Date of Filing:18.06.2008<br /> Date of Order:17.03.2009<br /> <br /> <br /> <br /> BEFORE THE II ADDITIONAL DISTRICT CONSUMER DISPUTES REDRESSAL FORUM SESHADRIPURAM BANGALORE-20<br /> <br /> <br /> Dated: 17TH DAY OF MARCH 2009<br /> PRESENT<br /> <br /> <br /> <br /> Sri S.S. NAGARALE, B.A, LL.B. (SPL.), President.<br /> Smt. D. LEELAVATHI, M.A.LL.B, Member.<br /> Sri BALAKRISHNA. V. MASALI, B.A, LL.B. (SPL.), Member.<br /> <br /> <br /> COMPLAINT NO: 1344 OF 2008<br /> <br /> M/s. Vinay Tractor Enterprises<br /> No. 26, 1st Floor<br /> Raja Ram Mohan Roy Extension<br /> K.H. Road, Bangalore 27<br /> Represented by its Prop: H. Chandrashekar Complainant<br /> V/S<br /> M/s. Canara Bank<br /> No. 18, K.H. Road<br /> Shanthinagar, Bangalore 560027<br /> Represented by its Chief Manager Opposite Party<br /> <br /> ORDER<br /> By the President Sri. S.S. Nagarale<br /> <br /> This is a complaint filed under section 12 of the Consumer Protection Act.<br /> The facts of the case are that complainant approached opposite party for loan. Opposite party has agreed to sanction loan of Rs. 200 lakhs of OCC loan and Rs. 1300 lakhs term loan. Opposite party has not disbursed the loan in time to the complainant. No documentation was done. However, opposite party has collected Rs. 7,16,300/- from the complainant and Rs. 1,50,000/- towards insurance amount and Rs. 5,000/- as legal fee. Complainant requested to return the said amount. Complainant wrote letter demanding repayment of upfront amount. Opposite party gave evasive reply denying repayment. Opposite party is liable to pay interest. <br /> 2. Notice issued to opposite party. Opposite party put in appearance through advocate and defence version filed admitting that opposite party collected sum of Rs. 7,16,300/- inclusive of service tax from the complainant’s current account. Opposite party vide sanction letter dated 26.11.2005 clearly intimated the complainant that he has to pay 1% of loan amount towards upfront fee to the bank. Complainant has agreed for such condition. Accordingly, bank was entitled for sum of Rs. 13,00,000/- from the complainant. However, complainant represented for reduction in the fee and opposite party after getting permission from higher authorities reduced the upfront fee by 50%. Opposite party after giving concession collected sum of Rs. 7,16,300/- from the complainant. Upfront fee collected is towards work involved in processing and sanctioning loan. The allegation that opposite party has collected further sum of Rs. 1,50,000/- towards insurance was false. Opposite party collected Rs. 16,530/- towards valuation fee paid to the valuer. Insurance and legal fees are paid by the party directly to the concerned. Opposite party as per the regulation of bank is entitled to collect legitimate charges. Complainant for the reasons known to him has not availed the loan. There is no deficiency in service. Therefore, opposite party requested to dismiss the complaint.<br /> 3. Affidavit Evidences are filed.<br /> 4. Arguments are heard.<br /> 5. The points for consideration are:<br /> 1. Whether the complainant has proved deficiency in service on the part of the opposite party?<br /> 2. Whether the complainant is entitled for the refund of the amount? If so, what would be the refund amount?<br /> 6. Almost all facts are admitted. It is admitted case of the parties that the complainant had applied for loan with the opposite party bank. The loan was sanctioned by the opposite party bank on 26.11.2005 with certain conditions. However, the complainant has not taken loan amount and the amount has not been disbursed to the complainant. But learned advocate for the opposite party submitted that as per the guidelines and instructions of the bank upfront fee at 1% of loan amount shall have to be paid by the borrower. It is submitted that opposite party bank was infact entitled to get sum of Rs. 13,00,000/- as upfront fee. However, the complainant had made representation for reduction in the upfront fee. The opposite party bank after getting permission from the higher authorities reduced the upfront fee by 50% and concession was given to the complainant. After giving concession the bank collected Rs. 7,16,300/- towards upfront fee and towards service tax. The complainant has given letter to opposite party bank on 01.02.2006. The letter reads as under:<br /> “Dear Sir,<br /> Sub: Sanction of Term loan of Rs. 13 crores collection of fee at 50% reg<br /> Ref: your letter No. CR/288/2006 dated 26.11.2005<br /> We are very much thankful to your kind self for having provided loan facility to the extent of Rs. 13 crores for purchase of property.<br /> In your letter it is intimated to us that upfront fee of Rs. 7,16,300/- has bee collected at 50% of rate.<br /> We request you to kindly collect Rs. 3,58,150/- only at 25% towards upfront fee.<br /> We shall be glad to have your kind action in this behalf.