REKHA GUPTA

                Revision petition no. 2001 of 2012 has been filed against the judgment and order dated 18.04.2012 passed by the State Consumer Disputes Redressal Commission, Union Territory, Chandigarh (‘the State Commission’) in First Appeal no. 53 of 2012.

2.           The brief facts of the case as per the respondent nos. 1, 2 and 3/ complainants are that in June 2010 petitioner no. 1 and 2 (hereinafter it will be referred in short as ‘Bank’) approached the respondents and offered loan against the property. The respondents informed Bank that the respondent have already availed loan against their property, i.e., House no. 379, Sector 7, Panchkula from GE Money Financial Services Ltd., SCO 72-73, 1^st Floor, Sector 8 C, Chandigarh, i.e., Loan Account no. HCHE00000664 for a sum of Rs.47,66,000/- @ 13.23% per annum and loan account no. HCHE00000682 for a sum of Rs.15,04,000/- @ 12.56% per annum.

3.     The Bank allured the respondents by saying that the Bank will take over the original loan of the respondents from GE Money and issued further loan to the respondents @ 11% per annum. The Bank further stated that the respondents had to pay only 2% towards foreclosure charges over the total amount of loan outstanding with GE Money, as the Bank had tie up with GE Money and thereafter the original title deeds of the respondents deposited with GE Money shall be received by the Bank on behalf of the respondents from GE Money. The respondents believing the version of Bank gave their consent for taking loan from the Bank.

4.     After about 15 or 20 days in June 2010, the Bank again approached the respondents and said that the Bank had verified the outstanding amount of the respondents from GE Money and as per the verification the respondents had to pay a lump-sum amount of Rs.61,36,000/-, i.e., (Rs.46,70,000/- & Rs.14,66,000/-) to GE Money including 2% foreclosure charges, to which the respondents agreed and the Bank got signed some blank papers on the pretext that the Bank required the same to receive the original title deeds from GE Money on their behalf.

5.     On 17.07.2010 the Bank informed the respondents that on the basis of verification from GE Money it had sanctioned a loan of Rs.88 lakh in favour of the respondents and out of the sanctioned loan the Bank would directly disburse a sum of Rs.61,36,000/- in favour of GE Money towards closure of their loan accounts and the balance amount of Rs.26,64,000/- will be disbursed to the respondents directly. The Bank further took a cheque bearing no. 015350, dated 17.07.2010 drawn at Union Bank of India, Sector 8, Panchkula for a sum of Rs.97,064/- from the respondents towards 1% processing charges, i.e., Rs.88,000/- including service taxes, i.e., Rs.9,064/-. Bank also signed the sanctioned letter for the respondents.

6.     On 19.07.2010, Bank got signatures of the respondents over the agreement, and thereafter, on 02.08.2010, the Bank handed over the repayment schedule to the respondents regarding disbursement of Rs.61,36,000/- in favour of GE Money which was applicable with effect from 07.09.2010 and further assured that the loan amount will be disbursed to the respondents and to GE Money on their behalf within a weeks’ time.

7.     On 12.08.2010, the Bank informed the respondents that the Bank had sent two pay orders amounting to Rs.46,70,000/- and Rs.14,46,000/- (Total Rs.61,36,000/-) in favour of GE Money but GE Money refused to accept the said amount from the Bank on the pretext that now the GE Money is demanding 4% foreclosure charges over the due amount from Bank. The respondents asked the Bank that if GE Money refused to accept Rs.61,36,000/- from the Bank then how had the Bank sanctioned the loan of Rs.88 lakhs in favour of the respondents, meaning thereby the Bank had negligently/ wrongly sanctioned loan of Rs.88 lakhs in favour of the respondents, i.e., without proper verification from GE Money, to which the Bank had no answer. The respondents requested the Bank to cancel the loan agreement and return/ refund Rs.97,064/- received towards the processing fee from the respondents. The Bank and assured the respondents that the processing feel shall be refunded to the respondents within one or two months.

8.     Thereafter the respondents received a letter dated 01.09.2010 from the Bank with regard to the cancellation of their loan, however, till date the Bank had not refunded the processing fee charged from the respondents.  The respondents contacted the Bank a number of times but the matter with regard to refund of processing fee was always delayed, on the pretext that it was in process and thereafter the Bank stopped attending the phone calls of the respondents on his mobile no. 9814433355.

9.     Respondent prayed that keeping in view the facts and records of the present complaint, to grant the following relief to the respondents:

1. Bank may kindly be directed to refund Rs.97,064/- along with interest @ 18% per annum to the respondents which had been illegally withheld by the respondents;
2. Bank may kindly be directed to pay Rs.2.00lakh on account of mental torture, agony and harassment which caused hardship to the respondents by their illegal acts;
3. Bank may kindly be directed to pay Rs.22,000/- towards counsel fee to the respondents’
4. Bank may kindly be directed to pay Rs.5,000/- to the respondents towards the cost of litigation; and
5. Any other relief which the Hon’ble Forum deems fit may also be awarded in favour of the respondents.

