Dt. of filing- 13/11/2017
Dt. of Judgement- 13/12/2018
Mrs. Sashi Kala Basu,President.
This complaint is filed by the complainant namely Shri Shyamal Kumar Panja under Section 12 of the Consumer Protection Act, 1986 against Opposite Parties namely Branch Manager, State Bank of India, Shakherbazar and Assistant General Manager, State Bank of India, Retail Asset Central Processing Unit alleging deficiency in service on their part.
The case of the complainant in short is that a term loan of Rs. 4,00,000/- was sanctioned on 03.09.2005 @ 8.50% per annum in favour of the complainant by OP No.1 for the purpose of housing loan. The said loan was sanctioned originally @ 8.50% per annum with monthly rest and floating rate of interest is subject to revision from time to time. It was stipulated in the sanctioned letter dated 03.09.2005 that the loan amount would be repaid in 132 E.M.I of Rs. 4675/-. From 10.03.2006, complainant started paying EMI of Rs.4,675/- @ 9% initially than it started increasing time to time but not as 8.5% as per sanction letter. Since the date of making payment of first instalment to till date, complainant never defaulted in making payment of the EMI. It could be noticed from the statement of accounts supplied by the OPs that as per the agreement, complainant was supposed to pay a sum of Rs.6,17,000/- ( Rs. 4675/- x 132 months = 6,17,100/- ). But due to ill motive and wrongful gain, the OPs have collected dishonestly from the complainant a sum of Rs. 6,50,000/- i.e. 33,000/- extra and still it is being continued without any intimation as the OP have been holding Title Deed of the property. Opposite Parties have been realising complainant’s EMI at the rate of 13% whereas the present rate of interest is between 8% to 8.5% everywhere pertaining to house building loan. A legal notice dated 14.03.2017 was sent to the OP by the complainant through his Ld. Advocate. OP have replied to the said notice but the same is totally baseless . Being compelled, complainant filed a suit before the Ld. Civil Judge ( Junior Division ) 6th Court at Alipore but as the process is very lengthy, same has been withdrawn. The OP have indulged in unfair trade practice and so the present complaint case is filed for directing the OP to refund the balance amount which has been deducted illegally from the complainants account i.e. Rs. 33,000/- along with interest @ 18%, to pay compensation of Rs. 1,00,000/- and the cost of litigation.
The OPs have contested the case by filing W.V. denying the material allegations made in the petition of complaint contending inter alia that in the sanctioned letter it was clearly mentioned that floating rate of interest and effective rate of interest being @8.50% per annum and the rate of interest is subject to revision from time to time and the borrower shall deemed to have notice of a change in the rate of interest whenever the change in SBAR displayed/ noticed at Branch/ published in Newspaper made through entry of interest charged in the Pass Book or the statement of account of the Borrower . Bank has the option to reduce and increased EMI or extend the repayment period consequent upon changes in the SBAR. Since the rate of interest was gradually increased on several occasions as per the RBI guidelines the Borrower is liable to pay the EMI on floating rate of interest and accordingly the complainant is liable to pay the EMIs as per the floating rate of interest and not at the initial rate of interest. As and when the complainant will pay the balance outstanding dues, the OP will return back all his original documents. The complainant is liable to pay the balance outstanding dues of Rs.99,808/- only to the bank upto the date of 04.01.2018. Thus the OPs have prayed for dismissal of the complaint petition.
Complainant has filed term loan sanction letter, statement of account, copy of letter dated 17.06.2016 sent by the complainant and notice sent through Ld. Advocate.
In course of evidence both parties adduced evidence by way of filing affidavit -in-chief followed by questionnaire and reply thereto.
Argument advanced by both the parties and they also filed their respective written argument.
So the following points require to be determined :-
- Whether Opposite Parties have rendered deficiency in service or adopted any unfair trade practice?
- Whether the complainant is entitled to the reliefs as prayed for ?
Decision with reason
Point No: 1 & 2 :-
Both these points are taken – up together for discussion for the sake of convenience and in order to avoid repetition.
It has been argued by the Ld. Advocate for the Opposite Parties that the complainant paid 132 EMIs at the rate of Rs. 4675/- per month. The rate of interest has been gradually increased on several occasions, as per RBI guidelines. So the complainant is liable to pay the EMIs on floating rate of interest and not at the initial fixed rate of interest.
