Orissa

Cuttak

CC/78/2021

Pramod Kumar Mishra - Complainant(s)

Versus

Chief ManagerUCO Bank,Cuttack Main Branch - Opp.Party(s)

A K Samal

18 Mar 2023

ORDER

                       

IN THE COURT OF THE DIST. CONSUMER DISPUTES REDRESSAL COMMISSION,CUTTACK.

C.C.No.78/2021

 

1.        Pramod Kumar Mishra,

S/O: Late Bhagaban Mishra,

Resident of “Mishra Bhawan”,

At:MeriaBazar,P.O:Buxi Bazar,

Town/Dist:Cuttack,Pin-753001.

 

2.        Puspa Mishra,

W/O: Sri Pramod Kumar Mishra,

Resident of “Mishra Bhawan”,

At:MeriaBazar,P.O:Buxi Bazar,

Town/Dist:Cuttack,Pin-753001.                                       ... Complainants.

 

                                                                Vrs.

1.           UCO Bank,Cuttack Main Branch,

          At:DarghaBazar,JailRoad,PO:Buxi Bazar,

         Town/Dist:Cuttack,Pin-753001 represented by

         Its Chief Manager.

 

2.          Managing Director,UCO Bank,

                                      Head Office:10,BTM Sarani(Brabourne Road),

                                      Kolkata-700001,West Bengal.                                                ... Opp. Parties.

 

 

Present:               Sri Debasish Nayak,President.

                                                Sri SibanandaMohanty,Member.

 

               Date of filing:     16.04.2021

Date of Order:    18.03.2023

 

For the complainant:          Mr. A.K.Samal,Advocate.

For the O.Ps.              :         Mr. B.N.Udgata,Adv. & Associates.

 

Sri SibanandaMohanty,Member

Case of the complainants as made out from the complaint petition bereft unnecessary details in nutshell is that in order to enable their son to prosecute higher studies they had obtained educational loan by filling up all the formalities of the O.Ps to that effect.  Their son, Sambit Mishra had prosecuted his studies at Institute of Technology, New Jersey at New York of USA for which the loan obtained by the complainants was of Rs.18,00,000/- and the loan account number to that effect was 00550610006344.  According to the agreement, the land and building in the name of complainant no.2 was mortgaged as co-lateral security.  As per the terms and conditions of the said loan agreement, the moratorium period was for 12 months after completion of the course and the repayment period was equated to 60 number of E.M.Is within one month after completion of the moratorium, period.  The proposed E.M.I was of Rs.39,813/- and the interest was to be simple being repayment as agreed.  The said son Sambit Mishra was admitted to the Phd. Course at RUIT of USA for which the loan was rescheduled to 60 number of E.M.Is commencing from May,2017 and the E.M.Is was therefore fixed to Rs. 55,553/-.  In the year 2014, the complainants could know that the O.Ps bank were charging compound interest which was in gross violation to the terms and conditions of the loan sanction letter as well as the repayment extension letter issued by the O.Ps.  When the matter was duly intimated, the O.P bank had reversed the compound interest which they had levied illegally on dtd.13.5.2014.  The complainants in the meanwhile had deposited a sum of Rs.20,00,000/- on dt.13.4.2015 and a sum of Rs.5,00,000/- on dt. 28.4.2015 in the said loan account, thus in total deposited Rs.25,00,000/- but again with an ulterior motive the O.P’s bank was charging compound interest which was brought to their notice in the year 2017.  On protest, the complainants in that connection had made a petition to the O.Ps bank on 26.9.2017.  According to the complainants, the charging of compound interest by the O.Ps bank was quite illegal and contrary to the policies of the Reserve Bank of India towards educational loan guidelines and it was a complete divergence from the sanctioned letter as well as the repayment extension letter of the O.Ps bank.  An amount of Rs.2,22,778/- was charged by the O.P bank towards the compound interest in the loan Account bearing No.00550610006344which stood in the name of their son,Sambit Mishra.  The O.P bank was again requested through representation to reverse the compound interest and to enable the complainants to repay the outstanding balance loan amount on 6.11.20.  Again, their son Sambit Mishra had submitted another representation to O.P no.1 on 18.1.21 to that effect.  One and half a month thereafter, O.P no.1 had issued a letter bearing no.BR/CTC-Main/Educational loan/136/2020-21 dt.4.3.21 to the complainant no.2 regarding charging of interest on the educational loan account wherein they had sought for clarification from their Zonal office as regards to the charging of compound interest and simple interest and had mentioned therein that only simple interest in the said educational loan was allowed during the moratorium period for one year.  Thus, according to them the interest debited on 31.3.16 on the educational loan account was correct and their request for reversal of the compound interest was improper and not possible.  Another letter of O.P no.1 was received by the complainants dt.5.4.21 where it was specified that the loan account had turned to be NPA with effect from 30.3.21 and the outstanding balance amount was of Rs.3,63,770.64p as on 31.3.21 which was desired to be paid within 15 days or else the O.P bank would proceed as per law adhering to the legal service recovery measures.  Finding no other way out, the complainants had approached this Commission through their complaint petition seeking direction to the O.P bank to re-calculate the outstanding loan amount on simple interest basis and to revive the loan of the complainants accordingly and further with a prayer to direct the O.P bank to pay a sum of Rs.50,000/- to the complainants towards their mental agony and harassment and also towards the cost of the case and for any other reliefs as deemed fit and proper.

