DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II

U.T. CHANDIGARH

1]          Surinderpal Singh Pasricha;

2]          Ms.Gurjeet Kaur wife of Sh.Surinderpal Singh Pasricha,

Both residents of H.No.1487, Pushpak Society, Sector 49-B, Chandigarh, presently resident of H.No.161/2, Near New Vikram Public School, Desu Majra, Kharar, District Mohali (Punjab).

            ---Complainants

V E R S U S

HDFC Bank, SCO No.59-63, Sector 9-D, Chandigarh, through its Branch Head/Authorised Signatory.

 ---Opposite Party

BEFORE:            SHRI LAKSHMAN SHARMA                    PRESIDENT

                        SMT. MADHU MUTNEJA                   MEMBER

                        SH.JASWINDER SINGH SIDHU            MEMBER

Argued By:            Sh.Satinder Pal Singh, Advocate, Proxy for the complainant

Sh.Sandeep Suri, Advocate for the OP.

PER JASWINDER SINGH SIDHU, MEMBER

1]             Complainant (hereinafter referred to as CC for short) has filed the present complaint against the Opposite Party (hereinafter referred to as OP for short) on the ground that the CC while residing at Sector 49-B, Chandigarh, approached The Bank of Punjab Limited, SCO No.59-63, Sector 9-D, Chandigarh for availing a house loan of Rs.13.00 lacs for purchase of a House at Village Desu Majra, Distt. Mohali (PB.).  That the then Bank of Punjab Limited sanctioned the loan of Rs.13.00 lacs to the CC vide File NO.CCC/160100/04-05, dated 02.09.2004 vide Reference NO.COLDH/HL/AUG 04.  As per the Sanction Letter the loan of Rs.13.00 lacs was to be repaid in 240 Equated Monthly Installments of Rs.10,222/-, which were calculated at an interest rate of 7.25% p.a.   The same is Annexure C-1.

                That immediately after the sanction of Loan and the CC having completed the paper work and signed the loan document, the Bank of Punjab Limited was taken over by Centurion Bank and the same was renamed as Centurion Bank of Punjab Limited. 

                The Centurion Bank of Punjab did not disburse the loan amount in one single go, but in parts and on different occasions.  That the CC started paying the EMI of Rs.10,222/- only after the total disbursement of loan amount was made. 

                The CC alleges that he was surprised to have received a notice dated 12.6.2007 under Section 13(2) of SARFAESI Act 2002 from Centurion Bank of Punjab Limited, stating that against the loan sanctioned to the CC vide Loan Account No.21LA160111570, dated 30.3.2001, an outstanding amount of Rs.12,96,766/- has become due as on 12.6.2007 and in case of failure of payment being made within 2 months, the mortgaged property would be asked to be sold.  The same is annexured as Ann.C-2. 

                The CC on receiving the said notice, procured the Account Statement for a period 01.09.2004 to 31.3.2007 on 30.06.2007 annexured as C-10.  CC claims that from the present document, he was surprised and shocked to come to know that the Bank was charging an interest @9% p.a. and that the total tenure of the repayment of loan was extended upto 377 months i.e. more than 31 years. 

                That while the process of securitization was already on, the Centurion Bank of Punjab Limited was amalgamated with H.D.F.C. Bank Ltd.  The CC was compelled to make a payment of Rs.45,000/- to HDFC Bank although the CC had no fault therein.  That after the payment of Rs.45,000/- the OP regularized the loan account of the CC by issuing a Certificate dated 02.06.2008 (Ann.C-5).  Once again, on 02.06.2008 CC procured the fresh Account Statement from the OP, which showed interest @12% p.a. being charged from him.  The CC claims that on perusal of these documents, he was totally confused and could not draw any inference from the entries therein. The CC claims that the OP had unilaterally without any intimation to him extended the period of loan from 240 EMIs to 377 EMIs and had also enhanced the interest payable from 7.25%p.a. to 12% p.a.  CC claims that he would end up paying Rs.38,53,694/- at the end of 31 years to which he had not agreed while entering into agreement of loan with Bank of Punjab Limited, all the assets and liabilities of which are now inherited by the answering OP.

