Mohtasib holds bank responsible for late execution of customer's instructions

On December 16, 1997, a borrower, in financial difficulty, asked his bank to sell all his under-lien shares and adjust his loan. At the time, the market value of shares was Rs 1,429,128, and the loan plus unpaid mark-up amounted to Rs 1,103,000.
By end December 1997, however, the bank had only partially delivered the shares to its broker, and some of the shares were not sent to the broker until February 2001, by which time, the stock market had slumped.
Some of the shares were never sent to the broker by the bank. As a result, the loan was only partially adjusted. Total amount of Rs 633,215 was adjusted up to mid-March 1998 and a further Rs 175,000 was adjusted through share sale proceeds by early 2002, reducing the loan principal to Rs 313,879. The bank continued to charge penal mark-up and threatened legal action. A complaint was lodged with Banking Mohtasib in December 2005 when total outstandings had increased to Rs 905,581 inclusive of unpaid mark-up Rs 591,702.
The bank denied any wrongdoing, saying that selling of shares was not its responsibility and had the borrower been serious about adjustment of his loan he could have got the shares released from the bank and sold them himself in the market. The bank's response was found to be evasive, and naïve, because any borrower compelled to dispose of his liquid assets can not possibly be expected to be in possession of large sums of spare funds with which to repay his obligations.
After extensive investigations, the Banking Mohtasib found that the bank had demonstrated extreme indifference, and inexplicable lethargy, in the disposal of the shares held by it under lien.
The Banking Mohtasib felt that had prompt action been taken by the bank, there was every likelihood that all under-lien shares could well have been disposed of latest by March 1998, well before the market faced a slump, thus wiping out the entire loan, including all mark-up.
Holding the bank liable for the delay, the Banking Mohtasib decided that all the shares held with the bank were deemed to have been disposed of by March 31, 1998 at the then market value of Rs 1,429,128 and that the loan, inclusive of all mark-up, was deemed to have been fully adjusted by March 31, 1998.
According to detailed calculations undertaken by the Banking Mohtasib, the amount the bank could have recovered at the time was Rs 1,144,128. Thus, the bank was directed to hand over the excess amount of Rs 285,000 to the customer and to issue him a clearance certificate.
In addition, the bank was ordered to pay, to the customer, Rs 50,000 as compensation for expenses incurred by him in pursuing, for nearly a decade, a matter which arose purely as a result of the bank's failure to promptly act upon his instructions.