STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

Sh. Parshotam Singh Sobti, S/o Sh.Amar Singh, resident of House No.2091, Phase-7, Mohali.

……Appellant/complainant.

V e r s u s

1]    HDFC Bank Ltd., Retail Assets Division, Bank House Building, Ground Floor, Plot No.28, Phase-I, Industrial Area, Chandigarh, through Branch Manager.

2]    Sh. Aditya Puri, Managing Director, HDFC Bank Ltd., Bank House, Lower Parale, Mumbai

              ....Respondents/Opposite Parties

Appeal under Section 15 of the Consumer Protection Act, 1986.

BEFORE:   JUSTICE SHAM SUNDER (RETD.), PRESIDENT.

                MRS. NEENA SANDHU, MEMBER.

Argued by: Sh. H.S. Parwana, Advocate for the appellant.

PER  JUSTICE SHAM SUNDER (RETD.), PRESIDENT

              This appeal is directed against the order dated 08.08.2012, rendered by the District Consumer Disputes Redressal Forum-I, U.T., Chandigarh (hereinafter to be called as the District Forum only) vide which, it dismissed the complaint, filed by the complainant (now appellant).

2.             The facts, in brief, are that the complainant availed of loan facility, from erstwhile Bank of Punjab Ltd., Sector 9, Chandigarh, with interest @ 8% p.a. Subsequently, the said Bank was merged with the Centurion Bank of Punjab Limited. The complainant then availed of another loan facility, from Centurion Bank of Punjab Limited, to the tune of Rs.3.00 lacs. At that time, Rs.8,44,363/-,  were outstanding against the loan account  of the complainant, as per the sanction letter dated 01.03.2006 (Annexure C-1). According to the letter Annexure C-1, issued by the Centurion Bank of Punjab Limited, the payment  schedule of both the loan accounts was mentioned as 132 monthly installments of Rs.9,639/- and Rs.3,547/-, respectively. The interest chargeable was mentioned as 8% p.a. and 8.75% p.a., for the loan amount of Rs.8,44,363 (BT) and Rs.3.00 lacs (Top Up), respectively.

3.              It was stated that the Centurion Bank of Punjab Limited, was later on, taken over by the HDFC Bank Ltd. Though, the complainant was paying regular installments, but he came to know only from the statement of account, dated 14.12.2009 (Annexure C-2), that the tenure for the repayment of his loan amount was increased from 132 months to 191 months. It was further stated that, similarly, the loan tenure of another loan of Rs.8,44,363/- was also increased to 208 months (Annexure C-3).  It was further stated that the tenure of loan, was increased, on account of increase in the rate of interest, from the sanctioned rate of interest, but the same was neither mentioned in the copies of statements of account, nor intimated to the complainant. It was further stated that the complainant, requested the Opposite Parties, to supply the copies of statements of account, indicating the interest charged, from time to time, but they did not do so. It was further stated that the Opposite Parties, had been raising/revising the interest rate, from time to time, without any notice or intimation to the complainant. It was further stated that the Opposite Parties had increased the tenure of both loan accounts, of their own, without intimating the complainant, with regard to the same. It was further stated that, ultimately, the Opposite Parties, issued certificates (Annexure C-4 and Annexure C-5) in June, 2009, wherefrom, the complainant came to know that the interest on his loan accounts, was being charged @13% p.a. Thereafter, the Opposite Parties, vide letters dated 12.7.2010 (Annexure C-6 and Annexure C-7), intimated the complainant, that the interest rate had been changed from 13% p.a. to 12.75% p.a. It was further stated that the complainant, sent an e-mail to Opposite Party No.2 (Annexure C-8), to the effect that interest rate being charged by it, was on the higher side, and the same should be reduced, as per the prevailing rate, but the same was not replied, despite the fact that  a  reminder,  Annexure C-9, was also issued.         

