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

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1.  Shri Vipul Kumar aged about 31 years, s/o Shri Satish Kumar Vohra, r/o House No. 424, Sector 16, Panchkula, 134109, Haryana through his father and GPA Holder,. Shri Satish Kumar Vohra.

2.  Shri Satish Kumar Vohra, aged about 54 years,  s/o Late Shri M.R. Vohra, r/o House No.424, Sector 16, Panchkula, 134109, Haryana

3.  Mrs. Sulakshna Vohra, aged about 52 years, w/o Shri Satish Kumar Vohra, r/o House No. 424, Sector 16, Panchkula, 134109, Haryana

…..Complainants

V E R S U S

1.  ICICI Bank Limited, through its Managing Director, ICICI Bank Towers, Bandra Kurla Complex, Mumbai-400051, Maharashtra.

2.  ICICI Bank Limited, [Retail Asset Branch] through its Branch Manager, SCO No. 129-130, 2^nd Floor, Sector 9-C, Madhya Marg, Chandigarh U.T. 160017.

                                   ……Opposite Parties

CORAM:        SH.JAGROOP SINGH MAHAL                      PRESIDENT

                SH.RAJINDER SINGH GILL                 MEMBER

                DR.(MRS) MADANJIT KAUR SAHOTA          MEMBER

Argued by:       Sh. Neeraj Pal Sharma, Adv. for complainants.

Sh. Sandeep Suri, Adv. for OPs

PER SHRI JAGROOP SINGH MAHAL, PRESIDENT

             Succinctly put, the complainants as per the amended complaint availed a home loan  of Rs.1,22,00,000/- from the OPs for purchase of residential house no. 424, Sector 16, Panchkula, Haryana which was to be repaid in 240 equated monthly installments of Rs.1,25,926/- per month for 20 years commencing from the month of May, 2007. The OPs disbursed the loan vide two payments of Rs.52,00,000/- and Rs.70,00,000/- on 30.03.2007 into their account against which the said house was pledged to the OPs as security for the loan.  The rate of interest agreed between the parties to be paid was 1% p.a. AIR (Adjustable Interest Rate) and the reset period was one month for any change in the said rate of interest.  They paid about 27 EMIs to the OPs and came to know the OPs have increased the rate of interest from 11% to 12% from Jun, 2007 to July 2008, 12.75% from August 2008 and 13.50% from September 2008 to January, 2009 and thereinafter reducing it to 13% for the month of February, 2009 onwards but the OPs failed to send any interest reset letters to them during the entire period.  The OPs increased the EMI from Rs.1,25,927 to Rs.1,33,037/- from June, 2009. They protested this from time to time, as and when it came to their knowledge.  A letter dated 09.03.2009 was also issued by the OP-2 wherein the OPs had admitted their follies and announced a waiver of the sum of Rs.42,135/-. In the mean time they could not pay the EMIs in question on time, on which the OPs wrote them a letter dated 19.06.2009 showing the dues as Rs.1,28,93,723.34 as outstanding and included a component of Rs.5,42,349.07 as delayed payment charges and Rs.2,67,063.27 as incidental charges. In between a theft took place at their residence which led to the loss of an estimate of Rs.20 lacs for which FIR was also lodged with Panchkula Police Station. The OPs sent the loan recall notice on 23.07.2009 showing an outstanding of Rs.1,30,27,730.62 and also asked them to pay the said amount upfront.  The officials of the OPs including a very senior official Shri Manjit Singh, Zonal Divisional Manager visited their residence on 21.08.2009 and held elaborate discussions with complainant no. 2 with regard to the delay in payment of EMIs, wherein it was mutually agreed between the parties that they would regularize the home loan account by making a payment of Rs.3,52,296/- latest by 31.08.2009 to avoid any further complications.  In pursuance thereof a sum of Rs.3,55,000/- was paid by them to the OPs on 26.08.2009 after which the balance due from them to be paid to the OPs would only be 2 EMIs and part payment of the 3^rd EMI till September, 2009.  They made a payment of Rs.1,28,542/- to the OP on 09.09.2009.  The OPs issued them a letter dated 09.03.2009 in which they agreed to rectify all outstanding grievances and in token thereof had also offered to waive overdue amount of Rs.42,135 on the payment of outstanding as on that day being Rs.4,12,890/-.  During the pendency of the complaint on 19.11.2009, they got recorded the statement of the OPs  that all outstanding arrear of the EMIs of the said loan had been paid off by the complainants  and the complainants were no more in any sort of default of any kind qua the OPs.  On 14.04.2010, they had made the payment of a substantial amount of Rs.50,00,000/- towards repayment of the loan amount to the OPs but have failed to reduce the outstanding from their loan account.  The OPs have charged a higher variable rate of interest on the loan. Hence this complaint alleging that the aforesaid acts of the OPs amount to deficiency in service and unfair trade practice.

