Punjab

Ludhiana

CC/20/222

sukhvinder Singh - Complainant(s)

Versus

PNB Housing Finance Ltd - Opp.Party(s)

V.K.Gupta Adv.

22 Jul 2024

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, LUDHIANA.

                                                Complaint No:222 dated 07.10.2020.                                                        Date of decision: 22.07.2024.

 

1. Sukhvinder Singh son of Sh. Joginder Singh,
2. Paramjit Kaur wife of Sh. Sukhvinder Singh, Both residents of House No.336, Vikas Nagar, Pakhowal Road, Ludhiana.
3. M/s. Synergy Data Links Pvt. Ltd., SCO-30, Second Floor, Ludhiana, through its duly authorized Director Sh. Sukhvinder Singh.                                                                                                 ..…Complainants

                                                Versus

PNB Housing Finance Ltd., SCO 16-17, Second Floor, Canal Colony, Pakhowal Road, Ludhiana through its Branch Head.                                                                                                                      …..Opposite party 

Complaint Under Section 35 of the Consumer Protection Act.

 

QUORUM:

SH. SANJEEV BATRA, PRESIDENT

MS. MONIKA BHAGAT, MEMBER

 

COUNSEL FOR THE PARTIES:

For complainants           :         Sh. V.K. Gupta, Advocate.

For OP                           :         Sh. Alok Mohindra, Advocate.

 

ORDER

PER SANJEEV BATRA, PRESIDENT

1.                Briefly stated, the facts of the complaint are that the complainants are husband and wife and they are Directors of complainant No.3, a Private Limited Company. The complainants were sanctioned Housing Loan of Rs.91,00,000/- under Residential Home Purchase (Floating) scheme for purchase of semi constructed house No.336, Vikas Nagar, Pakhowal Road, Ludhiana. The insurance amount was Rs.2,68,000/- and as such, on 31.07.2015 Rs.93,68,000/- was disbursed, to be repaid in 240 equated monthly installments of Rs.82,096/- each. According to the complainants, the housing loan bearing account No.00046660003432 was basically in the name of complainant No.1 and 2 being individuals but for its convenience, the bank included name of complainant No.3 for repayment purposes.

                   Complainant No.1 and 2 further stated that they were sanctioned another Housing Loan of Rs.20,00,000/- under the scheme Home Improvement Loan (Floating) for making improvements on the said house No.336, Vikas Nagar, Pakhowal Road, Ludhiana. The insurance amount was Rs.71,300/- and thus, the OPs disbursed Rs.20,71,300/- on 21.10.2016, to be repaid in 180 equated monthly installments. Further this housing loan bearing account No.HOU/LUD/1016/325807 was in the joint name of complainant No.1 and 2, but the bank for its convenience added the name of complainant No.3 to secure its repayment. Even this loan was being repaid by complainant No.1 from his individual sources. The complainants further stated that they were not satisfied with the services of the OP regarding charging of higher rate of interest and hidden charges and as such, they wished to adjust the both loan accounts. But the OP made illegal demand of prepayment/foreclosure charges. Complainant No.1 wrote letter dated 21.05.2019 stating they are not liable to pay the extra charges as both the loans were under individual name of Sukhvinder Singh and Paramjit Kaur and requested the OP to waive off the said charges. However, the OP charged Rs.2,68,925/- as prepayment charges in loan account No. 00046660003432 and charged Rs.59,527/- in loan account No.HOU/LUD/1016/325807, which the complainants made under coercion in order to get released title deed from the OP. Complainant No.1 also wrote a letter dated 30.10.2019 to the OP to refund the amount of said charges but to no effect. The complainants stated that as per guidelines of Reserve Bank of India, the banks cannot charge, prepayment/foreclosure charges in the housing loan. Complainant No.1 also sent an Email to the bank to refund the said foreclosure amounts to which the OP vide Email dated 31.10.2019 informed that if a loan under Floating rate of interest is prepaid/pre-closed, it shall attract a loan prepayment fee, if any of the borrower-co-borrowers is non-individual. The OP has wrongly considered M/s. Synergy Data Links Pvt. Ltd. as a co-borrower. The complainants vide Email dated 31.10.2019 informed the OP that name of M/s. Synergy Data Links Pvt. Ltd. was added by them to adversely affect their rights from deserving this waiver but to no avail. According to the complainants, there is no clause in sanction letters regarding charging of the prepayment/foreclosure charges and it is against the public policy and against the RBI rules and norms. This amounts to deficiency in service and unfair trade practice on the part of the OP due to which the complainants have suffered mental tension, torture, agony and financial loss etc. and as such, they are liable for compensation/damages from the OP. In the end, the complainants have prayed for directing the OP to pay the amount of Rs.3,28,452/- along with interest from 04.06.2019 and to pay compensation of Rs.2,00,000/-.

