Punjab

Faridkot

CC/19/98

Gyan Chand Balmiki - Complainant(s)

Versus

ICICI Bank - Opp.Party(s)

Atul Gupta

27 Jan 2020

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, FARIDKOT

 

Complaint No. :          98 of 2019

Date of Institution :     09.04.2019

Date of Decision :       27.01.2020

Gyan Chand Balmiki aged about 61 years son of Amir Chand resident of Sangat Singh Nagar, Dwareana Road, Kotkapura, Tehsil Kotkapura District Faridkot.

           .....Complainant

Versus

 

1. ICICI Bank Ltd. through its  Branch Manager, Bank Branch Kotkapura.
2. ICICI Bank Ltd, through its Manager, Bibi Wala Road, Opposite Clock Tower, Bathinda.

.....OPs

Complaint under Section 12 of the

Consumer Protection Act, 1986.

 

Quorum:     Sh Ajit Aggarwal, President,

Sh Param Pal Kaur, Member.

Present:       Sh Atul Gupta, Ld Counsel for Complainant,

 Sh Jatinder Bansal, Ld Counsel for OPs.

 

ORDER

(Ajit Aggarwal, President)

 

                                   Complainant has filed the present complaint under Section 12 of the Consumer Protection Act, 1986 against OPs seeking

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directions to OPs to issue NOC and to release the title deed and for further directing them to pay Rs. One lac as compensation for harassment and mental agony suffered by him besides litigation expenses of Rs.20,000/-.

 2                                             Briefly stated, the case of the complainant is that complainant availed two home loans: one bearing no LBFKT00000350135 for Rs.2 lacs and another bearing no. LBFKT00001109723 for Rs.67,650/-from the bank of OPs. Complainant pledged his original title deeds with OPs and at the time of granting loans, OPs took signatures of complainant on various blank papers and he was told that interest would be charged to him as per instructions of Reserve Bank of India and as per Policy issued by Government of India from time to time, but no terms and conditions or copy of policy was ever supplied to him by OPs. It is submitted that in respect of loan account no. LBFKT00000350135, complainant has paid the principle as well as interest to the tune of Rs.3,71,246/- and for his second loan bearing no. LBFKT00001109723, he has paid Rs.1,26,754.40 to OPs. It is further submitted that complainant has already cleared all the loan amount, but despite this, Ops have not released NOC to him for both the loans and they have also not released title deeds for said loans, which is quite illegal and unlawful. Even legal notice served upon OPs also served no purpose. all this act of OPs amounts to deficiency in service and trade mal practice on the part of OPs. He has prayed for accepting the present complaint

 

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alongwith compensation and litigation expenses besides the main relief. Hence, the present complaint.

3                                                         Ld Counsel for complainant was heard with regard to admission of the complaint and vide order dated 22.04.2019, complaint was admitted and notice was ordered to be issued to the opposite party.

4                                               On receipt of the notice, OP-1 and 2 filed written reply wherein they admitted before the Forum that complainant availed two home loans from them for Rs.2 lacs and Rs.67,650/-respectively. It is averred that at the time of availing said loans, complainant was fully aware of rate of interest, tenure of loans, EMIs of loan and about other details, which were clearly explained to him and he was also provided copies of loan agreements and other documents signed or entered by him  besides amortization schedule for repayment and about interest charged at every stage of repayment. Complainant is bound by the terms and conditions of the loans. It is also admitted that loan bearing account no. LBFKT00000350135 for Rs.2 lacs was initially payable in 180 monthly instalments for 15 years at the rate of 9.25 % (IHPLR 10.25% -Margin 1%) and his another laon bearing no. LBFKT00001109723 for Rs.67,650/-was sanctioned at the rate of interest of 9.75% for 168 monthly instalments with Floating Rate of Interest. It is sternly denied that answering OPs took signatures of complainant on any blank papers. It is averred that whenever, there is an increase in rate of

