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Judgment
The complainants, who were seeking to start a Stone Crushing Unit, approached the appellant bank for grant of several credit facilities. After desired documentation by them, the appellant bank, vide its letter dated 07.04.1997, conveyed sanction of Rs. 2 lakhs as secured cash credit, Rs. 5 lakhs as secured loan (under SIDBI scheme) and Rs. 1,94,000/- as soft loan to the complainants/respondents, against hypothecation of raw materials and finished goods and mortgage of land as well as building to be constructed on it and hypothecation of plant and machinery. Vide letter dated 03.09.1997, the appellant bank informed the complainants/respondents about sanction of the aforesaid facilities totalling Rs. 8,94,000/-. Pursuant to the sanction issued by the appellant bank, the respondents/complainants mortgaged the land owned by the complainant no. 1 in favour of the bank and both the complainants also pledged deposit receipts of their family members, by way of security. Complainant No. 1 dug a bore well on which the Stone Crusher was to be set up and also deposited Rs. 36,470/- for obtaining electricity connection. The expenditure incurred in digging the bore well was amounted to Rs. 27,500/-. The complainants also spent Rs. 40,000/- on erecting the structure besides paying Rs. 4,000/- as stamp duty on mortgage deed and incurring expenditure of Rs. 2,145/- on its registration. The aforesaid credit facilities, however, were not released to the complainants, who thereupon sent a legal notice to the bank on 13.03.1999. No response to the said notice having been given, he approached the concerned State Commission by way of a complaint.
A Civil suit had been filed against the complainants by Nandini Fruits and Vegetables Production Sangh before a Civil Court, seeking injunction against setting up a Stone Crusher by them. Yet another suit was filed by one Sh. Shripati Dyanu Tagare, against the complainant no 1, Sandeepkumar Ramgauda Patil. Vide order dated 17.04.1998, the Civil Court, while dismissing the appeal filed by the plaintiff in that suit for grant of interim injunction, directed complainant no. 1 to comply with the directions given in para 13 of the said order. The directions contained in para 13 of the aforesaid order required the complainant no. 1 to erect a wall surrounding the Stone Crusher so that the dust shall fall within the limits of the said wall. An alternative was given to him to fix a curtain upto the height of the belt from which the stone used to fall on the ground. Thus, in terms of the aforesaid order of the Civil Court, the complainant no. 1 could either erect a wall or fix a curtain upto the height of the belt from which the stone used to fall on the ground. Though, according to the learned counsel for the appellant, the height of the belt was 27 feet from the ground, there is no material on record to substantiate the said statement. After filing of the complaint, a reply was sent by the appellant bank to the complainants stating inter-alia as under:- "It is observed that some serious restrictions have been imposed upon you and you have been temporarily permitted to start the stone crusher. My client expects that you are aware that the said interim order is not the final order. The bank is doubtful as to whether the final decision of the court will allow you to start stone crusher or not. As per interim order of the court some serious restrictions have been imposed upon you. The court has ordered you to construct a wall of sufficient height to prevent the dust of the stone crusher to move outside the premises. In addition to this even after the construction of wall of sufficient height you have been advised and take care to see that the dust has not moved away from
site. The Bank honestly feels that to prevent the dust from moving outside the compound wall, when the location is on the place where the height of the land is maximum, is not possible for you. Secondly to construct compound wall of sufficient height was not projected in the project cost which will unnecessarily increase the expenditure. Even if after making such huge expenditure of construction of compound wall nobody will give guarantee that the dust will not move the adjoining land. In case it happens so it will amount to contempt of court and in such eventuality there will be no any other alternative but to stop the stone crusher. My client Bank therefore seriously feels that due to the situation arose after the sanction of the loan, it is doubtful that your stone crusher activity will run smoothly and you will not be able to bear the huge expenditure that will be incurred in future for constructing compound wall of sufficient height. In the circumstances it is dangerous for you too to invest own funds in uncertain industry. In the circumstances and after serious thinking our Bank is of the view that financing your project would be dangerous for Bank also and they think that Bank interest will not be protected."
