BEFORE THE A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION : HYDERABAD

F.A.No.1045/2011 against C.C.No.161/2010, Dist.Forum, Rangareddy Dist.  

Between:

1.The Branch Manager,

   M/s. ICICI Bank  Ltd.,

   ICIC Bank Towers,

  Bandra Kurla Complex,

  Mumbai - 400 051.

2. The Branch Manager, 

   M/s. ICICI Bank Ltd.,

   ICICI Bank Tower, RAPG, Level II,

   East Wing, 1-11-256, Begumpet,

   Hyderabad – 500 016.

3. The Branch Manager,

    M/s. ICICI Bank Ltd.,

    IV Floor, Thirumala Heights,

    Near Videocon Service Centre,

    Behind Shoppers Stop,

    Hyderabad-500 016.                                   …Appellants/

                                                                     Opp.parties 1 to 3

       And

1.Ramana C.Reddy , S/o.C.Venkata Malla Reddy,

2.Jyothisha  Cherukupally, W/o.Ramana C.Reddy,

  Both are residents of 43397, Wheat Lands Chase Court,

  Ashburn, V.A, U.S.A.,

  Rep. by their Power of Attorney,

   C.Venkata Malla Reddy, S/o.C.Buchi Reddy,

  Aged 70 years, R/o.Plot No.39, Road No.3,

  Thirumala Hills, Gaddi Annaram,  Dilsukhnagar,

  Hyderabad – 500 036.                                  …Respondents/

                                                                     Complainants

Counsel for the Appellants     :       M/s. P.Ramachandran

Counsel for the respondents  :        Mr.C.Venkata Malla Reddy                        

                                                (Power of Attorney of respondents)

QUORUM:   SMT. M.SHREESHA, HON’BLE INCHARGE PRESIDENT,

AND

SRI S.BHUJANGA  RAO, HON’BLE MEMBER.

WEDNESDAY, THE NINETEENTH DAY OF JUNE,

TWO THOUSAND  THIRTEEN .

Oral Order: (Per  Sri S.Bhujanga Rao, Hon’ble Member)            

                                    ***

         This appeal  is directed against the order dt.22.3.2011 of the District Forum, Ranga Reddy Dist. made in C.C.No.161/2010, whereunder, the District Forum  allowed the complaint directing  the opposite parties 1 to 3 to collect interest @ 10.75% for the period from 1.9.2008  to 30.4.2009 , to collect interest @ 10.25 % from 1.5.2009  onwards and the excess  amount collected by way of interest shall be adjusted  in future instalments.   The opposite parties are also directed to refund Rs.4,96,600/-  with interest at  9% p.a.  from 23.11.2006  till realization. The opposite parties are also directed to pay Rs.50,000/-  as compensation for mental agony and causing loss to the complainant and Rs.10,000/-  as costs.  

        The appellants are  the opposite parties 1 to 3 and the respondents herein are the complainants in C.C.No.161/2010. For the sake of convenience, the parties are described as  arrayed in the complaint.

         The brief case of the complainants as set out in the complaint are   that the complainants 1 and 2  availed home loan  of Rs.1,30,00,000/-  from the opposite parties for purchase of  plot no.44,  Sy.No.7, Bhavya’s Alluri Meadows, Kondapur.  The opposite parties sanctioned  the   house loan to the complainants by their  letter dt.23.11.2006. The complainants have paid  pre EMI of Rs.17,102/-  on 30.11.2006  and further the complainants are regular in payment of EMI of Rs.1,38,906/-  without any default from the month of  January,2007.

While so, the opposite  parties sent a letter dt.21.8.2008  to the complainants informing that :

“You would be aware that the Floating Reference  Rate (FRR)/Prime Lending Rate (PLR) is determined by market conditions  and cost of the funds of the bank. We wish to inform you that the benchmark reference rate (FRR/PLR) of ICICI Bank  floating interest rate home loans has increased by 0.75% p.a. in June 2008.Subsequently, the FRR/PLR   has been increased  by 0.75% p.a. in July,2008, making it a net increase of 1.50%   p.a.

Your new rate of interest  is 13.25% p.a. , due to this increase in interest; we propose to increase  your EMI to Rs.147008/- with  a revised  loan tenure of 496 months.”   

