Haryana

StateCommission

A/909/2016

RAJ GRAPHICS - Complainant(s)

Versus

INDIA BULLS HOUSING FINANCE LTD. - Opp.Party(s)

VARUN CHAWLA

31 Oct 2017

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION HARYANA, PANCHKULA

                                                 

First Appeal No  :      909 of 2016

Date of Institution:      30.09.2016

Date of Decision :       31.10.2017

1.     M/s Raj Graphics, Service Booth No.38, Industrial Area, Phase-1, Panchkula through its Proprietor Sh. Naresh Kumar s/o Sh. Raj Kishan Sharma.

2.     Smt. Neeru Sharma w/o Sh. Naresh Kumar, Resident of House No.2124, Sector-15, Panchkula.

3.     Sh. Raj Kishan Sharma s/o Sh. Ram Ji Lal, Resident of House No.2124, Sector-15, Panchkula.

4.     Sh. Sanjay Sharma s/o Sh. Raj Kishan Sharma, Resident of House No.2124, Sector-15, Panchkula.

5.     Sh. Naresh Kumar s/o Sh. Raj Kishan Sharma, Resident of H.No.2124, Sector-15, Panchkula.

                                      Appellants-Complainants

Versus

1.      India Bulls Housing Finance Limited, M-62 & 63, First Floor, Connaught Place, New Delhi-110001 through its Managing Director.

2.      India Bulls Housing Finance Limited, SCO No.230, 1^st Floor, Sector-20, Panchkula through its Branch Manager.

                                      Respondents-Opposite Parties

 

CORAM:             Hon’ble Mr. Justice Nawab Singh, President.

                             Shri Balbir Singh, Judicial Member.

                             Shri Diwan Singh Chauhan, Member.            

 

Argued by:          Shri Varun Chawla, Advocate for appellants.

                             Shri Hitender Kansal, Advocate for respondents.

 

                                                   O R D E R

 

BALBIR SINGH, JUDICIAL MEMBER

 

        This appeal has been preferred against the order dated August 16^th, 2016 passed by District Consumer Disputes Redressal Forum, Panchkula (for short ‘the District Forum’).

2.                Complainant-M/s Raj Graphics, purchased a Service Booth No.38, Industrial Area, Phase-1, Panchkula and for making payment of the sale price amount borrowed an amount of Rs.48,50,000/- from India Bulls Housing Finance Limited – Opposite Parties, on November 30^th, 2013 with interest at the rate of 18.50% per annum. As per version of the complainants, signatures of the complainants were obtained on number of printed documents but neither copies of the documents were supplied nor contents thereof were read over to the complainants. The complainants were required to make payment of the loan amount in 180 equal installments with Equated Monthly Installments (EMI) of Rs.58,209/-. Although loan amount was sanctioned and has been shown paid to the tune of Rs.48,500/- but actually only an amount of Rs.47,47,973/- was paid to the complainants. An amount of Rs.48,877/- was deducted as processing fee and an amount of Rs.50,000/- has been deducted showing payment of insurance policy premium.

3.                Earlier, complainants were assured that processing charges will not be recovered from the complainants. Regarding payment of insurance policy amount also, no consent was obtained. Earlier it was mentioned that the loan amount shall be paid in 180 monthly installments of Rs.58,209/- each but later on the complainants were informed that the EMIs had been increased from 180 to 188 on account of increase in interest rate from 18.50% to 18.75% in the month of January, 2014. In the month of February, 2014, the complainants desired to make pre-payment and for foreclosure of the loan account they are liable to make payment of total amount of Rs.50,22,370.41, which includes an amount of Rs.2,35,187.95 as foreclosure charges at the rate of 5.62% of the principal amount. In the loan documents, foreclosure charges were mentioned as 5% of the principal amount within a period of two years but later on the complainants were informed that foreclosure charges as 5.62% and ultimately foreclosure charges were received from the complainants at the rate of 5.7%. The complainant made prepayment of an amount of Rs.6,50,000/- in the loan account in the month of April and May, 2015 and thereafter made payment of the remaining total loan amount of Rs.42,90,901.02 in the month of July, 2015 which includes foreclosure charges at the rate of5.7% of the principal amount. The complainants got sanctioned loan from HDFC Bank at the floating rate of interest of 10.50% per annum for prepayment of the loan amount advanced by the opposite parties.

