BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-I, U.T. CHANDIGARH

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1.       Davinder Singh  Thapar s/o Sh.Amrit Singh

2.       Surinder Kaur Thapar w/o Sh.Amrit Singh Thapar.

3.       Amrit Singh Thapar s/o Sh.Ishar Singh Thapar

4.       M/s Allena Auto Industries Pvt. Ltd. through its Director Sh.Davinder Singh Thapar.

All resident of H.No.35, Sector 10-A, Chandigarh.

…..Complainants

                                      V E R S U S

ICICI Bank Ltd. through its Branch Manager, Home Loan Section SCO 180-182, Sector 9, Madhya Marg, UT Chandigarh (previously situated at SCO 53-54, Sector 8, Chandigarh)

                                                ……Opposite Party

CORAM:     SH.P.D.GOEL                                             PRESIDENT

                   DR.(MRS) MADANJIT KAUR SAHOTA      MEMBER

Argued by:    Sh.J.S.Bagga, Counsel for complainants.

                        Sh. Sandeep Suri, counsel for OP.                        

PER P.D. GOEL, PRESIDENT

1.                 Briefly stated, the complainants availed Home Equity Loan of Rs.2,61,00,000/- from OP Bank on 8.1.2008, at a floating rate of interest of 12.5%, which was repayable in 180 monthly EMI of Rs.3,21,689/-. Another loan of Rs.46,00,000/- was availed on 30.6.2010 by the complainants at the rate of 11% interest, repayable in 120 months and EMI was Rs.63,366/-. Later on, the floating rate of interest @13% per annum against loan of Rs.2,61,00,000/- and interest       @ 11.5% for a loan of Rs.46,00,000/- was charged by OP bank. The complainants approached the OP bank with a request that rate of interest is much higher as compared with other Banks. The OP agreed to switch over rate of interest to a lower rate of interest and got executed from the complainants “Amendatory Agreement”, but the OP did not reduce the rate of interest.

                    It is alleged that complainants approached FI, Tata Capital Ltd. for taking over of his loan, who agreed to sanction loan of equal amount @10.75% interest per annum. The complainants approached the OP for the issuance of loan closer statement. It is further the case of the complainants that the OP issued letter dated 8.11.2010 to the complainants, demanding therein, Rs.2,51,33,536/- as principal outstanding and Rs.5,55,451/- as foreclosure /prepayment charges. In the other loan account, the OP issued letter, demanding therein Rs.45,38,294/- as principal outstanding and Rs.10,0,296/- as prepayment charges. The total prepayment charges were Rs.6,55,747/-. The complainants refused to pay the said unjustified and illegal charges.

                   It is further the case of the complainants that the OP refused to issue the NOC and also to release the title deeds of the property mortgaged with it. The principal outstanding of both the loans were paid by successor FI Tata Capital Ltd., whereas the foreclosure charges were paid by the complainants to the OP. The complainants objected and protested to the payment of the foreclosure charges of Rs.6,55,747/-, but to no effect. Hence this complaint.

2.                The OP in its reply pleaded that it was agreed between the parties that in case, the complainants wishes to close the loan prior to the period of the loan, he shall pay a prepayment charges @ 2%. The said terms of prepayment and foreclosure are used interchangeably in the banking industry to denote early closure of loan. The complainants themselves produced on record the accepted conditions of the loan agreement, wherein it has been specifically provided that the complainants had agreed to the foreclosure charges. It is denied that any charges taken by the OP bank was in any manner unjustified or illegal. Denying all other allegations made in the complaint, the OP prayed for dismissal of the complaint. 

3.                Parties led evidence in support of their contentions.

4.                We have heard the learned counsel for the parties and have also perused the record.

5.                The admitted facts many be noticed thus ;

a)                That the complainants availed Home Equity Loan of Rs.2,61,00,000/- on 8.1.2008 and another loan of Rs.46,00,000/-. The first loan was repayable in 180 monthly EMI of Rs.3,21,689/- and the second loan was payable in 120 monthly EMI of Rs.63,366/-.

6.                The learned Counsel for the complainants argued that the OP bank agreed to charge floating rate of interest @ 12.5% on the Home Equity Loan of Rs.2,61,00,000/- and on another loan of Rs.46,00,000/-, the rate of interest was @11%. It was further argued that later on, the floating rate of interest @ 13% p.a. against the loan of Rs.2,61,00,000/- and @ 11.5% for the loan of Rs.46,00,000/- was being charged by the OP bank. It was further argued that the OP bank agreed to switch over rate of interest to a lower rate of interest and got executed from the complainants “Amendatory Agreement” but thereafter did not reduce the rate of interest.

7.                It was lastly argued that FI, Tata Capital Ltd. agreed to sanction the loan of equal amount @ 10.75% interest per annum, so the complainants approached the OP for the issuance of loan closer statement. The OP in turn issued a letter that Rs.2,51,33,536/- is due as principal outstanding and Rs.5,55,451/- as foreclosure/prepayment charges and in the other loan account, the amount of Rs.45,38,294/- was demanded as principal outstanding amount and Rs.10,0,296/- as prepayment charges. The OP in toto demanded prepayment charges to the tune of Rs.6,55,747/-. It was argued that the demand of Rs.6,55,747/- raised by the OP is illegal and unjustified.

8.                The learned Counsel for the OP submitted that as per terms of agreement, the complainants were liable to pay foreclosure charges, so the demand in question raised by the OP is legal and justified.

