Bank told to pay damages for cancelling loan

NEW DELHI: If you thought nothing could go wrong once your car loan was sanctioned, read on. Taking his car loan for granted once he had submitted the requisite papers, Stonechem (India) Private Limited director, R N Singhal was in for a rude shock when the Standard Chartered Bank cancelled his loan. Refusing to be put down like that, Singhal moved the District consumer disputes redressal forum (New Delhi).Finding the bank guilty of deficiency of service, the court directed it to pay a sum of Rs 10,000 as damages and costs to the complainant within a stipulated time. Failing which, it said, the bank would have to pay an interest rate of 9 per cent till its realisation. Singhal had applied for a car loan with the Standard Chartered Bank in the name of his company after reading an advertisement in a National daily. The bank assigned a marketing executive, Brijesh Sharma, to help Singhal with the procedure. Sharma contacted Singhal and obtained the documents for the release of loan. These included 35 post-dated cheques duly signed by Singhal and a cheque for Rs 11,747 towards the booking amount and the first instalment for the purchase of a Maruti-800, and for a loan amount of Rs 2,23,000. The cheque was even encashed by the bank. But a few days later, the bank returned the 35 duly filled in cheques along with a pay-order of Rs 11,747 and a covering letter showing their inability to release the loan amount. Singhal lodged a complaint with the consumer court saying the bank cannot unilaterally terminate the contract without giving the reason for its refusal, especially since it had already encashed the cheque handed out by him. Notices were issued to the bank and the marketing executive. The bank contended that there was no contract by which it was bound to release the loan amount and therefore there was no negligence on its part. The bench, comprising judges L C Jain, R Narayana and Janak Juneja, ruled that The bank was found guilty of deficiency of service and was directed to pay damages to Singhal.