Punjab

Ludhiana

CC/19/466

Vinay Thapar - Complainant(s)

Versus

HDFC Bank - Opp.Party(s)

A.K.Kalsi Adv.

19 Apr 2024

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, LUDHIANA.

                                                Complaint No:  466 dated 01.10.2019.                                                      Date of decision: 19.04.2024. 

 

1. Vinay Thapar S/o. Sh. Vijay Kumar Thapar,
2. Smt. Komal Thapar W/o. Sh. Vinay Thapar C/o. Maa Bhawani Ornaments, Shop No.1, 1^st Floor, Kharadian Bazar, Near Radha Krishan Jeweller, Ludhiana-141003.
3. Maa Bhawani Ornaments, Shop No.1, 1^st Floor, Kharadian Bazar, Ludhiana Through its Proprietor Vinay Thapar S/o. Sh. Vijay Kumar Thapar.                                                                                                                                                                           ..…Complainants

                                                Versus

1. HDFC Bank Ltd., Branch: Plot No.B-19-65/SE, The Mall, Lower Ground Floor-1, 1^st Mall, Ludhiana-141001 Through its Branch Manager.
2. HDFC Bank Ltd., having its registered office at HDFC Bank House, Senapati Bapat Marg, Lower Parel (West), Mumbai-400013 through its Chairman.

…..Opposite parties 

Complaint Under Section 35 of the Consumer Protection Act, 2019.

QUORUM:

SH. SANJEEV BATRA, PRESIDENT

MS. MONIKA BHAGAT, MEMBER

 

COUNSEL FOR THE PARTIES:

For complainants           :         Sh. A.K. Kalsi, Advocate.

For OPs                         :         Exparte. (Sh. Rahul Rajput, Advocate for                               applicants/OPs)

 

ORDER

PER SANJEEV BATRA, PRESIDENT

 

1.                Briefly stated, the facts of the case are that complainant No.1 was granted a loan for his livelihood and complainant No.2 was a guarantor of the loan granted by the OPs through OP1. The loan amount Rs.12,50,000/- @12% P.A. was granted, repayable in 120 months in equal monthly installments of Rs.17,934/-. The last installment was payable on 07.06.2020 as per schedule No.1 provided by the OPs. The OPs also obtained signatures of the complainant on some blank papers. The complainant paid the installments regularly up to August 2019. The complainant stated that he received a letter dated 12.06.2019 from the OPs that the period has been extended from 120 months to 145 months  and asked to pay the installments for 145 months. Further the rate of interest was also increased from 12% to 14.75% w.e.f. 2015and presently started realizing in 5% without any rhyme and reason and without any legal right. The unilateral act of the OPs was brought to knowledge of the complainant in June 2019 entitling the OPs to the extent of Rs.4,50,000/- as per new schedule of payment in order to enrich themselves. The complainants further stated that the interest rates are coming down and had been reduced by Reserve Bank of India as well as the repo rate was also reduced by the RBI for the banks. The RBI rates of interest are having statutory force and binding on all the financial institutions. The OPs cannot go beyond that by charging interest against the rates prescribed by RBI and this act of the OPs amounts to unfair trade practice and deficiency in service. The complainants further stated that they are ready to adhere to the schedule of payment till 07.06.2020 at present rate of interest @ less than 8% as per Govt./RBI instructions but the OPs have not adhered to the same. In the end, the complainants have prayed to issue directions to the Ops to realize the EMI’s up to 07.06.2020 as agreed and further to charge interest at the rate of interest on loan as prescribed by Govt. of India/
RBI i.e. less than 8% per annum. The complainants further prayed to restrain the OPs to realize the amount of EMI by electronically deducting from bank account or from presenting the blank cheques taken in advance for EMIs and also to calculate the present rate of interest less than 8%. Further to adjust the amount of interest and principal amount w.e.f. 2015 to the agreed rate of interest @12% per annum and not 14.75% per annum and also to restrain the OPs from realizing the installments and to accept the installments on old rates/EMIS. The complainants also prayed to award compensation of Rs.2,00,000/- along with Rs.50,000/- as cost of the complaint.

2.                Upon notice, none appeared on behalf of the opposite parties despite service and as such, the opposite parties were proceeded against exparte vide order dated 23.12.2019.

3.                The OPs preferred a Revision Petition No.1475 of 2020 before the Hon’ble State Consumer Disputes Redressal Commission, Chandigarh for condonation of delay of 163 days in filing the revision petition and for setting aside exparte order dated 23.12.2019. The said revision petition was dismissed by the Hon’ble State Commission vide order dated 19.10.2020.

