BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, PONDICHERRY

C.C.No.21/2013

Dated this the 29^th day of April 2015.

Dr.R.Veeraraghavan, S/o.C.Radha

Associate Professor in Puducherry

Government College,

No.18, Nila Street, Vasanth Nagar,

Muthialpet, Puducherry-605 003.                                                ….       Complainant

Vs.

1. State Bank of India, rep. by

    The Assistant General manager,

    RASMECC, Puducherry.

2. State Bank of India, rep. by

    The General Manager,

    (Network-I Nodal Officer,

    SBI Local Head Office,

    No.16, College Lane (Circletop House)

    Chennai – 600 006.                                                                     ….     Opposite Parties

BEFORE:

            THIRU.A.ASOKAN, B.A., B.L.,

            PRESIDENT 

Tmt. PVR. DHANALAKSHMI, B.A.,B.L.,

           MEMBER

FOR THE COMPLAINANT                     :  Party in person.

FOR THE OPPOSITE PARTIES             :  Thiru.V.Anandavijayan, Advocate.

O R  D  E  R

(By Thiru.A.ASOKAN, President)

This is a complaint filed by the complainant under section 12 of the Consumer Protection Act, 1986 praying to:

1. Direct the opposite parties to delete their illegally debiting of Rs.1,10,000/- (Rupees one lakh ten thousand only) in the complainant's account no.30039240048 on 31.05.2012 towards arrears of interest and recalculate his dues at the interest rate of 8% till May 2012 and at 10.75% for two years from June 2012.
2. Direct the opposite parties to pay a compensation of Rs.2,50,000/- (Rupees two lakhs fifty thousand only) towards the unnecessary torture, physical hardship, suffering and mental agony caused to him and his family members due to the opposite parties' deficiency in service and Unfair Trade Practice as per Section 14(d) of Consumer Protection Act.
3. Direct the opposite parties to pay a sum of Rs.15,000/- (Rupees fifteen thousand only) towards litigation expenditure and cost of the complaint.

2.  The case of the complainant is as follows:

            The complainant has availed Housing Term Loan (HTL) from State Bank of India ADB Branch, Puducherry in February 2006 for 15 years at a fixed interest rate of 8% per annum.  The complainant had been paying the loan regularly at EMI of Rs.11,300/- (minimum). The rate of interest was maintained the same i.e. 8% p.a. by the bank till middle of May 2012.  Contrary to the terms of loan contract, on 29.07.2012 the complainant received a letter dated 23.05.2012 from the first opposite party stating that the interest on his fixed rate home has been reset upwards from 8 to 12.50% with effect from 13.5.2012 on 14.05.2012 and due to the increase in interest rate retrospectively, arrears of interest amounting to Rs.84,248/- has been charged to his loan account resulting into account becoming irregular.  He immediately complained to the Assistant General Manager, RAASMEC, Puducherry regarding sudden great increase in interest rate from 8 to 12.5% and the interest arrears amount, since the repayment is regular and the increase in the interest rate is applicable only from 13.05.2012.  The bank has given one time option of switching over to current card interest rate of 10.75% for two years on payment of a fee of Rs.8169/- @ 1.00% of the outstanding loan amount, which he opted and paid the prescribed fees Rs.8169 by cheque on 31.05.2012 and got the interest rate reduced to 10.75%. 

3.         It is further submitted by the complainant that regarding the interest arrears amount, he was given to understand that the opposite parties have raised the rate of interest retrospectively i.e from 01.03.20118 @ 10.25%, from 01.03.2010 @ 9.5% and from 01.03.2012 @ 12.50%.  But, according to loan arrangement/agreement letter dated 28.02.2006 signed by the complainant, the bank is allowed to revise 'in case of major volatility in the interest rate' once in two years only prospectively, with proper notice in advance, giving the right to terminate the loan within 15 days of the receipt of the notice, if the revised interest is not agreeable.  He was further shocked and mentally agonized to find that, an interest arrears amount of Rs.1,10,000/- was included in his loan account on 31.05.2012.  This inclusion of arrears amount in the complainant's loan account is contrary to the agreed terms of loan arrangement/agreement. Since 2012, he has given so many representation s for cancellation of the unjust interest arrears amount included in his account.  The opposite parties increased the interest rate in May 2012 retrospectively from March 2008, but claim that it is only prospective and tried to justify their illegal activity.  The complainant caused legal notice to the opposite parties, for which he received reply from CRC, SBI Local head office, Chennai directing the complainant to approach the Branch Manager, Personal Banking Branch, Puducherry. The complainant met the Branch manager only to find that the Manager is not at all empowered to take any decision in this regard. Finally, he sent a representation-cum-legal notice dated 06.03.2013 to the second opposite party, for which there was no positive reply from them.  Hence this complaint.