                The CC is aggrieved of the unilateral action of the OP in deciding about the interest to be charged from the CC as well as the extension of loan period.  The CC claims that since 06.08.2007 he is compelled to pay installments of Rs.13,009/- instead of Rs.10,222/- as agreed earlier.  Even as the CC paying a regular installment of Rs.13,009/-, the OP were sending cheques, which got dishonored as the CC while making the payments in Cash, did not maintain his bank account.  The CC also challenges the Outstanding of Rs.55,961/- on account of Dishonoring of 22 Cheques over the period 06.04.2007 to 06.01.2009. 

                CC has claimed that even on having made repeated request, the OP did not yield to educate him as to in what manner the said period has been extended.  CC claims to have suffered mental tension & agony due to the callous attitude of the OP and prays that the OP be directed to pay a sum of Rs.5.0 lacs as compensation and OP be also directed to reschedule the loan period from 31 years to that of 20 years. 

2]             On notice, OP filed their version. 

                OP has taken preliminary objection on the ground that the CC is abusing the process of law and as the CC having alleged that a fraud and cheating having been committed, the same cannot be decided under the summary jurisdiction of C.P.Act. 

                On merits, OP stood their ground that CC having agreed to the rate of interest of 7.25% (V) i.e. the variable rate of interest, could not claim that the same was to remain fixed for the total tenure of loan period.  That at the time of agreement the variation between the Fixed Rate of Interest and Variable Rate of Interest was 2.5%, but it was on the asking of the CC, a lower rate of interest was specified in the agreement.  The CC at a later stage cannot claim that the changes effected in the rate of interest from time to time were not agreed upon. 

                The OP has also mentioned in Para-2 of their reply that the CC was required to prove this fact by placing some documentary evidence on record. That the rate of interest being Variable in case of change of interest as applicable, necessarily, the monthly installment or tenure or both of them would change.  That the OP has annexed the detailed Rates of Interest as applicable from time to time.  That the Statements of Account are matter of record and the changes effected in the account of the CC are due to the change of rate of interest as applicable. 

                The OP has also contested that the procedure adopted by the Bank as per the provisions of applicable law, the same cannot be brought into question, under the present proceedings.  That the jurisdiction of the Consumer Fora in respect of proceedings undertaken under Securitization Act is expressly barred.  It is alleged that it was on the request of the CC that OP had offered a special settlement as the loan having been recalled and CC having made the amount due towards him, the same stood completely addressed and does not require any further action. 

                The OP in reply had strongly contested the fact that CC was not provided with documents as desired by him.  However, OP further states that the CC was informed about the change in rate of interest from time to time but the CC has deliberately not placed on record the agreement.  The OP claims to have annexed the Amortization Schedule according to which the change in schedule has come on account of change in applicable rate of interest and it is also denied that the CC was not intimated of such changes. 

                Lastly the OP claims that CC himself making the payment of Rs.13,010/- in cash proves that he is aware of the changes that have come with the course of time and the CC not having knowledge about the change in the rate of interest is proved wrong by his own act.  On the above ground OP deny the claim of the CC and pray for the dismissal of the complaint with exemplary cost.

3]             Parties led their respective evidences.

4]             Having gone through the entire complaint and version of OP and the evidence of the parties, we are of the considered view that the CC is successful in proving deficiency in service and unfair trade practice on the part of OP on the following grounds:-

i)      The present complaint has been filed on two basic issues pertaining to:-  

(a)    The change in the rate of interest, as charged by the OP from time to time and not intimating the CC for the same.

(b)    The change in the Loan Period from 240 EMIs (20 years) to 377 EMIs (31 years approx.) and while doing so CC was again not informed about the same.

ii)     It would be important to visit the Loan Agreement document executed between the CC and The Bank of Punjab Limited, dated 02.09.2004.  That in the said document on Page No.13 under the heading SCHEDULE, it is clearly mentioned that the loan amount is Rs.13.00 lac, rate of interest is 7.25%(V) and tenure of loan agreement is 20 years.

iii)        Further, on visiting Page No.5 of the said document        , the term Tenure mentioned under Article 3.1 speaks “This agreement shall come into force from the effective date and shall remain in force for such period as stipulated in the Schedule”. 