                   Subsequently, the OPs filed Revision Petition No.1172 of 2020 before the Hon’ble National Consumer Disputes Redressal Commission, New Delhi challenging the order dated 19.10.2020 passed by the Hon’ble State Consumer Disputes Redressal Commission. The said Revision Petition was dismissed by the Hon’ble National Commission vide its order dated 01.09.2023.

4.                In evidence, the complainants tendered affidavit of complainant No.1 Sh. Vinay Thapar as Ex. CA and reiterated their averments of the complaint. The complainants also placed on record Ex. P1 copy of welcome letter dated 23.06.2010 along with repayment schedule, Ex. P2 is the copy of Schedule-1, Ex. P3 is the copy of statement w.e.f. 31.05.2010 to 19.06.2019, Ex. P3A, Ex. P4 and Ex. P5 are the envelops, Ex. P6 is the copy of legal notice, Ex. P7 is the copy of Email, Ex. P8 and Ex. P9 are the copies of Emails dated 25.06.2019, Ex. P10 is the copy of Email dated 14.07.2019 and closed the evidence.

5.                We have heard the arguments of the counsel for the parties and also gone through the complaint, affidavit and annexed documents produced on record by the complainant.

6.                In their written arguments, the OPs contended that the complainant does not fall within ambit of definition of ‘Consumer’ under Section 2 of the Consumer Protection Act as they are doing business for commercial purpose. The loan was obtained in the name and style of Maa Bhawani Ornaments who deals in sale and purchase of jewellery items and precious stones which comes under commercial activities for earning profits. Further as per Schedule-1 of loan agreement the loan was obtained for “Business” purpose and the complaint is liable to be dismissed on this ground alone. The OPs further contended that the complainants obtained the loan as per their free will after reading the terms and conditions of the agreement. The rate of interest charged on the loan was basis the Benchmark Prime Lending Rate (BPLR/PLR). Benchmark Rate means the reference rate use to determine the interest rate on loans. As such, the stipulation of Floating Reference Rate (FRR) is/was derived from the BPLR/PLR. The OPs have charged the interest in terms of loan agreement on the basis of PLR which varies with the increase/decrease in cost of fund and various other factors including risk and global interest and exchange rates. The OPs further contended that there is no violation of terms of the agreement in charging the rate of interest on the basis of BPLR. The OPs have discretion to decide on passing the benefit to the customers if the BPLR shots high and thus had significant impact on the borrowers in terms of time and quantum. Further the OPs work under the guidance and procedures prescribed by the RBI and as per RBI norms, the bank has from time to time shifted the basis of charging the ROI from BPLR to base rate and from base rate to MCLR etc. in compliance with master direction issued by RBI from time to time. A floating mortgaged loan rate fluctuates throughout the term of the loan which is influenced by external factors such as inflation. Financial market conditions and the base rate decided by the RBI are applicable to all loans disbursed on floating ROI. The OPs further contended the complainant took loan of Rs.12,50,000/- vide agreement on 15.06.2010 having EMI of Rs.17,934/- payable in 120 installments as per schedule 2 at the interest rate equal to BPLR(+)/(-) -3.75% per annum equal to 12% per annum i.e. BPLR-3.75%. The complainant was aware regarding change interest rate as per policies of the OPs from time to time and they sent various intimation letters to the complainant regarding change of rate of interest from time to time. The OPs denied any deficiency on their part and prayed for dismissal of the complaint.

7.                Even the complainants filed written arguments as well as rejoinder to the written arguments filed by the OPs.

8.                Complainant No.3 is a partnership firm which deals in sale and purchase of jewellery items and precious stones etc. Complainant No.1 claimed himself to be the proprietor of the said firm. On 16.06.2010, the complainant firm availed loan against property to the tune of Rs.12,50,000/- having a rate of interest linked with BPLR (Benchmark Prime Lending Rate). In case of default, additional interest @2% per annum was payable. Repayment of the loan amount was to be made in 120 EMIs of Rs.17,934/- each in accordance with the schedule attached with the loan agreement. The purpose of loan was ‘business’. Complainant NO.1 and 2 were the co-borrowers in their respective individual capacities. According to the complainants, they had been paying EMIs as per schedule but the OPs have illegally and unauthorizly extended the number of EMIs from 120 to 145.

9.                The OPs were proceeded against exparte on 23.12.2019 but in view of law laid down in Sangram Singh Versus Election Tribnal Kotah AIR 1955 Supreme Court 425, the OPs were permitted to file written arguments. It was contended on behalf of the OPs that the complainant is not a ‘consumer’ and he is not competent to file the present complaint. However, counsel for the complainant refuted the contentions and asserted the maintainability of the complaint.

