STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

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

2. Davinder Singh  Thapar s/o Sh.Amrit Singh, For self and as SPA of other complainants.

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

4. M/s Allena Auto Industries Pvt. Ltd. through its CMD

Sh.Amrit Singh Thapar

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

                     ……Appellants

V e r s u s

ICICI Bank Ltd., through its Branch Manager, Home Loan Section, SCO 129-130, Sector 9, Madhya Marg, U.T., Chandigarh

              ....Respondent

Appeal under Section 17 (infact 15) of the Consumer Protection Act, 1986.

BEFORE: JUSTICE SHAM SUNDER, PRESIDENT.

              MRS. NEENA SANDHU, MEMBER.

              SH.JAGROOP SINGH MAHAL, MEMBER.

Argued by:  Sh.J.S.Bagga, Advocate for the appellants.

PER  JUSTICE SHAM SUNDER, PRESIDENT

1.             This appeal is directed against the order dated 15.12.2011, rendered by the District Consumer Disputes Redressal Forum-I, U.T., Chandigarh (hereinafter to be called as the District Forum only) vide which, it dismissed the complaint, filed by the complainants (now appellants).

2.             The facts, in brief, are that the complainants, availed of Home Equity Residential Loan of Rs.2,17,00,000/-,  from the Opposite Party, on 8.1.2008, at a floating rate of interest of 12.5%, per annum, which was repayable in 84 equal monthly installments of Rs.3,38,891/- each.  Another loan of Rs.54,00,000/-,  was availed of on 30.6.2010, by the complainants @ 11% interest, per annum, repayable in 120 equal monthly installments of Rs.74,386/-each. Later on, the rate of interest was charged at floating rate, to the extent of 13% per annum, against loan of Rs.2,17,00,000/- and interest @ 11.5% P.A. (floating), was charged against the loan of  Rs.54,00,000/-. It was stated that the complainants, approached the Opposite Party, with a request, that the rate of interest was much higher, as compared to other banks. The Opposite Party, agreed to switch over to a lower rate of interest, and got executed from the complainants, an Amendatory Agreement. It was further stated that, however, the Opposite Party, did not reduce the rate of interest. Ultimately, it declined to do so. The complainants approached FI, Tata Capital Ltd., for taking over of their loan, which agreed to sanction the same, at a lesser rate of interest of 10.75% per annum. The complainants approached the Opposite Party, for the issuance of loan closer statement. The Opposite Party issued letter dated 8.11.2010, to the complainants, demanding therein, Rs.1,27,74,823/-, as principal outstanding and Rs.2,82,323.59Ps., as prepayment/foreclosure charges. In the other loan account, the Opposite Party issued letter, demanding therein Rs.53,27,563/-, as principal outstanding and Rs.1,17,739.14Ps., as prepayment/foreclosure charges. The total prepayment charges were Rs.4,00,062.73Ps. The complainants refused to pay these unjustified and illegal charges. On the other hand, the Opposite Party, refused to issue the “No Objection Certificate” (NOC) and release the title deed of the property, mortgaged with it. It was further stated that the principal amount outstanding, of both the loans, was paid by the successor FI Tata Capital Ltd., whereas, the prepayment/foreclosure charges, were paid, by the complainants, to the Opposite Party. It was further stated that the complainants, objected and protested, at the time of payment of foreclosure/prepayment charges of Rs.4,00,062.73Ps, in relation to both the loans.  However, their protest fell on the deaf ears of the representative of the Opposite Party. It was further stated that the aforesaid acts of the Opposite Party, amounted to deficiency, in rendering service, as also indulgence into unfair trade practice. When the grievance of the complainants, 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), for the refund of amount of unjustified prepayment/foreclosure charges of Rs.4,00,062.73Ps, paid by them, to the Opposite Party, alongwith interest @18% per annum; payment of Rs.50,000/- as compensation, towards mental agony & physical harassment; and litigation costs to the tune of Rs.20,000/-, was filed.

