DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II
Udyog Sadan, C-22 & 23, Qutub Institutional Area
(Behind Qutub Hotel), New Delhi-110016
Case No.92/2010
Sh. Sanjay Aggarwal
S/o Sh. Jagdish Prasad Aggarwal
R/o BN-78, West Shalimar Bagh,
New Delhi-110088 ….Complainant
Versus
The Branch Manager
Citi Financial Consumer Finance India Ltd.,
Regd. Office: 3, LSC, Pushp Vihar,
New Delhi-110062 ….Opposite Party
Date of Institution : 10.02.10 Date of Order : 13.03.18
Coram:
Sh. N.K. Goel, President
Ms. Naina Bakshi, Member
ORDER
Case of the Complainant, in nutshell, is that he availed home loan for an amount of Rs.2 crores from the OP with certain terms and conditions accepted by both the parties vide ref. letters No. 14589471 dated 11.03.08 for Rs.1,10,00,000/- and ref. no. 14327009 of the same date for Rs.90 lacs. He had to repay the loan amount in equal monthly installments w.e.f. March, 2008 to November 2009. In the original sanction letter the OP agreed to disburse loan on the conditions inter-alia that there shall not be any escalation in rate of interest for the first 12 months of the loan and there shall not be any pre-payment charges after 05.02.09 i.e. after first 12 months from the sanction. The OP, however, increased the rate of interest from 11.75% to 12.5% in the month of August, 2008 against which the complainant protested for the reasons stated hereinabove but the OP did not reply. The OP again increased the rate of interest from 12.5% to 13.25% against which the complainant again lodged a protest but in vain. However, the OP did not increase the amount of EMIs but unilaterally increased the tenure of the loan from 180 months to 236 months thereby seeking to derive additional money and burden the complainant with an illegal additional amount of Rs.72,94,280/-. Keeping in view the illegal behaviour of the OP the Complainant searched for a better option in the market and decided to migrate from the OP to another lender providing the same service and requested the OP to issue a foreclosure statement on 12.09.09. The OP issued the foreclosure statement on 12.09.09 wherein the OP not only held audacity to retain all the increases in interest rates that it had threatened the Complainant unmindful of its own tacit acceptance of complainant’ replies but also in complete and utter disregard for the law, decency and the agreement imposed pre-payment charges of Rs.5,28,715.45p @ Rs.3% and service tax on it @ Rs.10.03% i.e. Rs.60,019.69p totaling to Rs.6,42,735-14p whereas in the sanction letter it was accepted that there would be no pre payment charges after the first twelve months of the loan i.e. after 05.02.09. The protests lodged by the complainant in this regard were not attended to by the OP inasmuch as the OP did not adhere to the terms of the service and unilaterally appropriated amounts towards its own gain/profit. According to the complainant, the OP illegally and forcibly collected a total amount of Rs.10,17,421/- from the complainant towards pre-payment charges as well as increasing the rate of interest and that these huge amounts were perforce paid by the complainant by raising loans on interest charges as paid to a Govt. Bank @ 14% per annum with monthly rests; that, therefore, a total amount of Rs.10,17,421/- is owed to the complainant as on date with a continuing liability being incurred on this amount by the complainant @ 14% p.a. with monthly rests till paid back by the OP in full. Hence, pleading gross abuse of the service on the part of OP the Complainant has filed the present complaint with a prayer that the OP be directed to pay to the Complainant a total sum of Rs.19,20,381/- only with 14% pendentelite interest and future interest from 12.11.09 till realization.
OP has contested the complaint and filed a reply. It is stated that the relationship between the complainant and the OP was of a debtor and creditor and not like a consumer and service provider and hence the complainant is a not a consumer as defined in the Consumer Protection Act. It is further submitted that loan account of the complainant has been closed in November 2009 and, therefore, at the time of filing of the complainant the Complainant was not the consumer of the OP. It is also stated there is no deficiency in service or unfair trade practice on the part of OP. In para 3 of the reply on merits it is stated as under:-
..It is strongly denied that the Opposite Party ever agreed that the rate of interest will not be increased in the first 12 months. It is further stated that regarding the enhancement of rate of interest within 12 months from the date loan has been written and signed by that person who was the witness of “Mortgage Credit Shield” and the same was not counter-signed by the any official of Opposite Party. A copy of the “Mortgage Credit Shield signed by the complainant and witness is annexed herewith as Annexure OP-2. It is further submitted that the alleged sanction letter is not acceptable in law because the same was altered by the witness and not signed by any disputing parties. The above said letter is can not be a proof at all…”
It is denied that the OP had agreed to disburse loan on the conditions inter alia that there shall not be any escalation in rate of interest for the first twelve months of the loan and there shall not be any prepayment charges after 05/02/2009, that is, after first twelve months from the sanction. In para 6 on reply on merits it is stated as hereunder:-
“…It is submitted here that the complainant was duly informed by a letter in the month of August 2008 and apprised of the fact that the interest rate was increased from 11.75 to 12.50% and further increased from 12.50 to 13.25%. It is pertinent herein to state that the interest rate was increased since there was increased in market rate of interest and that the loan availed by the complainant was at floating rate of interest accordingly, his tenure of EMI also has been increased from 180 months to 236 months. It is further submitted that as per clause 2.6 of the loan agreement, the complainant is bound to pay the pre-payment charges and the hand written “no pre-payment charges or lock in period” in the said clause can not be accepted because it was signed by the borrower only and was not signed by any official of opposite party. It is well settled law that any change in the agreement must be signed by both the parties and since the same has been signed by the borrower hence it has no value….”
