The brief facts of the complaint are that the complainants availed  home loan of Rs. 38,00,000/- @ 10.8%(fixed) per annum from the OP, the complainant successfully paid  the EMIs as per the repayment schedule, after one year he requested for the subsequent top up loan of Rs. 25,00,000/- as committed by the AR for the OP. Under one pretext or the other the OP did not disbursed the top up loan as such the complainant requested the OP to close the loan account in question and handed over the DD in this regard. The OP arbitrarily withhold the security papers and asked the complainant to pay the foreclosure charges of Rs. 61,360/- having no other option the complainant paid the foreclosure charges to the OP under protest.

The complainant requested the OP to refund the aforesaid amounts illegally charged but to no effect.  It is alleged by the complainant that the OP has been guilty of deficiency in service as a result of which they have suffered huge monetary loss.  Hence, this complaint.

The OP bank has contested the complaint and has filed a written statement.  It has denied any deficiency in service on its part and has claimed that the OP never committed any error, omission or negligence and it is acting within the cannon of law.  It is further stated that an amount of Rs. 61,360/- was charged rightly and in consonance with the clause 2.8 of the loan agreement as well as the clause 10 of the terms and conditions of the sanctioned letter which describe the applicability of pre-payment charges and prayed for the dismissal of the complaint.

 Both the parties have filed their evidence by way of affidavit.
We have heard arguments advanced at the bar and have perused the record.

Some facts are not disputed in this case.  It is admitted by the counsel for the OP that they had levied the foreclosure charges on the home loans, under the pretext that foreclosure charges are neither illegal nor unknown in the banking industry.  Such charges are rightly levied by the banks as per clause 2.8 of the loan agreement as well as the clause 10 of the terms and conditions of the sanctioned letter which describe the applicability of pre-payment charges.

 However, we are not convinced with the contention of the counsel for the OP.  The complainant has placed on record the copy of the RBI circular dated 07/05/2014, the contend of which are reproduced as under:-

“It was indicated that in the interest of their consumers, bank should consider allowing their borrower the possibility of pre-paying floating rate term loans without any penalty. Accordingly, it is advise that bank will not be permitted to charge foreclosure charges/pre-payment penalties on all the floating rate terms loan sanctioned to the individual borrowers with immediate effect.”

 Moreover, it was held by the Hon’ble State Commission, Delhi in State Bank of India V/s Usha Vaid (Dr.) & Anr. II (2008) CPJ 166 that

No bank or for that purpose finance companies can be fallowed to indulge in restrictive trade practice by binding the consumer to go on availing loan even if rate of interest charged by the said bank is much higher than the other banks and any such clause which operates adversely to the consumer like Clause 4 has to be held as void and, therefore, not enforceable.

In the present case also the complainant has availed the facility of closure of loan from OP, hence, the foreclosure charges levied by the OP bank is illegal in terms of the RBI circular dated 07/05/2014.

In view of the above discussion, we hold OP guilty of deficiency in services and direct it as under:

1.   Refund to the complainant a sum of Rs. 61,360/- alongwith interest @ 9% p.a. from the date of filing of this complaint i.e. 13/10/2011 till payment.

2.    To pay to the complainant a sum of Rs. 05,000/- as compensation for the pain and agony suffered by him.

3.    To pay to the complainant a sum of Rs.05,000/- as a cost of litigation.

          The OP shall pay this amount within a period of 30 days from the date of this order failing which they shall be liable to pay interest on the entire awarded amount @ 9% per annum.  If the OP fails to comply with this order, the complainant may approach this Forum for execution of the order under Section 25/27 of the Consumer Protection Act.

Copy of the order be made available to the parties as per rule.  File be  consigned to record room.

          Announced in open sitting of the Forum on 18/03/2020