Punjab

Ludhiana

CC/14/613

Surinder Kumar - Complainant(s)

Versus

ICICI Bank Ltd - Opp.Party(s)

04 Jul 2016

ORDER

BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, LUDHIANA.

                                                            C.C. No.613 of 04.09.2014                           

                                           Date of decision: 04.07.2016

1.Sh.Surinder Kumar Sehgal, aged 65 years s/o Sh.Ram Nath Sehgal.

2.Sh.Narinder Kumar Sehgal, aged 56 years s/o Sh.Ram Nath Sehgal

3.Smt.Sangeeta Sehgal, aged 61 years w/o Sh.Surinder Kumar Sehgal.

4.Smt.Anita Sehgal, aged 53 years w/o Sh.Narinder Kumar Sehgal.

   Complainants no.1 to 4 residents of 682-683, Model Town, Jalandhar.

5.Kapsons Industries Limited, G.T.Road, Suranussi, Jalandhar through Sh.Chakkarvarti Sharma s/o Sh.B.B.Shastri, General Manager(Finance/Authorized Signatory).

                   …Complainants.

                                      Versus

1.ICICI Bank Limited, Landmark, Race Course Circle, Vododara 390007 through its M.D.

2.ICICI Bank Limited, Feroze Gandhi Market, Ludhiana through its Branch Manager.

                                                                                ….Opposite parties

COMPLAINT UNDER SECTION 12 OF THE

CONSUMER PROTECTION ACT, 1986.

 

QUORUM:

SH.G.K.DHIR, PRESIDENT

MS.BABITA, MEMBER

 

COUNSEL FOR THE PARTIES:

For complainant                      :           Sh.Nitin Kapila, Advocate

For OPs                          :           Sh.Alok Mohindra, Advocate

 

PER G.K DHIR, PRESIDENT

 

1.                          Complainants no.1 to 4 were the joint owners of property No.254, Defence Colony, New Delhi and they mortgaged the same with OP1 for borrowing amount. After considering the proposal of complainants no.1 to 4, loan was sanctioned subject to the association of complainant no.5 as co-borrower. Complainant no.5 is the family business concern of the complainants no.1 to 4, who are the Directors and Principal Office Bearers. OP5 is a corporate body duly incorporated under the Companies Act, 1956 having its registered office at G.T.Road, Jalandhar. Sh.Chakkarvarti Sharma, the General Manager of this concern is fully conversant with the facts of the case and even he has been authorized to pursue the complaint vide resolution dated 6.8.2014 passed by Board of Directors of the company. OP bank considered the proposal of the complainants and sanctioned loan of Rs.400 lac on 28.12.2010 in terms of agreement accepted by the complainants. Another loan of Rs.860 lac was sanctioned by OPs bank vide another agreement in the name of complainants against the same property. Separate complaint in  respect of second agreement is also filed. As per the terms of the sanction order,  the loan was repayable in 138 equated monthly installments with interest @11% p.a. commencing from 10.3.2011 and ending on 10.8.2022. Complainants no.1 to 4 had been paying the installments on due dates as per the terms of loan agreement. As per the terms of sanction and  loan  agreement, bank