2.                Upon notice, the OP appeared and filed written statement by taking preliminary objections assailed the complaint on the ground of maintainability; lack of jurisdiction; the complainants being not the consumers; the complainants have no locus standi to file the present complaint etc. The OP stated that in the present case, the mandate was given in the circular issued by the National Housing Bank was that no prepayment charges are to be levied on housing loans where the borrower and the co-borrowers are individuals. The said instructions did not apply to the cases where either the borrower or any of the co-borrowers is a non-individual viz a Company or a firm. Further one of the co-borrower was a Private limited Company i.e. Synergy Data Links Pvt. Ltd. and as such, the said circular is not applicable on the loan accounts of the complainants. The OP further stated that the complainants are no more its Consumers as after the repayment of the loan amounts, the relationship of borrower and lender between the parties has come to an end.

                   On merits, the OP reiterated the crux of averments made in the preliminary objections. The OP stated admitted the sanctioning of loan in the name of the complainants. The loan application was moved jointly by the complainants and PAN cards of all the complainants were provided. The loan of Rs.93,68,000/- vide account No.00046660003432 was sanctioned vide letter dated 23.06.2014 and disbursed to the complainants by mortgaging the property of the complainants with the OP as security. Further the complainants requested for grant of another loan of Rs.20,00,000/- which was granted by the OP under loan account No.HOU/LUD/1016/325807 vide sanction letter dated 20.10.2016. The complainants were duly made aware regarding the terms and conditions of the loan agreements regarding both loan accounts. The OP further stated that the complainants made a request for foreclosure of the loan accounts by paying the entire outstanding amount and the OP issued foreclosure statements to the complainants. The complainants were bound to deposit the prepayment charges and other charges calculated as per terms and conditions of the loan agreement which were duly agreed to pay by the borrowers at the time of entering into loan agreement. The OP further stated that the borrowers paid the entire amount including the prepayment charges and other charges and their loan accounts were closed and security was released. The borrowers did not raise any objection to payment of prepayment charges and other charges at the time of foreclosure of their loan accounts. According to the OP, there was no illegality in the demand of the prepayment charges. Even the OP vide Email dated 30.10.2019 brought into notice of the complainants that the PNB Housing Finance Limited is a Housing Finance Company which is registered with the National Housing Bank and the complainants are not entitled to the benefit of the circular issued by National Housing Bank with regard to non-levying of any prepayment charges on the floating rate term loans because the circular No.63 and 66 of the NHB clearly states that the foreclosure/prepayment charges are not to be levied with regard to loans sanctioned to the individual borrowers. As such, the complainants are not entitled to the benefit given under the circular of the NHB. The OP has denied that there is any deficiency of service and has also prayed for dismissal of the complaint.

3.                In support of their claim, complainant No.1 Sh. Sukhvinder Singh tendered his affidavit Ex. CA in which he reiterated the allegations and the claim of compensation as stated in the complaint. The complainant also tendered documents Ex. C1 is the Memorandum and Articles of Association, Ex. C2 is the Certificate of Incorporation, Ex. C3 is the resolution, Ex. C4 is the copy of sanction letter of loan of Rs.91 Lacs, Ex. C5 is the copy of sanction letter of loan of Rs.20 Lacs, Ex. C6 is the copy of letter of loan closure statement of loan of Rs.91 Lacs, Ex. C7 is the copy of letter of loan closure statement of loan of RS.20 Lacs, Ex. C8 is the copy of letter of complaints dated 21.05.2019, Ex. C9 is the copy of letter dated 30.10.2019 of the complainant, Ex. C10 and Ex. C11 are the copies of Emails dated 30.10.2019 of the complainants, Ex. C12 is the copy of Email dated 31.10.2019 of the OP, Ex. C13 is the copy of receipt dated 04.06.2019 of Rs.93,68,925/-, Ex. C14 is the copy of receipt dated 04.06.2019 of Rs.19,64,782/-, Ex. C15 is the copy of Email dated 31.10.2019 of the complainant and closed the evidence.