3.             The Opposite Party, in its written version, admitted the factum of grant of the aforesaid loans, in favour of the complainants. It was stated that, it was agreed to between the parties, that, in case, the complainants wanted to close the loan accounts, prior to the expiration of the normal period of the said loans, they would pay prepayment charges @ 2%. It was further stated that the terms prepayment and foreclosure are used interchangeably, in the banking industry, to denote early closure of loan. It was further stated that the complainants themselves produced, on record, the terms and conditions of the loan agreement, wherein, it was specifically provided that the prepayment/foreclosure charges, were payable by them, in case, they wanted to close the loan accounts prematurely. It was denied that the prepayment charges/foreclosure charges, paid by the complainants, were unjustified or illegal.  It was further stated that neither there was any deficiency, in rendering service, on the part of the Opposite Party,  nor it indulged 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, was filed by the appellants/complainants.

7.             We have heard the Counsel for the appellants, and, have gone through the evidence, and record of the case, carefully. 

8.             The Counsel for the appellants/complainants, submitted that, no doubt, the aforesaid loans were taken by the complainants, from the Opposite Party. He further submitted that Annexure P-3A, the original agreement, which was executed, between the parties, did not contain the specific Clause, regarding the percentage of prepayment charges, to be charged by the Opposite Party, in the event of pre-closure of loan accounts. He further submitted that an Amendatory Agreement (now marked as Annexure-X) by this Commission (at pages 33/14 to 41/22 of the District Forum file), as per the assurance of the Opposite Party, was signed by the complainants, according to which, the former, agreed to reduce the rate of interest, as also, non-raising of the demand of prepayment charges. He further submitted that the District Forum, was wrong in not relying upon the Amendatory Agreement Annexure-X, on the ground, that the same was not signed, by any authorized signatory of the Opposite Party. He further submitted that, in the written reply, no specific denial of the Amendatory Agreement Annexure-X, duly signed by the complainants, was made by the Opposite Party. He further submitted that the District Forum, was, thus, wrong in holding, that the Opposite Party, was entitled to claim the prepayment/foreclosure charges, as per the agreement executed between the parties. He further submitted that the District Forum, was,  wrong in coming to the conclusion,  on the basis of Annexure P-1, the document, which was signed by the complainants, as also by the authorized signatory of the Opposite Party, to the effect that, in case of pre-closure of loan account(s), 2% prepayment charges, would be paid, by the complainants/borrowers.  He further submitted that the order of the District Forum, being illegal and invalid, is liable to be set aside.

9.             After giving our thoughtful consideration, to the contentions, advanced by the Counsel for the appellants, and on going through the evidence, and record of the case, we are of the considered opinion, that the appeal is liable to be dismissed, at the preliminary stage, for the reasons to be recorded hereinafter. There is, no dispute, between the parties, that the complainants, availed of Home Equity Residential Loan of Rs.2,17,00,000/-,  from the Opposite Party on 8.1.2008, at a floating rate of interest of 12.5%, per annum, which was repayable in 84 equal monthly installments of Rs.3,38,891/- each.  It is also not disputed,  that another loan of Rs.54,00,000/-,  was availed of on 30.6.2010, by the complainants with interest @ 11% interest, per annum, (floating) repayable in 120 equal monthly installments of Rs.74,386/- each. The terms and conditions of the original agreement,  Annexure P-3A, executed between the parties, at the time of advancement of loans, are at pages 23/47 to 34/58 of the District Forum file. These terms and conditions were duly accepted by the complainants. Condition no.18 of the terms and conditions, referred to above, 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).”

10.           From the afore-extracted condition, it is evident that, in case, borrower prepaid the outstanding principal amount of the facility, in full or in part, before the due date(s), he would have to pay prepayment charges. No doubt, percentage of prepayment, in the event of pre-closure of loan was not mentioned in the terms and conditions referred to above. However, in the sanction letter Annexure P-1, it was, in clear-cut terms, mentioned that 2% shall be charged, on the prepaid amount, and on all amounts tendered by the borrower, towards prepayment of the facility, during the last one year, from the date of final prepayment. This document is duly signed by the complainants. The complainants are educated persons. Once, they signed this document, with eyes wide open, admitting the terms and conditions thereof, they could not later on wriggle out of the same, and say that they were not liable to pay 2% prepayment/foreclosure charges, in the event of pre-closure of loans. This document is required to be read, in conjunction with the terms and conditions of the loan agreement P-3A. Once, both these documents are read together, only one and one conclusion, that can be arrived at, is that the complainants agreed to pay 2% prepayment charges, in the event of premature closure of loans. The terms “foreclosure charges” and “prepayment charges” are interchangeable, and one and the same thing. In other words, the meaning of both the aforesaid terms, in the context of the facts of this case, is the same.  Mere change of nomenclature, does not make any difference. The Consumer Foras are required to see the intention of the parties, and not to literally interpret the terms and conditions of the document, so as to defeat the very purpose thereof. In Hotel Vrinda Prakash Vs Karnatka State Financial Corporation (AIR 2007Kant 187) , the principle of law, laid down, was to the effect, that the Financial Corporation, had authority to charge premium for prepayment/foreclosure of the loan account, on the outstanding loan balance.  In 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 these cases, is fully applicable to the instant case. The District Forum, was, thus, right in holding, that according to the aforesaid terms and conditions and the sanction letter, the Opposite Party, was legally justified in claiming prepayment/foreclosure charges @ 2% on the amount prepaid.

