Order-15.
Date-17/05/2016.
Complainant Debanjan Majumdarby filing this complaint has submitted that complainant is an employee of South Eastern Railway, Garden Reach who for some urgent need of construction of home applied for Home Equity Loan from CITI Financial Consumer Finance India Ltd. for an amount of Rs. 3,80,000/- subject to payment of fixed interest 13.9994543 percent p.a. (inclusive of 2 percent interest tax applicable) and accordingly for application and process even a sum of Rs.4,700/- non-refundable was paid and terms of EMI was 120 months and each EMI amount is Rs.5,901/- and payment date of each EMI is on 5th day of each month and last EMI shall be paid on 5th July, 2016 and to that effect complainant submitted application for Home Equity Loan having Reference No. 8362796 and loan was sanctioned.
Accordingly loan account no.8362796 was opened for repayment of 120 EMIs and as per application loan was sanctioned on 29.04.2006, interest rate was 14 percent p.a. and to that effect against that account, repayment statement was issued by the CITI Financial on 23.07.2006 against loan A/C no.8362796 in the name of the present complainant DebanjanMajumdar.
Complainant has further submitted that he has been paying EMI regularly and already paid presently up to May,2015. But complainant suddenly received a notice on 09.11.2015 from CITI Bank Mortgage and came to know that his loan account is changed and interest rate is also changed from 14 percent to 17.8 percent p.a. and from that letter complainant also came to know that a sum of Rs.2,31,847.02 paisa is shown as loan amount outstanding against the complainant’s loan account and remaining loan tenure is 57.
But as per original loan agreement, the CITI Financial or present changed the name of the Company CITI Finance India Ltd. cannot anyway change the rate of interest from 14 percent to 17.8 percent p.a. under any circumstances, in view of the fact no fresh agreement against the loan account had been executed by the complainant and ops and at the same time if the payment schedule is calculated, in that case it shall be found that only six number of EMIs are to be paid by the complainant up to 05.07.2016 (presently upto 5th July-15). So, only six number of EMIs are required to be paid by the complainant.
Fact remains that under any circumstances the CITI Financial subsequently changed their name as CITI Finance India Ltd. cannot unilaterally impose any further condition or change the rate of interest withiout any fresh agreement with the complainant violating the agreement already executed by and between both the parties in respect of A/c. No.8362796 and at the same time cannot change the said loan account by any means. Considering such an act on the part of the OPs no doubt it is violation of the terms and conditions of the loan agreement and at the same time all guidelines of the RBI when CITI Finance or CITI Crop Financial Ltd. or CITI Mortgage cannot anyway violate the original terms and conditions of the agreement.
Moreover in respect of the total loan amount granted by CITI Financial (CITI Mortgage or CITI Finance India Ltd.) was Rs. 3,80,000/- and rate of interest was fixed at 14 percent p.a. (inclusive 2 percent interest tax applicable). So, w.e.f. 09.11.2015 even if loan has been migrated from CFIL to CITI Bank N.A., the CITI Bank N.A. cannot anyway change the terms and conditions of the loan agreement as granted by CITI Financial Consumer Finance India Ltd. or subsequently known as CITI Crop. Finance India Ltd. in the month of June, 2006 and when complainant has been paying the EMI regularly as per account repayment statement issued by CITI Finance on 23.07.2006 against account no.8362796 in that case rate of interest cannot be changed, period of payment cannot be changed and no other interest cannot be charged violating the original sanctioned letter. So, the payment for outstanding amount of Rs.2,31,847.02 paisa is completely baseless and there is no question of charging of any interest at the rate of 17.8 percent p.a. and there is no legal ground for change of period of tenure.
