BEFORE THE CONSUMER DISPUTES REDRESSAL FORUM,

ERNAKULAM.

Date of filing : 08/11/2011

Date of Order : 30/01/2013

Present :-

Shri. A. Rajesh, President.

Shri. Paul Gomez, Member.

Smt. C.K. Lekhamma, Member.

C.C. No. 620/2011

Between

And

O R D E R

A. Rajesh, President.

1. The facts of the complainant's case leading to this complaint are as follows :-

The complainant availed himself of a loan of Rs. 2 crores from the opposite parties with a repayment period of 120 months and EMI was fixed to be Rs. 2,92,752/-. The overdraft facility also was given to the extend of Rs. 2 crores for a period of 12 months. The granting of overdraft facility was intimated by the 2^nd opposite party by their letter dated 21-07-2008. The letter does not contain anything about pre-closure charges. The complainant enquired about the pre-closure charges in the terms and conditions in the facility letter. The 2^nd opposite party clarified to the complainant that it was meant for the instalment loan and not for the overdraft . Believing the assurances and clarifications of the 2^nd opposite party, the complainant had accepted the facility letter by putting his signature in it. Since the service of the opposite parties was not satisfied, the complainant decided to close the overdraft facility. At that juncture, the opposite parties demanded 2% extra as pre-closure charges in both accounts. The complainant was ready and willing to pay pre-closure charges in the instalment loan. However, the complainant had to remit pre-closure charges in the overdraft account as well to the tune of Rs. 4,42,000/- on 04-10-2010. There is sheer deficiency in service and unfair trade practice on the part of the opposite parties in collecting pre-closure charges in the OD account. On 09-10-2010, the complainant caused to issue a lawyer notice demanding the opposite parties to refund the pre-closure charge to which the opposite parties replied stating untenable contentions. The complainant is entitled to get the pre-closure charges refunded together with a compensation of Rs. 5 lakhs. This complaint hence.

2. The opposite parties filed version contending as follows : -

The matter under dispute is related to the agreement between the parties and not maintainable in this Forum. The complainant applied for loan against properly and overdraft facilities for an amount of Rs. 2 crores each from the opposite parties. The loan was sanctioned and was disbursed vide the facility letter dated 23-06-2008. The said letter contains the terms and conditions pertaining to the loan against property and OD and the same was duly acknowledged by the complainant, in which it is stated that 2% pre-closure charges would be levied. The letter clearly states that pre-closure charges is also applicable to OD account. The OD facility was further renewed in July 2010. The charges have been levied only as per the terms and conditions as agreed upon by the complainant and there is no cause of action for the complainant to file this complaint. The complaint is devoid of any merit and is liable to be dismissed.

3. The complainant was examined as PW1 and Exts. A1 to A5 were marked on his side. No oral evidence was adduced by the opposite parties. Exts. B1 to B3 were marked. Heard the learned counsel for the parties.

4. The points that emanated for consideration are as follows :-

1. Whether the complaint is maintainable in this Forum?

2. Whether the complainant is entitled to get 2% pre-closure charges refunded from the opposite parties?

3. Whether the opposite parties are liable to pay a compensation of Rs. 5 lakhs to the complainant?

5. Point No. i. :- The primary contention of the opposite parties is that the present complaint is not maintainable against them, since the matter impugned in connection with an agreement entered into between the parties. We are only to reject the above contention, since the Hon'ble Apex Court categorically sustained in the following authoritative pronouncements that banking is business transaction between bank and customers. Such customers are consumers within the meaning of Section 2 (1) (d)(ii) of the Consumer Protection Act. Vimal Chandra Gover Vs. Bank of India II (2000) CPJ 11 (SC), Standard Chartered Bank Ltd. Vs. B.N. Raman III (2006) CPJ (1) (SC). In the latter decision, the opposite parties themselves approached the Hon'ble Supreme Court raising the same point, but miserably failed naturally.

