1.      The present Revision Petition has been filed by the Petitioner under Section ­­­58(1)(b) of the Consumer Protection Act, 2019 (the “Act”) against impugned order dated 04.01.2022, passed by the State Consumer Disputes Redressal Commission, Punjab, Chandigarh (‘for short ‘State Commission’) in First Appeal No.99 of 2020. In this appeal, the Respondent /Complainant appeal was allowed, thereby set aside the Order dated 09.12.2019, passed by the District Consumer Disputes Redressal Forum, Faridkot (For short “District Forum”) in Consumer Complaint No. 146 of 2019, wherein the Complaint filed by the Complainant (Respondent herein) was dismissed.

2.      For the sake of convenience, the parties in the present matter are denoted as per positions in the Complaint before District Forum.

3.      Brief facts, as per the Complainant are that, in the year 2015 he obtained Rs.35,70,000 loan for interest @ 11.95% per annum from OP Bank for establishing a Poly House for vegetable cultivation. The repayment was through half-yearly instalments. However, extreme heat conditions from May to September rendered vegetable cultivation impractical and repayments infeasible. Further, the OP Bank unlawfully imposed Rs.44,000/- processing fee for grant of loan and he was also compelled to bear registration charges which should have been borne by the bank. Additionally, OP Bank obtained 10 blank cheques from him as security. Out of the total loan amount, he paid Rs.31,00,000/- as instalments, consistently maintaining payment without default. On receiving a Bank Account statement, he discovered that the bank was charging compound interest and penal interest, instead of agreed simple interest. Despite repeated requests to adhere to the terms of simple interest at 11.95% per annum through half-yearly instalments, and to refund the excess amount charged due to compound interest, the bank disregarded the same. Feeling aggrieved, he filed CC No. 146 of 2019 before the learned District Forum seeking direction to OP Bank to charge simple interest at the agreed rate and payment intervals, along with compensation of Rs.1,00,000 for harassment and mental anguish, an Rs.1,00,000 for unfair trade practices, and Rs.20,000 for litigation expenses.

4.      In reply, the OP Bank refuted all his allegations and asserted the absence of any service deficiency on their part. They stated that the Complainant was granted loan of Rs.35,70,000/- for establishing a Green House for cucumber cultivation under regulated conditions, with primary security being the hypothecation of fixed and movable assets created from bank finance and hypothecation of standing crops grown in the greenhouse. The repayment terms were 84 equated monthly instalments of Rs.62,924/- each, commencing from December 2015, with interest @ 11.95%, consisting of a base rate of 9.95% plus an additional 2%. The OP refuted the claim that the loan was to be repaid through half-yearly instalments, asserting that EMIs were specified in the agreement. They contested the assertion that vegetable cultivation was infeasible from May to September, stating that repayment during these months was part of the agreed terms.

5.      As regards processing and documentation charges, the OP referred to HO circular No. CHO/OSD/02/2011-12 dated 01.04.2012, asserting their entitlement to charge such fees as per banking regulations. They clarified that the Complainant was to mortgage 48 Kanals of agricultural land as collateral security, with all associated expenses to be borne by the borrower and denied imposition of registration charges on him. The OP Bank acknowledged deposit of Rs.31,00,000 by him but contested the claim that these deposits were made in accordance with the agreed monthly instalments. The OP asserted that the Complainant was fully aware of the repayment schedule and interest terms from the loan sanction to the execution of documents. The Bank denied charging penal interest to him and maintained that compound interest was applied as per the sanction agreement, without any excess amount levied or requiring refund. Based on these grounds, the OP sought dismissal of the complaint with costs, asserting absence of any service deficiency on their part.

6.      The District Forum in its Order dated 09.12.2019, dismissed the Complaint with the following reasons/findings: -

9. Ld. Counsel for OP bank has brought our attention towards document Ex OP-4. that is copy of. Post Sanction Compliance Report dated 25.06.2015 wherein at Serial No.12, it is clearly mentioned that the term loan is to be repaid in 84 Equated Monthly instalments of Rs.62,924/-commencing from December 2015. (Six months of Moratorium). Interest is to be served during the moratorium period. Branch is stipulated to obtain an undertaking from the customer in this regard. Moreover, complainant has wrongly stated in his complaint that mode of repayment of schedule was half yearly, but from the careful perusal of letter dated 19.02.2018 written by complainant to UCO Bank, there remains no doubt that he himself made request to opposite party to change his repayment schedule from monthly instalments to half yearly instalments and vide letter dated 21.02.2018 Ex OP-5, Opposite party bank recommended his application to make payment of instalments from monthly to half yearly to their Higher Authorities. All the terms and conditions are already clear to complainant and no extra amount has ever been charged from complainant. There seems to be no fault on the part of OP and allegations levelled by complainant do not appear appropriate as complainant himself applied for change of the schedule for repayment of loan amount from monthly to half yearly by admitting that the mode of ·repayment is monthly. It is observed that there is no deficiency in service on the part of OP Bank.

