This Complaint coming up before us for hearing on                     24-08-11 in the presence of Sri V. Durga Prasad, advocate for complainant and of Sri L. Vijaya Kumar, advocate for opposite party, upon perusing the material on record and after hearing both sides and having stood over till this day for consideration this Forum made the following:-

O R D E R

Per Sri A. Hazarath Rao, President:-

          The complainant filed this complaint under section 12 of the Consumer Protection Act seeking a direction to the opposite party to calculate the amount due by him with agreed rate of interest besides reduction Rs.50, 000/- as compensation towards mental agony and Rs.1, 000/- towards costs.

2.     In brief the averments of the complaint are these:

          The complainant on 29-09-08 borrowed Rs.12,00,000/- for his business from the opposite party agreeing to repay together with interest @ 15.25% p.a. in 60 equal monthly installments @ Rs.35,250/-.    The complainant also deposited his title deed dated  18-11-04 with the opposite party as a security.   The complainant paid 21 monthly installments amounting to Rs.7, 43,400/-.   In July, 2010 the complainant informed the opposite party about his willingness to pay the balance at a time.   But the opposite party claimed a huge amount calculating interest exorbitantly besides several other charges.   The complainant paid installments in time.   Even as per calculations according to agreement the total amount will not exceed Rs.6, 00,000/-.   The opposite party is claiming interest at 24% p.a.   The complainant on 18-08-10 got issued a notice to the opposite party requiring him to furnish calculations.   The opposite party though received notice kept quite.   The complainant suffered a lot mentally and financially due to the above attitude of the opposite party.   The complaint therefore be allowed.

3.   The contention of the opposite party in brief is hereunder:

          The complainant is not a consumer within the meaning of Consumer Protection Act.    The complainant in all paid 21 monthly installments totaling to Rs.7, 38,900/-.     The opposite party is entitled to collect pre -payment charges as per agreement in its sole and absolute discretion.   In the event of pre-payment by the borrower the amount pre-paid will be adjusted firstly towards the incidental charges, secondly towards additional interest, thirdly towards EMI outstanding and fourthly towards EMI of current month and balance if any finally towards principle amount of the loan.   Any borrower has to give notice seven days earlier expressing his intention to repay the loan.  As per pre-payment policy of the opposite party the complainant has to pay Rs.11, 49,765/- as on 07-02-11 and future interest of Rs.3, 15,733.13 ps and besides pre-payment charges.   The opposite party is ready to close the account and return the documents of title to the complainant if he pays the above amount.   The complaint therefore be dismissed.

4.      Exs.A-1 to A-5 on behalf of complainant and Exs.B-1 and B-2 on behalf of the opposite party were marked.

5.   Now the points that arose for consideration in this complaint are:

1. Whether the complainant is a consumer within the purview of Consumer Protection Act?
2. Whether the opposite party committed deficiency of service?
3. Whether the complainant is entitled to compensation?
4. To what relief?

6.    POINT No.1:-      Since the opposite party charged interest and other charges i.e., upfront finance charges (Ex.A-1) as well in providing service in our considered opinion the complainant is a consumer.   Under those circumstances, the contention of the opposite party that the complainant is not a consumer is devoid of merit.  Hence, we answer this point against the opposite party.

7.   POINT No.2:-   The complainant obtaining a loan of Rs.12, 00,000/- on 29-09-08 and agreeing to pay together with interest at 15.25% p.a. in 60 monthly installments of Rs.35, 250/- are not in dispute.   The complainant got issued Ex.A-2 notice on 18-08-10 expressing his willingness to repay the remaining amount in lumpsum and sought return of his title deeds.   The opposite party received notice on 19-08-10.   It is not the case of the opposite party that it gave reply to Ex.A-2 notice.   

8.    The contention of the opposite party is that it is entitled to collect pre-closure charges as per agreement.  Clause 13 of loan agreement at page 32 deals with pre-closure charges.    Clause 13 says that if the borrower agrees to foreclose an agreement 2% will be charged on balance principal outstanding.    It is not the case of the complainant that he is not aware of the above clause.    

9.     In S. Krupanidhi Educational Trust vs. Union Bank of India 2010 (2) CPR 138 (KSCDRC)  held that it is not appropriate for the bank to collect the pre-closure charges in the event if the borrower had come forward to discharge the loan much earlier to the expiry of the period of the loan.  

10.  In the State Bank of Travancore and others vs. Rajan K.C., 2011CTJ 115) it was held

“It is the contention of the appellants that the pre-closure charge has been levied as per Ex.B-1 circular which enabled the opposite parties to collect the same and as per the terms of the agreement sanctioning the loan.   We find that the appellants have no case that they are empowered to collect the pre-closure charges of 2% on the outstanding amount, as per any statutory provision or that their alleged right is authorised by law except the case that their own circular authorised the same and except that it was mutually agreed that the appellants can collect pre-closure charges”.   

11.  In Smt Sashikala Gupta vs. H.D.F.C. Bank Limited and another  2010 CTJ 716 (SCDRC) it was held

“It is on record and unrebutted that the agreement documents have been duly signed by the complainant.   It is also admitted and unrebutted that it contains clause No.3.2 vide which the Bank has the right to charge prepayment charges as applicable.   Thus, in this view of the matter, we find no infirmity in the order of the learned District Forum and we also find no merit in the contention of the learned counsel for the appellant that the complainant was not made aware and had not agreed to make any prepayment charges”. 

12.  The preponderance of judicial pronouncements is that collecting pre-closure charges amounted to deficiency of service.   We therefore opine that the opposite party in demanding pre-closure charges from the complaint amounted to deficiency of service.

13.  POINT No.3:-   After issuing Ex.A-2 notice the complainant did not pay any installments to the opposite party.   The complainant even did not deposit the installments amounts subsequent to filing the complaint or the amount due according to him to the opposite party into this Forum for the reasons best known to him.   The complainant cannot take advantage of filing the complaint in not paying the installments amounts or depositing the amount according to him into this Forum.  The above attitude of the complainant in our considered opinion disentitles him to the relief of compensation.   

14.    POINT No.4:-   In view of above findings, in the result the complaint is allowed partly as indicated below:

1. The opposite party is directed not to collect pre-closure charges from the complainant.
2. The opposite party is directed to return documents of title to him on payment of the remaining amount due (Excluding pre-closure charges).
3. The opposite party is directed to pay Rs.1, 000/- (Rupees one thousand only) towards costs.                                     
4. The above order shall be complied within a period of six weeks from the date of receipt of the copy of the order.

             Typed to my dictation by Junior Stenographer, corrected by me and pronounced in the open Forum dated this the 30^th day of              August, 2011.

MEMBER                                  MEMBER                           PRESIDENT

APPENDIX OF EVIDENCE

                                        DOCUMENTS MARKED

For Complainant:

For opposite party:

                                                                              PRESIDENT