4.         The reply version of the first opposite party being adopted by the second opposite party is as follows:

            The complaint is unjust, unsustainable and not maintainable in law or facts. This opposite party denies all the averments narrated in the complaint except those that are admitted in the reply version. The corporate Centre of State of Bank of India is changing the rate of interest from time to time depending on various factors, which is applicable to all the branches in India. So, the application of interest to home loans is done uniformly.  There is no deficiency in service.  The rate of interest is revised and reset all over India by all the Nationalised Banks, so the complainant cannot allege unfair trade practice.  The complainant availed housing term loan in A/c No.30039240048 from the State Bank of India (Agriculture Development Bank), Puducherry in letter No.AGM-III-03-03465 dated 27.02.2006.  It is specifically mentioned in the letter that the interest rate will be charged at 2.25% below SBAR with a minimum of 8.00% p.a. (Fixed rate).  However it has been decided to incorporate a 'force majeure' clause to alter the fixed interest rate applicable suitable and prospectively in the event of major volatility in the interest rate during the period of loan agreement and it will be reviewed once in two years".

5          The rate of interest at the time of disbursement of loan was 8% and there after periodically it is revised by the corporate centre. The complainant has been informed of the revision of rate of interest regularly.  From the loan arrangement letter, it is clear that any revision of rate of interests, intimated in newspaper or notice board of the bank is deemed to have been intimated to the borrower. The borrower cannot allege that he has not personal knowledge. At the time of disbursement of loan, the rate of interest was 8% , from 01.03.2008 it is 10.25%, from 01.03.2010 it is 9.5%, from 01.03.2012 the rate of interest is 12.5%.   The above revision is as per terms acknowledged and accepted by the complainant in the arrangement letter issued to him, on sanction of loan.   The revision in rate of interest had not applied periodically due to the error in the computer system.  The fact was found out during the course of audit and after that the rate of interest has been applied as per the rate prevailing that time i.e 10.25% from 01.02.2008, 9.5% from 01.03.2010 and 12.5% from 01.03.2012.   It is as though the rate of interest of 12.5% is charged retrospectively.  The rate of interest had been revised already, but was not given effect due to the error in the computer system.  So, the question of increase retrospectively does not arise.

6.         As already stated, the increase/decrease is made as per the discretion of the bank which is specifically mentioned in the arrangement letter dated 28.02.2006.  The complainant was given one time option of switching over to current card interest rate of 10.75% and paid Rs.8169/-.  On payment, the complainant has accepted the rate of interest 12.50% prevailing then.  So, the complainant is stopped from contending that the rate of interest is only 8% till 31.03.2012. The contention of the complainant that interest rates are revised retrospectively is incorrect. The complainant made representation to the bank about his grievance and the same was properly addressed by the letters dated 18.06.2012, 04.07.2012, 18.01.2013, 11.03.2013.   Best service is being given to the complainant till now.   Whenever the interest is revised, it will be applied prospectively.  The genuine grievance of the complainant is properly redressed. The arrears of interest cannot be cancelled since it is applied uniformly.  The claim of the complainant is unacceptable.  The opposite party is not liable to pay any amount as prayed in the petition.

7          On the side of the complainant, he has chosen to examine himself as PW.1 and marked Exs.C1 to C21.  On the side of the opposite party, one Thiru..Sivasailam, Chief Manager has been examined as RW.1.

8.         Points for determination are:

1. Whether the complainant is consumer?
2. Whether the opposite parties attributed deficiency in service?
3. To what relief the complainant is entitled for?

9.         Point No.1:

            The complainant availed House Term Loan (HTL) of Rs.11,80,000/- from the opposite parties at the rate of interest of 8% per annum.  Hence the complainant availed service from the opposite parties under section 2(i)(o) and 2(i)(d)(ii) of Consumer Protection Act.

