MRS. NEENA SANDHU, MEMBER

                        The brief facts of the case are that the complainants jointly availed of a loan, against the house/property i.e. H. No. 3106, Sector 32-D, Chandigarh from the OPs, in the month of July, 2009, for Rs. 4.00 crores @13.25%  interest per annum. The tenure of the loan was for 120 months (10 years). The complainants were to pay the monthly installments of Rs.6,03,156/- as per the loan agreement (Annexure C-1). In the month of January, 2010, vide Annexure C-3, the complainant requested the OPs, to decrease the rate of interest, as per the assurance given by their representative, at the time of approval of loan as also the market conditions improved. It was stated that moreover other institutions in the market were charging low rate of interest. Despite their repeated requests the OPs did not pay heed to their request, despite the fact, that they had taken the loan at floating rate of interest. In the month of March, 2010 the complainant received an offer/sanction vide Annexure C-4 from M/s Reliance Capital for advancement of loan @11.25% per annum against the property i.e. at much lesser rate of interest.  Thereafter, the complainant in order to foreclose his loan account requested the OPs for furnishing the foreclosure statements through Email dated 12.4.2010. The complainant received reply from the OPs on 23.4.2010, wherein, they exorbitantly and without any justification charged foreclosure charges at the rate of 7% on the principal outstanding. The total foreclosure charges demand vide Annexure C-6 were Rs. 33,53,112.54/-. The complainant requested the OPs not to charge such excessive foreclosure charges. It was further stated that due to the monopolistic trade practices, adopted by the OPs, the complainants were compelled to transfer the loan to other institutions where the rate of interest was lesser than the OPs. Subsequently, the OPs issued a fresh foreclosure charges statement on 6.9.2010, wherein, the foreclosure charges were shown to be Rs.20,73,836.68, which demand was opposed by the complainants. The OPs asked the complainants either to continue the loan or to pay the foreclosure charges @5% of the total outstanding principal amount. Thus, in this way, the OPs indulged into monopolistic and restrictive trade practice, as there was no such condition in the agreement executed between the parties. Alleging monopolistic, restrictive and unfair trade practices, as well as deficiency in service, on the part of the OPs, the complainants filed this complaint.

2.                     In their joint reply, the OPs took up the preliminary objection that the complaint was not maintainable as the agreement for advancement of loan, in question, was entered into by M/s Punjab Acids Chemical Pvt. Ltd. and the loan was taken in the name of the said  Company for commercial purposes, by mortgaging the residential property. It was stated that present complaint was filed, in the name of its Directors. It was further stated that since the loan was obtained by the aforesaid Company for commercial purpose, it did not fall within the definition of consumer as per Section 2(1)(d) (ii) of the Consumer Protection Act, 1986.  It was further stated that the rate of interest as well as the foreclosure charges were levied in accordance with terms and conditions  of the agreement of loan executed between the aforesaid Company and the OPs. It was further stated that the loan was advanced at floating rate of interest, which was variable at the discretion of OPs, on account of change, in the rate of interest, change in the money market conditions, availability of fund, cost of fund etc.  It was further stated that according to clause 2.7 of the loan agreement  (Annexure –R1) the borrower was liable to pay prepayment charges, in case the loan amount was prepaid or closed or swapped to some other facility.  It was further stated that the OPs as per Schedule of charges were entitled to charge 5% pre-closure charges in the event of preclosure of loan by the customer. It was further stated that the application form was duly signed by a representative of the loanee accepting the terms and conditions mentioned therein, including the loan agreement which clearly inferred right upon the OPs to charge the foreclosure/prepayment charges.  It was further stated that as per the terms of loan agreement the complainant was not entitled to foreclose/prepay the loan prior to 12 months from the date of disbursal. It was further stated that on the insistence of the complainant the OPs provided him the foreclosure amount with penalty, as a service gesture, vide statement dated 23.4.2010. Rest of the allegation, made in the complaint, were denied being wrong.

3.                     The parties adduced oral as well as documentary evidence in support of their case.

4.                     We have heard Counsel for the parties, and, have perused the record, carefully.

5.                     The Counsel for the complainants submitted that the OPs charged them excessive foreclosure charges on the loan amount in a monopolistic and restrictive manner.  He further submitted that the loan was obtained by M/s Punjab Acids Chemical Pvt. Ltd. for working Capital and not for a commercial purpose. He further submitted that the complainants fall within the definition of consumer and as such, the complaint is maintainable.

6.                     On the other hand the Counsel for the OPs submitted that loan was taken by Punjab Acid Chemicals Pvt. Ltd., for advancement of its business with the motive to earn profit and as such the complainants did not fall within the definition of consumer as per Section 2 (1)(d) (ii) of the Consumer Protection Act, 1986.  It was further stated that the foreclosure charges were rightly levied as per the Facility Agreement (Annexure C-1), which was duly signed by the complainants.

