Super Vehicles Fabrique and Others Vs. Delhi Financial Corporation and Another - Court Judgment

Excerpt:
consumer protection act, 1986 - section 2(1)(g) - case referred: ii (1992) cpj 553 (nc). (distinguished) [para 4] comparative citations: 1997 (1) clt 630, 1997 (1) cpc 221, 1997 (2) cpj 10j.b. garg, president: 1. complainant-super vehicle fabric is a small scale industry and situate at no. 1812, sector 33c, chandigarh. it wanted to manufacture specialised rack carrier, bus bodies for soft drink companies, like thums up, campa cola, coca cola, etc. the complainants were lured by the respondents claiming that they had a scheme to advance loans for the purchase of plant and machinery against hypothecation and mortgage of property. a sum of rs. 1,000/- was deposited by the complainants as a kind of fee for the loan application and towards process fee, receipts, etc. regarding which receipts were also issued by the respondents. a loan of 8.27 lakhs was sanctioned in favour of the complainant on 8.1.92 (annexure p 5). the complainants had been trying to buy machines and.....

Judgment:

J.B. Garg, President:

1. Complainant-Super Vehicle Fabric is a small scale industry and situate at No. 1812, Sector 33C, Chandigarh. It wanted to manufacture specialised rack carrier, bus bodies for soft drink companies, like Thums up, Campa Cola, Coca Cola, etc. The complainants were lured by the respondents claiming that they had a scheme to advance loans for the purchase of plant and machinery against hypothecation and mortgage of property. A sum of Rs. 1,000/- was deposited by the complainants as a kind of fee for the loan application and towards process fee, receipts, etc. regarding which receipts were also issued by the respondents. A loan of 8.27 lakhs was sanctioned in favour of the complainant on 8.1.92 (Annexure P 5). The complainants had been trying to buy machines and quotations Annexures P 6 to P 8 were brought to the notice of the respondents. The break up of the loan of Rs. 8.27 lakhs conveyed by the respondents was as under:

"1.	For machinery	Rs.5,55,000/-
2.	For pre-operative expenses	Rs.30,000/-
3.	For other assets	Rs.26,000/-
4.	Working capital	Rs.2,16,000/-
	Total	Rs.8,27,000/-"

2. By 31.7.92, the complainants had invested Rs. 2,16,070/- and it also paid a sum of Rs. 65,000/- as advances to Basant Sales Corporation, Ludhiana at the time of placing the orders. The relevant receipts are Annexures P 10 and P 11. By the end of June, 1994, the complainants had invested Rs. 1.74 lacs and had also spent 1 year and 5 months in executing the project when the respondents dropped a communication that they shall not disburse the loan. It has been further alleged that no reason was assigned in their communication Annexure P-12. In all the complainants wasted 31/2 years besides an investment of Rs. 1.74 lacs and also alleged that the conduct of the respondents had been deficient and unfair and had acted as bomb shell to the complainants who were mainly educated unemployed.

3. In a reply filed by Mr. R.K. Jain, Manager   Legal of the respondents, it has been averred that the complainant is not a consumer and was not entitled to invoke the jurisdiction of this Commission. The sanction of the loan of Rs. 8.27 lakhs has been admitted. It has further been averred that at the time of appraisal of the loan application as well as the sanction thereof, it was agreed between the parties that payment to the suppliers will be made by demand draft only against delivery of the machinery or its despatch documents through Bank. The complainants in disregard thereof insisted that the respondents should release 40% payment in advance to the suppliers and it was subsequently increased to 100% payment to the suppliers. Besides this, the complainants requested for release of the loan amount against machinery which wasto bepurchased.

4. On behalf of the respondents, there is a preliminary objection that there is no relationship to bring the complainants in the definition of a consumer qua. the respondents Delhi Financial Corporation. In support of it, learned Counsel for the respondents has referred to Padmalaya Auto Complex Ltd. v. Andhra Pradesh State Financial Corporation, II (1992) CPJ 553 (NC), wherein it was observed that the financial institution which undertakes to provide loans necessarily will have considerable discretion in deciding as to whether a particular instalment of loan should be released or not, to determine the value of the words executed against which further instalment of loanshave to be released. In the aforesaid case of Andhra Pradesh, the Financial Corporation had released a sum of Rs. 4.15 lakhs though a sum of Rs. 10.45 lakhs was required and the facts were altogether distinguishable.

5. In the case in hand, the respondents examined the scheme and prepared synopsis and appraisal notes in favour of the complainants which runs into about 10 pages. The educational qualifications of the complainants educated unemployed were also taken into consideration and it was thereafter that the loan of Rs. 8.27 lakhs was sanctioned vide their sanction letter dated 8.1.92 (Annexure P 5). The quotations of some dealers such as Basant Sales Corporation, Ludhiana, which were on the approved list of the respondents were brought to the notice of the respondents on and about 8.3.91 and 14.3.91. It must have been after examination that the sanction of the loan was conveyed on 8.1.92. The respondent was not expected to curb the attempt of the unemployed youth suddenly by means of issuing the letter dated 17.6.93 Annexure P12. It shall be useful to refer to this P 12 which is reproduced as under:

DELHI FINANCIAL CORPORATION
(A Government Undertaking)
SCO 1076-77 (2nd floor). Sector 22B,
Chandigarh-160 022 Phone 41451.
DFC/BOC/93-94/215	17th June, 93
M/s. Super Vehicles Fabrique
181/42, Industrial Area Phase I,
Chandigarh.

Dear Sir,

Reg: Your loan case.

Please refer to your letter dated 26.5.93 and the discussion you have with the undersigned. We wish to inform you that your loan case has been closed.

Yours faithfully,

Sd/

(U.K. Diwan)

Manager (Tech)."

6. A sum of Rs. 1,000/- was charged by the respondent-Corporation for appraisal of the project submitted by the complainant. It was only after the appraisal report that the project of the complainant was found a feasible one and the quantum of loan referred to above was sanctioned in his favour. Without there being any subsequent event which could render the said appraisal report ineffective, the total refusal on the part of the respondent to fulfil the contract entered into by the respondent with the educated unemployed youths amounts to deficiency in service. The service having been paid as referred to above. Nothing was concealed by the complainant. The rates of machines, other conditions attached thereto were well known to the respondent-monopolists throughout and certainly at the time of the appraisal. The conclusion is that the complaint succeeds. It is ordered that the respondents shall pay a sum of Rs. 25,000/-  to the complainants on account of the deficiency on their part. This should be paid within a period of three months/ failing which the respondents shall also be liable to pay interest @ 18% per annum from the date of this decision till realisation. Besides this/ the respondents shall pay Rs. 2,000/- as costs.

7. Announced. Copies of order be supplied to the parties free of charges.