Chandigarh

DF-II

CC/1094/2019

Raman Kumar - Complainant(s)

Versus

IDFC First Bank Ltd. - Opp.Party(s)

Gaurav Bhardwaj Adv.

06 Mar 2023

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION-II

U.T. CHANDIGARH

 

Consumer Complaint No.	:	1094/2019
Date of Institution	:	05.11.2019
Date of Decision	:	06.03.2023

 

                     

            

 

Raman Kumar, House No.143. Khusal Enclave. Zirakpur Punjab.

 

...Complainant

 

Versus

 

IDFC First Bank Ltd, SCO 47, 1st Floor Madhya Marg, Sector 26- Chandigarh through its branch Manager.

 

…. Opposite Party.

 

BEFORE:
		SHRI AMRINDER SINGH SIDHU,	PRESIDENT
		SHRI B.M.SHARMA	MEMBER
Present:-
	Sh.Gaurav Bhardwaj, Counsel of complainant Sh.Bhawandeep Jindal, Advocate, Proxy for Sh.H.S.Kathpal, Counsel of OP.

   

ORDER BY AMRINDER SINGH SIDHU, M.A.(Eng.),LLM,PRESIDENT

1.     The complainant has filed the present complaint under Section 12 of the Consumer Protection Act, 1986, as amended up-to-date alleging therein that he availed housing loan facility for Rs.12,00,000/-, which was sanctioned vide two loans of Rs.7,20,000/- and Rs.4,80,000/- bearing no.13892886 & 14275122 on 25.01.2018 and 17.02.2018 respectively. He raised the issue at that time with the O.P but they stated that it was for the benefit of the complainant. The EMIs of the loans were fixed at Rs.8411/- and Rs.6719/- respectively.  Since, the rate of interest was high, therefore, the complainant approached the O.P and requested them to provide the foreclosure letters and the amount due in loan No.13892886 was Rs.6,98,659.02P and no overdue or foreclosure charges were mentioned and in the Loan A/c No.14275122, the outstanding amount was Rs.5,00,572.97/- and Rs.23,367.60 was shown as foreclosure charges and Rs.4206.17 as GST, as per the foreclosure letters (Annexures C-3 and C-4).  On 09.08.2019, the OP provided  another foreclosure letter (Annexure C-5)  for the loan account No.14275122 mentioning the total foreclosure amount as Rs.4,86,486.71P including the current month interest of Rs.3,498.56P, foreclosure amount of Rs.13,994.25P and GST of Rs.2,518.96P and foreclosure letter (Annexure C-6) for loan account No.13892886 wherein, the total foreclosure amount was mentioned as Rs.7,44,532.04P including foreclosure charges of Rs.34,523.46P.  The complainant was given another letter (Annexure C-7) where foreclosure amount was mentioned as Rs.7,28,016.40P including Rs.3749.63P as current month interest Rs.20,714.08P as foreclosure amount and Rs.3738.53 as GST. The matter was discussed and he was asked to pay the amount as per previous letter fresh letter.  The complainant got the cheque from his bankers for Rs.7,00,000/- for the loan account 13892886. The complainant handed over the cheque and raised the issue with regard to charging of current month interest of Rs.3,749.63P and foreclosure charges of Rs.20,714.08P. The complainant deposited the balance amount of Rs.25,500/- & Rs.2,516.40P in cash to the O.P. Similarly, the complainant got the cheque from his bankers for Rs.4,75,000/- for the loan account No.14275122. The complainant handed over the cheque and raised the issue with regard to charging of current month interest of Rs.3,498.56P and foreclosure charges of Rs.13,994.25P. The complainant was shocked when he was handed over another letter dated 09.08.2019 (Annexure C-11) wherein the total foreclosure amount was mentioned as Rs.4,97,301.16P, current month interest as Rs.3,304.20 and foreclosure charges of Rs.23,323.75P. However, the OP didn't pay any attention to the issue. It has been asserted that the complainant had to pay the said amount because he wanted to have the loans closed and get no dues certificate. The OP issued No dues certificate for both the loans on 30.08.2019 but even after issuing No Dues Certificate an amount of Rs.8411/- was debited against the installment for loan account no.13892886 on 03.09.2019. The complainant immediately approached the O.P and the O.P gave a certificate that they have not received the excess amount and they will process the refund of excess amount when it is received. The said amount of Rs.8411/- was however refunded by the O.P later on after lot of visits.  It has been alleged that the OP illegally charged Rs.44,037.83P (Rs.20,714.08P+ Rs.23,323.75P)  as foreclosure charges towards the loan accounts, inspite of clear instructions from RBI. Alleging that the aforesaid acts of omission and commission on the part of the OPs amount to deficiency in service and unfair trade practice, the complainant has filed the instant complaint seeking directions to the OPs to refund Rs.44,037.83P (Rs.20,714.08P+ Rs.23,323.75P)  as foreclosure charges  along with interest, compensation for mental agony and physical harassment as well as litigation expenses.
2.     In its written version, the OP took the preliminary objection that the loans were sanctioned in the name of Raman Kumar and Asha Gautam and as such the complainant alone has no locus standi to file the present complaint and the complaint is liable to be dismissed for non-joinder of necessary party. It has further been stated that the complainant and Mrs. Asha Gautam took two loans from Capital First Ltd (Now IDFC First Bank) meaning thereby when the loans were availed by the complainant, the OP was not bank and was a Non-Banking Financial Institution. Since RBI guidelines are applicable only to Banks, the same are not applicable on it. It has further been stated that the complainant availed one Housing Loan of Rs.7,20,000 vide Sanction Letter dated  24-01-2018. It was specifically mentioned in the Sanction Letter that a fixed rate of interest was to be applicable for the first 36 months. Since the complainant got the first loan foreclosed within first 36 months, the foreclosure charges are applicable on the foreclosure amount as per Sanction Letter (R-1).  Similarly, the complainant availed another loan of Rs.4,80,000/- against property vide Sanction Letter dated 14-02-2018 at fixed rate of interest. It was agreed by the complainant while taking the loan that he will be liable to pay Foreclosure Charges as per Sanction Letter (Annexure R-2). Since the RBI guidelines are applicable only on Home Loan having floating rate of interest, the same are not applicable on the loans availed on the fixed rate of interest. The remaining allegations have been denied, being false. Pleading that there is no deficiency in service on their part, the OPs prayed for dismissal of the complaint.
3.     The complainant filed replication to the written reply of the OP controverting its stand and reiterating his own.
4.     The parties filed their respective affidavits and documents in support of their case.
5.     We have heard the Counsel for the contesting parties  and have gone through the documents on record.