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interest, they can increase tenure of loan to avoid burdening the higher EMI and if EMI is not adequate to cover the interest payment, then bank can increase the EMI amount suitably and it is duly mentioned in loan agreement signed by complainant at the time of taking loan. It is further averred that change in floating rate of interest was intimated to complainant and he did not objected the same. It is also admitted that complainant has paid 180 instalments for loan of Rs. 2 lacs and initially his EMI was of Rs.2059/- and now due to change in rate of interest, EMI of Rs.2252/-is being paid by him since November, 2011 without any protest and uptill 12.06.2019, 180 EMIs have been paid by him and 4 instalments are due towards him uptill 12.06.2019 and 126 future instalments for total sum of Rs.2,81,674/- are due towards complainant. It is also admitted that complainant has paid 160 instalments for loan of Rs. 67,650/- and initially his EMI was of Rs.740/- and now due to change in rate of interest, EMI of Rs.854/-is being paid by him since November, 2011 without any protest and uptill 12.06.2019, 160 EMIs have been paid by him and 5 instalments are due towards him uptill 12.06.2019 and 123 future instalments for total sum of Rs.1,04,707/- are due towards complainant. However, it is admitted that Rs.3,71,246/-have been paid by complainant for his loan of Rs.2 lacs and Rs.1,26,754.40/-are paid by him for his loan of Rs.67,650/-, but due to change in rate of interest as per instructions of government and Reserve Bank of India, complainant is liable to clear the remaining instalments of enhanced EMIs in respect of

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his loan accounts. Complainant was also issued several letters to this effect but all in vain. All the other allegations are denied being wrong and incorrect and asserted that there is no deficiency in service on their part. Prayer for dismissal of complaint is made.

5                                                The ld counsel for complainant tendered in evidence affidavit of complainant  Ex.C-1 and documents Ex C-2 to C-12 and then, closed the evidence.

6                                              In order to rebut the evidence of the complainant, Counsel for OP-1 and OP-2 tendered in evidence affidavit of Sunil Kumar, Branch Manager Ex. OP-1,2/5 and document Ex OP-1,2/1 to Ex OP-1, 2/4 and Ex OP-1,2/6 and then, closed the evidence.

7                                              We have heard the ld counsel for complainant as well OPs and have carefully gone through the documents placed on record.         

 8                                              From the careful perusal of record, pleadings of respective parties and arguments advanced by ld counsel for respective parties, it is observed that case of the complainant is that complainant availed two home loans. His one loan was for Rs.2 lacs and another was for Rs.67,650/-from OPs and he pledged his original title deeds with OPs. At the time of loan, OPs took signatures of complainant on various blank papers and assured that interest would be charged as per instructions of Reserve Bank of India and as per Policy issued by

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Government of India from time to time, but no terms and conditions or copy of policy was ever supplied to him by OPs.  It is submitted that in respect of loan account no. LBFKT00000350135 for Rs.2  lacs, complainant has paid the principle as well as interest to the tune of Rs.3,71,246/- and for his second loan bearing no. LBFKT00001109723 for Rs.67,650/- he has paid  Rs.1,26,754.40 to OPs. Though, he has paid all the loan amount alongwith interest, but still, Ops have neither released NOC nor have released title deeds for said loans, which is unlawful. Legal notice issued also bore no fruit and all this act of OPs amounts to deficiency in service and has caused great harassment and mental torture to complainant and it amounts to deficiency in service. He has prayed for compensation and litigation expenses besides the main relief and stressed on documents Ex C-1 to 12.

9                                              Ld counsel for complainant has placed on record document Ex C-2 i.e copy of statement of account for his loan account no.xxxxxx350135 that shows that OPs have charged interest at the rate of 14.5% against agreed rate of interest of 9.25% alongwith additional interest at the rate of 24% which is more than the agreed rate of interest. Ex C-5 is also bank account statement for his loan account no.xxxx1109723 that also reveals that OPs charged interest at the rate of interest 15.50% against agreed rate of interest of 9.75% alongwith additional interest of 24%. Ex C-9 is legal notice served upon by

 

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complainant to OPs vide which he requested OP-1 and 2 to redress his grievance. Through his affidavit Ex C-1 complainant has reiterated his grievance and has made prayer for justice. In reply, OPs have denied all the allegations of complainant, but admitted the fact that loan account no  LBFKT00000350135 sanctioned to complainant for Rs.2 lacs was initially payable in 180 monthly instalments for 15 years at the rate of 9.25 % (IHPLR 10.25% -Margin 1%) and his another laon bearing no. LBFKT00001109723 sanctioned for Rs.67,650/-was granted at the rate of interest of 9.75% for 168 monthly instalments with Floating Rate of Interest. It is averred that whenever, there is an increase in rate of interest, they can increase tenure of loan to avoid burdening the higher EMI and if EMI is not adequate to cover the interest payment, then bank can increase the EMI amount suitably and it is duly mentioned in loan agreement signed by complainant at the time of taking loan. Change in floating rate of interest was intimated to complainant and he did not object the same. It is also admitted that complainant has paid 180 instalments for loan of Rs. 2 lacs and initially his EMI was of Rs.2059/- and now due to change in rate of interest, EMI of Rs.2252/-is being paid by him since November, 2011 without any protest and uptill 12.06.2019, 180 EMIs have been paid by him and 4 instalments are due towards him uptill 12.06.2019 and 126 future instalments for total sum of Rs.2,81,674/- are due towards complainant. It is also admitted that complainant has paid 160 instalments for loan of Rs. 67,650/- and initially his EMI was of Rs.740/- and now

