BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, SIRSA.
Consumer Complaint no.204 of 2016
Date of Institution : 26.8.2016
Date of Decision : 31.5.2017.
Joginder Singh aged about 61 years son of Sh. Dayal Singh, resident of Gobind Nagar, Sirsa, Tehsil and Distt. Sirsa (Ex-Serviceman).
……Complainant.
Versus.
1. Punjab & Sind Bank, Main Branch Sirsa, situated at near L.I.C. office Sirsa through its Branch Manager.
2. Zonal Manager, Punjab & Sind Bank, Gurgaon.
...…Opposite parties.
Complaint under Section 12 of the Consumer Protection Act,1986.
Before: SMT. RAJNI GOYAT…………………PRESIDING MEMBER
SH.MOHINDER PAUL RATHEE ……….. ……MEMBER.
Present: Sh.Inderjeet Singh, Advocate for complainant.
Sh.S.L. Sachdeva, Advocate for the opposite parties.
ORDER
Case of complainant, in brief is that he is an ex-serviceman of the Punjab and Sind Bank. In the year 2005, the complainant had applied for the education loan of Rs.4 lacs and further Rs.3 lacs for his son Inderpreet Singh. The said loan was sanctioned by the opposite parties on 14.9.2005 and on 18.8.2009 and the rate of interest was settled between the parties at the rate of 11% and 12% per annum vide letter dated 14.5.2005 and 18.8.2009 issued by the ops. It is further averred that it was also settled that if loanee has paid the interest of the loan amount since the day of taking loan then he will be able for the concession of 1% on interest and it was also settled that installment of the loan amount will be started after one year of completing the education course. The course of the son of complainant was completed in January, 2014, hence as per letter dated 15.6.2015 issued by bank, the loan installments was to begin from February, 2015. That the complainant is paying/ deducting the interest upon the above said loan regularly through the account of the complainant as per settled interest at the rate of 11% and 12% per annum. That in the year 2015, the complainant had written a letter to the opposite parties and also approached personally and requested that the course of the son of the complainant has been completed in January, 2014, hence the installments of loan should be started since February, 2015 and also for correction of the excess interest which has been wrongly shown/ claimed by the ops but till today the ops did not take any action in this matter after so many letters and visiting by the complainant in the branch of ops. The complainant also requested for the depositing of amount of two installments of Rs.4000/- each dated 2.3.2009 and 31.3.2009 respectively in his loan account which were paid by the complainant to the ops but the ops have not shown these amounts in his loan account. The letters dated 14.5.2005, 18.8.2009, 19.1.2016, 15.6.2015, 17.9.2015, 12.9.2015, 24.8.2015, 20.7.2015, 15.4.2015, 26.10.2015 and legal notice are attached herewith. It is further averred that the complainant already filed a writ petition against the management of the bank which is pending in the Hon’ble Punjab and Haryana High Court, Chandigarh for not giving promotion during the service time as per rules of the bank and Manager Joginder Singh intentionally is adamant to recover the excess interest at the rate of up to 15% instead of 11% and 12% due to his personal grudge as well as on the asking of the management of the bank and the complainant reserves his right to file another proceeding against Joginder Singh Manager. That the complainant has visited and approached the ops several times for taking action in this matter but the ops neither settled the account nor settled the interest, rather the ops have wrongly issued a legal notice dated 15.7.2016 in which they themselves admitted in para no.1 of the legal notice regarding the rate of interest as 11% and 12 % respectively, but even then they did not bother about the genuine request of the complainant. In this way, the ops are unnecessarily harassing and humiliating the complainant due to their act and conduct and want to recover excess interest from the complainant. Hence, this complaint for a direction to the opposite parties to charge interest at the rate of 11% and 12% on the loan amount and to adjust the excess interest as well as rebate of 1% (which become about Rs. Two lacs) and to pay compensation of Rs.50,000/- for harassment as well as litigation expenses.
