Bank of India v. M/s Brindavan Agro Industries Pvt. Ltd.
Background
The respondent company, an existing customer of the appellant Bank, applied for enhanced credit facilities worth over Rs. 40 crore in 2011 and revised its requirements three times before the Bank sanctioned the facilities in March 2012. The Bank had debited the respondent's account for processing fees and a mandatory technical-economic viability (TEV) study, but the respondent complained to consumer fora that this was excessive and that the Bank had delayed sanctioning the loan, causing it to seek credit elsewhere. The State and National Consumer Disputes Redressal Commissions ruled substantially in the respondent's favour, ordering the Bank to refund a large portion of the charges with interest.
Decision Breakdown
The Supreme Court held that the NCDRC's calculation of what the Bank was entitled to charge was not based on the Bank's actual circular or the sanction letter but was essentially the Commission's own improvised figure ("ipse dixit"). It found that the respondent, a sophisticated borrower seeking a Rs. 40-crore facility, could not credibly claim ignorance of the Bank's standard processing-fee circular, and that even after applying the 50% concession the respondent had itself requested, the amount properly chargeable was still well above what the Bank had actually debited. The Court therefore set aside the consumer fora's orders as legally unsustainable, but held the Bank to its own prior offer (made by email) to refund Rs. 9.16 lakh, directing that specific, smaller refund within two months.
Lesson Learnt
Consumer forums must base refund or compensation orders on the actual contractual terms and bank circulars governing a transaction, not on an improvised figure of their own, and a party is generally bound by its own clear, communicated settlement offer even when the broader claim against it fails.