It is stated that prepayment charges including service tax was charged as per the terms and conditions of the loan agreement. It is, however, denied that that any protest is/was made by the complainant with the OP as alleged in the complaint. It is prayed that the complaint be dismissed.
Complainant has filed a rejoinder.
Complainant has filed his own affidavit in evidence. On the other hand, affidavit of Sh. Shailesh Kr. Sinha, AR has been filed in evidence on behalf of the OP.
Written arguments have been filed on behalf of the parties.
We have heard the oral arguments advanced at the bar and have also carefully gone through the record.
The only disputes between the parties are (1) whether or not there was a relationship of consumer and service provider between the parties (2) whether the complainant ceased to be a consumer after the repayment of the loan amount and closure of his loan account in November 2009 and (3) whether the complainant is entitled to the reliefs prayed for?
All these questions are inter-connected and, hence, can conveniently be disposed off together.
The dispute between the parties is with regard to a term or condition contained in the loan agreement with regard to escalation in the rate of interest during the first 12 months from the date of sanction of the loan and pre-payment charges after first 12 months from the date of sanction i.e. 05.02.09. The reply to the complaint has been filed under the signature of Sh. B. Shekhar, AR of the OP alongwith his affidavit and copy of Power of Attorney. Copy of Power of Attorney is Annexure OP-1. As stated hereinabove, affidavit in evidence on behalf of the OP has been filed of one Sh. Shailesh Kr. Sinha whose Authority Letter is not filed on the record.
According to the OP’s witness the copy of Sanction Letter(s) is Ex. R-1. Copy of no such sanction letter has been filed on the record. On the other hand, the complainant has filed the copies of application for Home Finance Loan Reference No. 14589471 dated 11.3.08 and Reference No. 14327009 dated 11.03.08 as EX. CW-1/1 and Ex. CW-1/2 respectively. These documents go a long way to prove that vide these documents the OP had sanctioned the loan amounts of Rs.1,10,00,000/- and Rs.90 lacs to the Complainant. Para 11 of these letters is in pari-materia. The same reads as under:
“11. Prepayment fee - 2% of the principal outstanding shall be charged in the first twelve months. Thereafter nil of the principal outstanding amount shall be charged.”
These letters have been signed by one Sh. Arjun Tapsall on behalf of the OP. Therefore, it does not lie in the mouth of the OP to say that the complainant had to pay the pre payment fee after the expiry of first twelve months from the date of sanction of loans in question.
According to the OP’s witness the copy of the loan agreement is EX. R-2. The same is infact Annexure OP-3. The same has been signed by the Director of Dev Bhumi Cold Chain Pvt. Ltd and perhaps by someone on behalf of the OP as may be gathered from the initials appearing at point ‘A’ on page 8 thereof though the same has been signed on behalf of the borrower on each page. Para 2.6 of the loan agreement deals with pre-payment wherein the following words, namely, “pre payment allowed with NO prepayment charges or Lock in period.” Now, according to the case of the OP, these words had been added in the loan agreement by the witness and not signed by the OP. This is the document which has been shown the light of the day by the OP itself and not by the complainant. Therefore, production of the copy of loan agreement on behalf of the OP goes a long way to prove that these words i.e. “prepayment allowed with no pre payment charges or lock in period” were added in the presence of and with the approval/consent of the officer/official who signed the said loan agreement on behalf of the OP at point A. Had it not been so, the officer/official of the OP would have certainly brought this fact to the notice of the complainant and asked him to delete the said words but, however, this was not done. Therefore, the only inference which can be drawn is that these words were agreed to be added in the loan agreement by the OP and this plea raised on behalf of the OP is clearly an afterthought.
This fact is further fortified from the fact that these words had not been written/added by some witness but by the complainant himself because if we compare the signature appearing after these words in the loan agreement with the signature of the complainant in the complaint etc. the same would lead to the only conclusion that the signatures have been made by one and the same person and not by a different person which is sought to be unsuccessfully tried to be created on behalf of the OP.
