BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II, U.T. CHANDIGARH

========

Complaint  Case No  :1352 of 2008

Date of Institution :  17.11.2008

Date of  Decision   :  08.12.2009

Rajinder Singh Bhasin S/o Late Sh. Manohar Singh Bhasin, R/o House No. 3337/1, Sector 40, Chandigarh.

 ……Complainant

V E R S U S

1]   The Zonal Manager, Punjab and Sind Bank, Sector  17-B, Chandigarh.

2]   The Branch Manager, Punjab and Sind Bank, Sector 22-B, Chandigarh.

.…..Opposite Parties

CORAM:     SH.LAKSHMAN SHARMA              PRESIDENT

          SMT.URVASHI AGNIHOTRI      MEMBER

          SH.ASHOK RAJ BHANDARI       MEMBER

PRESENT: Sh.Vijay Singh, Adv. for the Complainant.

Sh.Neeraj Sahni, Adv. for OP.

PER ASHOK RAJ BHANDARI, MEMBER

        Concisely put, the Complainant had taken a loan of Rs.2.80 lacs for the purchase of Maruti Zen car from the OP No. 2 on 26.02.2003. At the time of advancing loan, OP No. 2 took FDR for a sum of Rs.2.80 lacs from the Complainant as security, which were to be returned to the Complainant after repayment of the entire loan. The Complainant had repaid the entire loan amount through his Loan A/c No. 12/318, being maintained with OP No. 2. It was alleged that as per the loan application (Ann.C/1), the loan was to be paid in 60 monthly installments of Rs.6000/- per month; whereas, the OP had received 61 installments from him i.e. one installment in excess, which was evident from Annexure C-2. It was averred that after the repayment of entire loan amount, he requested the OP No. 2 to issue the NOC, to return the FDR and also to refund one excess installment of Rs.6,000/- deposited by him, but all in vain. Finally, a legal notice dated 9.7.2008 was served upon the OPs, which was replied to by the OPs, interalia, stating that the installment of loan amount was Rs.6280/- instead of Rs.6000/- and a sum of Rs.13,499/- was demanded from the Complainant, hence, this complaint, alleging that the aforesaid acts of the OPs amount to deficiency in service and unfair trade practice. In the end, the Complainant has prayed that the OPs be directed to issue no due certificate, to return FDR which was taken as security from him, to refund one excess installment of Rs.6000/- with interest, to pay Rs.75,000/- as compensation for mental tension, harassment & agony. The Complainant has also demanded Rs.11,000/- as costs of litigation, besides Rs.1100/- for legal notice.

2]      Notice of the complaint was sent to OPs seeking their version of the case. 

3]      OPs No. 1 & 2 in their joint reply, while admitting the factual matrix of the case, pleaded that a loan of Rs.2.80 lacs was sanctioned as per sanction letter dated 26.02.2003, repayable by installments of Rs.6,000/- per month with interest @12.5% p.a. with quarterly rests. In consideration of the above said loan, the Complainant executed on 26.02.2003, the following loaning documents (Annexure R-1 to R-3) in favour of the OP at its Sector 22-B, Chandigarh Branch:-

(i)    Promissory Note dated 26.02.2003 for Rs.2,80,000/-

(ii) Deed of Hypothecation of said car.