 10  From the above discussion and in view of evidence and pleadings put forward by parties, it is made out that there is no deficiency in service on the part of OP bank. Hence, complaint in hand ls hereby dismissed being devoid of any merits. However, in peculiar circumstances of the case, there are no orders as to costs. Copy of the order be supplied to parties free of cost. File be consigned to record room.”

7.      Being aggrieved by the dismissal of the complaint, the Complainant/Respondent filed Appeal No. 99 of 2020 and the State Commission vide order dated 04.01.2022, allowed the appeal and set aside the order of the District Forum, thereby granting relief to the Complaint, with the following reasons and findings:

“20. As per calculation of respondent-Bank, the complainant has not paid any amount to OP-Bank from April 2019, but despite that the respondent- Bank has not declared the loan account of the complainant as Non-Performing Asset (NPA). There was no stay order passed by this Commission in this regard during pendency of the appeal. The document placed on record by respondent-Bank alongwith M.A. No.580/2021, shows that OP-Bank has settled the cases of some of the loanees customers under one time settlement scheme. The appellant/ complainant has also requested the respondent-Bank to settle his loan case under one time settlement scheme, but of no avail. This act of respondent-Bank is also discriminatory. In this way, it can be said that the respondent-Bank has not complied with the guidelines issued by the RBI from time to time and terms and conditions of the Agreement as well. Had the information of increase of rate of interest, outstanding principal amount, number of due installments and charging of compound interest been in the knowledge of the appellant/ complainant, he could have taken the appropriate step in repaying the loan amount. The District Commission has failed to appreciate the above said aspects of case, accordingly, the impugned order is hereby set-aside.

21. We are of the considered view that because of inaction on the part of the respondent/OP not only a huge financial burden has come on the shoulders of the complainant, but it has caused mental and physical harassment in pursuing the litigation and by engaging lawyers for redressal of his grievance. This act of the respondent/OP, not only amounts to 'deficiency in service', but 'unfair trade practice and has also caused 'harassment' to the borrower / complainant.

22.      Keeping In view the facts and circumstances of the case as well as the discussion as above and after taking into consideration the guidelines issued by RBI and case law as discussed above in detail, the appeal is allowed, and the respondent-Bank is directed

(i) to adjust the amount of Rs.3,28,000/- against the principal amount not towards interest, as the Bank has not furnished any break-up of interest charged;

(ii) not to charge any compound interest from the complainant for the whole period of loan because of action and inaction of OP which has resulted into 'deficiency in service' and 'unfair trade practice' on the part of respondent-Bank, as discussed above;

(iii) by calculating the simple interest @11.95% from December, 2015 without charging any compound interest the appellant/ complainant be furnished calculation chart within a period of 15 days from the date of receipt of certified copy of this order and thereafter the complainant shall deposit the amount, if any;

(iv) to refund an amount of Rs.44,000/- charges of processing fee, as the same was never disclosed to the appellant/ complainant;

(v) to pay an amount of Rs.50,000/- to the appellant/ complainant towards compensation for mental harassment and agony.

(vi) to pay litigation expenses of Rs.25,000/- to complainant.

(vii) to adjust the subsidy, if any, in the loan account of the complainant; and

(viii) to issue 'No Objection Certificate' to the complainant.

The respondent-Bank is directed to comply with the order within a period of 45 days fro1n the date of receipt of certified copy of the order.”

