IN THE CONSUMER DISPUTES REDRESSAL FORUM, KANNUR

Present: Sri.K.Gopalan:  President

Smt.K.P.Preethakumari:  Member

Smt.M.D.Jessy:               Member

Dated this, the  29^th day of   March 2010

C.C.No.116/2005

Jose Nedumaruthuymchalil,

Pakkannikkadu,

P.O.Cherupuzha.                                                         Complainant

(Rep. by Adv.P.Prabhakaran)

1. Secretary,

   Kerala State Housing Board.

   Thiruvannthapuyram.

2. The Branch Manger,

   Kerala State Housing Board,

   Pilathara Branch,

   P.O.Pilathara.

3. The Asst. Secretary,

   Kerala State Housing Board,

   Kannur.                                                         Opposite parties

  (Rep. by Adv.C.P.Jayan)

O R D E R

Smt.K.P.Preethakumari, Member

            This complaint is filed under section 12 of consumer protection act for an order directing the opposite parties to  repay the sum of Rs.1,30,000/- which was collected from the complainant by the opposite party with an interest at the rate of 17.75% p.a from 2.6.04 and for Rs.2,70,000/- as compensation.

            The case of the complainant is that he is a small agriculturist with a limited holding of land ed property and hence he is included in the category of weaker section of priority sector of the community and he approached the 2^nd opposite party for a financial assistance by way of housing loan for Rs.3,00,000/- on 9.4.96. The complainant signed on all papers of the loan transaction required by2nd opposite arty and he sanctioned the above said amount as loan and had executed a mortgaged deed in favour of Kerala Housing board with respect to the property comprised in RS.87/104 in Thirumeni amsom and desom having an extent of 54 cents. The 2^nd opposite party sanctioned the loan with a condition of interest at the ate of 17.75% p.a and agreed to release the amount in 3 installments. The repayment schedule was fixed as 168 EMI”s for a sum of Rs.4870/- and the penal interest was 21.25% per annum. The maximum chargeable rate of penal interest as per the RBI guide lines is 2% p.a and the opposite party has charged highly exorbitant amount which is against the principles of natural justice. The loan ledger maintained by the opposite party is incorrect and not self speaking and are incomplete. By dividing the loan amount of Rs.3, 00,000/-the EMI will come only Rs.4018/- and hence the calculation is not correct. By calculating Rs.4870/- EMI, the opposite party claimed Rs.1, 30,000/- excessively. The opposite party is bound to follow the circulars and common guidelines of RBI and HUDCO while lending to priority sector advances and hence any provisions in the agreement in violation of circulars are void. The   Kerala State Housing Board is also bound to follow the guidelines of RBI and HUDCO. The complaint is entitled for the service from the opposite party as directed by RBI and HUDCO. But the opposite parties fraudulently acted in violation of the mandatory directions which amounts to the deficiency of service.

            The complaint has stated his annual income as Rs.56, 000/- and the complainant has to execute a loan agreement for repayment of Rs.4870/- per month which would come Rs.58, 440/- annually which speaks that the amount to be repaid is in excess of his annual income. Such an agreement is void-abinitio. The repayment starts only after the 3^rd installment obtained by the complainant. But the opposite party has deducted the interest upon the first installment from the 2^nd installment and interest upon the 1^st and 2^nd installments is deducted from the 3^rd installment and the act is in violation of the terms of agreement. The non-disbursement of the entire loan sanctioned also is the deficiency in service. Hence this complaint.

            In pursuance to the notice issued by the Forum opposite parties filed their version.

