Appeal No.1611/08


BHW Home Finance Ltd. Appellant


V.

1.Subhash Mittal

2.Smt.Madhur Mittal

3.Mohit Mittal

All r/o 186,VivekVihar,Sodala,Jaipur Respondents


Before

Mr.Justice Sunil Kumar Garg-President

Mrs.Vimla Sethiya-Member


Shri Abhishek Bhandari,counsel for the appellants

Shri O.P.Jain,counsel for the respondents



Date of judgement : 20.05.2009


BY THE STATE COMMISSION.


This appeal has been filed by the appellants Finance Company which were ops no.1 & 2 before the District Forum-I,Jaipur against the order dated 30.7.08 passed by the District Forum-I,Jaipur in complaint no.774/2006,by which the complaint of the complainant respondents was allowed against the appellants in the manner that the appellants were directed to return Rs.13,000/-,the amount charged by the appellants as processing fee for sanctioning the loan and further to pay Rs.10,000/- as amount of compensation for mental agony and Rs.2500/- as amount of cost of litigation and if the above amount was not paid within one month,the rate of interest charged would be 12% p.a.

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2. It arises in the following circumstances:


That the complainant respondents had filed a complaint against the appellants before the District Forum-I,Jaipur on 9.6.06 interalia stating that for constructing the house,the complainant respondents had applied with the appellants for sanctioning loan and,through order dated 31.8.05 annex.1 loan to the tune of Rs.7,70,000/- were sanctioned,but with some conditions and further through order dated 31.8.05 annex.R.1 loan to the tune of Rs.14,30,000/- was also sanctioned, but with some conditions but the case of the complainant respondents was that for that a sum of Rs.13,000/- was charged as processing fee, but the loan was not disbursed and thereafter the complainant respondents had applied for return of the processsing fee and since it was not returned,therefore,the complaint was filed.


A reply was filed by the appellants on 4.9.06 and the case of the appellants was that Rs.13,000/- were taken for processing the files of the loans and since both loans were sanctioned with some conditions and since these conditions were not fulfilled by the complainant respondents,therefore,loan was not disbursed to the complainant respondents and thus the complainant respondents were not entitled for return of the processing fee and it was prayed that the complaint be dismissed.


The District Forum after hearing both the parties through the impugned order dated 30.7.08 had allowed the complaint against the appellants as stated above,interalia holding that since the loan was not paid or disbursed,therefore,the complainant respondents were entitled for the refund of the processing fee alongwith compensation as stated above.


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Aggrieved from that order,this appeal has been filed by the appellants.


3. In this appeal,the main contention of the learned counsel for the appellants is that since the file in question was processed for sanctioning the loan and since requisite conditions were not fulfilled by the complainant respondents,therefore,the amount was not disbursed and when amount was not disbursed and file was processed,they were not entitled to the refund of the processing fee and thus the findings of the District Forum are erroneous one and be quashed and set aside and appeal be allowed.


4. On the other hand,the learned counsel for the complainant respondents has supported the impugned order.


5. We have heard the learned counsel for the parties and perused the record.


6. In this case,so far as the fact that through order dated 31.8.05 annex.1 a sum of Rs.7,70,000/- and Rs.14,30,000/- annex.R.1 were sanctioned by the appellants to the complainant respondents but with the following conditions:


“Disbursement to be made in favour of existing financer.

NOC of No Dues for loan emi rs 6836/-,6405/- and 1194/- to be provided before disbursement.

Credit card stmt dues will be cleared before disbursement.

Cross Linked with JAI/003201.”


7. There is also no dispute on the point that as per the case of the appellants loan was not disbursed becase of the above conditions were not fulfilled by the complainant respondents.

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8. There is also no dispute on the point that for processing the file of the complainant respondents for sanctioning the loan a sum of Rs.13,000/- were charged as processing fee by the appellants from the complainant respondents. There is also no dispute on the point that through annex.R.1,loan in principal was sanctioned but later on they were not disbursed.


9. Thus,in the facts and circumstances just narrated above,the question for consideration is whether the findings recorded by the District Forum could be sustained or not;


10. It may be stated here that sanctioning of financial aid or grant of loan is a discretionary power of the financial institutions or the bank as the case may be. If refusal to sanction financial aid is pursuant to bonafide exercise of such discretion,same would not constitute deficiency.


11. But pertinent question arises that in such cases,the procedure which is being adopted by the bank or financial institutions in the manner that they first sanctioned the loan with some conditions and thereafter they refused to disburse, is not a proper procedure as the whole enquires about the bonafides of the loanee must be made by such institutions before sanctioning the loan.


12. On one hand, they sanctioned the loan without any enquiry and after enquiry they refused. This is not a good practice and thus this has happened in this case also. When the financial institutions had full power to refuse loan,therefore,they should have taken proper steps prior for sanctioning the loan and taking steps after sanctioning loan would amount to some extent deficiency in service on the part of the financial institutions. Taking that stand into consideration this Commission is of the view that if the District Forum had ordered for refund of the

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processing fee of Rs.13,000/- ,the District Forum had not committed any illegality, but on point on compensation it appears to be on higher side and thus the complainant respondents would be entitled to compensation for mental agony to the tune of Rs.5000/- in place of Rs.10,000/- with interest @ 9% p.a in place of 12% p.a and to that extent appeal deserves to be allowed.


13. So far as the placing on reliance by the learned counsel for the appellants on a case Niwas Spinning Mills Ltd. V. Bank of India reported in III(2003) CPJ 190(NC) is concerned, the law laid down in that case by the Hon'ble National Commission stands on different footing from the facts of the present case as in that case loan proposals were pending for more than 3 years while in the present case first the loan was sanctioned thereafter it was refused.


14. For reasons as stated above,this appeal filed by the appellants is partly allowed in the manner that the appellants would pay a sum of Rs.5000/- in place of Rs.10,000/- as amount of compensation and the rate of interest for processing fee as well as on other amount would be 9% p.a in place of 12% p.a and to that extent the impugned order dated 30.7.08 passed by the District Forum-I,Jaipur is treated as modified and rest order is maintained.




Member President