Kupwara Consumer Commission Holds J&K Bank Liable for Giving Loan to Third Party Without Consent
The District Consumer Disputes Redressal Commission, Kupwara, held Jammu and Kashmir Bank responsible for poor service. The bank gave part of the loan to another party without the complainant’s permission. The Commission partly allowed the complaint. It said that starting recovery and charging EMIs without proper loan disbursement was wrong.
The complainant, Nasir Ud Din Zargar, got approval for a loan of Rs. 10 lakh under the PMEGP scheme from J&K Bank, Old Chowk branch, Kupwara. He submitted a GST bill of Rs. 1.20 lakh. The bank released this amount to him. The remaining loan amount stayed with the bank.
After this, the complainant did not ask for any more money. He also did not give permission for further payment. However, the bank gave Rs. 6.05 lakh to a third party, Al Nawaf Pharma, without his consent. The bank also did not have proper documents for this payment.
It was also alleged that Rs. 2 lakh was taken from the guarantors’ accounts. When the complainant came to know about this, he contacted the bank many times. Bank officials told him that no money would be taken from the guarantors. But later, the bank still deducted Rs. 2 lakh from the guarantors’ accounts. This was said to be against RBI rules.
The complainant then filed a case before the Commission for poor service.
J&K Bank argued that the complaint was filed to delay loan recovery and trouble bank officials. The bank said that Al Nawaf Pharma had a valid GST registration. It also argued that the Commission did not have the power to grant the relief asked by the complainant. The bank claimed that the loan was approved in 2021 with the complainant’s consent.
The Commission observed that the loan of Rs. 10 lakh was approved, but only Rs. 1.20 lakh was given to the complainant. This fact was not disputed. The Commission said that the bank failed to show any proof that the complainant had allowed payment to the third party.
The Commission held that the bank acted carelessly and without proper authority. Giving loan money without consent was wrong. Starting recovery and charging EMIs on the full loan was also wrong. The Commission clearly said that a borrower cannot be made to pay for money that he never received.
So, the complainant’s liability was limited to Rs. 1.20 lakh with interest. The guarantor was also not responsible for the wrongly given amount.
Finally, the Commission partly allowed the complaint. It directed the bank to conduct an internal enquiry against the officials involved. It also ordered the bank to release the remaining loan amount as per RBI rules and refund Rs. 2 lakh to the guarantors with 5% interest.
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