On the other hand Ld. Advocate for the complainant has argued that the bank cannot enhance the EMIs without giving a written intimation to the borrower and without obtaining the written consent of the borrower. In support of his argument Ld. Advocate for the complainant has relied upon the decision reported in 1(2018) CPJ 141 (NC) ( India Bulls Housing Finance Ltd. & Anr.-vs- Boot a Singh Sidhu & Anr. )
At the very outset it may be pointed out that the practice followed by the banks in the home loan are that home loan is given at a fixed rate of interest or at a floating rate of interest. Under the fixed rate of interest scheme, the interest is fixed over the entire period of loan. Under the floating rate of interest scheme,the rate of interest is pegged to the market rate of interesti.e. they would vary with the fluctuation of interest rate in the market. In this case, admittedly term loan of Rs. 4,00,000/-was sanctioned by the OP in favour of complainant on 03.09.2005 for the purpose of house building. It is also apparent from the term loan sanction letter that floating rate of interest and effective rate of interest being 8.50% per annum and the rate of interest is subject to revision from time to time. It is stated in the sanction letter that borrower shall be deemed to have notice of change in the rate of interest wherever the change in SBAR displayed/noticed at/by branch/published in Newspaper /made through entry of interest charged in the Passbook/statement of account sent to the borrower. The bank has the option to reduce the EMI or extend the repayment period consequent upon changes in SBAR.
From the statement of account filed by the complainant it is evident that complainant has paid much more EMIs than fixed 132 EMIs stated in the sanction letter. According to complainant , he has already paid Rs.6,50,000/-in place of Rs. 6,17,000/-i.e. an extra amount of RS. 33,000/-. Bank statement does support the claim of the complainant. It shows that complainant has paid tota l144 EMIs . But according to the bank, complainant is still liable to pay balance outstanding due of Rs. 99,808/- upto the date of 04.01.2018 as per the banking rules and the sanction letter about floating rate of interest.
The statement of account filed by the complainant reveals that rate of interest charged time to time annually has been stated in the said statement. In the beginning, the rate of interest was 9% during 2006-2007 & 2007 – 2008. From 10.04.2018 to 31.03.2009, 01.04.2009 to 31.03.2010 and 01.04.2010 to 31.03.2011 it was9.75% per annum, respectively, but thereafter each year interest rate has been stated as 13% per annum. On and from10.04.2011 rate of interest charged in interest increased rate of 13% p.a. But in this context it may be mentioned that no RBI guidelines filed by the bank that rate of interest continuously remained 13% p.a. Does it mean that the interest rate stuck to 13% all along from 2011 to 2018 and it never reduced any time during these years. It is for the bank to establish that interest charged was actually prevalent market rate of interest during those years. It is the case of the bank itself that in floating rate of interest, the rate varies time to time. It fluctuate but it is strange in this case, it did not change. Be that as it may, barring the statement of account complainant was never intimated in writing about such enhanced rate of interest. Though statement of account reveals that EMIs has been realised from the complainant in a higher scale at the rate of 13% interest from29.09.2011 onwards till31.03.2018 i.e. last entry in the statement of account filed by the complainant.
In the case law cited by the Ld. Advocate for the complainant, India Bulls Housing Finance Ltd. & Anr.(Supra) Hon’ble National Commission referred theR.B.I guideline in RBI circulars relating to Floating rate of interest wherein it provides that “ Banks have the Freedom to offer all categories of loans on fixed or floating rates, subject to conformity to their asset liability management (ALM) guidelines. The methodology of computing the floating rates should be objective, transparent and mutually acceptable to counter parties. The base rate could also serve as the reference bench mark rate for floating rate loan products, apart from external market benchmark rates. The floating interest rate based on external benchmark should, however, be equal to or above the base rate at the time of sanction or renewal. This methodology should be adopted for all new loans. In the case of existing loans of longer/fixed tenure, banks should reset the floating rates according to the above method at the time of review or renewal of loan accounts, after obtaining the consent of the concerned borrower/s”.
It has been held by the Hon’ble National Commission in Para 17 of the judgement that“ From the above it is clear that RBI has clearly issued directions to all commercial banks that in case of floating rate of interest the consent of the borrower should be obtained”.
It is further held that “ Natural Justice demands that the consumer must have right to either change the number of EMIs due to change in the interest rate or to change the instalment amount to keep the same number of EMIs”.
In this case in hand as already highlighted above,neither intimation was sent to the complainant nor any consent was obtained for change in number of EMIs due to enhanced interest rate. So in view of legal proposition in the judgement referred to above, there has been unfair trade practice on the part of the Opposite Parties. Complainant is thus entitled to some amount of compensation for mental agony and litigation cost as he has been compelled to file this case.
However, in the given facts and situation of this case refund of Rs.33,000/- as prayed cannot be allowed. These points are thus answered accordingly.
Hence
Ordered
CC/641/2017 is allowed on contest. Opposite Parties are directed to payRs.20,000/- as compensation and Rs. 5,000/- as litigation cost to the complainant within two months from the date of this order. Opposite Parties are directed to seek consent from the complainant regarding the increase in the number of EMIs or he wants the amount of EMI to be increased. After obtaining consent, Opposite Parties will reschedule the number of instalments or the amount of EMI after adjusting the amount already paid by the complainant in his .loan account and fix the rat e of interest as per RBI guidelines and furnish the complainant full details regarding the increase/decrease rate of interest since the date of disbursement of the loan till the date of this order,within the aforesaid period of two months.