2.               Notice was served to the OPs. In their written reply the OPs submitted that the complainant had purposely not placed on file the complete filled copy of the agreement.  As per the agreement, the loan was granted on a variable rate of interest.  FRR/ICICI Bank Floating Rate had been duly notified from time to time and the same had been notified to the RBI as well as the general public and was also informed to the complainant from time to time and no objection was raised by the complainant at any time. The complainant had been given the benefit of a variation of 0.75% on the FRR which would vary from time to time.  The payments made by the complainant were strictly in conformity with their contractual obligations. The complainant was a defaulter in paying the dues and was given the benefit of waiver of the over due amount of Rs.42,135/- provided he cleared all the outstanding installments of Rs.4,12,890/- but the complainant did not. The complainant had been repeatedly approached by their representatives to clear the dues but he refused to do so. The complainant did not pay the amount as per the loan recall notice and they have the right to adjust the loan against the loan recall amount which could be adjusted by them at any stage.  Denying all the material allegations of the complainant, the OPs pleaded that there has been no deficiency in service or unfair trade practice on their part and prayed for dismissal of the complaint. 

3.               The Parties led evidence in support of their contentions.

4.               We have heard the Learned Counsel for the parties and have also perused the record including the written arguments. 

5.               There is no dispute about it that according to the facility agreement (Annexure C-2) entered into between the parties, the complainants were liable to pay adjustable rate of interest on the loan amount. As per clause 9(b) of this agreement (Annexure C-2), the FRR was 11.75% on the date of the agreement and until varied by the OP bank in terms of this facility agreement, the complainants were liable to pay adjustable rate of interest @ 11% per annum i.e. FRR +/- margin of .75% plus applicable interest tax or other statutory levies.  The standard terms and conditions for facilities for/against properties at page 18 of this agreement defines FRR or ICICI Bank Floating Reference Rate to mean the percentage rate per annum decided by ICICI Bank from time to time and announced/notified by the ICICI Bank as its  floating reference rate.  This definition does not differentiate between one borrower and the other and, therefore, would remain the same on a given date for all borrowers of the bank.  Clause 30A further provides that if the rate of interest applicable to the borrowers is adjustable interest rate, the applicable interest rate shall be changed within each reset period based on the then prevailing FRR and the borrower shall thereafter pay interest on the facility at such new rate.  It shows that the rate of interest is dependent on the FRR. As mentioned earlier, in the present case the rate of interest is FRR +/- .75% margin money which means 11% per annum and would change as and when FRR increases or decreases.

6.               It is also admitted between the parties that from 11% the interest rate was enhanced by the OP bank to 13.75% per annum and was then decreased to 12.75% as intimated later on vide letter Annexure C-9 dated 20.7.2009.  It also confirms that the adjustable rate of interest would go up and down depending upon the FRR fixed by the OP bank.  This FRR is a constant figure which as per Annexure C-9 is linked to ICICI Bank’s cost of funds and appropriate cost of operations for the relevant product, credit charge and margin.  It was explained by the OP bank in this letter that while ascertaining the FRR, in addition to the cost of funds, estimated cost of operations, credit charge and margin associated with the relevant product, factors such as likely changes in the ICICI Bank’s cost of funds, market rates, interest rate outlook, systematic liquidity and volume of funds required  for the appropriate maturity for the business are taken into consideration. It may again be mentioned for the sake of repetition that all these factors on a given date would be static and would remain the same in case of each borrower meaning thereby that if FRR or the rate of interest in case of one borrower is 11%, it would be the same for all other borrowers also.

7.               When we advert to the facts of the present case it becomes clear that the OPs are indulging in unfair trade practice in so far giving FRR and different rate of interest with respect to different customers.  In fact, their modus operandi is to show a lower rate of interest to the new customers and when the loan is disbursed, and sometimes even before that date, the rate of interest starts increasing in case of different customers.  The ld. counsel for the OPs has not been able to show any case in which the rate of interest came down below the rate at which the loan was initially sanctioned to a customer.  In fact a lower rate of interest is  shown by the OP bank to the intending borrowers to catch them in their net and once the loan is advanced, then the rate of interest is enhanced frequently whereas the new customers are being baited by giving them a lower rate of interest even on that date on which the complainants were being charged @ 13.75% per annum.  In order to demonstrate this fact, the ld. counsel for the complainants referred to Annexure C-12 which is letter dated 31.8.2009 written by the OPs to the complainant mentioning that if he gets a fresh loan they would charge @ 8.75% per annum as interest if the loan is upto 20 lacs and 9.75% if it is above Rs.50 lacs.  It was also mentioned that in his case the rate of interest would be tried for 9.5% upto 1.5 crores though the same was subjective and he would be given a processing fee waiver of 0.25%.  On the other hand is the letter dated 20.7.2009 (Annexure C-9) intimating to the complainants that they would charge @ 12.75% as interest w.e.f. 6.6.2009. This rate of interest continued till 31.8.2009 in case of the present loan whereas the rate of interest to the complainants themselves for a fresh loan was being offered @ 9.75% per annum by the same bank. There is no dispute about it that 9.75% per annum rate of interest was also assessed on the basis of the FRR which gives a clear indication that the FRR on that date was around 10.5% (i.e. 9.75 + .75) and not 13.5% as was worked out in Annexure C-9 by giving a margin of .75% to peg it at 12.75% per annum.

