1996 (1) TMI 337 - Commission - Companies Law

Summary

Issues:
Allegations of deficient financial assistance, concealment of material facts, misrepresentations, non-viability of project, delay in loan disbursement, and damages sought.

Analysis:
The complainant alleged deficient financial assistance and inadequate rendering of assistance by the respondents. The complainant sought a direction for the sanction of a fully viable project, a waiver of interest until the loan is sanctioned, loan disbursement for project completion, and damages of Rs. 1.15 crores. The respondents, Orissa State Financial Corpn. (O.S.F.C.) and Industrial Promotion & Investment Corpn. Ltd. (IPICOL), were accused of deliberate concealment of material facts, misrepresentations, and handing over a non-viable project for completion. The complainant raised issues regarding the non-viability of the project, misrepresentations by the respondents, delays in loan disbursement, and other alleged wrongdoings.

The complainant contended that the project handed over was non-viable, banned for financing, and had obsolete machinery. Allegations included deliberate concealment of project status, misrepresentations leading to the purchase, delays in sanctioning additional loans, default in asset registration, and non-release of sanctioned amounts. The complainant also accused the respondents of high-handed actions, victimization, and causing financial losses. The complainant prayed for specific directions, including sanctioning a viable project, waiving interest, loan disbursement, and payment of damages.

The respondents, O.S.F.C. and IPICOL, defended against the allegations, claiming the complainant's financial mismanagement and arbitrary project handling led to the current situation. They argued that the complainant's actions caused the project's predicament due to lack of financial liquidity and changing project scopes without proper advice. The respondents contended that the complainant's blame on financial institutions was an attempt to shift responsibility for their own failures. They highlighted the complainant's fickle management approach, lack of technical advice, and attempts to enhance project capacity arbitrarily.

The Commission declined to adjudicate the matter under the Consumer Protection Act, citing the need for an elaborate trial to determine disputed facts. Referring to a previous judgment, the Commission emphasized that the Act is not meant for complex factual determinations requiring extensive evidence and scrutiny. Therefore, the Commission directed the complainant to pursue ordinary remedies like filing a suit, without making any order as to costs. The decision was based on the complexity of factual issues and the need for detailed evidence, which was not suitable for resolution under the Act's time-bound proceedings.