10.    Petitioner/ OP 1 – the Bank - in their reply before the District Forum admitted that the respondent had applied for a loan from the petitioner bank and that instructions had been given for transfer of part of the loan amount to GE Money Financial Services Ltd., that the loan was duly sanctioned by the petitioner Bank and that the draft in respect of the payment of GE Money Financial Services Ltd., was also prepared. However, the respondent then refused the loan facility. From the above, it was evident that there is no deficiency in service on the part of the petitioner - Bank. The loan was applied for to the bank, the agreement also took place between the bank and the respondent and the loan was also sanctioned by the bank, the instruments for the disbursal of the same were also duly prepared, however, the respondent refused the same. Refusal by the respondent does not amount to deficiency on the part of the petitioner Bank.

11.    As per the terms and conditions of the loan, the respondents was liable to pay processing charges amounting to Rs.97,064/-. The petitioner – Bank has completed all the requirements as were required to be done on its part and even disbursed the loan, however, the respondent refused to accept the same and hence, the bank had no option but to cancel the loan. An agreement has been entered between the parties, providing for the payment of the processing fees and hence, the bank was entitled to the same. The respondent was not entitled for refund of the same on account of the cancellation of the loan on account of the respondent after the disbursal cheques were also prepared.

12.    An application for the loan was made by the respondent to the petitioner – Bank as the respondent was in need of more money and hence, the respondent applied for the loan from the petitioner – Bank. The respondent was getting a better rate of interest and hence, he applied to the Bank. It was wrong and denied that the respondent was told by the petitioner or its representatives that GE Money shall only charge 2% as foreclosure charges. The respondent had a contract with the said GE Money, and the petitioner – Bank was not in any manner privy to the same, and hence, there was no occasion or opportunity for the petitioner – Bank or any of its representatives to make a statement as to how much would be the foreclosure charges charged by the said company. The respondent alone was aware of the same (and not the bank), as also the decision to transfer the loan from one institution to another institution was that of the respondent alone based upon what he thought was the best for him. The respondent was now trying to make up stories and finding fault with the petitioner – Bank which does not exist. It was further wrong and denied that the petitioner - Bank had any relationship with the other company. However, it was a matter of record, as the loan was being transferred by the respondent from GE to the petitioner - Bank, the original documents in respect of the title deeds were required to be transferred to the petitioner - Bank. As a matter of practice, in order to protect the interest of the bank who was subsequently funding the loan under a loan transfer, and to ensure the documents were not taken away by the loanee, the loanee authorises the subsequent bank to take the documents from the first institution and that was also required to be done in the present case.

13.    The disbursal of the loan by the petitioner – Bank was a matter of record. The same was disbursed as per the instructions of the respondent. Petitioner- Bank. The petitioner – Bank has worked on the representations made by the respondent and as per the instructions. On the contrary, the respondent has not fulfilled his part of obligations, under which he was required to close the loan from the GE Money, and to ensure that all conditions precedent, were met which required that the title deeds in respect of the property against which the respondent was taking the loan were transferred and handed over by the GE Money to the petitioner – Bank. The respondent failed to fulfil his part of his obligations. The petitioner – Bank was not privy to the understanding between the respondent and GE Money. The loan has been sanctioned as per the application of the respondent. Hence, there was no deficiency in service on the part of the petitioner – Bank.

14.    The District Consumer Disputes Redressal Forum, I, Union Territory Chandigarh (‘the District Forum’) while allowing the complaint on 21.10.2011 has held that:

“In view of the foregoing, we are of the considered opinion that the complaint must succeed and it is accordingly allowed. The OPs are directed to refund the amount of Rs.97,064/- to the complainants and Rs.10,000/- as compensation & litigation costs, within a period of 30 days from the date of receipt copy of this order; failing which they shall be liable to pay the amount of Rs.97,064/- along with interest @12% p.a. from 20.7.2010 till its actual realization besides paying Rs.10,000/- as compensation & litigation costs”.

