Punjab

Rupnagar

RBT/CC/18/226

Davinder Singh - Complainant(s)

Versus

Indiabulls Housing Finance Pvt.Ltd. - Opp.Party(s)

RS Bhatti adv

21 Dec 2023

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION,

ROPAR

Consumer Complaint NO.	:	RBT/CC/226/2018
Date of Institution	:	05.04.2018
Date of Decision	:	21.12.2023

 

Davinder Singh aged about 60 years son of Sh. Bahadur Singh, proprietor M/s Decent Apparels, resident of House No.99, Surya Vihar, BarewalAwana, Rishi Nagar, Near Income Tax Colony, Ludhiana 

                                                                ……Complainant

                                Versus

1. India bulls Housing Finance Private Limited, SCO-16-17, First Floor, Fortune Chamber Feroze Gandhi Market, Ludhiana, through its Authorized officer/Manager
2. Indiabulls Housing Finance Private Limited, Indiabulls House, 448-451, Udyog Vihar, Phase-5, Gurgaon-122016, Haryana through its authorized officer/Manager   

….Opposite Parties

Consumer Complaint under Section 12 of the Consumer Protection Act, 1986 (old)

QUORUM:

                Sh. S.K. Aggarwal, President

                Mrs. Ranvir kaur, Member

                Sh. Ramesh Kumar Gupta, Member

Present:-

For the complainant       :      None

For OP 1 &2                    :      Sh. Anand Sabharwal

 

ORDER

 

          The complaint has been filed by the complainant against the OPswith the averments that he had availed LAPLfrom the OPs for a sum of Rs.30,33,039/-vide sanction letter dated 02.07.2016. and the same was to be repaid in 180 month.In loan account No.HHLLUD00282592 the OPs charged Rs.1,47,069.77 illegally from the complainantwhich was deposited under protest. As per circular DBOD No. Dir. BC.107/ 13.03.00/2011-12 dated June 05,2012, issued by Reserve Bank of India, no bank can charge foreclosure charges on all floating rate loans. The complainant has requested Ops for the refund ofabove foreclosure charges.Legal notice dated 12.01.2018 was also sent  to Ops but Ops have given false and frivolous reply to the said legal notice. Alleging deficiency in service and unfair trade practice on the part of the Ops, a prayer has been made for issuance of following directions to OPs:-

1. To refund the foreclosure charges of Rs.1,47,069.77;
2. To pay the interest @ 18% per annum on foreclosure charges for delay from the day  of charging i.e. dated 11.09.2017;
3. To pay Rs.50,000/- as compensation on account of mental harassment;
4. To pay Rs.33,000/- as litigation expenses.

2. Upon notice, the OP Nos.1 & 2 have appeared and filed written reply taking preliminary objections to the effect thatno cause action has ever accrued to the complainant and is not a consumer of the answering OPs as the complainant had availed/applied/utilized the loan amount for business expansion, which is covered under the category of commercial purpose. On merits, it is stated that in June, 2016, the complainant and Mrs. Inderjit Kaur, M/s Decent Apparels approached the OPs for availing loan facility of Rs.30,33,039/- vide loan account No.HHLLUD00282592 and accordingly signed the terms and conditions mentioned in the loan application form and loan agreement. The complainant has availed the said loan for business purpose. That the Opposite Party is a Housing Finance Company which is regulated by guidelines/circulars issued by the National Housing Bank( herein referred to as NHB). It is submitted that the loan availed by the Complainant herein was for business purpose/expansion and the same is also mentioned in loan application forms.On 22.7.2016 the NHBissued a circular on levy of foreclosure charges/prepayment penalties on loan facility availed by borrower. As per the said circular, the loan pre-closed by an individual borrower, then foreclosure charges/pre-payment penalties shall not be attracted. However, the same shall be charged/levied in case of a company, firm etc.Further, the issue relating to applicability of the aforesaid Circulars to a Sole Proprietorship Concern/Firm or an HUF, as a borrower/co-borrower has also been examined in the light of complaints / representations received by us. We clarify that the intent and spirit of the circular is to protect the interest of the individual borrowers. Therefore, a Sole Proprietorship Concern/Firm or an HUF, as borrower or co-borrower will not be treated as an individual borrower for the purpose of these circulars. The foreclosure/prepayment penalties are charged/levied by the Opposite Party in view of the terms and conditions of the loan agreement duly executed between the parties. The Complainant being a Prop. of Proprietorship Firm, also the borrower of the loan, was fully aware of the terms and conditions of the loan agreement. The sanctioning of the loan, name of the borrowers and guarantors, rate of interest, terms of the repayment and such other particulars has been clearly detailed in the Schedule of the loan agreement. executed between the complainant and OPs. It is further stated that during the pendency of the loan, the complainant had approached the OPs and requested for foreclosure of the loan, then the OPs provided the details of payment required to pay for foreclosing the loan andthe complainant made payments without reserving anyprotest and with free consent. The complainant has taken the loan along with the proprietorship firm, therefore, being a non-individual entity  foreclosure charges has been collected in terms of the agreement and also the policy circular bearingNo.NHB(ND) DRS/Policy No.66/2014-15 dated 03.09.2014 issued by the NHB. The answering OPs does not cover under the guidelines of the Reserve Bank of India as the answering OPs is Housing Finance Company Private Limited. As per NHB circular bearing No. NHB(ND) DRS/Misc. No.17/2015-16 dated 22.7.2016, has clarified that Sole Proprietorship Concern/Firm or an HUF, as borrower or co borrower will not be treated as an individual borrower. The answering OP is registered under Section 29A of the NHB Act and the circular/guidelines issued by the National Housing Bank do not restrict OP to levy foreclosure charges on loan facility availed by the complainant.  Denying deficiency in service and unfair trade practice on the part of the answering OPs, a prayer for dismissal of the complaint has been made.
3. In support of his case, the complainant has tendered in evidence