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due to change in rate of interest, EMI of Rs.854/-is being paid by him since November, 2011 without any protest and uptill 12.06.2019, 160 EMIs have been paid by him and 5 instalments are due towards him uptill 12.06.2019 and 123 future instalments for total sum of Rs.1,04,707/- are due towards complainant. Rs.3,71,246/-have been paid by complainant for his loan of Rs.2 lacs and Rs.1,26,754.40/-are paid by him for his loan of Rs.67,650/-, but due to change in rate of interest as per instructions of government and Reserve Bank of India, complainant is liable to clear the outstanding amount of enhanced EMIs in respect of his loan accounts. There is no deficiency in service on the part of OPs and prayed for dismissal of complaint with costs.

10                                       To prove his version, the complainant has placed on record loan account statement Ex.C-2 and Ex C-5 that reveal that opposite parties had been charging higher rate of interest than agreed and no information regarding it was ever given to complainant and no consent of complainant was taken by opposite parties. The amount of interest was increased and the principal amount in EMIs was also increased. Moreover, they are charging additional interest at the rate of 24% on overdue instalments which is very high than the agreed rate of interest. This act of opposite parties unilateral and arbitrary and detrimental to the economic interests of the complainant. The opposite parties have no right to increase the rate of interest unilaterally without

 

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information and consent of complainant. It amounts to deficiency in service and mal trade practice on the part of opposite parties.

11                                           The grievance of the complainant is that opposite parties never informed him regarding any change of rate of interest or EMIs at any time. Opposite parties have not acted upon as per guidelines of RBI and National Housing Bank issued by them time to time to Housing finance companies. The alleged letters dated 25.10.2011,  8.05.2017, 11.08.2017, 6.11.2017 have never been received by complainant. Moreover, the opposite parties failed to show any record vide which these letters were sent to complainant as per guidelines of RBI and National Housing Bank. The opposite parties should inform the complainant and other borrowers regarding any change of rate of interest and floating rate of interest prior to any change, but they failed to inform it on time. He put reliance on the guidelines of Fair Practices Code for HFCs dated 05.09.2006 issued by National Housing Bank. As per these guidelines at Serial no.3.4 under the Heading Interest rates it is mentioned that HFCs shall given information to the customer on: (a) the interest rates which apply to his/her accounts, both deposit and loan, (b) when interest is paid on his/her deposits, or changed on his/ her loan accounts, (c) how interest is applied to his/her account and method of calculation of interest. At Serial No.3.5 under the Heading Changes in interest rates it is mentioned that "HFCs shall inform their customers when they change interest rates on their products. Further put reliance on the guidelines of

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dated 02.06.2009 issued by National Housing Bank to HFCs, vide which it is mentioned that NHB has been receiving complaints from the  borrowers of HFCs about the excess interest and charges being levied by them. This also partly could be due to lack of disclosure and transparency or information on interest rate, common fees and charges levied by the HFCs. Hence, HFCs are advised to revisit their policies on interest rate determination, fee and other charges etc., including margin and risk premium charged to different categories of borrowers and get the same duly approved by their Boards. Further the HFCs are also advised to put in place an internal mechanism to monitor the process and the operations so as to ensure adequate transparency in communications with the borrowers. Ld. Counsel for the complainant further produced copy of guidelines on Fair Practices Code for HFCs dated 11.10.2010, which is as follows:- 'Loans' point 4.1 (iv) (b) The HFCs should give notice to the borrower of any change in the terms and conditions including disbursement schedule, interest rates, service charges, prepayment charges, other applicable fee/ charges etc. HFCs should also ensure that changes in interest rates and charges are effected only prospectively. A suitable condition in this regard should be incorporated in the loan agreement. 4.1 (iv) (c) If such change is to be disadvantage of the customer, he/she may within 60 days and without notice close his/ her account or switch it without having to pay any extra charges or interest. As per these guidelines, HFCs should give notice to the borrower of any

