STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

(Appeal No. 658 of 2009)

ICICI Bank Limited, SCO #174-175, 2nd Floor, Sector 9-C, Chandigarh, through its Branch Manager.

….…Appellant

V E R S U S

Pankaj Mahajan, son of late Sh. C.L.Mahajan, R/o #253, Sector-4, Panchkula.

.…..Respondent

Appeal under Section 15 of the Consumer Protection Act, 1986.

BEFORE:      HON’BLE MR. JUSTICE SHAM SUNDER, PRESIDENT.

                   MRS. NEENA SANDHU, MEMBER.

Argued by: Sh. Manish Jain, Advocate for appellant.

                Sh. Sanjeev Trikha, Advocate for respondent.

PER  JUSTICE SHAM SUNDER, PRESIDENT

1.                This appeal is directed against the order dated  14.09.2009, rendered by the District Consumer Disputes Redressal Forum-I, UT, Chandigarh (hereinafter to be called as the District Forum only), vide which the complaint was accepted and the OP, was directed to refund the amount of Rs.91,001.25, alongwith interest @ 8% per annum, since the date of payment, till the amount was actually refunded to the complainant, alongwith Rs.50,000/-, as penalty and Rs.5,000/-, as litigation expenses. It was further directed that, if the aforesaid amount, is not paid, within thirty days, from the date of receipt of copy of this order, the complainant would be entitled to penal interest, on the above said amount @ 12% per annum, from the date of filing of the present complaint i.e. 31.3.2009, till the amount was actually paid to the complainant.

2.                The facts, in brief are that, the complainant purchased Apartment No.1581, 5th & 6th Floor, Silver City Greens, Village Bishanpur, NAC Zirakpur, Distt. Patiala, vide agreement dated 23.5.2006, after getting it financed from OP bank.  The OP Bank, sanctioned him a loan of Rs.45.00 lacs, against the said property, at floating rate of interest @9.75% per annum, with discount of 0.75%, as adjustable rate of interest, vide Ann.C-1.  The payment of Rs.32,76,000/- and Rs.76,85,000/- was released to the complainant by the OP Bank on 31.5.2006 and 15.9.2006, respectively.  The complainant was regularly paying the installments, as per the Schedule.  The floating rate of interest was later on reduced on housing loan, but the OP continued charging interest at the higher rate, that too, without giving the discount of 0.75%, as per the terms & conditions, settled at the time of sanctioning the same.  The complainant made several requests to the OP, to reduce the rate of interest; give him discount of 0.75% and to further refund or adjust the excess amount charged on account of discount of 0.75%.  The OP bank accepted the request and reduced the rate of interest and discount of 0.75% from April, 2008, but by that time, the complainant had already paid approx. Rs.51,645/-, to the OP, in excess, towards discount of 0.75%, as is reflected in Ann.C-2.   It was further stated that, the OP Bank charged higher interest @12% p.a., during the period from April, 2007 to April, 2008, whereas, it was reduced to 10.50%, after long persuasion by the complainant, in the month of April, 2008 and, thus, they charged 1.50% p.a. extra interest, on the total amount of Rs.40,44,5000/-, which comes to Rs.65,723/-, for 13 months i.e. from April, 2007 to April, 2008.   Thereafter, the complainant decided to close the loan account, under protest. The OP while closing his loan account, arbitrarily charged a sum of Rs.91,001.25 as foreclosure charges @2.25% at O/s Principal i.e. Rs.40,44,500/-.  The complainant asked the OP to refund him a sum of Rs.2,08,369/-, charged by them towards excess amount of interest and foreclosure charges, but they did not pay any heed.  Ultimately, a legal notice was sent, but to no avail.  It was further stated that the acts of the OP, amounted to deficiency in service, and indulgence into unfair trade practice. It was further stated that the complainant was caused mental as well as physical harassment. When the grievance of the complainant, was not redressed, left with no alternative, he filed a complaint under Section 12 of the Consumer Protection Act, 1986 (hereinafter to be called as the Act only).

