MRS. M. SHREESHA, MEMBER

          Aggrieved by the orders in Consumer Complaint Nos. 19/2010, 38/2010, 42/2010, 65/2010, 01/2011, 04/2011,12/2011, 22/2011, 23/2011, 24/2011, 25/2011, 26/2011, 27/2011, 32/2011, 33/2011, 34/2011, 36/2011, 38/2011, 61/2011 and 79/2011 passed by the Rajasthan State Consumer Disputes Redressal Commission, Jaipur (in short “the State Commission”), IDBI Bank has preferred these Appeal Nos. 116, 117 ,224, 319, 364, 387-393, 407, 408, 427, 430, 431, 436, 437 and 602 of 2015 under Section 19 of the Consumer Protection Act 1986 (in short “the Act”). By the impugned order, the State commission has directed the Appellant herein not to recover any amount from the Complainants prior to the receipt of the possession of the allotted flats; the loan amount shall be recovered from the Developer who is the principal debtor;  the Developer shall disburse the amount deposited by the Complainant with interest at 12% p.a. from the respective dates of deposit till the date of realisation or handover the possession within three months from the date of order; the Appellant herein shall take all steps to remove the Complainant’s name  from the defaulters list of CIBIL;  the Appellant shall withdraw all legal proceedings initiated against the Complainants in respect of the loan amount and interest; both the Developer and the Appellant shall pay an amount of ₹2,00,000/- each as compensation for the mental agony suffered by the Complainants together with costs of ₹25,000/- each within 30 days  from the date of receipt of the order, failing which the entire amount shall attract interest at 12% p.a.

2.       For the sake of convenience, First Appeal No. 117 of 2015, arising out of Consumer Complaint No. 01 of 2011, is taken as the lead case.

3.       The facts in brief are that the Complainant booked Flat No. A1-503 in “My Liberty Home” project floated by the first Opposite Party (hereinafter referred to as “the Developer”). It was averred that the Developer assured the Complainant that he would get 85% of the financial assistance from the second Opposite Party (hereinafter referred to as “the Bank”) and that the Complainant would not have to pay any instalments or interest prior to the possession of the flat. Attracted by the assurances given by the Developer, the Complainant deposited ₹1,59,240/- and an Agreement was executed between the Complainant and the Developer on 09.02.2008 for the subject flat for a total sale consideration of ₹15,92,400/-. It was stated that ₹14,33,160/- was to be paid through loan to be financed by the Bank as per the schedule of payment under Special Payment Plan specified in Annexure-1 of the Agreement. On 21.02.2008, there was a letter from the Bank to the Developer that the project has been evaluated by the technical and legal advisors of the Bank and the entire loan amount was disbursed under Advance Disbursement Facility (ADF). It was stated that the Complainant received the loan approval letter on 03.03.2018 and a Tripartite Agreement was entered into on 29.03.2008 and a Memo of Understanding (MOU) on 29.03.2008. The Home Loan Agreement was executed on 31.03.2008. On 13.02.2008 the Complainant received an e-mail dated 20.01.2010 from one Mr. Sanjeev Lodha stating that the Developer had not been  paying the interest on the loan disbursed in advance to it by the Bank. The Complainant responded vide his e-mail dated 19.02.2010 informing Mr. Lodha that he too had tried to contact the Developer and also the officials of the Bank for relevant information but did not receive any response. On 06.04.2010 the Complainant once again sent an e-mail to the Bank expressing concern over the entire situation. On 08.04.2010, the Complainant received an e-mail with the statement of Home Loan amount evidencing that the Bank had disbursed in advance a sum of ₹12,98,844/- to the Developer on 31.03.2008 and that the Developer had stopped paying the interest on the loan so disbursed from 10.09.2009 onwards. On 17.04.2012, the Complainant sent an e-mail to the Bank that the interest prior to the possession of the unit shall be paid by the Developer alone and asked the Bank not to hold the Complainant responsible for any such interest till the possession of the unit was offered to him and to realise such payments out of the securities mortgaged to the Bank by the Developer.

