Skip to main content

State Bank of India : Bank cancels loan after approval, set to pay 1 lakh fine

Cancelling a loan that it had sanctioned has earned State Bank of India a stiff fine of 1 lakh.

The State Consumer Disputes Redressal Commission ruled in favour of a garment export company and directed SBI to pay the owner of the firm the sum as compensation for causing him mental agony.

The firm's proprietor, K Ramani, applied for a loan of 24 lakh from the Small and Medium Enterprise City Credit Centre of State Bank of India, Egmore.

In his submission to the consumer redressal commission, he said bank officials thoroughly scrutinised documents pertaining to the expansion of his enterprise and sanctioned a loan of 22.5 lakh. He submitted all documents required for the loan, including the title deed of land owned by his daughter as mortgage.

However, the bank later refused to release the loan, stating that it found discrepancies in the submitted documents. The bank's action was arbitrary and unjust, Ramani said.

In its counter, the bank said it did release the loan because Ramani had cited an inflated amount for purchases and bank officials had doubts regarding a business unit that had placed an order with his firm. The bank said it could cancel the disbursement of a loan at any stage if doubts arose regarding the viability of the project for which it was extending credit. It said Ramani's daughter was a minor and could not execute a title deed.

The bench comprising president R Regupathi and judicial member A K Annamalai pointed out that the bank had not verified all documents before sanctioning the loan.

Though the bank had the authority to reject the loan, the bench questioned the manner in which it exercised that authority, stating that it should not have caused "embarrassment to a customer" and made him "run from pillar to post for several months". The bench said the bank's refusal to disburse the loan after sanctioning it amounted to deficiency in service.

It directed SBI to pay a compensation of Rs 1 lakh for mental agony to the complainant and 10,000 as costs. However, it said it could not issue directions to the bank to disburse the loan.

Article referred: http://www.4-traders.com/STATE-BANK-OF-INDIA-9058834/news/State-Bank-of-India--Bank-cancels-loan-after-approval-set-to-pay-1-lakh-fine-17748683/

Comments

Post a Comment

Most viewed this month

Amendment of plaint under Order VI Rule 17 of the CPC explained

Cause Title :  Ganesh Prasad vs Rajeshwar Prasad, SLP (C) NO. 28377 OF 2018, Supreme Court Of India Date of Judgment/Order : 14/3/2023 Corum : J. B. Pardiwala, J. Citied:  Revajeetu Builders and Developers v. Narayanaswamy & Sons and Others reported in (2009) 10 SCC 84 North Eastern Railway Administration, Gorakhpur v. Bhagwan Das reported in (2008) 8 SCC 511 P.A. Jayalakshmi v. H. Saradha and Others reported in (2009) 14 SCC 525 B.K. Narayana Pillai v. Parameswaran Pillai and Another reported in (2000) 1 SCC 712 A.K. Gupta and Sons Ltd. v. Damodar Valley Corporation reported in AIR 1967 SC 96 Life Insurance Corporation of India v. Sanjeev Builders Private Limited and Another, Civil Appeal No. 5909 of 2022 dated 01.09.2022 Firm Sriniwas Ram Kumar v. Mahabir Prasad and Others reported in AIR 1951 SC 177 G. Nagamma and Another v. Siromanamma and Another reported in (1996) 2 SCC 25 Praful Manohar Rele v. Krishnabai Narayan Ghosalkar and Others reported in (2014...
Post a Comment
Read more

Even An Unregistered Partnership Firm Can Maintain ‘Cheque Bounce’ Complaint

In M/s Uttam Traders Ranghri vs. Tule Ram alias Tula Ram, an appeal was filed before the Himachal Pradesh High Court solely on the ground that one of the partners of the complainant-firm which is an unregistered partnership concern, had failed to prove that he was one of the partners of the complainant-firm and duly authorised by it to file the complaint and acquitted the respondent. The High Court decided that two questions arise for consideration in this matter :- 1) Whether acquittal by the magistrate solely on the ground that the managing partner of the appellant having failed to establish that he was one of the partners of the complainant-firm and duly authorised by it to file the complaint was correct 2) Whether a partner of an unregistered partnership firm can maintain a complaint under Section 138 of the Negotiable Instruments Act. For the first issue, the High Court referred to M/s Haryana State Co.Op., Supply and Marketing Federation Ltd. vs. M/s Jayam Text...
2 comments
Read more

Interim order staying the operation of an impugned order vs quashment of an impugned order

In Deific Abode LLP vs Union of India & Ors., while discussing on the issue of interim order staying the operation of an impugned order and the quashment of an impugned order, the Calcutta High Court observed that :- These salient principles emerge: i. As per the law laid down in Shree Chamundi Mopeds Ltd (supra) by the Supreme Court, the effect of an interim order staying the operation of an impugned order and the quashment of an impugned order are considerably different from one another. While the former merely ensures that the order impugned would not be operative from the date of the passing of the order of stay, without annihilating the said impugned order from existence, the latter ensures that such quashment results in the restoration of the position as it stood on the date the impugned order was passed, with the impugned order ceasing to exist in the eyes of the law. ii. Quashment of such impugned order would revive the appeal before the appellate authority and would be con...
Post a Comment
Read more