STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
U.T., CHANDIGARH
First Appeal No. |
: |
178 of 2013 |
Date of Institution |
: |
26.04.2013 |
Date of Decision |
|
06.09.2013 |
1.Sh. Gian Chand Garg S/o Late Sh. Atma Ram Garg.
2.Smt. Santosh Garg W/o Sh. Gian Chand Garg.
3.Sh. Gaurav Garg S/o Sh. Gian Chand Garg.
All resident of House No.95-A, Sector 17, Panchkula.
……Appellants/Complainants
Versus
ICICI Bank Ltd., through its Regional Manager, Regional Office, SCO 9-11, Sector 9-D, Chandigarh.
....Respondent/Opposite Party.
Appeal under Section 15 of the Consumer Protection Act, 1986.
BEFORE: JUSTICE SHAM SUNDER (RETD.), PRESIDENT.
SH. DEV RAJ, MEMBER.
Argued by: Sh. Gian Chand Dhuriwala, one of the appellants, in person.
Sh. Sandeep Suri, Advocate for the respondent.
PER DEV RAJ, MEMBER
This appeal is directed against the order dated 12.3.2013, rendered by the District Consumer Disputes Redressal Forum-I, UT, Chandigarh (hereinafter to be called as the District Forum only) vide which, it dismissed the complaint, filed by the complainants (now appellants).
2. In brief, the facts of the case are that the complainants availed of the following five home loans against property from the Opposite Party:-
Name |
Loan Account No. |
Loan Amount |
Sh. Gian Chand Garg
(complainant No.1)
|
LBCHD00001467929
LBCHD00000591498 |
Rs.12,41,472.00
Rs.10,00,000.00 |
Smt. Santosh Garg
(complainant No.2)
|
LBCHD00000961493 |
Rs.20,00,000.00 |
Sh. Gaurav Garg
(complainant No.3) |
LBCHD00001258112
NHCHD00000792868 |
Rs.18,00,000.00
Rs.10,000,00.00 |
It was stated that the loan accounts had been running properly since 2003. It was further stated that whenever, under the directions of Reserve Bank of India (RBI), the interest rates were increased, the Opposite Party, immediately, without any intimation/notice, hiked the same, against the loan accounts of the complainants. It was further stated that after October, 2008, when the interest rates were decreasing, neither the Opposite Party, made any entry, as regards the same nor credited the amount on account of change in interest rates. It was further stated that on coming to know about the decrease in interest rates, by the RBI, the complainants repeatedly requested the Opposite Party, to give benefit of lesser interest rate, but it postponed the issue by saying that the same was available only to the new customers, and they (complainants) were not covered under the said policy. Due to this reason, the complainants expressed their interest to pre-close the loan. It was further stated that the complainants were shocked to receive letters dated 19.10.2010 (Annexures C-2 to C-6) vide which they were advised to pay a sum of Rs.1,24,333/- on account of pre-payment charges. It was further stated that in order to get rid of the burden of higher rate of interest, the complainants had to pay the outstanding dues of five loan accounts, plus the prepayment penalty of Rs.1,24,333/-, which the Opposite Party was not legally entitled to charge. It was further stated that the complainants were also maintaining one loan account No.LBCHD00000591462 in the name of complainant No.1, for Rs.30,00,000/- wherein the Opposite Party was charging interest @ more than 14%, whereas in similar circumstances/similar class of loan, interest @ 10.25% - 10.75% was being charged from new customers. It was further stated that this account was closed by the complainants on 15.11.2011 for which prepayment penalty of Rs.52,389/- was charged by the Opposite Party. It was further stated that the complainants issued a legal notice dated 9.12.2010 (Annexure C-8) to the Opposite Party, but to no avail. It was further stated that the aforesaid acts of the Opposite Party, in charging pre-payment penalty and not giving benefit of lesser interest rate, 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), directing the Opposite Party, to refund Rs.1,24,333/- and Rs.52,389/- charged as prepayment penalty/foreclosure charges alongwith interest @18% per annum; pay Rs.5,00,000/- as compensation for mental agony and harassment and litigation expenses, was filed.