4.                On the other hand, counsel for the OP tendered affidavit Ex. RA of Sh. Umesh Sharma, Authorized Signatory of the OP  along with documents Ex. R1 is the copy of sanction letter of loan Rs.93,68,000/- Ex. R2 is the copy of loan agreement of Rs.93,68,000/-, Ex. R3 is the copy of statement of account of loan of Rs.93,68,000/-, Ex. R4 is the copy of sanction letter of loan of Rs.20,00,000/-, Ex. R5 is the copy of Board of Resolution dated 21.10.2016, Ex. R6 is the copy of Disbursement request form dated 21.10.2016 of loan of Rs.20,00,000/-, Ex. R7 is the copy of receipt dated 21.10.2016 of loan amount of Rs.20,00,000/-, Ex. R8 is the copy of statement of account of loan of Rs.20,00,000/-, Ex. R9 is the copy of Email of the complainants, Ex. R10 is the copy of Emails dated 01.11.2019, 31.10.2019 of the OP, Ex. R11 is the copy of circular dated 14.08.2014 of the NHB, Ex. R12 is the copy of letter dated 03.09.2014 of the NHB and closed the evidence.

5.                We have heard the arguments of the counsel for the parties and also gone through the complaint, affidavit and annexed documents and written reply along with affidavit and documents produced on record by both the parties.     

6.                Admittedly, complainant No.1 and 2 along with complainant No.3 (co-applicant) availed Housing Loan of Rs.91,00,000/- at the floating rate of interest  i.e. @14.50%-3.85%=10.65% per annum as on the date of execution of the loan agreement per annum from the OP vide sanction letter Ex. R1. The loan was repayable in 240 monthly installments of Rs.94,475/- each. The loan agreement Ex. R2 which bears the signatures of the complainant No.1 and 2 along with seals of Synergy Data  Links Pvt. Ltd. Ex. C6 is the foreclosure letter dated 20.05.2019 wherein the request of the complainant to foreclose was accepted by the OP. The detail of the foreclosure is given hereunder:-

Principal outstanding as on 20-May-2019	Rs.91,42,948.49
CERSAI Fees	Rs.590.00
Interest for the month	Rs.55,494.00
Pre Closure Charge	Rs.2,15,775.00
ROI Conversion Charges-Migrated	Rs.4.00
Excess Amount Available	Rs.82,116.16
Total Amount Payable	Rs.93,32,695.33
Linked Loan Account No. (if applicable)	HOU/LUD/1016/325807

 

                   Further, complainant No.1 and 2 along with complainant No.3 (co-applicant)  also availed Housing Loan of Rs.20,00,000/- at the floating rate of interest  i.e. @14.50%-4.80%=9.55% per annum as on the date of execution of the loan agreement per annum from the OP vide sanction letter Ex. R4. The loan was repayable in 180 monthly installments of Rs.21,692/- each. Ex. C7 is the foreclosure letter dated 20.05.2019 wherein the request of the complainant to foreclose was accepted by the OP. The detail of the foreclosure is given hereunder:-

Principal outstanding as on 20-May-2019	Rs.19,03,782.52
CERSAI Fees	Rs.118.00
Interest for the month	Rs.6303.00
Pre Closure Charge	Rs.44,930.00
Bounce Charges	Rs.1180.00
Swap Charges	Rs.590.00
Excess Amount Available	Rs.0.00
Total Amount Payable	Rs.19,56,903.52
Linked Loan Account No. (if applicable)	00046660003432

 

The complainants have repaid the above said loan amounts with the OP.  Now the complainants have challenged the levying of foreclosure charges by the OP on pre-payment of both outstanding loan amounts as they claimed to have obtained the loan as Housing Loan..

7.                The first and foremost point of consideration arises whether the OP was competent to levy the foreclosure charges or not?

8.                In this regard, reference can be made to the circular/notification issued from time to time.

“Ex. R11 is the Circular No.NHB(ND)/DRS/Policy Circular-63/2014-15 August, 14, 2014, issued by National Housing Bank addressed to all Registered Housing Finance Companies with regard to levying of foreclosure charges/pre-payment penalties on floating rate term loans.

 

“Please refer to paragraph 4.1 (iv) of Guidelines on Fair Practices Code for Housing Finance Companies (HFCs) issued vide Circular NHB/ND/DRS/Pol.No.34/2010-11 dated October 11, 2010 and other Circulars NHB(ND)/DRS/Pol.No.36/2010 dated October 18, 2010 NHB(ND)/DRS/Pol.No.43/2011-12 dated October 19, 2011, NHB(ND)/DRS/Pol.No.48/2011-12 dated April 4, 2012 and NHB(ND)/DRS/Po.NNo.51/2012-13 dated August 7, 2012 on pre-payment penalty on pre-closure of housing loans.

