Complaints filed on: 10-10-2022

                                                      Disposed on: 27-04-2023

BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, TUMAKURU

          DATED THIS THE 27^th DAY OF APRIL 2023

PRESENT

SMT.G.T.VIJAYALAKSHMI, B.Com., LLM., PRESIDENT

SRI.KUMARA.N, B.Sc. (Agri), LL.B., MBA., MEMBER

SMT.NIVEDITA RAVISH, B.A., L.L.B, LADY MEMBER

CC.No.127/2022

1.       Sri. Dr. B.V.Sudhakar Reddy

          S/o Venugopal Reddy,

          Aged about 56 years

2.       Smt. T.Srilakshmi

          W/o Dr.B.V.Sudhakar Reddy,

          Aged about 52 years,

          Both are C/o Sudha Clinic, Tumkur Road,

          Pavagada-561 202, Tumkur District.

(By Sri. Ramakrishna .N., Advocate)

……….Complainant

V/s

1.       Sri. Mahabaleshwara M.S.

          M.D. & C.E.O.,

          Karnataka Bank Limited,

          K.B.L. PB No.599, Mahaveer Circle,

          Kankanady, Mangalore-575 002

          Dakshina Kannada District.

2.       Balachandra Y.V.

          Chief Operating Officer,

          Credit Monitoring Department,

          Karnataka Bank Limited,

          Head Office, Mahaveer Circle,

          Kankanady, Mangalore-575 002

          Dakshina Kannada District.

3.       Nagaraja Rao .B, General Manager,

          Credit Monitoring Department,

          Karnataka Bank Limited,

          Head Office Mahaveer Circle,

          Kankanady, Mangalore-575 002.

          Dakshina Kannada District.

4.       Subbaramu .L,

          Assistant General Manager,

          Karnataka Bank Limited,

          Regional Office, B.H.Road,

          Tumkur.

5.       The Manager,

          Karnataka Bank Limited,

          Branch Code – 603, SSK Sangha Building,

          Old Bus Stand, Tumkur Road,

          Pavagada – 562 102. Tumkur District.

……….Opposite Party

(By Sri. M.C. Prabhu., Advocate)

:ORDER:

BY SMT.G.T.VIJAYALAKSHMI -  PRESIDENT

This complaint has been filed by the complainant against the OPs U/s 35 of the Consumer Protection Act 2019 with a prayer to direct the OPs to re-cast the interest at 9.5% p.a. on loan of the complainant and re-fix the repayment period to 190 equated monthly installment and also prays to direct the OPs to pay Rs.4,50,000/- with interest @ 12% p.a. form 01.09.2013 to till the date of payment along with damages of Rs.5,00,000/- and such other reliefs as the Hon’ble Commission deems fit to grant. 

2.       The brief facts of the complaint are as under:-

The complainants are the customers of Karnataka Bank Ltd., with Pavagada Branch and were sanctioned with credit facilities vide sanction reference No.DGMS(RFD)11, dated:15.04.2010 for the purpose of purchase of a built house under KBL-APNA GHAR SCHEME.  Accordingly, credit sanction intimation vide letter dated:16.04.2010 has been issued intimating that the term loan of Rs.32,00,000/- with rate of interest PLR-4.25 (i.e. 9.50% p.a. as on the date of sanction), with monthly rests, subject to change from time to time, the period of repayment being 180 months with EMI of Rs.33,415/- each.  Accordingly, the complainants have been paying the EMI regularly without any default, from 17.05.2010.  It is further submitted that as per the agreement and under the impression, the term of the loan comes to an end with last installment on 17.04.2025, but when enquired casually, the OPs informed that the period of loan is for 240 months and not 180 months and further informed that the rate of interest for the said loan is being charged at 12.00% p.a. though at present rate of interest is being charged only at 7.50% p.a. for homes loans. 

The complainant further submitted that without the knowledge or consent, the OPs went on charging and collecting the interest and not intimated to the complainant about enhancing the rate of interest even on orally.    It is further submitted that the interest came down drastically based on the revision of REPO rate and PLR by RBI, but such downward revision was applied only for new loans to attract fresh borrowers, but grossly ignored the existing customers like complainants from the benefit of such downward revision and this was totally against the principles of natural justice.  The complainant further submitted that after noticing the injustice by the OPs, the complainant issued legal notice dated:23.07.2022 to the OPs by bringing the manner in which the floating rate of interest is to be applied/charged/revised.  It is further contended that the OPs would not re-fix the floating rate of interest without obtaining their consent in writing and the Banks obligations about the providing of opportunity being heard to the borrowers before re-fixing of the floating rate of interest in case of existing borrowers has been reiterated time and again and in this regard the Hon’ble Apex Court has passed catena of judgments.