3. The Opposite Party, in its written version, took up preliminary objections to the effect that the complaint was barred by limitation, as the complainants were raising dispute in respect of the agreements which were executed between the parties in the years 2003 and 2004; and that the dispute with regard to rendition of accounts as well as settlement of accounts could not be entertained under the Act. It was stated that the circular dated 5.6.2012 relied upon by the complainants did not have any retrospective effect on any existing loan. It was further stated that the transactions, in relation to the complaint filed, related to the year 2010. It was further stated that even the complaint was filed, prior to the issuance of the circular relied upon. It was further stated that the circular dated 2.2.2007 did not make reference to any loan category, nor did it make any reference to the foreclosure charges. The grant of home loans, in question, to the complainants, and the charging of prepayment penalties were admitted. It was further stated that the rate of interest was floating and, as such, changed from time to time. It was further stated that the rate of interest was based on PLR and the benefit of reduced rates of interest was also given as applicable. It was further stated that it was agreed to, between the complainants, and the Bank, that, in case, they (complainants) wished to close the loan prior to expiry of duration thereof, they would pay prepayment charges of 2% on the amount prepaid including the amount prepaid in the last one year. It was further stated that no charges were payable on part repayment. It was further stated that the prepayment charges were rightly charged from the complainants on pre-closure of the loan accounts. It was further stated that neither there was any deficiency, in rendering service, on the part of the Opposite Party, nor did it indulge into unfair trade practice. The remaining averments, were denied, being wrong.
4. The parties led evidence, in support of their case.
5. 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, in the opening para of the instant order.
6. Feeling aggrieved, the instant appeal, has been filed by the appellant/complainant.
7. We have heard Sh. Gian Chand, Advocate, one of the appellants, Counsel for the respondent, and have gone through the evidence and record of the case, carefully.
8. Sh. Gian Chand, one of the appellants, submitted that the prepayment penalty/charges could not be charged, by the Opposite Party but illegally charged the same. He further submitted that the Opposite Party was liable to refund the same alongwith interest. He further submitted that the appellants placed a copy of the circular dated 5.6.2012 in reference to circular dated 2.2.2007 issued by the Reserve Bank of India, before the District Forum, whereby the Banks were instructed not to charge prepayment penalties, but the District Forum while passing the impugned order did not make mention of the same in its order. It was further submitted that the case of the appellants/complainants required consideration on equity as the Banks in many cases, by way of one time settlement, even leave the entire interest, and, if some loanee/borrower repay the loan without any delay, they instead of rewarding him/her penalize him/her. He further submitted that the order of the District Forum, being illegal, is liable to be set aside.
9. On the other hand, the Counsel for the respondent/Opposite Party, submitted that the prepayment penalty/charges, were charged from the complainants, when they pre-closed the loan account, before the completion of duration thereof, as per the terms and conditions of the Home Loan Agreements, executed between the parties. He further submitted that, no excess interest was charged, from the complainants. He further submitted that the appeal, being devoid of merit, is liable to be dismissed.
10. After giving our thoughtful consideration, to the rival contentions, advanced by the appellants/complainants, the Counsel for the respondent/Opposite Party, and on going through the evidence and record, we are of the considered opinion, that the appeal is liable to be dismissed, for the reasons to be recorded hereinafter. The first question, which falls for consideration, is, as to whether the complaint filed by the complainants was within limitation or not? No doubt, the loans were taken during the years 2003 and 2004 but these were to continue for a period of 10 years and the same continued till the complainants closed the same by paying the foreclosure charges in the year 2010/2011. Since the appellants/complainants have disputed the charging of prepayment charges and interest at an excessive rate, the loans were continuing upto 2011. The cause of action arose to them only when the loan was pre-closed. Under these circumstances, by no stretch of imagination, it could be said that the complaint filed by the complainants, was barred by time. The plea taken up by the Opposite Party, in their written version, in this regard, being devoid of merit, must fail, and the same stands rejected.