his own affidavit as Ex-CA along with other documents as Ex. Cl to C6.

4. In rebuttal, OPs tendered in evidence affidavit of their authorized representative, Sh. Sanjeev Kumar, Regional Legal Manager, India bulls Housing Finance Limited, Indiabulls House, 448-451, Phase-5, Udyog Vihar, Gurgaon-122016, Branch Office at Feroze Gandhi Market, Ludhiana,asEx-RA, along with documents Ex.R1 to Ex.R5.
5. We have considered the submissions of the complainant as well as the OPs. We have also carefully perused the materials on record.
6. Admittedly,in June, 2016, the Complainant Mr. Davinder Singh alongwith Mrs. Inderjeet Kaur, M/s Decent Apparels approached the Opposite Party for availing loan facility of Rs.30,33,039/- (Rupees Thirty LacsThirty Three Thousand and Thirty nine Only) vide Loan account no. HHLLUD00282592,Ex-R2 &Ex-R4 and the said loan was sanctioned for Rs. 30,33,039/-with the borrower name as Mr. Davinder Singh, Mrs. Inderjeet Kaur, M/s Decent Apparels,Decent Textile Engineers,Ex-C1,&Ex-R4(Schedule) with term of repaymentas 180 months.
7. The main allegation of the complainant is that Ops have wrongly charged Rs. 1,47,069.77as foreclosure chargesEx-C2. As per this letter, Ex-C2, date of foreclosure charges considered is 11-09-2017.During the pendency of the loan, the Complainant had approached the Ops for the foreclosure of said loan. As the Complainant intends to close the loan, the OPs provided the details of payment required to pay for foreclosing the loan, Ex-C2. Ops have averred in the evidence affidavit Ex-RA as under:_

        “The said payments were made without reserving anyprotest. The complainant made the payment with free consent. The Complainant hastaken the loan along with the proprietorship firm, therefore being a Non-individual Entity a foreclosure charges has been collected in terms of the agreement and also the policy circular bearing No.NHB(ND)DRS/Policy circular No. 66/2014-15 dated 3/9/2014 issued by the National House Bank(NHB). It is pertinent to mention that the Opposite Party does not covered under the guidelines of the Reserve Bank of India (RBI), being a Housing Finance Company, the Opposite Party follows the guidelines,directions and circulars issued by the NHB. The circular issued by the NHB is produced and marked as Ex-R5.

That in the circular NHB (ND)/DRS/Misc. Circular No.17/20.15-16 dated 22 July,2016 the NHB has further clarified that “a Sole Proprietorship Concern/Firm or an HUF, as borrower or co-borrower will not be        treated as an individual borrower”.

