Punjab

Ludhiana

CC/14/804

Bhoj Raj Goyal - Complainant(s)

Versus

L&T Finance Home Loans - Opp.Party(s)

Munish Gupta

09 Dec 2015

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, LUDHIANA.

 

Consumer Complaint No.804 of 26.11.2014

Date of Decision            :   09.12.2015

 

Bhoj Raj Goyal aged 50 years son of Sh.Khazanchi Lal, resident of House No.3833/34, Mahavir Jain Colony, Street No.15, Sunder Nagar, Ludhiana.

 

….. Complainant

Versus

 

1.L&T Finance Home Loans, Unit No.505 & 506, DLF Tower ‘B’, District Centre, Jasola, New Delhi-110025, through its Director/M.D.

2. L&T Finance Home Loans, Plot No.19, House No.223/2, IInd Floor, Rani Jhansi Road, Ludhiana, through its Branch Manager.

           

…Opposite parties

 

                   (Complaint U/s 12 of the Consumer Protection Act, 1986)

 

QUORUM:

SH.G.K.DHIR, PRESIDENT

SH.SAT PAUL GARG, MEMBER

 

COUNSEL FOR THE PARTIES:

For complainant                      :        Sh.Munish Gupta, Advocate.

For OP1                         :        Sh.Saurabh Kumar Puri, Advocate

For OP2                         :         Ex-parte.

 

PER G.K DHIR, PRESIDENT

 

1.                          Complainant Sh.Bhoj Raj Goyal, filed complaint under Section 12 of the Consumer Protection Act, 1986(hereinafter referred to as the ‘Act’) against the Ops, by alleging that he being in need of money approached GE Countrywide and availed financial assistance of loan of Rs.4,55,000/- by mortgaging his house by depositing  the original title deed. Subsequently, the Citi Financial Services Limited, Sheetal Arcade, 3, Shakti Nagar, Pakhowal Road, Ludhiana took over the above said finance company. The loan was availed at the rate of interest 13.50%. Loan amount was returnable in 120 equal monthly installments of Rs.6969/- each. First installment was payable on 5.10.2004, but the last on 5.10.2014.   Complainant paid the installments from time to time. In the meanwhile, the Citi Financial Services assigned the mortgage loan of the complainant to the Ops. Complainant paid the entire installments of loan amount up to 6.10.2014, but on demand of the sale deed back after paying the loan installments on 6.10.2014, OPs claimed as if 24 more installments of Rs.6920/- p.m. are payable by the complainant. That raised demand alleged to be illegal and arbitrary and that is deficiency in service and adoption of unfair trade practice on the part of OPs.      By claiming so it is pleaded that complainant was never intimated regarding change of constitution of his loan account. Rate of interest of the complainant was fixed and thereafter, complainant was never made aware of change of the rate of interest in writing, though it is required so. Complainant remained hospitalized, being patient of neuro problem for long period, but even then his son continued to deposit the monthly installments from time to time. No circular qua chargeable  rate of  interest ever supplied to the complainant as per rules of RBI and even no bank instructions were ever conveyed to the complainant. Complainant has paid all the 120 installments with late charges, penalty etc and as such, he is entitled for the release of the title deed. Some of the installments were paid through cheques and others in cash. Blank cheques in good faith even were given by the complainant to G.E.Countrywide. Despite legal notice dated 6.10.2014 sent through counsel, OPs have not returned the documents of the title deed and that is why, the complaint filed for direction to OPs to release the title deed of the house and return the blank signed cheques after settling the accounts. Compensation of Rs.50,000/- along with litigation expenses of Rs.5500/- also claimed.