It is specifically mentioned that already complainant paid 114 numbers of EMIs up to the date of filing the complaint out of 120 EMIs. Then as per EMI payment statement, complainant is liable to pay balance six EMIs and at present only two EMIs because already complainant paid 118 EMIs. So, the claim of the OP is completely bad in law. Ultimately complainant sent a letter to Branch Manager of CITI Bank N.A. on 14.12.2015 stating all the fact and asking them to take necessary action against that. But they are very much silent and for such negligent and deficient manner of service, complainant is being harassed and in fact complainant has been facing mental pain and agony and as a consumer complainant has been deceived by the OP and fact remains that the entire act is unfair trade practice for which complainant prayed for passing such necessary order to determine the present consumer dispute related to Home Equity Loan and to decide as per Home Equity Loan Agreement what is the present position of EMI, OP shall have to pay for compensation and for harassing etc.
On the other hand OP by filing written statement submitted that loan application dated July 29, 2006 together with Home Equity Agreement dated June 9, 2006 complainant availed of a home loan from Citi Financial Consumer Finance India Ltd. (CCFIL) for an amount of Rs.3,80,000/- together with interest was repayable 14 percent p.a. or such other rate that the lender may fix from time to time. The said loan was at variable interest rate loan which meant that as fixed by company from time to time and the same shall be evident from page-06 of the Loan Application under the title Some Important Information and rate of interest is clearly mentioned as fixed by the company from time to time and further at various places in Home Equity Agreement. So, the complainant was aware of the change of interest etc. and as per Home Equity Loan Agreement, OP is unable to refund the rate of interest as per his policy market condition etc. and complainant is liable to pay.
OP has further submitted that they communicated to the complainant by releasing letter on different dates from April-2007 to September-2008. But complainant was silent that means complainant did not challenge the changed rate of interest. It is specifically mentioned that complainant was informed vide letter dated 09.11.2015 about the rate of interest, tenure of loan and OP by his letter dated 28.12.2015 responded to the complainant by a letter that the loan was completed and complainant had also been informed from time to time. So, there was no negligence and deficiency and further it is submitted that the entire complaint is vexatious and as per Law it is being done.
So, the complaint should be dismissed.
Decision with reasons
On careful consideration of the complaint and written version and particularly the sanctioned letter regarding the loan and statement of repayment statement against Loan A/c. No.8367296, it is clear that loan was granted by the CCFIL with reference to Home Loan Application being No.8362796. CITI Financial issued letter to the complainant mentioning the amount of loan and rate of interest submission of transfer fee, terms 120 months repayment of amount of Rs.5,901/- each and date of payment on 5th day of each month, but against other condition, it is nil and in the said sanctioned letter, there is no such term that rate of interest is floating, rate of interest or interest can be changed in future.
On the other hand in the sanctioned letter it is specifically mentioned that the rate of interest is 13.9994543 percent p.a. (inclusive of 2 percent interest of tax were applicable) and when the loan was sanctioned on 29.06.2006 and on 23.07.2004, account repayment statement was also sent to the complainant from which it is found that EMIs shall be paid by 5th July of 2016 by 120 installments and the each installment shall be Rs.5,901/- and it is not denied by the OP. At the same time complainant has already paid EMI up to 5th May, 2016 on regular basis and he is not a defaulter that has not been challenged.
It is equally true on payment of EMI of Rs.5,901/- of 5th June and 5th July of 2016 as per account repayment statement, the complainant’s liability for payment of EMI as per sanctioned letter shall be discharged.
Peculiar factor is that complainant has been paying EMI regularly and as paid up to 5th May 2016 against account No.8362796 and that has been collected in that account and OP has accepted the same without any change of any account. So, considering that fact it is clear that complainant is neither a defaulter nor he has failed to pay any EMI at any time. It is found that on 5th August 2006 to upto date he has regularly paid and completed 118 EMIs already up to 5th May 2016 and balance would be paid in June and July, thereafter as per account repayment statement his liability shall be completed. Regarding that there is no denial on the part of the OP. But OP’s Ld. Lawyer submitted that agreement was executed by the complainant and in the said agreement, it is specifically mentioned that interest may vary and if it is changed, the complainant shall have to pay the same. When there is an agreement, complainant cannot go beyond that agreement, probably complainant did not follow the terms and conditions of the sanctioned loan agreement dated 28.06.2006. In this context the complainant submitted that in the sanctioned loan letter, there are several conditions. But nowhereit is noted that it is floating rate or in future rate of interest shall be changed.
