Sharan, The Real Hero

History shows that where ethics and economics come in conflict, victory is always with economics. Vested interests have never been known to have willingly divested themselves unless there was sufficient force to compel them. — B.R. Ambedkar
Has the consumer court, which is responsible for dispensing justice, looked at the letter or the spirit of the law? This case raises many such uncomfortable yet very important questions. Let us deal with some of them here.

Why does the builder or the bank exist? To serve customers; else they will quickly be consigned to the dustbin of history. The bank's lawyer has drowned himself in technicalities and tried to delude himself into believing that he is acting in the interest of the customer. He has lost sight of the end goal — the goal of serving customers.

Even if we accept that the bank had the best intent, should it not graciously reimburse the expenses — the loan processing fees, property surveyor charges, etc.?

Yes, the builder had indeed reduced the consideration price for the sale, probably to avoid stamp duty. And the bank was right in insisting that this be corrected; but not as an afterthought, not after having sanctioned the loan, and certainly not at Sharan's cost.

The builder, on the other hand, is an epitome of arrogance — "We have sold 700 apartments using the very same standard agreement." What does it take to make minor modifications in the sale deed, like the one about bringing James Joyce's name on the first page? Nothing at all.

Moreover, the bank has gone back on its word, refusing to disburse the loan after having sanctioned it. Did anything change materially between sanction and disbursal? Nothing at all.

Banks are supposed to be the bastion of diligence and good processes. Could this bank not have been a little more careful before sanctioning the loan?

Clearly, different departments within the bank are working at cross-purposes and chasing departmental targets — the agent selling insurance policies and the lawyer with zero tolerance. In the end, the bank achieved its insurance target, but Sharan was left without his loan. The bank was either too clever or very risk averse — both are a problem. The bank will do well to remember that employees and customers alike punish companies that try to be ‘too clever'.

What is the role of the court? The court is supposed to be constituted of wise men. Can such men of wisdom say "for reasons best known to the bank" and pass an order without even making an effort to understand why the loan was not disbursed?

Real justice expects the court to weigh in with the disadvantaged and the less powerful. In this case, the ‘balance of power' lies with the bank and the builder. They can engage the best legal minds and build an argument that is technically right but morally wrong. The court's job is to uphold what is morally right. Failing which, issues will go to the people's court — and we know the consequences of that. Divorced from ethics, dispensing justice is reduced to a mere technicality.

‘The law is blind' is a paradigm of people frozen in the past. This court is expected to show empathy and sensitivity — placing itself in the shoes of the customer (after all it is a consumer court), and understanding Sharan's anguish and his loss.

The court order makes an assumption without basis. For instance, how did it infer that Sharan was in a hurry to progress the application? Such errors lead to a ‘credibility crisis'. The verdict should have been to offer compensation to Sharan, to cover his expenses and compensate for the agony caused, and not to penalise him. What a travesty of justice! The courts are accountable too — to their conscience.

The second bank disbursed the loan smoothly, albeit at a higher price. So does accountability improve with price? It would worry me no end if the answer is a ‘yes'.

Every organisation rewards certain behaviours, and what gets rewarded gets practised. For example, behaviours such as putting procedure before people, disbursing a loan only when there is zero risk, etc., have their place and value. But sometimes they are an anachronism. The bank, the builder and the court are in serious need of reforms.
Lastly, who is the winner in this case? It is Sharan. He may have lost at the consumer court, but he has won in the eyes of the people. 

Instead of suffering in silence or showing apathy, he fought, and he deserves applause for this. He will survive; the builder and the bank will not.

It is thanks to people like Sharan that there has been a dramatic change in our focus on ethics. We have made more progress in the past five years than in the previous five decades.

Sudheesh Venkatesh is the chief people officer at Azim Premji Foundation. He holds a postgraduate degree in management from IIM, Calcutta

(This story was published in Businessworld Issue Dated 07-11-2011)