2.       The O.Ps being noticed appeared before this Commission and had filed their written version jointly.  It is stated by the O.Ps that one Sambit Mishra son of the complainants had applied for educational loan alongwith his parents for pursuing M.S course at the Institute of Technology, NewJersey at New York of USA and the O.Ps after due consideration of the said proposal sanctioned an amount of Rs.18,00,000/- under term loan on 31.8.2010 with some terms and conditions.  In order to secure the loan the complainant no.2 mortgaged her landed property under Mouza Cuttack Sahar Unit no.16,Maria Bazar, Khata no.1417, plot no.1112 Ac. 0.082 dec. and plot no.1115, Ac. 0.030 dec. in total Ac. 0.112 dec. and both the complainants alongwith their son extended personal guarantee to the said loan.  As per the sanctioned letter the complainants and said Sambit Mishra agreed to repay the loan outstanding in 60 equated monthly instalments @ Rs.39,813/- with moratorium period of 12 months after completion of course. The sanctioned letter stipulates interest @ 11.75% rising and falling with monthly rest subject to changes as per the banks/R.B.I guidelines notified from time to time.  Penal interest @ 2% per annum was fixed to be charged on overdue amount for the overdue period beyond the moratorium period.  It was further stipulated in the said sanction letter that simple interest would be charged during repayment/moratorium, period and accrued interest during the moratorium period to be added to the principal and E.M.I to be fixed accordingly.  It is stated by the O.Ps that as per the sanction order, equated monthly instalments are fixed for the convenience of the borrower whereby interest payable towards the loan is spread over the entire terms of the payment fixed and the repayment of all such equated instalments will not be construed as full repayment/settlement of loan account unless all equated monthly instalments, the scheduled amount if any in the account due to debiting overdue/penal interest/additional interest as consequences of revision, the interest rate, the other incidental charges etc with other terms and conditions are paid.  It is further stated by the O.Ps that the son of the complainants completed the coursein the month of June,2012 for which the complainants had availed loan.  As such as per loan agreement, the sanctioned E.M.I is repayable from May,2013 and for the said moratorium period as per the agreement and sanction, the complainants including their son are liable to pay simple interest on the loan amount.  The O.Ps further stated that on the request of the complainants for rescheduling of the repayment period with extension of time to repay the loan outstanding on the plea that the son of the complainants would pursue Phd. in RUIT,USA after completion of the M.S course in June,2012, the repayment schedule of the loan was rescheduled on the existing balance outstanding i.e. Rs.25,20,005.00 as on 11.10.13, wherein interest was calculated upto 3.9.2013 and it is agreed that the complainants and their son would repay the loan outstanding of Rs.25,20,005.00 with interest repayable in 60 E.M.Is @ Rs.55,553/- per month with effect from May,2017 with other terms and conditions and the original sanction was unaltered.  The further case of the O.Ps is that the repayment period is only extended by rescheduling the period of repayment and the  question of further giving moratorium period during the reschedule period does not arise and as such,  they have charged penal interest after 12 months of completion of course i.e. after October,2013.   It is stated by the O.Ps that the agreement executed between the parties on 11.10.13 for rescheduling the loan is without any moratorium period and hence the prayer of the complainants has no basis and the penal interest charged by them on 31.3.2016  is not in contravention of the terms and conditions of the loan documents or the RBI guidelines.   It is also stated by them that as the complainants defaulted in payment of instalment dues, the loan account of the complainants was classified as NPA for which the O.Ps issued notice intimating the complainants as well as borrower to repay the loan outstanding in view of the classification of the loan account as NPA failing which they were intimated therein for initiation of the recovery proceeding to recover the loan outstanding and as such the O.Ps have prayed for dismissal of the complaint case with cost.

