PRESENT: Sh.J.S.Johal, Adv. for Complainant.

           Sh.O.P.Narang, Adv. for OP.

PER ASHOK RAJ BHANDARI, MEMBER

        Concisely put, the Complainants had obtained a loan of Rs.5.00 lacs from OP for home repair/ construction on 30.09.2002. The agreed rate of interest was 10.25% p.a., which was later on reduced by the RBI to 7.5% p.a. and in case of default, an addl. int./ penalty of 18% p.a. i.e. 1.50% p.m. would be charged by the OP on the unpaid amount. Rs.500/- were charged as administrative charges. Some blank papers were got signed from the Complainant after disbursal of loan. It was averred that an amount of Rs.4,00,717/- had been returned back by the Complainants. As on 31.10.2008, an amount of Rs.1,00,503/- as principal amount was balance; Interest due @10.25% to 7.5% was Rs.1,59,241/- and addl. interest/penalty @18% p.a. on unpaid amount was calculated to be Rs.14,923/-. His contention was that he requested the OP to provide them actual loan statement/calculation on the basis of reduced interest rates, so that they could settle their loan account, but without supplying of actual statement of loan amount, the OP started harassing them to recover more amount from them and even resorted to blackmail tactics to make the payment as per their desire. Due to all this, the Complainants filed a complaint before the SLSA, U.T. Chandigarh, where they had submitted one statement of loan account prepared by Chartered Accountant on 24.11.2008, but the OP flatly refused to admit or amend or correct their claim, due to which the Complainants withdrew their complaint. It was alleged that the OP was adding interest into principal amount monthly and charging interest and penalties on that interest plus principal amount monthly instead of yearly. Hence, this complaint, alleging that the aforesaid acts of the OPs amount to deficiency in service and unfair trade practice. In the end, the Complainants have prayed for a sum of Rs.1.00 lacs towards damages, legal expenses and harassment meeted out to them at the hands of OP.

2]      Notice of the complaint was sent to OP seeking their version of the case. 

3]      OP in the written statement/reply, while admitting the factual matrix of the case, pleaded that the Complainant took housing loan of Rs.5.00 lacs @10.25% p.a. (floating rate) and the additional interest/penalty, in case of default as mentioned in the agreement executed (Annexure R-II). It was denied that the rate of interest was decreased by the OP only on receiving direction from the RBI. The statement of changed rate of interest as being floating rate is at Annexure R-III. The rate of interest as floating, as agreed had been charged as per the statement placed at Annexure R-III. It was denied that an amount of Rs.4,00,717/- was paid towards the principal amount as only amount of Rs.1,61,411.57 had been paid/adjusted towards the principal amount, which is evident from Accounts Statement (Annexure R-IV). The Complainant was given the accounts statement whenever demanded. He never approached the OP for return of the whole amount. It was further pleaded that the Complainants were chronic defaulters in repayment of EMIs towards their liabilities of housing loan taken by them. It was admitted that the Complainant had also filed complaint before the SLSA, where written statement was filed, submitting reply of each and every issue raised, but the Complainant was adamant and was not willing to pay the dues of the OP. The statement prepared by the Chartered Accountant was prepared on wrong basis and misleading information given by the Complainant to the Chartered Accountant. It was denied that the repayments were required to be firstly adjusted against the principal and only then towards the element of interest. It was asserted that the interest was being charged as floating and as per agreement and nothing wrong had been committed by the OP. All other material contentions of the Complainant were controverted. Pleading that there was no deficiency in service on their part, a prayer has been made for dismissal of the complaint with exemplary costs.

4]      Parties led evidence in support of his contentions.