2.                          In joint written statement filed by OPs, it is pleaded interalia that Ops acquired certain financial assets with all underlying securities, interest etc., from M/s Citi Financial Consumer Finance India Ltd., by virtue of Assignment Deed  qua which intimation was duly conveyed to the complainant vide letter dated 2.12.2013. The loan account of the complainant with all rights and underlying securities were assigned in favour of the OPs by virtue of the above mentioned assignment deed. In view of the assignment of the loan in favour of the Ops, they are absolute legal and beneficial owner of the securities even.   It is claimed that complainant has not approached this Forum with clean hands because he has suppressed the material facts. Even it is claimed that complaint is time barred because complainant was intimated about the revised upwards rate of interest vide letters dated 21.9.2006, 23.2.2007, 1.6.2007, 27.8.2008 and 18.7.2008. Complainant was intimated that same monthly installment amount has been retained, but the loan tenure has been extended. Despite receipt of the aforesaid letters, complainant has not raised any grievance . Complainant put his house No.3833/34, Mahavir Jain Colony      Sunder Nagar, Main Road, Ludhiana under equitable mortgaged for securing the payment of loan and interest. As per Section 34 of the SARFAESI ACT, 2002, the jurisdiction of Civil Courts as well as this Forum is barred. As per clause 2.2(b) of the Loan Agreement, rate of interest liable to be revised by the OPs. Though, the loan was availed in October, 2004, but issue of raised rate of interest has been taken after more than 10 years. Claim of the complainant is based on ROI at the time of sanction of the loan, but owing to revision of rate of interest,               tenure of the loan has been changed. Claim of the Ops for charging higher rate of interest does not suffer from any infirmity. Whatever payment made by the complainant, those have been duly entered in the account. Huge amount is still outstanding against the complainant. Official of the Ops approached the complainant for clearance of the dues and payment of installments. No employee of the Ops indulged in highhandedness or unethical behavior. There is no deficiency in service on the part of OPs. Complainant is not a consumer and as such, he is not entitled to the benefit of provisions of the Consumer Protection Act. M/s Citi Financial Consumer Finance India Limited and thereafter, OPs have acted themselves as per terms and conditions of the loan agreement and applicable law. Complainant himself is at fault and as such, no cause of action has arisen in favour of the complainant. G.E.Countrywide has not been impleaded as party and as such, complaint alleged to be bad due to mis-joinder and non-joinder of necessary party. Factum of contracting of loan and execution of the deed of the property under the equitable mortgage are admitted. Loan was availed by the complainant on floating rate of interest basis and increase in rate of interest was duly intimated to the complainant. Each and every other averment of the complaint denied.

3.                Complainant to prove his case tendered in evidence his affidavit Ex.CA along with documents Ex.C1 to Ex.C14 and even tendered affidavit Ex.CB of Sh.Ravi Goyal and thereafter, closed the evidence.

4.                On the other hand, counsel for the OPs tendered in evidence affidavit Ex.RA of Sh.Amit Gupta, authorized representative of OPs along with documents Ex.R1 to Ex.R11 and thereafter, closed the evidence.

5.                Written arguments have not been submitted by any of the parties, but only oral arguments were addressed and heard. Records gone through carefully.

6.                Admittedly, loan in question was availed by the complainant initially from GE Countrywide and thereafter, the assets of the said finance company were assigned in favour of the M/s Citi Financial Services Limited, Sheetal Arcade, 3, Shakti Nagar, Pakhowal Road, Ludhiana, who in turn assigned their further rights qua the loan in question in favour of the OPs. These facts are borne from para nos.1 and 2 of the complaint and even from the contents of the written statement. It is vehemently contended by Sh. Munish Gupta, Advocate representing  complainant that as per term of statement Ex.C1, Rs.4764.38P was accepted as installment of the loan amount after fixing same at Rs.6929/- on 5.4.2006 and installment of Rs.6929/- has been continuously paid by the complainant to Ops until 5.10.2014 and as such, no further amount of loan is due to the complainant after payment of 120/- equal monthly installments, particularly when change of rate of interest not notified to the complainant. Even he placed reliance on receipt Ex.C2 dated 6.10.2014 for claiming that installment of Rs.6930/- was paid to OPs and the last installment of Rs.6929/- was paid by the complainant to OPs on 5.11.2014 through receipt Ex.C4. Ex.C3 is the legal notice dated 6.10.2014 sent by the complainant to Ops through counsel, whereas Ex.C5 is the receipt issued by the Office of Sub Registrar and Ex.C6 is the notice sent by the GE Countrywide to the complainant on 22.11.2004 for disclosing that his Home Equity Loan has been foreclosed. Ex.C7 is the letter dated 22.12.2004 sent by Citi Financial to the complainant for disclosing that original title papers pertaining to the equitable mortgaged property No.3833/34, Mahavir Jain Colony, Ludhiana has been received by them as security documents qua mortgage of that house. Ex.C8 and Ex.C9 are the postal receipts showing the dispatch of the legal notice. Ex.C10 to Ex.C14 are the documents produced to show that complainant suffered from Neurological problem, for which, he got treatment from the hospital.       Documents of terms and conditions of the loan has not been produced by the complainant and as such, evidence produced by the complainant virtually does not throw light as to on what terms and conditions,  the loan was availed and as to when the loan installment amounts were payable.