agreed to charge interest @11% p.a., which subsequently stood enhanced to 13.25% p.a in illegal way. Due to increase of this rate of interest, installments payable by the complainant stood inflated resulting in disturbance of financial planning of complainants no.1 to 4. Complainants no.1 to 4 could not afford heavy burden of interest and they became ready to sell the immovable property for repaying the outstanding amount. Complainants no.1 to 4 sought permission to sell the ground floor and first floor of the mortgaged property and the same was granted by OPs, subject to deposit of Rs.600 lac in the loan accounts. Complainants no.1 to 4 sold the ground floor and first floor portion of the said house and deposited the stipulated amount of Rs.600 lac with the bank. However, vide letter 21.2.2014, OP bank through its Adarsh Nagar branch at Jalandhar confirmed the receipt of Rs.600 lac, out of which, sum of Rs.400 lac was credited in the LAN account No.LBLUD00001844367 and Rs.200 lac was credited in the LAN account No.LBLUD00001844368. Through this letter, confirmation was given qua release of charge over the second and third floor portions. Bank had unconditionally accepted the said amount without charging any prepayment charges as revealed by the contents of letter dated 21.2.2014. Complainants no.1 to 4 submitted written request for waiving off the foreclosure and prepayment charges. After accepting the request of complainants no.1 to 4,  OP bank sent three foreclosure statements dated 25.2.2014, 7.3.2014 and 8.3.2014. Through letter dated 8.3.2014, the OP bank  advised  the complainants to deposit Rs.15,261,492.72P including amount of Rs.1,66,092/- due to late payment penalty, but Rs.7,68,015.72P on account of prepayment charges @2.2472% against the account No.LBLU00001844368. Protest was lodged with OP bank by the complainants no.1 to 4 vide letter dated 11.3.2014, but OP bank  refused to waive off the prepayment charges on flimsy grounds. Reserve Bank of India had directed banks to discontinue the practice of levying prepayment penalty on all floating rate loans and to ensure that fixed rate loans are truly fixed and are not referenced to any floating rate bench mark. These instructions were issued to Indian Banks Association on 4.2.2014. Even letters/emails on 3.4.2014, 9.4.2014, 8.5.2014, 4.4.2014 and 5.7.2014 were sent to the OPs for waiver off prepayment charges. It is claimed that OP bank have illegally recovered a sum of Rs.7,49,668/- on account of prepayment charges, despite the fact that those are not liable to be charged as per RBI Directives. Moreover, rule of estoppel debars the OP bank from claiming prepayment charges after acceptance of Rs.200 lac and 400 lac in the above said two loan accounts. By pleadings deficiency in service on the part of OPs, prayer made for directing Ops to refund the amount of Rs.7,49,668/- with pendentelite and future interest @13.25% per annum. Even directions sought to OPs to pay Rs.2,50,000/- for undue harassment, mental tension and inconvenience.