4.             It was further stated that the complainant, wanted to pre-close the account, by making full and final payment towards the loan, in response to which, the Opposite Parties, vide letters Annexures C-10 and C-11, conveyed the outstanding loan amount, as well as pre-payment charges, on the outstanding principal. It was further stated that, thereafter, the complainant availed of loan of Rs.7.60 lacs, from the Housing Development Finance Corporation Ltd., vide Home Loan Agreement Annexure C-12.  Ultimately, the complainant paid a sum of Rs.7,58,468/-, through cheque dated 31.03.2010-Annexure C-13, to the Opposite Parties, towards the adjustment of loan account, and the same was adjusted on 8.4.2010, by making additional payment of Rs.2,838/- on account of interest upto 8.4.2010.  It was further stated that the Opposite Parties had charged Rs.13,893.74 and Rs.4,944.51 as pre-payment charges, in respect of the loan amounts of Rs.8,44,863/- and Rs.3,00,000/- respectively, though the pre-payment charges were not at all permissible, under any Rule or Regulation.  It was further stated that the complainant took up the matter with the Opposite Parties, a number of times, that the amount of prepayment charges illegally charged from him, be refunded and the interest be charged at the rate which was applicable, from time to time, and not at higher rate, but to no avail. It was further stated that the aforesaid acts of the Opposite Parties, amounted to deficiency, in rendering service, as also indulgence into unfair trade practice. When the grievance of the complainant, was not redressed, left with no alternative, a complaint under Section 12 of the Consumer Protection Act, 1986 (hereinafter to be called as the Act only), was filed, for directions to the Opposite Parties, to refund Rs.18,838.25P, paid by him, on account of prepayment charges, which they (Opposite Parties) could not legally charge; pay compensation for mental agony and physical harassment, caused to the complainant, to the tune of Rs.2 lacs; and pay cost of litigation, to the tune of Rs.11,000/-, with interest @15% P.A., on the aforesaid amounts.

5.             The Opposite Parties, in their joint written version, admitted the factum that the complainant availed of the loan, as mentioned in the complaint. It was, however, stated that the loan was availed of, by the complainant, on floating rate of interest. It was further stated that, as such, the rate of interest was variable, as per the cost of funds, market conditions, the government credit policies, CRR rates, fixed by the Reserve Bank of India, the rates prevalent in the international money market etc. etc. It was further stated that there was no Clause in the Agreement, executed between the parties, that the Opposite Parties, were liable to intimate the complainant, with regard to the change in the rate of interest, as per the market conditions. It was further stated that, the loan was granted, at floating rate of interest, prevailing at the relevant time. It was denied that the applicable rate of interest was 8 P.A. to 9% P.A., but the Opposite Parties, were charging the same @ 13% P.A. It was further stated that, as per the loan Agreement, the complainant was liable to pay prepayment charges, in the event of pre-closure of loan. It was further stated that the interest and the prepayment charges were charged from the complainant, in accordance with the terms and conditions of the Agreement, and the Rules & Regulations of the Reserve Bank of India. It was further stated, that neither there was any deficiency, in rendering service, on the part of the Opposite Parties, nor they indulged into unfair trade practice. The remaining averments, were denied, being wrong.

6.             The Parties led evidence, in support of their case.

7.             After hearing the Counsel for the parties, and, on going through the evidence, and record of the case, the District Forum, dismissed the complaint, as stated above. 

8.             Feeling aggrieved, the instant appeal, has been filed by the appellant/complainant.

9.             We have heard the Counsel for the appellant, and, have gone through the evidence, and record of the case, carefully. 

10.           Admittedly, the complainant availed of the loan facility from erstwhile Bank of Punjab Ltd., Sector 9, Chandigarh, with interest @ 8% p.a., which was later on merged with the Centurion Bank of Punjab Limited. It is also not disputed that, thereafter, the said Bank was taken over by the HDFC Bank Limited. The Facility Agreement, which was executed between the parties, and produced by the Opposite Parties, before the District Forum, is at pages 78 to 115 of the District Forum file. Clause 1.11. of the Facility Agreement, executed between the parties, reads as under:-

“1.11      “Floating Rate of Interest” shall mean CBPLPLR applied by the Lender to the financial assistance granted by the Lender to the Borrower with a spread, if any, as may be decided by the Lender from time to time, pursuant to this Agreement. This is the applicable rate.  Floating rate of interest will be reviewed as per the policy of the bank from time to time.”

11.           From the afore-extracted clause of the Facility Agreement, it is evident, that the loan was availed of, by the complainant, from the Opposite Parties, at floating rate of interest. It was not that, at fixed rate of interest, the loan was availed of by the complainant, from the Opposite Parties. Since, the loan was availed of by the complainant, from the Opposite Parties, at floating rate of interest, as per the Facility Agreement, referred to above, the said rate of interest, was liable to vary, from time to time, keeping in view the cost of funds, market conditions, the government credit policies, CRR rates fixed by the Reserve Bank of India, the rates prevalent in the international money market etc. etc. Under these circumstances, the case of the complainant, to the effect, that interest was charged at a rate, higher than the prevailing rate, does not appear to be correct. If, in some other cases, in respect of some other customers, different rate of interest was charged, by the Opposite Parties, this Commission cannot comment upon the same. Only, on the basis of the terms and conditions of the Facility Agreement, executed between the parties, in this case, that the Consumer Fora, could decide, as to at what rate, the interest could be charged. No cogent and convincing evidence was produced, by the complainant, to prove that higher rate of interest was charged from him, by the Opposite Parties, which was not in accordance with the terms and conditions of the Facility Agreement.