11. There is hardly any dispute that, at the time of granting the home loan, Home Loan Agreement dated 31.10.2003 (Annexure C-1), was executed between the parties. Clause 2.7, with regard to the prepayment of Loan as stipulated in the Agreement (Annexure C-1), reads as under:-
“2.7 Pre-payment of ICICI Bank LOAN:
ICICI Bank may, in its sole discretion and on such terms as to pre-payment charges, etc., as it may prescribe permit prepayment/acceleration in payment of EMIs at the request of the BORROWER, subject that ICICI Bank may specify, from time to time, the minimum amount of prepayment/amount payable on account of acceleration of EMIs. In the event ICICI Bank permits any prepayment/ acceleration, the repayment schedule for the Loan shall be amended/altered by ICICI Bank for giving effect to such prepayment/acceleration, and such amendment/altered repayment schedule shall be binding upon the BORROWER. In case if any amount is prepaid by the BORROWER, the same shall be adjusted first towards the incidental charges, additional interest, PEMII, EMI outstanding, EMI of current month and balance towards the principal amount of the ICICI Bank LOAN, ICICI Bank at its sole discretion may permit swap of the post-dated cheques for re-scheduling of EMI only if such minimum amount, as may be decided by ICICI Bank from time to time is prepaid.”
A similar Clause 11 also existed in the terms and conditions (Annexure R-1).
12. It is evident, from the afore-extracted clause of the Loan Agreement (Annexure C-1), that there was a specific provision for charging the prepayment charges/penalty. Not only this, it is further evident, from the Offer Letters for Loan facility (Annexure R-1 to R-4), that on payment of full and final prepayment of loan charges, @2% on amount prepaid and on all amounts tendered by the Borrower towards Prepayment of the loan during the last one year from the date of final prepayment were to be charged, and the complainants agreed to all the terms and conditions thereof, especially the loan agreement, executed subsequently. Undoubtedly, by accepting the aforesaid terms and conditions, the complainants appended their signatures on Annexures R-1 to R-4, as also on the Loan Agreement (Annexure C-1). The parties were, thus, bound by the terms and conditions aforesaid.
13. In the instant case, admittedly the complainant pre-closed his loan account, for whatever the reason may be. In other words, he prepaid the loan, before the expiry of the normal duration thereof. Prepayment charges to the tune of Rs.1,24,333/- and Rs.52,389/- were charged as per terms and conditions of the agreement and the offer letters which were duly accepted by the complainants by appending their signatures thereon. Thus, the District Forum, was right in holding that the Opposite Party was entitled to charge the prepayment charges. In Hotel Vrinda Prakash Vs. Karnataka State Financial Corporation, AIR 2007 Kant 187, the principle of law, laid down, was that the Financial Corporation had authority to charge premium for prepayment/foreclosure of the loan account, on the outstanding loan balance. In C.S.No.513 of 2001-Hatsun Agro Products Chennai Vs. Industrial Development Bank of India, Chennai, decided on 14.10.2009, by the Madras High Court, the plaintiff was charged Rs.51,42,895/-, as prepayment charges/premium, before foreclosing the loan. The demand was challenged as illegal. The Hon`ble High Court held that the prepayment charges, before foreclosing the loan, were legally charged by the defendant, and, ultimately, dismissed the suit. The principle of law, laid down, in the aforesaid cases, is fully applicable to the instant case.
14. The contention of the appellants that respondent/Opposite Party did not give any benefit of lesser interest to them does not find support from any evidence. The appellants/complainants were well aware of the terms and conditions including payment of foreclosure charges, which were in accordance with the terms of the agreement. They cannot now take the plea that the same were unreasonable or unjustified. During the course of arguments, the appellants/complainants argued that their case required consideration on the basis of equity. The plea of the appellants that the Banks in many cases, as one time settlement, even leave the entire interest amount and if some loanee/borrower repay the loan without any delay, they instead of rewarding him/her, is penalized. It is settled principle of law that when there is an agreement, between the parties, the terms and conditions thereof prevail. When the respondent/Opposite Party charged the prepayment charges and interest, in accordance with the agreement, the same could not, in any way, be said to be amounting to unfair trade practice. Rather, by signing and accepting the offer letters and loan agreement, they were bound by the terms and conditions thereof. As such, this contention of the appellants is not acceptable and thus, stands rejected.