 From the month of Sepetember,2008, the opposite parties have collected  Rs.1,47,008/-   towards EMI. 

The complainants   were  surprised and shocked to see the contents  of the above said letter as the loan tenure  was increased from 180 months  to 496 months and also EMI from Rs.1,38,906/- to Rs.1,47,008/-. The opposite parties have also shown  the new  rate of interest at  13.25%.  The complainant further contended that all of a sudden, interest is increased from  9.25% to 13.25% on 21.8.2008.  The increase of interest is 43.24%  which is abnormal and contrary  to Reserve Bank of India guidelines and as such, the complainants approached the opposite parties and requested to furnish the calculations with regard to abnormal increase of some loan tenure  from 180 months to 496 months and also charging  of interest at 13.25%  instead of 10.75% , but the opposite parties failed to explain  why the rate of  interest is calculated  at 13.25%   instead of 10.75% and also the complainant addressed  letters  on 20.3.2009 and 5.3.2009 demanding to furnish the calculations for the above. Having received the same, the opposite parties failed to give reply. 

The complainants further contended  that the opposite parties informed in their letter dt.1.5.2009 :

        “ We are pleased to  inform you  that the bench mark rate, Floating Reference Rate/Prime Lending Rate ( FRR/PLR) of ICICI Bank floating interest rate loans has  reduced by 0.50%  p.a. from 13.75%  p.a.to 13.25%  p.a. , w.e.f. May,2009.

        The revised rate of interest applicable on your loan is 12.25% p.a. Consequently, we  have  reduced your EMI  from Rs.1,47,008/- to 1,41,991/- . The outstanding tenure of your loan is 297 months. “

         The complainants further contended that the opposite parties have  calculated    and fixed the rate of interest  as 13.25%  instead of 10.75%  as shown  in the letter dt.21.8.2008,  in a careless and negligent  manner and further the opposite parties failed to rectify their mistake even after repeated   personal and written requests.  Instead of acting the same, the opposite parties further sent a letter dt.1.5.2009 fixing the rate of interest at 13.25% instead of 10.25% (9.25% + 0.75% + 0.75% -0/.50%),   which is nothing but deficiency in service and unfair  trade practice.

      The complainants further contended that the opposite parties in the letter dt.23.11.2006  informed that  with the final disbursement  of the loan, free personal accident insurance  cover to the first  applicant  of this loan  to the extent of principal  amount is extended.   Contrary to their letter and without request, the opposite parties have issued Home Safe  Plus  Secure Mind Policy in the name of first complainant deducting premium of Rs.98,251/- on 28.11.2006.   The period of policy is  from 25.11.2006 to 24.11.2011. The opposite parties have also issued another policy in the name of the first complainant deducting premium of Rs.8,567/-  on 28.11.2006 . The opposite parties  totally  charged Rs.1,06,818/-  towards premium for issue of two policies.  The issue of above two policies  is  not at all necessary as per the terms and conditions  of the home  loan agreement and the  issual of the  above policies, by collecting huge  amount as premium,  without any request from the complainants’ side, is nothing  but illegal and unethical. 

         The complainants further asserted that they approached the opposite parties and demanded for  cancellation of the policies issued by them  in favour of the first complainant and refund premium amount of  Rs.4,96,600/-.  But the opposite parties failed to do so. Hence the complaint was filed after issuing notice  dt. 1.7.2010 to the opposite parties. 