10.              Before adverting to the merits of the case, it is desirable that issue regarding the maintainability of the complaint may be adjudicated first.

11.              Section 2(7) of the Consumer Protection Act, 2019 defines the word “consumer”, which reads as under:-

                 “Consumer” means any person who:-

(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or

(ii)hires or avails of any service for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and include any beneficiary of such service other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person, but does not include a person who avails of such service for any commercial purpose.”

Explanation. -For the purposes of this clause, -

(a) the expression "commercial purpose " does not include use by a person of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment;

 (b) the expressions "buys any goods " and "hires or avails any services " includes offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing;”

Further the Hon’ble Supreme Court of India in "Lilavati Kirtilal Mehta Medical Trust Vs. Unique Shanti Developers and others", Civil Appeal No.12322 of 2016, decided on 14.11.2019, reported in 2020 (2) Supreme Court cases 265, summarized the board principles for determining the nature and purpose of activity/transaction. The relevant extract reads as under:-

“7. To summarize from the above discussion, though a straightjacket formula cannot be adopted in every case, the following broad principles can be culled out for determining whether an activity or transaction is 'for a commercial purpose':

1. The question of whether a transaction is for a commercial purpose would depend upon the facts and circumstances of each case. However, ordinarily, 'commercial purpose' is understood to include manufacturing/industrial activity or business-to-business transactions between commercial entities.
2. The purchase of the good or service should have a close and direct nexus with a profit-generating activity.
3. The identity of the person making the purchase or the value of the transaction is not conclusive to the question of whether it is for a commercial purpose. It has to be seen whether the dominant intention or dominant purpose for the transaction was to facilitate some kind of profit generation for the purchaser and/or their beneficiary.
4. If it is found that the dominant purpose behind purchasing the good or service was for the personal use and consumption of the purchaser and/or their beneficiary, or is otherwise not linked to any commercial activity, the question of whether such a purchase was for the purpose of 'generating livelihood by means of self employment' need not be looked into."

12.              Although the complainants have stated in para No.1 of the complaint that complainant No.3 was granted loan for earning livelihood and complainant No.2 stood guarantor in the said loan. It is evident from the record that it is complainant No.3, a firm who is the principal borrower and complainant No.1 and 2 are just the co-borrowers. It was the loan against property sanctioned and disbursed for business purpose. Complainant No.1 being the proprietor carries the business of complainant No.3 firm. The dominant purpose for availing loan was directly linked to commercial activities to complainant No.3 firm who was dealing in trading of jewellery items and precious stones etc. The loan was obtained about 14 years ago from now and at that time the loan of Rs.12,50,000/- was a huge loan. Such loans are obtained not for simply to earn livelihood but exclusively for generation of large scale profits. Apparently, the loan was availed for commercial purpose and the complainants do not qualify to be called as “Consumer” within meaning of Section 2(7) of the Consumer Protection Act.

                   Further reference can be made to  Civil Appeal No. 5858 of 2015 Rohit Chaudhary & another Vs M/s. Vipul Ltd.  decided on 06.09.2023 by the Hon’ble Supreme Court of India and while reiterating the law laid down in Lilavati Kirtilal Mehta Medical Trust Vs. Unique Shanti Developers and others (Supra) the Hon’ble Supreme Court of India has made the following observations:-

“Consumer Protection Act, 1986; Section 2(1)(d) - ‘consumer’ - ‘commercial purpose’ - A person buying goods either for resale or for use in large-scale profit-making activity, will not be a ‘consumer’ entitled to protection of the Act - If the dominant purpose of purchasing the goods or services is for a profit motive and the said fact is evident from the record, such purchaser would not fall under the ambit of ‘consumer’, as defined under Section 2(1)(d) of the Act. However, the Explanation clarifies that even purchases in certain situations for ‘commercial purposes’ would not take within its sweep the purchaser out of the definition of expression ‘consumer’. In other words, if the commercial use is by the purchaser himself for the purpose of earning his livelihood by means of self-employment, such purchaser of goods would continue to be a ‘consumer’.

By applying the ratio of the above cited case, it is our considered view that the complaint is not maintainable and same deserves dismissal and is hereby dismissed.

13.              As a result of above discussion, the complaint is hereby dismissed being devoid of any merits. However, there shall be no order as to costs. Copies of order be supplied to parties free of costs as per rules. File be indexed and consigned to record room.        

14.              Due to huge pendency of cases, the complaint could not be decided within statutory period.

 

 

(Monika Bhagat)                              (Sanjeev Batra)               Member                                         President  

Announced in Open Commission.

Dated:19.04.2024.

Gobind Ram.