IN THE CONSUMER DISPUTES REDRESSAL FORUM, ALAPPUZHA
Wednesday the 31st day of January, 2018
Filed on 26.09.2016
Present
- Smt. Elizabeth George (President)
- Sri. Antony Xavier (Member)
- Smt.Jasmine.D. (Member)
in
C.C.No.312/2016
between
Complainant:- Opposite Party:-
Smt. Lathy.K.S 1. Chairman & Managing Director
W/o C.H. Chandrabhanu HDFC Bank Ltd
Chettichuparambil HDFC Bank House
CMC/26, Cherthala North Village Senapati Bapat Marg
Cherthala.P.O Alappuzha Lower Parel (west)
Mumbai 400013
2. The Branch Manager
HDFC Bank Ltd
Cherthala Branc
North of Paradise Theater
Cherthala
O R D E R
SMT. ELIZABETH GEORGE (PRESIDENT)
The case of the complainant is as follows:-
Complainant availed an auto loan from the 2nd opposite party under the first opposite party on 22.08.2015 as per auto loan account No. 34715578 for the purchase of a new Skoda Rapid car. Though the period of loan was five years, due to some unavoidable reasons complainant wanted to close the loan account by paying the entire amount with interest up to date due in the account. Second opposite party gave a printed statement on 27.04.2016, wherein it is stated that over and above the outstanding amount with interest up to date complainant had to pay Rupees Sixty thousand four hundred and sixty nine (Rs.60469/-) towards extra charges under the head prepayment charges at the
rate of 6.87% on the outstanding amount due. To the said statement complainant gave replay on 04.05.2016 stating that collection of such an exorbitant amount is not only illegal but also against the norms applicable to banks in India. To the said letter, on 11/5/2016 1st opposite party’s Ernakulum office gave a reply letter to the complainant reiterating the same stand of charging the aforesaid additional amount and the amount is rescheduled as Rs. 59553/-. Since the complainant has to close the loan account immediately she was forced to pay the entire amount including said additional amount and she paid the same on 17/5/2016 under the protest and subject to her right to approach the appropriate forum to realize the additional amount illegally collected. It is respectfully submitted that the complainant is legally bound to pay only the amount outstanding with interest up to the date of repayment. The 2nd opposite party illegally collected Rs. 59553/- from complainant. Alleging deficiency in service on the part of the opposite party the complaint is filed.
2. Version of the opposite party is as follows:-
Complainant had availed auto loan for an amount of Rs. 9, 70,532/- from the opposite parties in the year 2015. The complainant also agreed that the opposite party is entitled to collected foreclosure charges in case the complainant opted to close the loan on a premature basis. The complainant is liable to pay foreclosure charges based on clause no 3.2 of the loan agreement and as per the rate as stipulated in the schedule of the loan agreement. The complainant voluntarily opted to foreclose the loan on 18/5/2016 ie within 1 year from the 7th EMI. Hence, the complainant is liable to pay 6% of Principal outstanding for pre-closures along with outstanding amount and interest payable on that date. The statement in para 2 of the complaint that the opposite party had charged an amount of Rs. 60469/- towards extra charges etc are not correct and devoid of any merits and hence denied. The closure of purchase charge is not on un just action as collected by the complainant. There is no deficiency in service on the part of the opposite party.
3. Complainant filed a petition of commission to examining the complainant’s husband for an on behalf of her and it was allowed. Complainant husband was examined as PW1 the document produced were marked as Ext.A1 to A7. Opposite party produced 3 documents and the documents were marked as Ext. B1 to B3.
4. The points for consideration are:-
- Whether there is any deficiency in service on the part of the opposite parties?
- If so the reliefs and costs?
