Need a suggestion on a consumer matter.

District Consumer Forum never deals with defamation cases, and do not trust such advises.

Contact a local advocate, get a consumer complaint filed alleging deficiency fo services, costs ..your advocate may advise you on such eligibility for compensation.

The total costs if you appear in person may not exceed Rs.1,000/- and it is you that has to express the actual problems before the forum.  The process is simple and not complicated as of a regular court proceedings.

Probably you are confusing deficiency, defamation...........

While drafting your complaint your very able local senior counsel of unshakable repute and integrity specializing in consumer matters can make use appropriate words say ; your repute and loss of repute.....................and stake claim to compensation... 

Yes, there is no defamation ninvolved, only deficiency of service.

You can follow the advice of Advocate Goyal. You can claim compensation without using  words such as defamation, loss of repute etc. You can also file, if you so feel, a criminal defamation case under IPC-499, 500 in a magistrate's court.  There are no large court fees for such a case.

As for any claim on the bank, it would depend on the terms of advancing you the loan. Most probably the terms would be such, that you cannot stop the bank from paying the amount to the merchant. For instance if you had paid through credit card, you cannot stop the bank from paying the merchant and you will have to pay the bank when you receive the bill. The terms with the bank will be such, that they cannot be drawn into any dispute, which you may have with the merchant. You will have to deal with the merchant as you would have, if you had paid him cash.

Thankyou all for all your suggestions and valuable inputs.