Now question is whether there is any fault on the part of the complainant. In this context we have gathered that agreement shall be as per sanctioned letter. When in the sanctioned letter there is no note of floating interest or variable rate of interest in future in that case sanctioned letter shall be the final for determination of actual interest and after getting the sanctioned letter including the rate, term and amount of repayment invariably complainant was satisfied about rate of interest as noted in the sanctioned letter to the extent of 14 percent and he had been paying the same and he was never disturbed upto this stage and he was also confirmed that term of loan for repayment is 120 EMIs. So, he has paid 118 EMIs up to May-2016.
If actually at the time of sanctioning of loan against the rate of interest, if anything would be noted as floating interest or variably rate of interest in future, complainant had his scope not to accept such sanctioned loan. But no such option was given to the complainant to realize that complainant shall have to pay floating rate of interest, though it is not noted in the sanctioned letter.
Practically back behind the knowledge of the complainant, OP has reset the interest at the rate of 17 percent and odd and rule is that in respect of Home Loan or Home Equity Loan if any interest is changed or varying the rate of interest though not noted in the sanctioned letter, in that case as per RBI guidelines, it is the duty of bank to ask the lonee member to submit in writing whether he is willing to accept the changed rate of interest or not and if in such a case customer or lonee member does not accept, such change of interest in that case banking authority shall charge such changed rate of interest but to pre-close the entire account by directing the complainant to deposit the entire outstanding EMIs within such a specific date as would be fixed by the bank. But that procedure has also not been followed by the OP in the present case. So, the entire act on the part of the OP is no doubt violating the terms and conditions and interest as fixed in the sanctioned letter dated 28.06.2006. Moreover the agreement was signed no doubt by the complainant. But it is proved that the agreement is printed form of bank and if any such clause is there that is against the sanctioned letter and that is not binding upon the complainant.
Another factor is that it is the settled principle of Law if in the sanctioned letter, fixed rate of interest is noted that cannot be changed by any agreement and no interest can be charged by resetting interest rate without consent of the complainant and in the present case, no consent was received by the OP. So, OP as a banking institution had no other alternative but to inform the complainant to pre-close the said loan account and the complainant would be directed to repay the entire loan amount that is balance EMIs within a certain date but that procedure has also not been followed. No doubt it is proved that it was within the knowledge of the complainant that at the time of taking or enjoing the loan as per sanctioned letter that he is liable to pay interest at the rate of 14 percent p.a. and it must be paid within 120 months and as per RBI rules if rate of interest is changed, it would be informed with increased rate to the lonee member to accept it and if it is not accepted by the lonee member, in that case there was no other alternative but to close the bank account and to direct the lonee member to pay the outstanding EMIs. But anyhow OP has failed to prove that.
No doubt OP has tried to convince this Forum that complainant did not file any objection against the changed rate of interest, tenure of payment and balance amount after receipt of the letter. But considering the entire materials and submission of the complainant, it is found that the entire submission of the Ld. Advocate for the OP is not sustainable in the eye of Law because loan was sanctioned on 28.06.2006 and loan was released on 29.06.2006. Complainant received the loan amount no doubt and after that he was satisfied that the fixed rate of interest of 14 percent and duration of payment by 120 EMIs and amount of each EMI is Rs.5,901/-. So, complainant satisfied about the rate of interest as noted in the sanctioned letter and also repayment term and also the EMI, complainant came to learn that and was satisfied that there was no chance of change of interest rate. At the same time payment of 118 EMIs, have been made by the complainant against his loan account which was issued by the earlier company and has been received by the OP without any objection. No option was given to the complainant whether complainant shall have to accept the rate of interest of 17.4 percent p.a. or not, no option was given to the complainant to close the loan by repayment of balance EMIs. So, it is proved that op Bank never took such procedure about changing of rate of interest. So, without the knowledge of the complainant and without any intimation to the complainant, they did it. But from the agreement it would be clear that before resetting the interest it was the duty of the bank to inform the complainant that complainant shall have to pay rest interest or to pre-close the entire loan account by refunding the balance amount of EMIs, but nothing has been done.
