BEFORE THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT PUDUCHERRY

FRIDAY, the 21st day of October, 2016

FIRST APPPEAL No. 13/2015

1. State Bank of India,

    Rep. by its Assistant General Manager,

    RASMECC, Puducherry.

2. State Bank of India,

    Rep. by its General Manager,

    (Network – I Nodal Officer),

    SBI Local Head Office, Chennai.                   ……..                  Appellants

 

             Vs.

Dr.R.Veeraraghavan

Assistant Professor,

Residing at No.18, Nila Street,

Vasantha Nagar, Muthialpet,

Puducherry.                                                   ………                                        Respondent

    

 (On appeal against the order passed in C.C.No.21/2013, dt.29.04.2015 of the District  Consumer Disputes Redressal Forum, Puducherry)

C.C.No.23/2013

Dr.R.Veeraraghavan

Assistant Professor,

Residing at No.18, Nila Street,

Vasantha Nagar, Muthialpet,

Puducherry.                                                   ………                                         Complainant

 

         Vs.

1. State Bank of India,

    Rep. by its Assistant General Manager,

    RASMECC, Puducherry.

2. State Bank of India,

    Rep. by its General Manager,

    (Network – I Nodal Officer,

    SBI Local Head Office,Chennai.                  ……….                              Opposite Parties

 

BEFORE:

HON’BLE THIRU JUSTICE K.VENKATARAMAN,

PRESIDENT

TMT. K.K.RITHA,

MEMBER

THIRU S.TIROUGNANASSAMBANDANE,

MEMBER

 

FOR THE APPELLANTS:

 

Thiru V. Anandavijayan,

Advocate, Puducherry

FOR THE RESPONDENT:

Party in person

O   R    D    E    R

(By Tmt.K.K.Ritha,  M.A., M.H.R., B.L., Member)

This appeal is preferred against the order of the District Consumer Disputes Redressal Forum, Puducherry (‘District Forum’ for short) in C.C.No.21/2013, dated 29.04.2015 by the appellants against the respondent who were the opposite parties and complainant respectively before the District Forum.

2. The case of the complainant before the District Forum is that he had availed housing loan on 28.02.2006 for Rs.11,80,000/- for a period of fifteen years from the 1st opposite party under fixed interest rate of 8% p.a. He was paying the loan amount promptly at an E.M.I. of Rs.11,300/-.  He received a letter dated 23.05.2013 from the 1st opposite party stating that the interest rate on fixed rate home loan has been re-set from 8% p.a. to 12.50% p.a.  with effect from 13.05.2012 and it is contrary to the terms of the loan contract, Ex.C1. An arrears of interest amounting to Rs.84,248/- has been charged on his loan account due to the increase in interest rate retrospectively. He has expressed his grievances to 1st opposite party in his letter, Ex.C4 for the sudden increase in interest rate from 8% p.a. to 12.5%p.a.  For this, the opposite parties gave one time option of switching over to the interest rate of 10.75% p.a. for two years on payment of fee of Rs.8,169/- @ 1.00% of the outstanding loan amount which he opted and got the interest rate reduced to 10.75% p.a., Ex.C5. This option is for a period of two years from June, 2012 to May, 2014 but he has not accepted  the illegal retrospective increase in the rate of interest from March, 2008 to May,2012.

3. Further, according to loan arrangement/agreement, dt.28.02.2006, Ex.C1.  the Bank is allowed to revise in case of major volatility in the interest rate once in two years “only prospectively” with proper notice in advance, giving an opportunity to the complainant to terminate the loan within 15 days of the receipt of the notice, if the revised interest rate is not agreeable to him. He was shocked when interest arrears of Rs.1,10,000/- was included in his loan account on 31.05.2012. This unilateral action of increase in the interest rate retrospectively for the past four years and  arriving at  huge interest arrears amounts to violation of agreed terms and conditions of loan agreement which amounts to deficiency in service and unfair trade practice on the part of opposite parties. Hence, the complainant filed the complainant before the District Forum to cancel i) to cancel  the arrears of interest accumulated due to retrospective increase in the rate of interest which amounts to Rs.1,10,000/-  as on 31.05.2012, ii)  to direct the opposite parties re-calculate the interest rate of 8% p.a. till May, 2012 at 10.75% p.a. for two years from June, 2012. Iii) to pay compensation of Rs.2,50,000/-  for mental agony and sufferings and for Rs.15,000/- towards costs of the proceedings. 

4. The opposite parties stated in their reply version that the complainant had availed the housing loan from the 1st opposite party by agreeing to the terms and conditions. At the time of sanction of the loan, it is clearly mentioned in the sanction letter, dated 28.02.2006 that the rate of interest will be charged at 8% p.a. and at the sole discretion of the Bank it can be varied or re-set in the event of any major volatility. This revision of interest is periodically reported in the newspaper and on the notice board of the Bank.  The fixed rate of interest is applicable only for two years and with a re-set once in two years. 

