Date of Filing:18.06.2021

Date of Disposal:24.04.2023

BEFORE THE IV ADDL DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION BENGALURU

1^ST FLOOR, BMTC, B-BLOCK, TTMC BUILDING, K.H ROAD, SHANTHINAGAR, BENGALURU – 560 027.

ORDER

SRI CHANDRASHEKAR.S.NOOLA, MEMBER

1. The complainant has submitted this complaint in accordance with Section 35 of the Consumer Protection Act of 2019. The complainant requests that this Commission order the opposite party to reschedule the loan payments and amount as per the initial agreement dated November 29, 2016/November 30, 2016. And to order the opposite party to pay the complainants Rs.5,00,000/- as compensation for harassment, inconvenience, and mental agony.

2. The following are the complaint's key facts: 

The complainants obtained a housing loan from the opposite party in order to purchase an immovable residential property. Following a review of the complainants' records and financial situation, the opposite party approved a home loan with terms and conditions on November 30, 2016. A loan of Rs.79,50,594/- was made available to the complainants as a Mortgage Loan, with the condition that it be repaid in 180 equalized monthly installments of Rs.90,557/- at a rate of interest of 10.10% per annum. The floating reference rate LFRR is notified from time to time at an 8.65% margin, with the current LFRR being 18.75% per annum. The complainant recognized the term and has regularly remitted monthly installments in accordance with the loan agreement of August 3, 2017.

3. After verifying the loan account statement in the month of December 2020, the complainants noticed that the installment amount had been increased from 05.01.2019 and that the tenure of the Mortgage Loan had been extended from 180 monthly installment to 248 equated monthly installment without the complainants' consent. Furthermore, the complainant claims that the opposite party is a schedule bank and has no right to impose an interest rate of 11% per annum in accordance with Reserve Bank of India norms. The complainants requested that the loan payments be re fixed in accordance with the original loan sanction letter dated 29.11.2016, and a legal notice was also issued to the opposite party.

4. The complainant further claims that after purchasing the schedule property after receiving the assurance of legal scrutiny, he did so without hesitation, mortgaging the property to the opposite party. A strange person filed a civil suit for permanent injunction and other relief against the complainants, claiming that he also has rights in the title of the schedule property and that the complainant's acquisition of the property is not in order, and the same was challenged by the complainants, and the Honorable Court issued a judgment and decree directing the plaintiff not to interfere in the complainant's possession of the property. The plaintiff has filed an appeal against the judgment, which is currently pending before the Hon’ble Karnataka High Court.

5. The opposite party is a non-banking housing finance company registered with the "National Housing Bank" as a Housing Finance institution controlled by the National Housing Board and currently governed by the Reserve Bank of India.

6. According to the opposite party, a loan of Rs. 83,79,280/- was sanctioned to the complainant and co-borrowers with an adjustable rate of interest/floating rate of interest to be repaid in equal monthly installments via a sanction letter dated 30.11.2016. The loan was secured with property and sanctioned in accordance with the loan sanction letter and loan agreement.

7. The adjustable rate of interest is set in accordance with the India Bulls Housing Finance Limited-Lap floating reference rate, and the applicable interest rate is calculated using the following figures (IHFL-LFRR)-8.65%; as a result, the applicable rate of interest changes whenever the IHFL-LFRR rates change.

8. The opposite party claims that, in accordance with the terms and conditions agreed upon, varying interest rates have been made applicable, as have the repayment schedule and loan tenure, and that whenever interest rates vary, such modifications have been duly disclosed to the complainants. The complainants failed to repay the loan amount, and as a result of the failure to repay, the complainants' loan account on 17 January 2022 was declared a non-performing asset under the provisions of the Securitization and reconstruction of financial assets and enforcement security interest Act 2002. (SARFAESI Act). The opposite party claims that because the proceeding under the SARFESI Act has already been initiated, grievances, if any of the complainants, can only be tried in the jurisdictional Debts recovery Tribunal further, as the value of the subject matter exceeds Rupees 50 lacs, falls outside the pecuniary jurisdiction of this Commission.

