Punjab

Ludhiana

CC/19/255

Manjeet Lamba - Complainant(s)

Versus

Tata Capital Finance Services Ltd - Opp.Party(s)

Rachin Soni Adv.

18 Nov 2022

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, LUDHIANA.

                                                Complaint No: 255 dated 23.05.2019.                                                        Date of decision: 18.11.2022.

Manjeet Lamba S/o. Sh. Pritpal Singh, R/o. House No.642, Near Dukhniwaran Gurudwara, Prem Nagar, Ludhiana, Punjab.                                                                                                                                      ..…Complainant

                                                Versus

1. Tata Capital Financial Services Limited, one forbes, Dr. V.B. Gandhi Marg, Mumba-400001 through its Manager/Authorized Signatory.
2. Tata Capital Financial Services Limited, SCO 143, Feroze Gandhi Market, Ludhiana through its Managing Director/Authorized Signatory.                                                                        …..Opposite parties 

Complaint Under Section 2, 12 and 14 of the Consumer Protection Act, 1986.

QUORUM:

SH. SANJEEV BATRA, PRESIDENT

SH. JASWINDER SINGH, MEMBER

COUNSEL FOR THE PARTIES:

For complainant             :         Sh. Rachin Soni, Advocate.

For OPs                          :         Sh. Sachin Seth, Advocate.

 

ORDER

PER SANJEEV BATRA, PRESIDENT

1.                Briefly stated, the facts of the complaint are that the complainant had availed two home equity loans from the opposite parties bearing account No.7260382 (hereinafter called Home Equity Loan No.1) for Rs.20,10,000/- and second loan bearing account No.7016333 (hereinafter called Home Equity Loan No.2) for Rs.36,00,000/-. The said loan was to be repaid in 180 installments. It was further stated by the complainant that he was assured by the representative of the opposite parties that in case of foreclosure/prepayment of the said loans, the foreclosure charges would not be charged from the complainant. According to the complainant, several blank forms/papers were got signed by the opposite parties from him including the loan agreement. The complainant received welcome letter from the opposite parties on 28.02.2017 with regard to loan account No.7016333 and 28.04.2017 with regard to the other loan account No.7260382. It has been further stated in the complaint that after paying the installments for more than one year, the complainant decided to pay the balance amount of the said loan accounts and requested for issuance of NOC. However, the opposite parties illegally demanded foreclosure charges. Ultimately, the complainant was coerced to pay the foreclosure charges amounting to Rs.1,38,059.86 for loan account No.701633 and Rs.77,475.40 for loan account No.7260382. The complainant further complaint that the coerced recovery of above said payment is illegal and he is entitled to interest @18% per annum from the opposite parties for indulging in unfair trade practice and rendering deficient services. The complainant has also claimed compensation of Rs.1,00,000/- for mental pain and agony besides litigation charges of Rs.11,000/- as litigation expenses.

2.                Notice of the complaint was issued to the opposite parties, but the opposite parties did not appear and were proceeded against exparte orders dated 25.10.2019 and 20.01.2020. Opposite party No.1 filed Revision Petition No.23 of 2020 before the Hon’ble State Consumer Disputes Redressal Commission, Punjab, Chandigarh against the order dated 20.01.2020 and the Hon’ble State Commission allowed the said revision petition and set aside the exparte order dated 20.01.2020 and opposite party No.1 was given opportunity to file written statement/reply and evidence within a period of 3 weeks from 16.12.2020. In pursuance of the order dated 16.12.2020, opposite party No.1 appeared on 06.01.2021 and filed written statement.

3.                In the written statement filed by the opposite parties, it has been stated that the home equity loans were availed by the complainant along with other co-applicants namely Charanjit Singh, Mrs. Manpreet Kaur, Mrs. Harjeet Kaur and M/s. Shanty Footwear and all of them executed loan agreement/documents which were read over and explained to them in simple language and after admitting the terms and conditions, they signed the same. Further the parties are bound by the terms and conditions of the agreement and foreclosure charges have been paid as per terms and conditions of the agreement and that toowithout any protest. Further the opposite parties took an objection that the complainant is not a consumer as he has availed the loan for the purpose of commercial activities and amount so sanctioned was disbursed in the current account of M/s. Shanty Footwear and repayment was also paid from the current account of M/s. Shanty Footwear. So as such, the complainant is not competent to file the present complaint as he is not a consumer. The opposite parties further asserted that they have not done any illegality against the guidelines of Reserve Bank of India or any Government of India. On merits, the advancement of the loan, its repayment schedule of 180 days, charging of foreclosure amount were admitted but they have denied that the complainant was coerced to make foreclosure charges or the complainant is entitled to any compensation or interest as prayed for.

