Chandigarh

StateCommission

A/198/2015

Deep Kamal Gill - Complainant(s)

Versus

M/s India Bulls Housing Finance Ltd. - Opp.Party(s)

Mukand Gupta, Navjeen Gupta, Adv.

24 Aug 2015

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

                                                                 

First Appeal No.	:	198 of 2015
Date of Institution	:	19.08.2015
Date of Decision	:	24.08.2015

 

1.   Deep Kamal Gill w/o Sh. Vijay Sahu, resident of H.No.537, Sector 18-B, Chandigarh.

2.   Vijay Sahu s/o Sh. Pala Ram Sahu r/o H.No.537, Sector 18-B, Chandigarh.

……Appellants/Complainants.

Versus

1.   M/s India Bulls Housing Finance Ltd., through its Branch Manager, SCO No.337-338, Ground Floor, Sector 35-B, Chandigarh.

2.   M/s India Bulls Housing Finance Ltd., through      its Managing Director, India Bulls House, 448-    451, Udyog Vihar, Phase-V, Gurgaon-122016 (Haryana).

....Respondents/Opposite Parties.

 

Appeal under Section 15 of the Consumer Protection Act, 1986.

 

BEFORE:   JUSTICE SHAM SUNDER (RETD.), PRESIDENT.

                SH. DEV RAJ, MEMBER.

                MRS. PADMA PANDEY, MEMBER.

               

Argued by:

 

Sh. Mukand Gupta, Advocate for the appellants.

                  

PER DEV RAJ, MEMBER

            This appeal is directed against the order dated 02.07.2015 rendered by the District Consumer Disputes Redressal Forum-I, U.T., Chandigarh (hereinafter to be called as the District Forum only) vide which, it dismissed the complaint filed by the complainants (now appellants).

2.         The facts, in brief, are that the complainants approached Opposite Party No.1 for raising of home loan in respect of House/Plot No.2239, Sector 38-C, Chandigarh which was granted.  It was stated that the complainants were paying regular instalments by way of cheques taken by the Opposite Parties at the time of giving loan and other documents. It was further stated that as the loan was too much, in the month of April 2014, the complainants requested the Opposite Parties for foreclosure of their home loan and to supply the details of amount due to be paid.  It was further stated that the Opposite Parties vide their letter dated 30.4.2014 (Annexure C-1) mentioned the amount payable as pre-payment of the home loan to the tune of Rs.54,29,486.86.

3.         It was further stated that thereafter the complainants paid a sum of Rs.54,46,198/- by way of draft (Annexure C-2) after calculating the amount of interest beyond 30.4.2014.  It was further stated that after going through the letter dated 30.4.2014, the complainants came to know that the Opposite Parties had also charged Rs.1,17,960.86 @2.25% at o/s principal of Rs.52,42,705/- in spite of the directions issued by the General Manager, Department of Regulation & Supervision of National Housing Bank Ltd. vide his letter dated 19.10.2011 (Annexure C-3). It was further stated that the complainants requested the Opposite Parties to refund the amount of foreclosure charges, but, to no avail. It was further stated that the aforesaid acts of the Opposite Parties, amounted to deficiency, in rendering service and indulgence into unfair trade practice.

4.         When the grievance of the complainants was not redressed, left with no alternative, a complaint under Section 12 of the Consumer Protection Act, 1986 (hereinafter to be called as the Act only), was filed, seeking directions to Opposite Parties, to pay an amount of Rs.1,17,960.86Ps charged as forclosure amount alongwith interest @18% per annum; Rs.30,000/- as compensation for mental and physical harassment; Rs.20,000/- on account of unfair trade practice adopted by the Opposite Parties and Rs.15,000/- as litigation expenses.  

5.           The Opposite Parties, in their joint written version, admitted that the complainants approached Opposite Party No.1 for availing a loan facility, which was granted to them.  It was denied that the complainants were paying regular installments by way of cheques. It was further stated that the NHB circular dated 19.10.2011 had no applicability in the present case because it created bar over levy of prepayment charges only in case where loan availed by the borrower was a housing loan.  It was further stated that as per the said circular, if a loan was taken for purchase of plot for construction of a residential dwelling unit, then it would be considered a housing loan only when the borrower provided a declaration that he would construct the said house within a period of three years from the availment of the said loan.  It was further stated that, however, as the construction was not completed within three years from the availment of loan, therefore, the loan in question could not be considered a housing loan.  It was denied that the Opposite Parties were liable to refund the amount of Rs.1,17,960.86Ps to the complainants. It was further stated that neither there was any deficiency, in rendering service, on the part of the Opposite Parties, nor they indulged into unfair trade practice. The remaining averments, were denied, being wrong.

6.         The complainants filed replication, wherein, they reiterated all the averments, contained in the complaint, and repudiated the same, contained in the written version of the Opposite Parties.