2. On notice, opposite parties appeared and filed written statement taking certain preliminary objections that this Forum has got no jurisdiction to try and entertain the present complaint; that complaint is not maintainable in the present form and from the facts of the complaint, no consumer dispute is made out; that complainant has got no locus standi or cause of action to file the present complaint against the answering ops; that complainant is estopped from filing the present complaint by his own act and conduct; that complaint is false, frivolous and vexatious and as such the same is liable to be dismissed with special costs; that complainant has not come with clean hands before this Forum, hence he is not entitled to any relief; that complaint is bad for non joinder of necessary parties and that complaint is hopelessly time barred. On merits, it has been submitted that Inderpreet Singh son of the complainant alongwith complainant being co-borrower had applied for grant of loan to the extent of Rs.4,00,000/- as education loan which was sanctioned on 14.9.2005 and later on they availed additional loan of Rs.3,00,000/- which was sanctioned on 18.8.2009. As per terms of the ops’ bank, the loan amount of Rs.4,00,000/- was repayable alongwith interest @11% per annum compound monthly or as per RBI instructions from time to time and loan amount of Rs.3,00,000/- was repayable alongwith interest @12% per annum compound monthly or as per RBI instructions from time to time. In case of default by the borrowers, the op bank is entitled to recover 2% per annum additional interest as penal interest from the borrowers. The complainant is not entitled to any concession in the rate of interest, since he has not paid any interest in terms of sanction letter and therefore, he is not entitled to any relief. It has been further submitted that it is worth while to mention here that the settled rate of interest was not fixed rate rather the same was floating one. As per RBI instructions rate of interest has been changed from time to time, hence the ops’ bank is not bound to charge rate of interest on the loan amount of the complainant at the rate of 11% per annum and 12% per annum respectively. It has been further submitted that no such letter has ever been received by the answering ops. Rather it is the op no.1 who has been requesting the complainant and his son from time to time in black and white as well as telephonically for the deposit of loan amount. The ops have also served a legal notice upon the complainant but inspite of it the complainant and his son have failed to repay the loan amount alongwith its upto date interest in terms of sanction letter. It is worth while to mention here that the complainant has never approached the answering ops in connection with any correction of rate of interest. However, no excess interest has been charged from the complainant. It is wrong to suggest that an amount of Rs.4,000/- is not being credited to the laon account of the complainant. It has been further submitted that it is wrong that Joginder Singh Manager has been adamant to recover excess interest amount from the complainant due to his personal grudge as well as on the asking of the management of the bank. Said Joginder Singh has already been retired from his services and Joginder Singh and any other official as well as Management of the bank cannot go beyond the rules of the RBI and cannot charge any excess rate of interest from any borrower. It has also been submitted that as per provisions of Banking Regulation Act, 1949 rates of interest charged by the bank are not to be subjected to scrutiny by courts and it is the complainant who has violated the terms and conditions of the loaning documents and has failed to repay the loan amount alongwith interest in time to the ops inspite of repeated reminders. Remaining contents of the complaint have been denied.
3. In evidence, complainant produced his affidavit Ex.C1 and copies of documents Ex.C2 to Ex.C20. On the other hand, opposite parties produced affidavit of Sh. Sultan Singh, Branch Manager as Ex.R1 and copies of documents Ex.R2 to Ex.R14.
4. It is pertinent to mention here that at the time of arguments also, copies of documents Ex.R15 to Ex.R22 have been tendered on behalf of ops by way of additional evidence by moving an application for additional evidence which was allowed in the interest of justice and keeping in view the fact that the complainant did not resist for the same.
5. We have heard learned counsel for the parties and have perused the case file carefully.
6. A perusal of the record placed on file has revealed that there are few questions to which answers have to be found out before deciding the matter on merits which are as under:-
(i) Whether the rate of interest applicable in the present case is fixed or floating?
(ii) Whether the complainant is entitled to rebate of 1% rate of interest on account of monthly service of interest levied in his loan accounts and from which date?
(iii) Whether the complainant is entitled to further rebate of 1% rate of interest on account of his being a staff of the Bank and from which date?
(iv) Whether the Bank is entitled to charge penal interest @2% for defaulting amount and from which date?
