DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, SAHIBZADA AJIT SINGH NAGAR (MOHALI)
Consumer Complaint No.879 of 2017
Date of institution: 24.10.2017 Date of decision : 11.06.2019
Jai Narain Aggarwal resident of Main Gali No.20, $S-12/496 (Now S-12/352), Shakti Nagar, Dera Bassi, District Mohali (Punjab).
…….Complainant
Versus
State Bank of India, Branch Office, Dera Bassi, Shakti Nagar, District Mohali.
……..Opposite Party
Complaint under Section 12 of
the Consumer Protection Act.
Quorum: Shri G.K. Dhir, President,
Mrs. Natasha Chopra, Member.
Present: Dr. Deepak Jindal, counsel for complainant alongwith complainant.
Ms. Sapna proxy counsel for OP.
Order by :- Shri G.K. Dhir, President.
Order
Complainant got sanctioned loan of Rs.5.00 lakhs in his and his son’s name on 31.01.2005. Interest @ 8.25% per annum on floating rate on the following terms and conditions was agreed:
a. That interest rate would be @8.25% per annum. The rate of interest was stipulated to be applied at the rate of 2.25% p.a. below long term prime lending rate (hereinafter referred to as LTPLR) rising and falling therewith.
b. Payment of 144 EMI’s of Rs.5,480/- per month was fixed by the bank for the period of twelve years. (Total amount Rs.7,89,120/- was to be paid in 12 years).
Complainant paid Rs.5,500/- instead of Rs.5,480/- per month for a total period of 12 years without any lapse. In this way complainant paid total sum of Rs.8,01,712.71 N.P. upto April, 2017 against the stipulated amount of Rs.7,89,120/-. Complainant claims that he is entitled for refund of excess paid amount. Instead of issuing No Due Certificate in favour of complainant, OP informed complainant as if amount of Rs.1,72,544/- including principal and interest is due against him as on 01.06.2017. OP claimed as if interest rate stood revised periodically during period of 12 years of repayment of loan. During period of 12 years of loan repayment, OP has not intimated even a single time about changes in rate of interest or regarding revision of installments. OP failed to comply with the rules and regulations, as per which information to customers about change of rate of interest or of revision of EMIs was to be provided. OP changed rate of interest at its own vide letter dated 01.07.2010, but without informing complainant. Change of interest made by OP through letter dated 25.07.2017 even without any information to complainant. In that letter of 25.07.2017 it was informed that loan was to be closed in March, 2017 if there is no change in ROI. Amount of Rs.1,74,084.97 N.P. was shown due/outstanding as on that date. In the said letter it was mentioned that bank has issued instructions to switch over from BPLR to Base rate vide circular dated 01.07.2010, but customer had not opted for switching over to base rate. So rate of interest was charged by linking the same with BPLR. That charged rate of interest was on higher side. Had the option about rate of interest would have been sought timely from the complainant, then he would have switched over to base rate by exercising option. Even if OP would have changed the interest on the loan within existing system, even then complainant would be having no objection, but change of rate of interest took place at back of complainant causing irreparable loss to him. By claiming that OP provided deficient services, matter taken to Banking Ombudsman, who did not make any attempt to come to the help of complainant. Banking Ombudsman has not even touched the grievances of the complainant. Non providing of information regarding periodical changes in rate of interest caused harassment and financial loss to the complainant, more so when complainant is 70 years of age. Aim of nationalized banks is not to earn illegal and unjust profits, but to render services to the public at large for their financial support in times of need and as such on the above referred averments, prayer made for directing OP to waive off the entire due amount demanded by it. Direction also sought to OP not to impose further interest on the due amount.
2. In reply filed by OP, it is pleaded inter alia as if complaint is misconceived , in view of involvement of intricate questions of law and facts the matter needs to be got decided from civil court of competent jurisdiction and that complainant has not approached the Forum with clean hands. Admittedly housing loan of Rs.5.00 lakhs with interest @ 8.25% on floating rate was sanctioned in favour of the complainant and loan was repayable in 144 equated monthly installments of Rs.5,480/- till entire loan and interest is fully repaid. Liability of complainant was to extinguish as and when outstanding loan amount becomes nil. Bank was entitled at any time without notice to vary and change rate of interest depending upon change in LTPLR. The said changes to be deemed sufficient notice of revision/variation and were to remain binding. Changes in the interest rate are notified by Reserve Bank of India from time to time and as such interest is accordingly chargeable in loan accounts. Complainant acknowledged terms and conditions contained in Arrangement Letter – Housing Finance and as such he is liable to pay the differences due to change in interest rate. Earlier complainant approached Banking Ombudsman of RBI Sector 17, Chandigarh for issuance of No Due Certificate. Complainant vide communication dated 28.07.2017 was explained the position that the loan account was to be closed in March, 2017 but due to increase in ROI during this period , amount of Rs.1,75,202.81 N.P. is outstanding as on 10.08.2017 and as such NDC cannot be issued. OP issued instructions to switch over from BPLR to base rate on 01.07.2010 but complainant did not opt for change to base rate and that is why rate of interest was charged by linking the same with BPLR in reconciliation meeting held before the Banking Ombudsman. Order dated 16.08.2017 was passed for advising action within three days. Bank was advised to recalculate the loan amount by indicating interest rate changes. MCLR date even may be preponed to 01.04.2016 without charges. CIBIL report may be corrected and penal interest charges may be revised as per this order. Outstanding amount may be rescheduled if request is made by borrower as per this order. However, complainant did not turn up and has filed this complaint. Borrower had been paying installments upto March, 2017, but overdue amount is payable due to change in the interest rate by RBI. Complainant was called upon to deposit Rs.1,72,544/- as on 01.06.2017 for enabling him to get NDC because said amount was outstanding against complainant. By denying each and every other averment of the complaint, prayer made for dismissal of the complainant
3. Complainant to prove his case tendered in evidence his affidavit Ex.CW-1/1 alongwith documents Ex.C-1 to Ex.C-7 and then his counsel closed evidence. On the other hand counsel for OP tendered in evidence affidavit Ex.OP-1/1 of Shri Ram Bhajan Negi, Branch Manager alongwith documents Ex OP-1 and Ex. OP-2 and thereafter closed evidence.
