ORDER

BY SRI.H.R.SRINIVAS, PRESIDENT.

This is the Complaint filed by the Complainant U/S Section 12 of Consumer Protection Act 1986, against the Opposite Party (herein referred in short as O.P) alleging the deficiency in service in charging extra interest and collecting the same to the extent of Rs.93,993/- during the period 2018 to October 2019 by increasing the rate of interest and hence for refund of the same along with other reliefs as the Commission deems fit.

2.      The brief facts of the complaint are that;

The complainant approached the OPs for housing loan.  He obtained Rs.21,96,058/- as first housing loan on August 21^st 2015 under loan account NO.HHLBEC00236064, second loan of Rs.25,25,000/- obtained on 28.03.2016 under loan account No.HGHLBEC00265372. Wherein the interest agreed for the above amount was Rs.8.50% floating to be repayable in 186 months installments.  The third loan of Rs.5,02,515/- obtained on 30^th September 2016 under loan account No.HHLBEC00293785 with interest at the rate of 8.50% floating rate repayable in 113 monthly installments respectively.

3.      OP increased the rate of interest to 12% and 11.80%, 186 and 205 instalments with effect from 11.12.2018 towards the first and second loan without prior intimation and also enhanced/increased the repayment period to 286 months and 490 months respectively without informing from 186 months and 205 months in respect of the said loans respectively.

He came to know the increase in the rate of interest and the increase in the tenure only in June 2019, when he logged on to his account over internet.  He raised the request with OP regarding not intimating the change of rate of interest as well as the increase in the tenure, which is against to the term and conditions and of the loan sanction.  Though OP informed that they have communicated regarding the change of rate of interest as well as enhancing the tenure of the loan he has not received any such emails and letters.  Though he requested to share the same, the same was not done. Had they informed him timely, he would have approached some other bank for the said loan by getting the loan transferred for a lessor rate of interest. By enhancing the rate of interest and the tenure of the loan repayment period, OP has collected Rs.94,00,000/- as excess interest for the period December 2018 to October 2019, which made him to life time indebtedness by increasing the overall interest burden on the principle amount.  The revised repayment schedule provided by OP is also filed to the commission.  When he approached the RBI they suggested to approach National Housing bank.  When he made a complaint online with the grievance cell, OP has submitted its response with same proof which they shared with him earlier but failed to provide the communication for change of rate of interest. Hence there is deficiency in service on the part of the OP and hence prayed to allow the complaint.

4.      Upon the service of notice, OP appeared before the Commission and filed its version contending that the complaint filed is on false, baseless, frivolous grounds and this complaint is filed to defeat the rights of OP.  There is no deficiency in service or unfair practice on its part. It is a non-banking financial company doing business in finance and lending.  It has admitted having sanctioned and released the three loans as contended by the complainant.  The amount was released at the request of the complainant.  The loan sanction letter was also issued to him.  The first, second and third loan were to be repayable in 240, 240 and 120 equated monthly installments.  The EMIs calculated by taking the interest at the floating reference rate as the base. The IHFL-FRR at the time of execution of the three loan agreements was 17.30%, 17.05% and 17.05% respectively, less the margin of 6.8% which aggregate to 11.50% and 9.55% and 9.55% applicable at that point of time.  However the rate of interest was variable in nature. On account of the variation in the rate of interest, the EMIs in value or in number varied.  All the terms and conditions, the repayment amount per installment and the tenure have been mentioned in the loan agreement duly executed by the complainant.

5.      As per the loan agreement executed in the month of December 2018 the applicable rate of interest to the first two loans was 12% and 11.80%. The same was intimated to the complainant by way of letters addressed to his registered address.  The copy of the letter having sent the same by Indian Postal Services shows that they have sent the information regarding the change of floating rate of interest along with annexures.  The entire amount of loan (principle and interest) in respect of all the three loans have been repaid by the complainant, as per the calculation provided by the OP.  After paying the entire amount, no due certificate has been issued to the complainant in respect of the said loans. No protest letter has been given by the complainant when OP calculated the interest as above which the complainant has paid and cleared the loan.  As on the date of filing of the complaint, there was no amount due from the complainant and hence there is no relationship of consumer and service provider. Hence the complaint is liable to be dismissed.

