Date of Filing: 07/07/2011
Date of Order: 30/08/2011
BEFORE THE I ADDITIONAL DISTRICT CONSUMER DISPUTES REDRESSAL FORUM SESHADRIPURAM BANGALORE - 20
Dated: 30th DAY OF AUGUST 2011
PRESENT
SRI.H.V.RAMACHANDRA RAO,B.SC.,B.L., PRESIDENT
SRI.KESHAV RAO PATIL, B.COM., M.A., LL.B., PGDPR, MEMBER
SMT.NIVEDITHA .J, B.SC.,LLB., MEMBER
COMPLAINT NO. 1238 OF 2011
Diwakar Siddaiah,
No.1046, “Samruddhi”,
7th Main, 7th Block, 2nd Phase,
Hosakerehalli, Bangalore-560085.
(Rep. by In-person) Complainant.
-V/s-
The Branch Manager,
Corporation Bank,
Srinagar Branch, # 22, Sai Plaza,
80ft Road, Srinivasanagar,
BANGALORE-560 050.
(Rep. by Advocate Sri.V.B.Ravishanker) Opposite party.
BY SRI.H.V.RAMACHANDRA RAO, PRESIDENT
ORDER
The brief antecedents that lead to the filing of the complainant made Under Section 12 of the Consumer Protection Act, seeking direction to the opposite party to pay a sum of Rs.1,70,727/-, are necessary:-
The complainant is having a S.B. account No.28073 in the opposite party’s Bank. The complainant requested the opposite party for a housing loan of Rs.25,00,000/-. The opposite party in this regard conducted various procedures like valuation of the property, legal opinion, etc., and the complainant has paid Rs.1,500/- to his advocate. The housing loan was sanctioned in the name of the complainant and his wife Smt.Shilpashree on 03.12.2010. On 14.01.2011 the officials of the opposite party took signature to several forms from the complainant and his wife. Accordingly they will be releasing the amount only after the complainant submits the original title deed as per the legal opinion and registering the absolute sale deed at the registering authority. The vendor Smt. B. Putta Lakshmamma failed to produce the original title deed to the complainant which she was bound to handover as per the agreement. It appears that the said document is deposited with the opposite party as security to her loan liability and loan has not been cleared hence she expressed her inability to provide the sale deed hence the loan could not be availed by the complainant, nor the DD has been handed over by the opposite party. In March-2011 when the complainant’s father got the SB account pass book of the complainants up dated the complainant was shocked to know the opposite party has debited Rs.30,664/- as EMI towards the housing loan on 25.02.2011. This was brought to the notice of the Manager Sri. U.M.Rao who accepted his mistake but inability to refund the amount. The complainant his wife and his father has sent several e-mails contacted the opposite party. The opposite party has debited twice the EMIs in all Rs.70,727/-. Hence that has to be returned to the complainant with damages and compensation of Rs.1,00,000/-.
2. In brief the version of the opposite party are:-
The complainant is a SB account holder bearing No.28073 since 2004 are true. The complainant planned to purchase a house property for a consideration of Rs.32,00,000/- and sought housing loan of Rs.25,00,000/-. It was sanctioned in the name of the complainant and his wife on 03.12.2010. The opposite party has not taken the signature of the complainant on 14.01.2011. The complainant and his wife have executed loan documents in favour of the opposite party. It is true that after submitting the original title deed the opposite party will release the loan amount to the complainant. As per the norms the opposite party has credited to the loan account of the complainant and his wife and the demand draft will be drawn in the name of the vendor of the complainant on handing over the original documents of the property. As the original documents are not handed over the demand draft has not been given. As the said transaction did not took place DD could not be handed over to the complainant and the loan amount of the complainant was pre-closed. The pre-closed amount of 2% has been taken. All the allegations to the contrary are denied.
3. To substantiate their respective cases the opposite party has filed its affidavit. The complainant did not turn-up at all. Hence heard the opposite party and perused the records.
4. The points that arise for our consideration are:-
- Whether debiting Rs.70,727/- to the SB account of the complainant without even disbursing the loan amount to the complainant amounts to deficiency in service/unfair trade practice?