 

6.     The opposite party took objection in its written version to the complaint that the complaint was filed by Raman Kumar whereas loan was taken by both husband and wife and this complaint was filed only by the husband and therefore it is bad for non-joinder of necessary parties. It is admitted fact that house loan was availed by both husband and his wife and the complaint is filed by the husband. In this regard opposite party has relied upon judgement titled as ICICI Bank (Home Loan) and another versus Ganga Singh Shekhawat 2015, (3) CPJ 507 decided on 24^th  February 2015 wherein it was observed that in case loan taken by the husband and wife then both are required to be impleaded as parties to the complaint. The learned counsel for the complainant relied upon order of the Hon’ble  Second Additional Bench of Hon’ble State Consumer Commission of Punjab passed in Appeal No.667/2017 titled as ICICI Home Finance versus Mr Jarnail Singh, decided on 12.02.2016 wherein the complaint titled as ICICI Bank (Home Loan) and another versus Ganga Singh Shekhawat 2015, (3) CPJ 507 was discussed. The learned counsel for the complainant argued that the Act is a beneficial statute. The proceedings under the provisions of the Consumer Protection Act are simple and summary in nature and the provisions of CPC and specifically Order 1 Rule 9 thereof is not particularly attractive. A reference has also been made to section 38(9) of the procedure under Consumer Protection Act, 2019 applicable in respect of the following manners:-

“(4) For the purposes of this section, the District Forum shall have the same powers as are vested in a civil court under Code of Civil Procedure, 1908 while trying a suit in respect of the following matters, namely:—

(i) the summoning and enforcing the attendance of any defendant or witness and examining the witness on oath;

(ii) the discovery and production of any document or other material object producible as evidence;

(iii) the reception of evidence on affidavits;

(iv)    the requisitioning of the report of the concerned analysis or test from the appropriate laboratory or from any other relevant source;

(v)     issuing of any commission for the examination of any witness, and

(vi)    any other matter which may be prescribed.”

