MANAGING DIRECTOR, MAHARASHTRA STATE FINANCIAL CORPORATION & ORS. versus SANJAY SHANKARSA MAMARDE

Citation: [2010] 8 S.C.R. 358 · Decided: 09-07-2010 · Supreme Court of India · Bench: D.K. JAIN · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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[201 O] 8 S.C.R. 358 
MANAGING DIRECTOR, MAHARASHTRA STATE 
FINANCIAL CORPORATION & ORS. 
v. 
SANJAY SHANKARSA MAMARDE 
(Civil Appeal No. 7189 of 2002) 
JULY 9, 2010 
[D.K. JAIN AND H.L. DATTU, JJ.] 
Consumer Protection Act, 1986 - ss 2(o}, 2(g) and 23 -
C Sanction of loan by State Financial Corporation to 
complainant - Non-disbursement of balance instalments by 
Corporation to complainant - Complaint alleging deficiency 
in service - Allowed by National Commission - Direction to 
Corporation to pay compensation to complainant -
o Correctness of - Held: Not correct - Non-release of Joan 
amount was not because of any deficiency on the part of 
Corporation but due to complainant's conduct - Complainant 
failed to furnish progress report and did not discharge his 
liability towards interest despite repeated demands - Thus, 
E failure of Corporation to render 'service' could not give rise to 
claim for recovery of any amount under the Act. 
The State Financial Corporation sanctioned loan to 
the complainant for his hotel project. The said loan of Rs. 
30 lakhs was to be disbursed to the complainant in 
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instalments on comp1ainant's furnishing the progress 
report of the project at Amravati. The Corporation released 
the first instalment of the loan of Rs-2,90,000/- to the 
complainant. However, the Corporation did not submit 
the progress report of the project and the other 
G documents. The complainant also did not discharge his 
liability towards the interest despite repeated demands. 
The Corporation also came to know about the proposal 
for railway line between Amravati and Narkhed which was 
likely to affect the hotel project. As such the Corporation 
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358 
M.D., MAHARASHTRA STATE FINANCIAL CORPN. 
359 
v. SANJAY SHANKARSA MAMARDE 
stopped the disbursement of balance amount of loan to 
the complainant. The complainant filed a complaint before 
the National Consumer Disputes Redressal Commission 
against the Corporation alleging deficiency in service on 
the part of the Corporation on account of their failure to 
release the balance loan amount. The Commission 
allowed the complainant and directed the Corporation to 
pay to the complainant -aij amount of Rs. 4,84,457/- as 
compensation. Hence th~ appeal. 
Allowing the appeal, the Court 
HELD: 1.1 Clause (o) of section 2 of the Consumer 
Protection Act defines "service". The use of the words 
'any' and 'potential' in the context these have been used 
in clause (o) indicates that the width of the clause is very 
wide and extends to any or all actual or potential users. 
The legislature has expanded the meaning of the word 
further by extending it to every such facilities as are 
available to a consumer in connection with banking, 
financing etc. Undoubtedly, when banks or financial 
institutions advance loans, they do render 'service' 
within the meaning of the clause. [Para 15] [368-G; 369-
B-C] 
1.2 It is manifest from the language employed in 
clause (g) of the section 2 defining deficiency that its 
scope is also very wide but no single decisive test in the 
determination of the extent of fault, imperfection, nature 
and manner of performance etc. required to be_ 
maintained can be laid down: It must depend on the "facts 
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of the particular case, having regard to the nature of the G· 
'service' to be provided. (Para 16] [369-F] 
1.3 In the instant case, the Corporation was obliged 
to disburse to the complainant a loan of Rs.30 lakhs in 
instalments on complainant's furnishing the progr_ess 
report of the project. Although, no specific information 
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SUPREME COURT REPORTS 
[201 O] 8 S.C.R. 
A with regard to the actual dates for release of the 
instalments of the loan amount are forthcoming, yet it can 
be gathered from the correspondence on record that the 
loan amount was to be disbursed periodically (perhaps 
half yearly), on the basis of the report of the approved 
B valuer on the progress of the project. It is evident from 
Corporation's letters that the complainant not only failed 
to furnish the progress report, he also did not discharge 
his liability towards interest, as demanded from him from 
time to time. Even the cheque in the sum of Rs.30,000/-
C issued by the complainant to the Corporation on 2nd 
September, 1992 towards up-front fee was returned 
unpaid by his bankers. In Corporation's letter dated 24th 
February, 1994 it was alleged that the complainant had 
not only failed to pay interest, it was also found on 

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