11.         The next question, that falls for consideration, is, as to whether, any protest was raised by the complainants, at the time of making the payment of prepayment charges or not, it may be stated here, that no document was placed, on record, showing that the complainants, raised any protest at the time of making the payment of prepayment charges @2%,. Annexures P6 and P7, are the account payee cheques, vide which the amounts outstanding in relation to both the loans were paid. Nothing was mentioned, on both these documents, that prepayment charges were paid under protest,  Even, no legal notice was sent to the Opposite Party, immediately after the payment of prepayment charges, that the same were paid under protest, reserving the right to resort to the legal remedy. In case, the complainants had paid the amount of prepayment charges, under protest, they were required to write a letter, to the Opposite Party, immediately after the payment thereof. However, they slept over the matter, and, ultimately, filed the complaint on 15.04.2011, i.e. after a period of about five months. Silence on the part of the complainants, in not raising any protest immediately, after making the payment of the amount of prepayment charges, and only filing a complaint, after a period of about five months, clearly goes to show, that the demand made by the Opposite Party, was legal and valid, and they (complainants), paid the same (prepayment charges), without any protest. Now, it does not lie, in the mouth of the complainants, that the claim made by the Opposite Party, in respect of prepayment charges, was unjustified. The submission of the Counsel for the appellants, being devoid of merit, must fail, and the same stands rejected.

12.         The Counsel for the appellants, placed reliance on Amendatory Agreement Annexure-X. The alleged Amendatory agreement Annexure-X, does not bear the signatures of any authorized signatory of the Opposite Party. Even, the names of the borrowers and the lender have been left blank, in the Amendatory Agreement Annexure-X. Not only this, many columns, in this alleged Amendatory Agreement Annexure-X, have been left blank. It is a document, which is unilateral in nature. Had, this document, been signed by an authorized signatory of the Opposite Party, it would have been considered, as a concluded contract, between the parties. No doubt, in the written reply, regarding this document, it was stated by the Opposite Party, that it was a matter of record. Had any concluded contract, come into existence, between the parties,  then it would have been said, that no specific denial of such an agreement, amounted to admission thereof. In the instant case, it cannot be said that the execution of the alleged Amendatory Agreement Annexure-X, was admitted as correct, by the Opposite Party. This document was not binding on the Opposite party, in any manner. The District Forum, was, thus right, in not placing reliance, on this document, by holding that it being a unilateral, in nature, could not bind the Opposite Party. The submission of the Counsel for the appellants, in this regard,  being devoid of merit, must fail, and the same stands rejected. 13.             The District Forum, was, thus right, in coming to the conclusion that the prepayment charges, were charged by the Opposite Party, in accordance with the agreement and the sanction letter.  The District Forum, was, also right, in coming to the conclusion that the said charges, could not be said to be illegal and unjustified. The District Forum, was, thus right, in holding that the Opposite Party, was neither deficient, in rendering service, nor it indulged into unfair trade practice. The findings of the District Forum, in this regard, being correct, are affirmed.

14.         No other point, was urged, by the Counsel for the appellants.

15.         The order, passed 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.

16.         For the reasons recorded above, the appeal, being devoid of merit, must fail, and the same is dismissed, at the preliminary stage, with no order as to costs. The order of the District Forum is upheld.

17.         Certified Copies of this order be sent to the parties, free of charge.

18.         The file be consigned to Record Room, after completion

Pronounced.

February 21, 2012

Sd/-

[JUSTICE SHAM SUNDER]

PRESIDENT

Sd/-

[NEENA SANDHU]

MEMBER

Sd/-

[JAGROOP SINGH MAHAL]

MEMBER

Rg