8. That We, have carefully studied the “policy circular bearingNo. NHB(ND)DRS/Policy circular No. 66/2014-15 dated 3/9/2014 Ex-R5” and NHB circular No. 17/2015-16 dated 22/07/2016 Ex-R3”. Some important facts of these circulars are as under:-

      As perNHB(ND)DRS/Policy circular No. 66/2014-15 dated    3/9/2014Ex-R5:-

“Please refer to our Circular NHB(ND)/DRS/Pol.circular No. 63/2014 dated August 14, 2014 advising HFCs not to charge foreclosure charges/pre-payment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect.

Enquiries are being received with regard to the applicability of the said Circular on floating rate term loans sanctioned prior to August 14, 2014 and in cases where a company, firm, etc. is a co-borrower.

2. The issues have been examined by us. It is clarified that the provisions of the said Circular are applicable in respect of all floating rate term loans sanctioned to individual borrowers by HFCs, irrespective of the date of sanction, and prepaid on or after August 14, 2014, The provisions of the said Circular cover both part as well as full pre-payments.

Further, the applicability of the said Circular is on foreclosure charges/pre­payment penalties in respect of all floating rate term Ioans sanctioned to individual borrowers. Loan in which company, firm, etc, is a borrower or co-borrower, therefore, is excluded from its purview.”

      As Per NHB circular No. 17/2015-16 dated 22/07/2016 Ex-R3”        Please refer to our Circulars NHB(ND)/DRS/PolicyCircular-63/2014-15               and 66/2014-15 dated August 14, 2014 and September 3, 2014,                     respectively, in terms of which, inter-alia, all floating rate term loans                        sanctioned to individual borrowers by the Housing Finance Companies              (HFCs), are exempted from any foreclosure charges /prepayment                         penalties.

2. It has come to our notice that some of the HFCs continue to levy foreclosure charges/pre-payment penalties on term loan sanctioned to individual borrowers under different nomenclatures, such as loan origination cost, loan maintenance cost, etc. This is in contravention of the provisions of the Circulars referred to above. We clarify that these provisions apply to all term loans sanctioned only to individual borrowers.
3. Further, the issue relating to applicability of the aforesaid Circulars to a Sole Proprietorship Concern/Firm or an HUF, as a borrower/co-borrower has also been examined in the light of complaints / representations received by us. We clarify that the intent and spirit of the circular is to protect the interest of the individual borrowers. Therefore, a Sole Proprietorship Concern/Firm or an HUF, as borrower or co-borrower will not be treated as an individual borrower for the purpose of these circulars.
4. However, in cases where the terms & conditions of the loans sanctioned indicate that no foreclosure charges/pre-payment penalties shall be levied, such loans shall continue to be governed by the already sanctioned terms & conditions.
5. HFCs are, therefore, advised to Implement the above referred Circulars in the right spirit and make all necessary efforts to resolve the complaints received from borrowers. Further, HFCs are also advised to educate the borrowers on the above issues at the time of sanction of loan and Include the same under para 6(iii) of Annex-Il of Circular No. NHB(ND)/DRS/Policy Circular No.70/2014-15 dated April 20. 2015.

6.         Any non-compliance with any of the provisions on levy of foreclosurecharges/pre-payment penalty will be viewed seriously.”

9. We, have observed that Complainant approached the OPs for the foreclosure of loan account well before the sanctioned repayment term, Ops in turn provided the details of payment required to pay for foreclosing the loan, Ex-C1 & Ex-C2. Aggrieved by this complainant approached this commission. Complainant have availed the loan not as an individual borrower, rather have co-borrower alsoEx-R4(Schedule). Complainantis bound by the terms and condition of loan agreement as well as above circulars. Rather as per Ex-R5, foreclosure charges are applicable on the loans sanctioned prior to August 14,2014.There is no illegality in the action of the Ops.Complainant have failed to prove the charges levelled in the complaint. There is no deficiency in service and unfair trade practice on the part of the Ops.
10. In view of above discussion,Complainant have failed to prove the charges levelled against Ops in the complaint. Hence,the instant complaint stood dismissed being devoid of any merit. No order to costs. Free Certified copy of this order be sent to the parties, as per rules. The instant complaint could not be disposed of within stipulated period for want of Quorum and due to paucity of staff. File be indexed and concerned clerk is directed to consign the file and sent back the same to the District Commission, Ludhiana against the proper receipt.

Pronounced on : 21.12.2023

 

 

(S.K. AGGARWAL)

     PRESIDENT

 

 

 

        (RANVIR KAUR)

              MEMBER

 

 

 

 (RAMESH KUMAR GUPTA)

                MEMBER