10.       Point No.2:

            We have perused the complaint, reply version, Exs.C1 to C21, documents filed by the opposite parties, calculation memo and written arguments filed by both the parties.  From the above records, we ascertained that the complainant availed Housing Term Loan from the opposite parties for Rs.11,80,000/- at the rate of 8% per annum by executing Ex.C1 in the month of February 2006 and agreed to pay the loan amount alongwith interest within 15 years with EMI of Rs.11,300/-.  The said loan was taken over from the HDFC vide Ex.C2. It is evident through Ex.C3 that the opposite parties have maintained the rate of interest @ 8% per annum upto 31.03.2012.  As per Ex.C4 the opposite party has reset the interest rate upwards from 8% to 12.5% with effect from 13.05.2012.  From that it is clearly understand that the opposite parties have maintained only 8% till May 2012 and increased the arrears of interest rate retrospectively.

11.       The opposite parties submitted that at the time of disbursement of loan the rate of interest was 8%.  As per Ex.C1, the rate of interest will be rest once in 2 years.  The revision of interest was made public in the newspaper, notice board of the bank.  The complainant cannot say that the interest rate was 8% till 31.03.2012.  The rate of interest has been revised three times.  The revision of rate of interest has not applied periodically due to the error in the computer system.  The fault was found out during the audit and after that the rate of interest was applied on the outstanding at the respective periods as per the prevailing interest at that time i.e. 10.25% from 01.02.2008, 9.5% from 01.03.2010 and 12.5% from 01.03.2012.  So the question of increase retrospectively does not arise.

12.       Form the records and evidence it is clear that the opposite party has not revised the rate of interest every two years prospectively as per Ex.C1.  The RW.1 during the cross examination accepted that they have calculated arrears of interest retrospectively and further admitted that no notice or publication was effected for the revision of interest rate.  If the opposite parties made revision of rate of interest periodically the complainant having chance to foreclose the account or switch over to another bank for lesser interest.  After knowing the increase in the interest rate retrospectively during 2012 the complainant gave one time option of switch over to current card interest rate of 10.75% for two years on payment of fee of Rs.8169/- @ 1.00% of the outstanding loan amount on 31.05.2012.  If the revised rate of interest intimated periodically from 2006 the complainant having the chance to take the decision on his own and having chance switch over to any other plan or bank.

13.       The complainant taken more efforts by sending request and representations through Exs.C8, 9, 11, 13, 14, 15, 17 to that effect the opposite parties replied by Ex.C10, 12, 16, 18.  All the efforts taken by the complainant ended in vain.  As per Ex.C1, point no.4, Rate of interest should be altered suitably and prospectively in the event of major volatility in interest rates during the period of agreement. But in this case the opposite parties have acted upon against the terms and conditions laid down in the Arrangement letter Ex.C1.

14.       It is clear that without giving prior notice to the complainant as prescribed in Ex.C1, the opposite parties have increased and imposed the rate of interest retrospectively is deficient on the part of the opposite parties.  We cannot accept the submissions of the opposite parties that due to error in computer system the rate of interest intimated and calculated belatedly by the opposite parties.  Therefore the complainant is not liable to pay the difference in the interest rate retrospectively by the opposite parties i.e. (i)10.25% per annum during the period of 01.03.2008 to 28.02.2010 for Rs.51,891/-  (ii)9.50% per annum during the period 01.03.2010 to 29.02.2010 for Rs.40,009, (iii) 12.5% per annum during the period 01.03.2012 to 12.05.2012 for Rs.9,355/- and the overall different of Rs.1,01,255/-. The complainant proved his case with supportive evidence that the opposite parties were indulged in deficient in service and unfair trade practice.  Hence the complainant is entitled for the relief for his loss and sufferings.

15.       Point No.3:

                        In view of the decision taken in point no.2, this complaint is hereby allowed.  The opposite parties are directed (i) to reverse the interest and waive the amount of Rs.1,01,255/- in the loan Account no.30039240048 imposed on 31.05.2012 as arrears of interest calculated as retrospectively, (ii) to recalculate the dues of the complainant at the rate of 8%  till May 2012 and at the rate of 10.75% for two years from June 2012,  (iii)to pay a sum of Rs.20,000/- as compensation for the loss and injuries suffered by the complainant and (iv) to pay Rs.5000/- as cost of the proceedings.

Dated this the 29^th day of April 2015.

1. ASOKAN)

PRESIDENT

(PVR. DHANALAKSHMI)

MEMBER

COMPLAINANTS WITNESS:  

CW.1             23.01.2014                Dr.R.Veeraraghavan

OPPOSITE PARTYS WITNESS: 

RW.1              04.08.2014                S.Sivasailam

COMPLAINANTS EXHIBITS:

OPPOSITE PARTY S EXHIBITS: Nil

1. ASOKAN)

PRESIDENT

(PVR. DHANALAKSHMI)

MEMBER