Date of Filing 24.11.2023

                                                                                                             Date of Disposal: 29.02.2024

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION

THIRUVALLUR

BEFORE TMT. Dr.S.M. LATHA MAHESWARI, MA. ML, Ph.D (Law),                                         …….PRESIDENT

               THIRU.P.VINODH KUMAR, B.Sc., BL.,                                                                              ……MEMBER-I

               THIRU.P.MURUGAN, M.Com, ICWA(Inter), BL.,                                                            ……MEMBER-II

CC.No.116/2023

THIS THURSDAY, THE 29^th DAY OF FEBRUARY 2024

1.Dr.J.Chakravarthy,

    S/o.D.Jayadeesan,

2.Dr.R.S.Sharmila,

   W/o.Dr.J.Chakravarthy,

Both residing at

No.AE 54, 1^st Street,

10^th Main Road,

Anna Nagar, Chennai 600 040.                                                            ......Complainants.

                                                                              //Vs//

The Branch Manager,

City Union Bank Limited,

Valasaravakkam Branch,

Valasaravakkam, Chennai 600 087.                                                   ….opposite parties.

Counsel for the complainants                                  : Mr.S.Arun Prasath, Advocate.

Counsel for the opposite party                                :  M/s.A.Manoj Kumar, Advocate.

This complaint coming before us on various dates and finally on 28.02.2024 in the presence of Mr.S.Arun Prasath, counsel for the complainants and M/s.A.Manoj Kumar, counsel for the opposite party and upon perusing the documents and evidences of both sides this Commission delivered the following:

ORDER

PRONOUNCED BY Tmt.Dr.S.M. LATHA MAHESWARI, PRESIDENT

1. This complaint has been filed by the complainant U/S 35 of the Consumer Protection Act, 2019 alleging deficiency in service against the opposite party with regard to demand made by the opposite party to pay 1% on the outstanding amount as pre-closure charges for the Home Loan closure along with a prayer to repay the sum of Rs.4,74,700/- paid by the complainants as Foreclosure/pre-closure charges and to pay  a sum of Rs.10,00,000/- towards for the mental agony and hardship caused to the complainants.

Summary of facts culminating into complaint:-

2. It was the case of the complainants’ that they had given a request to close their Housing Loan on 01.05.2023 and subsequently on03.05.2023 repaid the entire dues together with the Principal amount to the opposite party and had closed their loan account.  While so, on 05.05.2023 when the complainants had gone to the opposite party’s office to receive their deposited documents and NOC they were informed through letter dated 05.05.2023 that they would have to pay 1% pre closure charges on the loan amount for loan account No.5018120800769440 i.e. Rs.5,52,545/- totally and Rs.4,74,700/-. It was submitted that till 05.05.2023 they were not informed about such charges and on the eleventh hour while they had come to collect their property documents and deposit the same in another Bank, the said letter was issued to them. The said letter was issued by the opposite party in the last moment only with the ill intention to corner the complainants and make them pay the same amount. Unable to do anything the complainants had borrowed money and deposited in their loan account and gave a letter on 05.05.2023 that they are making the payment under protest. Banks are not permitted to levy foreclosure charges for housing loan with floating interest as per several circulars and instruction form the RBI and therefore levy of such charges for housing loan was illegal. Complainants sent representations dated 19.05.2023 & 31.05.2023 apart from the protest letter dated but the opposite party failed to issue any reply to the complainants and clarify their position. Intimation of pre closure charges in the last moment, levying of pre closure charges against the circulars issued by the RBI and ignoring the representations made by the complainants’ amounts to deficiency in service. Thus aggrieved by the act of the opposite party the present complaint was filed to repay the sum of Rs.4,74,700/- paid by the complainants as Foreclosure/pre-closure charges and to pay  a sum of Rs.10,00,000/- towards for the mental agony and hardship caused to the complainants.

The crux of the defence put forth by the opposite party:-

3. The opposite party filed version disputing the complaint allegations contending inter alia that when the complainant had approached the opposite party to receive their deposited documents and NOC they were informed through their letter dated 05.05.2023 at the last moment that the complainant would have to pay 1% pre-closure charges on the loan. Complainants were a Doctors and they were well aware of all the terms and conditions while availing the loan sanctioned to them on 05.12.2020 and acknowledged and accepted the conditions stipulated by the Bank while the execution of loan. Complainants have not raised any objection to point no.9 of the sanction order wherein the details of pre-closure charges were mentioned while obtaining the loan from the opposite party Bank. Complainant availed a facility subsequent to the above loan without any objection.  Complainant preferred to transfer the loan by way of takeover by another bank which could not be technically termed as closure of loan.  For such accounts, Banks can collect pre-closure charges based on the preconditions stated in which was duly acknowledged by the parties in the sanction order. Complainant gave a DD for an amount of Rs.4,72,84,000/- and 77,56,000/- on 27.04.2023 and the foreclosure of the credit facilities which were closed on 03.05.2023. Complainant obtained two loans i.e. Account No.501812080076940 and Account No.501812080087184.  It was submitted that the complainants requested the opposite party to waive the pre-closure charged by giving a request letter which was clearly suppressed by the complainant before this Commission. As reply for the requisition made by the complainant on 05.05.2023 reduction in pre-closure charges to 1% making a total of Rs.5,52,545/- was made for both the loans. Complainant agreed and paid the pre-closure chares and accordingly the loan accounts of the complainant were closed and the documents were released immediately without any delay as per the guidelines of RBI. Thus they sought for the dismissal of the complaint.