7. The first question is that whether the rate of interest applicable in the present case is fixed or floating? As per sanction note prepared by Branch Manager of Punjab and Sind Bank, Branch Office, Sirsa dated 14.9.2005 (Ex.C2/Ex.R16), loan of Rs.4,00,000/- has been sanctioned @11% per annum rate of interest as education loan repayable in 60 EMI of Rs.7500/- after one year of completion of course of son of the complainant. Further, as per sanction note prepared by Branch Manager of P&SB, Branch office Ellenabad dated 18.8.2009 (Ex.C3/Ex.R15), loan of Rs.3,00,000/- has been sanctioned @12% per annum rate of interest as education loan repayable in 60 EMI of Rs.5000/- each. It is further evident that said loan was to be repaid after one year on completion of course or after six months after getting job whichever is earlier. However, these sanction notes are silent as to the category of fixed or floating rate of interest. Further the said sanction notes are silent with regard to linkage of said rate of interest to BPLR/ Base rate. No notice served, if any to the complainant by Bank with regard to change of interest rate category from fixed to floating has been placed on file of the Forum. The Bank has taken the plea about the outstanding balance revival letters as proof of the charging of correct rate of interest. Revival letters obtained by the bank duly signed by the complainant on 12.2.2008 (Ex.R20), 10.12.2010 (Ex.R21), 12.12.2011, 5.12.2014 and 21.4.2015 relating to the said loan accounts are an acknowledgement only to the outstanding loan amount on a particular date and none of the same makes any mention of any rate of interest and statement of account is not a part of any of the said revival letters. According to the learned counsel for the opposite party as per the Banking Regulation Act, 1949, rate of interest is not questionable by any Court. However, we see no substance in this contention. In clause 6 of Section 21A of Banking Regulation Act, 1949 mentioned in Ex.R22, it is laid down that a nationalized bank or a banking institution functioning under the provisions of Act and subject to the Control of Reserve Bank of India as the apex bank has no free hand in relation to the stipulation of interest on advances made by it to debtors and is bound by the periodical circulars issued by the Reserve Bank regulating the rate of interest on lending. Further proviso 4 to Section 21-A of the said Act states that if interest charged by Banks on loans advanced is not in conformity with the rate prescribed by Reserve Bank then Court could disallow excessive interest notwithstanding provisions of Section 21-A.
8. From the copy of interest calculation sheet Ex.C19 of loan account No.02991200000220, it is evident that initially the complainant was being charged interest at the rate of 11% per annum from 14.9.2005 i.e. the date of sanction of loan amount of Rs.4,00,000/- and he was charged at the rate of 11% per annum up to 29.4.2006 but then the opposite parties charged interest from the complainant at the rate of 11.50%, 11.75%, 12.25%, 12.75%, 13.50% and at the rate of 15.25% per annum instead of 11.% per annum i.e. agreed rate of interest as per sanction letter dated 14.9.2005. Further, from the copy of interest calculation sheet Ex.C19 of loan account No. 02991200000240, it is also evident that complainant was being charged interest at the higher rate of 13.50%, 14.00%, 15.25%, and 13.25% per annum on the amount of Rs.3,00,000/- instead of @12% per annum as agreed between the parties vide sanction letter dated 18.8.2009 Ex.C3. Nothing has been placed on the file to prove that the loans were sanctioned on floating rate of interest. Further no consent of the borrowers has been obtained by the bank/ opposite parties with regard to change of rate of interest from fixed to floating. Thus, the opposite parties have failed to prove that loan was sanctioned on the floating rate of interest. At the time of arguments, the opposite parties have placed on file circular regarding rationalization of interest rates structure of the bank bearing No.1647 dated 26.9.2011 but that circular will not apply in the case of the complainant because it is very much mentioned in clause (c) of the said circular that revised interest rates structure for advances will be applicable to fresh advances w.e.f. 01.10.2011 and for existing advances, the revised interest rates structure shall be applicable on annual renewal/ reviewal of loan/ limit and on reset of interest but in the present case neither annual renewal/ reviewal of loan/limit nor any reset of interest has been done by the bank. Further, no consent of the complainant to revise rate of interest has been placed on record by the ops. Further, as per clause (h) of the Circular dated 26.9.2011, the fixed interest rates prescribed under some Priority Sector Lending Schemes as per Govt. of India/ RBI guidelines will continue as per guidelines meaning thereby that loan advanced to the complainant for education loan falls under the category of Priority Sector Lending Scheme. There is nothing on file to suggest that above said loan amounts were sanctioned to the complainant on floating rates of interest. In this regard we are also fortified with the observations of the Hon’ble State Consumer Disputes Redressal Commission, Punjab in case titled as ICICI Bank Limited Vs. Pankaj Goyal, F.A. No.877 of 2013 decided on 8.6.2015 wherein it has been held that Loan advanced to borrower even on floating rate of interest, bank cannot increase rate of interest without notice and without consent of borrower. It is unfair trade practice and deficiency in service.
