STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

(APPEAL NO.170 OF 2010)

                                                                   Date of Institution: 19.4.2010.

                                                                   Date of Decision: 24.09.2010.

1.      The Chairman, State Bank of India, Corporate Office, Blackbay Reclamation, Madam Cama Road, Mumbai.

2.        The Chief General Manager, State Bank of India, Local Head Office, Sector 17, Chandigarh.

3.        The Assistant General Manager (Administration), State Bank of India, Zonal Office, Haryana, Sector 5, Panchkula.

4.        The Branch Manager, State Bank of India, R.A. Bazar, Ambala Cantt., Haryana.

……Appellants/OPs.

Versus

Sh. N. K. Sharma S/o Sh. A. L. Sharma R/o 25, Bankers Enclave, Ambala Cantt.

              ....Respondent/Complainant.

BEFORE:      HON’BLE MR. JUSTICE PRITAM PAL, PRESIDENT.

                        SH. JAGROOP SINGH MAHAL, MEMBER.

Argued by:     Sh. Vikas Chatrath, Advocate for the appellants.

                    Sh. Anand Goel, Advocate for the respondent.

PER JAGROOP SINGH MAHAL, MEMBER.

1.       The OPs – State Bank of India and others have filed this appeal under Section 15 of Consumer Protection Act, 1986 against the order dated 11.2.2010 passed by learned District Consumer Disputes Redressal Forum-II, U.T., Chandigarh (hereinafter to be referred as District Forum) vide which the complaint filed by Sh. N. K. Sharma, respondent was allowed and the OPs were directed as follows:-

(i)                “To refund the amount of Rs.53,640/- to the complainant for the wrongful debit on account of the arbitrary change in the EMI and other terms and conditions of the loan agreement.

(ii)              Charge the revised rate/floating rate of interest with effect from 19.4.2006 onwards from the complainant instead of charging the fixed rate of interest @13% p.a., as was being erroneously done presently.

(iii)            To pay compensation of Rs.5,000/- for causing physical harassment, mental agony and pain to the complainant on account of wrongful debit of the excessive amount of interest from the housing loan account of the complainant.

(iv)            To pay litigation expenses of Rs.5,000/-.

(v)              To release the FDR of Rs.3.00 lakh, which is already under the lien of the OPs in respect of the housing loan, if the same is not required by the OPs in connection with the part payment of the revised/reduced EMIs for repayment of the housing plan. In addition, the entire Housing Loan Account of the complainant be recast and the revised statement of the said account be supplied to the complainant after due re-scheduling/rephrasing of the account.”

2.                 According to the complainant, he was earlier an employee of the OPs/appellants and retired on 31.3.2001 as Deputy Manager under the SBI Voluntary Retirement Scheme . He had availed a housing loan of Rs.5 Lacs on 2.3.1998 from the Zonal Office, Sector 8, Chandigarh, which was re-payable through installments at a simple rate of interest of 5.10% per annum upto Rs.1,10,000/- and 11.10% above the aforesaid amount. On his retirement, he offered to continue the facility till 70 years of age and agreed to pay commercial rate of interest as applicable to the public on the entire outstanding loan. The concessionary simple rate of interest applicable to the staff was converted to compounding rate of interest then prevailing @13% per annum as applicable to the public. The principle and the accumulated interest were clubbed at Rs.6,00,563/- and the complainant deposited Rs.1,50,563/- on 31.3.2001 and the balance was reduced to Rs.4,50,000/-. The EMI was fixed at Rs.5,850/- for remaining 162 months and he started repaying the amount in view of the supplementary agreement dated 11.4.2001 between the parties. Then started a down forward trend in the rate of interest. It came down to 8.25% p.a. in October 2003 and further dipped to 7% or 7.25% p.a. The complainant represented to the appellants on 16.4.2004 requesting  for the revision of rate of interest in accordance with the market trend and thereafter, made several visits to their office but they did not reduce his rate of interest. He then received a letter dated 19.4.2006 whereby not only his request was declined but the floating rate of interest was changed unilaterally to fixed rate of interest and the amount of Rs.53,640/- was debited to his account as different of interest. He again represented to the OPs/appellants and approached the Banking Ombudsman but to no effect. Ultimately, he filed the present complaint requesting for the refund of Rs.53,640/-, fixing/revising the floating rate from 19.4.2006, for compensation for harassment and legal expenses.

