Date of filing : 27.12.2013

Date of hearing : 01.08.2016

Date of judgement : 11.08.2016

PER HON’BLE SAMARESH PRASAD CHOWDHURY, PRESIDING MEMBER

JUDGEMENT

        The instant  appeal Under Section 15 of the Consumer Protection Act, 1986 ( hereinafter referred to as “the Act “) is at the instance of the Opposite Party to impeach the  judgement    and final order dated 25.11.2013 passed by the Ld. District Consumer Disputes Redressal Forum, Kolkata, Unit – II ( for short, Ld. District Forum ) in Consumer Complainant No. 245/2011 whereby the Consumer complaint initiated by the respondent was allowed on contest with directions upon the Opposite Party/Appellant to receive the EMIs @Rs.16,518/- by instalments from the complainant without claiming any further interest, to pay Rs.50,000/- for unfair trade practice to the Consumer Welfare Fund  etc.

        The respondent herein being complainant lodged the complainant Under Section 12 of the Act  stating that he along with his wife applied for a secured loan facility and the said loan was sanctioned by OP Bank for a sum of Rs.9,08,000/- @ 13% interest repayable by EMI of Rs. 16,518/- to be made over within  84 months. After receiving  36 post dated cheques for the said amount, complainant was informed in the month of June, 2010 that the rate of interest of the said loan had been increased time to time resulting in increase in the repayable amount of the complainant. As the said increase was done unilaterally by the OP, complainant made a representation before the OP Bank on 13.07.2010 complaining against such unilateral increase of rate of interest. The OP Bank by their letter on 19.10.2010 took the plea that the said aspect of time to time change of rate of interest had always been intimated to the complainant. The complainant approached Banking Ombudsman for relief but being without result made a personal representation to the Branch Manager of the OP Bank which also yielded no result. On 11.11.2010 complainant made another representation before the Retail Assets Division of the OP Bank and the OP Bank took the same stand by their letter dated 23.11.2010 that the said increase of rate of interest had been notified to the complainant. Hence, the complaint with prayer for certain reliefs, viz. – (a) an order  directing the Opposite Party Bank recall and withdraw the said uncalled for imposition of EMI return charges and late payment penalties imposed by latter dated 14.09.2011 and to late to be repaid completely by  84 Nos. EMIs of Rs. 16,518/- , (b) an order of compensation of Rs. 2,50,000/- as compensation for harassment and  mental agony etc.

        The  Appellant herein being Opposite Party by filing a Written Version disputed and denied the allegations  levelled by the complainant contending, inter alia that as per terms of the agreement, the loan amount was payable in 84 equal monthly instalments @Rs.16518/- and the said loan was sanctioned at floating rate of interest containing  in Clause 5.1 of the agreement. The Opposite Party submits that as the loan was subject to the floating rate of interest as such it varies  from time to time due to inflation in the market. It is also submitted that the complainant was regularly informed about  the increase in rate of interest and as the complainant stopped ECS as such he became a defaulter. Therefore, the complaint should be dismissed with costs.

        After assessing the  materials on record, the Ld. District Forum by the order impugned allowed the consumer complaint with certain directions upon the opposite party, as indicated above, which prompted the Opposite Party to prefer this appeal.

        We have scrutinised the materials on record and considered the submission advanced by the Ld. Advocates appearing for the parties including the brief notes of argument filed on behalf of the appellant. Admittedly, the respondent approached the appellant Bank for a home loan against mortgage of immoveable property and accordingly the appellant sanctioned a loan of Rs. 9,08,000/- to the respondent on terms and conditions contained in a written agreement under loan being A/c. No. 2956912. The respondent has created an equitable mortgage in favour of the appellant by depositing the title deed in respect of  a flat lying and situated at Premises No. 13, Kshudiram Bose Sarani, P.S. Dum Dum, Kolkata – 700 080. It is also not in dispute that as per terms and conditions of the agreement, the loan amount was payable in  84 equal monthly instalments @ Rs.16,518/-.

        Now, the sanctioned letter dated 21.02.2007 issued by the Appellant Bank in favour of Respondent indicates the relevant terms and conditions of loan which are as follows :-

        The Demand Promissory Note dated 21.02.2007 executed by the respondent and his wife postulates that the amount of loan of Rs.9,08,000/- only together with interest thereon from the date thereof at 13% p.a. or such other rate the Bank may fix from time to time payable monthly /quarterly rests, for value receipt.

        Ld. Advocates appearing for the appellant has referred the Clause 5.1 as mentioned in the terms and conditions and submitted that the said Clause unerringly lead to indicate that the loan will carry at the floating rate of interest. Drawing our attention to schedule – I of the agreement the has submitted that the respondent has opted for floating rate of interest as per schedule –2 and not  fixed rate of interest as per schedule  - 3. He has also referred Clause 5.5 of the agreement and has submitted the Bank in its sole discretion would be entitled and modified and vary the said rate of interest without any prior intimation to the borrower from time to time and upon such revision, the borrower agrees to pay the revised rate of interest.

        Ld. Advocate for the respondent, on the other hand, has contended that as the amount of loan was sanctioned for repayment of principal and interest by  84 monthly instalments of Rs. 16,518/- each and further as per terms and conditions of loan applicable interest rate was 13 %,  the Bank had no authority to converted the repayment of amount of loan into a floating rate of interest without concurrence of the respondent. He has further submitted that by letter dated 01.01.2009 the appellant Bank revised the rate of interest at 15% and the total tenure of that loan stands revised to 92 instalments which was also not in conformity with the  terms and conditions of loan. Ld. Advocate for the respondent has submitted that the appellant bank has adopted an unfair means to change the account of loan of the respondent from fixed rate  to floating rate of interest after receipt of  36 Nos. Post dated cheques and as such the  impugned order should not be interferered with.

