Tamil Nadu

North Chennai

127/2014

Mr.Bharat Mirpuri,S/o.Mohandas E.Mirpuri,Mrs.Anju Mirupuri,W/o.Barat Mirpuri - Complainant(s)

Versus

Rep by its Manager,Cholamandalam Investment and Finance Company ltd,Dare hOUSE - Opp.Party(s)

M/s.V.Balaji

05 Jan 2018

ORDER

 

                                                            Complaint presented on:  30.06.2014

                                                                Order pronounced on:  05.01.2018

 

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, CHENNAI (NORTH)

    2^nd Floor, Frazer Bridge Road, V.O.C.Nagar, Park Town, Chennai-3

 

        PRESENT: THIRU.K.JAYABALAN, B.Sc., B.L.,        PRESIDENT

              THIRU. M.UYIRROLI KANNAN B.B.A., B.L.,      MEMBER - I

 

FRIDAY  THE 05^th   DAY OF JANUARY 2018

 

C.C.NO.127/2014

 

1.Mr.Bharat Mirpuri,

S/o.Mohandas E.Mirpuri

 

2.Mrs.Anju Mirapuri,

W/o. Bharat Mirpuri

 

Both are residing at

C2, Sams Glory Towers,

F-153, Anna Nagar East,

Chennai – 600 102.

                               

                                                                                          ….. Complainants

 

..Vs..

 

Cholamandalam Investment and Finance Company Ltd.,

Dare House,

No.2, N.S.C.Bose Road,

Parrys, Chennai – 600 001,

Rep. by its Manager.

 

.....Opposite Party

Date of complaint                                 : 07.07.2014

Counsel for Complainants                    : M/s.V.Balaji, A.Sermaraj

Counsel for Opposite Party                      : M.B.Gopalan, N.Vijayaraghavan,

                                                                    M.B.Raghavan                                                 

 

 

O R D E R

 

BY PRESIDENT THIRU. K.JAYABALAN B.Sc., B.L.,

          This complaint is filed by the complainant to direct the opposite parties to pay a sum of Rs.1,62,705/- collected by them towards the pre-closure charges and also to pay a sum of Rs.10,00,000/- as compensation for mental agony with cost of the complaint u/s 12 of the Consumer Protection Act.1986.

1.THE COMPLAINT IN BRIEF:

          The complainants availed a home loan for a sum of Rs.40,00,000/- with 14% of floating rate of interest on 28.07.2011 from the opposite party. The loan has to be repaid in 120 monthly installments at the rate of Rs.62,107/- per month. The condition for pre-closure of loan is that 2% of the amount if being pre-paid through own funds and 4% of the amount if being pre-paid via balance transfer of loan to any other financier. The opposite party even before disbursement recovered two monthly EMIs on 12.07.2011 and 13.08.2011 thereby causing a interest loss of Rs.24,000/-.

          2. The complainants expressed their intention to transfer the loan to Deutsche Bank. On the same date the opposite party issued a letter and directed the complainants to pay Rs.1,53,043.44/- towards the foreclosure charges. The complainants also paid the fore-closure charges of Rs.1,62,705/-. The opposite party has no right to levy fore-closure charges. Reserve Bank of India vide its circular DBOD.No.DIR BC.107/13.03.00/2011-12 dated 05.06.2012 hold that the banks will not be permitted to charge fore-closure charges on home loans on floating interest rate basis with immediate effect. The said circular has been further modified in 2014 thereby Reserve Bank has abolished the very fore-closure charges.

          3. No bank or finance companies can be allowed to indulge in restrictive trade practice binding the Consumer when the availing loan is void. Therefore, the charges of the pre payment charges contained in the loan sanction letter of the opposite party are void and not enforceable. Hence the complainant filed this complaint to direct the opposite parties to pay a sum of Rs.1,62,705/- collected by them towards  the pre-closure charges and also to pay a sum of Rs.10,00,000/- as compensation for mental agony with cost of the complaint.       

4. WRITTEN VERSION OF THE  OPPOSITE PARTY IN BRIEF:

          The opposite party submits that it is a Non Banking Finance Company and not a Bank. The complainant cannot invoke Circulars issued by RBI in respect of Banks, as against the opposite party. The complaint is filed on a misconception/misrepresentation that RBI had prohibited collection of foreclosure/pre-payment charges by reference to Circulars applicable to Banks whereas no such Circular was in force on the date of the foreclosure by the complainant. It was only on 14.07.2014 that RBI issued a Circular, which is long after the closure of complainant’s account and that too after filing of the complaint. There was no earlier circular as against NBFC and the opposite party has therefore charged the specified pre-closure charges as per the terms of the agreement when the complainant approached for closure of the account in April 2014 or in May 2014 when the closure was actually effected.

          5. The complainant approached the opposite party requesting for a Loan of Rs.40,00,000/-. The opposite party agreed to provide the loan as per terms of the Sanction Letter dated 28.07.2011 stipulating broadly various terms, subject to the Loan Agreement to be entered into. In particular, besides other basis terms, the opposite party had clearly stipulated.

Charges for Pre Payment	2% of amount if being prepaid through Own Funds
Part/Full & Final pre payment	4% of the amount  if being prepaid via a balance transfer of the loan to any other financier

 

The complainant accepted the terms stipulated in the Sanction Letter and believing the same the opposite party was induced to provide the loan of Rs.40,00,000/-. The opposite party would be entitled to Pre-closure charges at the rate mentioned in the Sanction Letter. The complainants agreed and accepted for the said stipulation. The complainant sought for pre-closure of the loan due to transfer of loan to another financial institution. Hence as per Loan Agreement read with Sanction Letter, the opposite party was entitled to charge 4% of the amount outstanding as Pre-closure charges. The complainants never whispered much less disputed or protested over the same and paid a sum of Rs.1,53,043.44/- (includes Service Tax of Rs.16,835/-) towards Pre-closure charges on the Outstanding amount of Rs.3405211/- as per terms of the Agreement and closed the Account. The opposite party handed over all the documents and closure letter was promptly provided on 14.05.2014 itself. The other averments made in the complaint are denied. The opposite party has not committed deficiency in service and prays to dismiss the complaint with costs.