4. Written arguments submitted by the OP, but not by the complainant. Oral arguments heard and records gone through.
5. It is vehemently contended by counsel for the complainant that entire payment of EMIs has been made and as such complainant entitled for issue of NDC. This submission vehemently controverted by counsel for the OP by claiming that on account of change of rate of interest from time to time as per circulars of RBI interest stood enhanced, more so when complainant did not exercise option despite issue of letter dated 01.07.2010. Admittedly installment of Rs.5,500/- per month was used to be deposited by the complainant for 144 months. So it is claimed by counsel for the complainant that an amount of Rs.7,92,000/- has been deposited by the complainant. It is vehemently contended by counsel for the OP that interest was applied by the system for every late payment of installments and that is why interest piled up. Besides rate of interest stood increased from time to time and that is why an amount of Rs.1,72,202.81 N.P. is still payable by complainant to OP. It is also contended by counsel for the OP that complainant opted for floating rate of interest, but without exercising option to switch over to base interest in view of instructions dated 01.07.2010 issued by Reserve Bank of India through newspapers and electronic media as well as putting of the same on notice boards. It is contended by counsel for the OP that complainant cannot claim that he was not individually informed. In view of non exercising of option by complainant as per letter dated 01.07.2010, OP was having right to charge interest by linking with BPLR, which has been done in this case and as such it is contended that this complaint is not maintainable, more so when deficiency in service on the part of the OP is not there. For considering pros and cons of rival contentions, material placed on record has to be taken into consideration.
6. Copy of arrangement letter of housing finance loan Ex. C-1 is produced on the record. Perusal of clause 3 of Ex.C-1 establishes that interest on amount of loan to be applied @ 2.25% per annum below loan term prime lending rate (hereinafter to be referred as ‘LTPLR’) rising and falling therewith with 8.25% per annum quarterly/monthly rests calculated on the daily outstanding balance of loan amount. Further as per this clause bank will be entitled from time to time at any time, without notice to the borrower to vary and change rate of interest depending upon the changes in the LTPLR/ or rates of interest and such revised, varied and changed rate and/or rates of interest on the outstanding loan amount shall be deemed to be sufficient notice to the borrower. As per this clause 3, variation and change shall be binding on the complainant. By referring to this clause it is vehemently contended by counsel for the OP that bank is entitled to charge interest on the varied rates as per instruction issued by RBI from time to time. As specifically through clause 3, it was stipulated that notice regarding variation in change of interest was not required to be issued and as such rate of interest could have been varied. Undisputedly loan of Rs.5.00 lakhs was sanctioned on 31.01.2005 and said loan amount was to be repayable in 144 months at 2.25% below BPLR as referred in clause 3 of Ex.C-1. Certificate Ex.C-5 issued by bank establishes that complainant paid 144 installments of Rs.5,480/- regularly, but due to increase in BPLR at various stages the amount could not be adjusted in specified time. Rather through certificate Ex. C-5, it is disclosed that the account started showing overdue amount all of a sudden after the term of loan expired and as such in view of this it is contended that the outstanding amount mentioned in Ex.C-2 is recoverable. Certainly OP claimed that no personal notice of change of interest/schedule of payment served upon the complainant by OP because it is claimed by OP that necessity of issue of such notice was not there in view of clause 3 of Ex.C-1. Though this submission looks ex-facie correct, but in fact same has no force because as per RBI Circular dated 01.07.2010 bearing No.DBOD.No.Dir.BC.9/ 13.03.00/2010-11 base rate to include all those elements of the lending rates that are common across all categories of borrowers. As per Clause 2.2.1 of this circular base rate system mentioned in Annex.1 will replace the BPLR system w.e.f. July 01, 2010. However for loans sanctioned upto June 30, 2010, BPLR will be applicable as given in Annex. 3 and 4. Further as per Clause 2.2.1 for those loans sanctioned upto June 30, 2010, which came up for renewal from July 1, 2010 onwards, base rate would be applicable. Base rate will include all those elements of the lending rates that are common across all categories of borrowers. Banks may choose any bench mark to arrive at the base rate for a specified tenor that may be disclosed transparently. Loan in question in this case was sanctioned prior to June 30, 2010 and virtually it came for renewal in July 2010 when outstanding amount disclosed to complainant and as such in view of above said circular base rate is applicable. As circular of RBI favours case of complainant regarding charging of base rate because of sanction of loan in question prior to June 30, 2010 and of its coming up for renewal from July 01, 2010 and as such certainly submission advanced by counsel for complainant has force that OP bank could have charged base rate on such loans only. On re-structured loans when sanctioned prior to June 30, 2010 came up for renewal from July 01, 2010; the base rate system would be applicable. Illustration of that base rate system is given in Annex.-2 appended with the circular. So it is obvious that in view of circular of 01.07.2010 of RBI, OP bank could have charged base rate and not any other rate because of loan being sanctioned prior to June 30, 2010. In such circumstances act of calling of option or non option by OP from complainant becomes irrelevant.
