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BW Businessworld

Truths And Half-Truths

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What is the truth? James Joyce bought an apartment from Gem Builders for Rs 36 lakh. He did not register the property but paid the transfer charges to the builder and put it up for sale for Rs 45 lakh. He found a buyer, Sharan Ranganathan, who needed a bank loan to buy the apartment. In addition to paying the stamp duty on the guideline value and registering the property in his name, Sharan also needed to ensure the legal validity of the agreement between James and the builder, which he did and it was part of the sale deed he presented to the bank.

Nothing wrong. Looks simple on paper, does it not? The second bank granted Sharan the loan. There was no ambiguity or argument.

So the real problem that Sharan had with the first bank had nothing to do with the truth. It had to do with the sense of injustice that Sharan, the aggrieved, felt from the judgement of the consumer court. The judgement was based on legal technicalities and the manner in which the facts were presented, which obfuscated the whole truth. In the end, the whole purpose of appealing to the consumer court seemed to have been defeated because the appellant was punished for no fault of his. It was the bank that went back on its own sanction, but the honourable court made Sharan the villain.
 
When these two events are seen against their respective outcomes, the conclusions are baffling. The second bank did not contravene any rules or statutory requirements. So on what basis did the consumer court pass its judgement? Did it see the truth, or was the judgement based on the presentation of the truth by the lawyers and the judge's interpretation?

Justice in any judicial system cannot be bereft of the context. Neither can it ignore the purpose for which any society creates judicial institutions. What is the purpose of any consumer court if it denies the consumer the right to protection from malicious business practices like coercion? The bank harassed Sharan by making him pay for all expenses while it would earn interest on the loan. Is this part of any banking regulation, or the bank's own imposition on Sharan? That question was never raised and answered.

Coercive business practices and harassment by the bank are, therefore, the core of the consumer issue. Does linking the sale of an insurance policy to loan sanction tantamount to restrictive trade practice? It also sets the context for examining the bank's actions, which can be questioned at every point of interaction.

If the sale deed, which is key to this discussion, was unacceptable to the bank, how was the loan sanctioned? Does a consumer's subsequent commitment, which affected his life (Sharan gave up his rented residence), based on inaccurate information from the bank when it sanctioned the loan, have no relevance in the court?

That brings me to the purpose of the consumer court. Why does it exist? Is it to entangle the consumer in legalities, or truly protect the consumer from insidious business? Justice is not merely a delivery of judgement sanctioned by the letter of law; there is also a spirit. In this case, the law failed to appreciate the human cost.

Sharan is a consumer completely at the mercy of the bank and the builder's code of business. The consumer court should have been a recourse to protect his vulnerability, which was exposed and exacerbated by the contradiction in the bank's actions. Surely the matter of sanctioning and disbursing loans is not a peculiar or frivolous activity for a bank. There are well-defined guidelines for it. Which begs the question does this contradiction get flagged off as a marker for poor branch management? Why should consumers like Sharan be responsible for management irresponsibility? When this contradiction caused such misery to Sharan that he literally was on the streets, how did the consumer court gloss over it?

Worse, in spite of a clear reference to the forced sale of an insurance policy, the honourable court failed to take any notice of a clear contravention of fair trade. In addition to this, the transfer of a bank's business costs to a consumer's account must be as per published business guidelines of the bank. Why was Sharan not made aware of that when he applied for the loan? Why was it almost made out as a necessary condition for sanction? Again, there were no questions raised on this issue that could have been treated as a coercive practice. When it was pointed out, again no notice was taken.

If the purpose of the consumer courts is to protect the interest of consumers, this case highlights a clear need to examine the facts against the context of the bank's behaviour. Bare facts only tell half the story; the real truth emerges from the context. Because the context highlights the intent. And in this case, it was the intent that needed questioning. Unfortunately, that seems to have got lost in the technicalities.

Subhabrata Ghosh is CEO of Celsius100 Consulting, which specialises in business and brand differentiation

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