        The term Interest as explained under Article 5 speaks “That the borrower shall pay to the Bank interest compounded on quarterly rests at the rate set out in the Schedule and subject to the provisions of Clause 5.2”.

The Clause 5.2 states that the Rate of Interest is subject to variation from time to time as per RBI directions and/or any other statutory or regulatory requirements including but not limited to levy of any tax.  The Bank may in accordance with its policy, from time to time, revise the rate of interest in case of any fluctuation in the money market conditions.  Such variations shall be binding on the borrower and the rate of interest increased as aforesaid shall be applicable to the said loan facility.

Another clause to be read along with this is clause 7.4 of Article7 and it speaks as “In the event of increase in the Rate Of Interest, the borrower shall deliver/hand over the additional PDCs on receipt of such intimation, within the date stipulated therein”.

iv)        Having gone through the said document and the objections of OP, we are of the considered view that the terms 7.25%(V)% is nothing but explains that the CC had opted for a variable rate of interest and the same was binding on him.  The main contention of the CC that he was not informed about the changes effected by the OP in the rate of interest from time to time, we believe that it was the sole prerogative of OP Bank to make such changes as per RBI Guidelines and hence, did not require the CC to be informed about it.  The judgment cited by the OP “Syndicate Bank Vs. R.Veeranna and Others, (2003) 2 Supreme Court Cases 15, decided on 19.12.2002  has held that if agreement makes express provision for enhancement of rate of interest,  bank need  not  put borrower on notice before charging higher rate of interest on basis of the agreement.  In the light of the above judgment, the desire of the CC to be informed about the change in rate of interest from time to time is completely extinguished. But while reading clause 7.4 according to which the OP was required to ask CC for fresh PDCs but such request is not made. Hence we are of the view that OPs intention of using old cheques of lesser amount to claim higher installment amount from the CC is not tenable. By doing so OP is multiplying the liabilities of the CC. Whereas OP should have demanded fresh PDCs for higher EMIs which would have served both the purposes of intimation about change in rate of interest as well as the requirement of fresh PDCs. Hence there is deficiency on the part of OP on this count.    

However, while dealing with the second point of contention with regard to the Repayment Schedule, it is important to visit Page-6 of the same document i.e. the Loan Agreement wherein under the heading REPAYMENT, read with Clause 7.3, clearly stipulates that The repayment schedule shall commence from such date as stipulated in the Schedule herein, subject to any other changes in such repayment schedule as communicated later in writing to the borrower.  However, in the event of delay or advancement of disbursement for any reasons whatsoever, the bank shall have the discretion to refix the EMI and the due date. 

         Clause 7.9 of Repayment states that Not withstanding what is stated hereinabove and in the Schedule, bank shall have the absolute right, at any time and from time to time, to review and reschedule the repayment terms of the loan facility in such manner and to such extent as the bank may in its sole discretion decide.  In such events, the borrower shall repay the loan facility as per the schedule revised by the bank. The bank shall upon such revision being decided by it, inform the borrowers the revised repayment schedule.

In the present circumstances and having visited the above two clauses and clause 7[4], it is very much clear that the OP failed to ask the borrower/complainant with regard to the requirement of fresh Postdated cheques from which the CC could have come to the knowledge about the change in the rate of interest as well as revised repayment schedule.  Further more, while the agreement had given the absolute power to the OP to reschedule the loan facility, but it was incumbent upon the OP Bank to inform the borrower/ complainant about the Revised Repayment Schedule, as mentioned in the last line of Clause 7.9 of Repayment, referred to above. 

The OP has failed to bring on record any cogent, reliable and trustworthy evidence to prove that it had dispensed with its contractual obligation, as entered into with the CC, with regard to having informed him about the changes effected in the rate of interest.   The OP has also failed to inform the CC about the Revised Repayment Schedule with regard to the extension in the loan period.   

        Where as the CC is successful in proving his contentions from the very records of the OP as placed on file.