9. Further, the Zonal Manager, Zonal Office Gurgaon of the ops bank wrote a letter dated 15.6.2015 to the Branch Manager, Punjab and Sind Bank, B/o Sirsa (Ex.C4), the contents of which are reproduced as under:-
“Reg: Education Loan A/c of Mr. Inderpreet Singh s/o Sh. Joginder Singh
This has reference to your letter dated 01.06.2015 requesting for guidance on the matter of repayment start date and ROI to be charged. As per HO Retail & Marketing cell cir no.30/2013 dated 17.02.2014, repayment of the loan will commence after the completion of the second course and further moratorium period as provided under the scheme. So in the present case repayment should start after the completion of the second course and further moratorium period as provided under the scheme. Further ROI is to be charged in the account as per rate mentioned in the sanction letter. Rate of interest mentioned in HO Retail & Marketing cell cir no.30/2013 dated 17.02.2014 are applicable from 05.12.2013 for fresh cases only. In this case you are advised to calculate the excess interest charged and submit your recommendation for refund of excess interest charged, duly verified and certified by CCA”. The complainant also written letter to the Zonal Manager Punjab and Sind Bank Zonal Office Gurgaon on 20.7.2015 (Ex.C8) and subsequent reminders for direction to the ops to refund excess interest charged and to change the installment date but to no effect. The complainant also written a letter to the Branch Manager, Punjab and Sind Bank, B/o Sirsa on 18.1.2016 (Ex.C13) mentioning therein that since compound interest has been applied during the Moratorium period and that too on higher rates, there is a difference between outstanding balance as maintained in bank’s system and the balance which should be outstanding if rate of interest is applied as per sanction letter and on simple interest basis. The said letter was duly acknowledged by the competent authority. Further, the copy of promissory note dated 14.9.2005 (Ex.C17) also mentions rate of interest of 11 per cent per annum. Similarly, the promissory note dated 18.8.2009 (copy Ex.C18) speaks about rate of interest as 12% per annum with monthly rests. Further, in the Education Loan Scheme for pursuing higher education in India and Abroad Ex.C20 under column 7, it is mentioned that simple interest to be charged during the repayment holiday/ moratorium period and up to commencement of repayment. But the opposite parties have charged excess rate of interest from the complainant and complainant’s grievance regarding excess rate of interest on the education loan has not been redressed at the branch level despite various letters and communication from higher authority. It has also come on record that opposite parties charged different rate of interests at one time on the amount of Rs.4,00,000/- and Rs.3,00,000/- for the period November, 2011 to January, 2012 i.e. @13.25% per annum on the loan amount disbursed on 18.8.2009 and @15.25% per annum on the loan amount disbursed on 14.09.2005. It is proved on record beyond any doubt that there has been deficiency in service on the part of ops and bank indulged into unfair trade practice. Hence, in view of above discussion, we are of the considered opinion that fixed rate of interest is applicable in both the loan accounts in question.