4.                The complainants filed complaint under Section 12 of the Consumer Protection Act, 1986 (for short “the Act, 1986) with a prayer that the opposite parties be directed to refund an amount of Rs.1,02,027/- which was deducted from the account of the complainants as processing fee and the amount paid as insurance premium with interest at the rate of 18% per annum; to pay an amount of Rs.1.00 lac to the complainants on account of excess interest amount charges; to refund an amount of Rs.1,25,335.74 being foreclosure charges and an amount of Rs.30,000/- as pre-payment charges; to pay an amount of Rs.5.00 lacs on account of un-necessary harassment, mental agony and an amount of Rs.2.00 lacs as punitive damages for carrying out unfair trade practice and  an amount of Rs.51,000/- as litigation expenses.

5.                The opposite parties filed their written version on the plea that the complaint is an abuse of process of law; that the complainants have no cause of action to file the present complaint and that the complainants are not covered under the definition of “consumers” as India bulls Housing Finance Limited is housing finance institution in terms of Section 2(d) of the National Housing Bank Act, 1987 (hereinafter referred to as ‘NHB Act’) and is registered with the NHB in terms of Section 29-A of the NHB Act. In terms of Section 30A of the NHB Act, the National Housing Bank is to determine the policies and to issue directions in this regard to the institutions working under it. National Housing Bank issued circular dated August 14^th, 2014 and September 03^rd, 2014 which made it clear that the complainants are liable to make payment of foreclosure charges as loanee. M/s Raj Graphics is a partnership firm. As per NHB Circular dated August 14^th, 2014, Housing Finance Company (HFC) shall not charge foreclosure charges/pre-payment penalties on all floating rate term loans sanctioned to individual borrowers with immediate effect. Vide Circular dated September 03^rd, 2014, it was made clear that loans in which company, firm etc. is a borrower or co-borrower is excluded from its purview. In this way, the complainants were given assurance that foreclosure charges and pre-payment penalty shall not be recovered from them. The loan amount mentioned above Rs.48,50,000/- was sanctioned after obtaining signatures of the complainants on loan agreement and other necessary documents and terms and conditions mentioned in the documents were explained to the complainants. It is also denied that copies of the alleged agreement and other documents were not supplied to the complainants. The installments of the loan amount were increased from 180 to 188 validly due to increase of rate of interest. The loan amount was sanctioned at floating rate of interest and the opposite parties were entitled to increase or decrease the Floating Reference Rate (FRR) of the company. Moreover, the insurance premium amount of Rs.50,000/- was deducted after consultation with the complainants. The complainants raised the issue of process charges and insurance premium for the first time after expiry of approximately two years from the date of sanction of the loan amount. It was mentioned in clear words that process charges shall be non-refundable. The opposite parties always followed the guidelines of the governing authority and National Housing Bank. The opposite parties have also taken plea that foreclosure charges at the rate of 5.7% shown in statement of account is inclusive of service-tax. It is also admitted fact that an amount of Rs.6,50,000/- was received by the opposite parties as pre-payment in the month of April and May, 2015. In this way, the complainants are not entitled to receive any amount from the opposite parties. It is prayed that the complaint filed by the complainants be dismissed.

6.                After hearing arguments, vide impugned order dated August 16^th, 2016 passed by the learned District Forum, the complaint filed by the complainants was dismissed being not maintainable as it is not a case of deficiency in service.

7.                Aggrieved with the impugned order dated August 16^th, 2016 passed by the learned District Forum, appellants-complainants filed the present appeal bearing No.909 of 2016 with a prayer to set aside the impugned order and to grant relief to the complainants as prayed in the complaint.