7. Base rate is the minimum interest rate of bank below which it cannot lend, except for DRI allowances, loans to bank’s own employees and loans to bank’s depositors against their own deposits. Base rate system stood replaced with the BPLR from July 1, 2010 as BPLR is gradually losing its importance except for the loans taken before July 01, 2010 and as such RBI has allowed to continue with BPLR at which the loans were approved. RBI does not fix base rate because individual banks fix their own base rates. Above referred circular of 01.07.2010 in such circumstances certainly comes to the help of complainant for holding that OP bank should have calculated due amount as per base rate interest w.e.f. 01.07.2010 and not above that. OP must do the calculations within specified period and thereafter divulge the complainant about chargeable amount calculated on base rate basis w.e.f. 01.07.2010. As NOC cannot be issued by OP to complainant unless entire due amount is deposited by complainant and as such only on deposit of calculated amount by OP as referred above, and on payment of due amount based on above said calculations, by complainant to OP, OP will issue NOC. As Clause 2.2.1 of RBI circular dated 01.07.2010 is misapplied by OP and as such certainly same caused mental harassment and agony to the complainant, more so when he had already deposited 144 EMIs as revealed by Ex.C-5.
8. Through letter Ex.C-2 dated 25.07.2017 it was informed as if OP bank has issued instructions to switch over from BPLR to base rate vide circular dated 01.07.2010, but complainant has not opted for switching over to base rate and that is why interest has been charged by linking the same with BPLR, which is on higher side. So this letter Ex.C-2 enough to establish as if higher rate of interest by linking the same with BPLR is charged. However, reference to charging of interest by linking the same with BPLR is not at all made anywhere in Ex.C-1 = Ex.OP-1 and as such it is obvious that OP switched over to system of charging rate of interest linked to BPLR in violation of Clause-3 of Ex.C-1 = Ex.OP-1. Even Ex.C-4 makes mention of charging interest by linking the same to BPLR. Contents of letter dated 25.08.2017 sent by OP to complainant shows that date of MCLR preponed to 01.04.2016 without charges and difference stand reversed w.e.f. 01.04.2016 of Rs.429.16 N.P. No penal interest has been charged in the account of complainant as per this letter and as such it is obvious that penal interest has not been charged from complainant at all.
9. Merely because complainant approached Banking Ombudsman earlier, due to that alone he is not debarred from filing the complaint. As per law laid down in case Cholamandalam M S General Insurance Company Ltd. versus Sandeep Joshi 2015 (4) CLT 108 (NC), Ombudsman award is no bar for Consumer Fora to adjudicate the matter. Being so, this complaint cannot be dismissed merely on ground that complainant approached the Ombudsman earlier.
10. As a sequel of above discussion, complaint allowed in terms that OP can charge base rate of interest only. OP required to calculate the amount as per base rate interest w.e.f. 01.07.2010 and give intimation of the same to the complainant in writing within 30 days after doing such calculations. These calculations must be made by the OP within 30 days after receipt of copy of the order. Complainant will be divulged about the chargeable amount by calculating interest on base rate w.e.f 01.07.2010. The amount as found due on the base interest rate will be deposited by the complainant with the OP and after receipt of that amount, the OP will issue NOC. Compensation for mental agony and harassment of Rs.30,000/- (Rs. Thirty Thousand only) and litigation expenses of Rs.10,000/- (Rs. Ten Thousand only) more allowed in favour of complainant and against OP. Payment of these amounts of compensation and litigation cost be made within 30 days from receipt of certified copy of order. Certified copies of the order be supplied to the parties as per rules. File be indexed and consigned to record room.
Announced
June 11, 2019.
(G.K. Dhir)
President
(Mrs. Natasha Chopra)
Member