7.                     Admittedly, the loan of Rs.4.00 crores was obtained by Punjab Acid Chemical Pvt. Ltd. for working capital, whereas M/s D.K. Chemical Pvt. Ltd. stood as guarantor for the repayment of loan. The complaint has, no doubt, been filed in the names of the individual Directors of Punjab Chemical Pvt. Ltd., as also by the Company.  Such a huge amount of loan was obtained by the aforesaid Co. for commercial purpose, to generate profits. Since the services of the OPs were availed of by Punjab Chemical Pvt. Ltd., a duly incorporated Co. for advancing and furthering its business, with a view to generate profits it did not fall within the definition of consumer, as envisaged by Section 2(1)(d)(ii) of the Consumer Protection Act, 1986. In Economic Transport Organisation Vs. Charan Spinning Mills (P) Ltd. & Anr., I (2010) CPJ 4(SC), a four judge Bench of the Hon’ble Apex Court held that after the amendment of Section 2(1)(d) (ii) of the Act w.e.f. 15.3.2003, if  the services had been availed of, for any commercial purpose, then the person availing of the same, shall not fall within the definition of a consumer. Under these circumstances the complaint is not maintainable.

8.                     We also do not find any force in the submission of the Counsel for the complainants that the OPs have levied the foreclosure charges, arbitrarily. It is evident from clause 1.1(s) of the Facility/Loan Agreement Annexure C-1 which reads, as under, that repayment of facility in part or full would include principal sum with interest and other dues payable;

Prepayment means premature repayment of the facility in part or full including principal sum, interest thereon, other charges or dues payable by the borrower(s) under this agreement/schedule of charges and interest.

Similarly clause 2.7 of the said agreement,  reads as under;

“2.7.1  The borrower(s) may prepay the whole or any part of the outstanding amount of the facility (along with interest, fees and charges mentioned in this agreement read with the schedule charges and interests) The borrower(s) at the time of such prepayment shall be liable to pay prepayment charges as may be specified in the schedule of charges and interest.

2.7.2    In the event RFL permits any prepayment/acceleration, the repayment schedule for the facility shall be amended/revised by RFL for giving effect to such prepayment/ acceleration, and such amended/revised repayment schedule shall be binding upon the Borrower(s)

2.7.3    Should the Borrower(s  )desire to swap/interchange the RPCs/ECS from one bank to another, or for any reason whatsoever, the Borrower(s) may, with the prior written permission of RFL, do so by paying to RFL such swap charges as set out in Schedule of Charges and interest or as amended by RFL from time to time.

2.7.4    No prepayment would be permissible till such time the facility is fully disbursed and before completion of 12 months from date of first disbursement except at the sole discretion of RFL”

9.                 According to the aforesaid Clauses of the agreement C-1, the OPs were entitled to charge prepayment/foreclosure charges. The OPs charged prepayment/foreclosure charges approximately to the tune of Rs.20,73,836.68 paise  @5% including service tax etc., as per Annexure C-4, which was duly signed by the Directors of M/s Punjab Acid Chemical Pvt. Ltd. (complainant No.7).  According to clause 2.7.3 of the agreement C-1, referred to above, the OPs/respondents, were also entitled to charge prepayment/foreclosure/swap charges, even if the borrowers desired to swap/inter-change RPCs/ECS from one bank to another bank or for any reason, whatsoever. Reliance, no doubt was placed by the appellants on State Bank of India Vs. Dr. Usha Vaid & another,  Appeal No.7/130  decided on 27.4.2007, by the State Consumer Disputes Redressal Commission, Delhi, which decision was affirmed by the National Commission in State Bank of India Vs. Dr. Usha Vaid and another,  Revision Petition No.2466/2007 on 26.7.2007, to support his contention, that since it was a case of transfer of loan from the OPs/respondents, to another bank, and not prepayment of loan, no prepayment/foreclosure charges could be levied.  The facts of the aforesaid cases, are clearly distinguishable from the facts of this case. In the aforesaid cases, there was no clause, in the agreement, executed between the parties, that in the event of swapping of loan, from one bank to another bank, prepayment charges will have to be paid.  No help therefore, can be drawn, by the counsel for the appellants, from these cases. The prepayment/foreclosure charges, in this case, were, thus, legally and validily charged, as per the aforesaid clauses of the agreement C-1 and C-4, referred to above.  The appellants, are, thus, not entitled to the refund of the prepayment/foreclosure charges.  

10.                   For the reasons recorded above, the complaint is dismissed, being devoid of merit, with no order as to costs.

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