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change in the terms and conditions including disbursement schedule, interest rates, service charges, prepayment charges, other applicable fee/ charges etc. and if such change is to be disadvantage of the customer, he/she is at liberty to close his account without any notice or switch it without paying any extra charges or interest. But the opposite parties never issued any letter regarding it to the complainant informing him that he may within 60 days and without notice close his/ her account or switch it without having to pay any extra charges or interest. The complainant has the option to close his account or switch it without giving any extra charges or interest. He further produced Circular dated 19.10.2011 issued by National Housing Bank to HFCs regarding Uniformity in charging interest (floating rate basis) for old and new Customers, vide which HFCs are directed to maintain uniformity in rates between their old and new customers. The relevant part of this Circular is reproduced as under:- "It has been observed that some of the housing finance companies are offering different floating rates of interest to their old and new customers. Several representations/complaints have been received by the National Housing Bank against such practice. We have carefully examined the issue in all its aspects. It is accordingly advised that the HFCs should ensure uniformity in rate, on floating rate basis, charged to their old and new customers, with the same risk profile, irrespective of the time of entry of the borrowers in the market. Charging of higher interest rate to the old customers against the new customers puts them to a great disadvantage,

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besides the practice being discrimination. The practice also generally lacks in transparency and fairness. In view of the foregoing, HFCs are  advised to apply uniform rates of interest to the old and new borrowers, who have the same credit/risk profile. This may be implemented with immediate effect." Ld. Counsel for complainant argued that opposite parties are of tendency to cheat the customers by saying and offering them low rate of interest then the market rate. When the customers fall in their  trap, then they increased the rate of interest at very high rate without informing them and looted the innocent customers.

12                                             To prove this fact, he produced copy of circular dated 05.04.2013 issued by National Housing Bank vide which they are instructed to facilitate quick and good understanding of the major terms and conditions of housing loan agreed upon between a HFC and the individual borrower. The HFCs shall obtain a document containing most important terms and conditions of such loan in all cases and copy of these terms and conditions should be handed over to the borrower under acknowledgement. In these terms and conditions at serial no.6 under the heading Repayment of loan and interest, the HFCs are instructed to mention the amount of EMIs and total number of installments, where in the loan is payable in equated monthly installments or other details for payment of principal amount of loan and interest including due date and also mention procedure for advance intimation of the changes in the rate of interest or EMI. In the present case, the opposite parties have failed to

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supply any detail, procedure or information in the change of rate of interest. In the loan document and loan agreement, copy of which is produced by opposite parties themselves is Ex.OP-1,2/-2, alongwith schedule in which the rate of interest is mentioned as 9.25% per annum.

The term of repayment is 180 months for loan of Rs. 2 lacs at the rate of 9.25%  and total number of EMIs 180 have been paid by complainant and OPs have duly admitted this fact before this Forum. And for loan of Rs.67,650/- terms of instalments was 168 at the rate of 9.75%, but OPs have charged 15.50% interest than the agreed rate of interest without any intimation to complainant and have made huge amount due towards him without any reason. The agreed rate of interest between the parties for both the  loans is 9.25% and 9.75% per annum, whereas the opposite parties charged excess rate of interest upto 15.50% per annum and also charged additional interest at the rate of 24% on overdue instalments without any notice and have unnecessarily increased number of instalments, which is not permissible under law, even natural justice.

13                                                      Since the opposite parties bank has failed to prove the alleged service of the intimation of resetting of interest rate to the complainant and have also failed to give any plausible reason for charging excessive interest than agreed rate of interest and for charging additional interest at high rate such as 24% per anum, therefore, action of OPs in charging excessive and additional interest is not appropriate.        

 

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14.                                         From the above discussion, we are of the considered opinion that at the time of sanctioning the loan, rate of interest between the parties was settled @ 9.25 % and 9.75% per annum and loan was repayable in 180  and 168 equal monthly instalments. The rate of interest in case of floating rate of interest is to be increased or decreased from time to time. But in the present case, the opposite parties charged very much higher rate of interest than agreed, which is not justified and against the law. Hence the present complaint in hand is hereby allowed and opposite parties are directed to overhaul the loan account of the complainant and to charge interest as charged by Nationalised Bank such as State Bank of India for such type of house loans as per guidelines of RBI issued time to time and they are further directed to charge additional interest at the rate of 12% on overdue instalments and to settle the loan account of the complainant accordingly. Opposite Parties are further directed to release the NOC, Title Deed and other documents which were pledged by complainant in security of the loan to him on repayment of balance amount if any found due after overhauling the loan accounts. Ops are further directed to pay Rs.5000/-to complainant as consolidated compensation for harassment and mental agony suffered by him including expenses incurred by him on litigation. Compliance of this order be made within one month of date of receipt of the copy of this order, failing which, the complainant shall be entitled to initiate proceedings against opposite parties under Section 25 and 27 of the Consumer Protection Act.

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Copy of order be supplied to the parties free of costs. File be consigned to record room.

Announced in open Forum

Dated: 27.01.2020

 

(Param Pal Kaur)                    (Ajit Aggarwal)

 Member                        President