3.                 The OPs/appellants opposed the complaint on the ground that the loan was advanced to the complainant when he was an employee of the Bank and therefore, he was not a consumer qua the OPs/appellants Bank. It was admitted that after his retirement, he was allowed to continue the housing loan facility paying interest at commercial rate  applicable on the date of retirement regarding which a supplementary agreement dated 11.4.2001 (Annexure C-3) was executed between the parties. It was alleged that the said agreement (C-3) was executed at Ambala Cantt. The office of appellant Bank was also situated at Ambala Cantt and therefore, the Consumer Fora at Chandigarh have no territorial jurisdiction to try this complaint. It was further alleged by the appellant that the cause of action accrued to the complainant on 19.4.2006 when he received letter (C-16) and therefore, the present complaint filed in April 2009 is barred by time.

4.                 On merits, it was admitted that the administrative sanction for grant of loan to the complainant was accorded by the Zonal Office of appellant Bank, which was then situated at Sector 8, Chandigarh but the loan was availed and the documents were executed at Ambala Cantt. The OPs/ appellants also admitted the execution of agreement dated 11.4.2001 (C-3) for repayment of housing loan after the retirement of the complainant. According to them, the complainant/respondent was liable to pay fixed rate of interest @13% per annum with quarterly rests and therefore, the revision of rate of interest downward or upward was not applicable to his case. The OPs, therefore, prayed for dismissal of the complaint and also requested for costs.

5.                 Both the parties were given opportunity to produce evidence in support of their contentions.

6.                 We have heard the learned counsel for the parties and have perused the evidence on record.

7.                 The first contention of the learned counsel for the appellants is that the complainant/respondent was posted at Ambala Cantt when the present loan was advanced to him and no cause of action accrued at Chandigarh and therefore, the Consumer Fora at Chandigarh  have no territorial jurisdiction to try this complaint. As against it, the learned counsel for the complainant/respondent has argued that the loan was sanctioned to the complainant by the Zonal Office, which was then located in Sector 8, Chandigarh. This fact has been admitted by the OPs/appellants in Para Nos.1 and 3 of the reply on merits. Annexure C-22 is the copy of letter dated 2.2.1998 issued by the Zonal Office at Chandigarh in this regard. Where the loan, with respect to which the dispute has arisen, was disbursed at Chandigarh, the Consumer Fora at  Chandigarh would have the jurisdiction to try the complaint. The contention of learned counsel for the appellants in this respect cannot be accepted.

8.                 It is also argued by the learned counsel for the appellants that it is a case where the loan at concessional rate of interest was granted by the employer i.e. (appellants) to the employee i.e. (complainant/respondent) and therefore, the complainant is not a consumer and the Consumer Fora have no jurisdiction to try the dispute between them. This argument also does not hold ground. No doubt the loan was advanced to the complainant when he was their employee but thereafter, he took voluntary retirement and executed a supplementary agreement (C-3) whereby the concessional rate of interest granted to the employees was withdrawn and he was treated as any other member of the general public and a higher rate of interest as was charged from the other loanees was agreed to be paid by him. The relationship between the parties w.e.f. 11.4.2001, therefore, no longer remained as that of an employee and an employer. The complainant became a consumer and the OPs were the service provider. It, therefore, cannot be said if the dispute is not justiceable by the Consumer Fora.