         Resisting  the complaint, the opposite party no.2 filed written version denying the material allegations made in the complaint and contended that the complainant entered into an agreement no.LBHYD00001430927   undertaking to abide by the terms and conditions of the above said agreement . The complainant undertook to repay the above said loan in 180 months at Rs.1,38,906/- at 9.25% floating  rate of interest. The complainant had opted for floating  interest. As per the above said agreement, the complainant had agreed to pay the rate of interest as and when increased or decreased by opposite party bank based on market conditions and as per rules and regulations and guidelines issued by RBI  from time to time.  If the interest rate  is increased or decreased, the complainant will be informed through letters, media and paper publications  giving an opportunity to the customers either to  increase or decrease the EMI or the  period and if the customer is willing to retain EMI as one and the same, the period  will be increased, in case  inspite of increasing the period and if increase period is too high, the EMI as well as the period will be adjusted  accordingly to suit the customer.  In this case also, from the date of  availing the loan facility by the complainants,  the rate of interest is changed from time to time and increased for 6 times and decreased for 3 times.  Accordingly the repayment schedule of the complainant is changed from  time to time under due notice  to the complainant.  In order to prejudice the  mind of the Forum, the complainant had filed  only few letters, but failed to file all the letters which were  issued to the complainant as and when  rate of interest increased or decreased.  Hence, the opposite party is  charging  the rate of interest and is collecting the EMIs, as per the lending rates being changed from time to time by RBI. The opposite parties further contended, that it is the complainant who opted for the   Home Safe  Plus Policy  at the time of availing  the house loan itself  and submitted an application for the same.  Further, at the  request of the complainants himself  the said amount of Rs.4,96,600/- is disbursed to M/s.ICICI Lombard General Insurance Company.  Hence the contention of the complainants, that  the  said two policies  were issued without their  request is false and  denied. The complainants never approached  this opposite party for cancellation of the above said policy and more over, the policy cannot be cancelled by this opposite party since   the opposite party has already disbursed the above said amount of Rs.4,96,600/-  to M/s. ICICI Lombard General Insurance Company which is a different entity. 

        The further contention of this opposite party is that the complainants  availed the above  said housing loan  after understanding  the terms and conditions of the loan agreement  and also undertook to abide  by   the same.  In order to avoid the payment, the complainants have filed the above said case on false and baseless allegations. Therefore, the complaint is liable to be dismissed  with costs to  this opposite party. 

During the course of enquiry, before the District Forum, the complainants filed evidence affidavit and got marked Exs.A1 to A12. On behalf of the opposite parties,  evidence affidavit along with Ex.B1 was   filed. 

Upon hearing the counsel for both the  parties and on consideration of the material on record,  the District Forum allowed the complaint  directing the opposite parties as afore said. 

Aggrieved by the said order, the opposite parties filed this appeal urging that the order    of the District Forum is contrary to law  and  is against established    principles of natural justice.  The District Forum  ought to have seen  that the appellants  herein have charged interest as per the RBI guidelines,  but not according to the appellants’ convenience. That the District Forum  ought to have seen that the respondents herein  have  accepted floating rate of interest at the time of disbursement of the loan  and that the respondent is  bound by the terms and conditions of the  loan agreement. That the District Forum ought to have seen    that as and when the interest rate   fluctuating, it is the  respondents who should have  opted  by requesting   to increase  or decrease the EMI or the period, which the respondents herein failed to do so.   That the District Forum ought to have seen that when the policies were    given, the respondents  herein  did not oppose for the same and kept quiet though the appellants herein charged the premium  amount for the policies. The District Forum  failed to understand that  free accidental policy which has been given to the respondents is free policy  which covers for entire loan  amount   and  the said policy  covers  till the loan is repaid and  that at the time of the disbursement of the loan, the respondents herein have consented for the policy  and accordingly, after  their consent,  Rs.4,96,000/-  was disbursed to the ICICI Lombard  Insurance    Company.  Finally, the appellants prayed for allowing the appeal setting aside the impugned  orders made in C.C.No.161/2010.

                We heard  the counsel for both  parties and perused the entire

material on record including the written arguments submitted by both the parties. 

Now the point for consideration  is whether the impugned order of the

District Forum is vitiated   for misappreciation of fact or law?

There is no dispute  with regard to the  availment of housing loan from the opposite parties by the complainants for purchase of plot. The only dispute is with regard to the quantum of sanction of the loan  and charging of rate of interest and also issuing of two policies without any request or  consent of the complainant  by collecting  huge amount of Rs.4,96,600/-. 

As seen from Ex.A1 letter  addressed to the complainant no.1, the loan amount sanctioned is Rs.1,34,96,600/-. The type of interest  is floating and effective rate of interest is 9.25%  and the term is 180 months. The complainant has not placed any evidence on record to show that  sum  of Rs.1,30,00,000/- was sanctioned to them. Infact the District Forum  has also  come to the conclusion  that the sanctioned  and disbursement amount is Rs.1,34,96,600/-.The said finding of the District Forum is not questioned by the complainants by way of appeal. Hence the same became final.   