(iii)     Undertaking/Promises/Assurances

In consideration of the above sanctioned loan, Sh.Davneet Singh S/o Sh. Rajinder Singh Bhasin stood guarantor and executed a deed of guarantee for the repayment of the above said loan and interest thereon (Annexure R-4). It was further pleaded that in terms of above said loaning document/agreement i.e. Cl.No. 10 of the Deed of Hypothecation, the interest was agreed to be charged by the OP and paid by the Complainant @6.25% over RBI rate, with a minimum of 12.5% p.a., which shall be calculated and charged on the daily balance in the Bank’s favour, due upon the said Cash Credit Account, until the same was fully liquidated and shall be paid by borrowers as and when demanded by the Bank, provided always that notwithstanding anything mentioned above, the Bank is hereby authorized to increase the rate of interest in its discretion from time to time and the borrowers expressly agree to pay such increased rate of interest as may be notified to them by the Bank and the Borrowers shall be bound and liable to pay interest at such enhanced rate. It was also submitted that the Complainant acknowledged and confirmed the debt of Rs.1,43,844/- outstanding on 10.02.2006 and also confirmed its correctness (Annexure R-5). As per Form No. 108-B (Revised), it has been agreed that the FDR in question was to be treated as continuing security even if the account runs into credit reduced or extinguished at any time or from time to time. Copy of Form No. 108-B and copy of FDR are at Annexure R-6 and R-7 respectively. While admitting the receipt of legal notice dated 09.07.2008, it was pleaded that the same was suitably replied vide reply dated 27.8.2008. All other material contentions of the Complainant were controverted. Pleading that there was no deficiency in service on their part, a prayer has been made for dismissal of the complaint with exemplary costs.

4]      Parties led evidence in support of their contentions.

5]      We have carefully gone through the entire case thoroughly, including the complaint and the relevant documents tendered by the complainant / OPs. We also heard the arguments put forth by the learned counsel for the Complainant and OP No. 1 & 2. As a result of the detailed analysis of the entire case, the following points/issues have clearly emerged and certain conclusions/arrived at, accordingly:-

i]  The basic facts of the case in respect of the Complainant having obtained a loan of Rs.2.80 lacs for the purchase of Maruti Zen car from OP No. 2 on 26.02.2003, repayable over a period of 5 years in 60 monthly installments, on the security of a Fixed Deposit Receipt [FDR] of Rs.2.80 lacs obtained from a Guarantor, have all been admitted. As per the Complainant, he has paid all the installments @ Rs.6,000/- per month as per the Loan Agreement and Loan Sanction Letter, but despite persistent requests, the OPs have failed to give him a ‘No Due Certificate’ and also refused to refund one extra installment of Rs.6,000/- paid by him to OP No. 2.    

ii] The only dispute between the Complainant on the one hand and the OPs on the other, has been in respect of the rate of interest. Whereas, as per the Complainant, the rate of interest was 12.5% (fixed) and accordingly, he was expected to pay the entire loan @ Rs.6,000/- per month for a period of 60 months and nothing more was required to be paid by him to the OPs. On the contrary, the stand of the OPs is that the loan was sanctioned to the Complainant @6.25% over and above the R.B.I. rate with a minimum of 12.5% per annum, which was to be charged on the daily balance in the Cash Credit Account opened by the Complainant with the OP No. 2. Further, since the rate of interest on the car loan was clearly linked with the R.B.I. rate, it was obviously a floating rate of interest and as such, it could be increased or decreased from time to time by the OPs and the borrowers were bound by the change of rate of interest.

iii] The OPs, especially, OP No. 2, which is the main party in this case, have produced the photocopies of the loan documents, in support of their contention that the loan in question carried a floating rate of interest and not a fixed rate of interest. In the Promissory Note in Form 14 (Annexure R1), it is clearly stated that the rate of interest is 1% per annum above the Prime Lending Rate, subject to minimum rate of interest of 12.5% per annum with calculation of interest with quarterly rests. Similarly, the letter of hypothecation of goods to secure a demand cash credit (Form No. 192 {Revised}) also states that the interest at the rate of 6.25% percent over Reserve Bank of India rate, with a minimum of 12.5% per annum shall be calculated and charged on the daily balance in the Bank’s favour due upon the said Cash Credit account, until the same is fully liquidated and shall be paid by Borrowers as and when demanded by the Bank. Provided always that notwithstanding anything mentioned above, the Bank is hereby authorized to increase the rate of interest in its discretion from time to time and the Borrowers expressly agree to pay such increased rate of interest as may be notified to them by the Bank and the Borrowers shall be bound and liable to pay interest at such enhanced rate. That on demand by the bank the Borrowers shall pay to the Bank the Balance then due to the Bank on the said Cash Credit Account, together with all further interest at the rate(s) above mentioned and the amount of all further charges and expenses, if any to date of payment, provided that nothing here in this Clause contained shall be deemed to prevent the Bank from demanding payment of the interest for the time being due without at the same time demanding payment of the balance of the principal amount due to the Bank exclusive of such interest. 

