1) T. Radhakrishnaiah, S/o Suryanarayana, 62 years.

2) T. Rajasekhar, S/o Radhakrishnaiah, 38 years,

Balatimmayagari Palli Village and Post,

Chakrayapet Mandal, Kadapa District. ….. Complainants.

Vs.

The Branch Manager, Andhra Pragati Grameena Bank,

B.T. Palli Branch, Chakrayapet Mandal, Kadapa District. ….. Respondent.

O R D E R

2. The brief facts of the complaint is as follows:- The complainant sent an application to National Horticulture Board (NHB) for development of his lands, who inturn issued Letter of Intent (LOI) bearing No. NHB/Hyd./LOI No. H13214, dt. 26-3-2007. As per conditions of LOI the complainants applied to the respondent branch on 4-4-2007 for sanctioning of loan and submitted all the documents within 2 or 3 days. The respondent branch with malafide intention violated the conditions of LOI that the scheme should be utilized within one year and LOI would be valid for one year from the date of issue and hence, the subsidy was not received. But the complainants spent 50% share of expenditure for sanctioning of the loan.

3. The first complainant had Ac. 8.09 cents and the 2nd complainant had Ac. 6.28 cents of patta land in Surabi village. After the complainants applied for loan the respondent expressed that he would consult the Head office for sanctioning of such loans in the month of May. The Bank requested to produce pattadar passbooks, title deed books, encumbrance certificate, land value certificate and no due certificate from other banks and they were submitted in the month of June.

The documents were sent to the legal adviser of the bank who gave the opinion, on 13-6-2007, after he secured the encumbrance certificate and search reports for giving opinion. The Bank Manager and field officer inspected the land regarding installation of bore well and planting of Mango plants and Amla plants and also enquired in which survey No. bank loan would be utilized and in which survey No. the complainants had to spend their share of 50% for the development of the land. The complainants issued a letter to that effect also. The respondent requested to produce a certificate from Electricity Department and ground water project and they were submitted in June 2007. Apart from it the Bank Manager asked the complainants to spend 50% of the share at first and later the Bank loan would be sanctioned.


4. The complainants dug two bore wells and fixed motor and constructed motor shed and planted mango plants with drip irrigation facility. Later the complainants reminded the bank to sanction the loan as per LOI within one year, otherwise subsidy would not be granted. But the respondent did not sanction the loan. The complainants were under the impression that they would get bank loan and subsidy. In view of it the complainants availed private loans for development of the land. The complainants spent 50% of their share by December 2007 and submitted the bills. The complainants demanded the respondent to execute a letter that the loan should not be granted so that they would approach some other bank. When the complainants approached State Bank of India, Lakkireddy palli branch they insisted to get No objection letter from the local bank and then the sanctioning of the loan would be considered. But the respondent did not give any letter. Atlast the complainants made a threat to close their accounts in branch. On 20-3-2008 the complainants sent another representation by post. There was no response. The complainants requested the respondent to sanction Rs. 3,00,000/- as loan by 28-3-2008, otherwise the subsidy would not be sanctioned.

The respondent denied to make a correspondence with NHB regarding expenditure of Rs. 5,00,000/- spent by the complainants. On account of the respondent, the complainants had much mental agony. Atlast after the period for subsidy was lapsed the respondent sanctioned Rs. 2,00,000/- on 10-11-2008 by keeping the lands under simple mortgage by spending Rs. 30,000/- as stamp duty. On 11-2-2009 the complainants got issued a notice to which the respondent sent a reply on 16-3-2009. In reply notice the respondent mentioned that the affidavit was not given and 1 (b) documents was not furnished. The affidavit was given on Rs. 100/- stamp paper on 10-3-2008 through the legal adviser. The agricultural loan was sanctioned after 1 (b) was given. Unless 1 (b) document was not delivered the loan should not be granted or sanctioned. Therefore, the complaint was filed in person for Rs. 5,00,000/- towards investment and Rs. 2,00,000/- towards loss of subsidy from NHB and Rs. 1,00,000/- towards compensation for mental agony totaling Rs. 8,00,000/-.