          Both sides have filed their evidence affidavit in support of their stand.

3. Keeping in mind the averments as made in the complaint petition and the contents of the written versions of O.Ps, this Commission thinks it proper to settle the following issues in order to arrive at a proper conclusion.

i.          Whether the case of the complainant is maintainable?

ii.         Whether there was any deficiency in service on the part of the O.Ps  ?

iii.        Whether the complainant is entitled to the reliefs as claimed by him?

Issue no.ii.

Out of the three issues, issue no.ii  being the pertinent issue is taken up  first for consideration here in this case. 

             Admittedly, the complainants alongwith their son namely Sambit Mishra had availed educational loan of Rs.18,00,000/- from the O.Ps which was required for their sonSambit Mishra for pursuing M.S course at Institute of Technology, New Jersey at New York of USA.  The loan sanctioned letter dt.31.8.2010 stipulated that the moratorium period was 12 months after completion of course and the loan was required to be repaid in 60 equated monthly instalments.  As per the loan sanctioned letter the complainants and said Sambit Mishra agreed to repay the loan outstanding in 60 equated monthly instalments @ Rs.39,813/- with moratorium period of 12 months after completion of course where interest was charged @ 11.75% rising and falling with monthly subject to changes as per the R.B.I guidelines notified from time to tie.  Penal interest was fixed @ 2% per annum was to be charged on overdue amount for the overdue period beyond the moratorium period.  After completion of the said course by the son of the complainants, for betterment of his career, he pursued Phd. in RUIT,USA.  Accordingly, as per the request of the complainants and their son the repayment of the loan was rescheduled by the O.Ps to 60 E.M.Is commencing from May,2017 @ Rs.55,553/- per month  taking into consideration the loan A/c. no.00550610006344 where the  outstanding dues was shown as Rs.25,20,005/- and an agreement to that effect has been executed between the parties on 11.10.2013.  The R.B.I guidelines for educational loan clearly reveals that, the financial institution cannot charge compound interest during pursuing higher studies. In the present case during the stipulated period, the son of the complainants had completed the M.S course atInstitute of Technology, New Jersey at New York of USA for which he had availed the loan from the O.Ps.  After completion of the said course, the son of the complainants pursued another course i.e.Phd. in RUIT,USA.  The rescheduling of the term loan was made by the O.Ps on 11.10.2013.  As per the said re-scheduling agreement, the loan was repayable in 60 number of E.M.Is @ Rs.55,553/- with effect from May,2017.  This calculation of E.M.I reveals that the O.Ps had calculated the E.M.I basing upon the simple interest during Phd. Course.  The O.Ps earlier had charged penal interest after completion of moratorium period of initial agreement.  However, when objection was made by the complainants to that effect, on 13.5.2014 they had reversed the said compound interest.  Hence, it is understood that the O.Ps would charge simple interest during the Phd. Course pursued by the son of the complainants.  This action of the O.Ps revealed that they had acted as per their re-scheduling loan agreement which is in consonance with the R.B.I guidelines in respect of Educational Loan.  Hence, they are estopped to charge compound/penal interest subsequently.   The complainants with an intention to clear the outstanding loan dues by selling their landed property had repaid loan amount of Rs.20,00,000/- on dt.13.4.2015 and Rs.5,00,000/- on dt.28.4.2015 in total Rs.25,00,000/-.  This payment was made before the commencement of E.M.I in respect of rescheduled loan agreement.  As on 10.8.2015, the outstanding dues of the complainants was Rs.1,19,689/-.  But surprisingly the O.Ps again charged penal/compound interest on 31.3.2016, whereas the E.M.I of rescheduled loan was yet to be started i.e. from May,2017.  