4.                In support of his claim, the complainant tendered his affidavit Ex. CA in which he reiterated the allegations and the claim of compensation as stated in the complaint. The complainant also tendered documents Ex. C1 is the welcome letter of loan account No.7016333, Ex. C2 is the details to access online account on its website, Ex. C3 is the repayment schedule/amortization pattern for loan account No.7016333, Ex. C4 is the invoice dated 28.02.2017 giving description of processing fee and charges, Ex. C5  is the welcome letter in loan account No.7260382, Ex. C6 is the details to access online account on its website, Ex. C7 is the repayment schedule/amortization pattern for loan account No.7260382, Ex. C8 is the invoice dated 28.04.2017 giving description of processing fee and charges,  Ex. C9 foreclosure letter of loan account No.2 and Ex. C10 is also the foreclosure letter of loan account No.1 and closed the evidence.

5.                On the other hand, counsel for the opposite parties tendered affidavit Ex. RW1/A of Sh. Varun Vohra, authorized representative of the opposite parties who also tendered documents Ex. RW1/A is the power of attorney, Ex. RW1/B is home equity loan sanction letter of amount of Rs.20,10,000/-, Ex. RW1/C is also the home equity loan sanction letter of amount ofRs.36,00,000/-, Ex. RW1/D is the loan agreement for the loan amount of Rs.20,10,000/-, Ex. RW1/E  is the loan agreement for the loan amount of Rs.36,00,000/- and closed the evidence.  

6.                We have heard the arguments of the counsel for the parties also gone through the complaint, affidavit and annexed documents and written reply along with affidavit and documents produced on record by both the parties. We have also gone through the written arguments submitted by the opposite parties.

7.                It is undisputed that the opposite parties sanctioned home equity loan account No.1 to the tune of Rs.20,10,000/- out of which Rs.17,10,000/- having a tenure of 180 month at the rate of interest of 11.05% per annum fixed one year and was payable in equated monthly installments of Rs.22,909/-.  After the expiry of period of one year, the Retail Prime Lending Rate of interest was applicable which could be variable during the tenure of the loan. Salient features of financial covenants of loan are as under:-

 

 

Total amount sanctioned	Tenor	Credit Life Insurance	General Insurance	Process Fee	Additional Processing Fee towards technical and legal
Rs.20,10,000/-	180 months	Rs.0/-	Rs.10,000/-	Rs.23,115/-	Rs.5,000/- (inclusive ST)

 

Current TCFSL	Present Rate of Interest	Spread over TCFSLRPLR	Monthly Installment (MI)
16.50%	11.05% (Fixed for 1 year)	-5.45%	Rs.22,909/-

Similarly, in another loan account No.2, the opposite parties sanctioned and disbursed Rs.36,00,000/- having a tenure of 180 months at the rate of interest of 11.05% per annum fixed for one year and was payable in equated monthly installments of Rs.41,031/-. After the expiry of period of one year, the Retail Prime Lending Rate of interest was applicable which could be variable during the tenure of the loan. Salient features of financial covenants of loan are as under:-

Total amount sanctioned	Tenor	Credit Life Insurance	General Insurance	Process Fee	Additional Processing Fee towards technical and legal
Rs.36,00,000/-	180 months	Rs.0/-	Rs.1,00,000/-	Rs.41,400/-	Rs.5,000/- (inclusive ST)

 

Current TCFSL	Present Rate of Interest	Spread over TCFSLRPLR	Monthly Installment (MI)
16.50%	11.05% (Fixed for 1 year)	-5.45%	Rs.41,031/-

Perusal of loan agreement Ex. RW1/D and Ex. RW1/E shows that the loan was meant for individuals and not for any commercial establishment. The complainant signed as applicant while Charanjit Singh, Mrs. Manpreet Kaur, Mrs. Harjeet Singh and M/s. Shanty Footwear signed as co-applicants. The home equity loan sanction letters as well as agreements have made stipulations regarding the part pre-payment and foreclosure charges which are reproduced in tubular form as under:-

9.