So, it is clear that no doubt it is proved that the unfair trade practice was adopted by the OP, when complainant performed his liabilities as per sanctioned letter and as per repayment schedule as issued by the previous bank which was merged with the present OP and such an act on the part of the OP is no doubt a violation of sanctioned letter and conditions as mediated in the sanctioned letter dated 28.06.2006.
Considering that fact that complainant has been harassed and unfair trade practice has been practiced by the OP by violating the terms and conditions of the agreement of the sanctioned letter as noted. No doubt we have minutely considered the documents, the loan sanctioned letter with condition dated 28.06.2006 wherefrom we have gathered that bank has no legal ground to change the interest rate when the fixed rate of interest is there. There is no such note that rate of interest is may change in future and fact remains that bank has miserably failed to prove at any point of time that at the time of sanctioning of loan by issuing sanctioned letter, they informed that loan can only be released if complainant is willing to pay floating rate of interest in future. But no such paper is produced by the OP and when the loan was sanctioned as per acceptance of the complainant. The terms and conditions as enumerated in the sanctioned letter, then there is no other alternative on the part of the OP to show that agreement is otherwise accepted and in this context it is to be mentioned that pre-condition of the resetting interest as per RBI guideline must be of such a nature in the sanctioned letter floating interest or varying interest must be notes in case of reset the rate of interest in future and in that case it is the duty of the OP bank to inform the complainant to either accept the reset interest rate or to close the entire account by depositing the balance amount by complainant but that has not been followed.
Fact remains that written version is also silent in this regard. But OP has tried to show that both the parties are careful as may be in the loan agreement and also in the sanctioned letter, when that is the fact, we are relying upon the written version of the OP and we have gathered that OP is equally bound to perform part performance as per conditions as embodied in the sanctioned letter and under any circumstances, OP bank cannot go against the terms as embodied in the sanctioned letter.
Another factor is that in the sanctioned letter it is noted that interest is fixed 14 percent and in that case no chance was there on the part of the O.P. to increase rate of interest unilaterally as per sanctioned letter has not given O.P. any scope to reset interest rate.
Peculiar factor is that after lapse of nine years, complainant was reported about that change of interest changed of account no. etc. Considering all the above fact and circumstances, we are convinced to hold that OP has violated in this regard the true spirit of the sanctioned letter and it is specifically mentioned that purpose of loan is always guided by the loan sanctioned letter issued by the bank. No relaxation can be made on the ground of any sort of change of interest and in this case it is proved that everything was done back behind the knowledge of the complainant without giving the complainant any chance for accepting the same, no consent was given for acceptance of change of interest and changed of interest cannot be done in view of the fixed rate of interest of sanctioned letter which is explicitly written and at the same time OP has failed to give any acceptation duly signed by the complainant but he was kept in darkness and they did it by violating the terms and conditions of the sanctioned letter and as per guidelines of RBI, they did not proceed and O.P. has failed to prove why the loan was not closed by directing the complainant to deposit the balance EMIs when complainant did not submit any consent letter and for the sake of the argument if it is found that complainant was intimated that shall not be treated as consent.
In the light of the above observation and considering the materials document, sanctioned letter, no doubt bank cannot reset interest after lapse of nine years, when consent of the complainant (customer) is mandatory and if customer is not satisfied about interest, then customer is entitled to get such option to close the loan by paying the valance EMI but scope has not been given to the complainant and this is not clean service on the part of the bank to the customer and no doubt for adopting such unfair trade practice, complainant as consumer has been harassed.
