TAMIL NADU INDUSTRIAL INVESTMENT CORPORATION, MADRAS vs KRISHNA FABRICS, MADRAS

THIS is an appeal filed by the Tamil Nadu Industrial Investment Corporation Ltd. against the order passed by the State Consumer Disputes Redressal Commission, Tamil Nadu at Madras. That complaint was filed by the present respondent M/s. Krishna Fabrics, Madras against the present appellant, the Tamil Nadu Industrial Investment Corporation Ltd. (hereinafter the parties are referred to as complainant and opposite parties). By the impugned order the State Commission directed the opposite party to disburse to the complainant the balance of the loan of Rs. 98,239.70 ps. within one month from the date of the order and to pay to the complainant a sum of Rs. 10,000/- as compensation. Feeling aggrieved by the impugned order the opposite party has come before this Commission in appeal.

THE case of the complainant is that he is a registered small sector unit engaging in the manufacture of fabrics. It applied to the opposite party which is a financial institution rendering service to the small scale industries for a loan of Rs. 9,30,000/-. The opposite party initially granted a loan of Rs. 7 lacs. The complainant put up a building to house the machineries at a cost of Rs. 5,23,675/- for which the opposite party granted a sum of Rs. 85,000/-. Subsequently, payments were made by the opposite party and there is a balance of Rs. 2,27,713/- out of the sanctioned loan of Rs. 7 lacs. Because of the non-payment of the balance the complainant could not purchase the accessories and raw-materials and run the factory profitably. Thus, according to the complainant there has been deficiency of service or negligence on the part of the opposite party. He prayed for a direction to order die opposite party to pay the balance of loan of Rs. 2,27,730/- and Rs. 5 lacs as compensation. The opposite party filed a counter averring that the application of the complainant was scrutinised and a term loan of Rs. 7 lacs was sanctioned on 4.8.88. As per the scheme the complainant was to put up the building measuring 1105 sq. ft. at a cost of Rs. 1.10 lacs but the complainant has constructed the building in a larger area. The cost of the machinery as per the original invoice and the scheme was 6.32 lacs but the complainant changed the supplier and the machinery had been purchased only at the rate oi Rs. 5.09 lacs. Under the scheme the complainant had to bring in capital at 18.6% of the total cost of the machinery and the opposite party was to advance the remaining amount of Rs. 81.4% towards the cost to the machinery. As the cost of the machinery has been reduced, the loan amount has also come down. The complainant did not produce all the bills and voucher sand the balance was not advanced. It was, therefore, averred that there was no deficiency of service.

THE State Commission has held that out of the total cost of the project the borrower had to advance capital to the tune of 18.6% and the opposite party had to advance the balance of 81.4% as loan. The project was to cost 8.60 lacs including the building at a cost of Rs. 1.10 lacs, plant and machinery at a cost of 6.32 lacs, transmit, erection and electrical s at a cost of 0.40 lacs and contingency at 0.78 lacs. Out of this Rs. 8.60 lacs the opposite party has agreed to advance a loan of 81.4% i.e. 7.00 lacs. It was admitted before the State Commission by both the parties that the opposite party has paid a sum of Rs. 4,54,466.30 and the balance remained to be paid. As the complainant has purchased the machinery only for Rs. 5.09 lacs and hence the loan amount is proportionately reduced. It was urged on behalf of the opposite party that the complainant had not produced the vouchers for transport, erection, electricals and cotingency covering Rs. 1.18 lacs and thus the loan was not advanced. The State Commission granted time to the complainant to produce the bills and vouchers and he produced them only to the value of Rs. 60,000/-. Thus, the State Commission found that the total project value comes to Rs. 6,79 lacs as follows: Building 1.10lacs Machinery 5.09lacs Transport, erection Contingency 0.60lacs 6.79lacs

THE State Commission further held that out of the sum of Rs. 6.79lacs, the loan payable was81.4% Le. Rs.5,52,706/-and as the sum of Rs 4,54,466.30 has already been paid the balance amount payable was Rs. 98,239.70ps. The State has held that the failure of the site party to disburse the balance of the loan amounts xo deficiency of service and negligence and the complainant had been put to loss and hardship, mental pain and agony on account of the delay in the disbursement of the loan amount. In view of the above findings the State Commission passed the impugned order. We have heard the learned Counsel for the parties and we are of the opinion that in the present case the opposite party i.e. the present appellant cannot be held guilty of any negligence of deficiency in the rendering of service. It was urged on behalf of the appellant that the vouchers in respect of transport, erection and contingency produced by the complainant before the State Commission at the time of inquiry were not produced before it and, therefore, further loan was not advanced. A financial institution had to take all relevant factors for sanction and disbursement of the loan and the disbursement of loan amount as per the eligibility credibility criteria is completely within the discretion of the appellant. We do agree with the contentions of the learned Counsel for the appellant. If the vouchers had been produced before the appellant the balance amount might have been advanced by it. It will not be out of place to mention here that though the complainant had claimed Rs. 1.18 lacs for transport, erection, eletricals and contingency, but before the State Commission he produced vouchers only to the value of Rs. 60,000/-. Thus, for the non-disbursement of the remaining part of the loan the complainant himself is responsible.

IN the light of the above observations we accept the present appeal and modify the order passed by the State Commission and set aside the part of the order so far it relates to the grant of Rs. 10,000/- as compensation and Rs. 2,000/- as costs. The State Commission was in error in issuing a direction for disbursement of the loan basing the said direction on its wrong finding that there was deficiency in service on the part of the Appellant Corporation. But since all the bills and vouchers have now been produced by the complainant it is only just and proper that the remaining part of the loan is disbursed by the Appellant Corporation to the complainant within two months from the date of receipt of a copy of this order. The appeal is disposed of in the manner indicated above. The parties will bear their respective costs.