15.   Aggrieved by the order of the District Forum, the petitioner/ OP 1, 2 & 3 – Bank - filed an appeal before the State Commission. The State Commission while dismissing the appeal has observed as under:

“Keeping in view the facts and circumstances of the case, we are of the considered opinion, that the District Forum rightly passed the order by placing reliance upon the loan agreement, Annexure C-2, executed between the complainants and the Opposite Parties and the letter dated 12.08.2010 (Annexure C-4) issued by the HDFC Bank. According to Clause No.4 under the heading Disbursement of the said loan agreement, it was the responsibility/liability of the Opposite Parties, to adjust the initial loan of the complainants, with GE Money Financial Services Ltd. which they failed to do and they (complainants) were compelled to get the loan agreement cancelled. By not refunding the amount of process fee to the complainants, without rendering any service to them, the Opposite Parties were not only deficient, in rendering service, but also indulged into unfair trade practice. With these observations, we are of the considered opinion that the District Forum has rightly allowed the complaint. The order of the District Forum, being legal and valid, is liable to be upheld.

The order passed by the District Forum, does not suffer from any illegality or perversity, warranting the interference of this Commission.

For the reasons recorded above, the appeal, being devoid of merit, must fail, and the same is dismissed with no order as to costs. The order of the District Forum is upheld”.

16.     Hence, the present revision petition.

17.     The main grounds for the revision petition are as follows:

• The State Commission and the District Forum have wrongly interfered in the terms and conditions of the loan agreement, which was duly agreed and binding between the parties. It is submitted that it is a settled principal of law that the Forum and Commission are not entitled to modify the terms of the agreement, which had been arrived at between the parties and when there is an acute dispute relating to facts, the Forum and the Commission ought not have gone behind the terms of the agreement and should have instead referred the parties to the Civil Court. Reliance in this regard is placed on case in “Bharathi Knitting Co. vs DHL Worldwide Express Courier (1996) 45 SCC 704).
• Clause 8.11.1 of the Banking Code and standard Board of India, specifically provides that at the time of sourcing of the loan product, the bank will provide as part of the loan application form, information about the interest rates applicable whether floating rate or fixed rate, as also the fees/ charges payable for processing, the amount of such fees refundable if loan amount is not sanctioned/ disbursed, pre-payment options and charges, if any, penal rate of interest for delayed repayment, if any, conversion charges for switching the loan from fixed to floating rates or vice versa, existence of any interest reset clause and any other matter which affects the interest of the borrower so that a meaningful comparison with those of other banks can be made and informed decision can be taken by the borrower. In the present case as well the respondents were at the time of entering into the agreement, were aware of the processing feeds to be paid and the same shall not be refunded. In case the loan is sanctioned and disbursed, as per the terms and conditions of the loan agreement. It is therefore, submitted that the impugned orders deserves to be set aside.
• The State Commission and the District Forum while passing the impugned orders failed to correctly appreciate that the petitioner sanctioned and disbursed the loan amount as per the specific instruction of the respondents (vide disbursement letter dated 19.07.2010) and accordingly the sanction letter dated 12.08.2010 was issued to the respondents. The demand draft for the sum of Rs.46,70,000/- and Rs.14,46,000/- was duly prepared for the payment to GE Money Financial Services Ltd.,  (i.e., part of the total loan amount), however, the respondents refused to accept the loan and subsequently cancelled the loan, alleging false and fictitious story. It is, therefore, submitted that the impugned order deserves to be set aside.
• The State Commission and the District Forum failed to appreciate that amount of Rs.97,064/- paid by the respondents was towards the processing fee of the loan to be sanctioned to the respondents. The said processing fee was non-refundable and was being charged for the processing of loan of Rs.88.00 lakh. The loan applied by the respondents were processed (i.e., entire due diligence with regard to the title of the property and financial condition of the borrowers was carried by the petitioner) and the loan was duly sanctioned and disbursed (in terms of the loan agreement and as per the disbursement request letter dated 19.07.2010 issued by the respondents) vide sanction letter dated 12.08.2010. It is, therefore, submitted that the impugned orders deserves to be set side.
• The State Commission and the District Forum ought to have entertained the complaint once it was found that the respondent themselves have cancelled the loan. It is submitted that the respondent had a contract with GE Money Financial Services Ltd., and the petitioner bank was not in any manner privy to the same and/ or party to the said contract. Hence, there was no occasion for the petitioner or any of its officers to have negotiated and/ or inform the respondent that the GE Money Financial Services Ltd., shall only charge 2% as foreclosure charges. The respondent alone was aware of the dues and charges, if any that shall be applicable and it was solely his decision to the transfer the loan from GE Money Financial Services Ltd., to the petitioner. It is further pertinent to note that the respondents were getting better interest on the loan amount and hence, they wanted to transfer their loan from GE Money Financial Services Ltd., to the petitioner Bank. It is, therefore, submitted that the petitioner duly adhered and discharged its part of the obligations and hence, cannot be held for the non-refund of processing fees by camouflaging the same as deficiency of the service on the part of the petitioner bank on the basis of false and concocted story, as pleaded/ alleged in the complaint before the District Forum.
• The respondent on receipt of the cancellation (issued by the petitioner after the cancellation instructions of the respondents) vide their letter dated 11.04.2011 asked the petitioner to refund the processing fees as the loan was cancelled and they did not utilize any loan amount. The said request was declined by the petitioner on the basis of the terms of the loan agreement. The loan agreement as entered between the parties, which inter alia provided for the payment of the processing fees, hence, the petitioner is entitled to the same and the respondent was not entitled to the refund of the processing fees, when the petitioner had already processed the loan, sanctioned and disbursed loan amount, moreover as per the instruction of the respondents.
• The District Forum and the State Commission has failed to appreciate that there were no evidence on record to show that the petitioner had asked the respondents that they shall arrange for the closure of the loan with the GE Money Financial Services Ltd., and/ or there are no documents on record to show that the petitioner and/ or any of its officers have assured that the GE Money Financial Services Ltd., shall charge 2% for the foreclosure of the loan of the respondents with them. The Forums below have wrongly held that the petitioner had assured the above. It is, therefore, submitted that the Forum below have committed error apparent on the face of record and the forums below have passed the impugned orders based on incorrect premise.
• The State Commission and the District Forum have wrongly held that ‘by not refunding the amount of processing fee to the complainants, without rendering any service to them, the opposite party were not only deficiency in rendering service, but also indulged in unfair trade practice’. In this regard, it is submitted that the role and responsibility of the petitioner was limited to the extent of processing, sanctioning and disbursal of the loan, which was admittedly done by the petitioner and as is evident from the documents on record. It is submitted that the amount of Rs.97,064/- was paid by the respondents towards the processing fee towards the loan to be sanctioned to the respondents. The said processing fee was non-refundable and was being charged for the processing of loan of Rs.88.00 lakh in favour of the respondents. The loan applied by the respondent were processed (i.e., entire due diligence with regard to the title of the property and financial condition of the borrowers was carried by the petitioner) and the loan was duly sanctioned and disbursed (in terms of the loan agreement and as per the disbursement request letter dated 19.07.2010 issued by the respondents) vide sanction letter dated 12.08.2010. Admittedly, the loan was duly processed, sanctioned and disbursed, however, the respondents got the same cancelled (post the disbursal) and as such the petitioner cannot be held liable for deficiency of service for not refunding the non-refundable processing fees.