10. The second question is whether the complainant is entitled to rebate of 1% rate of interest on account of monthly service of interest levied in his loan accounts and from which date? As already discussed above it is specifically mentioned under clause 7 of the Education Loan Scheme that Additional concession @1% to all borrowers on account of service of interest during moratorium period irrespective of amount of loan and category of borrower and concessions is allowed and this is also applicable in the present case of complainant. In terms of the policy, he is entitled to rebate of 1% rate of interest but the account holder failed to serve the monthly interest so levied. From the copy of ledger Ex.R5 regarding loan account No.220, it is evident that on 14.9.2005, an amount of Rs.1,00,000/- was disbursed to the complainant and monthly interest levied on the outstanding amount but instead of serving monthly interest regularly, he paid Rs.12,000/- as interest on 9.6.2006 after about nine months and again Rs.23,780/- as interest after approximately further 14 months i.e. on 23.8.2007 and so on. Similarly, from the copy of ledger Ex.R3 regarding loan account number 240, it is evident that on 18.8.2009, an amount of Rs.2,00,000/- was disbursed to the complainant but he did not serve the interest on monthly basis. Again after disbursement of another amount of Rs.1,00,000/- on 13.6.2010, the complainant paid interest of Rs.5000/- on 2.2.2011 when the amount of interest outstanding was Rs.31345/- and so on. In these circumstances, the complainant himself defaulted in payment of interest amount and failed to serve the levied interest on monthly basis. Therefore, the right of the complainant to claim rebate of 1% is forfeited by his own act. Hence, he is not entitled to rebate of 1% under this Head.
11. The third question is whether the complainant is entitled to further rebate of 1% rate of interest on account of his being a staff of the Bank and from which date? It is not in dispute in any way that complainant was an employee of the opposite parties’ bank. As discussed above in the policy regarding Education Loan Scheme under clause 7, it is mentioned that rate of interest on the loan up to Rs.4 lacs to the general public would be Bank rate + 3.00% and to the staff as co-borrower would be BR+2.00 and on loan above Rs.4 lacs and up to Rs.10 lacs to the general public would be BR+3.50% and to the staff as co-borrower would be BR+2.50% meaning thereby that 1% concession in the rate of interest will be given to an employee of the bank. As such, the complainant is entitled to this concession w.e.f. initial date.
12. The fourth and last question is whether the Bank is entitled to charge penal interest @2% for defaulting amount and from which date?
As discussed above in various documents and education loan policy, it is clearly evident and established beyond any doubt that simple rate of interest will be charged during the repayment holiday/ moratorium period and upto the date of commencement of installments. In the present case, since the course completed in January, 2014, the repayment of the loan was to be commenced w.e.f. February, 2015. Therefore, simple rate of interest is chargeable in both loan cases upto 31.1.2015. The bank is not entitled to charge any penal interest before 1.2.2015. In case there is any default in repayment of interest including installment after 1.2.2015, the Bank is entitled to recover penal interest @2% only on defaulted amount and for default period only.
13. Thus, as a sequel to our above discussion, we are of the considered opinion that there has been deficiency in service on the part of bank and bank indulged into unfair trade practice with its own staff member. Hence, we allow the present complaint and Bank is directed to enact/ prepare afresh statements of account of both the loans i.e. Rs.4 lacs and Rs.3 lacs from the date of first disbursement and directed to charge fixed rate of interest @11% per annum and @12% per annum on simple interest basis respectively upto 31.1.2015. After this date rate of interest @ 11% & 12% will be levied on compound basis. Further the complainant will be allowed benefit of 1% rebate in interest being staff member of the bank from the initial date of each loan account. However, wherein default has occurred in repayment after 1.2.2015, penal interest @2% may be charged on defaulted amount for the default period only at the discretion of the Bank. The Bank is also directed to refund penal interest, if any, charged so far in the past from the complainant. The Bank is further directed to take into account all amounts paid by the complainant/debited to his SF account towards repayment/ recovery of loan accounts in question including cash repayment, if any. The statements of account so prepared by the bank should be supplied to the complainant within 30 days from the date of receipt of copy of this order failing which Rs.200/- per day as penalty will be leviable to the ops and this amount will be payable to the complainant/ consumer on monthly basis by the Bank. However, keeping, in view the overall circumstances of the case the complainant is not granted any cost and litigation expenses. The Bank is also directed to fix and communicate amount of installments in each loan case taking into account the accrued interest and principal outstanding as on 31.1.2015 as per enacted statements of account in such a way so that the entire loan amount is adjusted fully within the remaining period of repayment. It will be the liability of the complainant to regularize both the loan accounts within further period of 30 days after receipt of revised statements of accounts and will pay amount of installment so fixed regularly. A copy of this order be supplied to the parties free of costs. File be consigned to the record room after due compliance.
Announced in open Forum. Presiding Member,
Dated: 31.05.2017. District Consumer Disputes
Redressal Forum, Sirsa.
Member.
