“Bank cannot retain processing charges when credit facility not provided
“Bank cannot retain processing charges when credit facility not provided as requested and sanctioned “held National commission confirming order by District and State commission.
Axis Bank V/S Sumitra DS Motors Pvt Ltd &others (NC)
RP 1899/2013 Decided on 16.10.2024(NC)
Facts
- M/S Sumitra DS Motors Pvt Ltd &M/S Sumitra sons applied for credit facility for Rs 2 crore and Rs 2.5 crore respectively and paid 1.0% processing charges for the same to the tune of Rs 496350/- to the bank
- Credit facility for both customers were sanctioned but disbursement was kept pending for documentation process.
- In the process customers were to obtain NOC from UBI with him their property was earlier mortgaged which they could not obtain for want of clearing their pending dues
- Disbursement of Credit facility amount was not done by the bank for not completing this condition.
- Complainants asked for refund of processing fee.
Legal Question
This was not the case of deficiency in services for not approving facility but was a question of holding processing fee.
- The question before the national commission in revision petition was as to whether District and state commission had not exercised their jurisdiction properly and whether there was any legal infirmity in deciding the issue in favour of complainant.
- The question was also raised as to whether Processing charges were for sanction or for disbursement?
Arguments by Bank
- Bank had put all its machinery in motion to process the case of complainant, valuer, legal mechanism and other technical things and processing charges were for that purpose
- It was the customer who failed to submit NOC from their previous financer which was the condition for completing the process from their end
- It was not the bank who refused to give requisite services, they can bring NOC and get benefitted
Observation by National Commission
Sanction or approval has no meaning for the customer if disbursement not done. For a customer sanction done or not done really does not matter to him. No services given, hence no processing charges can be asked for
District and state commission order is confirmed by National Commission
Dr Prem Lata