8.      Being dissatisfied by the Impugned Order dated 04.01.2022, the Petitioner/OP filed the instant Revision Petition No. 101 of 2022 mainly raising the following:

1. The State Commission failed to appreciate that the relief granted to the Respondent was not even sought by him in the complaint. Fixing rate of interest, irrespective of increase/decrease in FRR is clearly erroneous in law. Accepting the same would render the credit facility sanctioned and entire agreement futile.
2. The State Commission failed to appreciate that it is its own findings that the loan availed of by the Respondent was of a floating nature. The loan agreement speaks for itself and states that: "The rate of interest is subject to revision/change from time to time as per HO /RBI Guidelines." Despite the loan availed was on a floating rate of interest, the SCDRC decided the issue against the Petitioner on the ground that the loanee was not apprised of the rate of interest charges as per RBI guidelines.
3. The State Commission erred in holding that the Petitioner/Bank failed to prove that a copy of the loan agreement was furnished to the Respondent. This was never raised by him before the District Forum. Moreover, the State Commission erred in holding that the Petitioner/Bank failed to prove that the Respondent was informed in writing in vernacular about the rate of interest. Signatures of the Respondent on documents are in Punjabi, hence alleging deficiency of service by the Bank is wholly illegal.
4. The State Commission erred in holding that any increase or decrease in the rate of interest should be duly informed to the Consumer, and in case of failure, a case of unfair trade practice is made out. However, where the contract is of a floating rate of interest as in the present case, the Bank/Petitioner is not bound to inform the Consumer about the increase/decrease of the rate of interest. The Petitioner/Bank has to simply apply the rate of interest fixed by RBI from time to time.
5. The State Commission erred in holding that charging of processing fee for granting loan to the Respondent/Consumer is illegal and should be refunded, as there was no waiver of the processing fee and the same was charged in the year 2015. Hence, this plea cannot be allowed to be taken in the year 2019. Therefore, the impugned order directing the refund of the processing fee of Rs. 44,000/- is liable to be set aside.
6. The State Commission erred in holding that the Bank should have declared the account of the Respondent herein as NPA, inasmuch as the Complainant had paid nothing since April 2019 and further that there was no stay by the Commission, as the account of the Respondent was not falling under parameters of NPA and hence was not declared as such.

9.      In his arguments, the learned Counsel for Petitioner reiterated the grounds outlined in the petition and emphasized that while the Respondent had indeed deposited substantial portion of the loan, the manner in which it was done did not adhere to the agreed terms of the loan agreement. The loan was structured to be repaid in 84 EMIs, commencing from December 2015, with a specified interest rate and a six-month moratorium period, during which interest may accrue. However, he erroneously stated in the complaint before the District Forum that the repayment was half-yearly. This misrepresentation was evidenced vide letter dated 19.02.2018, in which he requested rescheduling of the loan to half-yearly instalments, and subsequent recommendation by the bank vide letter dated 21.02.2018 to higher authorities. Additionally, the Counsel asserted that no excess amount was charged by the bank, hence there was no basis for any refund. The learned Counsel also argued that the judgments relied upon by the State Commission were inapplicable to the present case. He specifically cited the judgment of the Hon'ble Supreme Court in Civil Appeal No. 5928/2015 titled ICICI Bank Vs Maharaja Kishan, which, according to the Counsel, directly addressed the same issue. However, the State Commission purportedly misapplied this judgment against the Petitioner. Given these arguments and the strong merit of the case, he urged allowing the Revision Petition and setting aside of the impugned order/judgment dated 04.01.2022 and further remand the matter to the State Commission for hearing on merits.

10.    On the other hand, the learned Counsel for Respondent reiterated the main issues in the complaint and emphasised that the actions of OP Bank were not only in violation of the terms and conditions of the Agreement but also constituted 'deficiency in service' and 'trade malpractice'. He highlighted that although the Complainant deposited a lump sum amount, this was not taken into consideration by the OP. Additionally, he emphasized that his agricultural activities were adversely affected, resulting in no income being accrued, which further exacerbated the financial strain. The Counsel further argued that the Respondent/Complainant's case could have been considered under any of the bank's schemes, such as the 'one-time settlement'. Yet the OP failed to do so. Moreover, while the Complainant's account had not been declared as Non-Performing Asset (NPA), similar accounts of other borrowers in comparable situations were declared as such, indicating clear discrimination. He further pointed out that during the pendency of the case, the Complainant had made additional payments amounting to Rs.7,98,000/- under the orders of the State Commission. However, the OP/Petitioner failed to treat the Complainant's case on par with other similarly situated individuals, demonstrating both discrimination and a departure from RBI policies regarding defaulters. He asserted that the acts of omission and commission by the OP constituted deficiency in service and unfair trade practice, warranting the dismissal of the Revision Petition.