5. The respondent filed a written statement denying the petition averments. It was not correct that the respondent delayed to sanction the loan within the period of LOI and submitted the documents within 2 or 3 days on the advice of the respondent. The complainant did not submit the required documents within time. The Bank had to follow certain rules and regulations while sanctioning of the loan. The documents like mortgage deed, search report, sanction letters and legal opinion had to be verified. There was no condition in between the complainant and the respondent to sanction the loan within a certain period. The total cost of the unit was Rs. 9,98,540/-. The promoter share was Rs. 6,98,540/- and the term loan was Rs. 3,00,000/-. The subsidy of Rs. 1,99,708/- was to be availed from NHB, which was a part of the promoters share. The loan was sanctioned under sanction letter No. 135/RO:KDP/CRD/FLMT/BTPL/08, dt. 18-8-2008. As per terms and conditions of the sanctioned letter the parties had to get renewal of LOI and undertake to repay the loan irrespective of subsidy from NHB. Accordingly the complainants gave willingness letter dt. 3-11-2008 expressing their willingness to get the LOI renewed from National Horticulture Board.

The complainants further agreed to repay the loan even though the subsidy was not received from NHB. Basing on the letter the respondent agreed to obtain registered mortgage. The registered mortgage was executed on 3-11-2008 in favour of the respondent. They executed a consent letter dt. 3-11-2008 also. The respondent released Rs. 1,10,000/- towards land development as first instalment and Rs. 80,000/- towards 2nd instalment for labour charges and the 3rd instalment of Rs. 1,10,000/- had to be released for raising inter crop. The complainants availed short term loan for crop production from the respondent bank. The complainants were eligible to avail 3rd instalment for inter crop when the existing crops loans were repaid in full. As per Bank rules a borrower was eligible for one short term crop production loan, but not two short term crop production loans. The complainants were postponing for repayment of short term loans.

The respondent advised the complainants to discharge the crop loan so that the 3rd instalment could be released. The complainants expressed that they were anticipating waiver of the loan by the Govt. and hence, refused to clear off the crop loan. The complainants were even defaulters and irregular in repayment of crop loan. The respondent gave a reply notice to the notice issued by the complainants. Thus there was no deficiency of service on the part of the respondents but it was on the complainants. In the simple mortgage deed the complainants undertook that the property mortgaged was not subject to any charge but was free from any prior charge and claims of any grant whatsoever, that the mortgagor had full powers to chare the same. The other allegations of the complaint were false and created. Thus the complaint may be dismissed with costs.

6. On the basis of the above pleadings the following points are settled for determination.

i. Whether there is any negligence and deficiency of service on the part of the respondent?

ii. Whether the complainants are entitled to the relief as prayed for?

iii. To what relief?


7. On behalf of the complainant Ex. A1 to A20 were examined and on behalf of the respondent Ex. B1 to B16 were marked.


8. Point No. 1 & 2 The first complainant was the father of the 2nd complainant. Both complainants approached National Horticulture Board, Hyderabad under Ministry of Agriculture, Government of India who issued a Letter of Intent (LOI) under the scheme “Development of Commercial Horticulture through Production and Post Harvest Management” under No. NHB/Hyd./LOI NO.H-13214, dt. 26-3-2007 under Ex. A1. Under Ex. A1 it was informed to approach the concerned bank and the LOI would be valid for one year from the date of issue i.e. 26-3-2007. The one year period would be completed by 25-3-2008. Further under Ex. A1 it was disclosed that the bank should solely responsible for financial appraisal of the project and the scope of LOI was limited and it would not in any way connote endorsement or approval of the Project cost indicated in the application. The financial expenditure would be required to be examined by the concerned bank as per their norms while sanctioning the term of loan. Under Ex. A1 under condition No. 5 it was mentioned that the project would not be eligible for NHB subsidy under the scheme where seasonal / short duration horticulture crops were envisaged in open field and under condition No. 6 it was noted that mere issuance of LOI would not guarantee the grant of subsidy to the beneficiary.

After receiving Ex. A1 the complainants approached the respondent branch and submitted the application with all relevant documents for grant of loan and requested to sanction the loan within one year so that the subsidy from NHB would be received. The complainants submitted the Xerox copies of the encumbrance certificates of their properties under Ex. A2. The complainants contended that they applied for loan for raising Mango garden and Amla garden and spent 50% expenditure by digging bore wells and obtained certificates from Electricity Department. The documents were submitted in June 2007. More over it was contended that the 50% expenditure was spent by December 2007. But the loan was not sanctioned by the respondent and at last Rs. 2,00,000/- loan was sanctioned on 10-11-2008 after executing a registered mortgage deed by spending Rs. 30,000/- towards stamp duty. On account of sanction of loan of Rs. 2,00,000/- on 10-11-2008 the complainants lost their subsidy from NHB. Therefore, the complaint was filed for Rs. 5,00,000/- towards their expenditure and Rs. 2,00,000/- loss of subsidy and Rs. 1,00,000/- for mental agony totaling Rs. 8,00,000/-.