4.       While so, the Complainant received a loan recall notice from the Bank informing the Complainant that the loan amount had turned into a      non performing asset because of non payment of pre EMIs and that the  same had been brought to the Complainant’s notice vide letters dated 26.02.2010 and 02.06.2010 and asked the Complainant to make the payment of the entire outstanding loan amount. The Complainant  vide letter dated 20.07.2010 wrote to the Bank that he never received any of these letters and that the disbursement of loan in advance was an arrangement  between the Bank and the Developer  and that the Bank must have taken proper securities for such advance disbursement of loan from the Developer and therefore the Bank should take necessary steps to recover the loan amount from such securities and that the Complainant had applied for loan only on the representation of the Bank that the Developer was a reputed coloniser and now the Bank cannot demand that the loan amount be paid by the Complainant, even without the possession being offered. It was averred that the Bank had replied to the Complainant’s letter that as per the Agreement they were entitled to recover the entire loan amount from the Complainant. On 16.08.2010, the Complainant got issued a legal notice to the Bank questioning the stand of the Bank in disbursing the entire amount in advance to the Developer  instead of doing  so in a phased manner.  It was clearly stated in the legal notice that the Complainant would be required to pay the EMIs and interest only when the possession of the unit was offered. The Bank replied to the legal notice on 20.08.2010. Relying on certain terms and conditions of the Tripartite Agreement and the MOU, the Bank contended that they were entitled to recover the entire loan amount, inter alia, from the Complainant even if the offer of possession of the unit was not given by the Developer. On 10.09.2010, Complainant wrote to the Bank seeking a copy of the Tripartite Agreement and the MOU along with the receipt of deposit of ₹225/- as charges for being furnished a copy of the aforenoted documents. On 04.07.2013 information was sought under the RTI Act regarding the Rules and Regulations for Advance Disbursement Facility(ADF).

5.       It was pleaded that the Complainant was attracted by the advertisement issued by the Developer with the logo of the Bank clearly stating that the entire amount shall be paid only after the possession of the flat was delivered. It was averred that such an advertisement was misleading and amounts to unfair trade practice. It was further pleaded that despite the Project in question being the first project of the Developer, coupled with the fact that despite the land of the project in question lying hypothecated/ mortgaged with Rajasthan Finance Corporation, the Bank approved the Advance disbursement Facility to the Developer, without any security worth the same, which showed that there had been no proper evaluation of the Project in question by any of the technical and legal advisors of the Bank, as mentioned in the  Bank’s letter dated 21.02.2008. Had such an evaluation really taken  place, the fact that the Developer was not a coloniser/ builder of repute and that the land of the Project was lying mortgaged with Rajasthan Finance Corporation could have been easily ascertained.

6.       It was pleaded that the Complainant was threatened by the Bank officials that if he did not pay the entire loan amount as demanded, his name would be placed in the list of defaulters with CIBIL and thereafter the Complainant would not be able to operate his credit cards or              obtain financial facilities from any Government or semi Government Bank or Non-Banking institutions. The Complainant being a Sr. Manager with Polylink Polymers (India) limited at Ahmedabad, travels all over the country and abroad in discharge of his duties and the Bank’s act in putting his name in the list of defaulters with CIBIL caused great hardship and inconvenience   to the Complainant both on personal and professional front and also defamed his standing in the society besides tarnishing his image in the business circles. Despite repeated requests the Bank continued to demand the loan amount and therefore, the Complainant had to approach the State Commission  seeking a direction to the Developer to handover the possession; to pay the EMIs and the overdue interest; to recall the loan  notice dated 09.07.2010; to seek the EMIs from the Complainant only after the date of delivery of possession; desist from any coercive action against the Complainant like putting his name  in the list of defaulters of CIBIL; in case the Developer is unable to handover the possession, he should be directed to reimburse  the amount paid with interest @18% p.a. from the date of deposit together with compensation of ₹15,00,000/- for the cost of escalation in the price of land; both the Opposite Parties be directed to pay jointly and severally a sum of ₹15,00,000/- as compensation and punitive damages and ₹50,00,000/- for the unfair trade practice adopted by both of them together with other costs and reliefs.