It would thus be seen that in its reply, which was sent to the complainants after filing of the complaint before the State Commission, the appellant bank did not even advert to the alternative available to the complainants to fix a curtain at the height of the conveyor belt, instead of erecting a wall upto that height. At no stage before filing of the complaint did the appellant bank write to the complainants that it was ready to disburse the loan, subject to their complying with the interim order passed by the Civil Court. In case the Bank was keen to ensure compliance of the order of the Civil Court by the complainants before it could disburse the loan amounts, it ought to have atleast given an opportunity to them to comply with the said order. Moreover, as noted earlier, in the reply sent after filing of the complaint, the appellant bank did not even advert to the option available to the complainants to hang a curtain instead of erecting a wall at the level of a conveyor belt. The aforesaid act of the bank clearly indicates that it was not at all interested in releasing the loan amounts which it had earlier sanctioned to the complainants and the interim order passed by the Civil Court was sought to be used only as an excuse for not disbursing the loan amounts.
The learned counsel for the complainants has drawn our attention to the letter dated 02.02.1999, sent by the complainants to the Bank, asking it to state so through a letter in case it did not want to grant the loan to them, so that they were able to remove the name of the appellant bank from the record of Stone Crusher and apply for loan to some other Bank. There is no justification shown for not responding to the aforesaid letter dated 02.02.1999. Considering that the loan facilities had been sanctioned to the complainants way back on 07.09.1998, the appellant bank, on receipt of the aforesaid letter dated 02.02.1999 from the complainants, should either have disbursed the loan or clearly informed the complainants that they were not interested in disbursing the loan and they could get the name of the said bank removed from the record and apply to some other bank for grant of loan to set up the Stone Crusher. That having not been done, it was a clear cut case of deficiency in rendering services to the complainants.
The learned counsel for the complainants has also drawn our attention to a letter dated 31.08.2004, sent to the Bank, after the decision of the Civil Court dismissing the suit which had been filed against them and seeking disbursal of the loan amount. Again, there was no response from the Bank.
We are informed that no appeal was preferred by the plaintiff in the aforesaid suit namely Sh. Shripati Dyanu Tagare. The other suit which had been filed against the complainants by a Society namely Nandini Fruits & Vegetables Production Sangh was also dismissed by the Civil Court on 24.07.2003. An appeal against the dismissal of the said suit was filed but eventually that
appeal also came to be dismissed vide order dated 14.11.2007. Unfortunately, even thereafter the bank did not offer to release the loan amount which it had sanctioned to the complainants. In our opinion, once the loan facilities had been duly sanctioned and the complainants had incurred substantial expenditure either for obtaining the said credit facilities or pursuant to the sanction of the said facilities, the appellant Bank could not have refused to disburse the loan amount except for cogent and valid reasons. In the case before us, despite filing of the Civil suit against the complainants, the bank did not withdraw the sanction which it had issued to the complainants at any point of time. If the bank, on account of filing of the Civil suit, challenging the setting up of the Stone Crusher, was not willing to disburse the loan facilities which it had sanctioned to the complainants, the least expected from it was to inform the complainants immediately so that they could take steps for removing the name of the appellant Bank from the record and approach some other Bank for grant of such a facility. The Bank did not bother to do so on receipt of the letter dated 02.02.1999 from the complainants. In fact, even the order of the Civil Court could not have come in the way of the appellant Bank disbursing the loan facilities to the complainants since, it could easily have asked them to comply with the said order either by erecting a wall or by hanging a curtain at the level of conveyor belt and as soon as that was done, the Bank could have disbursed the loan facilities to them.
For the reasons stated hereinabove, we have no hesitation in upholding the view taken by the State Commission that there was deficiency on the part of the appellant bank in rendering services to the complainants who had incurred substantial expenditure in order to avail the said credit facilities and set up the Stone Crushing unit. However, considering all the facts and circumstances of the case, we are of the view that the compensation awarded by the State Commission to the complainants was rather on the higher side. We, therefore, in modification of the order passed by the State Commission, direct the appellant bank to pay a sum of Rs. 2.5 lakhs to the complainants as compensation, inclusive of cost of litigation, alongwith interest on that amount @ 9% per annum from the date of filing of the complaint. The appeal stands disposed of accordingly. The aforesaid payment shall be made within four weeks from today.