3.                The  OP  filed reply, wherein, it was pleaded that the complaint was liable to be dismissed, as co-borrower Alka Mahajan and M/s. IPF Vikram India Ltd., have not been made a party to the present complaint.  It was stated that the complainant and the co-borrowers, agreed and accepted vide Ann.R-1, that, in case of full & final repayment, prior to the date of normal expiry, the loanees shall be liable to pay fees of 2% on full and final repayment, on the amount prepaid and on all amounts, tendered by the borrower towards repayment of the loan, during the last one year, from the date of final repayment.  It was denied, that the complainant was charged rate of interest, different from the rate of interest, as was applicable.  It was further stated that, on the representation of the complainant, a special facility was extended to him w.e.f. 10.4.2008, wherein, on the applicable rate of interest, benefit based on the variation on ICICI Bank floating reference rate, was increased from 0.75% to 2.25% and the same was also conveyed to the complainant, vide letter dated 24.4.2008 and the said benefit was given to him as a special case.  It was further stated that the complainant was also liable to pay statutory taxes, and levies, as may be applicable. It was further stated that after addition of statutory tax and levies, the complainant was liable to pay 2.25%, to the bank as prepayment charges.  It was denied, that there was any deficiency, in rendering service, by the OP, to the complainant and indulgence into unfair trade practice. All other averments were denied. 

4.                The parties led evidence, in support of their case.

5.                After hearing the Counsel for the parties, and, on going through the evidence, and record, the District Forum, accepted the complaint, in the manner, referred to, in the opening para of this case.

6.                Feeling aggrieved, the instant appeal, was filed by the OP (now appellant).

7.                We have heard the Counsel for the parties, and have gone through the evidence and record, of the case carefully. 

8.                The Counsel for the appellant, submitted that, at the time of taking loan, by the complainant/respondent, an agreement was executed between the parties. He further submitted that, even C-1, one letter, was issued to the complainant, intimating him, that the loan would be advanced, at floating rate of interest. He further submitted that in C-1, it was in clear-cut terms stated that, if the loan was prepaid, the appellant would be entitled to charge 2% on full and final amount, and all the amounts, tendered by the borrower towards prepayment, from the date of final prepayment. He further submitted that, according to Clause 9.4 of the agreement A-2, the borrower also undertook to pay any and all stamp duties, legislation fees or other taxes/levies in respect of the loan and/or, in respect of the documents evidencing/concerning the loan and/or any penalties, that may be imposed. He further submitted that 0.25% was levied, on account of levies/taxes. He further submitted that, the mere fact, that in the letter C-4, the word “foreclosure charges” were inadvertently written instead of “prepayment charges” did not make the payment of 2.25% at O/S principal, as “foreclosure charges”. He further submitted that, in C-4, the document which was duly accepted by the complainant/respondent, at so many places, the word “foreclose” was written, which actually meant the prepayment of loan before the expiry of the actual duration. He further submitted that the mere change of nomenclature as “foreclosure charges” instead of “prepayment charges” did not make the payment of Rs.91,001.25 paisa, by the respondent/complainant, at the time of prepayment of loan, as illegal. He further submitted that the Consumer Fora, is required to interpret the document, as a whole, to come to the conclusion, as to what is the intention of the parties, in executing the same. He further submitted that, infact the “prepayment charges” alongwith levies and taxes @ Rs.2.25% on the O/S principal were charged, when the loan was prepaid by the complainant/respondent, before the actual date of the expiry of duration. He further submitted that the District Forum, was wrong, in coming to the conclusion, that there was no document, showing the payment of 0.25% as levies/taxes and that the words “foreclosure and prepayment” are not interchangeable. He further submitted that the District Forum, was wrong in accepting the complaint.

9.                On the other hand, the Counsel for the respondent/complainant, submitted that, it was not that the “prepayment charges” were demanded by the OP, from the complainant, but there was a specific demand, with regard to the “foreclosure charges @2.25% at O/S principal”. He further submitted that, there was no agreement, between the parties, for the payment of “foreclosure charges” at that rate, and, as such, the amount of Rs.91,001.25 paisa, charged by the appellant/OP, on account of “foreclosure charges” was illegal. He further submitted that, the District Forum, after considering the true interpretation of the words “foreclosure charges and prepayment charges”, came to the conclusion, that the amount, in the sum of Rs.91,001.25 paisa, was illegally charged. He further submitted that, the order of the District Forum, being legal, and valid, is liable to be upheld.