<br /> Yours faithfully,<br /> For Vinay Tractor Enterprises<br /> <br /> Sd/-<br /> (H. Chandrashekar)<br /> Proprietor”<br /> <br /> 7. As per this letter it is very clear that the bank has collected 50% upfront fee. The complainant requested for giving further concession and requested the opposite party to collect 25% towards upfront fee. But the request of the complainant has not been considered by the opposite party bank. Therefore, he has approached the forum. The opposite party bank has produced guidelines of service charges published by Canara Bank. As per this guidelines bank is authorised to collect upfront fee of 1% of loan amount. However, the bank on request of the complainant referred the matter to higher authorities and concession was given to complainant and collected only 50% towards upfront fee. Collection of service charges or processing fee as per the guidelines does not amount to deficiency in service. On the facts of the case there is absolutely no deficiency of service on the part of the opposite party bank. The complainant himself expressed thanks for giving concession and further requested for collecting 25% towards upfront fee. So under these circumstances there shall not be any grievance by the complainant against the opposite party bank. It is admitted case that rates of service charges have never been fixed by any law. The banks have formulated instructions / guidelines of service charges and as per such guidelines banks are charging service charges and upfront charges. The very fact that 50% concession was given to the complainant itself goes to show that there is no fixed rate of upfront fee to be collected. It is entirely at the discretion of the bank. The representation of the complainant was sent to higher authorities and 50% fee was reduced and accordingly Rs. 7,16,300/- was collected. No fault could be found with the opposite party bank in collecting the upfront fee. The complainant should not have any grievance. The complainant only requested for further reduction of fee. The learned advocate for the complainant argued that the complainant company has sustained heavy loss in business. It is in a financial constraint and difficulty. Therefore, the complainant is seeking some more concession on account of his very bad financial position. The learned advocate for the complainant submitted that the complainant could not have approached the forum had the financial position of the complainant company was good. The opposite party bank has exercised discretion in reducing the upfront fee. The action taken up by the opposite party bank in giving 50% concession is appreciated. Complainant is old customer of opposite party bank. He is in financial trouble. Therefore, he has requested for some more concession. Though there is no deficiency in service on the part of opposite party the forum can exercise its judicial and discretionary power in directing the opposite party to reduce or give some more concession to the complainant in view of his very bad financial situation. On the facts and circumstances of the case and taking into consideration the arguments advanced by both the learned counsels of the parties we feel the ends of justice will be met in ordering the opposite party bank to refund lumpsum amount of Rs. 3,00,000/- to the complainant out of Rs. 7,16,300/- collected towards upfront fee. As regards insurance premium and legal charges the complainant has not produced any evidence or proof to show that opposite party bank has collected Rs. 1,50,000/- towards insurance amount and Rs. 5,000/- towards legal charges. Therefore, the complainant is not entitled for refund of this amount. The opposite party bank has paid Rs 16,530/- to Chandra Shekar & Co. towards Professional Charges. Therefore, the complainant has no right to ask for refund of that amount. On the facts of the case the only order that could be passed is opposite party bank shall refund Rs. 3,00,000/- to the complainant. This order is passed on the facts on particular case. This will not be setting any precedent. The borrower has no right in law to seek refund of the upfront fee since there is no deficiency of service on the part of the opposite party bank. However, in this particular case taking into consideration of loss in business and financial constraint of the complainant we are directing the opposite party bank to give further concession and to refund lumpsum amount of Rs. 3,00,000/-. In the result I proceed to pass the following: <br /> ORDER<br /> 8. The Complaint is partly allowed. The opposite party bank is directed to refund Rs. 3,00,000/- to the complainant (reverse to the account of the complainant) within 30 days from the date of this order.<br /> 9. Send the copy of this Order to both the parties free of costs immediately. <br /> 10. Pronounced in the Open Forum on this 17TH DAY OF MARCH 2009. <br /> Order accordingly,<br /> <br /> <br /> PRESIDENT<br /> We concur the above findings.<br /> <br /> <br /> MEMBER MEMBER<br />