6. Point No. ii. :- Admittedly, the complainant applied for loan against property and over draft facility for an amount of Rs. 2 crores each from the opposite parties. It is not in dispute that the loan was sanctioned and was disbursed to the complainant vide Ext. B1 facility letter dated 23-06-2008. It is also not in dispute that the over draft facility was renewed in July 2010 vide Ext. B2 facility letter dated 16-07-2010. As per Exts. B1 and B2, the complainant is liable to pay 2% pre-payment charges in case of pre-closure of the loan accounts. The said clause reads as follows :-

“The facility shall attract a pre-closure and past pre-payment charge at 2% (as may be revised by the bank from time to time) on the facility limits granted to the borrower in the event of

1. repayment by the borrower to the Bank of any amount ahead of previously agreed repayment schedule or tenor or terms or dates of repayment or renewal as contained in the facility letter, or

2. the Borrower's not availing of the Facility or any part thereof within 60 (sixty) days from the date of its grant.”

7. According to the complainant, at the very inception of the facility he objected to the above clause in Ext. B1 and the opposite parties assured that the complainant need not pay pre-closure charges in the OD account and the complainant agreed to pay the charges in the other loan account. The opposite parties maintain that the complainant acceded to the payment of 2% pre-payment charges in both accounts loan against property account as well as OD account.

8. At the threshold, the opposite parties stated in the version that there is an agreement between the complainant and the opposite parties with regard to the loan transactions. The agreement does not see the light of the day in this Forum, for reasons of their own. The present dispute can be easily resolved by going through the terms and conditions in the agreement entered into between the parties. Exts. B1 and B2 are only the facility letters issued by the opposite parties to the complainant. Though the payment of 2% pre-closure charges does find a place in Exts. B1 and B2, we are at a loss to ascertain whether such a clause is there in the agreement which has not been produced on evidence. The non-production of a vital document in this Forum is conspicuously consistent as far as this case goes. Just an averment on even a challenge does not find a place in law, if not sustained.

9. The banks have been levying pre-closure charges in all the loan accounts in spite of disapproval of the apex bank of India, the Reserve Bank. The willful failure of the opposite parties in not producing the mandatory approval of the Reserve Bank of India in this Forum is unexplained for the same reasons. The laches which cannot legally be condoned such an act in all probability would draw any Forum of law to a conclusion that there is specific interpretation which amounts not only to unfair trade practice, but also to deficiency in service. Out of the way, it is pathetic and deplorable, why such conditions be come to such a conclusion, which is as observed above. It is pertinent to note that the opposite parties do not have a case that they have sustained any loss on account of the pre-closure of the loan account for which they have raised the claim of 2% by way of pre-closure charges.

10. The Hon'ble Kerala State Consumer Disputes Redressal Commission has held in the following judgments that the realisation of pre-closure charges, though there is such a clause in the loan agreement, the same amounts of deficiency in service and is illegal.

1. The General Manager, State Bank of Travancore & Ors. Vs. Rajan. K.C. (Appeal No. 78/2008 decided on 05-05-2010).

2. M/s. Indian Overseas Bank Vs. Dr. P.C. Shaji (Appeal No. 285/2009 decided on 16-10-2009)

3. The Branch Manager, Lord Krishna Bank & Anr. Vs. K. Kunjambu Nair (Appeal No. 226/2008 decided on 07-03-2011)

11. In the above circumstances keenly keeping in mind, the decided decisions untraveled, we are of the firm view that the opposite parties are legally liable to refund the pre-closure charges in the over draft account.

12. Point No. iii. :- Since the primary grievance of the complainant having been met squarely, an order for compensation is not necessarily called for.

13. In the result, the opposite parties shall jointly and severally refund the 2% pre-closure charges collected in the over draft account of the complainant.

The order shall be complied with, within a period of thirty days from the date of receipt of a copy of this order, failing which the above amount shall carry interest @ 12% p.a. till realisation.

Pronounced in the open Forum on this the 30^th day of January 2013.

Forwarded/By Order, Sd/- A. Rajesh, President.

Sd/- Paul Gomez, Member.

Sd/- C.K. Lekhamma, Member.

Senior Superintendent.

A P P E N D I X

Complainant's Exhibits :-

Opposite party's Exhibits :-

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