DISTRICT CONSUMER DISPUTES REDRESSAL FORUM,

PATIALA.

                                      Complaint No. CC/15/105 of 19.5.2015

                                      Decided on:        17.12.2015

Darshan Singh Dhillon son of Mehar Singh, resident of Near Taraksheel Office Taraksheel Chowk, Near Bajakahna Road, Barnala, Tehsil and District Barnala.

                                                                   …………...Complainant

                                      Versus

1.      The Managing Director, HDFC Housing Development Finance Corporation Ltd. Regd.Office Roman House, H.T.Parkeh Marg, 169, Backbay Reclamation, Churcgate, Mumbai-400020.

2.      The Area Manager, HDFC Housing Development Finance Corporation Ltd.SCO No.343-344,near Khyber Restaurant, Sector 35-B, Chandigarh.

3.      The Branch Manager, HDFC Housing Development Finance Corporation Ltd.,SCF No.15,Ist Floor, Leela Bhawan Market, Patiala.

                                                                   …………….Ops

                                      Complaint under Section 12 of the

                                      Consumer Protection Act.

                                      QUORUM

                                      Sh.D.R.Arora, President

                                      Smt.Neelam Gupta, Member

                                      Smt.Sonia Bansal,Member

Present:

For the complainant:     Sh.Gagandeep Singh , Advocate

For Ops:                         Sh.Mayank Malhotra,Advocate           

                                         ORDER

D.R.ARORA, PRESIDENT

1. It is the case of the complainant that he had raised a housing loan of Rs.3lacs from Op no.3,sanctioned on July 15,2006, which was repayable with interest @9.25% per annum in his loan account No.894734 in a tenure of 96 equated monthly installments of Rs.4435/-.
2. The complainant repaid the aforesaid installments and nothing was due against the complainant. However, the complainant received a letter No.HDFC/560894734/REM3 dated 15.1.2015 from Op no.2 asking him to pay an amount of Rs.63871/- in respect of said loan account. After going through the said letter, the complainant served the Op with legal notice through his counsel and the complainant received a reply thereto vide which Op no.2 disclosed that an amount of Rs.1,19,762/- was still due against the complainant in the said loan account. However, nothing was due against the complainant. The complainant had never received any intimation about any increase in the rate of interest nor the complainant received any intimation regarding the increase in the equated monthly installment because of the revision in the rate of interest.
3. On receipt of the aforesaid letter and the reply to the legal notice, the complainant approached ops no.2&3 and requested them not to raise the aforesaid demands but they threatened the complainant that in case he failed to pay the same a criminal case would be initiated against him besides filing the suit for recovery, which resulted in the harassment and the mental agony experienced by the complainant for which he is entitled to a compensation in a sum of Rs.50,000/- .Accordingly the complainant brought this complaint against the Ops under Section 12 of the Consumer Protection Act,1986 ( for short the Act) for a direction to the ops to withdraw the letters dated 15.1.2015, 2.3.2015 and 12.5.2015 and further to issue a No Due Certificate ; to pay him Rs.15000/- by way of compensation on account of the harassment and the mental agony experienced by him and to pay him Rs.15000/-towards the expenses of the litigation.
4. On notice, the Ops appeared and filed their written version. It is averred by the Ops that the complainant had raised the housing loan from Op no.3 and he agreed to pay variable/adjustable rate of interest, which necessarily means  that rate of interest changes witn the change in “Retail Prime Lending Rate”. The complainant had a choice to opt for a ‘fixed rate loan’ where the rate of interest does not vary. However, looking at other borrowers who opted for a adjustable/variable rate and having been benefited from falling rate in earlier years, the complainant had opted for a adjustable rate and accepted the terms and conditions of the loan agreement. It is a normal lending practice followed by the Banks and other financial institutions to bench mark from lending rates on the basis of their own Prime Lending Rate (PLR) which are revised by respective managements independently. Since the matter involves technicalities it is averred that it would be appropriate to elaborate the process of  charging of “Floating rate of interest”. When the complainant had availed the loan, the prime lending rate was 11.75%per annum and he was given the benefit of negative spread/discount of 2.50% per annum and thus he was charged 9.25% per annum. The discount/negative spread of 2.50% was fixed and agreed to by the complainant in the loan agreement. Irrespective of the retail prime lending rate, which has kept on changing during the loan tenure, the rate of interest charged to the complainant  has been prevalent i.e.  RPLR- 2.50% (spread/discount)
5. It is further averred by the complainant that discount/spread offered to the customer remains fixed for the entire loan tenure. However, for the benefit of the customer, he is given an option to avail the benefit of prevalent discount/spread after paying nominal conversion charges. The spread/discount from the RPLR is decided by each financial institution/bank taking into consideration their respective prevalent lending policies/norms vis-à-vis market competition. After paying nominal conversion charges the customer gets benefit of the revised spread in the respective loan. In this regard clause 2.13 of the loan agreement has been referred to by the  Op as: “The spread applicable to the borrower for the purpose of computation of AIR(Adjustable Interest Rate) is as indicated in the Schedule. In the event of HDFC offering revised spread in future, the borrower shall have the option to opt for the revised spread in respect of the loan provided if such option is made available by HDFC with the prospective effect upon the payment of such fee and execution of documents as HDFC may prescribe in that behalf. It is shall be the borrowers responsibility to keep himself informed about the revision in spread from time to time”.
6. It is further averred by the Ops that vide letters dated 15.1.2015 and 12.5.2015 only outstanding/default amount were notified to the complainant and for the months of January and May,2015 the figures were bound to differ. In reply to the legal notice, the Ops notified the total outstanding loan amount including the outstanding principal amount. HDFC Limited informs all its customers about the change in “Retail Prime Lending Rate” and the customers are sent system generated communications annually by post and this information is also published in all leading newspapers. The Ops are entitled to recover outstanding dues in accordance with law. Ultimately, it was prayed to dismiss the complaint.
7. In support of his case, the complainant produced in evidence Ex.CA his sworn affidavit alongwith documents Exs.C1 to C10 and his counsel closed the evidence.
8. On the other hand, on behalf of the Ops, their counsel tendered in evidence Ex.OPA, the sworn affidavit of Sh.Nandan Singh Rawat, authorized representative of the Ops at Chandigarh alongwith documents Exs.OP1 to OP4 and closed their evidence.
9. The  parties failed to file the written arguments. We have heard the learned counsel for the parties and gone through the evidence on record.
10. It is the case of the complainant that he had raised the housing loan of Rs.3lacs , which was repayable in 96 equated monthly installments and that he  deposited the same and nothing was due against him but op No.2 demanded a sum of Rs.63871/- from him vide letter No.HDFC/560894734/REM3 dated 15.1.2015,Ex.C3 and when he got the Ops served with a legal notice, in the reply thereto,Ex.C8, the Ops demanded a sum of Rs.1,19,762/- still due in his loan account No.560894734 upto 28.2.2015. It is further the case of the complainant that the complainant received another letter dated 12.5.2015 from the Ops having raised a demand of Rs.84180/- due upto to 30.4.2015 but no details of the amount outstanding towards EMI for Rs.30265/- with reference to the period , the detail of the additional interest of Rs.15,655/- with regard to the period as also the rate of interest and similarly with regard to the incidental charges of Rs.17951/- i.e. for what purpose he was burdened with incidental charges were provided and in that way he was taken with a surprise.
11. It was submitted by Sh.Gagandeep Singh, the learned counsel for the complainant that the Ops have not rebutted the plea taken up by the complainant that he had made the payment of entire equated 96 installments of Rs.4435/- and they have come forward with the plea that the rate of interest agreed to be paid by the complainant was adjustable/variable i.e. it was floating rate of interest which is determined by the managements of the banks and consumers are informed about the same. Sh.Gagandeep Singh, also made a reference to Ex.C1, the copy of the loan agreement, in which article 2.6(e) provides: “Notwithstanding anything to the contrary contained in this Agreement, having regard to the AIR for the time being, HDFC shall be entitled to increase the EMI amount suitably if:

1. the said EMI would lead to negative amortization (i.e. EMI not being adequate to cover interest in full), and/or
2. the principal component contained in the EMI is inadequate to amortise the loan within such period as determined by HDFC.

The borrower shall be required to pay such increased EMI amount and the number thereof as decided by HDFC and intimated to the borrower by HDFC”.

12. It was submitted by the learned counsel for the complainant that the complainant was never given the intimation by the Ops regarding the increase in the EMI qua the increase in the rate of interest. Even in the letters Exs.C3 dated 15.1.2015 and C9 dated 12.5.2015, the details of the increased amount of the EMI qua the period thereof as also the increase in the rate of interest have not been disclosed. The complainant can not understand his liability without the detailed information on the said points to be given by the Ops.
13. On the other hand, Sh.Mayank Malhotra, the learned counsel for the Ops failed to pout out us the aforesaid information either in written version filed by the Ops or in the aforesaid letters or even in the reply Ex.C8 got sent by the Ops to the legal notice dated 16.2.2015 Ex.C4, got served by the complainant upon the Ops.
14. We have considered the submissions. In the statement of account Ex.OP3, running into 11 leaves for the period  1^st April,2013 to 31^st March,2014 in the opening balance a sum of Rs.8865/- is shown towards EMI, receivable amount is shown to be Rs.53220/- and the amount received is shown to be 58235/- and the closing balance is shown to be Rs.3850/-. In the statement of account for the period 1^st April 2014 to 31^st March,2015, the opening balance is shown to be Rs.3850/- but again the receivable amount is shown to be Rs.53220/- and the received amount is shown to be Rs.13500/- and the closing balance is shown to be Rs.53570/-. We are not concerned with the statement of account as produced by the Ops but we are to see as to whether the ops could raise the demand of Rs.63871/- vide letter Ex.C3 without disclosing the period of the installment of the EMIs outstanding, the period of the additional interest qua the rate of interest , which might have increased qua the detail of the incidental charges and similarly it can be said with regard to the claim of Rs.84179/- raised by the Ops vide letter dated 12.5.2015 Ex.C9. The failure on the part of the Ops to provide the detail of the period the EMIs outstanding , which were not deposited by the complainant qua the incidental charges as also the detail of the additional interest qua the period as also the rate of the increased interest  in the said letters amounts to a deficiency in service and therefore, we accept the complaint with a direction to the Ops not recover the amounts as per letters dated 15.1.2015 Ex.C3 and dated 12.5.2015,Ex.C9 with an option to the Ops to recover the amount of the EMIs outstanding against the complainant after giving the detail of the same with reference to the period for which the same were not deposited qua the incidental charges raised thereon and similarly they can recover the amount of the additional interest by providing the detail of the period as also the increased rate of interest applicable to the said period within a period of two months from the receipt of the certified copy of the order, failing which they shall be obliged to issue the No Due Certificate to the complainant. In view of the facts and circumstances of the case, the complaint is accepted with costs assessed at Rs.20,000/- which is inclusive of the amount of the compensation on account of the harassment and the mental agony experienced by the complainant as also on account of deficiency in service on the part of the Ops.

Pronounced

Dated:17.12 .2015

                   Sonia Bansal                Neelam Gupta                        D.R.Arora

          Member                        Member                                  President