Fact remains that the complainant has been paying EMIs regularly and there was no fault on the part of the complainant. Fact remains that the entire service and conduct of the O.P. has been proved an illegal and immoral act and by adopting such unfair trade practice the rate of interest 17.4 percent p.a. was reset without the consent of the complainant.
Considering the above fact and materials unfair trade practice and negligent manner of service of the OP it is well proved and for which no doubt complainant has been mentally and also physically suffered and for which the matter ought to have been brought to the notice of the complainant in time as per RBI guidelines and in that case complainant may repay the entire loan that is balance EMIs, but that scope has not been given to the complainant for which no doubt complainant has brought the allegations against the bank administration about their unfair trade practice in respect of charging reset interest back behind the knowledge of the complainant and complainant has also proved the allegation against the OP which is well proved. In this regard the judgement passed in RP/2205/2015 by the National Commission in case Appellant State Bank of India, Shyam Bazar - Vs. - M/s. Sova Mohan where Hon’ble National Commission has confirmed the judgement of this Forum and that was also affirmed by the State Commission and in that judgement it is specifically confirmed that the rate of interest if it is noted in the sanctioned letter fixed that cannot be changed and if OP wants to change it in that case scope would be given to the consumer that the complainant either to repay the balance EMI and to close the account and if customer accept the change rate of interest in that case loan account shall be continued. So, relying upon the that judgement of the National Commission, we are convinced also that OP bank has not complied specific guideline of RBI etc. and also has not complied the principle as laid down by the OP and this is common practice of the private bank. Practically in case No.CC/215/2012 State Bank of India, Shyam Bazar was imposed penal damages for unfair trade practice and in that case decree was passed and that was confirmed up to National Commission in the judgement passed in RP/2205/2015 on 07.09.2015 and that judgement of the lower Court was also confirmed by State Commission, W.B. and SBI, Shyam Bazar paid Rs.25,000/- as penal damages for unfair trade practice.
In view of the above findings and judgement, we are allowing this complaint by passing such necessary order and giving such relief and redressal to the complainant.
Hence, it is
ORDERED
That the complaint be and the same is allowed on contest with cost of Rs.10,000/- against the OP.
It is also held that complainant has already paid 118 EMIs up to 5th May 2016 against A/c. No.8362796 which is admitted by the OP and on payment of the balance two EMIs by July-2016, complainant’s liability shall be discharged against that loan account and OP has no legal authority to impose any interest or charge of any other interest in respect of Loan A/c or in support of the market purpose.
Complainant is directed to deposit the EMIs 119th & 120th by due date by July-2016 and on deposit of said two EMIs, complainant’s liability shall be discharged and the entire loan account shall be treated as closed on full satisfaction of the payment as per sanctioned letter and OP shall have to hand over all documents in respect of the loan in favour of the complainant within one month from the date of last payment of EMI without any harassment, without charging any fees and penalty etc. and OP bank shall not charge any further interest except the fixed EMI as paid by the complainant and such payment loan account being No.8362796 in the name of DebanjanMajumdar shall be treated as finally closed.
OP bank is hereby directed to pay compensation of Rs.25,000/- to the complainant causing mental pain and for adopting unfair trade practice, OP Bank is hereby directed not to impose any interest, penal charge in respect of the loan account but shall have to hand over the document which is mortgaged by the complainant within 5th August, 2016.
OP shall have to pay litigation cost and compensation to the complainant within one month from the date of this order. Further OP is imposed of RS. 20,000/- as punitive damages as it is imposed to check unfair trade practice as adopted by the OP and same has to be deposited to account of President, DCDRF, Kolkata Unit-II.
OP is hereby directed to comply the order by 5th August, positively and without any delay and in default penal interest at the rate of Rs.300/- per day shall be assessed over the same which shall be paid by the OP.
Even if OP is reluctant to comply the order, in that case penal action shall be started against OP u/s 25 read with Section 27 of C.P. Act, 1986, for which further penalty and fine shall be imposed upon OP.