7.       The Developer did not choose to appear before the State Commission despite service of notice.

8.       The Bank filed their Written Version admitting the sanction of the Home Loan on 03.03.2008 and the execution of the Home Loan Agreement dated 31.06.2008 for an amount of ₹14,33,160. It was stated that a Tripartite Agreement was entered into between the Developer, the Complainant and the Bank on 29.03.2008, Clause 2 of which stipulates that ‘the borrower  instructed the Bank to disburse the loan amount sanctioned to him directly to the party of the first part and the said disbursement shall be deemed to have been done directly to the borrower’ It was averred that Clause 10 of the Tripartite Agreement empowers the Bank to recall the entire loan amount from the borrower or on the borrower being declared as insolvent or incapable of handling its affairs or for delay in completion of the project, which, in the opinion of the Bank would affect the repayment of the quality of the security or for any reason which in the sole discretion of the Bank warrants recall of the loan amount and other dues.

9.       It was pleaded that an MOU was entered into between the Developer, the Complainant and the Bank on 29.03.2008, and that as per Clause D, the Developer and the Complainant were aware of the fact that in terms of the financing agreed to by the Bank, the Bank shall be disbursing the loan so sanctioned upon completion of each of the phases as per the terms of the Agreement and or 80% at the first instance and 5% at the time of offer of possession, subject to submission of producing  necessary evidence to that effect. As per Clause 1 of the MOU, the purchaser requested the Bank to disburse the amount and has confirmed to the Bank that the purchaser has no objection to the said disbursement.

10.     The following clauses were relied upon by the Bank in their Written Version:

             Clause 1. Inconsideration of the Bank, solely at the request of the builder and the purchaser, agreeing to release 80% of the sanctioned 85% of the loan amount……..

             Clause 2. The purchaser agrees that the purchaser shall be liable to service and repay the loan once the offer of possession or 18 months whichever is earlier given to the purchaser.

             Clause 3. Notwithstanding what is stated herein the Bank shall not be responsible for any delay in offer of possession of the premises on the due dates and the bank reserves the right to demand the payment of interest from the purchaser and/or the builder in case of delay.

             Clause 4. The Purchaser confirms that he/she has no objection to the above arrangement and further undertakes and confirms that he/she is aware that none of these provision under this MOY shall release him or her from the liability to repay the loan together with interest in terms of the sanction letter no. ……… dated ……… and/or the loan agreement no. ………. dated …………

             Clause 8. This MOU shall be read in conjunction with the Housing Loan Agreement dated ………. And sanction letter no. …….. and dated …….. In the even of any conflict between this MOU and the said Housing Loan Agreement or the said sanction letter the interpretation, which is beneficial to the Bank, shall prevail.”

11.     It was pleaded that the loan amount was disbursed to the Developer only on confirmation by the purchaser and that no cause of action accrues against the Bank and the Complainant is wholly liable to repay the loan amount along with interest and other consequential charges. It was denied that the Bank had anything to do with the advertisement issued by the Developer in which  it was published that “EMIs began with only after you take possession of your flat” under the logo of the Bank. It was denied that the Complainant purchased the flat only on the strength of the assurances given by the Bank that the amount would be collected only after the possession was delivered. It was pleaded that there was no deficiency of service on the part of the Bank and therefore, the Complaint deserved to be dismissed with costs.

12.     The State Commission, based on the evidence adduced, allowed the Complaint in part observing as follows (The translation leaves much to be desired):

    ”The agreement executed between complainant and opposite parties is vague, blank  and is ambiguous. Where any fact shows two interpretations, in that case it has been held by Hon’ble Supreme court in (2004) 6 SCC 230 H.N. Shankara Shastry Vs. Asstt. Director of Agricultural, Karnataka that in such matters the discrimination which may be in favour of consumer should be made because the Consumer Protection Act has been made for the interests of consumers.

    That opposite party No. 1 with connivance of opposite party No. 2 not only received advance money from innocent consumers in account of Flat but also receive the loan amount under Advance Disbursement Facility and thereafter also no started his project on correct time and also not refunded the amount deposited by them and also no paid ay amount to opposite party No. 2. The act of opposite party No. 1 falls under improper business practice.

    In this regard the Hon’ble National commission in I (2012) CPR (NC) Shri subhakara Estates Pvt. Ltd. Represented by its Managing Director Vs. D. Ramabu has held that:

      “ Developers cannot be allowed to cheat innocent public by launching fake project.”