9. The respondent filed Ex. B1 Xerox copy of application for renewal of agriculture credit dt. 29-8-2008 executed by the 1st and 2nd complainants in support of application forms along with copies of No. 3 Adangal extract. Both complainants executed a simple mortgage deed on 3-11-2008.

The Xerox copy of simple mortgage deed was Ex. B3. The Ex. B4 was a Xerox copy of letter executed by both the complainants dt. 3-11-2008 that the loan was sanctioned for Rs. 3,00,000/- and in case the subsidy was not granted the loan amount would be repaid. Ex. B5 was Xerox copy of encumbrance certificates of the 2nd complainant, in which he executed another mortgage on 30-8-2008 in favour of B.T Palli PACS. So the simple mortgage to the respondent was on 3-11-2008, Under Ex. B3. Another mortgage was in favour of PACS, B.T pally prior to Ex. B3. Ex. B6 was Xerox copy of affidavit on stamped paper executed by 1st complainant and two others, regarding the properties partitioned in oral partition in between the family. Ex. B7 was another Xerox copy of stamped affidavit executed by the 1st complainant and two others adding two more properties under survey Nos. 964 and 965 which were not disclosed in Ex. B6. Both Ex. B6 and B7 were executed on the same day on 10-3-2008. Ex. B8 was Xerox copy of valuation certificate. Ex. B9 was Xerox copy of stamped affidavit executed by 2nd complainant and two others with regard to the properties in oral partition among the family members.



10. After submitting the documents the respondent took legal opinion for sanction of the loan. The Xerox copy of legal opinion on the properties of both the complainants was Ex. A3, dt. 12-6-2007 and the supplementary legal opinion for the first complainant was Ex. B10. It was Xerox copy with regard to the 1st complainant. Ex. B11 was Xerox copy of supplementary legal opinion regarding to the 2nd complainant. Ex. B12 was Xerox copy of letter addressed from the respondent to its Regional Manager, dt. 12-2-2008. Ex. B13 was Xerox copy of letter from the Regional Office of the respondent dt. 21-2-2008. Ex. B14 was Xerox copy of village plan regarding the survey Nos. of the complainants. Ex. B15 was Xerox copy of letter from the respondent to its Regional office. Ex. B16 was another Xerox copy of letter from Regional office to the respondent. The complainants filed a Xerox copy of search report in respect of property of the 1st complainant given by the standing counsel of the respondent. The search report accompanied legal opinion of the first complainant was Ex. A3. In Ex. A3 it was enclosed the Xerox copy of legal opinion of the 2nd complainant and search report of his property.

The Ex. A3 included the Xerox copy of supplementary legal opinion on the property of 2nd complainant. The complainants also filed similar copies of Exs. B6 & B9 under Ex. A4. The complainants filed Xerox copy of bills Ex. A5 towards their expenditure in the field. The Ex. A6 was Xerox copy of quotation for drip irrigation issued by Gayatri Irrigation systems, Kadapa with a total cost of Rs. 1,03,078-54Ps with regard to the 2nd complainant and a similar quotation was issued to the 1st complainant for a total cost of Rs. 1,20,431-30ps. Ex. A7 was bills issued by Sairam Bore Wells and Sri Sapthagiri Agencies, Kadapa for digging bore well and purchase of pump sets.



11. On 13-12-2007 the complainants wrote a letter to the respondent to sanction the loan immediately. The copy of the letter was Ex. A8. On 20-3-2008 the complainants wrote another letter to the respondent for sanction of loan. So Ex. A8 was two letters dt. 13-12-2008 and 20-3-2008. As the loan was not sanctioned and the complainants had loss, they got issued a notice through their advocate on 11-2-2009 to the respondent.

The office copy of the notice was Ex. A9. The respondent filed the same copy as Ex. B2. The Ex. A10 was reply notice from the respondent on 16-3-2009. Ex. A11 was Xerox copy of simple mortgage deed, dt. 3-11-2008 in favour of the respondent with regard to certain properties executed by both the complainants. Ex. A14 and A15 were Xerox copies of simple mortgage deeds executed by the complainants in favour of Bank with regard to some other properties. Under Ex. A12, dt. 17-12-2008 the 1st complainant wrote a letter to NHB, Hyderabad that the loan was sanctioned and 50% of share was spent under impression that the loan would be sanctioned and subsidy also from NHB, so that the project would be completed and hence subsidy may be sanctioned. Ex. A13 was Xerox copy of letter dt. 01-8-2007 from Regional Office to the respondent with regard to loan proposals.