Hence we feel that the OP cannot wash away its hands from any liability in the light of the judgment cited above as well as the variable rate of interest agreed by the CC with regard to supply of information.  It is very clear from the Clause 7.4 of Repayment that in the event of increase in the rate of interest, the borrower shall deliver/handover the additional PDCs on receipt of such intimation, within the date stipulated therein.  It is very much clear that if at the time of effecting the change the OP had asked for additional PDCs (postdate cheques) from the CC, the CC could have been aware of the changes that have come in the due period of time.

5]             It is also clear that OP’s failure in demanding fresh postdate cheques, for enhanced EMIs as well as the enhanced period of loan facility, amounts to deficiency in service, which has led the CC in making short payments against each EMI till he became aware, resulting into a huge backlog of Outstanding Dues against him.

6]             The OP had initiated the process of securitization against these Outstanding Dues and had recovered Rs.45,000/- from the CC for which we believe the CC was not at fault.  As per Annexure C-3 & C-4, which both are dated as 30.06.2007 are completely contradictory to each other in showing the figures of the loan installment and date of disbursement of loan amount.  That as per Ann.C-3, the first installment of Rs.10,222/- is shown to be deposited on 06.10.2004 whereas as per Ann.C-4, the same is shown deposited against the date 07.03.2005.Further more as per Annexure-c-3 the loan amount is shown to be disbursed in five installments between 02.09.2004 to 05.10.2004 where as  according to annexure-c-4 the disbursal is on 11.02.2005 . It is difficult to comprehend as to how two documents of the same Institution and generated on the same date i.e. 30.06.2007 are giving different versions and figures.  Under present circumstances, we believe that the CC has been taken for a ride and the OP has deliberately tried to hoodwink the terms & conditions of the loan agreement, which it itself had entered into with the CC. 

7]             The mother of all surprises lies in the fact that the letter addressed to the CC dated 12.06.2007, through which he is intimated about, the enforcement of securitization of his assets is initiated, speaks of the loan agreement of Loan Account No.21LA160111570, dated 30.03.2001. This document is issued under the signature of one Mr. C.L. Kathuria, Authorized Officer of the OP. The documents annexed as Annexure -1 also mentions the date of disbursement of loan as 30.03.2001 from these documents we draw an inference that the OPs are not only gross negligent but criminally negligent in having subjected the CC to the process of securitization on doctored and fudged documents from their own records.

8]             It was the fall out of their disservice towards the CC that the CC was wrongly charged under Section 13(2) of SARFAESI Act 2002  and compelled to part with Rs.45,000/- as penalties and Rs.5000/- as litigation charges.

9]                 Further more, one more document is brought on record and annexured as OP and carries the signatures of ld. Counsel for OP, wherein it is mentioned on the top “Pls find the calculation received”.  This one document is nothing but one more creation by the OP to confuse this Forum about the status of their own records as the said document is neither signed by the Official of the OP Bank nor speaks about as to who has received the same.  Such kind of acts of the OP with regard to production of such documents in evidence shows the crass respect they have for the adjudicating authorities before which they are contesting their case. 

10]            It is also the outcome of their deficient acts that an amount of rupees more than Rs.50,000/- stands outstanding against the CC on account of dishonoring of cheques while the CC was paying the installments in Cash for the same months/period when the cheques were being produced. 

11]            In the light of above facts, we find a gross deficiency in service on the part of the OP in not intimating the changes in the rate of interest as well as the loan period as per the Agreement authored by them.  Hence, we allow the compliant and direct the OPs to Reschedule the Loan Period to its original status or as per his repayment capacities as of today.  However, the OPs are at liberty to charge the prevailing rate of interest as applicable. We also quash the Outstanding penalties that stands against the complainant till Sept., 2011.  We further direct OP to pay Rs.1.00 (One Lac) as consolidated amount of compensation for causing mental agony, harassment and unnecessary litigation to the CC.    

                This order be complied with by the OP within 30 days from the date of receipt of its certified copy, failing which OPs shall be liable to pay an interest @18% p.a. on the total amount of compensation that stands against them after completion of 30 days.

                Certified copy of this order be communicated to the parties, free of charge. After compliance file be consigned to record room.

Announced

16.09.2011

                                                           (LAKSHMAN SHARMA)

PRESIDENT

 (MADHU MUTNEJA)

MEMBER 

 (JASWINDER SINGH SIDHU)

MEMBER