During course of the hearing the complainants on 30.1.2023 filed copy of advice letter dt.12.1.2011 of another nationalised bank i.e.of Corporation Bank regarding restructuring/rescheduling of Educational Loan availed by their son, which is marked as Annexure-B series.  This letter reveals that the said Bank had provided education loan for pursuing B.Tech. Degree course by the son of the complainants, where the repayment was required to be commenced from 21.2.2011.  But the said Bank rescheduled the loan with simple rate of interest, where repayment was scheduled to be commenced from 21.7.2013, as the son of the complainants pursued his study at Institute of Technology, NewYork,USA by availing study loan from the present O.Ps.  Be that as it may, both the parties are bound by the agreement.  Rescheduled loan agreement stipulates that E.M.I would commence from May,2017, where simple interest was charged from the date of availing the loan.  The O.Ps cannot change the conditions of the agreement unilaterally and arbitrarily and  impose compound interest, which is sheer whimsical in nature.   Hence, charging of compound/penal interest before May,2017 is bad in the eye of law.   It is understood that as because the complainants repaid Rs.25,00,000/- in a short time, the O.Ps with an ulterior motive had harassed the complainants and had charged compound interest  on 31.3.2016.    The complainants in one hand objected to the charging of compound interest by the O.Ps and on the other hand also vide representation dt.6.11.2020 had expressed their willingness to clear the entire loan dues by visiting branch of O.Ps as well as by way of written representation.  But the O.Ps without considering the representation of complainants in a proper perspective as per the settled principles of law governing the field declared the loan account of the complainants as NPA and threatened to recover the outstanding dues by way of coercive measures.     The O.Ps, being  a Nationalised Bank,  such type of attitude are not expected from them which is beyond ethics and also contrary to law.  In view of the above discussions, it is held that the O.Pswere deficient in their service as well as had practised unfair trade.

Issues no.i& iii.

          From the discussions as made above, the case of the complainant is definitely maintainable and the complainant is entitled to the reliefs as claimed by him.  The loan statement reveals that outstanding loan dues was Rs.1,19,689/- by 10.8.2015.Hence, the complainants in order to close the loan account are liable to pay simple interest on the said amount i.e. Rs.1,19,689/- for the period from 10.8.2015 to 6.11.2020, the date when the complainants wanted to close the loan account.  Hence it is so ordered;

                                                          ORDER

          The case is decreed on contest against the O.Ps, who are found to be jointly and severally liable here in this case.  The O.Ps are directed to revive the loan A/c No.00550610006344 of the complainants.  The O.Ps are entitled to get a sum of Rs.1,19,689/- alongwith simple rate of interest thereon calculated from 10.8.2015 to 6.11.2020 for closure of loan account of the complainants bearing No.00550610006344 and accordingly the O.Psare directed to calculate the outstanding loan dues taking into consideration the payment made by the complainants towards the loan dues and intimate the same  to the complainants forthwith. The O.Ps are also directed to pay Rs.50,000/- to the complainants towards their mental agony and harassment as well as a sum of Rs.20,000/- towards cost of their litigation within a period of 30 days from the date of receipt of copy of this order.

Order pronounced in the open court on the 18^th day of March,2023 under the seal and signature of this Commission.          

                                                                                                             Sri Sibananda Mohanty

                                                                                                                   Member

                                                                                                                 Sri Debasish Nayak

                                                                                                                       President