6. POINTS FOR CONSIDERATION:

          1. Whether there is deficiency in service on the part of the opposite party?

          2. Whether the complainant is entitled to any relief? If so to what extent?

7. POINT NO :1 

          It is an admitted fact that the complainant availed an housing loan of Rs.40,00,000/- with 14% floating rate interest on 28.07.2011 as per Ex.A1 sanction letter of the opposite party and the complainant agreed to pay the said loan amount with interest as per Ex.A2 payment advice  in 120 months at the rate of Rs.62,107/- per month and Ex.A3 is the repayment schedule and the complainant expressed his willingness to transfer the above home loan to Deutsche Bank and the opposite party issued Ex.A4 pre-closure letter with charges payable by the complainant and the complainant also paid a sum of Rs.34,27,332/- towards balance  loan amount and a sum of Rs.1,62,705/- towards pre-closure charges.

          8. The complainant alleged deficiency against the opposite party is that he had collected the sum of Rs.1,62,705/- by way of pre-closure charges  is an restrictive trade practice of the opposite party and stipulating the charges of the pre payment  in Ex.A1  sanction letter clause 11 is void and therefore the opposite party has committed deficiency in service.

          9. Admittedly the complainant wanted to transfer the loan account to Deutsche Bank and thereafter the opposite party issued pre-closure letter to pay the balance loan amount and also to pay the pre-closure charges. The complainant also paid the said pre-closure charges in Ex.A5. The Ex.A1 sanction letter contains terms and conditions and agreeing with the terms and conditions of the complainant had availed the loan from the opposite party. Further, the opposite party is a Non-Banking Finance Company and not a bank.

          10. The learned counsel for the complainant relied an order of the Delhi State Commission reported in II (2008) CPJ 166 (State Bank of India Vs. Usha Vaid (Dr) & another) in support of his contention that he is entitled for refund of the pre-closure charges paid by him and he also relied on a circular of the Reserve Bank of India RBI/2011-12/589 DBOD.No.Dir.BC.107/13.03.00/2011-12 dated 05.06.2012.

          11. Per contra the opposite party relied on National Commission Order reported in 2016 (3) CPR (NC) in support of his case that the order of the State Commission and the RBI Circular are not binding to the facts of the case in hand.

12. The Delhi State Commission held in para 9 of the order that No Bank or Finance Company can be allowed to indulgent restrictive trade practice by binding the Consumer to go on availing loan even if rate of interest charged by the said bank is much higher than the other banks and any such clause which operates adversely to the Consumer like clause 4 has to be held as void and, therefore, not enforceable. It is settled law that the parties are bound by the terms and conditions likewise the complainant is also bound by the terms and conditions printed in Ex.A1. The complainant availed the loan in the year 2011 and he had repaid the loan and pre-closure charges on 29.04.2014. After that this complaint was filed on 30.06.2014. The RBI circular relied on by the complainant is dated 05.06.2012 after availing the loan by the complainant from the opposite party on 28.07.2011. The circular will be given effective only prospectively and not retrospectively. The loan availed by the complainant and paid the pre-closure charges much before the circular come into effective. The National Commission also relied on the RBI circular dated 05.06.2012 and held that the circular came into effect from the date of its issue, i.e., 05.06.2012 and the same is applicable for foreclosures of housing loans prospectively. Therefore, the National Commission categorically held that the RBI circular has only prospective effect and therefore, the circular is not applicable in this case because the loan availed and pre-closure charges paid before the RBI circular come into force. Since the RBI circular is not applicable to the facts of the case in hand, the opposite party had not committed any deficiency in service in collecting the pre-closure charges as per Ex.A1 sanction letter and accordingly this point is answered.

13. POINT NO:2

Since the Opposite Party has not committed any Deficiency in Service, the Complainant is not entitled for any relief and the Complaint is liable to be dismissed.

          In the result the Complaint is dismissed. No costs.

          Dictated to the Steno-Typist transcribed and typed by her corrected and pronounced by us on this 05^th day of January 2018.

 

MEMBER – I                                                                PRESIDENT

LIST OF DOCUMENTS FILED BY THE COMPLAINANTS:

Ex.A1 dated 28.07.2011                   Loan Sanctioned letter

Ex.A2 dated 03.08.2011                   Payment Advice

Ex.A3 dated 09.08.2011                   Welcome letter with repayment schedule

Ex.A4 dated 29.04.2014                   Pre-closure letter

Ex.A5 dated 29.04.2014                   Series of Receipts with Demand Draft

LIST OF DOCUMENTS FILED BY THE OPPOSITE PARTY :

 

Ex.B1 dated 28.07.2011                   Sanction Letter

 

Ex.B2 dated 28.07.2011                   Loan Agreement

 

Ex.B3 dated 11.04.2014                   Letter from the complainants to opposite party

 

Ex.B4 dated 09.05.2014                   Reply from the opposite party

 

Ex.B5 dated 14.05.2014                   Acknowledgement for return of documents from

                                                    the complainants

 

Ex.B6 dated 14.07.2014                   RBI Circular for NBFC’S

 

 

 

 

MEMBER – I                                                               PRESIDENT