BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, MYSORE-570023

CONSUMER COMPLAINT NO.501/2015

DATED ON THIS THE 23^rd June 2017

      Present:  1) Sri. H.M.Shivakumara Swamy

B.A., LLB., - PRESIDENT   

    2) Smt. M.V.Bharathi                    

                                   B.Sc., LLB., -  MEMBER

                     3) Sri. Devakumar.M.C.                  

                                                          B.E., LLB.,    - MEMBER

Sri DEVAKUMAR.M.C,

Member

1.     The complainant has filed the complaint under section 12 of the C.P.Act 1986, against the opposite party, alleging unfair trade practice and seeking direction to refund Rs.11,498/- collected as late fee on instalments, Rs.2,11,388.17 collected as pre-closure charges with interest at 14.5% from the respective date of collection of the above said amount and Rs.1,00,000/- as damages for causing mental agony and pain suffered with cost of the litigation and other charges.
2.     The complainant, availed financial assistance from opposite party, with an intention to purchase a residential site on 10.10.2012.  A sum of Rs.1,32,146/- paid and the repayment through ECS, was commenced from 01.10.2012 on first of every month and the total instalments were 144.  The floating rate of interest at 11.5% was agreed.  The instalment amount was paid promptly.  The opposite party was debiting excess amount from complainant’s account without taking consent. The opposite party levied excess interest for the delay in payment of instalments, to the tune of Rs.11,498/- as penalty for delayed payment.
3.     The opposite party levied interest at 14.5% instead of agreed 11.5% without the knowledge of the complainant.  Aggrieved complainant informed opposite party, to close the loan account, then opposite party demanded for a sum of Rs.3,17,619/- as pre-closure charges.  On protest by the complainant, the opposite party, reduced the same to Rs.2,11,388/-.  The complainant closed the loan account by paying the amount as demanded under protest.  Hence, the complaint, alleging deficiency in service and unfair trade practice and seeking reliefs.
4.     The opposite party submits, the complaint is not maintainable, as there was conclusion of contract with the complainant.  The complainant has closed the loan account by paying the entire amount, without protest. 
5.     M/s Hotel Ruchi The Prince, represented by its Managing Partners have approached the opposite party, seeking financial assistance to purchase a property and a sum of Rs.1,02,97,191/- was sanctioned.  The complainant and his wife, executed the loan agreement agreeing to the terms and conditions.  The complainant has agreed to pay the interest at floating rate.
6.    During the pendency of the loan, the complainant requested to foreclose the loan.  Thereby, the details of payment to be made was furnished to the complainant and the same Rs.97,08,036/-, was paid by the complainant, without any protest.  The fore-closure charges @ 2.25% on outstanding principal was collected based on the terms of the agreement and as per the policy circular issued by the National Housing Bank (NAB) only.  Thereby, the opposite party denies, the allegation of excess interest, as false and baseless.  As such, prays for dismissal of the complaint with costs.    
7.     To establish the facts, the complainant filed his affidavit and relied on several documents.  The opposite party led his evidence and filed affidavit with documents.  Written arguments filed by both side.  Heard the oral submissions.  Perusing the material on record, mater posted for orders.
8.     The points arose for our consideration are:-

1. Whether the complainant establishes the deficiency in service and unfair trade practice by the opposite party, in levy and collection of excess amount towards fore closure of the loan account and thereby he is entitled for the relief sought?
2.  What order?

9.    Our findings on the aforesaid points are as follows:

Point No.1 :- Partly in the affirmative.

Point No.2 :- As per final order for the following

:: R E A S O N S ::

10. Point No.1:- The complainant availed housing loan from opposite party, agreeing to the terms and conditions.  Dissatisfied with the debiting of excessive amount, without the consent/knowledge, the complainant, opted for fore-closure of the loan account with opposite party.  Under protest, the housing loan account has been closed by the complainant.  On payment of Rs.97,08,036/-, inclusive of outstanding principal amount, late payment penalty charges, cheque bouncing charges, interest for the month and fore-closure charges.  Aggrieved by the excessive levy of interest and late payment penalty charges, the complainant, filed the complaint and sought for the reliefs.
11. However, the complainant contended that under the RBI regulations, the opposite party cannot levy fore-closure charges, on the home loans at floating rate of interest.  Therefore, contended that, the levy of fore-closure charges was against the law and the opposite party is liable to refund the amount, which was collected and hence prays for the reliefs with damages.
12. The opposite party contended that, the complainant had availed loan for expansion of his commercial business, as such, complainant never fall under the provision of the definition of ‘Consumer’ under section 2(1)(d) of the C.P.Act.  Further, the complainant has paid the dues and closed his loan account without any protest.  As such, the settlement was accepted as full and final.  Accordingly, the complaint is liable to be dismissed as not maintainable. 
13. The complainant availed the loan agreeing to the terms and conditions laid down in the loan agreement.  As such, the complainant himself agreed to the rate of interest at floating rate of interest.  The complainant himself agreed to the foreclosure statement, and has settled the loan account without any protest.  As such, the privity of contract has been concluded.  So the complaint is not maintainable and liable to be dismissed.  The complainant relied on several judgements rendered by the Hon’ble National Commission, to establish that, the complaint is not maintainable on full and final settlement of the claim without any protest.  Further, the complainant is bound to pay the pre-closure charges as per the agreement.  So the opposite party contended that, they have not committed any deficiency in service and unfair trade practice and are not liable to pay any compensation to the complainant.
14. The documents placed on record established that, the complainant had availed loan by executing loan agreement.  The instalment amount was paid regularly as agreed.  The opposite party levied floating rate of interest as against the agreed 11.5% of interest on loan amount.

15. The statement of the opposite party, established that, pre-closure charge was levied on the outstanding principal amount, late payment charges, and also pre-closure charges was collected before closure of the loan account.  The complainant relied on directions issued by the National Housing Bank, to all the Housing Finance Companies regarding non-levy of pre-closure charges on housing loans availed by its customers.  In view of the same, the collection of pre-closure charges towards the loan amount by the opposite party, is held as unjustifiable and the same amounts to deficiency in service and unfair trade practice.  Thereby, the opposite party is liable to refund the entire pre-closure charges received from complainant with interest and to pay compensation for the mental agony, hardship caused.  Accordingly, the Point No.1 is answered partly in the affirmative.

16.  Point No.2:- In view of the above observations, the following

:: O R D E R ::

1. The complaint is allowed in part.
2. The opposite party is hereby directed to refund Rs.2,11,388/- with interest at 12% p.a. from the date of this order to the complainant, within 60 days.  Failing which, the opposite party shall pay interest at 18% p.a. on the said amount i.e. Rs.2,11,388/- until payment made.
3. The opposite party is hereby directed to pay Rs.5,000/- towards deficiency in service and unfair trade practice, Rs.3,000/- towards damages for the mental agony and hardship caused and Rs.2,000/- towards cost of the litigation to the complainant, within 60 days of this order.  Failing to comply, the opposite party shall pay interest at 12% p.a. on the said total sum of Rs.10,000/- until compliance.  
4. In case of default to comply this order, the opposite party to undergo imprisonment and also liable for fine under section 27 of the C.P.Act, 1986.
5. Give the copies of this order to the parties, as per Rules.

(Dictated to the Stenographer transcribed, typed by her, transcript corrected by us and then pronounced in open court on this the 23^rd June 2017)