HOTEL SUPREME PVT. LTD. vs Tamil Nadu Industrial Investment Corporation

THE complainant is the appellant. THE complainant promoted a Hotel of three-star category in Madurai, for which purpose he approached the opposite party for sanction of a term loan of Rs. 30 lakhs initially. But the loan was reduced to Rs. 26 lakhs unilaterally by the opposite party. THE documents relating to the hotel were hypothecated. THE opposite party disbursed only a sum of Rs. 18,08,000/- as against Rs. 20 lakhs sectioned to him. THE disbursement was also not done immediately, but with considerable delay. As a result, the complainant had to apply for loan from third parties for higher interest. In spite of time, the balance amount of Rs. 7,92,000/- has not been disbursed by the opposite party. THE opposite party have failed to act in accordance with the norms, but have proceeded against the complainant under Section 29 of the State Financial Corporations Act. THE complainant moved the High Court for injunction to forbear the opposite party from taking possession of the property. THE repayments were promptly made by the complainant and the accounts were settled in full on 27.9.1994. THE complainant having settled the loan account, has been asking for the return of the title deeds. THE opposite party informed the complainant that during the internal auditing, it was found that the refinance sanctioned by IDBI got lapsed for a portion of the loan amount and as such higher rate of interest has to be collected. THE opposite party, therefore, called upon the complainant to pay a sum of Rs. 2,35,417/-. THE auction of the opposite party is illegal. THEy have no right to retain or withhold the title deeds when the loan has been discharged. THE complainant filed the complaint alleging that there was deficiency in service.

THE opposite party filed a version pleading as follows: THEre is no relationship of consumer and trader. A person who applied for financial assistance is not a consumer. THE Tamil Nadu Industrial Investment Corporation Ltd. is a Government of Tamil Nadu Undertaking. THE Industrial Development Bank of India will coordinate the activities of all the State Financial Corporations. Sanction of loan will be valid only after the sanction of refinance by the Industrial Development Bank of India and the loan will become effective only after the proposal was accepted. If the Industrial Development Bank of India rejects or refuses the proposal for refinance to certain portion of the loan, then the industrial concern is liable to pay 2 more percent. Further, if any conditions are stipulated by the Industrial Development Bank of India, it will also be applicable. For various reasons, the term loan of Rs. 30 lakhs sanctioned was reduced to Rs. 26 lakhs. THE amounts were disbursed by 19.7.1988. Since the last two disbursements viz., 12.3.1987 and 19.7.1988 are not within the validity period of refinance, i.e., prior to 5.4.1986, it attracts 2% additional interest. It is the case of the opposite parties that the total amount sanctioned as loan will be disbursed in instalments depending upon the completion of stages in the construction of building. THE balance of the sanctioned amount was availed of by the complainant on 12.3.1987 and 19.7.1988. THE corporation has the right to take the management or possession whenever the unit makes any default. During the internal auditing it was noted that the refinance sanctioned to the complainant''s unit had lapsed on 5.4.1986 and as the disbursements were made on 12.3.1987 and 19.7.1988, the term loan deserves attraction of 2% interest. THErefore, the sum of Rs. 2,35,417/- towards left out or non-charged interest from the period from 12.3.1987 to 31.7.1995 was claimed. It is legally tenable. A copy of the working sheet had also been sent to the complainant. THE complainant has failed to maintain the financial discipline. THE opposite party is not a trader and the complainant is not a consumer. THEre is no deficiency in service. THE sum of Rs. 4 lakhs claimed as damages is imaginary. Hence the opposite party prays that the complaint may be dismissed. The lower Forum, by its order dated 12.9.1999 dismissed the complaint. Hence this appeal.