            The opposite parties admits that the  complainant had availed a housing loan for an amount of Rs.3,00,000/- under Higher Income Group Scheme after producing necessary documents including the income certificate for Rs.56,000/-, which shows that he belongs to higher income group and not in the category of weaker sections. The loan amount was sanctioned from the Kerala State Housing Board office at Kannur as per loan No. RQMHS/HIG/111/113/96 on 19.4.96. The loan was disbursed on 3 installments namely Rs.60, 000/- on 21.5.96, 2^nd installment of 1.2 lakh on 5.7.96 and 3^rd installment of Rws.1.2 lakh on 25.9.96 with 17.75% interest and the EMI was fixed as Rs.4870 for 168 monthly instalments.16^th installments were not repaid on due dates, penal interest at 2.5% with normal rate of interest shall also be paid on such installments for the period of default. As on 30.4.04 he had remitted 88 monthly installments when the board implemented one time settlement scheme, the complainant requested on 27.5.04 to allow him to settle the loan amount and the loan was finally settled on 27.5.04 by extending all the benefits under the one time Settlement. The mortgage was released and the documents produced for sanctioning the loan were returned to the complainant on 28.6.04. The complainant had remarked in the petition that he had signed all papers of the loan transaction in good faith that the provisions and conditions there in are in accordance with the NABARD and NHB guide line are against the facts. All the terms and conditions of the loan scheme are explicit in the appendix attached to the application form and mortgage deed executed in favour of the Board. The loanee is legally bound to comply with the terms and conditions of the said agreement. The various cash loans schemes were implemented by the board with the assistance of financial institutions like HUDCO and nationalized bank and hence the board is bound to obey the rules and regulations laid down by such financial institutions and has reduced the rate of interest from 1.5.03 as per the direction of the government and accordingly the rate of interest from 1.5.03 is reduced to 1.5%. 

            The loan ledger and accounting is maintained correctly which was admitted by the complainant while closing the loan account. Every loanee has got a right to check and verify their account for which the loanee can come personally to the concerned office on any working day during working hours. The guidelines of Nabad are not applicable while sanctioning of the loan. The beneficiaries are bound to follow the conditions which are clearly shown in the mortgage deed executed by them in favour of the board. The repayment of 1^st installment became due on the succeeding month of the month in which last installment is paid or on expiry of one year from the date of disbursement of1st installment which ever is earlier. The complainant had received the 1^st installment on 21.5.96 and last installment on25.9.96 and hence the complainant had to start repayment from 10.10.96 onwards.

            The complaint is not entitled for any service as directed by the RBI/NABARD from the board. So there is no deficiency of service on the part of the opposite parties. The opposite parties informed the complainant ton 30.9.04 that the opposite arty allowed the complainant to receive the copies of required documents from the office of the 2n d opposite arty as per the reply to the complainant’s request dt.11.8.04. But the complaint did not attend the office for the purpose.

            As per the conditions in the application and annexure and clause 2 of mortgage deed. Service charge at the rate of 5% and interest during the period of construction shall be recovered from the installments disbursed while releasing the first installment of Rs.60, 000/- on 21.5.96, Rs.3000/- being the service charge at 5% was recovered. From the 2^nd installment of Rs.6000/- towards service charge for 2^nd installment and interest for 1^st installment Rs.2101/- were recovered from the 3^rd installment of rs.1.2 lakhs service charge at the rate of 5% for3rd installment Rs.6000/-together with interest of 1^st and 2^nd installments Rs.6915/- were received and the recoveries were made as per the conditions laid down in the agreement and hence there is no deficiency in service on the part of opposite parties and there is no cause of action.

            The loanee is not entitled to get any compensation as claimed in the complaint. The loanee enjoyed the benefits from 30.3.96 to 2.6.04, without raising any objection and hence the complainant is not entitled to get any relief hence the complaint is liable to be dismissed.

            Upon the above pleadings the following issues have been raised for consideration.

1. Whether there is any deficiency on the part of opposite parties?

2. Whether the complainant is entitled to any relief as prayed in the complaint?

3. Relief and cost.

            The evidence in this case consists of the oral testimony of PW1, DW1 and xts.A1 to a6 and B 1 to B6.