7.         The Parties led evidence, in support of their case.

8.         After hearing the Counsel for the parties and, on going through the evidence, and record of the case, the District Forum dismissed the complaint, as stated above, in the opening para of the instant order. 

9.         Feeling aggrieved, the instant appeal, has been filed by the appellants/complainants.

10.       We have heard the Counsel for the appellants/complainants, at the preliminary stage, and have gone through the evidence, and record of the case, carefully. 

11.       The Counsel for the appellants/complainants submitted that the District Forum, by wrongly misinterpreting the documents, on record, held that the loan taken by the appellants/complainants could not be considered as a home loan/housing loan. He further submitted that the District Forum also wrongly held that the appellants/complainants did not furnish declaration of completing the construction on the plot, in question, within three years from the date of availing the loan. He further submitted that there was no such document, on record, to show that the loan taken by the appellants/complainants was not a home  loan  rather  the  loan  agreement  filed  by  the respondents/Opposite Parties before the District Forum clearly stated that it was a home loan and there was no such condition that the appellants/complainants were required to raise construction within three years, and after fulfillment thereof, the loan could be termed as home loan. He further submitted that the appellants/complainants have already raised the construction and has got partial occupation certificate from the Competent Authority and has also got the sewerage connection. He further submitted that as per the instructions issued by the Reserve Bank of India and National Housing Bank, the Housing Finance Companies cannot levy the prepayment/foreclosing charges in respect of the home loans and the appellants/ complainants were fully covered under the definition of home loans. He further submitted that the appeal be accepted and the impugned order be set aside.

12.       After giving our thoughtful consideration, to the contentions, raised by the Counsel for the appellants/complainants, and the evidence, on record, we are of the considered opinion, that the appeal is liable to be dismissed, at the preliminary stage, for the reasons, to be recorded hereinafter.

13.       The core question, that falls for consideration, is, as to whether, the respondents/Opposite Parties   were right in charging the foreclosure charges of Rs.1,17,960.86Ps on pre-payment of the loan amounts or not? There is hardly any dispute that, at the time of granting the loan, loan agreement dated 26.06.2010 (Annexure R-4) in respect of loan of Rs.70,52,500/- was executed between the parties and the complainants appended their signatures thereon.  Clause 2.8 of the loan agreement (Annexure R-4) deals with prepayment charges, which is extracted hereunder:

              “2.8 PREPAYMENT:

 

              The borrower shall be entitled to prepay the loan either partly or fully, as per rules of IHFL, including as to the prepayment charges, for the time being enforce in that behalf. However, any prepayment upto 25% of principal outstanding loan amount on the date of prepayment will not attract any prepayment charges in next twelve month from date of such payment. In case, the prepayment amount exceeds 25% of principal outstanding within twelve month from date of such prepayment then all prepayment amount will attract prepayment charges as stipulated in the schedule.”

 

14.         In the Schedule to the agreement aforesaid, (Pages 44 and 45), the relevant details incorporated are given hereunder:

              Loan Amount        :      Rs.70,52,500/-

               EMI                           :      Rs.58,990/-

              Term of repayment :      240 months

              PEMII Interest             :      8% per annum

              Delayed Payment   :      2% per month of unpaid

                                                EMIs.

 

              Part Prepayment fee:    2% + S.T.% of amount

Prepaid.

              Foreclosure charges:    @2% + S.T.

 

15.         Thus, the demand of prepayment charges to the tune of Rs.1,17,960.86Ps was in accordance with the terms of the loan agreement, as discussed above.

16.             Evidently, as per illustrative list of loans, which the respondents/Opposite Parties, placed, on record of District Forum file alongiwth letter dated 26.09.2011 (Annexure R-1) of the National Housing Bank, the loans for purchase of plots for construction of residential dwelling units were covered under housing loans, provided a declaration was obtained from the borrower that he intended to construct a house on the plot with the assistance of Bank/HFC or otherwise within a period of three years from availing of the loan. The loan, in the instant case, was for purchase of a plot and for construction of a residential dwelling unit thereon. Admittedly, the construction did not complete within the stipulated period of three years from the availment of the loan. Even the appellants/complainants did not furnish the required declaration. Since in the instant case, no such declaration has come, on record, it has to be assumed that the loan was non-housing loan and foreclosure charges were payable. Thus, the District Forum rightly held that the loan, in question, could not be considered as a housing loan, as the appellants/complainants failed to furnish the declaration, in question.

17.       Even if, it is assumed, for the sake of arguments that the purpose of loan was housing, the appellants/complainants were not entitled to exemption, as the exemption as per the policy of National Housing Board was to come into effect from the date of issuance of guidelines vide letter dated 19.10.2011. In Para 7 of its order, the District Forum while referring to Policy dated October 19, 2011, of the National Housing Bank (wholly owned by Reserve Bank of India) held that “…the National Housing Bank circular dated 19.10.2011 created a bar over levy of pre-payment charges only in respect of the housing loans….” According to the said policy, it was decided that Housing Finance Companies should not charge pre-payment levy or penalty on pre-closure of housing loans under the following situations: (a) Where the housing loan is on floating interest rate basis (pre-closed through any source), (b) Where the housing loan is on fixed interest rate basis and the loan is pre-closed by the borrowers out of their own sources.”