    The Complainant approached to opposite party to obtain residential accommodation from his head earned money and had paid him his hard earned money. The opposite party by investing the money of complainant in his project and by not allotting him residence has committed deficiency in service. The complainant has to make publication in newspaper for making service upon opposite party for which also he has incurred money.

The Hon’ble National Commission has held in Appeal No. 349/2014 Mrs. Veena Khanna Vs. Ansal Properties & Industries Ltd. and etc. that if the builder does not complete the construction work within stipulated time then in that case the compensation should be provided in such proportion so that the actual loss to complainant could be received to complainant because the rates of land get increased. Hence, in compliance of above order, it is in the interest of justice  to provide compensation to complainant for mental agony suffered by him.

    That facts and parties of judgments submitted are different to the facts of this matter therefore they do not help to opposite party no. 2. That due to not making party to builder  in the matter of Deepak Goel Vs. IDBI Bank Limited, the Hon’ble National Commission had dismissed the stay order but builder is party before us and the stay order has “also been passed by Commission. The matter has been dismissed on the basis of withdrawing the case before Hon’ble National Commission. Hon’ble National Commission has not disposed of the matter on its merits.  Besides of this due to availability of alternative relief the writ petition filed before Hon’ble High court was dismissed.

Hence the above said all legal judgements do not help to opposite party No. 2.

It is cleared by above said entire discrimination that the opposite party No. 1 with connivance of opposite party No. 2 had bound to consumers who were going to book the flat under above said project, to borrow the loan from opposite party No.2. the opposite party firstly made loan agreement and thereafter obtained loan application. The tripartite agreement are vague and of different dates. The MOU is executed at beginning and thereafter the agreement is made. The opposite party No. 1 firstly made agreement and thereafter executed MOU to hide his errors. He has mislead to consumers by inserting conflicted terms in MOU and tripartite agreement and not even this the loan agreement has been made firstly and the stamp paper was purchased thereafter. The   loan agreement has been made on 09.02.2008 and the stamp has been purchased on 29^th of March which certainly put question mark upon the working procedure of opposite party. The opposite party did not make any proceeding against his irresponsible officer/ employees and neither rejected the project of builder which is certainly unjust with innocent consumer which is serous deficiency in service on the part of opposite party No.2 and 1. Hence, the complaint of complainant is deserved to be allowed.

…… Providing advance disbursement facility by opposite party No. 2 on fabricated project of opposite party No. 1 and thereafter preparing due diligence report letter is serious deficiency in service on the part of opposite party.”

  (It is expected that the Counsel would file better translations in future)

13.     Learned counsel for the Bank vehemently argued that the State Commission has miserably failed to appreciate that the payment of pre EMIs facility was only for the period of 18 months or the date of offer of possession whichever was earlier; that the Bank had conducted  the TSR(Total Search Report) of the Developer before advancing the Home Loan; till the disbursement of the Home Loan the title of the land was very much clear; that the Tripartite Agreement and the MOU read together make the Complainant completely accountable to pay the loan amount; that the State Commission has wrongly stayed the recovery proceedings of the Bank and advanced other reliefs to the Complainants  which they were not entitled to; that the Bank filed an OA/80/2014 titled as IDBI Bank Ltd. Vs. Prakash Chand Sharma & Anr. before the Hon’ble DRT, Jaipur claiming the recovery of ₹17,90,782/-; that clauses 2 to 10 of the Tripartite Agreement read together with Clauses 1,2,3,4 and 8 of the MOU clearly stipulated that the EMIs and the interest amount had to be paid by the purchaser only; that as per Clause 3 of the MOU the Bank shall not be held responsible for any delay in offer of possession of the premises and the Bank reserves the right to demand the payment of interest from the purchaser and having signed the MOU, the purchaser had to accept the terms and pay the subject amount and hence there was no deficiency of service or unfair trade practice adopted by the Bank in this regard.

14.     Learned counsel for the Complainants vehemently argued that having induced the Complainants to get the unit financed by the bank stating that they will not have to pay any EMIs or interest on loan till the offer of possession was made, the Complainants signed on a blank Agreement, the clauses of which contradict the assurances given in the Special Payment Plan.

15.     Learned counsel for the Complainants drew our attention to the Special Payment Plan, the terms and conditions whereof are detailed as follows:

          “This special plan has been designed through a special arrangement with IDBI Bank Ltd. In order to avail of this plan the buyer shall have to take Home Loan only through IDBI Bank Ltd.

