Justice Pritam Pal, President 1. This appeal by complainant is directed against the order dated 18.1.2010 passed by District Consumer Forum-I, U.T. Chandigarh whereby his complaint bearing No.1347 of 2009 seeking refund of preclosure/prepayment charges, excess interest charged etc was dismissed. 2. The parties hereinafter shall be referred to as per their status before the District Consumer Forum. 3. In nutshell, the facts as set out in the complaint are that the complainant had availed a Housing Loan of Rs.17,00,000/- sanctioned by OP-1 vide letter dated 20.08.05. The loan was repayable in 240 equated monthly installments @ 7.50% p.a. at variable interest rate without any special favour or special consideration as stated by OP-2 vide letter dated 27.07.09, addressed to the complainant. The loan was disbursed on 29.08.05 and was released in stages depending upon the progress in construction of the flat after completing the normal documentation formalities/requirement of OP-1. The Pre EMI interest was paid regularly as per terms and conditions of the sanction. The construction of flat was completed in March,2007 and balance amount of the loan was released on 7.03.09 and EMI was paid by the complainant w.e.f. March 2007, itself. The complainant alleged that OPs enhanced the rate of interest arbitrarily on each increase in the Cash Reserve Ratio by Reserve Bank of India. However, when the rate of interest was reduced by RBI, subsequently in various stages, interest charged on loan taken by him from OPs was never reduced accordingly and OP-1 continued charging higher rate without any justification whereas they were sanctioning new loans on much lesser rates as compared to the rates charged from him. The complainant reduced the outstanding balance of loan to mere Rs.1,42,326/- as on 31.03.09 and wrote a letter to OP-2 seeking details of the charges, if any, being levied for closure of loan by sale of the flat but there was no reply received from OP-2. The complainant approached OP-1 and gave letter dated 15.05.09 to him requesting to continue the loan, outstanding in which was merely Rs.1,27,115/- assuring regular EMI`s in future and also offered to substitute the property mortgaged by the conveyance deed relating to H.No.1483, sector 15, Panchkula, the market value of which was very high as compared to the flat already mortgaged . OP-1 orally agreed and assured to get the approval for the same from OP-2 and the complainant got N.O.C. from the Haryana Urban Development Authority, Panchkula for mortgaging the said house as substituted security. After that OP-1 advised that substitution of property was not approved by OP-2 and complainant then requested for waiver of foreclosure charges if any but he was told that preclosure charges were permitted as 2% of the highest balance outstanding during preceding 12 months, on the date of closure. Thereafter ,in view of the financial constraints and the assurance given by OP-1 to accept substitution of security, the complainant entered into the agreement to sell with some buyer of the flat at Shimla on 29.05.09, with undertaking to execute the sale deed latest by 12.07.09 and in view of the agreement, he closed the loan on 10.07.09 as there was no other option for him. OP-1 charged Rs.15,907/- as Prepayment charges inclusive of service tax etc.@ 2% on Rs.7,20,934/- outstanding amount as on 9.07.08 i.e. twelve months prior to the date of closure of loan, though the loan outstanding was Rs.96,339/- on the date of closure of loan on 10.07.09. Hence, alleging deficiency in service and unfair trade practice on the part of OPs, complainant filed complaint before the District Forum seeking refund of excess interest charged by recalculating the interest as reduced rate of interest due to reduction in Cash reserve ratio by the RBI from time to time, refund of excess interest charged in comparison to the rate of interest charged on the loans granted to new borrowers after disbursal of loan to the complainant, refund of preclosure charges of Rs.15907/- alongwith interest and compensation etc. 4. OPs contested the complaint and filed reply before the District Forum inter-alia stating therein that they were non-banking housing finance company, therefore the concepts viz., Cash Reserve Ratio etc. as varied by RBI from time to time and which were applicable to the Nationalized Banks were not applicable to OP company and the charging of interest on the housing loan was based on the costs of the funds/term loans raised by OP from banks, refinance assistance from NHB and the interest payable from time to time. All the terms and conditions of the loan were made known to the complainant in the loan sanction letter and were accepted by the complainant. It was further stated that they borrow term loans from Nationalized Banks and avail refinance facility from NHB etc. at varying rates of interest. The rates of interest for these sources of funds varied from time to time depending upon the market conditions and as per the rates applicable at the time of drawing the sanctioned amounts. The OPs had to apply a minimum spread to meet the establishment and staff expenses and fix the rate of interest for its housing loan products. Hence, the ratio of interest on the loan sanctioned cannot be the same. OPs stated that they have to pay the charges to the NHB in case it Prepays the loan liability to its lender or continue to pay the agreed rate of interest till closure of its loan liability with the lender. The company has no option but to pass on the burden to those borrowers proportionately who opt for preclosure of their loan liability. OPs further stated that the rate of interest and the preclosure charges were strictly as per the accepted terms of the contract and conditions. OPs stated that the complainant cannot claim the substitution of the property as of right, it is the discretion of