4. On the side of complainants proof affidavit was filed and documents marked as Ex.A1 to Ex A10 were submitted. On the side of opposite party proof affidavit was filed but no document was submitted on their side.

Points for consideration:-

1)    Whether the demand made by the opposite party for a sum of Rs.4,74,700/- from the complainant as pre-closure charges for the Home Loan closure, amounts to deficiency in service and whether the same has been successfully proved by the complainants?

2)    If so to what relief the complainant is entitled?

Point No.1:-

5. Heard both learned counsels appearing for the complainant and the opposite party.

6. The learned counsel appearing for the complainants argued that complainants availed housing loan vide two loan accounts from the opposite party and when they approached the opposite party to close them they demanded on the day when they approached the opposite party for receiving the deposited documents, to pay 1% of the loan amount as pre-closure charges.  The complainant with no other option paid Rs.4,74,700/- as they are in need of documents.  Thereafter they sent representation to the opposite party to return back the pre-closure charges stating that as per the RBI guidelines the opposite party was not entitled to demand any pre-closure charges.  As the opposite party did not re-credit the amount the present complaint was filed.

7. On the other hand the learned counsel appearing for the opposite party argued that the complainants while availing the loan in 2020 were very well known about the pre-closure charges for loan account.  Further it is not a pre-closure loan but it is a transfer of loan to some other Bank.  It is also submitted by him that the Branch Manager got special permission from the central office for reduction of pre-closure charges from 2% to 1% on the outstanding amount.  Thus he argued that the complainant is not entitled for any refund of the pre-closure charges as the complainant had availed the loan only after agreeing for the terms and conditions and had signed in the loan agreement.

8. On appreciation of the entire pleadings and materials the factum of availing housing loan under two loan accounts with floating interest by the complainants from the opposite party was not disputed by either of the parties. Also the complainants closing the loan account after paying 1% pre-closure charges to the opposite party on the outstanding amount was also not disputed by either of the parties. The core issue to be decided by this commission in the present case is that whether the opposite party has the right to demand any foreclosure/pre-closure charges from the complainant at the time of closing of the loan.

9. At this juncture this commission come across an RBI circular dated 02.08.2019 which was also submitted as Ex.A10, wherein it has been specifically ordered that the Bank are not permitted to charge foreclosure charges/pre-payment penalties on home loans / all floating rate terms loan sanctioned to individual borrowers. As the loan availed by the complainants was a home loan with floating rate of interest it very well comes within the purview of the above citied circular issued by the RBI.  Further, the loan availed by the complainants was only in the year 2020 after issuance of the said circular.  Therefore when the circular was issued on 02.08.2019 contrary to the same, the opposite party should not have made the complainants to sign a loan agreement with a clause for payment of pre-closure charges.  In the facts and circumstances the defence raised by the opposite party that the complainants had signed the loan agreement knowing very well about pre-closure charges cannot refuse the same later could not be accepted.

 10. Also the defence raised that the complainants’ pre-closure of loan does not come under the category of foreclosure but it was only a transfer of loan to some other bank also seems unacceptable as the opposite party was no way concerned or connected with the switch over of the Bank.  Still no document was filed by opposite party to substantiate their defence that for take over loan, the pre-closure charges could be imposed by the Account closing Bank.  In the said scenario we have no other option but to conclude that the opposite party demanding 1% pre-closure charges from the complainant at the time of closure of the loan clearly amounts to deficiency in service and unfair trade practice as it is against the circular by RBI/2019/2029.  Thus we answer the point accordingly in favour of the complainant and as against the opposite party.

Point No.2:-

11. As we have held above that the opposite party had committed clear deficiency in service we direct them to repay the sum of Rs.4,74,700/- received by the opposite party from the complainant as foreclosure/pre-closure charges. Further for causing hardship and mental agony to the complainant, we award a sum of Rs.25,000/- towards compensation to be paid to the complainant by the opposite party along with a sum of Rs.10,000/- towards litigation expenses.

In the result, the complaint is partly allowed against the opposite party directing them

a) To repay a sum of Rs.4,74,700/- (Rupees four lakhs seventy four thousand and seven hundred only) received by the opposite party from the complainant as Foreclosure/Pre-closure charges for loan Account No.501812080076940 within six weeks from the date of receipt of copy of this order to the complainant;

b) To pay a sum of Rs.25,000/-(Rupees twenty five thousand only) towards compensation for the mental agony and hardship caused to the complainant;

c) To pay a sum of Rs.10,000/- (Rupees ten thousand only) towards litigation expenses to the complainant;

d) Amount in clause (a) if not paid within six weeks from the date of receipt of copy of this order, interest at the rate of 6% will be levied on the said amount from the date of complaint till realization.

Dictated by the President to the steno-typist, transcribed and computerized by him, corrected by the President and pronounced by us in the open Commission on this 29^th day of February 2024.

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 MEMBER-II                                           MEMBER-I                                           PRESIDENT

List of document filed by the complainant:-

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MEMBER-II                                           MEMBER-I                                           PRESIDENT