2.                In joint written statement filed by OPs, it is pleaded interalia as if this Forum has no jurisdiction to entertain and try the present complaint because recovery of already paid amount sought, which cannot be granted by this Forum. Moreover, complainants were not availing the services at the time of filing of the complaint and as such, they have no locus standi to file the complaint. Admittedly, two loans were contracted by the complainants against the same property and as such, single complaint with respect to two loans  should have been filed. However, complainants deliberately filed two   separate complaints, so as to bring the complaint within the pecuniary jurisdiction of this Forum. Complainants are residing at Jalandhar and even they mortgaged the property situate at Jalandhar and as such, this Forum has no territorial jurisdiction. Relief claimed in the complaint is against the provisions of the guideline and circular of the Reserve Bank of India. Complainants have already availed remedy of filing the complaint with the Banking Ombudsman at Chandigarh. No deficiency in service on the part of OPs proved and as such, complaint not maintainable, particularly when involved intricate question of law and facts can be decided after appreciation of lengthy evidence to be adduced by the parties. Admittedly,       complainants no.1 to 4 are the joint owners of the mortgaged property and complainant no.5 is a co-borrower in the loan transactions. Complainant no.5 is a public limited company and has a separate legal entity. As per law, no individual can claim any company to be owned by him. Rights and liabilities of the company are governed under the Companies Act. So, complainants no.1 to 4 cannot  claim that complainant no.5 is their family business concern. Owing to impleadment of complainant no.5, it is denied that the OP5 has no vital stake in the loan transaction. No document produced in support of the assertion that Sh.Chakkarvarti Sharma has been authorized through resolution to file the complaint. Complainants availed loan of Rs.860 lac form the OPs under the Loan Account No.LBLUD00001844367. Even another loan of Rs.400 lac was availed by the complainants under Loan Account No.LBLUD00001844368. Property No.254, Defence Colony, New Delhi was mortgaged by the complainants in favour of OPs as a security against both the loan accounts. Complainants availed loans on floating rate of interest, due to which, the same can increase or decrease depending upon the floating reference rate of the bank. The installments paid by the complainants were duly entered in the statement of account duly maintained by the OPs. Dispute regarding payment of installments is not there in this complaint. Ops charged the interest as per the terms and conditions of the loan agreements. In case of any enhancement of interest, the enhanced amount liable to be adjusted either by way of increase in the amount of EMI or in the tenure of EMI. Complainants were irregular in making  payment of the EMIs. Moreover, complainants were fully aware at the time of contracting loans that rate of interest can vary from time to time depending on the factors mentioned in the loan agreements. Loans in question were disbursed on the requests of the complainants and on their assurances that they will abide by the terms and conditions of the loan agreements. The loans were sanctioned simultaneously through the common sanctioned letter and duly disbursed in favour of the complainants after mortgaging  the property by them in favour of the bank. Complainant aspired to prepay the loan amount and that is why they  requested Ops to give permission to sell the ground and first floor of the mortgaged property. After granting of that permission, complainants deposited Rs.600 lac with the Ops after sale of the said property. Those amounts were not accepted unconditionally. In fact, prepayment charges are leviable as per the loan agreements. Those charges have been levied at the time of final closure of the loan accounts and before the release of the security. Complainants themselves requested for foreclosure of their accounts by offering to pay the outstanding amount and in view of acceptance of that offer, the complainants were bound to deposit the prepayment charges as well as late payment penalty. The amounts in this respect calculated as per the terms and conditions of the loan agreements. Account of the complainants was closed and the security was released and as such, the complainants are no more consumers. Complainants are not entitled to the benefit of circular issued by Reserve Bank of India because  major amount was paid by them in    February, 2014 and the remaining in March, 2014. However, circular in question was issued by the Reserve Bank of India on 7.5.2014 whereby advising  the bank not to charge the foreclosure charges/prepayment    penalties on all floating rate term loans. In case  the complainants one of the co-borrower i.e. M/s Kapsons Industries Ltd., is a public limited company and as such, loan was not availed by the individual. As per circular of Reserve Bank of India, prepayment charges are not to be levied after 7.5.2014 in respect of the loan account of the individual only. The Banking Ombudsman had already dismissed the complaint of the complainants vide its order dated 25.6.2014 after awarding due opportunity to the complainants. No illegality committed by the Ops in putting forth the demand of prepayment charges and as such, complaint termed as frivolous. Letters sent by the complainants on 3.4.2014 and 9.4.2014 were claimed to be pre-mature because the circular was issued by Reserve Bank of India on 7.5.2014. The wording of the circular itself provides that the levying of the prepayment charges has to be stopped from the date of circular. Other averment of the complaint denied by claiming that there is no deficiency in service on the part of OPs, owing to which, complainants have no cause of action.