        We have considered the rival contention of the parties. It is trite law that the parties are bound by the terms of the agreement. Both the parties after understanding the contents of the terms and conditions of the loan put their signatures on the same. None of the parties raised any conflict as to the terms and conditions after execution of the document. Therefore, the parties must rely upon the contents of the terms and agreement of loan and the contents of Demand Promissory Note.

        On a perusal of the terms and conditions of loan  communicated by the bank to the respondent dated 21.02.2007 it appears that the amount of loan of Rs. 9,08,000/- was to be repaid by the respondent in 84 equal instalments of Rs.16,518/-p.m. towards payment of principal and interest and the  applicable interest rate was settled at 13.00%. The Demand Promissory Note  executed by the  respondent and his wife on the same date also indicates that the amount of loan together with interest from the date thereof would be @13% p.a.

         It is interesting to note that at the relevant time in the HDFC Bank floating reference rate was 14%. There is no explanation how the said  amount of floating rate of interest of 14% as on that date was reduced to  13% in favour of the respondent. It also creates doubt as to the conduct of the appellant bank for extending the tenure of payment from 84 instalments to  92 instalments by their letter dated 01.01.2009. Another shortcoming on the part of the appellant would be revealed from the letter dated 03.08.2009 given by the Bank to the respondent wherefrom it reveals that though the rate of interest has been revised from 15% 14.75% but the repayment term of the loan remain unchanged. I am at a loss to understand how if on the basis of 15% interest the amount of loan to be  repaid by  92 instalments, how the  same instalments will require to be paid after reduction of rate of interest at 14.75% p.a. These are apparent anomalies which are unexpected from a Public Sector Organisation like a Bank, whose object is to take active role for improving the economic condition of the people in a welfare state like ours.

        The argument advanced by the Ld. Advocate for the appellant with regard to Clauses 5.1 and 5.5 does not come to any  help of the Bank. Clause  5.1 indicates that the loan will carry interest at the floating rate or fixed rate of interest. When the agreement in question indicates the loan of sanction to repay the amount of Rs. 16,518/- p.m. towards payment of principal and interest in  84 EMIs it certainly indicates that it was not the floating rate of interest but the fixed rate of interest was applied in the facts and circumstances of the case. As per Clause  5.5  the bank has discretion to modify and  vary the said rate of interest without any prior intimation to the borrower from time to time and it shall be the responsibility of the borrower to check with the bank from time to time about such revision but such a Clause  has no application in this case because the bank has accepted the Demand Promissory Note from borrower in respect of an interest @ 13% p.a. and as such the submission by the Ld. Advocate for the appellant has no leg to stand upon.

        Ld. Advocate for the appellant has placed three decisions like – (1) AIR 2003 SC 2122 ( Syndicate Bank  - vs. – R. Veeranna & Ors. ) ; (2) AIR 1999 SC 896 ( State Bank of India – vs. – Yasangi Venketswara Rao ) and (3) a decision of this Commission dated  20.02.2014 in FA/190/2012 ( The Manager, ICICI Home Finance Ltd. –vs. –Rakha Hari Das  & Anr. ). On the other hand, Ld. Advocate for the respondent has referred a decision of National Consumer Commission reported in (2016) CJ1 (NC) ( State Bank of India – vs. – Mrs. Shoba Mohan ).

        We have gone through the decisions referred above. The decision of Syndicate Bank ( Supra ) was relating to rate of interest enhanced as per agreement between the parties which is not identical with our case in accordance with the terms and conditions of the loan. The decision of State Bank of India ( Supra ) referred by the appellant has also no manner of application in our case because in the referred case the issue came for consideration whether in allowing the appeal filed by the respondent High Court has got any authority to come to a conclusion that Parliament had no jurisdiction to enact Section 21 A of the Banking Regulation Act as Ultra Vires. The referred  decision  of the State Commission is also distinguishable  with our case because in that case the respondents stopped making payment of EMI and the Bank served notice upon the respondents Under Section 13 (4) of the SARFAESI Act , 2002. The decision of National Consumer Commission referred by the respondent rather appears to be relevant to some extent. According to the said decision, Bank cannot increase rate of interest without prior notice to loanee. After accepting  36 post dated cheques of Rs. 16,518/- the appellant bank without any intimation and information to the respondent changed the manner of loan from fixed rate to floating rate of interest and thereby the appellant bank adopted unfair trade practice keeping respondent in darkness and charged reset interest at their own whim and fancy.

        The Ld. District Forum after assessing the evidence on record has observed – “ But fact remains that OP unilaterally increased rate of interest without the consent of the complainant and fact remains that complainant never accepted such unilateral decision of the OP and as per agreement parties cannot go beyond the terms and conditions of the agreement and considering the agreement, it is found that  OP has no legal authority to impose the further interest as because fixed rate of interest is 13% i.e.  specifically mentioned without any word including floating rate of interest alongwith 13%. So the entire defence of the OP is not only fabricated, false but the entire conduct of the OP tentamounts to unfair practice”.

        Relying upon the entire materials on record, we do not find any reason to differ the view adopted by the Ld. District Forum. In our assessment, the Ld. District Forum consider the matter from proper perspective and as such the impugned order should not be interfered with. In other words, the appeal being devoid of merit should be dismissed. However, considering the facts and  circumstances of the case, we do not make any order as to costs in this appeal.

        For the reasons aforesaid, the appeal is dismissed on contest but without any order as to costs.

        The judgement and final order dated 25.11.2013 passed by the Ld. District Forum in CC No.245/2011  are hereby affirmed.

        The Registrar of this Commission is directed to send a copy of this order to the Ld. District Consumer Disputes Redressal Forum, Kolkata, Unit - II  for information.