11.    I have examined the pleadings and associated documents placed on record, including the orders of the learned District Forum and the learned State Commission and rendered thoughtful consideration to the arguments advanced by the learned Counsels for both the parties.

12.    The primary issue is to determine whether the OP/Bank correctly applied the terms and conditions of the loan agreement, including the calculation of interest rates, processing fees and adherence to RBI guidelines? Additionally, was the Complainant treated differently compared to other similarly situated borrowers?

13.    It is established that the Complainant had availed loan facility of Rs.35,70,000/- from OP-Bank for constructing a greenhouse project intended for vegetable cultivation. The repayment terms stipulated 84 Equated Monthly Installments (EMIs) of Rs.62,924/- each, starting from December 2015. Later, the EMIs were sought to be converted into half-yearly payments by the Complainant. The main contention revolves around the interest rate, with the Complainant asserting that the agreed rate was simple interest at 11.95% per annum, while the OP-Bank imposed compound interest, penal charges and processing charges. Conversely, OP-Bank refuted the claims of penal interest.

14.    As regards the nature and quantum of interest on the loan, Clause No. 1 of the terms and conditions of the agreement between the parties inter alia lays down "1. The rate of interest is subject to revision/change from time to time as per HO/RBI guidelines.". Therefore, what has been agreed between the partiers is floating rate of interest as per HO/RBI guidelines. Thus, the application of floating rate of interest by OP Bank is within the scope of contract.

15.    After about three years, on 19.02.2018, the Complainant submitted a letter to the OP Bank requesting for the rescheduling of the term loan due to difficulty in repaying the instalments on monthly basis and cited that an acquaintance was enjoying a similar facility from the State Bank. On receiving the request letter, the OP Bank vide letter dated 21.02.2018 recommended the request and forwarded the same to Head Office for consideration and decision. However, no disposal was received for the said request and no confirmation of approval was communicated to the Complainant by the OP-Bank. Therefore, the Complainant was to adhere to the payment schedule as per the contract.

16.    As regards loan repayment, as per the Complainant, he paid Rs.31,00,000/- through instalments, to the OP-Bank of the total loan amount. As per him, he is not a defaulter. However, when he received Statement of Account from the OP-Bank, he learnt that OP is demanding EMIs for loan repayment and, for not paying the EMIs, the OP Bank is charging Compound and penal interest from him, instead of simple interest. On the other hand, the OP-Bank admitted to have received Rs.31,00,000/- through EMIs, denied his contention of any change approved from EMIs to six monthly payments.

17.    Regarding the interest charges, the Complainant contended that the OP-Bank charged compound and penal interest, contrary to the agreed simple interest at 11.95% per annum. The OP-Bank asserted that it was entitled to charge compound interest at the rate as per the terms and conditions of contract. However, the learned State Commission found that the OP-Bank did not adequately inform the appellant about the floating rate of interest and its changes, which is a violation of RBI guidelines. The Bank failed to provide evidence that it informed the processing fee of Rs.44,000 to the Complainant, which was deemed as unfair trade practice and ruled that the bank's actions constituted 'deficiency in service' and 'unfair trade practice,' leading to the setting aside of the District Commission's order and allowing the appeal.

18.    As regards violation of terms of agreement with respect to charges imposed, the learned State Commission vide order dated 04.01.2022 observed that the Complainant complained that the bank charged compound and penal interest, whereas the agreement was for simple interest at 11.95% per annum. The bank's response was inconsistent, claiming at different times that they charged simple interest at 11.60% and that no penal interest was levied. However, but compound interest was as per sanction. Further, the Complainant was charged a processing fee of Rs.44,000, which was not disclosed upfront, constituting an 'unfair trade practice' as per the guidelines of the Reserve Bank of India. Also, the bank failed to communicate changes in the interest rate and other loan terms in the vernacular language, leading to a lack of transparency and a violation of RBI's Fair Practices Code. The learned State Commission considered that the bank's actions amounted to 'deficiency in service' and 'unfair trade practice', and directed the bank to adjust Rs.3,28,000 against the principal, not to charge compound interest, refund the processing fee, and pay Rs.50,000 as compensation for mental harassment and Rs.25,000 as litigation expenses to the Appellant.