10.             After giving our thoughtful consideration, to the rival contentions, raised by the Counsel for the parties, we are of the considered opinion, that the appeal deserves to be accepted, for the reasons, recorded hereinafter.         Annexure C-1, is the letter, which was issued by the appellant/OP Bank, intimating the complainant that the loan would be advanced, at the floating rate of interest, which, on the date of issuance of the same was 9.75% p.a. Then, another letter C-2, was written, wherein, it was conveyed to the complainant/respondent, that the rate of interest, would be 10.15% p.a. However, in letter C-1, it was in clear-cut terms stated that, the OP/appellant was entitled to 2% fees, on full and final prepayment, and, on all amounts tendered by the borrower, towards prepayment of loan, during the last one year, from the date of final prepayment. In the written statement, the case of the  OP/appellant  was that, it charged the amount of Rs.91001.25, @2.25% on pre-payment of loan, before the expiry of normal duration, as per the documents, executed between the parties. In the grounds of appeal, it was also stated by the appellant, that the amount of Rs.91001.25, was on account of “prepayment charges”, as mentioned in C-1, as also, the taxes and levies, to the extent of 0.25%, as per the agreement, entered into between the parties, which is A-2, attached with the appeal. There is no dispute, with regard to the factum, that the amount of loan, which had been advanced, in favour of the complainant/respondent, was prepaid by him, before the expiry of the duration of the same. In these circumstances, we have to see the intention of the parties, as also, the terms and conditions, of the documents, executed between them. Mere change of nomenclature, from “prepayment charges” to “foreclosure charges”, inadvertently, does not convert the one into another. The intention of the OP/appellant Bank was only to charge the prepayment charges, plus levies and taxes, as per C-1, the letter which was duly accepted by the complainant/respondent and A-2, the loan agreement executed  between  the  parties.  There  was  no intention, on the part of the OP Bank, to charge “foreclosure charges”. If, instead of “prepayment charges @2.25%” as mentioned in C-1, and  A-2, executed between the parties, referred above, in Annexure C-4, the words “foreclosure charges @2.25% at O/S principal”  were written, that did not make any difference. The Consumer Foras, are not required to make literal interpretation of the words, mentioned in the agreements, so as to defeat the very purpose thereof, but are required to see the intention of the parties, in mentioning certain words, in the letters or agreements executed, between the parties.

11.             The District Forum, by literally interpreting the words “foreclosure charges” came to the conclusion, that the same were never agreed to be paid.  Even, at the time of payment of a sum of Rs.91,001.25 paisa, the complainant did

not raise any protest. The payment receipt in this regard is Annexure C-5. This receipt is dated 11.06.2008, whereas, the complaint was filed by the complainant on 31.03.2009 i.e. after more than 9 months. Why, the complainant/respondent, did not raise protest, at the time of making the payment vide receipt C-5, is not known. Even, there is no evidence, on the record, to show that, immediately after 11.06.2008,  the complainant wrote a letter to the OP, that he was not liable to pay “foreclosure charges” as mentioned in C-4. He only gave legal notice on 27.12.2008, for the first time, which is C-7, i.e. after about six months of making payment vide receipt C-5, which means that the complainant very well knew, that the amount of Rs.91,001.25 paisa, was on account of “prepayment charges”  mentioned in C-1, as also on account of the levies and taxes, mentioned in A-2, the agreement, executed between him and the Bank, at the time of advancement of loan. It was on account of this reason, that he kept mum for a period of more than six months, after making prepayment of loan vide C-5. If an Officer/employee of the Bank, committed an inadvertent mistake, by writing the words “foreclosure charges” in C-4, instead of “prepayment charges”, then the Bank could not be penalized for the same. Had the loan been paid by the complainant, as per the duration originally fixed, he would have certainly paid interest to the OP, for that period. The OP was deprived of the interest, for the period, for which, the loan was advanced, on account of prepayment of the same. As stated above, mere change of nomenclature of the words “foreclosure charges” instead of “prepayment charges” that too, on account of the inadvertence of an Officer/employee of the OP, did not disentitle it (OP/appellant) from charging prepayment charges, plus taxes, and levies, as per the letter C-1 and agreement A-2. The District Forum was, thus, wrong in allowing the complaint, by giving literal meaning to the words, and, without seeing the intention of the parties. The OP/appellant, thus, was neither deficient in rendering service, nor indulged into unfair trade practice.

12.             In view of the above discussions, it is held that the order of the District Forum is illegal and perverse, warranting the interference of this Commission.

13.             For the reasons, recorded above, the appeal is accepted with costs of Rs.3,000/-. The order of the District Forum, is set aside and the complaint stands dismissed.

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

Pronounced.

11^th May, 2011                                                         Sd/-

[JUSTICE SHAM SUNDER]

PRESIDENT

                                                                    Sd/-

 [NEENA SANDHU]

MEMBER

Rg