5]      We have carefully gone through the entire case thoroughly, including the complaint and the relevant documents tendered by the complainant / OP. We also heard the arguments put forth by the learned counsels for the Complainant and OP. As a result of the detailed analysis of the entire case, the following points/issues have clearly emerged and certain conclusions/arrived at, accordingly:-

i]  The basic facts of the case in respect of the Complainant having taken a loan of Rs.5.00 lacs from the OP for home repair/ construction on 30.9.2002 at the initially agreed rate of interest of 10.25% p.a. (floating), with a provision that in case of default, the penal rate of interest at 18% p.a. (1.5% p.m.) would be charged on the delayed unpaid amount, another Rs.500/- having been charged as administrative charges and that the Complainant had signed some loan papers, as required by the OP, have all been admitted. The basic dispute between the parties has been the rate of interest and also the calculation of interest whether monthly or yearly and mode of payment as EMIs; whereas, the claim of the Complainant is that he has already paid a sum of Rs.4,00,717/- as on 31.10.2008 and that an amount of Rs.1,00,503/- only as principal amount was pending and the interest due @ 7.5% was Rs.1,59,241/- and the penal interest to the tune of Rs.14,923/- was all that the Complainant was required to pay. The second grievance of the Complainant against the OP is that the OP has been charging interest at monthly rests, instead of yearly in contravention of the terms & conditions of the loan agreement.

ii] The OP while denying all the charges and allegations made by the Complainant against it, says that it is an admitted fact that the Complainant took housing loan of Rs.5.00 lacs @ 10.25% p.a. (floating) interest. It has further stated that the rate of interest being floating, was being changed from time to time and the statement of changed rate of interest was at Annexure R-3, which shows that the interest rate has gone as low as 9.50% and also as high as 11.25% over a period of 3 years (2006-09). As a matter of fact, there was no dispute between the parties from the year 2002 till July, 2006 on any issue. The dispute arose only during the period 2006 to 2009. The OP, in support of its case, has enclosed the copy of the, copy of the loan offer letter (R-1),loan agreement giving the terms & conditions forming part of loan offer letter (R-2), the details of interest movement based on the floating rates (Ex.R-III) and the detailed statement of loan account, showing the various payments made by the Complainant in the loan account (Ex.R-IV). The Complainant on his part has attached a statement of loan account, which he got prepared from a Chartered Accountant (C-1).

6]      From the detailed documents and papers submitted by the respective parties, it is quite clear that the entire case of the Complainant is based on certain assumptions and on that account, he has alleged deficiency in service on the part of the OP and he has claimed a sum of Rs.1.00 lac as compensation. Some of the important points in respect of the sanction, disbursal and repayment of the housing loan are as under:- 

(a) One of the allegations of the Complainant against the OP is in respect of the floating rate of interest being charged by the OP wrongly. As per the Complainant, the OP has not been charging the reduced rate of interest on the housing loan strictly in accordance with the directions of the Reserve Bank of India. The second grievance of the Complainant is with regard to the charging of interest on monthly basis instead of yearly basis. Both these points find mention in the loan offer letter (C-2), which clearly states that the interest is payable monthly and the initial rate of interest is 10.25% p.a., subject to the floating rate, which may change from time to time. The same facts are also available in the loan agreement document (R-2). Clauses 4(a) and 4(b), which confirm and corroborate what has been stated in the loan sanction letter. The relevant clauses are quoted as under:- 

“4(a)(i) The schedule of the loan offer letter will indicate whether the loan is under fixed or floating rate of interest.

   (ii) Where the loan is under fixed rate of interest, the interest stipulated in the Schedule of the loan offer letter shall ordinarily, be applicable throughout the term of the loan. However, the same shall be altered if a levy, tax or interest or any other charge or burden is imposed or levied by any government or Authority, from the date of such imposition.

  (iii) Where the loan is under floating rate of interest, the interest stipulated in the Schedule of the loan offer letter shall be reviewed every 6 months (January & July), based on the prevailing market conditions as judged by LIC Housing Finance Limited. The revised floating rate of interest could increase, decrease or remain the same. The revised floating rate of interest will be applicable with effect from 1^st January or 1^st July, as the case may be. 

4(b) The rate of interest specified in the Condition No. 2 of the Schedule of the Loan Offer Letter is calculated on monthly rests. Interest and any other charges shall be computed on the basis of 365 days for any year, other than a leap year, for which it will be computed on the basis of 366 days.”

In the same loan agreement document, it is also stated that the repayment term will commence on the 1st day of the calendar month immediately following either the disbursement of the final installment of the loan or expiry of 12 months from the date of disbursement of the first installment of loan, whichever is earlier. In the same document, it is stated that in the case of default in paying the EMIs, additional interest @1.5% p.m., shall be levied, which includes 18% p.a. for the period upto and inclusive of 12 months default and 2% p.m. i.e. 24% p.a. on the defaulted installments beyond 12 months default.  