Issue Nos. 1 to 3

            The case of the complainant is that even though Rs.3,00,000/- was sanctioned as loan the opposite parties  were not released the entire amount, the penal interest is exorbitant and without any basis, the opposite parties were not given moratorium for 18 months,. The EMI fixed is more than that of the income of the complainant and the opposite parties were not credited the entire amount. In order to prove this case, the complainant has produced Ext.A1 the photocopy of mortgage deed, A2 is the copy of the letter issued by opposite party, A3 is a letter from opposite party, A4 is the copy of accounts and A5 is circular from HUDCO. The opposite parties also produced documents and are marked as Exts.B1, loan application, B2 conditions of loan, B3, original mortgage deed, B4 consent letter given by complainant, B5 Income certificate and B6 the application for one time settlement.

            The one of the contention of the complainant is that the entire loan amount of Rs.3, 00,000/- was not disbursed to him. But the opposite parties contended that they have sanctioned the loan amount only after verifying the entire documents produced by the complainant and as a security the opposite party mortgaged 54 cents of property comprising in survey No.87/10A of Thirumeni village. The all conditions are approved by the complainant and the opposite parties disbursed the loan amount as per three installments. To prove this contention the opposite parties produced ext. B2 loan conditions and Ext.B3 Mortgage deed and the complainant has admitted the above said documents. In Ext.B3 the paragraph two clearly states that “The loan amount shall be paid to the mortgagor by the mortgagee in three installments that the first installment of a sum foRs.60,000/- equal to 20% of the loan sanctioned shall be paid to the mortgager after completing the construction of foundation and basement of the building, that the 2^nd installment of Rs.1,20,000/- equal to 40%of the loan sanctioned shall be paid to the mortgager after completing the construction up to the roof level and storing the materials required for construction of roof and on starting finishing work, that the3rd and final installment of Rs.1,20,000/- equal to 40% of the loan shall be paid after completing the construction of roof and on starting finishing work. It is further in paragraph 8 states that “At the time of disbursement of the 2^nd installment, the mortgage shall deduct the interest and other expenses due on the first installment till the date of payment of the 2^nd installment and like wise deduct the interest and other expenses outstanding on first and 2^nd installments at the time of disbursement of 3^rd installment. More over the complainant deposed that “Board se FÃm \n_-Ô-\-I-fpT AT-Ko-I-cn-¨mWv tem¬ hm§n-b-Xv. 3 e£T cq] 3 Xh-W-I-fm-bn-«mWv In«n-b-Xv. kÀhokv NmÀÖ CuSm-¡m-sa¶p \n_-Ô-\-bn ]d-ªn-«p-­v.Higher income group  loan sâ service charge 5%  amWv. H¶m-as¯ XhW kÀho-kvNmÀPv 3000/-- cq] Ign¨v 57000 cq]-bmWv \ÂIn-b-Xv. c­m-as¯   KUp-hn 6000 cq] kÀhokv NmÀPpT  BZ-y-K-Up-hnsâ ]en-i-bmbn 2101 cq] C³S-d-ÌpT FSp-¯n-«p­v . aq¶m-as¯ L«-¯n 6000 cq] kÀhokv NmÀPp-T-P-eni 6915 cq]-bpT CuSm-¡n-bn-cp-¶p. CXv F{Kn-saâv {]Im-cT AT-Ko-I-cn-¨-X-mWv.

So it is clear that the complainant had agreed for the above condition at the time of executing the mortgage deed and he has received Rs.3, 00,000/- as loan amount and hence the above contention of the complainant is baseless.