3.                Complainants to prove their case tendered in evidence joint affidavit Ex.CA of Sh.Surinder Singh Sehgal and Sh.Narinder Singh Sehgal along with documents Ex.C1 to Ex.C42 and thereafter, counsel for complainants closed the evidence.

4.                On the other hand, counsel for OPs tendered in evidence affidavit Ex.RW1/A of Sh.Jaswinder Singh, Zonal Credit Manager of OPs along with documents Ex.R1 to Ex.R12 and then closed the evidence.

5.                Written arguments in this case submitted by complainants only and not by the OPs. Oral arguments of counsel for parties heard and records gone through minutely.

6.                Perusal of Ex.R8 to Ex.R10 along with Ex.C25 to Ex.C27 reveals that complaint qua the subject matter in question was filed by the complainants with the Banking Ombudsman at Chandigarh, but the same was dismissed with the observations that complainants may approach the other authorities. Merely because the Banking Ombudsman has dismissed the complaint, due to that jurisdiction of the Consumer Forum to adjudicate the matter is not barred. In holding this view, we are fortified by law laid down in case M/s General Insurance Company Limited vs. Sandeep Joshi-2015(4)Consumer Law Times-108(N.C.). Ratio of this case lays that Banking  Ombudsman award is not a bar for Consumer Fora to adjudicate the matter. Being so, this consumer complaint is maintainable, despite the dismissal of the complaint of the complainants by Banking Ombudsman qua the subject matter.

7.                Undisputedly, two loans of Rs.400 lac and Rs.860 lac were availed by the complainants on execution of loan documents and thereafter, complainants deposited Rs.400 lac and Rs.200 lac in the above referred two loan accounts. Contentious issues involved in the case are 

i)Whether complainants ceased to be  consumers after adjustment of the loan accounts?

ii)Whether this Forum has territorial and pecuniary jurisdiction?

iii)Whether benefit of circular of Reserve Bank of India qua non charging of foreclosure and prepayment charges available to the complainants or not?

8.                Ex.C1 is the copy of resolution showing as if Sh.Chakkaravarti Sharma has been authorized to institute and follow up the legal proceedings on behalf of OP5. Memorandum and Articles of OP5 produced on record as Ex.C2. So, this documentary evidence establishes as if OP5 is duly represented.

9.                Letter Ex.C4 is dated 17.7.2014 which shows as if loan with respect to loan account No.LBLUD00001844368 has been repaid fully and no further dues of OPs outstanding against the complainants. Ex.C9 is the letter dated 28.4.2014 through which complainants were intimated that in response to their request for prepayment of the loans, they have been permitted to deposit Rs.14,963,049.55P including the prepayment charges of Rs.7,49,674.55P. Date of prepayment taken as 30.4.2014 through this letter Ex.C9 with rider that in case, loan prepaid after 10.5.2014, then installments for the following month will become payable. In the same loan account bearing account No.LBLUD00001844368, the complainants were called upon to pay Rs.15,261,492.72P including Rs.7,68,015.72P as prepayment charges through letter Ex.C11 dated 8.3.2014 by taking the date of prepayment as 8.3.2014. However, through letter Ex.C17, complainants were called upon to pay Rs.36,738,593.27P by taking the date of prepayment as January 31,2014. However, vide letter Ex.C16, complainants were informed that floating interest rate on loans has been increased from 9.75%p.a. to 10.00% p.a. w.e.f.August 23, 2013, but from 13.00% p.a. to 13.25% p.a. w.e.f. September, 2013. Complainant no.1 through letter Ex.C16 was suggested to reduce the loan tenure. Protest against this enhancement of interest rate lodged by the complainants through letters Ex.C22 and Ex.C23. Inspite of these letters, controversy qua the date, as to when, the amount of Rs.600 lac deposited for clearing two loans remains unresolved. Rather, contents of Ex.C34 establishes as if OP bank confirmed through this letter of 21.2.2014 having received the payment of Rs.400 lac and 200 lac in above referred loan accounts with observations that the property documents pertaining to ground floor and first floor of the mortgaged property will be handed over to the complainants shortly. So, virtually the part of contracted loan paid by 21.2.2014. However, prepayment charges in question shown in the foreclosure statement dated 28.4.2014 is the case of the complainants.

10.              After going through para no.7(g) of the written statement filed by OPs, it is made out that major part of the loan amounts prepaid in February, 2014, but balance amount paid in March, 2014. The assertion in that respect is supported by contents of para no.15(g) of affidavit Ex.RW1/A of Sh.Jaswinder Singh, Zonal Credit Manager of OPs bank. Copy of statement of account Ex.R12 of loan account in question bearing No.LBLUD00001844368 shows as if after waiver, the full amount was adjusted on 1.5.2014. So, keeping in view zero balance worked out through Ex.R12 on 1.5.2014, it is obvious that entire payment was made by the complainants to OPs on 1.5.2014. So, virtually this complaint has been filed after 4 months of the full and final payment of the loan amount.