19.    It is undisputed that the Petitioner had entered into the subject contract for availing agricultural loan with OP Bank on 29.06.2015. In terms of the contract the loan of Rs. 35,70,000/- was sanctioned and this was to be repaid in 84 EMIs @ Rs. 69,924/- commencing from December 2015 (after six months moratorium). Interest @ 11.95% was applicable as per HO/RBI guidelines as stipulated at Sr. No. 1 of terms and conditions of the said contract. It is also matter of record that he was provided the payment schedule for 84 months of EMIs @ Rs. 62,924.84. As per Sr. No. 14 of the terms and conditions certain processing and documentation charges were recovered as per HO Circular No. CHO/OSB 02/2011-12 dated 01.04.2012. Accordingly, necessary charges for processing and documentation were charged.

20.    The State Commission considered that the Complainant ought to have been provided vernacular copies of terms and conditions of the loan facility. However, there is no evidence on record that he had sought a vernacular copy or ever stated that he had some queries about the terms and conditions. Further, the State Commission has also considered that whenever floating rates change as per the direction of RBI/HO, the Complainant ought to have been informed. At the same time, the terms and conditions of loan granted indicate that the rate of interest is subject to revision/change from time to time as per HO/RBI Guidelines. While it is not expressly stated that the Complainant ought to be so informed, such information ought to have effectively communicated by the OP-Bank towards transparency.

21.    It is established legal position that an individual who enters into a contract with open eyes is liable for terms and condition stipulated thereat. After entering into the contract and obtaining the benefit of loan, one cannot retort and question the terms and conditions agreed while entering. Hon’ble Supreme Court in in United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal, (2004) 8 SCC 644 decided on 24.09.2004 has held as under:  

“Therefore, it is settled law that the terms of the contract has to be strictly read and natural meaning be given to it. No outside aid should be sought unless the meaning is ambiguous”

22.    That the terms and conditions of the Policy are sacrosanct have been reiterated by the Hon’ble Supreme Court in Suraj Mal Ram Niwas Oil Mills Pvt. Ltd. Vs. United India Insurance Co. Ltd. (2010) 10 SCC 567 and Canara Bank Vs. United India Insurance Co. Ltd. (2020) 3 SCC 455.  The observation/ order of the Hon’ble Supreme Court in Suraj Mal (Supra) is reproduced below:-

“26. Thus, it needs little emphasis that in construing the terms of a contract of insurance, the words used therein must be given paramount importance, and it is not open for the court to add, delete or substitute any words.  It is also well settled that since upon issuance of an insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risks covered by the policy, its terms have to be strictly construed to determine the extent of liability of the insurer.  Therefore, the endeavour of the court should always be to interpret the words in which the contract is expressed by the parties.”

23.    Therefore, the terms of contract between the parties ought to be interpreted within scope of the terms of contract. It is not open to add or delete words used therein. The Complainant contended that he had no knowledge of nature and type of interest is untenable. No individual will obtain such high value Bank loan, without knowing implications of financial liability of the rate of interest. Even if there is a doubt, he ought to have immediately sought clarification. After availing six months of moratorium and paying certain EMIs, he sought change of repayment from EMIs to six monthly payments. Apparently, his request was processed by the OP Bank Branch and, however, the same has not been approved by the competent authority. In the absence of approval for changing from EMI to six-monthly payments, he ought to have adhered to EMI schedule. If there was any delay in payments, the liability is on the Complainant as per terms of contract.

24.    The Complainant has also contended that, in the circumstances that emerged, his loan account ought to been converted into a non-performing asset. As per him, certain other accounts were turned into NPA, except his account. Such contention is prima facie untenable as considerations to declare an account into NPA by a bank would entail evaluation of multiple factors, financial and legal implications. He could not have declared himself to be eligible for certain treatment with respect to the loan he has obtained with OP Bank. Further, if he had grievance on this account for declaring his loan Account as an NPA with the OP Bank, Consumer Forum is not the appropriate forum for the same.

25.    As regards processing fees, Para 14 of terms and conditions for loan provides for recovery of processing and documentation charges as per OP Bank Circular dated 01.04.2022. Evidently, this is for costs involved in processing and documentation towards establishing the credit worthiness for loan sought and included in the terms of loan. Therefore, the Complainant’s contention in this regard is untenable.

26.    In view of the foregoing discussions, the order of the learned State Commission dated 04.01.2022 is set aside and the present Revision Petition No. 101 of 2022 is allowed.

27.    There shall be no order as to costs. All pending Applications, if any, also stand disposed of.

28.    The statutory amount or any other amount deposited by the Petitioner, if any due, may be refunded as per law.