As discussed hereinabove, para 11 of the application forms for Home Finance Loan in question clearly provides that no prepayment fee shall be chargeable after the expiry of first tweleve months. In these documents the words “the interest rate will not be increased in the first twelve months” had been written in hand and the same is shown to have been signed by someone. The name of that “someone” has been written as (Deepak) on the 3rd page of these documents at point ‘B’ and ‘C’ respectively. Who is the said Deepak is not made clear by the OP. It is not clear whether the said Deepak had signed these documents as witness on behalf of the complainant or as a witness on behalf of the OP. His address is also not written on the document. Therefore, we are not inclined to place any reliance on such a vague and untenable plea taken by the OP that these words had been added by a witness. Therefore, we hold that the said loan agreements executed between the parties were binding on the OP and the OP had no reason to depart from or to say a good bye to the terms and conditions of the said loan agreements. Rather, this is a case where after accepting the terms of the loan agreement the official(s)/officer(s) of the OP had themselves resiled from the terms and conditions and forced the complainant to pay the amount in question by taking undue advantage of their position.
Vide letters dated 18.08.08 and 18.09.08 the copy of which are Ex. CW1/3 and CW1/ 4 respectively, the OP had informed the complainant about the change of interest from 1111.7500782% per annum to 12.5% per annum w.e.f. 05.09.08 and from 12.50% per annum to 13.25% per annum w.e.f. 05.10.08.
As discussed hereinabove, the escalation in the rates of interest was not according to the terms and conditions of the loan agreements and/or loan applications sanction letters.
The Complainant has filed a copy of a letter dated 17.11.08 as Ex. CW1/5 written by him to the OP. The relevant portion of the same reads as under:
“Sub: For reversing the increased rate of interest from 11.75% to 13.25% Ref: Your letters dt. 18-Aug-2008 & 18-Sept-2008; Loan Account # 14589471
Dear Sir
This letter is sent to you in response to your successive letters as referred to above & without prejudice to our existing rights under law.
That on 11th March 2008 you have entered into an agreement with us on approval of our home loan and vide clause # 2 of the said document the rate of interest will not be increased in the first twelve months.
In spite of this agreement you have been increasing the rate of interest repeatedly on two successive months.
From your letter it seems that you are only following the trend adopted by many financial institutions without any basis and foundation.
But you simply violated the contract so you are guilty of breach of contract.
Therefore PLEASE TAKE NOTICE that you withdraw the increase in rate of interest within 15 days of receiving this notice failing which necessary and appropriate legal action shall be taken against you in court of law and you shall be held responsible for the entire costs, damages and consequences thereof..”
Therefore, it is proved on the record that the Complainant had raised protests against the escalation of the rates of interest which according to him was in breach of the contract. Therefore, the OP is not legally entitled to say that after the closure of the loan account in question the complainant has ceased to be a consumer. Besides there being a relationship of debtor and creditor between the parties the OP had also acted as a service provider and, hence, the Complainant is a ‘Consumer’ as defined in the Consumer Protection Act, 1986 and, hence, we hold that the Complainant was/is a consumer vis-a-visa the OP. Therefore, we hold that the OP acted in violation of the terms and conditions of the loan agreement in question and increased the rates of interest twice and also charged the pre-payment charges from the complainant in utter violation and gross breach of the terms and conditions governing the loan account in question and, hence, is thus guilty of unfair trade practice and deficiency in service.
The OP has not taken a plea with regard to the pecuniary jurisdiction of this forum to entertain the complaint. However, vide our order dated 01.11.2017 we had asked the Counsel for Complainant, in view of the judgment passed in C.C. No. 97/16 –Ambrish Kr. Shukla & 21 and Vs. Ferrous Infrastructure decided on 07.10.16 by the National Commission, to show that this Forum has the pecuniary jurisdiction to entertain the present complaint. The said plea has not been raised during the course of arguments on behalf of the OP. However, we still say that in view of the decision in C.C. No. 2206/2016 - M/s Advance Ispat (India) Ltd. Vs. M/s Parsvnath Developers decided by the National Commission on 13.07.2017, this Forum has the pecuniary jurisdiction to entertain the complaint.
The extra amount charged by the OP from the Complainant towards the loan amount in question is not in dispute. Therefore, we allow the complaint and direct the OP to refund Rs.10,17,421/- alongwith interest @ 13.25% per annum w.e.f. 12.11.09 i.e. the date on which the repayment charges and also the payment at the enhanced rate of interest was received by the OP till the date of payment. Since the Complainant has not made any prayer in respect of granting compensation on account of mental harassment or legal expenses etc. we do not award any such amount under these heads to him.
The order shall be complied within 30 days of receipt of copy of this order failing which the OP shall become liable to pay interest @ Rs.14% per annum on the amount of Rs.10,17,421/- from 12.11.09 till realization.
Let a copy of this order be sent to the parties as per regulation 21 of the Consumer Protection Regulations. Thereafter file be consigned to record room.
Announced on 13.03.18.
