiness and if so the extent to which it should be allowed credit and against what security. The refusal of the Bank to enhance the existing sanctioned limits of credit or even to continue to grant credit to the extent of the limits already sanctioned cannot and does not constitute a breach of the Bank''s obligations towards its debtors. It is primary duty of the Bank to ensure that the money of the depositors which it invests in the form of credit is safe.

THIS Petition accordingly is dismissed inasmuch as the Petitioner has failed to establish any deficiency in service on the part of the Respondents in terms of the Consumer Protection Act, 1986. No order as to costs. Petition accordingly dismissed.