5. Moreover, the revision of rate of interest has not been applied periodically due to the error in the computer system and this was found out during the auditing of the Bank. Thereafter, the rate of interest is applied on the outstanding amount as per the prevailing interest rate at that time, i.e. 10.25% p.a. from 01.02.2008, 9.50% p.a. from 01.03.2010 and 12.5% p.a. from 01.03.2012. The rate of interest of 12.5% p.a. is not charged retrospectively. The rate of interest was already revised, but it was not given effect due to the error in the computer system.  Hence, the question of increase retrospectively does not arise. Whenever the rate of interest is revised it will apply prospectively. The complainant’s contention that the rate of interest is 8% p.a. for his loan till 31.03.2012 is untenable. Hence, there is no deficiency in service and unfair trade practice on the part of opposite parties and prays to dismiss the complaint. 

6. Before the District Forum, the complainant was examined as CW1 and Exs.C1 to C21 were marked on his side. On the side of opposite parties, RW1 was examined but no document was filed.

7. The complainant was allowed by the District Forum. 

8. Aggrieved by the order of the District Forum, the opposite parties have preferred the present appeal before this Commission.  We have heard the learned counsel for the opposite parties and the complainant, who is party in person and perused all the documents.

9. It is admitted that the complainant availed housing loan on 21.02.2006 at a fixed rate of interest at 8% p.a.  As per the Arrangement Letter, the Bank can revise the interest rate once in two years only.  In case of any major volatility in the interest rate the revised rate is applicable only prospectively and not from any retrospective date. But, it is observed that the opposite parties have revised the rate of interest in May, 2012 retrospectively for four years prior date and charged Rs.1,01,255/- as interest arrears in the loan account of the complainant on 31.05.2012 which is in total violation of the agreed condition.  The arrangement letter, Ex.C1 reads as “If the borrower is not agreeable to the revised rate of interest so fixed, he shall request SBI, within 15 days of receipt of the notice intimating the change in interest rate from SBI, to terminate the loan and shall repay the loan and any other amount due to SBI in full”. This condition clause stipulates that it is necessary that fifteen days notice shall be given to the borrower to take a decision if such change is acceptable to him or not. The inclusion of arrears amount in the complainant’s loan account is contrary to the agreed terms of loan arrangement/agreement.  It is clear from the records that the opposite parties have not revised the rate of interest every two years prospectively as per Ex.C1.  If the opposite parties revised the rate of interest periodically, the complainant would have got a chance to foreclose the account or shift to another Bank for lesser interest. Thus, the complainant has lost the opportunity to exercise his option.  Moreover, as per Ex.C1, the rate of interest should be altered suitably and prospectively in the event of major volatility in interest rates during the period of agreement.  The opposite parties have not complied the terms and conditions laid down in the arrangement letter, Ex.C1. Thus, there is a lapse on the part of opposite parties in not giving prior notice to the complainant as stipulated in Ex.C1 by imposing the rate of interest retrospectively in his account. The opposite parties contention that the rate of interest for the loan under the category fixed rate of interest is applicable only for two years and the interest rate will be re-set as per the guidelines of the Corporate Office of the State Bank of India.  The rate of interest was 8% p.a. at the time of disbursement of loan on 01.03.2008, it is 10.25% p.a. from 01.03.2010, it is 9.50% p.a. from 01.03.2012, the rate of interest is 12.5% p.a. The stand taken by the Opposite parties are that the revision of interest is made public in the newspaper and notice board of Bank;  the revision of interest has not applied periodically due to the error in the computer system; this fact was found out during the auditing and after that the rate of interest is applied on the outstanding at the respective periods as per the prevailing rate at that time;  it is not that the rate of interest of 12.5% is charged retrospectively; and the rate of interest was revised already but it was not given effect due to the error in the computer system.  The above stand taken by the opposite parties that the revision of interest was not done due to error in the computer system and the same error was detected during the auditing time and thereafter the rate of interest was added on the outstanding amount for the respective periods cannot be accepted. 

10. The 1st opposite party in the chief examination has stated that  “the interest rates ought to have applied at the relevant period itself, but it was postponed due to the error in the computer system. This would not mean that the interest rate is revised retrospectively”  This statement of the opposite parties that the interest rates ought to have applied is nothing but failure on the part of 1st opposite party to keep up-to-date account of the complainant.  This is nothing but mere deficiency in service on the part of 1st opposite party. We cannot appreciate the contention of the opposite parties regarding the error in the computer system, change of interest exhibited in the newspaper and notice board of the Bank. The opposite parties are expected to offer tangible information to their customers, but not an evasive reply like this. It is not practicably possible for the customers to get information regarding the change in the rate of interest whenever they exhibit in the notice board or in the newspaper. Hence, it is beyond doubt that the opposite parties have committed lapse on their part which amounts to deficiency in service. 

11. The District Forum has awarded Rs.20,000/- towards compensation for the loss and injury suffered by the complainant which is just and reasonable . The order of the District Forum was on 29.04.2015 and that almost one and half year have passed and the complainant had undergone further sufferings and mental agony due to the wrong calculation of the interest rates and it is apt to award cost of Rs.10,000/- to the respondent before this Commission.

12. In view of the above reasoning,  we confirm the order of the District Forum and the appeal filed by the opposite parties is hereby dismissed. We order cost of Rs.10,000/- (Rupees Ten Thousand only) in this appeal  payable by the opposite parties to the complainant for the reasons set out in para 11. 

Dated this the 21st day of October, 2016

(Justice K.VENKATARAMAN)

PRESIDENT

 

 

 

(K.K.RITHA)

MEMBER

 

 

(S.TIROUGNANASSAMBANDANE)

MEMBER