(Against the order dated 12.09.2005 of the Bihar State Consumer Disputes Redressal Commission, Patna in First Appeal No. 193 of 2004)



Canara Bank

Represented through its Manager                                                                    Petitioner

Madhubani Branch, Madhubani




Shri Binay Kumar Jha

Son of Shri Nabi Nath Jha                                                                             Respondent

Resident of Village Chauri

P. S. Sakari, District Madhubani




HON’BLE MR. B. K. TAIMNI                                                   PRESIDING MEMBER


HON’BLE MR. ANUPAM DASGUPTA                                                         MEMBER


For the Petitioner                                                      Mr. P. B. A. Srinivasan, Advocate                                                                         and Mr. Harinder Singh, Advocate


For the Respondent                                                    Mr. Rajan Chaudhary, Advocate



14th October 2008







            This revision petition seeks to impugn the order dated 12.09.2005 of the Bihar State Consumer Disputes Redressal Commission, Patna (hereafter, ‘the State Commission) in First Appeal No. 193 of 2004. By this order, the State Commission dismissed the appeal of the appellant bank (which was the Opposite Party (OP) before the District Consumer Disputes Redressal Forum, Madhubani (hereafter, ‘the District Forum’) and is the petitioner before us) and directed as under:


                        However, the sanctioned loan was Rs. 47,500/-. Hence the bank is directed to deposit within a month Rs. 47,500/- in the account of complainant for his grains business, failing which the appellant will have to pay damages @ Rs. 1,000/- per month beginning from February 2001 till the transfer of the loan amount to the account of complainant. The amount of compensation awarded by the learned District Forum is inadequate and it is raised to Rs. 5,000/- (Five thousand) only and the litigation cost is also raised to Rs. 1,000/- (One thousand) only. The compensation amount and litigation cost must be paid within thirty days from today, failing which interest @ 10% will be payable on this amount after expiry of one month from today till the date of payment. With above direction the appeal is dismissed (sic) devoid of merit.”


2.         Before the District Forum, the case of the complainant (respondent before us) was that he is a physically challenged, educated person who was unemployed at the relevant time. He applied for and was selected by the District Industries Centre (DIC), Madhubani as a candidate under the Pradhan Mantri Rozgar Yojana (PMRY), given necessary training and recommended to the petitioner bank for loan assistance. On his application, the bank approved a project cost of Rs. 50,000/- against which it sanctioned a loan of Rs. 47,500/- in early September 2000 but did not release the loan despite the complainant’s compliance of the requirements stipulated by the bank and several requests, as well as follow-up by the office of the District Magistrate, Madhubani. This led the complainant to approach the District Forum, Madhubani. By its order dated 05.02.2004, the District Forum allowed the complaint and directed the OP bank to release the loan of Rs. 50,000/- to the complainant, pay him compensation of Rs. 2000/- for mental and physical harassment and litigation cost of Rs. 100/-. The OP bank went up in appeal to the State Commission against this order of the District Forum, with the result already noted.


3.         We have heard the learned counsel for the parties and considered the documents produced before us. For better appreciation of the case on hand, it would be useful at this point to notice that the PMRY is a credit-linked-subsidy scheme sponsored and funded by the Central Government and implemented by the State Governments, for employment generation among the educated unemployed youth belonging to economically disadvantaged sections of the population in both urban and rural areas. The scheme is coordinated by the DIC’s in the States which select the candidates from among the applicants, give them training in self-employment under the scheme, help them with preparation of their individual project reports and then sponsor them to various participating bank branches in the District for extending loan for their projects of self-employment. The Central Government allocates the annual targets of employment generation to the individual States and accordingly provides them the grant funds for training, at normative rates. The Central Government also releases the amount of subsidy in instalments, through the Reserve Bank of India (RBI), to the participating banks. Both the project cost and the subsidy are subject to monetary ceilings, based on the category of candidates, nature of the projects and the region of the country, and the subsidy is generally limited to 15% of the project cost. The bank branches are expected to appraise the individual projects of the DIC-sponsored candidates from the standpoint of viability and only then sanction loans – loan sanction can be refused if the project is not found viable. The candidates are required to deposit upfront margin money @ 5% of the project cost. The loan is released in instalments, depending on the progress of the project and accordingly the subsidy is credited, from out of the funds placed at the disposal of the banks, directly to the loan account of the beneficiary. The scheme requires the bank branch to ensure that the loan account is operated in such a manner that the selected loanee does not withdraw moneys out of the account, except to use them for the purposes of the sanctioned employment project. Needless to add, the loanee is not to be allowed by the bank branch to withdraw any part of the margin money from the account at any stage prior to completion of the project.