9.                The learned Counsel for the complainants made a reference to Amendatory Agreement – Annexure P-3 (page 13 annexed with the complaint) and at page No.14, there is a clause which reads that the Borrower has now requested the Lender to allow the borrower to switch to an adjustable rate of interest on the loan, instead of the rate of interest earlier availed by the borrower and the Lender has agreed to allow the borrower to switch as requested in terms and conditions appearing hereinafter.

10.              It was conceded by the learned Counsel for the complainants during the course of arguments that the said Amendatory agreement did not bear the signature of the OP bank. Therefore, it can legitimately be concluded that this is a unilateral document, as such, the OP bank is not bound by it, so it does not lie in the mouth of the learned Counsel for the complainants that the OP bank has agreed to switch to an adjustable rate of interest on the loan, instead of the rate of interest earlier availed by the borrower. Otherwise also, it is a settled proposition of law that any contract, which is unilateral in nature is not binding upon the other parties. Since, the said Amendatory Agreement is unilateral in nature, therefore, it is not binding upon the OP bank, so the complainants cannot take any advantage from it.

11.              The learned Counsel for the complainants during the course of arguments produced proposals of RBI, wherein, it has been stated that foreclosure charges on housing loans are anti-consumer and anti-competitive. Admittedly, these are only guidelines and not the directions to the OP bank, therefore, it did not have any legal force, as such, are not enforceable till specific directions to the banks are issued by the RBI not to charge foreclosure/prepayment charges.

12.              It is the case of the complainants that they approached FI Tata Capital Ltd. for taking over of his loan, who agreed to sanction loan of equal amount @ 10.75% interest p.a. Therefore, it can legitimately be concluded that it is a case of taking of a loan by a different bank from the earlier bank. Annexure P-1 at page No.10 of the complaint, (produced by the complainants) speaks under the heading “Fees on Full and Final Prepayment” reads as under :-

“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.”

Admittedly, Annexure P-1 is the sanction letter dated 8.1.2008, which bears the signatures of the parties to the lis. The said fact has not been disputed by the learned Counsel for the parties at the time of arguments. The complainants have also produced at page No.27, the terms and conditions applicable to the loan with adjustable interest rate. The condition No.18 reads as under :-

“The Borrower/s shall not, without the approval of the Lender (which approval may be given subject to such terms and conditions as may be stipulated by the Lender including payment of minimum prepayment amount, prepayment charges or discounted interest and/or any other charges, plus applicable interest tax or other statutory levy), prepay the outstanding principal amount of the facility in full or in part, before the Due Dates. In the event any part prepayment of the facility is permitted by the Lender, the Lender shall be entitled to amend the repayment schedule/amount of installment(s) as specified in the Application Form(s) and the Borrower/s shall thereafter make payment of the installments as per such amended Application Form(s).”

13.           Now, it is clear that in case of full and final payment, prior to the date of normal expiry, the loanee shall be liable to pay 2% on the amount prepaid and on the amount paid by the borrower towards the repayment of the loan from the date of final payment. It is also clear that at the time of advancing/taking the loan, a sanction/offer letter dated 8.1.2008 – Annexure P-1 was issued to the complainants, in which, it was mentioned that the loan would be advanced at floating rate of interest. It was also mentioned therein that in case of full and final prepayment, the OP would have a legal right to charge foreclosure charges on full and final amount and also on the amount tendered by the borrower towards the prepayment from the date of final payment. The word ‘foreclosure’ actually means and used for the prepayment of the loan before the expiry of actual duration. The mere change of nomenclature of ‘foreclosure charges’ instead of ‘prepayment charges’ did not make the payment by the complainants at the time of prepayment of loan as illegal. Reliance placed on the judgment of own State Commission in Appeal No.417 of 2010 decided on 12.7.2011 titled as ICICI Bank Limited Vs. Hitesh Harjani.

14.           Admittedly, the payment of Rs.6,55,747/- was on account of prepayment/foreclosure charges. Therefore, as per sanction letter dated 8.1.2008 and also as per condition No.18 at page No.27 of the terms & conditions of the loan agreement, the OP had a legal right to charge foreclosure charges. There is no dispute that in the instant case, the amount of            Rs.6,55,747/- had been charged by the OP-bank on account of foreclosure charges/prepayment charges, as the loan was paid before the expiry of the same. The court is to gather the intention of the parties and in view of this, it is held that the OP intended to charge prepayment charges, as per the sanction letter dated 8.1.2008 and also as per condition No.18 at page No.27 of the terms & conditions of the loan agreement. Therefore, it is held without any hesitation that the OP had a legal right to charge Rs.6,55,747/- on account of prepayment charges, as per the sanction letter and also as per the terms & conditions contained in the agreement at page No.27, referred in para supra(s). More so, it is not disputed that the sanction letter was not signed by the parties to the lis i.e. complainants and the authorized signatory of the bank – OP. Since, the complainants are signatory to the sanction letter which contains clause with regard to prepayment charges along with rates applicable, referred to above, so it is held without any hesitation that the demand raised by the OP-bank of Rs.6,55,747/- on account of foreclosure charges/prepayment charges is legal and genuine.

15.           As a result of the above discussion, it is held that the complainants have failed to prove any deficiency in service on the part of OP. With the result, the complaint is dismissed, with no order as to costs.

16.               Certified copies of this order be sent to the parties free of charge. The file be consigned.