8.               The ld. counsel for the OPs has been at a loss to explain as to why the rate of interest of old loanees has not been decreased to 9.75% per annum on 31.8.2009 when as per Annexure C-12 this rate of interest should have been prevalent on that date.  In fact it is a device adopted by the OP bank to entice the new customers by giving them this temptation of a lower rate of interest which eventually would go up within a short span of time to the chagrin of the borrowers who, after taking loan, cannot even withdraw due to the reason that if they take the loan from some other bank, they have to pay foreclosure or prepayment charges determined by the OP bank.  We are, thereof of the opinion that the OPs cannot charge beyond 9.75% per annum as interest w.e.f 1.9.2009.

9.                    The next question which arises in the case is that even if the increase in the FRR is admitted for arguments, whether the rate of interest has been increased in accordance with the agreement.  Our answer to this question would also be in the negative.  The rate of interest could be increased from 11% per annum in accordance with Annexure C-2 which requires that the FRR or the ICICI Bank floating reference rate would mean the percentage rate per annum decided by the ICICI Bank from time to time and announced/notified by ICICI Bank (emphasis supplied) as its floating reference rate.  It was, therefore, necessary for the OP bank to announce or notify the floating reference rate.  Again clause 30A(e)(2)(iii) which deals with the situation arising out of the increase in the FRR provides that the borrowers shall be required to pay such increased EMI amount and/or the differential amount resultant as determined by the ICICI Bank in its sole discretion and intimated to the borrowers.  The ld. counsel for the complainants has argued on both these points to the effect that the increase in the floating reference rate was not announced or intimated till 20.7.2009 and secondly the increase in EMI was also not intimated to the borrowers.  However, to counter this allegation the ld. counsel for the OPs has referred to letters dated 10.4.2007, 1.1.2009, 1.7.2009 and 30.11.2009 and argued that the change in the FRR was announced/intimated to the complainants through these letters. The complainants have denied having received any such letters from the OPs. The OP Bank has not produced any evidence to show as to how these letters were sent to the complainants, on which date/dates and by which of the complainants these were received.  The acknowledgement in that respect has also not been produced.  In the absence of this evidence, it is clear that the increase in the FRR was not intimated to the complainants.  Further the reply in para 10 confirms this fact when the OPs mentioned that without prejudice to the facts mentioned by the OPs in that para, it was submitted that the complainant was not even otherwise required to be notified individually everytime they (?) were the change in the applicable rate of interest.  It was, therefore, accepted by the OPs that the complainants were not required  to be intimated. When the OPs were of this view, the question of sending any intimation to the complainants does not arise. 

10.            In order to cover up their negligence/deficiencies the OPs have now introduced false evidence (now  marked  Annexure R-1 to R-4) not only to mislead this Forum but also to defeat the genuine claim of the complainants.  It is a very unfortunate trend in litigation which is being adopted by the OP bank and it is being done with the sole purpose of misleading this Forum and camouflaging their own mistakes in not complying with the terms of the agreement and to fasten unnecessary liability on the complainants of paying a higher rate of interest when in the absence of this communication they are not liable to pay the same.  The OPs are, therefore, liable to be penalized for fabricating this evidence and leading false evidence before this Forum.  Otherwise, the increase in the FRR and consequently the enhancement of rate of interest cannot take effect in this case from the dates mentioned by the OPs. 