12. The complainants filed Ex. A16 Xerox copy of letter from respondent to the State Bank of India, B.T. Palli, and PACS to issue no due certificate, dt. 28-5-2007. Ex. A17 was Xerox copy of letter from respondent to its counsel to give supplementary legal opinion dt. 5-2-2008. Ex. A18 was loan proposal of the complainants from Regional Office of the respondent dt. 18-8-2008. Ex. A19 was Xerox copy of registered mortgage discharge deed, dt. 29-5-2007 executed by the Secretary, PACS, B.T. Palli in favour of the complainants. Ex. A20 was Xerox copy of letter dt. 22-8-2007 from 2nd complainant to respondent for sanction of loan. In written arguments the complainant mentioned that he filed a copy of letter from credit department of the respondent in Ref.No. 802/RO/Kadapa/BTPL/07, dt. 01-8-2007. But it was not filed with written arguments. However, it was filed already and was marked as Ex. A13.



13. The case of the complainants was that the Bank had not sanctioned the loan within stipulated period and hence, they lost subsidy amount from NHB. At this juncture it would be relevant to say that the sanctioning of the loan was the discretion of the bank and it was not mandatory.

With regard to the allegations of the complainant that adequate amount of the required loan were not advanced at right time and hence they had not received the subsidy and they had much loss, due to deficiency of service and negligent Act on the part of the respondent. But the decision of the sanctioning the loan was only a power of discretion of the Bank. It was reported in II (1993) CPJ 147 (NC) Jagannath Meher Vs. The Branch manager, State bank of India and others. It was held that “with regard to the allegations of the complainant that adequate amounts as required were not advanced at the right time, we cannot sit in judgment upon the decision taken by the Bank as this is a power of discretion of the Bank”. In I (1993) CPJ 238 Haryana Financial Corporation of Chandigarh Vs. M/s Jamna Dass Cotton Mills of Hansi, it was held that “a subsidy is not in terms one of the many services expressly incorporated in the definition. It is surely neither banking, or financing or insurance etc., Nor can one even remotely bring such a central bounty or concession within the concept of a service as such.

It is true that the word ‘service’ is a wide-ranging one and cannot be easily put in a strait – jacket. However, it needs no great erudition to hold that a central subsidy intended for the development of the backward areas and granted as an incentive and concession to industry cannot be labelled as the hiring out of a service by either the State or the Central Government”. In the same decision it was further held “However, assuming at the highest in their favour it is again necessary for them to show that they had hired any services for a consideration to come within the ambit of the definition of a consumer as laid out in section 2 (1) (d) (ii). Plainly enough little or no question of hiring any subsidy or paying a consideration for such hiring can possibly arise in the fact situation. It is significant that barring strained attempt made through subsequent corrections, it was not even the specific case in the complaint that the Central subsidy was a service nor is there any pleading worth the name to the effect that there was any hiring of all alleged services of a subsidy or a paid or promised consideration, therefor. The conclusion is inevitable that the respondent cannot, therefore, pretend to come within the ambit of the definition of either being a consumer and equally as already held the Central subsidy is not a service which is capable of being hired stricto-sensu. Once that is so, no question of any deficiency in such a service can arise nor can any relief be afforded in the consumer jurisdiction”. It was for financial institutions to decide whether to provide loan to any incumbent after taking into consideration of all factors. Non sanction of the loan by the bank or financial institutions was not deficiency of service. So the bank had power of discretion to grant loan to the borrower. The subsidy was not a guarantee to the beneficiary and the projects would not be eligible for NHB subsidy under the scheme. It was mentioned in Ex. A1 that the Project would not be eligible to receive subsidy under NHB schemes, in case the benefit of subsidy from other agencies of Govt. of India had been availed or proposed to be availed. So in the present case the respondent sanctioned the loan. But the complainants had no opportunity to get subsidy. As discussed earlier grant of loan or sanction of loan was discretionary power of the bank. The central subsidy was not a service. The NHB, Hyderabad was under the Ministry of Agriculture, Government of India. There was no hiring of service for grant of central subsidy. Subsidy did not come under the deficiency of service and the complainants had not come as Consumers under the definition of section 2 (1) (d) (ii) of C.P. Act. After considering the various factors and documents. Loss of subsidy from NHB was not a ground to claim compensation from the respondent bank.

14. In view of the above said discussion it is very clear case that the complainants are not consumers and they are not entitled to any claim against the respondent on the ground that they lost subsidy grant from NHB, a Central Government organization. The release of Central subsidy was not a service. The points are answered accordingly.