7.                Ex.R1 is the letter sent by the Citi Financial to the complainant on 2.12.2013 for disclosing about the assignment of the mortgaged loan in favour of the Ops by it, whereas, Ex.R2 is the loan application form submitted by the complainant.  So virtually the documents of loan has been produced by the Ops.

8.                In Ex.R2 itself it has been mentioned that loan availed for business requirement and as such, it is vehemently contended by the counsel for the OPs that loan in question was availed for commercial purpose, due to which, complainant is not a consumer and this Forum has no jurisdiction. Even if in Ex.R2, it is mentioned that loan was availed for business requirement purpose, but in that loan application, itself it has been mentioned that the said loan availed for self employment for running Goyal Foot Ware. So virtually the loan was availed for self employment and as such, mention of the category of the loan for business requirement alone is not enough to hold that actually the loan was contracted for commercial purpose. If a person avails a loan for self employment, then certainly he avails the same for earning his livelihood. As and when, a loan availed for earning livelihood by a person, then certainly he is a consumer because as per law laid down in case Kerala State Electricity Board and others vs. Yesu Adminidear-2015(4)CLT-89(N.C.), if a consumer using the electricity in his small scale unit for earning livelihood, then he is a consumer as per section 2(1)(d) of the Consumer Protection Act, 1986. Ratio of this case is fully applicable to the facts of the present case because complainant here availed the loan for self employment i.e. for earning his livelihood.

9.                In case titled as Shiv Shanker Lal Gupta vs. Kotak Mahindra Bank Ltd., and others bearing Consumer Complaint No.74 of 2012 decided on 1.2.2013 by the Hon’ble National Consumer Disputes Redressal Commission, New Delhi, it was found that loan against collateral security of immovable property was obtained for the purpose of setting up  project of mint of gold         and silver coins and manufacturing of semi precious and precious stones studded jewellary and that is why the loan was held to be contracted for commercial purpose. So, virtually the loan in the reported case was contracted for running huge business i.e. not for self employment or  for earning livelihood, but for earning profits at  large scale. That is not the position in the case before us and as such, benefit of above said case is not available to the OPs, particularly when in para no.8 of this case itself it has been mentioned that by no stretch of imagination, it can be held that loan was obtained by the complainant exclusively for the     purpose of earning his livelihood by means of self employment. However, in the case in hand, the loan was contracted by the complainant exclusively for the purpose of earning his livelihood by means of self employment as disclosed in the loan application form and as such, complainant certainly is a consumer. By relying upon the above said case titled as Shiv Shanker Lal Gupta vs. Kota Mahindra Bank Limited(Abid), it is also argued that jurisdiction of this Forum is barred in view of  Section 34 of The  Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Provisions of Section 34 of the above said Act applicable in respect of the suit or proceedings instituted or pending for recovery of debt due to bank and institutions established under the Banks and Financial Institutions Act, 1993. Companies of the OPs not shown to be established under the provisions of the Banks and Financial Institutions Act, 1993 and as such, benefit of above said case is not available to the Ops.

