aKERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION VAZHUTHACAUD, THIRUVANANTHAPURAM.

APPEAL  NO: 226/208

 JUDGMENT DATED:07-03-2011

PRESENT

JUSTICE SHRI. K.R. UDAYABHANU              :  PRESIDENT

1.      The Branch Manager,

Lord Krishna Bank,

(Now HDFC Bank),

Kasaragode.P.O.

                                                                   : APPELLANTS

2.      The Assistant General Manager,

Regional Office,

Lord Krishna Bank,

(Now HDFC Bank)

(By Adv: Sri.V.S.Bhasurendran Nair)

Vs.

Mr.K.Kunhambu Nair,

S/o Kunjiraman Nair,                                 : RESPONDENT

Residing at K.M.House,

Palakkunnu.P.O, Kasaragode.

                                           JUDGMENT

JUSTICE SHRI.K.R. UDAYABHANU : PRESIDENT

The appellants are the opposite parties/bank authorities in CC.6/08 in the file of CDRF, Kasaragod.  The appellants are under orders to pay a sum of Rs.30,000/- towards the additional liability caste upon the complainant by the opposite party/bank and also to pay Rs.20,000/- by way of punitive compensation for hardships caused in and Rs.2000/- towards cost.

2.      It is the case of the complainant is that he had availed a housing loan of Rs.8,50,000/- with interest at 8.5% per annum from the appellants.  He had opted for a fixed rate of interest at 8.5%.  Subsequently the opposite parties/appellants informed that the interest rate is variable.  Had he known it he would not have opted for the floating rate as the above rate would cause increased financial burden to him.  He subsequently contacted Central Bank of India, Kasaragode branch and had the loan taken over by the Central bank and he was provided the loan with interest at 9.55 per annum fixed rate.  On account of the arbitrary act on the part of the opposite parties, the complainant had to incur a financial loss of Rs.30,000/-.  He has also undergone considerable mental agony.  He has sought for compensation of Rs.1.lakh in this regard also.

3.      The opposite parties have filed version contending that the loan documents clearly showed that the loan provided carried a floating rate of interest and that the rate of interest is subject to change from time to time as per the directives of the Reserve Bank of India and Lord Krishna Bank Ltd., now the Centurian Bank of Punjab.  The loan was sanctioned for the period of 15 years.  There is no fixed rate of interest for any period above 10 years in the opposite parties bank.  The increase in the rate of interest was intimated to the complainant.  The pre payment charges of 2% on term loan pre paid can be waived only after the completion of 5 years, vide the circulars of the opposite party bank.

4.      Evidence adduced consisted of proof affidavits of the respective sides, Exts.A1 to A5 and B1 to B3.

5.      The Forum has found that the evidence showed that the complainant had applied for the loan at 8.5% fixed rate of interest and that the signatures etc obtained in the loan documents would not as such show that the complainant was made aware of the change of the terms of the rate of interest.  The Forum has quoted observations of the National Commission in Rohit Bajaj Vs. ICICI Bank in OP.7/07 dated:17/4/2008. The Hon’ble National Commission has observed that:-

These standardized contracts are really pretended contracts that have only the name of contract.  They are called contracts of adhesion from the French term (contracts d’adhesion) because, in these, a single will is exclusively predominant, acting as a unilateral will, which dictates its terms not to an individual but to an indeterminate collectivity.  The standard terms and conditions prepared by one party are offered to the other on a “take-it-or-leave-it” basis.  The main terms are put in large print, but the qualifications are buried in small print.  The individual’s participation consists of a mere adherence, often unknowing, to the document drafted unilaterally and insisted upon by the powerful enterprises: the conditions imposed by the document upon the customer, are not open to discussion, nor are they subject to negotiation between the parties, but the contract has to be accepted or rejected as a whole.  The contracts are produced by the printing press.  The pen of the individual signing on the dotted line does not really represent his substantial agreement with the terms in it, but creates a fiction that he has agreed to such terms.  The characteristics, usually and traditionally associated with a contract, such as freedom to contract and consensus are absent from these so-called contracts.  

6.      The entire basis of a contract, that it was freely and voluntarily entered into by parties with equal bargaining power, completely falls to the ground when it is practically impossible for one of the parties not to accept the offered terms.  In order to render freedom of contract a reality and particularly of one whose bargaining power is less than that of the other party to the contract, various measures like labour legislation, money-lending laws and rent Acts have been enacted, but there is no general provision in the Contract Act itself under which courts can give relief to the weaker party.  The existing section in the Contract Act does not seem to be capable of meeting the mischief.

7.      Further we find that it is the case of the complainant that Ext.A1 loan application was filled up by the branch manager.  There in the rate of interest noted is 8.5% fixed rate.  Further it is seen that Ext.A1 application has been counter signed by the branch manager certifying that he has scrutinized the documents concerned, verified the same and has recommended the loan to be sanctioned.  Of course in Ext.A2 advance sanction memo and in Ext.B3 loan agreement, rate of interest is mentioned as 8.5% floating rate.  There is nothing to show that the complainant was intimated that the rate of interest specified in Ext.A1 loan application is not acceptable to the opposite parties and that the rate of interest has been converted to floating rate.  There is nothing to show that the complainant singed in the loan agreement after he was made aware specifically as to the change in the rate of interest.  The case of the complainant is that he got the loan taken over by the Centreal Bank and he was granted loan at the fixed rate of interest of 9.5% for 15 years.  The case of the opposite party that for loans beyond the period of 10 years fixed rate of interest will not be provided stands not established.  A statement of the complainant that he was provided loan by the Central Bank at fixed rate of interest stands not disproved.  In the proof affidavit, the complainant has stated that he was made to pay Rs.30,000/- towards pre closure charges.  The same has also not been disputed.  Just because the complainant was made to sign in the loan agreement he cannot be burdened with liability to pay enhanced and variable interest.

In the circumstances we find no reason to interfere in the order of the Forum below.  Hence the appeal is dismissed.  The opposite parties are directed to make the payment as ordered by the Forum within 3 months from the date of receipt of this order failing which the complainant will be entitled to interest at 12% from 7/3/2011, the date of this order.

Office will forward the LCR along with the copy of this order to the Forum below.

JUSTICE K.R. UDAYABHANU                :  PRESIDENT

VL.