Calcutta High Court Sets Aside Consumer Commission Orders Against Bank & Jute Corporation In Jute Loan Dispute
The Calcutta High Court has set aside concurrent findings of the District, State and National Consumer Commissions, which had held the Uttarbanga Kshetriya Gramin Bank and the Jute Corporation of India (JCI) liable for deficiency in service in connection with jute-pledge loans availed by farmers.Justice Debangsu Basak disposed of eight revisional applications filed by the farmers, the bank,...
The Calcutta High Court has set aside concurrent findings of the District, State and National Consumer Commissions, which had held the Uttarbanga Kshetriya Gramin Bank and the Jute Corporation of India (JCI) liable for deficiency in service in connection with jute-pledge loans availed by farmers.
Justice Debangsu Basak disposed of eight revisional applications filed by the farmers, the bank, and the JCI, holding that the consumer fora had committed errors in fixing liability on both entities.
Background
Several farmers had availed loans from the bank by pledging warehouse receipts for jute. The bank sanctioned and disbursed credit on the strength of such pledges. The farmers later defaulted.
They approached the District Consumer Forum alleging that the bank failed to sell the pledged goods in time, causing loss and JCI failed to procure jute at Minimum Support Price (MSP) under a Central Government scheme, making it impossible for them to repay.
The District Commission upheld the complaint, directed recovery of loan amounts from the farmers, and awarded compensation for deficiency in service by both the bank and JCI. The State and National Commissions affirmed the findings.
A Special Leave Petition was disposed of by the Supreme Court, granting liberty to file revisions before the High Court.
High Court Findings
The Court noted that although the pledge clause empowered the bank to sell the pledged jute to mitigate its loss, the bank never initiated recovery proceedings after issuing a recall notice.
“Question… of the bank failing to mitigate loss… does not exist,” the Court held.
Since the bank had not attempted recovery at all, its failure to sell the pledged goods could not be treated as deficiency in service.
On the allegations against JCI, the Court found no credible evidence, even on a preponderance of probabilities, that the farmers ever offered their jute for sale at MSP. The complaints only suggested an oral offer, denied by JCI, with no documentary proof.
Interpreting Section 2(o) of the Consumer Protection Act, 1986, the Court held that JCI's procurement operations under a government MSP scheme did not amount to rendering a commercial service, especially since no fee or charge was levied on farmers.
“JCI did not render any service which can be questioned within the parameters of the Act of 1986,” the Court held.
The High Court thus set aside the orders of the District Commission, State Commission, and National Commission.
Case: The Branch Manager, Uttarbanga Kshetriya Gramin Bank Vs. Sri Dulal Ch. Chandra & Ors
Case No: CO 125 of 2023