15. The appellants/complainants also placed reliance on a copy of the Circular DBDO. No.Dir.BC.107/13.03.00/2011-12 dated 5.6.2012 (Annexure A-1), in reference to Circular DBOD. No.Dir.BC.56/13.03.00/2006-2007 dated 2.2.2007, issued by the Reserve Bank of India, in support of their contention, that the respondent/Opposite Party could not charge foreclosure charges/prepayment penalties on home loans granted on floating interest rate. It may be stated here, that this Circular letter was issued on 5.6.2012, whereas the loan was granted and disbursed, in favour of the appellants/complainants, in 2003 and 2004. This circular had no retrospective effect. Under these circumstances, the aforesaid circular letter, could not be made applicable to the loan sanctioned and disbursed, in favour of the appellants/complainants, in 2003 and 2004.
16. The appellants/complainants, placed reliance on Naresh Malhotra Vs. ICICI Bank Ltd. & Ors., I (2011) CPJ 434, of this Commission; IDBI Bank Ltd. (M/s) Vs. Subhash Chand Jain & Anr, 2013(1) CPJ 256 (NC); Rohit Bajaj & Ors. Vs. ICICI Bank Ltd. & Ors., 2008 (2) CPC 507 and “AWAZ” & Ors. Vs. Reserve Bank of India & Ors. 2008 (2) CLT 602. The facts of the aforesaid cases, relied upon by the appellants/complainants are wholly and completely distinguishable from the facts of the instant case. Under these circumstances, the principle of law laid down in these cases, is not applicable to the instant case.
17. Not only this, the dispute raised, in the complaint, by the complainants, related to the rendition of accounts. The main allegation of the complainants was that they were charged interest at a rate higher than the one, agreed to be paid by them, right from the date of disbursement of loan, till filing of the complaint. Such transactions relate to a number of years, requiring proof through voluminous oral as well as documentary evidence. Since the case related to the settlement of accounts, the appropriate Forum for deciding the same is the Civil Court. Similar principle of law, was laid down, in Vishal Roadways Vs. Economic Traders (Gujarat) Ltd., III (1998) CPJ 9 (N.C.), a case decided by a Four Member Bench of the National Consumer Disputes Redressal Commission, New Delhi and Bihar State Housing Board Vs. Chairman-cum-Managing Director and Ors 1(1996) CPJ 228 (NC), a case decided by a Five Member Bench of the National Consumer Disputes Redressal Commission, New Delhi.
18. No other point, was urged, by the Counsel for the parties.
19. In view of the above discussion, it is held that the order rendered 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.
20. For the reasons recorded above, the appeal, being devoid of merit, must fail, and the same is dismissed, with no order as to costs. The order of the District Forum is upheld.
21. Certified copies of this order, be sent to the parties, free of charge.
22. The file be consigned to Record Room, after completion.
Pronounced.
September 6, 2013 sd/-
[JUSTICE SHAM SUNDER (RETD.)]
PRESIDENT
Sd/-
[DEV RAJ]
MEMBER
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STATE COMMISSION
(First Appeal No.178 of 2013)
Argued by: Sh. Gian Chand Dhuriwala, one of the appellants, in person.
Sh. Sandeep Suri, Advocate for the respondent.
Dated the 6th day of September, 2013
ORDER
Vide our detailed order of the even date, recorded separately, this appeal filed by the appellant/complainant, has been dismissed, with no order as to costs. The order of the District Forum has been upheld.
(DEV RAJ)
MEMBER |
(JUSTICE SHAM SUNDER (RETD.))
PRESIDENT |
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