The complainant further submitted that the agreed period of loan of 180 months has been unilaterally without the knowledge and consent of the complainant has been enhanced to 240 equated monthly installments, disproportionate to the actual amount to be repaid as per the agreed terms and the EMI and if the rate of interest was enhanced the complainants would have asked to enhance the amount of EMI instead of enhancing the period of repayment as they never agree or agreed to increase the repayment period.   It is further submitted the due to the act of the OPs, the complainant suffered mental agony and the OPs have illegally collected the excess interest from the complainant to the tune of Rs.4,50,000/-.  In spite of several requests, the OPs did not set-right the same.  Hence, the complaint.

3.       After receipt of notice, one Sri. M.C.Prabhu, Advocate files power for OPs and also files version of OP No.5 and memo of adoption stating that the OP Nos. 1, 2 & 4 have adopted the version of OP No.5.  In the version, the OPs have admitted about the sanction of loan of Rs.32,00,000/- to the complainant  with interest @ 9.50% and monthly EMI of Rs.33,415/- and payment of EMI regularly from 17.05.2010 from the complainant and the loan comes to an end with the last installment on 17.04.2025, but denied that the OP stated the period of loan was 240 months and not 180 months and interest for the said loan is being charged at 12%.  The complainants have not given any requisition to the said bank to know about EMIs and interest.  The complainants being well educated and working as a doctor, they know that interest will be displayed in the notice board of the 5^th OP/Bank from time to time and the 5^th OP/Bank also informed the change in the interest and revised EMI from time to time whenever the changes arose to all the customers of the bank including the complainants.

The OPs further contended that the 5^th OP/Bank with hardening interest rate scenario, have regularly revised upward their PLR/Base Rate during the last one year, that this has necessitated review of  ceilings fixed for installments consequent to upward revision in PLR/base rate and accordingly, as per the RBI guidelines, the necessary changes/revision in the maximum period upto which period of various EMI loans can be increased, consequent to upward revision in PLR/Base Rate shall not exceed 300 months in the case of housing loans etc.  It is further contended that as per the terms and conditions, the 5^th OP has charged the interest and has not charged any excess interest in the complainant’s loan account and the 5^th OP Bank has enhanced the installments to 240 from 180 in order to facilitate the complainant and whatever the amount to be in 180 installments, the complainants have to pay the same amount in 240 installments.  If the complainants are ready to pay the loan amount in 180 installments, they have ready receive the loan amount in 180 installments only.

The OPs have further contended that they cannot enhance the rate of interest at their own power and it will be enhanced only on the direction of RBI.  The complainants have misunderstood about the revision of rate of interest and without approaching the OPs for clarification, filed this false complaint, which is not maintainable.  On these among other grounds, the OPs have prayed to dismiss the complaint.     

4.       The complainant No.1 has filed his affidavit evidence and also marked the documents at Ex.P1 to P14.  Sri. Rayala Ramesh Babu, Branch Manager of OP No.5 has filed his affidavit evidence.  The OPs have marked the documents at Ex.R1 to R11(a).

5.       We have heard the arguments from both side counsels. The OPs have also filed written arguments.

6.       On perusal of pleadings and documents, the points that would arise for our consideration are:

1)                    Whether there is any deficiency in service on the part of OPs?

2)                     Whether complainant is entitled for reliefs sought for?

7.       Our findings to the aforesaid points are as under:

Point No.1: Partly in the affirmative

Point No.2: As per the final order

:REASONS:

8.       On perusal of pleadings, evidence and documents placed on record, the admitted facts between the parties are:

The complainant availed the financial assistance from the OP/Bank for the purpose of purchase of a built house under KBL – APNA GHAR SCHEME.  The OP No.5 sanctioned loan of Rs.32,00,000/- to the complainant with interest @ 9.50% and the period of payment is 180 months with EMI of Rs.33,415/-.  The complainants have paying the EMI regularly without any default from 17/05/2010 and the term of the loan comes to an end with last installment on 17/04/2025.  The complainant’s grievances are

1. OPs changed the period of loan from 180 months to 240 months and charged the interest @ 12% PA though present interest rate is being charged only @ 7.50% PA for home loans. 
2. Without the knowledge/consent of the complainants, the OPs charging and collecting the interest at enhanced rate and not intimated the same to the complainant.

9.       The OPs contended that the complainants have not given any requisitions to the bank, to know about EMIS and interest.  The interest will be displayed in the notice board of the 5^th OP Bank from time to time.  The 5^th OP also informed the change in the interest and revised EMI from time to time whenever the changes arose to all the customers of the Bank including the complainants.  The OPs further contended that as per the terms and conditions and RBI guidelines, directions, the OPs charged the interest and has not charged any excess interest in the complainant’s account.  The OPs enhanced the installments 240 EMI from 180 EMIs in order to facilitate the complainant. 

