BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-I, U.T. CHANDIGARH

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Vijay Kumar Agarwal s/o of Late Shri Khushi Ram r/o #1483, Sector 15, Panchkula-134113(Haryana).

…..Complainant

                           V E R S U S

1]Branch Manager, Can Fin Homes Ltd., S.C.O.69, First Floor, Sector 46-C, Chandigarh-160047 and another.

2]The General Manager, Can Fin Homes Ltd., 29/1, Sir M.N. Krishna Rao Road, Basavanagudi, Bangalore-560004

                                  ……Opposite Parties

CORAM:  SH.JAGROOP SINGH MAHAL PRESIDENT

              DR.(MRS) MADHU BEHL       MEMBER

Argued by: Complainant in person.

                Sh.G.K.Juneja,  Adv. for OPs.

PER SHRI JAGROOP SINGH MAHAL, PRESIDENT

             Succinctly put, the complainant 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 without any special favour or special consideration as stated by OP-2 vide letter dated 27.07.09, addressed to the complainant. That 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.  As per the complainant, 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.  OP-2 received the letter but there was no reply from OP-2 on the same.The complainant approached OP-1 and gave a letter dated 15.05.09 requesting him to continue the loan, outstanding of Rs.1,27,115/- assuring regular EMI`s in future and offered to substitute the property mortgaged by the conveyance deed relating to H.No.1483, sector 15, Panchkula. OP-1 orally agreed and assured to get the approval for the same from OP-2 and the complainant applied for N.O.C. to Haryana Urban Development Authority, Panchkula for the permission to mortgage the said house as substituted security. The N.O.C. for the same was received by the complainant from HUDA. After that OP-1, orally advised that substitution of property was not approved by OP-2 and as such the complainant gave a letter dated 16.02.09 requesting for waiver of foreclosure charges if any.  OP-1 further advised the complainant that preclosure charges are permitted as 2% of the highest balance outstanding during preceding 12 months, on the date of closure. 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. In view of this agreement the complainant 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 as on 9.07.08 i.e. as on 12 months prior to the date of closure of loan, though the loan outstanding was Rs.96,339/- as on the date of closure of loan on 10.07.09. Hence this complaint alleging that the aforesaid acts of the OPs amount to deficiency in service and unfair trade practice and has prayed to direct OPs to refund the preclosure/prepayment charges paid by him and costs of litigation alongwith compensation towards mental and physical harassment and pain suffered by the complainant.

2.             In their written reply OPs submitted a similar plea and have admitted the factual matrix of the case. OPs stated that they are non-banking housing finance company, therefore the concepts viz., Cash Reserve Ratio etc. as varied by RBI from time to time and which are applicable to the Nationalized Banks are not applicable to OP company and the charging of interest on the housing loan is 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. OPs further stated that when an offer is made to a person and is accepted by him, it becomes a binding contract between the parties duly recognized by the law of the land. OPs stated that they borrow terms loan from Nationalized Banks and avail refinance facility from NHB, the regulator and collects deposits from the public at varying rates of interest.  The rates of interest for these sources of funds varies 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 has 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.

3.             Parties led evidence in support of their contentions.

4.             We have heard the parties and have also perused the record. 

5.             The contention of the complainant is that originally the loan was advanced to him @ 7.5% p.a. but it was later on enhanced to 11.50% and thereafter reduced to 10.75% and 10.25%. It is argued that in case of the fresh loans, the rate of interest is much lower and therefore that lower rate of interest should be allowed to him also.  The complainant however did not mention any instance where the OP has advanced loan to any other person or individual at the rate lower than that which the complainant was liable to pay.  Needless to mention that the complainant had chosen variable rate of interest, which was bound to increase/decrease at Cash Reserve Ratio fixed by the Reserve Bank of India.  There is therefore no deficiency in service on their part.

6.             The learned Counsel for the complainant has also argued that the OP has charged prepayment charges at an exorbitant rate whereas  the other banks are not charging any such charges or their charges are much lower.  The Learned Counsel referred to Annexure C-11 issued by  Canara Bank, State Bank of India and Bank of Borada,  showing that they do not charge any prepayment charges. We are however of the opinion that the rules and regulations for charging prepayment charges by other banks or institutions cannot be applied to the OP. It may be mentioned that when the loan was sanctioned to the complainant a letter Annexure C-1 (and OP-1(produced by the OPs) was issued to him in para 9 of which it was mentioned that the loan can be repaid in part or in full on payment of prepayment charges subject to prepayment norms of Can Fins Homes Ltd., (the OP), prevailing at the time of loan prepayment. The OP has placed on file Annexure- OP-4 vide which the complainant accepted the terms and conditions set out in the said sanction letter.  The contention of the OPs is that they charge 3% as prepayment charges as mentioned in Annexure C-7 and C-10 but as a special case the prepayment charges were reduced to 2% for the complainant.  The complainant has not been able to show as to how charging of prepayment charges is contrary to the agreement between the parties.  There is therefore no unfair trade practice or deficiency in service on the part of the OP in this respect.

7.             There is yet another draw back in the present complaint. The loan was advanced by Can Fin Homes Ltd., but the complaint has not been filed against the said company but it has been filed against its Branch Manager.  There is no liability on the Branch Manager because the loan was advanced by the OP Company, which has not been arrayed as a party in the present complaint.  Needless to mention that the Branch Manager is a distinct entity than Can Fin Homes Ltd., which may be having hundreds of Branch Managers working in the organization. 

8.             In view of the above discussion we are of the opinion that there is no merit in this complaint. The same is accordingly dismissed.

              Certified copies of this order be sent to the parties free of charge.  The file be consigned.