In our opinion, it is not necessary to consider the question of payment of interest and whether the claim of interest made by the opposite party at Rs. 2,35,417/- is just, equitable and maintainable. That is a question that can be agitated only before a Civil Court where alone the quantum of the amount and the extent of liability can be decided after going through such oral and documentary evidence that are placed by the parties before the said Court. In their letter dated 31.7.1995, while replying to the complainant''s letter the opposite party have stated that the complainant has stated in his letter that the term loan has been settled in full on 27.9.1994 but, however, it has been noted during the internal that as on 31.7.1995, a sum of Rs. 2,35,417/- is due from the complainant towards the higher rate of interest and hence to treat the letter cited in the reference i.e., letter dated 9.1.1995 sent by them as cancelled. Therefore, by their letter dated 9.1.1995 they have stated that the loan amount had been paid in full. The sum of Rs. 2,35,417/- is stated to have become due because during the internal auditing it was found that certain disbursements were made after the validity period. If it is so, it is the mistake of the opposite party. It is not a default or act committed by the complainant. If really certain disbursements had been made after the validity period, viz., 12.3.1987 to 19.7.1988 by way of two payments alleged to have been made, it is not known how the letter was sent on 9.1.1995 stating that the entire amount has been settled. For, if the entire amount had been settled by or before 9.1.1995, how it can be stated that the sanction had lapsed on 5.4.1986 and, therefore, they are entitled to claim interest? Admittedly, before the sanction lapsed, the amount has been settled by them as we see from their letter dated 9.1.1995. Therefore, if it was so, how is it that two payments were made on 12.3.1987 and 19.7.1988 and how the two payments can be considered to have been made by the institution after the lapse of IDBI sanction on 5.4.1986. And it is also not stated in the version how the sum of Rs. 2,35,417/- representing the interest at higher rate by 2% i.e., calculated and the entire Rs. 26 lakhs and the two sums of money sanctioned as advance on 12.3.1987 and 19.7.1988 both aggregated to Rs. 7,92,000/-. Thus, there is incongruity in the opposite party''s case. Once they have stated by their letter that but for a sum of Rs. 2,35,417/- the accounts have been settled in full, they cannot retain the title deeds of the complainant. The opposite party cannot still withhold the title deeds of the complainant, especially when they have started in clear terms that the accounts have been settled. If at all they feel that a sum of Rs. 2,35,417/- is still payable to them by way of interest, their remedy is to take separate action in a Court of law. We have already pointed out that once it is admitted that the accounts have been settled even prior to 9.1.1995, to say that subsequently payments were made and for it the complainant is liable to pay interest because of expiry of loan, is rather strange. Moreover, the so-called internal auditing report is not produced. When the internal auditing was done it is also not stated. If it was stated so in the internal audit, it is not known why they should send a letter stating that the entire claim has been settled. Moreover, in the letter of sanction, there is no such condition. Clause 7 only reads that "the sanction of our loan or part thereof remaining undrawn after the expiry of eighteen months from the date of sanction of refinance loan by IDBI would stand automatically lapsed and any further disbursement shall carry higher rate of interest at the discretion of the Corporation." Here as on the date of the last two payments, there was no loan pending since it has been settled. Therefore, it is not a question of any part of the loan remaining undrawn and even if the part of the loan is allowed to have been left undrawn, it must be shown that the opposite parties were ready to disburse the amount but it was wilfully kept undrawn by the complainant. On the other hand, from the schedule of payment, it is seen that the first amount was sanctioned on 7.7.1984, the 2nd amount was paid on 12.11.1984, the 3rd amount was sanctioned on 13.12.1984, the 4th, 5th and 6th amounts were disbursed with an interval of 2 months each and the 7th and 8th amounts were disbursed with an interval of one month and the 10th amount was disbursed with an interval of 1 year and 4 months. So, the disbursement has not been regular as alleged by the complainant and there has been considerable time-gap. Unless it is shown that it is the complainant who was responsible and he having obtained the sanction of disbursement of loan kept quiet without drawing the amount, the opposite party cannot impose any interest much less higher rate of interest on the ground of internal auditing and without notice to the complainant.

THERE is thus deficiency in service on the part of the opposite party. The contention of the opposite party that there is no consumer dispute and the relationship is one of debtor and creditor between the parties cannot be accepted at all. THERE is a contract of service in the sense when the complainant approached for a loan the opposite party sanctions the same and disburses the same. They have taken the title deeds by way of hypothecation. When on their own showing the amount has been settled, they cannot simply make a claim without any basis or provision for the same and retain the title deeds. It would amount to an illegal act. THERE is thus deficiency of service in the sense that there is an unjust withholding of documents by the opposite party. The said act of the opposite party is unjust and it amounts to unfair trade practice. The opposite party being a statutory Corporation, has adopted bullying tactics in this case. Having received the amount, they are illegally retaining the documents. Hence, in such circumstances, we hold that the Forum would have ample jurisdiction since the language employed in Section 2 of the Act is so wide as to include "service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with Banking, financing, insurance, transport", etc. and, therefore, "service" in this case is one rendered by the opposite party which squarely falls within the definition of "service" incorporated under the Act and the complainant having paid for it in the sense that he was availed of the services by obtaining loan and repaying it with interest. It is definitely a consumer dispute and hence the view of the lower Forum cannot be accepted at all. Now coming to the claim of damages: the complainant has claimed a sum of Rs. 4 lakhs as compensation for the deficiency in service. His claim is highly fanciful. It cannot be entertained without some material to support the same. If the complainant has produced material to show that for want of those documents he could not carry on any business or in any way his earning capacity has been affected, one can understand. But such a claim is not made even in the complaint. Therefore, in such circumstances, we have no hesitation in holding that there is deficiency in service and thus the complainant is entitled to return of the documents viz., title deeds deposited by him with the opposite party.

IN the result, the appeal is allowed modifying the order of the lower Forum as follows: (1) There will be a direction to the opposite party to return all the documents submitted by the complainant to them at the time of sanction or availing of the loan from the opposite party. (2) Time for compliance : 2 months (3) IN the circumstances, the parties are directed to bear their own costs throughout.

Appeal allowed.