It is the contention of the  complainants that the rate of interest charged is not according to the rules and regulations of Reserve Bank of India. As stated above, the type of interest is floating   and effective rate is 9.25%  on the date of sanction of loan i.e. 23.11.2006. It is not in dispute that the complainants have been paying the EMI amounts  regularly at Rs.1,38,906/-  per month.  Thereafter, the complainant received Ex.A2 letter dt. 21.8.2008 from the  opposite parties. 

      Under Ex.A2  letter,  the complainants were informed that ICICI Bank  floating interest rate on home loans has increased by 0.75%  p.a. in the month of June,2008  and  subsequently FRR/PLR  has been increased by 0.75%  p.a.  in  July  2008, making it a net increase of 1.50% p.a.  and the new rate of  interest is 13.25% and due to increase in interest rate, they increased EMI to Rs.1,47,008/-  with revised loan tenure to 496 months. 

      It is an admitted fact  that on the date of disbursement of loan, the rate of interest is 9.25%.  As per Ex.A2 letter, the rate of interest is increased by 0.75% in June,2008  and 0.75% in July,2008  making it net increase of 1.50%.  So the rate of interest must be 10.75% ( 9.25%  + 1.50%)  and not  13.25%.  The opposite parties have not explained as to how and on what  basis they have stated that the new rate of interest is 13.25%  p.a.  It is not mentioned  in Ex.A2 letter dt. 21.8.2008,  from which rate of interest, the interest  has been increased to 13.25%. As rightly observed by the District Forum , there is something fishy about the prevailing rate of interest prior to Ex.A2 letter.  Ex.A5 is another letter  dt.1.5.2009  issued by opposite party bank  to the complainant no.1, wherein it has been mentioned that the rate of interest on loans has been reduced by 0.50%  p.a. from 13.75% 13.25%  w.e.f.  May, 2009 and that the revised rate of interest applicable on his loan  is 12.25%.  It is not known  as to when the interest has been increased to 13.75% from 13.25%. There is no mention about the same in Ex.A5 letter.  In the same letter i.e. Ex.A5,  it is mentioned that the revised rate of interest is applicable on the loan amount of the complainant is Rs.12.25% and consequently they have reduced their EMI from Rs.1,47,008/- to  Rs.1,41,991/-  and the outstanding tenure of the loan is 297 months.  

The contention of the opposite parties is that  whenever the rate  of interest is increased or decreased, the complainant is informed giving the opportunity to the customer  either to increase or decrease the EMI  or  the period and  the interest increased 6 times and decreased 3 times.  It is the  case of the complainants that   except through  Exs.A2 and A5 letters, the opposite parties’ bank never informed the complainants, whenever there was change of  interest.  The opposite parties have not filed any documents to show that the rate of interest prior to Ex.A2 is 11.75%. Inspite of  the above  contention of the complainants, the opposite parties have not placed any recorded proof that they informed the complainants, as and when interest has been increased and decreased. Exs.A3 and A4   are the   letters dt.5.3.2009 and 20.3.2009  respectively  addressed by the father of the  complainant no.1   to the opposite parties, wherein the  he  categorically questioned about increase of  rate of interest as 13.25% instead of 10.75%.  Admittedly, the opposite parties  did not respond to Exs.A3 and A4  letters of the complainant .Then the complainant got issued Ex.A10 legal  notice dt.1.7.2010  to the opposite parties and the opposite parties 1 to 3 received the original of Ex.A10 legal notice vide Ex.A12 postal acknowledgement.  The opposite parties did not choose to give any reply to Ex.A10 legal notice.  