10.     As per Ex.P1 i.e. loan sanction letter dated:15.04.2010, it is seen that the complainant obtained financial assistance from the OPs under KBL – APNA GHAR SCHEME, wherein it is specifically mentioned that rate of interest subject to change from time to time.  The period is 180 months with EMI of 33,415/-.  The OPs are charging interest @ 9.5% as on the date of sanction of loan.  Later, OPs charging and collecting the interest at the rates hereunder:

But while enhancing the rate of interest as above from the date of sanction to till date, the complainant’s consent was not obtained by the OPs.  The counsel for complainant also submitted that the OPs are charged higher rate of interest to existing customer compared to new home loan borrowers and benefit of decreasing in home loan interest is not given to existing home loan borrowers.  For this allegation, the OPs counsel submitted that the complainants are taken loan under KBL – APNA GHAR SCHEME, under this scheme floating rate interest depending upon the PLR rates fixed by the RBI from time to time.  The other home loan schemes interest rates are deferred from KBL – APNA GHAR SCHEME.  Hence, there is no discrepancy in charging the interest rates. 

11.     The counsel for complainant to prove their case, has submitted following citations:

1. Un-reproted judgment of Karnataka High Court in WP 42815/2019 (GM-RES) Shekar B.S. Vs Chief General Manager, Syndicate Bank and another
2. [2015(8) scale 623] ICICI Bank Ltd. V/s Maharaj Krishan Datta and others”
3. 2012 STPL 27392 NC = IV (2012) CPJ 415 NC M/s IDBI Bank Ltd., and another V/s Subhash Jain and another,
4. ICICI Home Finance V/s Jarnail Singh First Appeal No.663/2007 decided on 12.02.2018 by State Consumer Disputes Redressal Commission, Punjab, Chandigarh
5. 2022 STPL 9371 DL = (III) 2021 CPJ 99 Mr.Vishnu Bansal V/s ICICI Bank (Para 16 & 17).

From the above citations, it is clear that “an opportunity must be afforded to the borrower before changing the floating rate of interest by the Banks. 

12.     The OPs counsel submitted that the Banks are fixed floating rate of interest as per the RBI guidelines and master circulars issued by the RBI from time to time.  Therefore, OP Bank enhanced the interest as per PLR rates and as per scheme KBL – APNA GHAR SCHEME.

13.     To prove their case, the counsel for OPs placed RBI guidelines and Maser Direction relating to fixation of floating interest rates. They are ; Master Direction – Reserve Bank of India (interest Rate on Advances) Directions, 2016, Master Circular – Interest Rates on Advances July 2, 2007.

14.     But in the case between ICICI Bank Ltd. V/s Vishnu Bansal, order dated:23.11.2022, the Hon’ble National Commission held that:

“the bank was well within its right to increase or decrease the rate of interest under the floating rate of interest provided for in the loan agreement executed between the bank and the complainant and any additional or further consent from the complainant was not required, the same having already been agreed to in the loan agreement itself”.

From the above dictum, it is clear that as per agreement executed between the Bank and complainant, the Banks have right to increase or decrease the floating rate of interest without obtaining the consent from the complainant.

Even though, Banks acted as per agreement executed between the Banks and complainant, the Banks duty is to notify in its website about changes in the floating rate of interest and to send EMI reset letters to the complainant/borrowers.

15.     On perusal of the above materials on record, it is seen that the OPs are not placed any relevant notifications or any documents to show that they are time to time intimated to the complainants regarding changes in floating rate of interest and re-set the EMIs and also not placed any relevant notifications in the public domine on its website from time to time whenever increased or decreased the rate of interest.  If the OPs intimated about the increase or decrease of rate of interest, the complainants would have taken timely steps to get his loan transferred to another bank with lower rate of interest.  This act of OP Bank i.e. failure to sent EMI re-set letters amounts to deficiency of service.   Hence, for the act of OPs, the complainants are compelled to approach this Commission and the complainants are deprived their right to shift to another banks with lower rate of interest or pre-close the home loan.  Therefore, the OPs are liable to pay compensation of Rs.75,000-00 to complainants and Rs.10,000/- as litigation cost. 

16.     The complainant prays to direct the OPs to re-cast the interest at 9.5% p.a. on loan of the complainant and re-fix the repayment period to 190 equated monthly installments. The OPs are right to fix the interest rates as per PLR rates fixed by RBI from time to time.  Hence, the complainant is not entitled for the said prayer.  But in the course of arguments OP’s counsel submitted that they are ready to re-fix repayment period.  If the complainant wishes to re-fix repayment period to 180 EMIs, the complainant is at liberty to approach the OPs in this regard and the OPs are directed to consider the request of the complainant regarding repayment period to 190 EMIs.  Further, the complainant prays to direct the OPs to pay Rs.4,50,000/- as illegally collected the excess interest.  As per Ex.P2 and P3, the OPs have collected interest rates as per RBI guidelines.  Hence, the complainants are not entitled to claim Rs.4,50,000/-.   Accordingly, we proceed to pass the following:-

:ORDER:

The complaint filed by the complainants is allowed in part.

The OPs are jointly and severally directed to pay compensation of Rs.75,000/- (Rs.Seventy Five thousand only) and Rs.10,000/- (Rs.Ten thousand only) as litigation expenses to the complainant.  

The OPs are further directed to consider the request of the complainant regarding repayment period to 180 EMIs if complainant gives requisition in this regard.

The OPs are further jointly and severally directed to comply the above order within 45 days from the date of receipt/knowledge of the order.

Supply free copy of this order to both parties