4.         Discussing the documentary evidence, the District Forum, in its order dated 05.02.2004, and the State Commission, in its impugned order, noticed that (i) the complainant was selected, trained and sponsored under the PMRY by the DIC, Madhubani to the local branch of the petitioner bank for sanctioning a loan for his proposed small business of grains and other simple household consumables (“kirana”), (ii) he was sanctioned a loan of Rs. 47,500/- on the approved project cost of Rs. 50,000/- (with his 5% margin money contribution of Rs. 2,500/-) by the said bank branch under its letter dated 06.09.2000 which explicitly stated that the sanction was valid upto 31.01.2001, (iii) he opened an account with the bank branch and deposited the margin money of Rs. 2,500/- in end-August 2000 (clearly, as per advice of the bank branch that this would be a pre-condition for sanctioning the loan), (iv) he obtained the necessary ‘no objection certificates’ from eight other banks operating in the area (to demonstrate that he was not a defaulter of any other bank) and furnished the certificates to the bank branch and (v) he executed the prescribed hypothecation deed in favour of the bank, got it duly embossed at the District Treasury and presented it to the bank branch. In other words, the complainant complied with all the stipulations under the PMRY guidelines for release of the loan.

5.         The order of the District Forum also noticed that the office of the District Magistrate (under whom the DIC operates) wrote expeditory letters in this case to the bank on 09.11.2000, 02.02.2001 and 18.02.2001 to release the sanctioned loan to the complainant but the bank branch did not even reply to any of these letters.


6.         In our view, the grounds of this petition (which were apparently the same as in the appeal as well as the written version of the bank in the complaint proceedings) highlight the sheer callousness of the bank’s approach to the implementation of a socially beneficial self-employment generation scheme of the Government for the educated unemployed in the economically disadvantaged sections of the society. Here is a bank owned entirely by the Central Government and is thus part of the “state” within the meaning of Article 12 of the Constitution of India and hence bound by the State’s socio-economic welfare policies, programmes and schemes, including the instructions regarding “priority sector lending”, as enunciated by the RBI from time to time. Loans for small business under the PMRY are in the category of priority sector lending and the banks are required to advance 40% of their total lending to the economic activities categorised as such. Loans to small business/industries are thus a high priority area of bank lending – at least, they ought to be as per the State policies. That apart, in this case, practically every substantive condition that the bank stipulated for releasing the sanctioned loan was met by the loanee/complainant. Yet, the bank did not release the loan, even in instalments, despite letters/reminders from the office of the District Magistrate – to these letters the bank did not even care to reply. Not only this, it refused to comply with the concurrent orders of the District Forum and the State Commission and chose to drag the poor complainant to this Commission on the same hackneyed grounds that the complainant (i) did not furnish “quotations” for his proposed kirana shop, (ii) went on withdrawing sums out of the margin money deposited by him and (iii) came to the bank for release of loan after the sanction validity period had expired. Both the District Forum and the State Commission had dealt comprehensively with each of these grounds and dismissed them as wholly untenable.


7.         That none of these grounds is, in reality, ‘worth the pieces of paper’ that have been used in the revision petition is clear from the documentary evidence on record. Any one remotely familiar with the ground reality in a rural/semi-urban area would recognise that it is meaningless, in fact, mischievous – if not worse, to ask for “quotations” for the purchases that would need to be stocked in a small kirana store to start that business. In any case, if the bank was so keen to ensure proper utilisation of the loan, the bank’s branch manager could have easily had the expenditure verified after the complainant had been given a letter authorising him to buy the stocks and then released the payment directly to the supplier(s) by debiting the loan account. No doubt, the complainant could not have withdrawn any part of the margin money deposited by him in his loan account. But the crucial question is: who allowed that withdrawal? Surely, the bank could have refused. The inference is, therefore, that in violation of the PMRY guidelines and the bank’s own management instructions in this regard, and for reasons unstated but not difficult to fathom, the employee(s) concerned of the bank allowed the withdrawal and then, before the Consumer Fora, the bank chose to hold this against the complainant as a ground for refusing to release the sanctioned loan. The fact also remains, as noticed by the District Forum, that the complainant very quickly (on 01.11.2000) re-deposited in full the small sums that he was allowed to withdraw (Rs. 100/- on 11.09.200 and Rs. 400/- on 03.10.2000) out of the margin money deposit. And, finally, the bank admitted that the period of validity of the sanction could have been easily extended by six months – any one familiar with the operation of the PMRY would know that such revalidation is done more or less as a matter of course, given the socio-economic background of the beneficiaries and the procedural hurdles that they have to overcome before commencing work on their approved self-employment projects. What prevented the bank from writing to the complainant even a single letter after 31.01.2001 to enquire why he had not approached the bank to avail of the sanctioned loan in time, if not to fairly advise that he could, for sufficient grounds, apply to seek extension of the period of validity of the sanction? Thus, it did/does not behove the bank to cite expiry of the initial validity period of sanction as a ground for its gross inaction in releasing the loan. It was only in compliance with our direction dated 6th March 2006 during these proceedings that the bank finally paid the sum of Rs. 47,500/- as loan to the complainant. This was, therefore, not only a case of deficiency in service but also of administrative misfeasance on the part of the bank officials.