2. As a measure of customer protection and also in order to bring the uniformity with regard to prepayment of various loans by borrowers of bank, NBFCs and HFCs, it is advised that HFCs shall not charge foreclosure charges/pre-payment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect…..”

 

“ Ex. R12 is the Policy Circular dated 03.09.2014 issued by the National Housing Bank to all registered Housing Finance Companies with regard to levying of foreclosure charges/prepayment penalties on floating rate term loans-Clarification.

“Please refer to our Circular NHB(ND)/DRS/Pol. Circular No.63/2014 dated August 14, 2014 advising HFCs not to charge foreclosure charges/pre-payment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect.

Enquiries are being received with regard to the applicability of the said Circular on floating rate term loans sanctioned prior to August 14, 2014 and in cases where a company, firm, etc. is a co-borrower.

2. The issues have been examined by us. It is clarified that the provisions of the said Circular are applicable in respect of all floating rate term loans sanctioned to individual borrowers by HFCs, irrespective of the date of sanction, and prepaid on or after August 14, 2014. The provisions of the said Circular cover both part as well as full pre-payments.

3. Further, the applicability of the said Circular is on foreclosure charges/pre-payment penalties in respect of all floating rate term loans sanctioned to individual borrowers. Loan in which company, firm, etc. is a borrower or co-borrower, therefore, is excluded from its purview.”

 

In the present case, loans were advanced to more than one borrower (individual borrower) and a firm was also co-borrower. Therefore, the OP was competent to impose prepayment charges.

9.                The next point of consideration arises whether at what rate the pre-payment charges was payable?

10.              After sanctioning of the respective loans, the loan agreement Ex. R2 with respect of loan account No.6660003432 was executed having clause 2.11 of the agreement, which reads as under:-

                   “2.11 Prepayment

b)      The borrower shall give a written notice at least thirty (3)  days expressing his intention to prepay the Loan. The Prepayment shall have effect only after PNBHFL has received the entire Principal Amount outstanding, overdue amount and other charges including the Prepayment Charges shall be applicable in the event that the Loan is recalled due to occurrence of any Event of Default.”

The Schedule attached with this Loan Agreement Ex. R2 also carries the details which are in terms of sanction letter Ex. R1. Ex. R3 is the statement of account of Loan account No.000466600033432.

11.              It is settled position of law that once a loan agreement is signed between parties, a concluded contract came into being and it binds the parties. Therefore, contracting parties cannot set up and introduce a different case beyond stipulation of agreement. A close scrutiny of these admitted documents shows that the rate at which the prepayment charges were chargeable has not been agreed upon between the parties. The written version as we as affidavit of the OP is also silent that how an amount of Rs.2,15,775/- and Rs.44,930/- were computed by it. In the absence of such explanation, this Commission holds that levying of foreclosure charges of Rs.2,15,775/- and Rs.44,930/- as per Ex. C6 and Ex. C7 is arbitrary and is liable to be quashed. In these circumstances, it would be just and appropriate if the OP is directed to refund the prepayment charges of Rs.2,15,775/- and Rs.44,930/- received by the OP from the complainants as per letters Ex. C6 and Ex. C7 within 30 days from the date of receipt of copy of order, failing which the OP shall liable to pay interest @8% per annum from the date of deduction till date of actual payment. The OP is also burdened with costs of Rs.10,000/-

12.              As a result of above discussion, the complaint is partly allowed with direction to the OP to refund the prepayment charges of Rs.2,15,775/- and Rs.44,930/- received by the OP from the complainants as per letters Ex. C6 and Ex. C7 within 30 days from the date of receipt of copy of order, failing which the OP shall liable to pay interest @8% per annum from the date of deduction till date of actual payment. The OP shall further pay a composite costs of Rs.10,000/- (Rupees Ten Thousand only) to the complainant within 30 days from the date of receipt of copy of order. Copies of the order be supplied to the parties free of costs as per rules. File be indexed and consigned to record room.

13.              Due to huge pendency of cases, the complaint could not be decided within statutory period.

 

(Monika Bhagat)                                (Sanjeev Batra)

Member                                                President         

 

Announced in Open Commission.

Dated:22.07.2024.

Gobind Ram.