18.    We have heard the learned counsels for the petitioner and the respondent and have carefully gone through the records of the case. It is an admitted fact that the respondents had applied for a loan from the petitioner - Bank to discharge their loan with the GE Money Financial Services Ltd., who were charging higher rate of interest, whereas the petitioner - Bank was charging 11% on the sanctioned loan of Rs.88 lakh, wherein it was clearly stated that the processing fees of Rs.97,064/- had been charged from the customer as per clause 4 & 5 of the agreement. It is also an admitted fact that the respondents had given instructions vide disbursement letter dated 09.07.2010 regarding how the loan was to be disbursed. Whereas Rs.46,70,000 + Rs.14,66,000 was to be paid to GE Money Financial Services Ltd., towards the two outstanding loan accounts the balance amount was to be paid to the respondent. It is also an admitted fact that two pay orders for the same amount in favour of the GE Money Financial Services Ltd., were prepared but the said GE Money Financial Services Ltd., refused to accept the same as they were demanding 4% foreclosure charges. Respondents have admitted in their complaint that they have requested the petitioner to cancel the loan agreement and return/ refund Rs.97,064/- paid towards the processing fee.

19.    It is also an admitted fact that the application for loan submitted by the respondents had been processed by the petitioner, time and money was spent by the petitioner for processing the loan, sanctioning the same and preparing the instruments for disbursement of loan as per the instructions of the respondent. It is the respondents who thereafter asked for the cancellation of the loan because they did not want to pay 4% foreclosure charges as against 2% as they were willing to pay. The allegation of the respondent that “the act of sanctioning loan of Rs.88 lakh negligently and receiving a sum of Rs.97,064/- towards the processing fee from the complainants without proper verification from GE Money amount to grave deficiency in service on the part of the OPs and further, the act of not refunding a sum of Rs.97,064/- to the complainants after cancellation of loan of the complainants because of their own fault amounts to unfair trade practice on the part of the opposite parties”, does not hold water. Any prudent person while signing a contract for loan agreement should have been aware of the percentage of foreclosure charges. The respondent should have taken a decision as to whether they would like to foreclose their loan at the cost involved. It is also not the case of the respondent that the petitioner had agreed or promised to absorb the foreclosure charge in part or in full.

20.    In the above circumstances, there is no justification for claiming refund of the processing charges as the bank had already carried out its part of his obligation, it is the respondents who has changed their mind.  Hence, we do not agree with the conclusions reached by the State Commission and the District Forum and set aside the orders of the State Commission and the District Forum and dismiss the complaint. No order as to cost.