9. The points that arise for our consideration are;

1. Whether the Complainant prove that there is deficiency of service on the part of the OPs as alleged in the complaint and thereby prove that he is entitle for the relief sought?

2. What order?

10. The findings on the above points are as under:

Point No.1               :       Negative

Point No.2               :       As per final order

REASONS

11. POINT NO.1:-   The complainants had obtained a housing loan from a non-banking housing finance company with a repayment schedule of 180 monthly installments and a floating interest rate. However, the complainants claim that without their consent, the installment amount was increased from January 5, 2019, and the loan tenure was extended from 180 to 248 equated monthly installments. The complainants also argue that the company had no right to impose an interest rate of 11% per annum as per Reserve Bank of India norms.

12. On the other hand, the opposite party claims that the loan was sanctioned in accordance with the loan agreement, and any changes in interest rates and repayment schedules were duly disclosed to the complainants. In the sanction letter of the opposite party (copy of the sanction letter furnished by complainant) the complainant agreed for the floating rate of interest and  adjustable rate of interest was set in accordance with the India Bulls Housing Finance Limited-Lap floating reference rate, and the applicable interest rate was calculated using the (IHFL-LFRR)-8.65%. As per the Asset Liability Committee (ALCO), the company claims that varying interest rates have been made applicable as per the terms and conditions agreed upon, and whenever interest rates vary, such modifications have been duly disclosed to the complainants which has been exhibited in document no 5 furnished by the opposite party.

13.   Additionally, because the complainants failed to repay the loan, the company has initiated proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement Security Interest Act, 2002 (SARFAESI Act). As a result, the complainants' loan account was declared a non-performing asset on January 17, 2022. The company argues that grievances, if any, can only be addressed in the jurisdictional Debt Recovery Tribunal.

14. After perusal of documents produced by both the parties and in the light of the above facts this commission is of the opinion that, since the proceedings against the complainants initiated under Securitization and Reconstruction of Financial Assets & Enforcement of Security Act, 2002 (SARFESI Act) and hence, the Commission has no jurisdiction in the matter. The Hon’ble National Commission in the case of Standard Chartered Bank vs Veirendra Rai; II (2013) CPJ 337 (NC). Wherein it has been held that the Civil Court or Forum cannot interfere in the proceedings initiated under SARFESI Act 2002. The Hon’ble Apex Court in the case of Jagadish Singh Vs Heeralal and others; 2013 STPL (Web) 895 SC, has held that the Civil Court jurisdiction is completely barred so as far the “measure” taken by a secured creditor under sub-section (4) of Section 13 of the SARFESI act 2002 against which an aggrieved person has a right to appeal before DRT or the Appellate Tribunal, to determine as to whether there has been any illegality in the measures taken. “After careful considerations of submissions of both sides in this case, the commission concludes that the complainant has failed to establish a prima facie case and the case is dismissed. Accordingly, the Point No.1 we answer in Negative.

15. POINT NO.2:- In the result, we passed the following:

ORDER

1. The complaint filed by the Complainant U/s.35 of the Consumer Protection Act, 2019 is dismissed. No costs.

2. Furnish free copy of this order to both the parties. 

 (Dictated to the Stenographer, got it transcribed, typed by him and corrected by me, then pronounced in the Open Commission on 24^th April 2023)

(RAMACHANDRA M.S.)

PRESIDENT

(NANDINI H KUMBHAR)             (CHANDRASHEKAR S.NOOLA)       

         MEMBER                                        MEMBER

Witness examined on behalf of the complainant by way of affidavit:

Sri N.Deva Rao-who being the complainant

Documents produced by the complainant:

Witness examined on behalf of the OP by way of affidavit:

Smt.Usha.M.-Who being the OP

Documents produced by the OP:

(RAMACHANDRA M.S.)

PRESIDENT

(NANDINI H KUMBHAR)          (CHANDRASHEKAR S.NOOLA)

         MEMBER                                     MEMBER

SKA*