5. It is an admitted fact that complainant availed an auto loan from the 2nd opposite party on 22-8-2015. According to the complainant she wanted to close the loan account by paying the entire amount with interest and asked the opposite party to furnish the details. But opposite party gave a statement demanding 6.87% of outstanding due i.e Rs. 60469 as pre-closure charge. Complainant questioned it and thereafter the amount is rescheduled as Rs. 59553/-. Since the complainant has to close the loan account immediately she was forced to pay the entire amounts and paid the amount under protest. According to the complainant opposite party collected Rs. 59,553/- as prepayment penalty and they are not entitled to do so. According to the opposite party the complainant is liable to pay foreclosure charges based on clause No. 3.2 of the loan agreement. In order to substantiate this opposite party produced loan agreement which marked as Ext.B1. Clause 3-2 of the loan agreement is as follows. ‘The Borrower(s) may, prepay the whole or any part of the outstanding of respective Loans (Including interest, other Dues, fees and charges here in ) by giving a notice in writing to that effect. The Borrower(s) would have to give minimum written notice of 30 days expressing his intention to repay the loan amount, unless the same is waived in writing by the Bank. The prepayment shall take effect only when the actual payment is received by the Bank and interest and other charges would be leviable till the end of the month in which the prepayment is actually effected. In such an event the bank will levy prepayment charges as mentioned in the schedule or any rate which is applicable at that time as per Bank’s policy on the dues outstanding”.
As per the schedule attached there in if the pre-closure is within 1 year from 7th EMI 6% of principal outstanding is allowed. Complainant produced RBI Circular dated 7/5/2014 and for the sake of reference it marked as Ext.A7. In the RBI Circular dated 7-5-2014 it is stated that “A reference is invited to Part B of the First Bi-monthly Monetary Policy Statement 2014-15 announced on April 1, 2014 proposing certain measures for consumer protection. It was indicated that in the interest of their consumers, banks should consider allowing their borrowers the possibility of prepaying floating rate term loans without any penalty. Accordingly, it is advised that banks will not be permitted to charge foreclosure charges/ Pre-Payment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect”.
It is pertinent to see that as per clause 3.2 of Ext.B1 agreement it is specifically stated that bank will levy repayment charges as mentioned in the schedule or any rate which applicable at that time as per Bank’s policy on dues outstanding. As per the RBI circular dated 7-5-2015 for the consumer’s protection bank will not be permitted to charge foreclosure charges on all floating rate term loan.
In the instant case complainant was regular in her payments. She has taken loan of Rs. 970532/- from the opposite party agreeing to repay the loan amount with monthly installment of Rs. 20536/-. As per the RBI circular even in case of floating rate of interest, pre-closure charges are not allowed. The contentions of opposite party is that they suffered significant loss since the complainant had foreclosed the loan. But not even a scrap of paper produced to prove the same.
In a case DEUTSCHE Bank Vs. K.S. Elangovan reported in IV 2015 CPJ 20 Hon’ble Tamil nadu state commission held that foreclosure charges against RBI rules is unfair trade practice. In the case of the SBI vs. Dr. Usha Vaid (11 2008 CPJ 166) it had been observed that no cash or finance companies could be allowed the restrictive trade practice by binding the consumer to go on availing loan even if rate of interest charged by the said bank is much higher than the other banks and any such clause which operates adversely to the consumer has to be held as void and therefore not enforceable.
Accordingly we are of opinion that it would be illegal to collect prepayment charges from the complainant. Bank not exercised its discretion in waiving foreclosure charges to the complainant who is regular in her transaction with bank. Banks have charged the same without considering complainants request and protest and it amounts to deficiency in service.
In the result the complaint is allowed. Opposite party is directed to refund the pre-closure charge of Rs.59 533/- (Rupees Fifty nine thousand five hundred and thirty three only) with 8% interest from the date of payment till realization to the complainant. Since the primary relief is allowed no further relief as to cost and compensation. The order shall be complied within one month from the date of the receipt of this order. .
Dictated to the Confidential Assistant transcribed by her corrected by me and pronounced in open Forum on this the 31st day of January, 2018. Sd/- Smt.Elizabeth George (President) :
Sd/-Sri. Antony Xavier (Member) :
Sd/-Smt.Jasmine.D. (Member) :
Appendix:-
Evidence of the complainant:-
PW1 - C.H.Chandrabhanu (Witness)
Ext.A1 - Computer Printed Statement dtd. 27/4/2016
Ext.A2 - Copy of Letter dtd. 4.5.2016
Ext.A3 - Letter dtd.11.05.2016
Ext.A4 - Computer Printed Statement dtd. 27/4/2016
Ext.A5 - Pay in slip for payment
Ext.A6 - Loan closure Letter.
Ext.A7 - RBI Circular
Evidence of the opposite party:-
Ext.B1 - Agreement for Auto loan
Ext.B2 - Loan Application Form
Ext.B3 - Statement of Account
// True Copy //
By Order
Senior Superintendent
To
Complainant/Opposite parties/S.F.
Typed by:- br/-
Compared by:-
