THE CHAIRMAN-CUM-MANAGING DIRECTOR, RAJASTHAN FINANCIAL CORPORATION AND ANR. versus COMMANDER S.C. JAIN (RETD.) & ANR.

Citation: [2010] 3 S.C.R. 836 · Decided: 26-03-2010 · Supreme Court of India · Bench: P. SATHASIVAM · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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c 
[2010] 3 S.C.R. 836 
THE CHAIRMAN-CUM-MANAGING DIRECTOR, 
RAJASTHAN FINANCIAL CORPORATION AND ANR. 
v. 
COMMANDER S.C. JAIN (RETD.) & ANR. 
(Civil Appeal No. 2774 of 2010) 
MARCH 26, 2010 
(P. SATHASIVAM AND H.L. DATTU, JJ.] 
CONSUMER PROTECTION ACT, 1986: 
ss. 2(1)(c), (g) and 14 - 'Complaint' - 'Deficiency' in 
service - 'Finding of District Forum' - Complaint filed alleging 
deficiency in service of providing loan - Rejected by District 
Forum holding that the bills produced by complainant, as 
D required in terms of agreement, were fraudulent - State 
Commission declining to entertain the appeal of complainant 
- National Commission in revision, holding that there was no 
deficiency in rendering service to the complainant, but 
directing the Corporation to pay the complainant 
compensation amounting to Rs.1,50,0001- along with 12% 
E interest - HELD: National Commission failed to appreciate 
that the respondent had repeatedly acted fraudulently in 
providing the bills and receipts to the appellant-Corporation 
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The Act has provided provision for correcting the 
shortcomings in the service or goods provided by way of 
F awarding compensation or other means specified only when 
the Consumer Forum comes to the conclusion that there is 
'deficiency' in service provided or goods sold -
The loss 
suffered by the complainant for the reason of not being able 
to start the unit cannot be the basis for awarding the 
G compensation specifically when the complainant was at fault 
for the non-release of the balance loan amount - Therefore, 
when there is no deficiency found on the part of the 
Corporation, it cannot be asked to pay compensation -
National Commission, though has held that there is no 
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836 
CHAIRMAN7CUM-M. D., CORPORATION v. 
837 
G:OMMANDER S.C. JAIN (RETD.) 
deficiency in service as regards the qisbursement of the 
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balance loan amount, has erred in going ahead to award 
compensation with interest @ 12 per cent - The impugned 
order cannot be sustained and is accordingly set aside. 
[para 13, 14, 18 and 19] 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 
2774 of 2010. 
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From the Judgment & Order dated 25.7.2006 of the 
National Consumer Disputes Redressal Commission, New 
Delhi in Revision Petition No. 2372 of 2004. 
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S.K. Bhattacharya for the Appellant. 
Commander, S.C. Jain (Retd.) Respondent-in-person. 
The Order of the Court was delivered by 
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ORDER 
H.L. DATTU, J. 1. The petitioner has sought leave to 
appeal against the order passed by the National Consumer 
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Disputes Rederessal Commission, New Delhi (for short 
'National Commission'}Wherein and whereunder it has directed 
the appellant to pay compensation to the tune of Rs.1,50,000/ 
- along with interest at the rate of 12 per cent from the date of 
filing of petition in favour of the respondent. Leave granted. 
Facts: 
2. The Respondent had applied for loan on 03.03.1990 to 
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the Rajasthan Financial Corporation (in short 'Corporation') for 
setting up a manufacturing unit of plastic doors, windows etc. 
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The Corporation after considering the request made, had 
sanctioned term loan of Rs.18,000/- for machinery and also 
Rs.1,26,000/- as the working capital limit for the said business. 
As per the sanction letter, the Corporation was to provide only 
75 per cent of the purchase price to the respondent and the 
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838 
SUPREME COURT REPORTS 
[2010] 3 S.C.R. 
A remaining share, i.e., 25 per cent was to be contributed by the 
respondent. The sanction letter also provided that if the concern 
has purchased machinery in accordance with the scheme and 
full payment has been made, 90 per cent of the admissible 
amount of loan will be released on the basis of the statement 
B of account prescribed for the purpose, duly supported by bills 
and receipts and balance after valuation of machines. The 
period of repayment of the loan was eight years in quarterly 
installments. The first installment was to be due on the first day 
of 18th month reckoned from the date of first disbursement of 
c loan against fixed assets. Further as per the terms of the 
sanction letter one of the important terms was that the 
machinery should be purchased from authorized dealer and of 
Wolf make or from M/s Rally India Ltd. 
3. On 29.06.1990, the respondent requested the appellant 
D -Corporation for more time to complete the formalities of 
submitting the loan documents in order to enable the appellant 
to disburse the loan amount. The loan document was,
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