- What order?
5. Our findings on the above points are:-
Point (A):In the Positive
Point (B) : As per the final order
For the following:-
REASONS
POINT (A) to (B):-
6. Reading the pleadings in conjunction with the documents and the affidavit of the opposite party it is needless to say that the complainant is having a S.B account with the opposite party bank bearing No. 28073 since 2004. It is also an admitted fact that the complainant had made an application for housing loan for purchase of a house (On what date the application is made? Is not mentioned). In any event the opposite party had sanctioned the housing loan but no amount of Rs.25,00,000/- has been paid to the complainant and the housing loan was not at all utilized by the complainant. The opposite party wanted the original title deed of the vendor of the property, so that it can release the amount. But as the vendor of the complainant did not produce the original title deed as it was given as security for her loan in the bank the sale did not took place, and the complainant did not avail any loan.
7. It is also an undisputed fact the opposite party has recovered Rs.70,727/- from the SB account of the complainant and took it. If the opposite party wanted two EMIs to be recovered as foreclosure charges it should have marked as a lien on the SB account of the complainant and if it is not paid it could have recovered as Under Section 171 of the Contract Act but that has not been done. Hence an action of the opposite party is illegal and it is unfair trade practice.
8. Further in III 2008 178, the Hon’ble Karnataka State Consumer Dispute Redressal Commission at Para 5, 6 & 7 has held thus:-
“ Para-5 The National Commission is also of the view that the Financial Institutions which advance loan should not collect any pre-closure charges if the loan is discharged by the borrower before the agreed period. Hence, we hold that the O.Ps are liable to refund Rs.14,47,000 to the complainants with interest”
Para-6 Accordingly, we pass the following Order.
The appeal is allowed. The impugned order is set aside.
The complaint filed by the District Forum is allowed with a direction to the O.Ps to refund Rs.14,47,000/- to the complainants with interest at 6% per annum from the date of filing the complaint before the District forum till realization.
Parties to bear their own costs.
Para-7 Before parting with this case, we express that we are coming across several cases where the Financial Institutions are charging certain charges in the form of ‘Service Charges’ Pre-closure charges, etc., without rendering any service even in cases where loan is not sanctioned for some reason and where loan is pre-closed. Instead of charging interest on pro rata basis the Financial Institutions are charging interest on the entire loan amount. This is unjust enrichment. In some cases the Financial Institutions have contended that they have charged interest in such cases as per the guidelines issued by the Reserve Bank of India. We hope the Government of Karnataka will take up that matter with the Government of India/Reserve Bank of India and pursuade the Reserve Bank of India to issue suitable directions to the Financial Institutions in this behalf.
That means to say foreclosure charges or preclosure charges is illegal and it is ultra virus even if it is agreed it cannot be charged. Hence the action of the opposite party without giving the loan amount to the complainant recovering the EMIs is nothing but an unfair trade practice. The opposite party is doing the business of shylock which is unkown to India and Indian culture and law. The opposite party is a service oriented organization and not earning blood from the poor customers. Hence the action of the opposite party is nothing but an unfair trade practice. Hence we hold the above points accordingly and proceed to pass the following:-
ORDER
1. The complaint is Allowed-in-part.
2. The opposite party is directed to pay to the complainant a sum of Rs.70,727/- together with interest at the rate of 12% per annum from 01.04.2011 until payment within 30 days from the date of this order.
3. The opposite party is also directed to pay Rs.2,000/- to the complainant towards cost of this litigation.
4. The opposite party is directed to send the amounts as ordered at Serial Nos. 2 & 3 to the complainant through DD by registered post acknowledgment due and submit the compliance report to this Forum with necessary documents within 45 days from the date of this order.
5. Return the extra sets filed by the parties to the concerned as under Regulation 20(3) of the Consumer’s Protection Regulation 2005.
6. Send a copy of this order to both parties free of costs, immediately.
(Dictated to the Stenographer, transcribed and typed by him, corrected and then pronounced by us in the Open Forum on this the 30th Day of August 2011)
MEMBER MEMBER PRESIDENT