        Ex.B1 is the statement of loan account  pertaining to the complainants  maintained by the opposite parties. It is  significant to note  that change of rate of EMI has not been shown in Ex.B1, from the date of disbursement of loan to August,2008  and there is no recital  with regard to the  tenure in Ex.B1 statement.   A perusal of Ex.B1 goes to show that upto August,2008 , the rate of interest is increased from 9.25%  to 9.75% in the month of February,2007, the rate of interest has been increased from  9.75% to 10.75%    in the month of April,2007  and the increase from 10.75% to 11.75% in the  month of May,2007 and the increase from 11.75% to 12.50% in the month of July,2008 and  from  12.50% to 13.25 % in the month of September,2008, whereas there is no consequential increase in EMI amount and also in tenure.  The complainant has paid EMI at Rs.1,38,906/- upto August,2008  without any change.   It is not the case of the opposite parties that as per the willingness of the complainant, the EMI is retained as it is and the tenure is increased. The opposite parties have not adduced any evidence to show that the complainants were informed  about the increase of rate of interest from time to time  as shown in Ex.B1.  Further , the opposite parties have not filed any documents to show that the rate of  interest has been changed as per the directions of the Reserve Bank of India.   If there are any directions of Reserve Bank of India, regarding change  of rate of interest, the opposite parties must have been in possession of such directions or guidelines. Therefore, it has to be inferred that because that there are no such directions from Reserve Bank of India about the increase or  decrease, the opposite parties did not produce any documents  in support of their contentions. 

        It is true that the respondents/complainants  have accepted floating  rate of interest at the time of disbursement of the loan as contended by the appellants/opp.parties.  It is not in dispute  that it is mandatory on the part of the appellants/opp.parties to inform the respondents/complainants every increase and decrease of interest as per para  30-A(e)(1) of Facility Agreement. As we observed above, Except EXs.A2 andA5 , the opposite parties  did not send any letters prior to the date of Ex.A2  informing  the complainants about the  increase and decrease of  interest. It is also in the interest of natural justice, the borrower of loan has to be informed  every increase or  decrease rate of interest.  In this case the fluctuation  of interest from time to time is not made known to the  complainants. 

 In view of the above facts and circumstances ,  there  can be no doubt , that the opposite parties  violated the rules and guidelines  issued by the Reserve Bank of India and also  natural justice  in increasing interest.

 In the written version filed by the opp.parties,   they have categorically   admitted that the opposite parties have provided a free personal   accident  insurance cover to the first applicant to the extent of principal amount. Infact  under Ex.A1 letter the opposite parties’ bank informed the complainant no.1  that with the final disbursement of  this loan, a free  personal accident insurance cover to the first applicant  of this  loan to the extent of principal amount is extended as far as applicable conditions.  It is the case of the complainants that the opposite parties  without having any  request  from the complainants have issued two policies in the name of the first complainant charging premium of Rs.4,96,600/- from the account of the complainant.

  Ex.A6  is the Home Safe Plus- Home Insurance Policy bearing no.4013/0004409/ICICI/HL/0023887 issued by the opposite parties in the name of the first complainant deducting premium of Rs.98,251/-   on 28.11.2006.   The opposite parties also issued another policy bearing no.4065/0000001/ICICI/HL/0023887 vide  Ex.A7  in the name of the first complainant deducting premium of Rs.8,567/-   on 28.11.2006. For both the policies, the opposite parties charged Rs.1,06,818/-  towards premium  for issue  of two policies. The amount deducted   towards the alleged insurance is  Rs.4,96,600/-, whereas the policies were  issued for Rs.1,06,818/- . The case of the complainants is that when they questioned this discrepancy vide Exs.A3 and A4 letters, after  few months, the opposite parties sent another two policies  vide Exs.A8 and A9.  Ex.A8 is the  Home Safe Plus-Home Insurance Policy bearing policy no.4013/0004409/ICICI/HL/0023887 dt. 28.11.2006 . The premium charged under this policy is Rs.98,251/- .Exc.A9  is the copy of Home  Safe Plus-Secure Mind  Policy  dt. 28.11.2006  bearing no.4065/0000001/ICICI/HL/0023887 issued in the name of the first complainant. They charged the premium of Rs.3,98,349/-  under this policy.