6.      It is the case of the complainant that OP has charged higher rate of interest then agreed from 11.12.2019 in respect of the first two loans without communication and thereby has collected an amount of Rs.93,993/- during the period December 2018 to October 2019 has been denied.  As per the National Housing Bank guidelines, and as per the terms and conditions of the loan agreement the interest rate and other charges of each product depends on the nature of the product, security, collateral provided repayment mode, geographical location, expected delinquency and cost for servicing the loan and most importantly, prevailing interest rate in the market, played a major role in revising and reviewing the interest periodically by the bank. The cost of fund of the finance company or the lender placed an important role on the interest rate policy. In additional to it, equity capital, OPs refunding requirement are met from the combination of sale of its loan to other lender, banks issuance of commercial papers, cash credit facilities etc.,

The interest rate policy also takes into consideration the prevailing regulations and guidelines issued by the regulators.  Complainant opted for floating rate of interest and not fixed rate of interest and the floating rate of interest linking with prime lending rate of the company and therefore rate of interest is bound to vary whenever there is a change in the PLR of the company which would in turn lead to change in the tenure in which loan has to be repaid or the amount of EMI.  Upward and downward change in PLR is made by a financial company or bank to manage its cost of funds and operation.  All customers are intimated from time to time regarding the change in PLR in terms of fair practice code adopted by the company besides sending individual information regarding change of PLR and notified and displayed on the website.  Hence the complaint is not maintainable either in law or on facts and no prima-facie case made out and further the floating rate of interest is based on India Bulls Marginal lending rates and the grievance raised by the complainant to the customer care portal has been replied properly and prayed the Commission to dismiss the complaint.

7.      In order to prove the case, both the parties filed their affidavit evidence and produced documents. Arguments Heard. The following points arise for our consideration:-

1) Whether the complainant has proved deficiency in service on the part of the Opposite Party?

2) Whether the complainant is entitled to the relief prayed for in the complaint?

8.     Our answers to the above points are:-

POINT NO.1:            In the Affirmative

POINT NO.2:            Partly in the affirmative.

                                For the following.

REASONS

9.     POINT No.1:-

        On perusing the complaint, version, documents, evidence filed by the both the parties, it becomes clear that, complainant borrowed loan of Rs.21,96,058/-Rs.25,25,000/- and Rs.5,02,515/- totaling = Rs.52,23,573/- to be paid in 186, 205 and 113  monthly installments with interest of 8.50% respectively.

10.   It is the specific case of the complainant that, he has paid entire amount along with interest as and when it became due and the entire loan has been cleared and clearance certificate also obtained. whereas, OPs enhanced rate of interest to 12% and 11.80% in respect of the first two loan from 11.12.2018 by increasing the repayment period to 286 months and 490 months without informing and obtaining his consent. Thereby it has received Rs.93,993/- as excess interest for the period December 2018 to October 2019. Which is arbitrary and without bringing to his knowledge and obtaining his consent, which is much against to the loan sanction letter and RBI guidelines. 

11.   He has also corresponded with the OPs in respect of levying the higher interest which is to be noted here that the all the loans granted sanctioned and disbursed to the complainant is towards the housing loan on a floating rate of interest.  It is to be noted here that the rate of interest in respect of housing loan has been frequently changed in view of the RBI guidelines. The same has to be passed on to the customer/the borrower as and when change was affected without waiting for the borrower to make representation as held in WRIT PETITION NO.42815/2019 (GM-RES) IN MR.SHEKAR BS VS CHIEF GENERAL MANAGER SYNDICATE BANK AND ANOTHER ON THE HON’BLE HIGH COURT OF KARNATAKA AT BENGALURU. 

12.   Whenever, there is an increase in the rate of interest than the agreed once either the borrower has to pay more amount per EMI or else to keep the same amount and increase the number of EMI’s.  In case the number of EMI’s are increased as has been done in this case, the bank would get the benefit out of it by way of interest for the balance of amount throughout the said period.  In case, there is a decrease in the interest rate than if the same amount of installment is continued, than there is every likelihood the loan being cleared much earlier than the prescribed EMI’s.  As per the correspondences made by the OP with the complainant there is enhancement of the rate of interest even during 2018 and 2019, though the RBI has reduced the rate of interest drastically.  It is also mentioned in the letters that whenever increase in the rate of interest the increase in the tenure of the loan to their customer subject to permissible limits in order to avoid burden on the customer with higher EMI and the same has been mentioned in the loan agreement duly signed by the borrower at the time of disbursement. In case the borrower wishes to reduce the tenure, he may opt to increase the EMI or make a part payment or a combination of both. Whenever, there is an increase or decrease in the interest rate change in tenure or EMI the reset letter were sent to the borrower by the bank to the communication address for information. 

13.   The reset of bench mark will be at interval of one year and six months. Borrower has to reprise the loan account to new bench mark and margin. OP has also admitted that they have received the entire loan amount with interest. 

14.   OP has also produced number of letters informing the rate of change of interest and also the interest certificate every year to facilitate the complainant to claim rebate of income tax in respect of paying the interest and principle of the housing loan with the income tax department.  But no acknowledgement filed in respect of the complainant receiving the said letters and notices. It claims that bulk intimation letter to an extent of     has been sent to certificate of posting, but not produced documents having been received by the complainant.