Part Pre-payment and Foreclosure charges

Rate Party to the agreement Foreclosure charges Partial Prepayment Charges. Description   Closure by own funds Closure by Balance TFR Closure by Own Funds Floating Rate Scheme All Individuals No Charges No Charges No Charges   Even 1 Non Individual 4% + Taxes 4% + Taxes 4% On Prepaid Amount Over 25% of Principal O/S. Fixed Rate Schemes Individuals/ Non Individuals 4% + Taxes 4% + Taxes 4% On Prepaid Amount Over 25% of Principal O/S. * Foreclosure Charges will be levied on the Principal Outstanding and all part payments, if any, made within immediate preceding 12 months of such foreclosure. * In case of Semi-Fixed Loans (fixed for initial period and then floating), the Foreclosure & Pre-payment norms for floating rate loans would be applicable on loan being converted into floating rate.

8.                The closure scrutiny of all the documents and its material terms and conditions clearly establishes that in case, if the loan has been advanced to the individuals and the interest is being levied on floating basis, then the opposite parties cannot impose or recover prepayment/foreclosure charges. In the present case, the loan was initially fixed for one year and, thereafter, valuable/floating Retail Prime Lending Rate of interest was applicable. The loan was disbursed in both the loan account on 28.04.2017 and it was foreclosed on 12.09.2018.

10.              The Reserve Bank of India has issued clarification circular No.RBI/2019-20/29 DBR.Dir.BC.No.08/13.03.00/2019-20 dated 02.08.2019, addressed to all Scheduled Commercial Banks, all Small Finance Banks and all Local Area Banks regarding the levy of foreclosure charges/pre-payment penalty on floating rate terms. Reserve Bank of India mandated that the bank shall not charge foreclosure charges/pre-payment penalty on any floating rate term loan sanctioned for purposes other than business, to individual borrowers with or without co-obligants. In view of the above said discussion, the opposite parties were not justified in recovery as foreclosure/prepayment charges from the complainant.

11.              Another argument of the opposite parties that the complainant is not a consumer, is not tenable because the loan facilities available by the complainant in the nature of home equity loan and the complainant was not generating any profit out of it. Therefore, it was not for a commercial purpose. So the complainant is a consumer of the opposite parties within meaning of Section 2(6) of the Consumer Protection Act, 2019.

12.              As a result of above discussion, the complaint is allowed with direction to the opposite parties to refund the foreclosure charges of Rs.1,38,059.86 and Rs.77,475.40 total Rs.2,15,535.26 to the complainant with interest @8% per annum from 12.09.2018 till the date of actual payment. The opposite parties shall further pay a composite compensation of Rs.10,000/- (Rupees Ten Thousand only)  to the complainant. Compliance of the order be made within 30 days from the date of receipt of copy of order. Copies of order be supplied to parties free of costs as per rules. File be indexed and consigned to record room.

13.              Due to huge pendency of cases, the complaint could not be decided within statutory period.

 

                             (Jaswinder Singh)                            (Sanjeev Batra)

                    Member                                           President

 

Announced in Open Commission.

Dated:18.11.2022.

Gobind Ram.

 

 

Manjeet Lamba Vs Tata Capital Financial                                 CC/19/255

Present:       Sh. Rachin Soni, Advocate for complainant.

                   Sh. Sachin Seth, Advocate for OPs.

 

                   Arguments heard. Vide separate detailed order of today, the complaint is allowed with direction to the opposite parties to refund the foreclosure charges of Rs.1,38,059.86 and Rs.77,475.40 total Rs.2,15,535.26 to the complainant with interest @8% per annum from 12.09.2018 till the date of actual payment. The opposite parties shall further pay a composite compensation of Rs.10,000/- (Rupees Ten Thousand only)  to the complainant. Compliance of the order be made within 30 days from the date of receipt of copy of order. Copies of order be supplied to parties free of costs as per rules. File be indexed and consigned to record room.

 

 

                             (Jaswinder Singh)                            (Sanjeev Batra)

                    Member                                           President

 

Announced in Open Commission.

Dated:18.11.2022.

Gobind Ram.