            The other contention of the complainant is that the EMI calculated by the opposite parties are more than the income of the complainant. It is admitted that the EMI is Rs.4870/-. But as per ext.B5 the income certificate dt.15.2.96 produced by the complaint is Rs.56, 000/- per anum. More over Ext.B 4 is a consent letter and  in it the approximate rate of EMI is shows as Rs.4866/-which is approved and signed by the complainant on 27..396 and he has not raised any question about EMI before. More over the DW1 deposed that hmbv] hm§p¶ Bfnsâ hcp-am\ ]cn[n A\p-k-cn-¨mWv hmbv] \ÂIp-¶-Xp.-Xn-cn-¨-Shv hcp-am-\-a-\p-k-cn-¨Ã \nÝ-bn-¡p-¶-Xp. BsI hcp-am-\-¯nsâ F{X-`m-KT Xncn-¨-S-hmbn ]nSn-¡m-sa¶p lukn-TKv t_mÀUn\v \n_-Ô-\-I-fn-Ã. sImSp¯ tem¬-A-\p-k-cn-¨mWv EMI Bh-i-y-s¸-Sp-¶-Xv.

More over as admitted by the complainant the opposite party is calculating EMI as per an approved formula i.e.

 R      X    (1 +R) n    X P

1200             1200

-----------------------------

(1 + R          ) n- 1

       ----                

1200          )

            Whereas R is the rate of interest. N is the number of installment and P is the loan amount. In the case R = 17.75, No. of installment t is 168 months and the principal amount is Rs.3, 00,000/-. So the EMI can be calculated on the basis of the above formula i.e.  

                                                                               168

17.75                                                                              17.75}

-------                     X            ( 1+   ---------)

1200                                                1200

_______________________________________________

                              168

                      17.75}

( 1+   ---------)  - 1

         1200   

       = 0.016163209 x 300000

       =4848.96  ied. Rs.4849 = 4850

            So in this case also it can be seen that the opposite party has calculated the EMI as per the above formula. The complainant has not produced any document or any circulars which direct the opposite arty to calculate the EMI as per the income of the complainant. More over in Ext.A3 which is the answer given by Finance Manger, KSHB, and Trivandrum to the question given by the complaint as per Right to Information Act. The answer to the question number 6 shows that the EMI are fixed for each category based on the quantum of loan, rate of interest and repayment period. So the contention of the complainant cannot be taken into consideration. But as per the above contention the EMI is Rs.4850/-. The another contention of the complainant is that opposite parties were not given moratorium period for 18 months for repaying the loan amount which is against the RBI’s regulations. As per Ext.B3 the mortgage deed Para 7 clearly says that “ The loan shall be repaid by the mortgagor in monthly 168 installments at the rate  as would be fixed and intimated by the mortgage. The repayment of the first installment becoming due on the succeeding of the month in which last installment of the loan is paid or the expiry of one year from the date of disbursement of the first installment which ever is earlier and there after subsequent installment shall be paid on or before the 10the day of succeeding month for 167 months. According to the complainant the master circular by the RBI, it is stated that there is moratorium period for 18 months or up to completing the construction. But the Master circular produced by the complainant with respect to primary (Urban) co-operative banking regarding finance for housing scheme and not for KHB. So there is no evidence before us to show that the housing board is bound to give a moratorium period of 18months. So the complainant failed to prove this contention also.

            Yet another contention of the complainant is that the opposite party had extracted an amount of more than 74000/- and is against the legal provisions and the penal interest is without any basis. In Para 12 of mortgage deed it is clearly stated that  “ If any installment of principal or interest is not remitted on the due dates  a penal interest at the rate of 2.5% in addition to the usual rates shall be paid  on the installments as are not paid on due dates”. This mortgage deed  is signed by the complainant.In Ext.B2 i.e. the conditions enclosed with the application B1 clearly states that the application for loan will be given only after going through it and after realizing that the conditions are acceptable to him. In Ext. B 2 document the complainant had signed by stating that he is ready to obey all conditions. So it is clear that as per the mortgage deed and other documents the loan amount bears 17.75% interest along with 2.5% penal interest and 17.75% defaulted interest for the days defaulted.  But on going through the statements of accounts submitted by opposite party it is seen that they have not credited the amount paid on 9.2.98, 12.10.98, 25.1.99, 14.9.00. 9.4.01, 6.6.01, 10.8.01, 8.10.01 towards the loan account on the date of payment. The opposite party has credited the payment on the above stated dates only along with the next payment while crediting that amount, towards the loan account, it is seen that the complainant has paid 94 installments as on 9.2.04. The details regarding the payment are as follows:

Balance as on 31.5.04 ie the dte of closing = 21174.469 +

                                                                             273.50

                                                                         = 21447.969

Amount paid as on  31.5.04                              = 109714.27

                        Excessreceived                           = 88266.31

So it is seen that as on the date of closing i.e. on 31.5.04, the complainant has to pay only Rs.21,174.47 after 92 installments. The complainant has paid the amount prior to the EMI. But the opposite party has received Rs.109714.27 on the date of closing. So the opposite party is bound to return the balance amount to the complainant as per the calculation shown below.

            The amount to be paid   = Rs.21174.47

            Interest 15.5%                 =21174.47 X 15.5   = 273.50

                                                                           1200

            Balance to be paid to complainant = 109714.27 – 21447.97

                                                                   = 88266.3

            More over in the above statement the opposite party claimed Rs.350.16 as balance interest during the period of construction .The first installment was released on21.5.96 and the amount is Rs.60,000/-. The second installment of Rs.1,20,000/- was released on 5.7.96 and 3^rd installment of Rs.1,20,000/- was released on 25.9.96.

            So the interest for first installment as on 5.7.96      60000 x 17.75       44

                                                                                             ----------------  X ------

1200                    30

      = 1301.67

            Interest for first installment as on 25.9.96  1,80,000 x 17.75           80

                                                                                         ----------------  X ------

1200          30

      = 8401.67

But the opposite party has received Rs.9016/- towards interest

                                                                             9016 – 8401.67

                                    Excess received                614.33

So the total amount to be paid by opposite party to complainant is

                                                              88266.3  + 614.33

                                                              = 88880.63

            So we are of opinion that there is deficiency of service on the part of opposite party in crediting the amount paid by the complaint on the date of payment and by receiving excess amount. So the complainant is entitled to receive Rs.88881/- with 9% interest from the date of closing ie. on 1.6.04. The complainant is also entitled to get Rs. 2000/- as cost with Rs.5000/- as compensation from the opposite party and order passed accordingly.

            In the result, the complaint is allowed directing the opposite party to return Rs.88881/-(Rupees Eighty  Eight thousand  Eight hundred and Eighty one only)with 9% interest from 1.6.04 till realization with Rs. 2000/-(Rupees Two thousand only) as cost and Rs.5000/-(Rupees Five Thousand only) as compensation to the complainant within one month from the date of receipt of this order, otherwise the complainant is at liberty to execute the order  against the opposite party as per the provisions of consumer protection Act.

                             Sd/-                                           Sd-                          Sd/-

President                      Member                       Member

APPENDIX

Exhibits for the complainant

A1.Copy of the mortgage deed

A2.Copy of the letter dt.30.7.04 issued by OP

A3.Copy of the letter from Housing Board

A4.Copy of the statement of account for loan closing issued by OP

A5.Copy of the HUDCO NIWASA (individual housing finance scheme )

A6.Letter dt.11.3.09 of Regional Chief HUDCO

Exhibits for the opposite parties

B1.Applicatin for loan submitted by complainant

B2.Condition of loan agreement

B3.Mortgage deed executed by the complainant

B4.Annexure to the application form for loan signed by complainant

B5.Income certificate dt.15.2.96 issued from Thirumeni Village Officer.

B6.Letter dt.27.5.04 submitted by complainant

Witness examined for the complainant

PW1.Complainant

Witness examined for the opposite party

DW1.K.Suseela

                                                            /forwarded by order/

                                                            Senior Superintendent

Consumer Disputes Redressal Forum, Kannur