8.                We have heard learned counsel for the parties and perused the case file.

9.                During the course of arguments, there was no controversy of any type that on November 13^th, 2013 the complainants borrowed an amount of Rs.48,50,000/- from the opposite parties-India Bulls Housing Finance Limited, on payment of interest at the rate of 18.50% per annum. The borrowers were required to make payment of the loan amount in 180 monthly installments (EMI) of Rs.58,209/-.  Admittedly, as per terms and conditions of the agreement (Annexure R-4), the opposite parties were entitled to receive interest at floating rate and at the time of advancement of the loan amount, rate of interest was 18.50%. Grievance of the complainants is that earlier loan amount was to be paid in 180 equal monthly installments but later on the monthly installments were increased from 180 to 188 without consent of the complainants.  Version of the opposite parties is that all it happened due to increase in rate of interest from 18.50% to 18.75% in the month of January, 2014. We also feel that when there was increase in rate of interest, there were only two options with the opposite parties either to raise EMI or to increase number of monthly installments. We feel increase of monthly installments regarding payment of the loan amount from 180 to 188 was justified and no prejudice of any type has been caused to the complainants due to this decision of the opposite parties. 

10.              Admittedly, after sanction of the loan amount as Rs.48,50,000/-, the opposite parties deducted an amount of Rs.48,877/- as process fee charges and an amount of Rs.50,000/- as insurance charges. After deducting the above mentioned amount, the remaining amount Rs.47,47,973/- was paid to the opposite parties for purchase of booth No.38. Legally and technically and as per terms and conditions, the finance company was entitled to receive process charges regarding sanction of the loan amount. It is not the version of the complainants also that finance company was not entitled to receive process fee. Version of the complainants in this case is that they were assured by the opposite parties that process fee shall not be charged from them if the complainants agreed to obtain loan from the opposite parties. The complainants could not place on the file any such undertaking in writing and also could not produce any other convincing evidence to prove that the opposite parties have given undertaking that the process fee charges shall not be recovered from the complainants. In these circumstances, merely on the basis of the plea taken in the complaint and the statements of the complainants in the shape of affidavits tendered in evidence, findings cannot be given that the complainants were given any such assurance. In these circumstances, the deduction of the amount of Rs.48,877/- was justified.

11.              As per version of the complainants, the opposite parties had deducted an amount of Rs.50,000/- for providing insurance policy to the complainants. It is not the version of the opposite parties that no such insurance policy was provided to the complainants. The complainants did not place on the file the insurance policy also to make it clear that the insurance policy was provided to secure the loan amount advanced or for any other purpose. The complainants did not raise any objection when the payment of the remaining loan amount was made by the opposite parties to the complainants for purchasing booth No.38 after deducting the insurance policy premium amount of Rs.50,000/-. The complainants in their complaint have taken plea that they came to know in the last week of April, 2014 when they visited the opposite parties for obtaining statement of account, that an amount of Rs.50,000/- was deducted as insurance charges. This version of the complainants is not believable. Certainly when already an amount of Rs.47,47,973/- was paid as loan amount to the complainants, it came to their knowledge in the month of November, 2013 that the insurance policy amount had been deducted.  The complainants remained silent for such a long time and raised this plea at the time of filing of the present complaint first time on March 28^th, 2016. Moreover, the above mentioned amount has been utilized for purchase of the insurance policy by the complainants. In these circumstances, findings can be safely given that the complainants are not entitled for refund of the insurance policy premium amount of Rs.50,000/-. Prayer of the complainants in this regard stands declined.

12.              It is also admitted fact that the complainants got sanctioned a loan amount of Rs.38,00,000/- from HDFC Bank in the month of December, 2015 with interest at the rate of 10.50% per annum to make pre-payment of the loan amount advanced by the opposite parties. It is evident from Annexure C-10also. An amount of Rs.38.00 lacs balance loan amount was deposited with the opposite parties as is evident from Annexure C-12.