    Under this special payment plan the buyer shall have no liability whatever towards paying any interest or Pre EMI till the time of possession of the apartment. All interest accrued during the period till the time of possession shall stand waived off with respect to the buyer.

    The obligation of the buyer to pay his EMIs shall be applicable after the possession of the apartment as per the standard terms of IDBI Bank Ltd. (or as specifically agreed between the buyer and the bank through the loan agreement)

    In the event the buyer wishes to terminate the Apartment Buyers Agreement for any reason whatsoever prior to taking over possession and registration of the property in his/her favour, then he/she shall be liable to pay to ‘M/s. Amy Home Services Ltd. the entire interest amount (with the prescribed 18% penal interest) that has been paid off during the period till the date.”

16.     For an effectual adjudication of the issues arising in these bunch of Appeals, during the course of hearing, vide order dated 30.04.2017, the Bank was directed to furnish information regarding certain issues  relating to special arrangement referred to in the Brochure, between the Bank and the Developer. The information has been furnished by way of an Affidavit by Mr. Anunay Kumar Jha, General manager & Sr. Regional Head (Rajasthan-I), IDBI Bank Ltd. For better understanding of the case, the queries and the answers are reproduced as hereunder:

i. When the ‘special arrangement’, as referred to in the brochure issued by the Developer at the time of launch of the project in question, was entered into by the Bank with the Developer to finance the project;

Ans. That the present batch of Appeals before this Hon’ble commission are concerned with three different projects, namely “sky Line” being developed by Krishna Villa Apartments Pvt. Ltd. as well as “My liberty Homes” and Luxury Studios” both being developed by Amay Home Services Pvt. Ltd.  After being favourably reviewed by its panelled legal and technical advisors, the arrangement for financing the housing projects of the Builder was entered into by the Bank, in February 2008 7 July 2008. The Appellant Bank informed the Developers of its approval of the aforesaid projects vide letters dated 25.01.2008, 21.02.2008 and 18.07.2008.

ii. The total financial exposure of the Bank in respect of the project in question and the Authority approving the project in question and the Authority approving the project funding;

Ans. That the total financial exposure of the Appellant Bank in all the three Advance Disbursal Facility (ADF/APF) projects in Rs. 16.63 Crore. The ADF/APF projects were approved  jointly by Mr. K. Davidon, the then Head-Retail Risk and Mr. Ananta Gopal Das, Head-Retail Asset at the Appellant’s Head Office in Mumbai on the basis of the recommendations of Analyst Retail Recovery, Jaipur namely Sh. Mohit Modi. The interest subvention for APF Scheme was recommended by Center Head, Retail Assets, Jaipur namely sh. Pradeep Kumar Meena and subsequently, it was recommended by the Regional Credit Manager, Jaipur namely Mr. Ghazi Islam to the approving authority. The e-mails by the aforesaid officers dated 19.02.2008, 21.02.2008 granting approval for the projects.

iii.  The circumstances under which the Bank had permitted the Developer to use its logo in the advertisement inviting application for purchase of Flats in the project;

Ans. That as per the records no permission was ever granted to the Builder/Developers for use of the logo of the Appellant Bank in the advertisements.

iv. The circumstances under which the Memorandum of Understanding (MOU) was signed between the Bank, the Developer and the Complainant after signing the Tripartite Agreement by the said parties;

Ans. That the parties signed a standard Tripartite Agreemtn however, in view of protecting the Borrower’s interest, a further MOU was signed between the Bank, the Developer and the Complainant (Borrower). The specific terms of the MOU provide that the Builder was to pay/ service the interest on behalf of the Borrowers for 18 months or till the possession of the Flats, whichever is earlier.

v. Whether while approving the funding of the project, the Competent Authority had kept in view the internal guidelines dated 27.04.2005 in particular, clause number 3.5.2 thereof with respect to Advance Development Facility/ Advance disbursement Facility(ADF);