iv]  Another document produced by OP No. 2 is a certificate dated 16.2.2009 (Annexure R8), which shows that the rate of interest was clearly a floating rate of interest, so much so, that the interest rate varied from 9.00% p.a. to 12.50% p.a, as per the chart given below:-

v]   The above chart clearly shows that, at no stage during the period of 5 years, the OP Bank has ever charged interest at the rate more than 12.5% p.a. On the contrary, the interest rate has gone down as low as 9% to 9.5% for about one year, which is clearly to the great advantage of the Complainant. The above chart proves that the Complainant has not been put to any loss, whatsoever, on account of the alleged charging of rate of interest beyond the terms & conditions of agreement. In fact, there is no violation of the Agreement signed by both the parties in respect of the floating rate of interest.

vi]  The Complainant has also made a reference to the Loan Installment Bank Statement (Annexure C-2), in which, as on 1.3.2008, the Bank has shown a debit balance of Rs.12,848/-, payable by the Complainant to finally settle the loan account. A close perusal of the Statement of Loan Account, shows that no doubt, the Complainant has paid all the installments @ Rs.6,000/- p.m., but since it is a Cash Credit (Running) Account, where the calculation of interest is done on daily basis, even if the payment of installment is delayed by one day by the Complainant, extra/penal interest shall be chargeable on that installment and payable by the Complainant. The Statement in question indicates that several installments have been delayed by the Complainant, as the same were not paid on the due dates, which has resulted in the levying of extra/ penal amount of interest being charged by the OPs. The Complainant has not been able to find any fault or incorrection or mistake in the Bank Statement. Neither in the pleadings, nor in the evidence or even in the arguments, any kind of mistake has been pointed out by the learned counsel of the Complainant. Therefore, the Statement issued by the OP Bank can be taken as correct.

vii] Another point taken by the Complainant is in respect of the fixed monthly installment of Rs.6,000/- per month, instead of Rs.6,280.68P, as claimed by the OPs. In this regard, OPs have clarified that it is a well known practice of the Banks to adjust the installments by way of rounding the amount of installments to the nearest thousands and accordingly, the monthly installment for the Complainant was fixed at Rs.6,000/- per month, instead of Rs.6,280.68P p.a. But, in any case, the Complainant is duty bound to pay back the entire amount of loan, along with interest, as per the prevailing rates fixed by the Bank, as per the Rules & Regulations of the Reserve Bank of India. Therefore, the contention of the Complainant that the amount of loan installment was permanently fixed by the OP @ Rs.6,000/- per month, is factually incorrect. Moreso, in the case of any loan account, carrying a floating rate of interest, the amount of monthly installment can never be permanently fixed. In any case, it has to vary from time to time, depending upon the changed rates of interest, as determined by the Bank based on the R.B.I. rates/Bank’s own PLR.  

6]      Keeping in view the above detailed analysis of the entire case, it is our considered view that there is no merit, substance or weight in the present complaint, as the Complainant has not been able to prove any of the allegations leveled by him against the OPs. On the contrary, the OPs have ably rebutted all the allegations leveled against them by the Complainant by producing all relevant documents, papers, evidence, pleadings, as well as through oral arguments, thereby, conclusively proving that the charges leveled against them by the Complainant are false. In our view, the present complaint being baseless and frivolous deserves rejection. We, therefore, dismiss the complaint. However, the respective parties shall bear their own costs.

7]     Certified copy of this order be communicated to the parties, free of charge. After compliance file be consigned to record room.

Announced

08.12.2009                                       Sd/-

(LAKSHMAN SHARMA)

PRESIDENT

                                            Sd/-

(URVASHI AGNIHOTTRI)

MEMBER

                                          Sd/-

(ASHOK RAJ BHANDARI)

MEMBER

‘Dutt’