FA. No.1283/2006 against CD.No.352/2006, District Consumer Forum-III, Hyderabad.

Between:

Andhra Bank, rep. by its Chief Manager,

Customer Service Dept.

Head Office, Hyderabad.

…Appellant/Opp.Party.

And

1.Smt.G.Hymavathamma, W/o.G.V.Raghava Reddy,

   Occ: Housewife, Age : 60 years,

   R/o.35/3, R.T.Vijayanagar Colony,

   Hyderabad.

2.G.V.Raghava Reddy, S/o.G.V.Reddy,

   Age : 65 years, Occ: Retd.Chief Engineer,

   R/o.35/3, R.T.Vijayanagar Colony,

   Hyderabad.

…Respondents/Complainants.

Counsel for the Appellant          :  Mr.K.Sridhar Rau.

Counsel for the Respondents        Mr.B.Ramesh:

QUORUM:THE HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT

&

SMT. M. SHREESHA, HON’BLE LADY MEMBER.

FRIDAY, THE TWENTY THIRD DAY OF JANUARY,

TWO THOUSAND NINE.

Oral Order: (Per Hon’ble Sri Justice D. Appa Rao, President)

*******

1.         This is an appeal preferred by the Andhra Bank, the appellant herein against the order of the District Forum, directing it to pay compensation of Rs.50,000/- together with costs.

2.         The case of the complainant in brief is that an amount of Rs.12,30,000/- was sanctioned by the appellant bank towards housing loan and released Rs.11,00,000/- in the first instance and later an amount of Rs.64,500/-.  However, without his consent it deducted Rs.13,554.60 ps towards processing fee, Rs.11,020/- towards engineering valuation charges and Rs.40,925.40 ps towards lumpsum interest, in all Rs.65,500/- arbitrarily.  Had the said fact been informed, he would not have borrowed any loan from the appellant.  The suppression of vital fact amounts to unfair trade practice, and therefore, he prayed for refund of Rs.65,000./- together with costs.

3.         The appellant bank resisted the case.  It alleged that the complainant had agreed to the terms and conditions wherein it was mentioned that the incidental charges in regard to sanction of loan would be deducted to the loan account.  Having availed the loan, an amount of Rs.65,.500/- was adjusted towards the loan account.  He did not pay interest accrued till December, 2003, though the loan amounts were availed on 14.05.2005 and 14.06.2006.  Had the interest was not adjusted, it would have been detrimental to his own interest.  Therefore, it prayed for dismissal of the complaint with costs. 

4.         The complainants in proof of their case filed affidavit evidence and got Exs.A.1 to A.4 marked, while the bank filed affidavit evidence of its Chief Manager and got Exs.B.1 to B.3 marked. 

5.         The District Forum after considering the terms and conditions opined that no consent was taken from the complainant to deduct Rs.65,500/- towards various charges, which amounts to deficiency in service, and therefore, it directed the bank to pay Rs.50,000/- towards compensation besides costs and interest

6.         Aggrieved by the said decision, the bank had preferred this appeal contending that the District Forum did not consider Clause 15 of the terms and conditions of Ex.B.1 and that the complainant was liable to pay those amounts.  It does not amount to deficiency in service, and therefore, prayed that the appeal be allowed.

7.         It is an undisputed fact that a sum of Rs.12,30,000/- was sanctioned to the complainant towards housing loan and an amount of Rs.65,500/- was debited to his account while releasing the loan.  This amount of Rs.65,500/- consists of Rs.13,554.60 ps towards processing fee, Rs.11,020/- towards engineering valuation charges and Rs.40,925.40 ps towards lumpsum interest, in all Rs.65,500/-.  The complainant asserts that the bank was not entitled to debit the amount under the above said heads, as it did not inform that he was liable to pay the same. 

8.         At the outset, we may state that as per Cl.2 of Ex.B.1, letter of sanction, the bank had to submit valuation report pertaining to the security before releasing the loan.  The District Forum after considering the fact that sanction of loan was made on 26.03.2005 and first, second and third instalments were disbursed on 14.05.2005, 14.06.2005 and 23.07.2005 respectively, and the valuation report was submitted on 03.12.2005, seven months after releasing the instalments, in violation of Clause 2 of Ex.B.1, which in fact had to be submitted before releasing the loan.  The bank could not debit the amounts as and when it chooses to do so.  Equally so, the process fee of Rs.13,554/-,  Rs.11,020/- towards engineering valuation charges and Rs.40,925.40 ps towards lumpsum interest.  Ex.B.3 statement of account shows that a sum of Rs.13,554/- was charged towards processing fees and sum of Rs.166/- towards administrative charges, while a sum of Rs.11,020/- was charged towards evaluation charges. 

9.         Clause 15 clearly states that these charges have to be collected in cash and not to be debited under the loan account of the loanee.  Clause 15 reads as follows:

            “Processing charges and Administrative charges as per H.O guidelines to be collected in cash or to the debit of Savings account and not to be debited the loan account.”

The above clause would undoubtedly disclose that these charges have to be debited to the Savings Account and not to the loan account.  Contrarily it was debited to the loan account.  When it was in violation of the terms and conditions, the bank had no right to collect these amounts by way of debiting it in the loan account and then contend that it had every right to do the same. 

10.       The learned counsel for the appellant relying on Clause 11 of Ex.B.1 contended that it can alter or modify the conditions stipulated in the agreement, and therefore, debiting of these amounts cannot be said to be in violation of the terms and conditions.  We may state that these terms and conditions have to be read harmoniously and not in isolation and as per the whims.  Clause 11, which the appellant relies , reads as follows:

“Bank reserves its right to alter/cancel and/or modify the credit limits/sanctioned and/or terms and conditions stipulated without notice and without assigning any reason thereof.”

A bare perusal of it would discloses that it relates to credit limits and terms and conditions stipulated in 1 to 10 clauses mentioned above and not to Clause 15.  .  When Clause 15 empowers the bank to collect process and administrative charges by cash or by debiting the same to the Savings Bank account, it cannot debit those charges to the loan account.  It cannot do contrarily and collect it out of the loan account and justify its actions.  The bank has unjustifiably acted in debiting these amounts contrary to the conditions.  It did not even issue notice.  Therefore, the order of the District Forum cannot be faulted.  It relied the very terms and conditions, relied by the bank.

11.       The learned counsel for the appellant contended that at any rate the compensation was on higher side.  No doubt, no reason whatsoever was assigned for awarding sum of Rs.50,000/- towards commission except the fact that the complainant had claimed the amount.  Undoubtedly, for amounts of Rs.13,554.60 ps towards processing charges, Rs.11,020/- towards valuation charges and Rs,166/- towards administrative charges, in all Rs.24,740.60 ps, the compensation could not have been more than the amount debited in the account.  Therefore, we feel that an amount of Rs.20,000/- could be awarded for the lapse committed by the bank, which we feel reasonable and modest in the circumstances.

12.       In the result, the appeal is allowed in part modifying the order of the District Forum reducing the compensation awarded from Rs.50,000/- to Rs.20,000/-.  Rest of the order is confirmed.  However, in the circumstances no order as to costs in the appeal.  Time for compliance four weeks.      

PRESIDENT                     LADY MEMBER

                                                  Dt:23.01.2009.