Ans. The projects were approved by the approving authority at Head Office level after confirmation of compliance of the guidelines of Bank on ADF/ APF schemes based on the confirmation/ recommendation from the then dealing official at RAC-Jaipur i.e. Analyst Retail Recovery, Jaipur namely Sh. Mohit Modi vide e-mail dated 19.02.2008. It was reported by the said officials at the RAC-Jaipur office that the Builder/Developer was found to be in compliance of all the criteria laid out in the internal guidelines. Pursuant to the positive recommendation/ compliance report, ADF was approved for the project vide e-mail dated 21.02.2008 and 22.02.2008.

vi. If, for any reason, answer to the query at (5) above is in negative, whether the Bank, being a public sector undertaking, had initiated any proceeding against any of its officers;

Ans. That the lapses by the officials of the Bank in following the guidelines for granting approval for ADF came to light when the project failed to take off. Having already disbursed a significant portion of the loan amounts, the bank apart from initiating the appropriate recovery proceedings jointly against the Borrower (complainants) and the Builder/ Developer, also launched an internal investigation to identify the officers who had recommended the projects for approval of ADF by misleading the approving authority. The Bank after thorough investigation initiated departmental proceedings against the then dealing officials at RAC-Jaipur i.e. Analyst Retail Recovery, Jaipur namely sh. Mohit Modi and Regional Credit manager, Jaipur namely Mr. Ghazi Islam and the Center Head Retail Assets, Jaipur namely Pradeep Kumar Meena for negligence in preparing the report of compliance of the internal guidelines and recommending the projects for approval under the ADF scheme. Order of departmental proceedings against the aforesaid officers.

vii. The procedure to be followed for furnishing  the information to CIBIL about bank’s Loanees/Borrowers and updating such information in respect thereof;

Ans. This information is forwarded to the CIBIL on monthly basis for all the Loan Accounts (both Standard & NPA) of Bank, directly from Head Office level, for all its Branches.

17.     It is evident that prior to the funding of the project the competent authority had not taken into consideration the viability, the capacity and the capability of the Developer in completing the project, particularly when it was its first project. It is admitted that there were lapses by the officials of the Bank in following the guidelines prior to granting approvals for Advance Disbursement Facility (ADF). When the same came to light, the Bank launched an internal investigation and initiated departmental proceedings against the then dealing officials  for the negligence in recommending the project for approval under ADF scheme. It is evident that the Bank did not adhere to the guidelines prior to the approval of ADF. All these factors lead to an irresistible conclusion that the Bank was deficient in service towards the Complainants, as it filed to adhere to the basic banking norms and in the process misleading in entering into a Tripartite Agreements and the MOU with the Developers, especially in the light of the Special Payment Plan, wherein it was clearly stipulated that in order to avail of the Plan, the Buyer shall have to take Home Loan only through the Appellant Bank.

18.     At this juncture, we find it relevant to refer to the  notifications of RBI on Housing Loans with specific reference  to Circular No. DBR.NO.DIR.BC.13/08.12.001/2015-2016 RBI/2015-2016/46 dated 01.07.2015, wherein the following guidelines have been laid down to protect the interest of the Banks as well as the purchasers immovable properties. This Master Circular on Housing Finance discusses the various regulations and specifically provides that the Banks ought to have uniformity in the practices adopted while sanctioning housing loans. An extract of the regulations is reproduced as it has a direct bearing on the facts of this case:

 (d) It has been observed that some banks have introduced certain innovative Housing Loan Schemes in association with developers / builders, e.g. upfront disbursal of sanctioned individual housing loans to the builders without linking the disbursals to various stages of construction of housing project, Interest/EMI on the housing loan availed of by the individual borrower being serviced by the builders during the construction period/ specified period, etc. This might include signing of tripartite agreement between the bank, the builder and the buyer of the housing unit. These loans products are popularly known by various names like 80:20, 75:25 schemes.

(e) Such housing loan products are likely to expose the banks as well as their home loan borrowers to additional risks e.g. in case of dispute between individual borrowers and developers/builders, default/ delayed payment of interest/ EMI by the developer/ builder during the agreed period on behalf of the borrower, non-completion of the project on time etc. Further, any delayed payments by developers/ builders on behalf of individual borrowers to banks may lead to lower credit rating/ scoring of such borrowers by credit information companies (CICs) as information about servicing of loans get passed on to the CICs on a regular basis. In cases, where bank loans are also disbursed upfront on behalf of their individual borrowers in a lump-sum to builders/ developers without any linkage to stages of constructions, banks run disproportionately higher exposures with concomitant risks of diversion of funds.