15.   It is the bounden duty of the OP to obtain the consent of the borrower in respect of enhancing the tenure of the EMI’s or his request to pay higher amount of the installment to cover the interest portion whenever it was hiked. On perusing the letters written by the complainant the interest has been exorbitantly levied to the extent of 12% and 11.08%. Whereas the interest in respect of the home loan has been reduced by the RBI and the same has to pass over to the consumers/borrowers as the RBI has kept the reporate i.e. the interest payable by the bank to the amount borrowed from it by the RBI at a lower level. When considering this the interest charged and the extension of EMI”s from 186 to 286 and 205 to 490 is highly unbecoming on the part of the OPs as by doing so it would get more interest from the complainant which is unethical unfair trade practice. Hence we answer POINT NO.1 IN THE AFFIRMATIVE.

POINT NO.2:

16.   As already pointed out, if there is an increase in the rate of interest naturally the outgo towards the principle will be less and towards the interest will be more if the same amount of installment is continued.  Then there will elongation of the tenure of the payment of the loan. 

17.   In view of this, complainant has not placed sufficient material before the commission to show that he has paid Rs.93,993/- additionally, over the amount paid to the OP in respect the loan borrowed by him.

18.   Further OPs ought to have properly assessed the rate of interest payable by the complainant as and when there was a change in the rate of interest and ought to have reset the installments and the tenure with the consent of the borrower which it has not done.  Had the OP done the same this situation would not have arisen.  Hence we are of the opinion that OP to be directed to redo the calculation from the very inception of the sanctioning and disbursing the loan to the complainant and calculate the interest as and when raised or lowered and adjust in the monthly installments paid towards the interest and the principle amount and to strike a balance accordingly till 186 installments in respect of the 1^st loan and till 205 installments in respect of the 2^nd loan and 113 installments in respect of 3^rd loan. Afterwards, if the payment made by the complainant fell short, regarding the interest and the principle, then the complainant has to make good the same. In case the amount paid is in excess of what is due then the same is to be returned to the complainant with interest at the same rate which it has charged at the end of clearing the entire loan amount and the same has to be carried out within 30 days from the date of receipt of this order.

19.   Further making the complainant to approach this commission by engaging his advocate by spending his time, money and energy we direct the OP to pay a sum of Rs.10,000/- towards litigation expenses and Rs.25,000/- as damages for causing him mental agony physical hardship and strain in not settling the issue amicably. Hence we answer POINT NO.2 PARTLY IN THE AFFIRMATIVE and pass the following:

ORDER

1. The complaint is partly allowed with cost.
2. OPs are jointly and severally hereby  directed to file the memo of calculation to this commission as directed in para No. 18 within 30 days from the date of receipt of this order as printed in Para 21 of this order.
3. OPs are directed to pay Rs.25,000/- towards damages for mental harassment and agony and Rs.10,000/- towards cost of the litigation expenses to the complainants.
4. OP is hereby directed to comply the above order within 30 days from the date of receipt of this order and submit the compliance report to this Commission within 15 days thereafter.
5. Send a copy of this order to both parties free of cost.

Note: You are hereby directed to take back the extra copies of the Complaints/version, documents and records filed by you within one month from the date of receipt of this order.

(Dictated to the Stenographer over the computer, typed by him, corrected and then pronounced by us in the Open Commission on this day the 16^th day of MARCH 2022)

MEMBER                         MEMBER                PRESIDENT

ANNEXURES

1. Witness examined on behalf of the Complainant/s by way of affidavit:

Copies of Documents produced on behalf of Complainant/s:

Ex P1: Three loan sanction letters issued by India bulls

Ex P2 : Screen shot

Ex P3: Letter written by me to the India bulls

Ex P4 : Email correspondences

Ex P5: Repayment schedule

2. Witness examined on behalf of the Opposite party/s by way of affidavit:

RW-1: Sri Hari Prasad, Working for gains at OPPOSITE PARTY company

Copies of Documents produced on behalf of Opposite Party/s

Ex R1: Board resolution authorizing me to represent OP

Ex R2: Loan application form filed by the complainants

Ex R3: Loan sanction letters with terms and conditions

Ex R4: Loan agreements

Ex R5: Intimation letters (2) regarding change of rate of interest which is not readable and hence directed to produce legible document with a readable font size

Ex R6: Intimation letter

Ex R7: Account statement (3 in Nos.)

Ex R8: No-due certificate (3 in Nos.)

MEMBER                 MEMBER                PRESIDENT

HAV*