FIRST APPEAL NO. 356 OF 2006
(Against the order dated 21.04.2006 in Complaint Case No.609 of 1993 of the State Commission, Delhi)
Delhi Financial Corporation,
E Block, Connaught Place,
New Delhi- 110001 ……….Appellant
Late Smt. Saroj Gupta
Through her L.RS.
1. Sh. Rajesh Gupta
Son of Late Sh. B.L.Gupta
2. Sh. Pradeep Gupta
Son Late Sh. B.L. Gupta
Both Resident of D/12,
House No.112, Sector 8,
Rohini, Delhi- 110085 ……..Respondents
HON’BLE MR. JUSTICE V.B. GUPTA,
HON’BLE MR. VINAY KUMAR, MEMBER
For the Appellant : Mr. B. Uday Dip Singh, Advocate
Ms. Faujia Shakil, Advocate
For the Respondent : Mr.Manoranjan, Advocate
PRONOUNCED ON: 31.01.2012
PER MR.VINAY KUMAR, MEMBER
The Delhi Financial Corporation (hereinafter referred to as DFC) has filed this appeal against the order of the State Consumer Disputes Redressal Commission of Delhi in CC No. 609/1993. In this order the State Commission has held the appellant liable for deficiency of service to the complainant. The Commission has therefore awarded a compensation of Rs 2.50 lakhs in favour of the complainant.
2. The case of the complainant before the state commission was that she had applied for a loan of Rs 8.76 lakhs for self-employment. The DFC sanctioned the loan of Rs 7.5 lakhs, including Rs 2.75 lakhs towards margin for working capital. It was alleged that while the complainant wanted to purchase the machine from M/S Aparna Mechanical Industries, Calcutta the DFC placed orders on M/S Illumina Lamps Private limited, Calcutta. Due to delay in sanction from the DFC, the machinery supply was delayed by more than seven months. This delayed the trial production by three months resulting in the loss as rent for the factory-building, water electricity and security charges were to be paid during the entire period. Further, the complainant had sought working capital loan from a bank in August 1990. This loan could not be sanctioned till 1992 as the project report required to be sent to the bank was not sent by the DFC. Finally, when the DFC sent the project report, it had already cancelled the balance of the loan required as margin money for working capital. This cancellation and consequent rescheduling of the loan was done without giving an opportunity to the complainant to represent against such action.
3. The main defense of the opposite party/DFC before the State Commission was that the margin for working capital was not released because the complainant had failed to obtain working capital from a bank. It is stated in the written response before the State Commission that “sanction of loan does not mean that the loan has to be released, even if the same is not required by the borrower.”
4. Considering the rival contentions, the State Commission came to the following conclusion—
“After giving careful consideration to the rival contentions of the parties, we find that OP was deficient in service firstly for not paying the loan directly to the complainant after sanctioning it which could have facilitated the complainant to purchase the machinery from the manufacturer of her choice and on her own terms and conditions secondly the OP intentionally withheld the project report as a result of which the working capital could not be procured and as a consequence the complainant could not start the production and suffered heavy loss, as she had to maintain a tenanted premises and bear expense of machinery, Labour, electricity charges etc. So much so the complainant had to dispose of the factory because of delay on the part of the OP in making payment.”
5. We have heard the counsels for the appellant/DFC and the respondent/complainant and also perused the records of the case. The main ground of appeal is that the State Commission has ignored the evidence on record which showed that the respondent herself had chosen to purchase the machines from M/S Illumina lamps Pvt Ltd. Learned counsel for the appellant also drew our attention to the correspondence which showed that the list of suppliers was not available with the complainant. However, he could not explain why payment was not released through the complainant, as required under the terms of sanction of the loan. According to the learned counsel, the DFC made direct payment to the machinery supplier, only after the complainant had already paid the advance towards the same. This is no explanation for making payment in violation of the terms of sanction. More so, as DFC had made this payment in October 1991,which was six months after intimation of the payment of advance by the complainant.
6. On the allegation of the complainant that her application was for sanction of loan under the Mahila Udyog Nidhi(MUN) Scheme while the sanction was made under the general scheme, the counsel for DFC argued that as the requirement was over Rs 10 Lacs, the application had to be considered under the general scheme and not MUN. This was the stand of the appellant before the State Commission as well. But, we find that this argument does not stand the test of the evidence on record. As per the record, the application itself was for a loan of Rs 8.76 lakhs and the sanction was Rs 7.5 Lacs. Both were within Rs 10 lakhs. In the face of this evidence the only response of the counsel for DFC was that the complainant had consented to the application being considered under the general scheme.
7. Learned counsel for the respondent/complainant referred to the terms of the loan sanction letter of 11.12.1990. The very first clause in this letter reads as follows:-
“1. When payment will be made:- Subject to the compliance of the terms and conditions contained in this letter and/completion of requisite formalities and documents to the satisfaction of the Corporation, the amount of the loan will be paid to you by cheques drawn in your favour”.
He argued that as per this clause, the payment of money to the machinery supplier should have been made through the Complainant by releasing the entire sanctioned amount of Rs.4.46 lakhs, by way of a cheque in the name of the complainant. Instead of this, the appellant/OP released the entire balance amount directly to the supplier, after deducting the advance already paid to him. This was in clear violation of condition of letter of allotment as detailed above. Even in this release, the DFC delayed the matter by six months. While the advance to the machinery supplier had been paid in February –March 1991, the rest of the amount was paid in October 1991. It was further argued that as per condition No.15 of the letter of sanction three months time were given for completion of the transaction for which the loan was sanctioned. We note that compliance of this condition became an impossibility when the sanctioning authority i.e. the appellant/DFC itself took six months to release the payment to the machinery supplier.
8. From rival contentions examined above and perusal of the records, the following picture clearly emerges:-
a) There was no justification on the part of the appellant/DFC to sanction the loan under the General Scheme. Their claim that the loan application could not be considered under the Mahila Udyog Nidhi Scheme as the cost of the project exceeded Rs.10 lakhs, is not borne out from the records. The application was for a loan of Rs.8.76 lakhs and the sanction was Rs.7.5 lakhs only.
b) Direct payment to the machinery supplier by the DFC was in violation of an express condition of the loan sanction order. The violation was further compounded by the delay of nearly six months in releasing the same.
c) The claim of the appellant/DFC that the balance of the loan towards margin money for working capital was not released as it was not required, is contrary to the facts on record. The consideration of the loan application for working capital by Punjab and Sind Bank was awaiting a copy of the project appraisal report. This was sent by the appellant/DFC through their letter No.DFC/SLD/R/90/91-92 of 30.7.1992. In this background, the decision of the DFC to cancel the un-drawn portion of the loan finds no legs to stand on.
d) Correspondence on record shows that the DFC cancelled the loan component of Rs.2.75 lakhs towards for margin of working capital on 26.5.1992. But, two months later, on 30.7.1992, the project report was forwarded by the DFC itself to Punjab and Sind Bank for consideration of working capital loan. It clearly shows that the cancellation of the balance of loan was premature and without any justification.
9. In the above background, we find ourselves in complete agreement with the view of the State Commission that the appellant was deficient in service on several counts. We therefore, find no merit in this appeal and dismiss it for the same reason. The order of the Delhi State Commission in CC NO.609/1993, awarding an overall compensation of Rs.2.5 lakhs to the respondent/complainant is confirmed. In addition, considering the facts and circumstances of this case, we also award a cost of Rs.20,000/-, which shall be paid by the appellant to the respondent/complainant within a period of two months. For delay in payment, if any, the amount shall carry interest at 9%.
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