(f) Banks are advised that disbursal of housing loans sanctioned to individuals should be closely linked to the stages of construction of the housing project / houses and upfront disbursal should not be made in cases of incomplete / under-construction / green field housing projects.

(g) However, in cases of projects sponsored by Government/Statutory Authorities, banks may disburse the loans as per the payment stages prescribed by such authorities, even where payments sought from house buyers are not linked to the stages of constructions, provided such authorities have no past history of non-completion of projects.

(h) It is emphasized that banks while introducing any kind of product should take into account the customer suitability and appropriateness issues and also ensure that the borrowers/ customers are made fully aware of the risks and liabilities under such products. (Emphasis supplied)

19.     At this juncture, it is relevant to refer to the Brochure issued by the Developer. A copy of the same is scanned below for ready reference:

20.     A bare glance at the Brochure makes it apparent that it conveys to the public at large that the project had been approved and financed by IDBI Bank. It was widely advertised that payment of EMIs would begin only after the purchaser takes possession of the subject flat. In view of the Brochure and the promises made to the purchaser, the act of the Bank in demanding from the Complainant the entire amount without possession being offered, amounts to unfair trade practice. From the material on record, it is evident that the Bank first induced the Complainants to get their units financed from it, with an assurance that the Complainants need not pay any EMI or interest on the loan disbursed in advance by the Bank to the Developer, till the possession of the units is offered to them. It can also be seen from the record that in the Tripartite Agreement the Developer is stated to be a ‘reputed coloniser’ and the MOU describes the Developer as a reputed one with a strong market position.

21.     The Bank itself supplied the following information on 04.07.2013, under RTI, that ADF is given to a builder of good standing which is assessed on the following parameters:

1. Number of years in business.

2. Track record of the Builder in terms of number of projects completed, its timely completion and also number of on-going projects.

3. Credibility and financial standing of the builder (company/firm/partner/promoters).

4. Promoters contribution in individual project.

5. Quality, marketability of project, total built up area sold built up area of the ongoing project.

6. Market feedback.

          It is only in special cases where the builder is of sound repute and enjoys good market credit that the Home Loan amount is disbursed in advance. We find force in the contention of the learned counsel representing the Complainants that the genesis of the entire dispute lies in the advance disbursement of the loan amount by the Bank to the Developer against the regulations stipulated by RBI. It is further interesting to note that the Complainants through RTI obtained the information that the land over which project in question was supposed to be executed was hypothecated with Rajasthan Finance Corporation and the Bank did not even bother to do the basic home work/ background check or this  aspect. Therefore, it can be safely concluded that it was fraudulently misrepresented in Clause 8 of the Tripartite Agreement that the Builder has assured that it had a clean/ clear title to the lands/ flats in question and the same can be freely transferred/ registered and is not subject to any lien or encumbrance. Needless to add, had the Bank got the land of the project hypothecated/ mortgaged with it a collateral security, the recovery of the loan amount from the Developer would not have presented any problem to all concerned, including the Complainants.

22.     The act of the Bank in approving the ADF without even taking any security for the amounts to be disbursed, clearly establishes that the Bank had failed miserably in complying with the RBI Regulations, while sanctioning ADF to the Developer, who has abandoned the Project.

23.     At the cost of repetition, it needs little emphasis that when the Complainants got issued  legal notice, referring to the terms of the Special Payment Plan and the fact that the Developer had absconded without completing the project, the conduct of the Bank, in including the Complainants name in the list of defaulters of CIBIL thereby, despite having disbursed the entire amount in advance to the Developer without following the RBI regulations, undoubtedly caused mental agony, inconvenience and hardship to the Complainants. It amounts to not only an act of complete deficiency of service on its part to the Complainants, it amounts to unfair trade practice as defined in Section 2 (r) as well.

24.     In view of the aforegoing discussion, we are of the considered opinion that there is no illegality or infirmity in the impugned orders passed by the State Commission. Consequently, all the Appeals are dismissed with costs of ₹25,000/- in each of the Appeals.

25.     The statutory amounts deposited at the time of filing of the Appeals shall stand transferred to the Complainant/ Respondent No. 1 in each case.