the OPs to accept or not to accept the proposal and further denied the orally agreed statement by OP-1 to get approval form OP-2. OPs further stated that the complainant did not obtain the consent of OPs before entering into an agreement to sell the mortgaged property for which the complainant deserves penalty and the complainant has miscalculated the amount of preclosure charges, whereas the OPs received an amount of Rs.11,2520/- in full and final closure of the account on 10.07.09. OPs stated that as per the terms and conditions of sanction laid down in its letter, they are bound to abide by them and are entitled to collect the preclosure charges strictly and as per the contractual obligations the complainant redeemed the mortgage created by him by clearing the entire loan liability and got his security released. Denying all the material allegations of the complainant the OPs submitted that there has been no deficiency in service or unfair trade practice on their part and prayed for dismissal of the complaint with costs and compensation. 5. The District Consumer Forum after going through the evidence and hearing the counsel for parties came to the conclusion that there was no merit in the complaint and dismissed the same. Still dissatisfied, complainant has come up in this appeal. 6. We have heard the appellant/complainant as well as counsel for respondents/OPs and gone through the file carefully. It has been argued by the complainant that when rate is fixed on variable rate basis, the cost of funds prevailing at the time of sanction of loan is taken into account with regard to Reference Rate i.e. PLR/FRR and this rate varies from time to time on the basis of cost of funds, which may increase with increase in cost of funds and would reduce with decrease in the cost of funds. As such these variable rates cannot vary between old and new borrowers concurrently on any particular point of time and that too higher for the old/existing borrowers and lower for the new borrowers. Varying cost of funds would remain same at a particular point of time, whether it is for old loan or the new loan. Variable/floating rate does not mean discriminative rate of interest. He further contended that even if the variable rate of interest is based on the cost of funds relating to refinance availed from National Housing Bank/term loans availed from Nationalized banks and deposits accepted from the public prevailing at the time of disbursement of loans, which is called cost of funds then also the rate of interest should not vary and should remain fixed. He further argued that there was no mention of preclosure charges in the sanction letter or the loan agreement but despite that the OP demanded preclosure charges and recovered to the tune of Rs.15907/- calculated @ 2% on the outstanding as on 9.7.2008 plus service tax thereon. It was submitted that charging of preclosure/prepayment charges are not only unfair trade practice but also it is restrictive trade practice as it restricts the right of the borrower to repay the loan early and/or to shift loan to other institution. However, these points of arguments have been repelled by the learned counsel for OPs. 7. There is no denial of the fact that the loan was granted by the OP finance company under the variable loan rate scheme which was opted by the complainant. Thus, the rate of interest and the EMI were subject to variation as per the scheme. Clause 1(a) of sanction letter dated 9.11.2009 Annexure OP-1 recites that the rate of interest and the EMI amount were subject to variation as per VLS. Further, Can Fin Homes Ltd.(CFHL) is a non-banking housing finance company and not a banking company and as such the circulars and guidelines issued by RBI from time to time are not applicable to the company. There is loan agreement annexure OP-2 on the file. Its article 2.2.2.(c) clearly states that the borrower had chosen the VLS after clearly understanding the difference between the fixed rate loan scheme (FLS) and VLS offered by the OPs and agreed to be bound by the terms of the agreement till closure of his loan with OPs under VLS. Further article 2.2.9 of the Agreement clearly provides for the prepayment charges that OPs may in its sole discretion and on such terms as to prepaymennt charges etc. as it may prescribe permit acceleration of equated monthly installments or prepayment at the request of the borrower. In such an event the loan can be repaid in part or in full on payment of pre-payment charges subject to the prepayment norms of OPs prevailing at the time of such prepayment. Thus, the word ‘prepayment charges’ denotes the amount to be charged on the amount of loan prepaid as on the date of closure of the account and as per terms and conditions of the sanction ,complainant was bound to abide by the same. Moreover the regulator of OPs was the National Housing Bank and not the Reserve Bank of India and as such the Cash Reserve Ratio like concepts were not applicable to the OPs and rate of interest applicable to existing customers and new customers cannot be linked and can not be compared as the rate of interest is based on various aspects and can vary from time to time. The complainant could not show as to how charging of prepayment charges was contrary to the agreement between the parties. The rules and regulations for charging prepayment charges by other banks or institutions cannot be compared with OPs. 8. In view of the foregoing discussion, we are of the considered opinion that there is no illegality in the impugned order dated 18.1.2010 and needs no interference and accordingly same is upheld. Consequently, appeal fails and same is dismissed, with no order as costs. Certified Copies of this order be sent to the parties, free of charge. The file be consigned to record room.
| | HON'BLE MRS. MRS. NEENA SANDHU, MEMBER | HON'BLE MR. JUSTICE PRITAM PAL, PRESIDENT | , | |
