JUDGMENT 7.10.2010 Justice Pritam Pal, President 1. This appeal by opposite parties is directed against the order dated 24.4.2009 passed by District Consumer Forum-I, U.T. Chandigarh whereby complaint bearing No.1263 of 2008 of respondent/complainant was allowed with costs of Rs.5000/- and appellants/OPs were directed to refund to the complainant a sum of Rs.2,71,849.45 alongwith interest @ 12% p.a with effect from 8.8.2008, the date on which the amount was received by them till its refund to the complainant. OPs were also directed to pay Rs.50,000/- as penalty for causing harassment to the complainant. 2. The parties hereinafter shall be referred to as per their status before the District Forum. 3. In nutshell, the facts as set out in the complaint are that the representatives of OPs approached the Complainant and requested him for availing the facility of loan against property, to which he agreed. He was disbursed Home Loan for a sum of Rs.1.30 crore, which was to be paid back in 120 monthly installments of Rs.1,74,813/- per month with floating rate of interest @9% p.a. The 1st installment was to be paid on 1.12.2005 and the last installment was to be paid on 1.11.2015. A loan agreement was also executed between the parties on 28.10.2005 wherein all the terms and conditions were mentioned with regard to repayment of loan. As per agreement, the complainant paid 33 installments of Rs.1,74,813/- each upto 31.7.2008 to the OPs. On 26.6.2008 with a view to pre pay the total amount, he wrote a letter to OPs No. 1 & 2 and sought details of the exact amount which was payable by him on or before 1.7.2008. In response thereto, the OP asked him to deposit the total payment of Rs.1,24,62,655.28P i.e. Rs.1,20,93,55/- as principal outstanding amount; Rs.97,000/- as interest upto July, 2008 and Rs.2,72,104.88 as foreclosure charges @ 2.25% of the outstanding principal amount. He thereafter vide letter dated 8.8.2008 requested OPs not to charge the foreclosure charges, but to no effect and he had to deposit Rs.1.25 crore under compulsion. However, after deducting Rs.1,20,57,309/- as principal outstanding amount, Rs.46,052/- as interest of 10 days of Aug.2008 and foreclosure charges of Rs.2,71,209.45P @ 2.25% of the outstanding principal amount, the amount of Rs.1,25,349/- was refunded to the Complainant by cheque. Thereafter, he made several requests to the OPs to return the foreclosure charges of Rs.2,71,289.45P as the same were not payable by him at all and it was never disclosed to him at the time of executing the loan agreement but all requests failed to get any tangible result. Hence, complainant approached the District Forum by filing a complaint seeking return of the foreclosure charges/prepay penalty alongwith interest and compensation etc. 4. On the other hand, OPs contested the complaint and filed their joint written reply inter-alia stating therein that the terms and conditions of the loan mentioned in Annexure R-1 were duly accepted by the complainant. A loan agreement was also executed between the parties and OPs acted within the framework of the said loan agreement.On the request of complainant for prepayment and foreclosure of the loan OPs provided the details of the amount to be payable for the foreclosure and prepayment of the above mentioned loan account, which were charged as per the agreed and accepted terms and conditions of the loan. The Complainant prepaid loan on 11.11.2008 and excess amount was refunded by OP. It was pleaded that the prepayment charges were duly mentioned in the sanction letter itself which was duly accepted by the Complainant and the same were charged as per terms and conditions of the loan agreement, so there was no deficiency in service on their part and a prayer was made for dismissal of the complaint. 5. The District Consumer Forum after going through the evidence and hearing counsel for the parties allowed the complaint as indicated in the opening part of this judgment. This is how feeling aggrieved, Opposite parties have come up in this appeal. 6. We have heard learned counsel for the parties and gone through the file carefully. It has been argued on behalf of the appellants/OPs that the learned District Forum has erroneously assumed the case to be one of ‘foreclosue’ instead of ‘pre-payment’ whereas Pre-payment implies the payment of a debt obligation prior to its due date and the bank had levied pre-payment charges in terms of clause 2.7 of the Loan Agreement. It was further argued that the service tax is payable as per the guidelines by the concerned tax authorities and the amount so collected is deposited with the State and it is not retained by the OP bank and the same can be refunded by the tax authorities. The compensation awarded by the learned District Forum was stated to be on the higher side as the complainant had been awarded both interest and compensation. However, these points have been repelled by the learned counsel for complainant. 7. The letter dated 8.8.2008 written to the complainant by the OP bank shows the detail of amount which was payable by the complainant for prepayment of home loan. Besides other heads, the disputed amount of Rs.2,71,289.45 has been shown on account of “foreclosure charges @ 2.25% as outstanding principal”. This amount also included service tax @ 0.25% as stated by OPs. It is true that as per clause 2.7 of the Loan Agreement the complainant was liable to pay prepayment charges but as analyzed by the learned District Forum there was no agreement for paying any fee or charges in case of foreclosure. The OPs were not charging pre-payment charges from the complainant because in the letters dated 27.6.2008, 22.7.2008 and 8.8.2008 they were mentioning foreclosure charges which were beyond the agreement and could not be levied on the complainant. The learned District Forum by referring the dictionary meaning of “foreclosure” and “prepayment” rightly distinguished that foreclosure is not synonymous with prepayment and OPs could be entitled to prepayment charges as per para 2.7 of the Loan agreement but they charged foreclosure charges @ 2% plus service tax @ 0.25% on the outstanding amount which the complainant was not liable to pay at all. 8. So far as service tax is concerned, OPs have not produced on record any notification, rule or law or the terms of loan agreement under which Service Tax was leviable if the loan amount was prepaid. Admittedly the whole amount was paid by the complainant to the OP bank directly. The OPs have also not brought on record and material or certificate that in fact they had deposited service tax with the tax authorities on the amount paid by the borrower. Had complainant been provided documentary proof/certificate of depositing the service tax with the authorities, he would have sought refund from them. Thus, the District Forum rightly directed OPs to refund the amount of Rs.2,71,289.45 charged on account of prepayment and service tax. 9. However, as submitted by learned counsel for OPs, the award of both interest as well as compensation appears to be on the higher side in the facts and circumstances of the case. We are of the considered view that award of interest @ 12% p.a. would include the compensation also. Hence, the amount of compensation of Rs.50,000/- awarded by the District Forum separately is not justified. Accordingly impugned order qua compensation is set aside. 10. In the result, this appeal is accepted partly and OPs are exonerated from paying Rs.50,000/- on account of penalty for harassment. However, the impugned order with regard to refund of Rs.2,71,289.45 alongwith interest and costs as awarded by the District Forum is affirmed. In the peculiar circumstances of the case, parties are left to bear their own costs. Certified Copies of this order be sent to the parties, free of charge. The file be consigned to record room.
| | HON'BLE MRS. NEENA SANDHU, MEMBER | HON'BLE MR. JUSTICE PRITAM PAL, PRESIDENT | , | |
