The Telegraph
Since 1st March, 1999
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Consumer court quashes farmers’ debt relief plea

Calcutta, Nov. 3: A ploy to escape repayment of a loan by more than 100 “farmers” has received a body blow from the National Consumer Disputes Redressal Commission despite a favourable verdict earlier from the forum’s state unit.

The judgment saves the state exchequer from being robbed of more than Rs 30 lakh — the amount the defaulters would have to pay back. In a rare instance in the legacy of consumer cases, the apex consumers’ court told the farmers that they are not “consumers” at all.

The national commission’s verdict will act as a “strong precedent” in several cases where recipients of social-welfare scheme loans seek benefits of the Consumer Protection Act to evade repayment and may help save the exchequer from widespread fraud, said officials of the state consumer affairs department.

The case, which came to its denouement in Delhi, had its genesis in several North 24-Parganas towns and villages in the late 1980s. The “farmers” took loans of varying amounts from the Sagar Gramin Bank and the Nadia Gramin Bank for agriculture.

In 1990, the Union government announced the Agricultural and Debt Relief Scheme, which provided for a waiver of agricultural loans up to a certain amount, and a section of the loan-recipients petitioned the banks that they be included in it and be granted relief from paying back.

The banks, however, felt otherwise, prompting 115 recipients to approach the state consumer disputes redressal commission in 1995.

The commission said the “farmers” were bona fide consumers according to the provisions of the Consumer Protection Act and that the banks had treated them shabbily.

It upheld the borrowers’ argument but did not impose a penalty on the banks.

Following the verdict, the State Bank of India took the case to the national commission along with the two rural banks from the state.

The SBI argued that the loan-recipients were not covered under the debt-relief scheme announced by the Centre and that they could not be considered consumers as they were taking advantage of welfare schemes promoted by the state.

The case came up for a final hearing before the apex consumers’ court late October.

Presided over by Justice J.K. Mehra, the court felt the loan-recipients could not claim cover under the Consumer Protection Act as they were beneficiaries of a state-sponsored scheme avowedly for social-welfare purposes. The judge asked the farmers to pay back the principal along with the interest that had accrued.

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