11.              Allegations of fraud or cheating not levelled, but in para no.16 of the complaint, it is mentioned that complainants were forced to pay the prepayment charges on account of the fact that OPs not willing to accept the balance outstanding amount in the loan accounts till these charges also paid. That element of coercion though pleaded is not virtually borne out from the allegations in the complaint because if at all the charges were levied illegally to the knowledge of complainants, then complainants would  have paid the amounts under protest. However, no document produced to show that complainants recorded protest note at the time of paying of the entire loan amounts on 1.5.2014. So, virtually allegations regarding forcible payment of prepayment charges are an afterthought, particularly when the notification on the basis of which, waiver sought, issued by the Reserve Bank of India on 7.5.2014 is a fact borne from the contents of Notification Ex.R11. So, virtually prepayment was made by the complainant before issue of directions by the Reserve Bank of India through circular Ex.R11 of date 7.5.2014. No circular of date 4.2.2014 has been produced on record by the complainants, but OPs produced on record the circular of date 7.5.2014 (Ex.R11) and as such, it is obvious that loans in question were paid by the complainants to the OPs before issue of direction by the Reserve Bank of India to the Banks. Being so, allegations of coercion are not borne out because the banks before issue of Ex.R11 had been charging prepayment penalty in routine. If such charging was in routine, then complainants were duty bound to pay the prepayment penalties/foreclosure charges. Allegations of fraud, misrepresentation or coercion not proved and as such, in view of payment of loan amount made by the complainants to the Ops prior to issue of circular Ex.R11, complainants  ceased to be consumers of OPs. Being so, complaint is not maintainable.

12.              Benefit of circular Ex.R11 certainly is not available to the complainants because after going through the same, it is made out that banks will not charge the foreclosure charges/prepayment penalties on all       floating rate term loan sanctioned to the individual borrower. However, loans in this case contracted for commercial transaction is a fact borne out from the contents of Ex.R2=Ex.C31.Type of facilities availed qua the loan in question is mentioned as commercial in Ex.R2=Ex.C31. No allegations levelled in the complaint  qua contraction of loan amounts in question for earning livelihood. Rather, as per claim of the complainants, loans amount of Rs.860 lac and of Rs.400 lac were availed by the complainants from OPs. Contraction of these heavy loan amount by the complainant from Ops also reflects as if the loans were contracted for commercial activities only. In case, the services of loan or of purchase of goods or of transportation availed for commercial purpose, then concerned customer will not be a consumer. In holding this view, we are fortified by law laid down in cases titled as Birla Technologies Limited vs. Neutral Glass and Allied Industries Limited-(2011)1-Supreme Court Cases-525; Punjab National Bank vs. M/s Bhaskar Textiles-2015(1)CLT-89(N.C.), Pharos Solution Pvt. Ltd. and others vs.  – Tata Motors Ltd., Bombay House-2015(IV)CLT-265(N.C.) and Dr.Baba Sahib Ambedkar Backward Class Cooperative Spinning Mill Limited and others vs. Maharashtra State Electricity Board and others-2015(4)CLT-383(N.C.) and Nikita Cares vs. Surya Palace IV(2015)CPJ-405(N.C.). Keeping in view  ratio of these cases and the fact that loans availed for commercial activities, there is no escape from the conclusion that complainants are not the consumers within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986. Besides, the benefit of circular Ex.R11 not available to the complainants because they contracted loan for commercial purposes and not for individual needs and as such, complaint merits dismissal.

13.     As a sequel to the above discussion, we hereby dismiss the complaint of the complainant by leaving the parties to bear their own costs. Copy of this order be sent to the parties free of costs as per rules. 

14.                        File be indexed and consigned to record room.

 

                              (Babita)                                       (G.K. Dhir)

                    Member                                        President

Announced in Open Forum

Dated:04.07.2016

Gurpreet Sharma.