10.              By placing reliance on letters Ex.R3 to Ex.R7, it is vehemently contended by the counsel for the OPs that intimation regarding increase in rate of interest was duly sent by the Ops to the complainant on 21.9.2006, 23.2.2007, 1.6.2007, 27.8.2008 and 18.7.2008. Even if these letters Ex.R3 to Ex.R7 are produced on record, despite that they do not establish the receipt of these letters by the complainant because postal receipts or other documents showing the dispatch of these letters to the complainant or acknowledgment of same by the complainant has not been produced. So just on strength of Ex.R3 to Ex.R7, it cannot be held that intimation regarding increase of rate of interest was sent to the complainant from time to time. Ex.R8 is the copy of deed of assignment showing that Citi Financial Consumer Finance India Limited assigned the  debts/assets                  and liabilities in favour of the Ops and dispute in that respect has not been raised by the complainant in the complaint even.

11.              Ex.R9 is the copy of statement of account of the complainant qua the loan in question showing that tenure of the loan was 143 installments with monthly frequency of EMI’s at Rs.6929/-, but Ex.C1, the copy of statement of account produced by the complainant do not show or reflect that tenure was of 120 monthly installments of Rs.6929/-. As Ex.R9 depicts more particulars qua tenure frequency of the monthly installments and as such, contents of Ex.R9 can’t be discarded, particularly when the complainant except his bald statement unable to prove that loan was repayable in 120 equal monthly installments. Ex.R11 is also the copy of statement of account of the complainant prepared by OPs for showing that still amount of Rs.94,357/- is due against the complainant, if calculations made at chargeable interest @17.15%. So bone of contention remains as to whether the rate of interest chargeable @17.15% after revision allegedly notified through Ex.R3 to Ex.R7 or not. As dispatch or receipt of Ex.R3 to Ex.R7 to complainant is not established and that is why on the strength of Ex.R3 to Ex.R7 alone, it cannot be inferred that rate of interest was duly increased to @17.15% as reflected in Ex.R11. Rules, regulations, notifications or circulars of the Reserve Bank of India authorizing Ops to increase the rate of interest have not been produced on record and as such, it cannot be held that increase in rate of interest was as per authorization or guidelines/rules/regulations of the Reserve Bank of India. Rather, contents of Ex.R8 establishes that Citi Financial Consumer Finance India Limited was a company incorporated under the Companies Act and even Ops, the assignees is a company incorporated under the Companies Act, 1956. So, the creditors of complainant are the companies incorporated under the Companies Act and are not the financial institutions established under the Banks and Financial Institutions Act, 1993. So, benefit of Section 34 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is not available to the Ops. As Ops or its predecessors are the companies incorporated under the Companies Act, 1956 and as such, the term of the loan  governed by the contract entered between the complainant and OPs or its predecessors. Letter dated 1.10.2004 sent to the complainant Sh.Bhoj Raj Goyal has been addressed by Citi Financial Consumer Finance India Limited containing the terms as if the rate of interest chargeable will be 13.5019161%(inclusive of 2% interest tax, where applicable) and terms of the loan installments will be 120 months with EMI’s of Rs.6929/- each and the installments will be payable by 5^th of each month. This letter bears the signature of complainant Sh.Bhoj Raj Goyal and the authorized signatory of Citi Financial Consumer Finance India Limited and as such, this letter (though un-exhibited) virtually contains the terms and conditions of the contracted Home Equity Loan. As terms and conditions contained in this letter is accepted by both the parties and as such, the same to  govern the case qua payment of the installments in EMI’s and the chargeable rate of interest. Rate of interest in Home Equity Agreement has been mentioned as the rate at which the lender has agreed to lend to the borrower as mentioned in the schedule which may be fixed rate or floating rate, as the case may be. Reference to clause 1(e) of the Home Equity Agreement can be specifically made in this respect. Though, this un-exhibited Home Equity Agreement has been signed by the complainant and his wife Smt.Bimla, but Schedule-II appended with this agreement does not contain the reference of chargeable rate of interest. So, in view of the letter dated 1.10.2004 referred above, it has to be held that rate of interest chargeable is 13.50% p.a. only. As clause regarding increase of rate of interest not contained in letter dated 1.10.2004 signed by both the parties and as such, the rate of interest cannot be held to be on floating basis, particularly when mention of charging of rate of interest not made in the Schedule-II appended with the Home Equity Agreement, even though clause 1(e) specifies that rate of interest will be mentioned in the schedule. So, charging of rate of interest in excess of 13.50% is against the terms and conditions of the contracted loan agreement. Being so action of Ops in demanding interest @17.15% is unjustified, arbitrary and illegal.