12.           The next question, that falls for consideration, is, as to whether, the Opposite Parties, were bound to inform the complainant, as and when, there was variation in the rate of interest, or not. The Counsel for the appellant, could not point out, any condition in the Facility Agreement, referred to above, showing that it was obligatory, on the part of the Opposite Parties, to inform the complainant, with regard to variation in the rate of interest, from time to time. Since, the complainant knew that the loan was availed of by him, at floating rate of interest, and the same was liable to vary, from time to time, he could not later on complain that he was not intimated, as and when there was variation.  In Syndicate Bank Vs. R. Veeranna and Others, (2003) 2 SCC page 15, the principle of law, laid down, was to the effect that if the agreement makes express provision for enhancement of rate of interest, the bank shall not be required to put the borrower on notice, before charging higher rate, on the basis of the Agreement. It was further held that the principles of natural justice, could not be read into the express terms of the contract. The principle of law, laid down, in  Syndicate Bank`s case (supra), is fully applicable to the facts of the instant case. The submission of the Counsel for the appellant, to the effect that the complainant was not informed, when the rate of interest had increased or decreased, and, hence the same could not be charged by the Opposite Parties, thus, being without merit, must fail, and the same stands rejected.

13.            The next question, that falls for consideration, is, as to whether, the Opposite Parties were entitled to charge prepayment charges, on pre-closure of loan or not. Clause 2.2.9 of the Facility Agreement, reads as under:-

“2.9    Pre-payment of the Loan

The Lender may, in its sole discretion and on such terms as to pre-payment fees, etc., as it may prescribe permit acceleration of EMIs or pre-payment at the request of the Borrower. If permitted by the Lender, the Borrower shall give prior written notice of his intention to Prepay the full amount of Loan and pay to the Lender such prepayment charges mentioned in serial no.7 of Schedule A, subject to change by the Lender from time to time.

The Borrower agrees that no Prepayment can be made during the first 6 months from the Effective Date or till the Loan is fully disbursed, whichever is later.  There are no charges on part prepayment of the loan after 6 months of disbursal.  However, if the Loan closes because of the prepayments made, charges as per Schedule A will be applicable.  If the Borrower prepays only a part of the amount payable by the Borrower to the Lender, the Lender shall be entitled to adjust the amount prepaid against the amount payable by the Borrower in such manner as the Lender thinks fit.

Save and except as mentioned above, the Borrower shall not be entitled to make any Prepayment, if notwithstanding the above, the Borrower pays any amount to the Lender, before the due date, the Lender shall be entitled to appropriate the same in such manner as it deems fit. And the Lender will give the Borrower credit for the same only on due date and not before.

In the event the Lender permits any Prepayment the Repayment schedule shall be altered by the Lender, at the request of the Borrower and the Borrower agrees to adhere to the altered Repayment schedule”. 

14.           Schedule ‘A’, attached with the Facility Agreement, at pages 112 to 115, also mentions the rate, at which the prepayment charges were required to be charged by the Opposite Parties, in the event of pre-closure of loan, before the expiry of the normal duration of the same. In the instant case, admittedly, the loan was pre-closed. In view of clause 2.2.9, of the Facility Agreement,  extracted above, read with Schedule ‘A’,  the Opposite Parties could charge the prepayment charges. Thus, the prepayment charges were legally and validly charged by the Opposite Parties, from the complainant. The submission of the Counsel for the appellant, to the effect that the Opposite Parties could not charge the prepayment charges, thus, being without merit, must fail, and the same stands rejected.

15.           No other point, was urged, by the Counsel for the appellant.

16.           In view of the above discussion, it is held that the order passed by the District Forum, being based on the correct appreciation of evidence, and law, on the point, does not suffer from any illegality or perversity, warranting the interference of this Commission.

17.           For the reasons recorded above, the appeal, being devoid of merit, must fail, and the same is dismissed, at the preliminary stage, with no order as to costs. The order of the District Forum is upheld.

18.           Certified copies of this order, be sent to the parties, free of charge.

19.           The file be consigned to Record Room, after completion

Pronounced.

October 1, 2012

Sd/-

[JUSTICE SHAM SUNDER (RETD.)]

PRESIDENT

Sd/-

[NEENA SANDHU]

MEMBER

Rg