Coming down heavily for manifest contradiction in the stand taken by State Bank of India (SBI) in a loss of original property documents, including title deeds, the national consumer disputes redressal commission (NCDRC) directed SBI to pay a conditional compensation of Rs25 lakh to a borrower. If SBI fails to issue a certificate to the complainant acknowledging the loss of his original documents by the Bank's personnel and publish a notification, then it will have to pay a compensation of Rs50 lakh as awarded by the West Bengal state consumer disputes redressal commission, NCDRC says.
In
an order last month, the NCDRC bench of justice Sudip Ahluwalia (presiding member) and air vice-marshal (AVM) J Rajendra (retd) (member) says, "The deficiency in service on the part of the Bank is clearly untenable. It nevertheless has brazenly sought to deny that it had ever received any original document from the complainant, whereas its own chief manager had stated in his affidavit in the state commission that the originals were given back to the complainant without any acknowledgement. Such manifest contradiction in the stand taken by the Bank qua the non-receipt on the one hand, and alleged return without acknowledgement of the documents on the other, cuts at the root of the defence raised by it in the original complaint."
"For the aforesaid reasons, this Commission finds no tangible grounds to interfere with the well-reasoned order of the state commission, since it cannot be denied that if the original title deeds are not returned to the complainant, the economic and financial loss which could be caused to him by way of fall in the value of his properties in case he needs to sell the same for valuable consideration, cannot be properly assessed or calculated. Nevertheless, an award of compensation to the tune of Rs50 lakh flat would appear to be somewhat exorbitant," it says.
The bench ordered a reduced compensation of Rs25 lakh, subject to the condition that SBI will issue a proper certificate to the complainant acknowledging the loss of his original documents, including title deeds by the Bank's personnel and also publishing a notification in that regard in the local English and vernacular newspapers having wide circulation in the area of Midnapur and its vicinity in West Bengal, at its own expense, within two months.
The case is related to a loan sought by Midnapur-based Rajkumar Goswami from SBI for setting up a food processing unit under the rural employment guarantee programme (REGP), recognised by the government of India, through a loan scheme under the small-scale industries unit sponsored by the Khadi Village and Industries Board (KVIB).
SBI asked Mr Goswami to submit the necessary promissory and collateral security and, after subsequent compliance, asked for two guarantors, which were provided along with their asset disclosures under oath and the original title deeds. However, despite completing all necessary procedures and submitting the loan documents and related papers, SBI did not disburse the loan despite considerable investment by Mr Goswami. As a result, he allegedly suffered losses amounting to Rs78.61 lakh. This loss included potential earnings projected by SBI's empanelled chartered accountant (CA), which indicated earnings of about Rs71.94 lakh, in addition to potential government subsidies.
Mr Goswami filed a complaint before the state commission. Holding SBI responsible for deficiency in service and negligence in not processing Mr Goswami's loan application properly and in time and also in not conveying its final decision even after a lapse of more than three years, the state commission directed the Bank to pay Rs50 lakh compensation.
"We also hold that non-return of the documents and assets records or relevant other papers to Mr Goswami, even after SBI decided on its own not to sanction the loan application beyond his knowledge and even failure to produce these before this Commission on being given opportunity is an unpardonable deficiency of service on the part of the Bank, for which clearly it had no explanation or even pretext," the state commission says.
Aggrieved by the order, SBI filed its first appeal before NCDRC. It argued that the non-processing of the loan application cannot be considered a deficiency in service because, for a service to be rendered, consideration for that service is essential which is conspicuously absent in this case.
The counsel for Mr Goswami argued that SBI engaged in fraudulent practices and approached NCDRC with unclean hands. "The Bank lost the original documents submitted by Mr Goswami for processing the loan and provided conflicting statements on affidavit, thereby making false statements before the state commission."
"The manager for SME and development banking division of SBI affirmed in response to question No29 by Mr Goswami that the Bank authority is the custodian of all original documents related to loan proposals submitted to the bank. However, in another affidavit, SBI claimed that the original documents were taken back by Mr Goswami without providing any receipt to substantiate the claim," the counsel contended.
After hearing all parties and perusing the documents on record, NCDRC observed that there are manifest contradictions in the SBI version regarding document submission and sanctioning of the loan. The bench noted that in its memo of appeal, SBI flatly denied having received any such original documents from Mr Goswami, which is in direct contradiction to the statements made by its chief manager in his affidavit filed before the state commission, in which he stated that all the original documents had been taken back by Mr Goswami, which were given to him by the Bank officer without obtaining any acknowledgement since they all had a soft corner for him on account of the fact that he is the son of a Bank employee.
"In view of such gross contradictory statements, and the fact that after having informed Mr Goswami that his proposal for loan had been approved in principle, not sanctioning such loan subsequently, nor informing him of any further formalities at all which remained to be completed by him, or not even informing him about the fate of his loan application at any stage thereafter would amount to manifest deficiency in service, especially concerning that the REGP scheme under which the loan was covered, was itself a limited duration scheme, which ended on 31 March 2008," the bench says.
While reducing the compensation to Rs25 lakh on a conditional basis, the NCDRC directed SBI to comply with its direction within two months, failing which the Rs50 lakh as awarded by the state commission, will not be reduced. Further, in case of delay, the bench asked SBI to pay an interest of 12%pa (per annum) instead of 10%pa as awarded by the state commission.
(First Appeal No96 of 2010 Date: 27 March 2024)