9.                 It is also argued by the learned counsel for the appellants that the complainant/respondent had been informed vide letter (Annexure C-16) dated 19.4.2006 declining his request for reduction in the rate of interest and therefore, the complainant/respondent should have challenged the same within two years i.e. by 19.4.2008. He, however, filed the present complaint on 29.4.2009 and according to the learned counsel for the OPs/appellants, the complaint is barred by time. The learned counsel for the complainant/ respondent in this respect has argued that Annexure C-16 was not the end of the matter because the complainant filed a representation and correspondence continued between the parties as the case of the complainant remained under consideration. When the complainant requested the OPs/appellants through his letter dated 9.11.2006, he was informed on 21.11.2006 through letter (C-24) that the OPs/appellants were reexamining the matter and would advise him shortly. Thereafter, the OPs/appellants issued a letter (C-25) on 5.12.2006 informing the complainant that the matter was under consideration of appropriate authority. The representation of the complainant against the letter dated 19.4.2006 was, therefore, still under consideration and had not been decided by the OPs/appellants when the present complaint was filed. The counsel for the respondent/complainant then referred to Annexure C-20, which is a letter sent by the OPs/appellants to the Secretary, Banking Ombudsman, New Delhi, in the concluding para of which, it was mentioned that the ex-employee were informed about the actual position vide their letter dated 8.10.2007 and aggrieved by the said letter, the complainant has lodged the present complaint with him. In the next para, it is mentioned that they have already explained the reasons to Sh. Sharma (complainant/ respondent) for charging fixed rate of interest on his housing loan vide letter dated 8.10.2007 etc. etc. It means that the complainant was informed by the OPs vide letter dated 8.10.2007 and the matter had not finally ended on 19.4.2006 on the issuance of the letter (C-16). Otherwise also, it is a continuing cause of action whereby every month fixed rate of interest is being charged from the complainant instead of floating rate of interest as agreed to between the parties and the complaint giving fresh cause of action every month and therefore, the present complaint cannot be said to be barred by time.

10.               The complainant has alleged that he was liable to pay floating rate of interest, which was to decrease or increase according to the commercial rate applicable to the loans advanced to the general public. This fact is disputed by the appellants alleging that 13% was the fixed rate of interest in his case as per supplementary agreement (C-3). Annexure C-3 was got executed from the complainant with respect to the loan in question and there is no other agreement between the parties with respect to this loan having executed after the retirement of the complainant, we are of the opinion that the matter is to be decided in accordance with the terms and conditions as settled in Annexure C-3. A perusal of Clause 4(b) of the said agreement shows that the complainant was liable to pay rate of interest @13% p.a. with quarterly rests and also agreed to pay the rate of interest as and when revised by the Bank till the loan account was closed. Had it been a fixed rate of interest, there was no question of revision of the same by the Bank and therefore, such an undertaking would not have been obtained from the complainant regarding the revision of the rate of interest. This fact, therefore, supports the contention of the complainant that it was not a fixed rate of interest.

11.               There is on record a letter (Annexure C-11) dated 5.10.2004 issued by the OPs/appellants to the complainant in response to a letter that 8.25% p.a. was being charged as interest for the loans having repayment period of 10 years (Annexure C-6). In Para No.2 of the letter (Annexure C-11), it was made clear by the appellants that the rate of interest may not remain at 8.25% p.a. as assumed by him. Annexure C-15 is the Income Tax Certificate issued by the OPs/appellants in which the loan description has been mentioned as HTL floating int PER, which also means that it was Housing Term Loan on floating rate of interest. These documents also support the contention of the complainant that it was a floating rate of interest.

12.               The learned District Forum has examined the matter in detail and have found that in view of the rate of interest being floating, the amount of Rs.53,640/- could not have been debited to the account of the complainant. The other findings recorded by the learned District Forum are also hereby confirmed.

13.               In view of the above discussion, we are of the opinion that there is no merit in this appeal and the same is accordingly dismissed with litigation cost of Rs.5,000/- to be paid by the appellants/OPs to the respondent/complainant.

14.               Copies of this order be sent to the parties free of charge.

Pronounced.

24^th September 2010.

Sd/-

[JUSTICE PRITAM PAL]

PRESIDENT

Sd/-

[JAGROOP SINGH MAHAL]

MEMBER

Ad/-

STATE COMMISSION

(APPEAL NO.170 OF 2010)

Argued by:          Sh. Vikas Chatrath, Advocate for the appellants.

                    Sh. Anand Goel, Advocate for the respondent.

Dated the 24^th day of September 2010.

ORDER

                    Vide our detailed order of even date recorded separately, this appeal filed by the OPs has been dismissed with cost of Rs.5,000/-.