11.            The ld. counsel for the complainants has also argued that the rate of interest does not depend solely on the FRR and is dependent upon various other factors also such as creditworthiness of the person applying for loan etc. as mentioned in para 23 of the reply.  He, however, could not produce any terms and conditions agreed between the parties that apart from the FRR, any other circumstance or fact would be taken into consideration for determination of the rate of interest. It was rather clearly mentioned in Annexure C-9 that the floating interest rates are subject to changes, depending on the change in FRR and that the borrower is under an obligation to pay interest at such reset rate of interest…… which means that the FRR is the sole criteria for determining the floating rate of interest.  In order to cover up the mischief, the OPs are now trying to introduce through para 23 that the adjustable/floating rate of interest is dependent upon the creditworthiness of the person applying for loan, amount of the loan, cost of the loan funding, applicable RBI guidelines etc.  Otherwise also, the present loan was obtained by Vipul Kumar and others whereas vide Annexure C-12 the same borrower was being intimated that 9.75% rate of interest would be charged from him for a fresh loan. There was, therefore, no question of creditworthiness or otherwise involved in reaching this figure of 9.75% in case of one loan of above Rs.50 lacs and 12.75% or 13.75% in case of another loan. The complainants were rather being intimated that the rate of interest would be tried to be 9.5% per annum if they took a loan of upto 1.5 crores.  It is, therefore, clear that in case of the present loan also, the rate of interest cannot be above 9.75% per annum w.e.f. 31.8.2009.

12.            In view of the above facts it is clear that the rate of interest could not have increased from 11% per annum till 31.8.2009 on which date due to the decrease in the FRR the rate of interest would come down to 9.75% per annum.  On the other hand, the OPs rather claim to have increased the rate of interest to 13% w.e.f. 1.1.2009 and 13.50% w.e.f. 30.11.2009.  It is an unfair trade practice adopted by the OPs for which they must be penalized.

13.            The ld. counsel for the OPs has argued that the complainants were in default of payment due to which the entire loan has been recalled and they have been directed to pay the amount in lump sum.  It is also argued that the proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 have been decided to be initiated against the complainants and, therefore, this Forum has no jurisdiction to entertain and try this complaint. This argument also is devoid of merit firstly because in view of Section 3 of the Consumer Protection Act, the remedy under the Act is in addition to and not in derogation of the provisions of any other law for the time being in force.  The mere fact that the OPs intend to initiate certain other proceedings against the complainants cannot curtail their rights to seek a relief under the Act to which they appear to be entitled.  Secondly, the liability of the complainants was increased illegally and in contravention of the agreement between the parties. The OPs would be well advised to reassess the liability of the complainants by withdrawing the illegal penalties/charges imposed on the complainants.  The contention of the ld. counsel for the complainants is that if the interest rate enhanced illegally is ignored, then there was no default of the complainants. It is also argued that the complainants have deposited a huge portion of the loan with the OPs on their assurance of withdrawing the illegal penalties and charges and, therefore, the question of there being any default does not arise.  We are also of the opinion that the illegal actions initiated by the OPs by ignoring the terms and conditions of the agreement cannot deprive the complainants of their remedy under the Act. This Forum, therefore, would nevertheless have the jurisdiction to entertain and try this complaint.

14.            It was also mentioned by the complainants that they made the payment of Rs.31,00,000/- on 11.1.2010, Rs.5,02,000/- on 12.1.2010, Rs.49,000/- on 13.1.2010 and Rs.13,49,2000 on 14.1.2010 but the amount of loan was not substantially decreased by them on receiving the said payments.  On the other hands, the OPs admitted in para 21 of their reply that the complainant was approached repeatedly by the representatives of the bank to clear the dues of the bank. It means that this amount of Rs.50,00,000/- was deposited by the complainants on the requests of the OPs and, therefore, on receiving the said amount, the balance due from the complainants was required to be reduced from the dates on which the payments were made.  It was, however, not done by the OPs which is an illegal practice adopted by them. The OPs are, therefore, required to give credit of the payments made by the complainants from the dates on which the said payments were made.

15.     In view of the above discussion we are of the opinion that the present complaint must succeed. The same is accordingly allowed with the following directions :-

a) The OPs are directed to overhaul the entire account of the complainants and charge from them interest @ 11% per annum since the disbursement of loan till 31.8.2009.

b) The OPs would charge interest @ 9.75% per annum w.e.f. 31.8.2009 till the rate of interest/FRR is enhanced in accordance with the agreement referred to above.

c) The OPs would pay Rs.50,000/- as compensation for adopting unfair trade practice and another Rs.50,000/- for introducing false evidence in the shape of Annexure R-1 to R-4.

d) The OPs shall give the waiver of Rs.42,135/- and all other waivers/concessions already extended to the complainants.

e) The OPs are directed to give credit of Rs.31,00,000/-, Rs.5,02,000/-, Rs.49,000/- and Rs.13,49,2000 to the complainants from the dates on which the above said amounts were deposited and the balance due from the complainants shall be reduced to that effect.

f) The OPs shall also pay Rs.5,500/- as costs of litigation.

The above directions shall be complied with by the OPs within thirty days from the date of receipt of copy of the order failing which the OPs would be liable to refund the excess amount so charged from the complainants, as mentioned above, alongwith interest @ 11% per annum since the filing of the present complaint i.e. 14.9.2009 till the amount is actually paid to the complainants.

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