12.     By placing reliance on clause 2.2(b) of Home Equity Agreement, which gives discretion to the lender to revise the rate of interest at any time as per its policy, market conditions and/or applicable laws and regulations it is argued that lender can increase the rate of interest. However, that submission of counsel for the OPs has no force because the policy, under which, the rate of interest increased has not been specified and nor any letters or regulations quoted for justifying the increase of rate of interest. Clause 2.2(b) further provides that endeavor be made by the lender to inform the borrower about the variation in the interest in due course, but that information in writing to the borrower has not been sent as held above because dispatch of Ex.R3 to Ex.R7 not proved and nor the acknowledgement thereof by the complainant proved. However, clause 1(e) of the Home Equity Agreement cannot be ignored, particularly when the same provides that rate of interest means the rate agreed between the borrower and lender as mentioned in the Schedule. In Schedule-I appended with the Home Equity Agreement, it is mentioned that rate of interest is 13.50% p.a.(fixed/variable*annually replaceable at the sole discretion of the lender). Tenure of the loan mentioned as 120 EMI’s of Rs.6929/- each in this schedule. As the discretion of the lender has to be in accordance with the policy or rules and regulations or documents justifying the increase of rate of interest and as policy documents/ rules and regulations have not been produced and as such, in view of the agreement of charging of the rate of interest @13.50% p.a, Ops not justified in enhancing the rate of interest unilaterally. Even in Amortization Schedule and in Demand Promissory Note mention of charging of rate of interest @13.50%(fixed/floating) specifically made and as such, virtually contractual agreed rate of interest chargeable on the loan transaction in question was @13.50% p.a. As clause 1(e) of Equity Home Agreement provides for charging of rate of interest mentioned in the Schedule-I and as such, Ops cannot  charged the rate of interest in excess @13.50% p.a. as envisaged in Home Equity Agreement. However, OPs contemplated charging the rate of interest in excess of that and as such, there is deficiency in service on the part of OPs.

13.              So, OPs are required to work out  fresh calculations and issue NOC to the complainant along with action of release of title deed of the mortgaged house. In view of the mental harassment caused by the Ops to the complainant in charging excess rate of interest, complainant is entitled to compensation of Rs.5000/- for mental harassment and sufferings and litigation expenses of Rs.3000/-.

14.              Therefore, as a sequel to the above discussion, the present complaint  partly allowed by directing OPs to submit statement of account of complainant by calculating the payable interest @ Rs. 13.5% per annum  as envisaged in Schedule-I of Home Equity Loan Agreement.  After such calculations, deductions of the amounts already paid by complainant to the OPs will be made and thereafter balance will be worked out for supplying the detailed information in that respect by the OPs to complainant.  That detailed information along with copy of statement of account of due amount, so calculated will be supplied to complainant within 30 days from the date of receipt of copy of this order by the OPs. After supplying of the details of the balance due amount, the complainant will pay the balance due amount to OPs (if any) within 60 days there from and after receipt of the said balance amount, the OPs will release the title deed of the house mortgaged by complainant along with N.O.C. within 40 days therefrom. Claim regarding charging of interest in excess of 13.5 % per annum of OPs is unsustainable legally and as such, the demand in that respect is quashed. Compensation of Rs. 5000/- will be payable by the OPs to the complainant and even litigation expenses of Rs. 3000/- more will be payable by the OPs to the complainant within 30 days from the receipt of copy of the order. Copies of this order be supplied to the parties free of costs as per rules.

15.                        File be indexed and consigned to record room.

 

 

(Sat Paul Garg)                                                 (G.K.Dhir)

   Member                                                            President

Announced in Open Forum

Dated:09.12.2015

Gurpreet Sharma.