MANAGER, ALLAHABAD BANK vs REETA JOSHI

THIS is an appeal against the judgment and order dated 24.2.1998 passed by the District Consumer Forum, Sonabhadra in Complaint Case No. 174/1998.

THE facts of the case, stated in brief, are that the complainant applied for a loan of Rs. 95,000/- for the purpose of running a beauty parlour and for sale of readymade garments and cosmetics. This amount was advanced by Allahabad Bank, Renukot Branch, Sonabhadra. After depositing margin money a sum of Rs. 20,000/- was given to the complainant for purchase of furniture, etc. After verification of the amount spent, a further sum of Rs. 40,000/- was advanced. THE rest amount of Rs. 40,000/- towards loan was not advanced by the opposite party and inspite of request, this amount was not advanced. This is deficiency in service. On behalf of the opposite party, it was alleged that the complainant had shifted her shop from Murdhawa to Turra (Pipri) for which the loan was not sanctioned as advance. On account of this fact, the rest of the loan was not disbursed.

After considering the facts of the case, the District Forum, Sonabhadra has held that even if the shop was transferred to Turra, there should be no problem to the opposite party. It, therefore, allowed the complaint and ordered for payment of rest of the amount within 15 days of the order.

AGGRIEVED against this order, the opposite party has come in appeal and has challenged the correctness of the order dated 24.2.1998. We have heard the learned Counsel for both the parties and have perused the judgment and evidence on record.

LEARNED Counsel for the appellant has argued that a sum of Rs. 20,000/- was sanctioned in the month of June, 1997 as first instalment. After the purchase of furniture, etc. the second instalment of Rs. 40,000/- was released in the month of July, 1997. The advance was done for running a beauty shop and selling readymade garments and cosmetics. When an inspection was tried to be done on complainant''s shop, then it was found that the shop has been closed. On enquiry it was revealed that the shop has been shifted to-some other place without either intimating the Bank or taking permission from the Bank for shifting of the shop. According to the learned Counsel for the opposite party, it is an admitted fact that no application was given to the Bank and no permission was sought from the Bank before shifting the shop. Now the question for consideration before this Commission is whether the shifting of shop without permission and knowledge of the appellant amounted to breach of conditions of the contract on which loan was sanctioned. The appellant had granted loan for running a shop at Murdhawa. Turra (Pipri) where the shop was transferred is in another place for which the contract of advance of loan did not take place. The complainant had to run the shop at Murdhawa and if she felt that her shop at Murdttawa cannot yield much profit on account of certain conditions prevailing in that area, then a prior permission had to be taken from the Bank, who had advanced the loan, for shifting the shop to another place. The reason is that the Bank has to see the viability of the shop at a certain place where the complainant wants to shift her business. At the time of sanction of the loan, Allahabad Bank had inspected the place at Murdhawa, where the shop has to be opened, and was actually opened. In the opinion of the Bank it might have been that this type of shop can be conveniently run at a place and earn profit. The Bank has to see the viability of the project, in order to safeguard the amount which was sanctioned and advanced. Unless the Bank is satisfied that if a party is able to run a particular business beneficially at a particular place, it will not grant loan to that party because in that case there is a chance of getting the money blocked and becoming unrecoverable. Therefore, the Bank should have been informed before shifting the shop to Turra (Pipri) so that the Bank official may visit that place and could come to a conclusion that the shop could have been run at that place in a profitable manner and the amount advanced is secured and there is every chance of its being recovered. It is for the Bank to have to me to the conclusion and the complainant could have convinced the Bank before shifting the shop that the shop will yield better results at a new place where the shop was intended to be shifted. Unless the Bank is taken into confidence, the Bank is not bound by the terms and conditions of the contract if a breach takes place from either side. In such case the parties have to come to terms again and reach a fresh settlement for running the shop at some other place, where in the opinion of the Bank, the project might be viable and profitable both to the complainant and to the Bank. Once a shop has already been shifted without intimating or taking permission from the Bank, it is upto the Bank either to go ahead with the advancing the final instalment or to recover the amount which has already been disbursed. If still the complainant wants that the Bank should advance the rest of the amount, then it has to convince the Bank about the viability of the project and take into confidence the Bank so that a fresh agreement may be executed between the parties in order to safeguard the interests of both the parties. During the course of arguments, it has come to our notice that Allahabad Bank is a lead Bank in that area and under these circumstances, it should not be difficult for parties to reach some understanding so that the complainant may also run his business with a motive to earn profit and to return the money already advanced from the Bank. It is hoped that the appellant, being a lead Bank, will take into consideration the fact that this type of business can be run more profitably at a new place, and if it is so may enter into an agreement with the complainant so that none of the parties is put to loss.

THUS we find that the shop has been shifted without the permission of the appellant, Allahabad Bank and hence the Bank was justified to revoke the contract and to recover the amount which it had advanced to the complainant. The appeal is therefore/liable to be allowed. ORDER The appeal is allowed and the order and judgment dated 24.2.1998 passed by the District Forum, Sonabhadra is set aside. However, in view of the observations made above, the parties will bear their costs and will try to amicably settle the matter. Let the copy of this order be made available to the parties as per rules. Appeal allowed.