8.         This is akin to the situation that the Hon’ble Apex Court deplored in the following words in its judgment in the case of Lucknow Development Authority vs M. K. Gupta [(1994) 1 SCC 243]:


                        “...... The importance of the Act lies in promoting welfare of the society by enabling the consumer to participate directly in the market economy. It attempts to remove the helplessness of a consumer which he faces against ........................... the might of public bodies which are degenerating into storehouses of inaction where papers do not move from one desk to another as a matter of duty and responsibility but for extraneous consideration, leaving the common man helpless, bewildered and shocked. The malady is becoming so rampant, widespread and deep that the society, instead of bothering, complaining and fighting against it, is accepting it as part of life. ...........................


                        “....... A public functionary, if he acts maliciously or oppressively and the exercise of power results in harassment and agony, then it is not an exercise of power but its abuse. No law provides protection against it............ Harassment of a common man by public authorities is socially abhorring and legally impermissible. It may harm him personally but the injury to the society is far more grievous. Crime and corruption thrive and prosper in the society due to lack of public resistance. Nothing is more damaging than the feeling of helplessness. An ordinary citizen, instead of complaining and fighting, succumbs the undesirable functioning in offices instead of standing against it. ............


                        .............. It is, therefore, necessary that the Commission when it is satisfied that a complainant is entitled to compensation for harassment or mental agony or oppression, which finding should be recorded carefully on material and convincing circumstances and not lightly, then it should further direct the department concerned to pay the amount to the complainant from the public fund immediately but to recover the same from those who are found responsible for such unpardonable behaviour by dividing it proportionately where there are more than one functionaries.

(Emphasis supplied]


9.         In view of the foregoing discussion, we see no reason to interfere with the well-reasoned and considered order of the State Commission, which effectively affirmed an equally well-considered order of the District Forum. The revision petition fails and is accordingly dismissed.


            For refusing to comply, successively, with the orders of the District Forum and the State Commission with disdain and then dragging the complainant to this Commission without justification, we direct the petitioner bank to (i) pay an enhanced cost of Rs. 10,000/- directly to the complainant by demand draft within four weeks from the date of this order and (ii) credit the amount of compensation of Rs. 5,000/-, as awarded by the State Commission, to the loan account of the complainant with the petitioner bank. The latter credit shall be treated, for the purpose of calculation of interest due, as if the amount had been so credited to the loan account of the complainant on the date of the order of the State Commission.


            We also order that the sum of Rs. 15,000/- thus paid to the complainant be recovered proportionately from the official(s) responsible for the misfeasance noticed in this case, in accord with the order of the Apex Court in the Lucknow Development Authority case (supra).


            We further direct the petitioner bank to remain present before the Registrar of this Commission on 15th December 2008 to report compliance of this order and to continue to remain present before him on such further dates as he may determine necessary to satisfy himself that this order of recovery from the officials concerned has been duly complied with, which may not be later than one year from the date of this order. The Registrar shall place the matter before this Commission if the petitioner bank is seen, at any stage, to be dragging its feet on any aspect of compliance.


            Copies of this order may be sent immediately to the petitioner bank, the complainant and their respective learned counsel and also to the Chairman and Managing Director of the petitioner bank as well as the Secretary, Ministry of Micro, Small and Medium Enterprises, Government of India (being in charge of overseeing the implementation of the PMRY), the last two by name.