         The contention of the opposite parties is that  the policies were issued only on submission of application of the complainant.   The District Forum  considered copies  of  the disbursal request   form,   Secure Mind Proposal Form and Home Insurance Proposal Form and came to  a  conclusion that the said forms are issued for obtaining  free personal accident insurance policy and not for issue of the above polices.   The District Forum also observed, that the columns of the above forms are to be filled by the insured , but on perusal of    the same forms, it is observed by them, that the complainant  except subscribing   the signature in  the place of the signature and all  the other columns are filled by some third person.  Therefore, the District Forum   has not relied upon the said forms.  The opposite parties might  have filed the copies  of the proposal  forms said to have  given by the complainant no.1.  But the appellants did not choose to get them  marked.  However,  in  view  of  the contentions of  both the parties,  the original  proposal forms are important documents to decide  the  issue in this case. But the opposite parties did not choose to file them. As seen from Exs.A6 and A8 policies both the parties are one and the same bearing the same number and  premium of Rs.98,251/-  was collected. The above policy i.e. Home Safe  Plus- Home Insurance Policy is a policy  pertaining to the house property  on which the  house loan was taken which  was not    opted by the complainant.  A perusal of Ex.A7 and A9   Home  Safe Plus-Secure Mind Policies   goes to show  that both the policies   are one and same and   showing the premium collected  as Rs.8,567/-  as per Ex.A7 and Rs.3,98,349/- as per Ex.A9. 

        The opp.parties have not explained anywhere as to why the different  premium rates  have been mentioned in Exs.A7 and A9 policies.  These policies are nothing , but Personal Accident Insurance Policies. When there is free personal accident policy provided by the opposite parties, we do not find any necessity  for the complainants to take the personal  accident insurance policy that too in the name of the first complainant by paying huge premium amount of Rs.3,98,349/-. As rightly observed by the District Forum, that if at all, the complainant opted for personal accident policy, the complainants ought to have taken  policy, in the name of the second complainant also.      

       The contention of the complainants is that ICICI Lombard General Insurance Company is the sister concern of ICICI  Bank,  that the ICICI Lombard General Insurance and the opposite parties colluded and on account of  such collusion, the policies  in question came to existence.   It is the contention of the  opposite parties that M/s.ICICI Lombard General  Insurance Company is a different entity.

        Further,  according to both the  Home Safe Plus-Secure Mind Policy and  Home Safe Plus–Home Insurance Policy, the loan amount is Rs.1,34,96,600/-. The same amount of Rs.1,34,96,600/-  is to be insured and reflected in Exs.A6 and A8,  Home Safe Plus–Home Insurance policies and  Exs.A7 and A9 Home Safe  Plus–Secure Mind Policies, but in Exs.A6 to A9, the total sum insured is shown as Rs.1,30,00,000/-. How this figure of Rs.1,30,00,000/-  came into light int he place of Rs.1,34,96,600/- has to be explained  by the opposite parties but they  did not make any attempt to explain the same.   The insurance company has insured for  Rs.1,30,00,000/-  instead of  Rs.1,34,96,600/- .There is also discrepancy as to the premium amount as mentioned above.   This discrepancy as to the premium amounts collected by the appellants is also not explained by the opposite parties.The similar discrepancies find place in Ex.A7 and A9 policies. 

        Having regard to the facts and circumstances of the case, the contention of the complainant cannot be ignored . There is some substance in the contention of the complainants that  M/s. ICICI Lombard General Insurance Company is the  sister concern of the appellants bank  and that both of them colluded in issuing the policies in q uestion, especially  for the reason  how the opposite parties  came into possession  of the proposal forms  which supposed to be in the  custody of M/s. ICICI Lombard General Insurance Company.  As rightly observed by the District Forum that though there is  a free personal accident insurance policy, the opposite parties brought  into existence the policies namely Home Safe Plus – Secure  Mind Policies.   

        For the afore said facts and circumstances, we are of the view that there is deficiency in service and unfair trade practice on the part of the opposite parties.   We do not find any irregularity or illegality in the  imugned order of the District Forum which is well reasoned to interfere with it. 

        In the result, appeal is dismissed confirming the impugned order of the District Forum. The opposite parties  are directed  to pay a sum of Rs.10,000/-  to the respondents/complainants  towards costs  of this appeal.  The appellants are directed  to comply with  the order of the District Forum within four weeks.   

                                                                INCHARGE PRESIDENT

                                                                        MEMBER

Pm*                                                               Dt.19.6.2013