18.         Clearly, the guidelines of National Housing Bank were to come into force prospectively i.e. after the issuance of Policy dated 19.10.2011.  In the instant case, the loan was obtained by the appellants/complainants vide application dated 15.6.2010 and loan agreement was signed on 26.06.2010, much earlier to the above Policy, and, therefore, the policy aforesaid was not applicable. Further the Circular dated 5.6.2012 and 7.5.2014 relied upon by the appellants/complainants, to contend that the Banks were not permitted to charge foreclosure charges/pre-payment penalties, it may be stated here that firstly these circulars came into force with immediate effect i.e. from the date of issue thereof, and, secondly the same related to floating rate term loans sanctioned to individual borrowers, whereas in the present case, the loan obtained by the appellants/complainants was joint loan and the rate of interest was fixed rate of interest, as was evident from the loan agreement. 

19.         In Hotel Vrinda Prakash Vs. Karnataka State Financial Corporation, AIR 2007 Kant 187, the principle of law, laid down, was that the Financial Corporation had authority to charge premium for prepayment/foreclosure of the loan account, on the outstanding loan balance. In C.S.No.513 of 2001-Hatsun Agro Products Chennai Vs. Industrial Development Bank of India, Chennai, decided on 14.10.2009, by the Madras High Court, the plaintiff was charged Rs.51,42,895/-, as prepayment charges/premium, before foreclosing the loan. The demand was challenged as illegal. The Hon’ble High Court held that the prepayment charges, before foreclosing the loan, were legally charged by the defendant, and, ultimately, dismissed the suit. The principle of law, laid down, in the aforesaid cases, is fully applicable to the instant case. Thus, in our considered opinion, the appellants/complainants were very much liable to pay the prepayment/foreclosure charges.

20.         Since the respondents/Opposite Parties, charged the prepayment charges as per the loan agreement executed between the parties, the same was binding upon the parties. By no stretch of imagination, it could be said that they (respondents/Opposite Parties) were either deficient in rendering service or indulged into unfair trade practice.

21.         No other point, was urged, by the Counsel for the parties.

22.         In view of the above discussion, it is held that the order passed by the District Forum, does not suffer from any illegality and perversity, warranting the interference of this Commission.

23.         For the reasons recorded above, the appeal is dismissed, at the preliminary stage, with no order as to costs. The order of the District Forum is upheld.

24.         Certified Copies of this order be sent to the parties, free of charge.

25.         The file be consigned to Record Room, after completion.

Pronounced.

August 24, 2015.

 

Sd/-

[JUSTICE SHAM SUNDER (RETD.)]

PRESIDENT

 

 

Sd/-

 [DEV RAJ]

MEMBER

 

 

Sd/-

 [PADMA PANDEY]

MEMBER

 

 

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STATE COMMISSION

 

 

(First Appeal No.198 of 2015)

 

 

[ Deep Kamal Gill and another

Vs.  

M/s India Bulls Housing Finance Ltd. and Anr.]

 

 

Argued by: 

 

Sh. Mukand Gupta, Advocate for the appellants.

 

Dated the  24^th day of August, 2015

 

ORDER

 

            Alongwith the appeal, the appellants have moved an application, for placing on record, certificate (Annexure A-1) by way of additional evidence on the ground, that the same are essential for the just decision of appeal.

2.         Arguments were heard, on the application at the preliminary stage.

3.         It may be stated here, that the document, sought to be placed, on record, i.e. letter dated 1.10.2014 (Annexure A-1), by way of additional evidence, was very much, in the knowledge of the appellants/complainants, when they were leading evidence, in the District Forum. In case, at this stage, the application for placing, on record, the document, aforesaid, by way of additional evidence, is allowed, that will delay the disposal of appeal, thereby defeating the very purpose of the provisions of Section 13 (3A), of the Consumer Protection Act, 1986, stipulating the specific time, for the disposal of Consumer Disputes. Thus, there is no justification, whatsoever, to allow the application, for placing, on record, the aforesaid document, by way of additional evidence, at this stage. The application is, accordingly, dismissed.

4.          Arguments in the main appeal, at the preliminary stage, already heard.
5.          Vide our detailed order of the even date, recorded separately, the appeal, being devoid of merit has been dismissed, at the preliminary stage, with no order as to cost. The order of the District Forum has been upheld.

6.         Certified copies of the order be sent to the parties free of charge.         

 

  

Sd/- (DEV RAJ) MEMBER

Sd/-   (JUSTICE SHAM SUNDER (RETD.)) PRESIDENT

Sd/-   (PADMA PANDEY) MEMBER

 

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