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Bank of Baroda Held Guilty for Not Disbursing Home Loan after Issuing Sanction Letter; NCDRC Upholds Rs1 Lakh Compensation

Upholding the decision of fora below, the national consumer disputes redressal commission (NCDRC) reiterated that Bank of Baroda (BoB) is deficient in providing the requisite service for a home loan and must pay a compensation of Rs1 lakh to the borrower.

In an order last week, the bench of Binoy Kumar (presiding member) and justice Sudip Ahluwalia (member) says, “No copy of any letter intimating the complainant about the infirmity or illegality of the no objection certificate (NOC) was placed on record by the opposite parties to support their claim, as admittedly no such letter was actually issued to the complainant. In such circumstances, both the fora below were justified in holding that the Bank had been deficient in providing the requisite service to the complainant in respect of his loan for which the sanction letter had already been issued.”

NCDRC, while dismissing the appeal, also directed BoB to pay Rs1 lakh compensation to the borrower, as per the ruling by the state commission.

Nallasopara-based Jayprakash R Kushwaha had applied for a home loan from the Bank. Based on documents submitted by him, on 8 February 2007, BoB issued a pre-sanction letter to Mr Kushwaha. Using the pre-sanction letter, Mr Kushwaha executed the agreement for sale with Rahul Lokhande, the seller, and paid Rs87,000 as margin money to the Bank. BoB transferred the home loan file of Mr Kushwaha to its Saki Naka branch in Andheri.

As per instructions from the Bank, Mr Kushwaha visited the Saki Naka branch and submitted all documents, including an NOC and a share certificate obtained from New Neil Aangan CHS Ltd. However, even after submitting all required documents, the Bank did not issue a cheque for loan disbursement. On enquiry, Mr Kushwaha was told that his file was missing and the loan would be disbursed as soon as the file was found.

However, no loan was disbursed to Mr Kushwaha, despite repeated reminders and visits to the branch. He then sent two legal notices and filed a complaint before the Thane district consumer complaint redressal forum against BoB.

During the hearing before the district forum, the Bank contended that the NOC submitted by Mr Kushwaha was false and fabricated as it did not bear the signatures of the president or the secretary of the housing society which was informed to them by the chairman and secretary of New Neil Aangan CHS. It also claimed that Mr Lokhande, the seller, was not authorised to execute the agreement for sale in respect of the flat. Hence, the title of the flat was not clear and the loan could not be given to Mr Kushwaha, the Bank contended.

During the hearing, the chairman and secretary of New Neil Aangan CHS remain absent.

After hearing both sides, the district forum observed, “BoB, after complying with all the processes, inquiring with the chairman and secretary of New Neil Aangan CHS about the NOC, and later giving in writing about not having the signature of the chairman of the society on the Bank’s letterhead, to remain absent in the case before the Forum, taking search report after complaint is filed, taking certificate regarding ownership, all these facts raise doubt in the bank’s working system.”

“… it is clear that BoB having encroached upon the legal rights of Mr Kushwaha and alternately he has been deprived from the basic rights of the consumer from the time the possession of the house has been taken over, upto the period of acquiring membership of the housing society and using the house. Therefore, it has come to the conclusion of the Forum that the Bank has defaulted in providing facility in housing loan to the complainant,” the district forum says.

Bank of Baroda challenged the ruling before the Maharashtra state consumer disputes redressal commission. On 24 April 2017, the state commission dismissed the appeal, saying, “(the) Bank had not responded to Mr Kushwaha on the pretext that house loan file of complainant is missing. Under such circumstances, we are of the opinion that there was deficiency in service given by the Bank to Mr Kushwaha and hence he is entitled to get compensation from the Bank alongwith costs of litigation.”

Alleging failure by the state commission to exercise its jurisdiction in the wake of admitted fact of forgery and fabrication, BoB filed an appeal before the national commission.

After hearing both sides, NCDRC observed that irrespective of the question of whether or not the NOC was actually fabricated, it was the duty of the Bank to inform Mr Kushwaha promptly that it was not acceptable in view of the information purportedly gathered from the chairman and secretary of New Neil Aangan CHS.

“But the same was not done which ex-facie was a deficiency in service on the part of the Bank. Had Mr Kushwaha been informed about this fact, he could have either rebutted the same, or resorted to any other method to secure a genuine certificate, if the same delivered to him was found to be false, fabricated or unauthorised. But the Bank in Para 12 of their reply filed in the district forum, simply denied in a bald fashion that ‘they have not intimated to the complainant about the delay in disbursement of the housing loan'”. Elsewhere they merely stated that they had ‘orally informed’ to the complainant about the delay in disbursement of the loan since the title of the said property was not clear and marketable,” it says. 

NCDRC also noted that the Bank failed to even respond to two legal notices sent by Mr Kushwaha. Nearly five-six months after he filed the complaint before the district forum, the Bank replied to his notices.

“No copy of any letter intimating the complainant about the infirmity or illegality of the NOC was placed on record by the Bank to support its claim, as admittedly no such letter was actually issued to the complainant,” the bench stated.

It then directed Bank of Baroda to pay Rs1 lakh as compensation to Mr Kushwaha.

(Revision Petition No2493 of 2017   Date: 3 March 2023)

Source: moneylife.in