13.              Admittedly, at the time of pre-payment of the balance loan amount of Rs.37.00 lacs, an amount of Rs.1,25,335.74 was deducted as foreclosure charges and an amount of Rs.30,000/- was deducted by the opposite parties as pre-payment charges at the rate of 5.7% of the principal amount including service-tax. Version of the complainants is that the opposite parties were not entitled to receive the above mentioned amount from the complainants and the complainants are entitled for refund of the above mentioned amount. On this point of controversy, learned counsel for the opposite parties argued that the opposite parties are entitled for foreclosure and pre-payment charges, as charged from the complainants. Our attention in this regard was drawn upon a letter dated August 14^th, 2014, (Annexure OP-2) and letter dated September 03^rd, 2014 (Annexure R-2). The above mentioned letters were issued by National Housing Bank. In the beginning, Circular dated August 14^th, 2014 was issued mentioning that finance companies shall not charge foreclosure charges and pre-payment penalties on all floating rate term loans sanctioned to individual borrowers with immediate effect. In the Circular dated September 03^rd, 2014 (Annexure R-2), it is made clear that loan in which company, firm etc. is a borrower or co-borrower; they are excluded from the purview of the letter dated August 14^th, 2014. In this way, findings can be safely given that the opposite parties were entitled to charge foreclosure charges and pre-payment penalty amount as received from the complainants, mentioned above. Findings can be safely given that the complainants are not entitled for refund of the above mentioned amount.

14.              As per discussions above in detail, findings can be safely given that remaining amount claimed by the complainants, as mentioned in the prayer clause of the complaint also cannot be awarded in favour of the complainants.

15.              Learned District Forum while passing the impugned order dismissed the complaint filed by the complainants mentioning that the same is not maintainable as the complainants do not fall within the purview of “Consumers” as provided in Section 2(1)(d) of the Consumer Protection Act, 1986 and it is not a case of deficiency in service. The opposite parties cannot be considered as a service provider. Service has been defined in Section 2 (1) (o) of the Act, 1986, which is reproduced below for close perusal:-

“(o)    “service” means service of any description which is made available to potential [users and includes, but not limited to, the provisions of] facilities in connection with banking, financing insurance, transport, processing, supply of electrical or other energy, board or lodging or both, [housing construction] entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service;”

16.              Learned District Forum has given findings against the complainants on the point of maintainability as case of the complainants is not covered under the definition of “service”. Learned District Forum based its findings on a decision of Hon’ble National Consumer Disputes Redressal Commission, New Delhi in Revision Petition No.3759 of 2007 titled as Sunny and others vs. Rajesh Tripathi, decided on September 11^th, 2015. India Bulls Housing Finance Limited is a registered finance company and is running its business as per guidelines and circulars issued from time to time from National Housing Bank. The opposite parties/Finance Company provides home loans and loans of such like other categories. As per facts of case law referred above, the amount was not advanced by finance company but by an individual. We have closely perused the above cited case Sunny and others vs. Rajesh Tripathi (Supra).  Facts and circumstances of the above cited case law are quite different from the facts and circumstances of the case in hand.

17.              As per discussions above in detail, findings can be safely given that the opposite parties/Finance Company is a service provider who provides home loans facility to the complainants and other customers. We feel that the learned District Forum has committed an error while passing the impugned order dated August 16^th, 2016 mentioning that the complaint is not maintainable as the opposite parties cannot be considered as service provider. So, findings given by the learned District Forum on the point of maintainability stand set aside.

18.              In this case, learned District Forum has given findings only on the point of maintainability of the complaint. Although finding of the learned District Forum on the point of maintainability of complaint stands set aside but as per discussions above in detail, we find no merit in the appeal filed by the appellants-complainants and the same deserves dismissal.  Consequently, the complaint filed by the complainants stands dismissed on the ground other than the ground recorded by the District Forum.   

 

Announced 31.10.2017

Diwan Singh Chauhan Member

Balbir Singh Judicial Member

Nawab Singh President

CL