(b) From the statement of loan account submitted by the OP (Ex.R-4), it is quite clear that the Complainant has been a chronic defaulter in paying the EMIs. A large number of cheques given by the Complainant to the OP in repayment of the housing loan were bounced, resulting in overdue interest and penalty charges, which have not been taken into account by the Complainant, while making his own calculations through his Chartered Accountant. Even in the statement of account, which the Complainant got prepared from his Chartered Accountant, the following assumptions were made by the Chartered Accountant:-

“1. This statement is prepared on the basis of rates of interest on various dates as informed by Sh. Angrej Singh.

2. Interest has been calculated at the rates on the running balance of principal.

3. Repayments have first been appropriated against principal.

4. Dates of repayment and amount repaid are as informed by the said Angrej Singh.”

One of the assumptions made by the Chartered Accountant has been that the repayments have first been appropriated against principal; whereas, as per the loan agreement, the EMIs have to be paid every month, which include both the principal, as well as the interest component. It is never possible to segregate the interest component from the principal amount in the EMIs, as the amount of the EMI is settled right in the beginning, subject to change by the floating rate of interest. As per the final statement prepared by the OP (R-6), the total amount repayable as on 10.9.2009 by the Complainant is Rs.4,98,530.43P. On the same lines, there is no proof that the Complainant has complied with or adhered to the other assumptions while making the repayment of the loan. 

7]      It is also on record that both the parties had gone to the Lok Adalat held by the State Legal Services Authority, U.T. Chandigarh, in November, 2007 and this case remained pending there for about two years. Finally, the Complainant withdrew his Petition with the liberty to avail the legal remedy under the law in the regular Civil Court. Even during the proceedings of the Lok Adalat held under the auspices of the State Legal Services Authority, the learned counsel for the OP had made a statement that as per information obtained from the office of OP, the Complainant was a bad pay master and not making payments well in time. In addition to this, there is a legal notice u/s 138 of the Negotiable Instruments Act, served by the learned counsel for the OP to the Complainant, stating that the Cheque No. 493871, dated 30.11.2004, amounting to Rs.13,800/-, which was given by the Complainant to OP had bounced on 10.12.2004 with the remarks “insufficient funds”. Apart from all this, the detailed statement of loan account (R-4) also supports and corroborates the fact that the Complainant has been a chronic defaulter, which has resulted in not only the imposition of the overdue interest, but also certain other penalties from time to time as per the loan agreement. The entire statement of loan account contains a large number of entries which show that the PDC cheques given by the Complainant as EMIs in repayment of the loan have bounced at regular intervals. There are at least 25 such instances as per the statement of loan account where the cheques have bounced and no payment could be adjusted against the outstanding loan, resulting in huge amounts of overdue interest and penalties etc. Last, but not the least, the Complainant has not been able to find any fault or mistake, clerical or arithmetical in the given statement.

8]      Keeping in view the overall facts and circumstances of the case, as well as the documents placed on record, as also the arguments put forth by the learned counsel of both the parties, it is quite evident that there is no deficiency in service or indulgence in any unfair trade practice on the part of the OP. There are no reasons to disbelieve the statement of loan account as prepared by the OP, showing the outstanding amounts against the Complainant to the extent of Rs.4,98,530.43P; whereas, the statement of account prepared by the Chartered Accountant of the Complainant is based on certain theoretical and impractical assumptions and subject to fulfillment of terms and conditions of the loan agreement by the Complainant, which the Complainant has not complied with/adhered to. He has himself rather violated most of the terms and conditions of the loan agreement and hence deserves no consideration of the complaint. Therefore, the Complainant has no valid claim of obtaining any compensation whatsoever from the OP. As such, the present complaint is baseless, has no weight, merit or substance and, therefore, deserves rejection. We, therefore, dismiss the complaint. However, the respective parties shall bear their own costs.

9]                Certified copy of this order be communicated to the parties, free of charge. After compliance file be consigned to record room.