         So as per the mandate of the Consumer Protection Act, only mentioned procedure of Civil Procedure Code, 1908 is applicable on Consumer Commissions and Order 1 Rule 9 of Civil Procedure Code, 1908 is particularly not applicable to the procedure provided under Consumer Protection Act, 2019, which is summary in nature. This complaint is filed by the complainant on account of deficiency and unfair trade practice adopted by the opposite party and therefore it is maintainable even if it is filed by either of the borrower. Therefore, keeping in view of the   matter in question in the present complaint, it cannot be said that complaint is bad for non-joinder of necessary parties on the ground of technicalities.

7.     The main issue involved in the present complaint is whether the OP is entitled/permitted to charge foreclosure charges/pre-payment penalties on home loans/all floating rate terms loans sanctioned to individual borrowers or not?.
8.     In order to find out the answer to the above mentioned issue, the instructions issued vide letter dated 07.05.2014 by the RBI are relevant and important, which are reproduced as under:-

“Levy of foreclosure charges/pre-payment penalty on Floating Rate Term Loans

    Please refer to our circular DBOD. No. Dir.BC.107/13.03.00/2011-12 dated June 5, 2012 on ‘Home Loans- Levy of Fore-closure Charges/ Pre-payment Penalty’.

2. A reference is invited to Part B of the First Bi-monthly Monetary Policy Statement 2014-15 announced on April 1, 2014 proposing certain measures for consumer protection. It was indicated that in the interest of their consumers, banks should consider allowing their borrowers the possibility of prepaying floating rate term loans without any penalty. Accordingly, it is advised that banks will not be permitted to charge foreclosure charges/ pre-payment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect.

Yours faithfully,

(Prakash Chandra Sahoo)

Chief General Manager”

 

9.     Similarly, the letter bearing No.RBI/2019-20/29 DBR.Dir.BC.No.08/13.03.00/2019-20 dated August 02, 2019  issued by the RBI, is also important and relevant which reads as under:

“Levy of Foreclosure Charges /Pre-payment Penalty    on Floating Rate Term Loans

 

Please refer to our circulars DBOD.No.Dir.BC.107/13.03.00/2011-12 dated June 5, 2012 and DBOD.Dir.BC.No.110/13.03.00/2013-14 dated May 7, 2014, in terms of which banks are not permitted to charge foreclosure charges / pre-payment penalties on home loans / all floating rate term loans sanctioned to individual borrowers.

2. In this connection, it is clarified that banks shall not charge foreclosure charges/ prepayment penalties on any floating rate term loan sanctioned, for purposes other than business, to individual borrowers with or without co-obligant(s).

Yours faithfully,

 

(Dr. S. K. Kar)

Chief General Manager”

 

10.         In view of the aforesaid letter(s), it is clear that the Banks are not permitted to charge foreclosure charges/pre-payment penalties on home loans/all floating rate term loans sanctioned to the individual borrowers.   It is further clarified that individual borrowers includes co-obligant(s). Thus, the OP-Bank has committed deficiency in service by charging a sum of Rs.20,714.08P as foreclosure charges from the complainant towards the loan account No.13892886 (Annexure R-2) sanctioned on the floating rate of interest against the instructions of the RBI.
11.     As regards, the foreclosure charges of Rs.23,323.75P are concerned, the complainant is not entitled to get refund of that amount because as per the sanction letter dated 14.02.2018 (Annexure R-3), the loan against A/c No.14275122 was sanctioned on fixed rate of interest and as such the aforesaid instructions of the RBI are not applicable to the loans sanctioned on fixed rate of interest and the OP-Bank is well within  right to charge the foreclosure charges from the complainant.
12.     In view of the above discussion, the present complaint deserves to be partly allowed and the same is accordingly partly allowed. The OP is directed to :-

i)      refund Rs.20,714.08P charged as foreclosure charges to the complainant along with interest @ 9% p.a. from 09.08.2019 till the date of its actual payment to the complainant.

ii)    pay Rs.7,000/- as compensation to the complainant on account of mental tension and harassment.

iii)   pay Rs.7,000/- as litigation expenses.

13.      This order be complied with by the OP within 60 days from the date of receipt of its certified copy.
14.     The pending application(s) if any, stands disposed of accordingly.
15.     Certified copy of this order be sent to the parties, as per rules. After compliance file be consigned to record room.

Announced 06/03/2023
	Sd/- (AMRINDER SINGH SIDHU) PRESIDENT
	Sd/-
	(B.M.SHARMA) MEMBER