Judgment & Order  dt. 31.10.2017

Alleging deficiency in service on the part of OP-Bank in issuing a notice dt. 22.6.2017 demanding payment of an excess amount of Rs.34,390/- from the complainant and giving an implicit threat to seize the vehicle of the complainant, unless the said amount  is paid within 7 days from the receipt of the notice, the complainant has come up before this Forum with the filing of the instant complaint u/s 12 of the C.P. Act, 1986, praying for reliefs for cancellation of the said notice, realization of compensation for mental pain and agony etc. against the OP-Bank.

            The facts leading to the filing of the instant case may be epitomized as follows.

The complainant being a government servant took a car loan amounting to Rs.2,48,140/- on 10.4.2010 from the OP-Bank on condition that he would repay the loan in 84 installments of Rs.3,903/- each to be paid month by month with floating rate of interest i.e. 8% p.a. According to the complainant, he has paid all the 84 installments to the Bank. But, still, the Bank has slapped a notice dt. 22.6.2017 upon him demanding payment of excess amount of Rs.34,390/- to which they are not entitled. It is further averred by the complainant that he has paid Rs.848/- in excess to the OP-Bank and he is entitled to get refund of the said amount. Now, the complainant has filed the complaint with the following prayer –

(a)  that a sum of Rs.848/- be refunded to him;

(b)  that the notice dt. 22.6.2017 be cancelled as being illegal and arbitrary with closure of loan account of him;

(c)  that a sum of Rs.50,000/- be paid to complainant as compensation for mental pain and agony suffered by him due to illegal notice of the Bank and a litigation cost of    Rs. 10,000/- be also ordered to be paid to him by OP-Bank. Hence, arises the instant case

            OP-Bank has filed a written statement wherein it is averred that the complainant took a loan from them for purchasing a car and the interest of loan has been properly calculated following guide lines of the Reserve Bank of India. The notice dt. 22.6.2017 has been correctly and lawfully issued against the complainant demanding payment of Rs.34,390/- and loan account of the complainant cannot be closed unless the said amount is paid by the complainant to the Bank. According to the averment of the Bank, there is no deficiency in service in issuing the aforesaid notice upon the complainant and therefore the case should be dismissed in limini.

            Upon the averments of the parties the following points are formulated for effective adjudication of the matter in dispute.

Points for determination

1. Is the OP-Bank guilty in deficiency in service as alleged by the complainant?

2. Is the complainant entitled to relief or reliefs as prayed for?

Evidence of the parties:

            The complainant has filed affidavit-in-chief along with some documents, which are marked as exhibit Nos. 1, 2, 3, 4, 5, 6 and 7 as detailed in the list of documents kept in the record. On the other hand, the OP-Bank has filed two documents as per firisti, which are marked as exhibit Nos. ‘A’ and ‘B’ also detailed in the list of the documents kept in the record.

DECISION  WITH  REASONS

Point Nos.1 & 2

            Ld. Lawyer appearing for the complainant has argued that the notice dt. 22.6.2017 is a whimsical and illegal one and the OP-Bank cannot thereby claim any money from the complainant on account of enhancement of rate of interest.  The rate of interest was 8% p.a.; it was a floating rate of interest and the OP-Bank can enhance it only when the complainant is informed about it. The OP-Bank cannot enhance the rate of interest unilaterally behind the back of the complainant and no notice about enhancement of rate of interest has ever been given to the complainant. Whatever is demanded by the OP-Bank by notice dt. 22.6.2017 from the complainant, as being excess amount, cannot lawfully be demanded from him by the OP-Bank and therefore the said notice is illegal of itself and by itself. He further continues to argue that the exhibit No. ‘A’ is a document, which shows the rate of interest as increased from year to year by the OP-Bank and exhibit No. ‘B’ is a document, which shows the rate of interest to be applicable to the loanee year by year. Exhibit No. ‘B’ being a circular shows that the rate of interest  to be recovered from the loanee in case of Ezee Car Loan is 10% for 2^nd and 3^rd year and 0.50% i.e. 11.25% p.a. currently for 4^th & 5^th year. But, the exhibit No. ‘A’ shows that more than 14% interest is effective on 2^nd, 3^rd, 4^th and 5^th year. So, according to the submission of the Ld. Lawyer appearing for the complainant, these documents i.e. exhibit Nos. ‘A’ & ‘B’ are self-contradictory in nature and they cannot be relied on in so far as the fixation of rate of interest is concerned.

            Ld. Lawyer appearing for the OP-Bank has contended that the rate of interest that 11.25% p.a. over the 4^th & 5^th year as shown in exhibit No. ‘B’ was applicable in the relevant year of sanction of loan i.e. in year 2010 and it is not applicable to any year thereafter. Such implication can be had, as goes his submission, from the word ‘currently’ used therein, vide exhibit No. ‘B’. So, there is no discrepancy between the two documents i.e. exhibit Nos. ‘A’ & ‘B’, as goes the submission of Ld. Lawyer appearing for the OP-Bank. It is further submitted by the said Ld. Lawyer that there is no specific mention in the sanctioned letter that the loan is to be repaid within 84 installments. It is to be repaid by the complainant until the loan is fully liquidated with interest thereon. The OP-Bank is still entitled to get Rs. 34,390/- from the complainant and therefore the notice was lawfully issued against the complainant with demand for payment of that amount. That notice is in consonance with the direction of R.B.I. and there is no deficiency in service on the part of OP-Bank in issuing such notice upon the complainant. With this submission of him, it is prayed by him that the case should be dismissed for want of cause of action.

            We have gone through the documents filed on behalf of the parties and have considered all these documents along with the submission canvassed on behalf of the parties.

            In a case of such kind the agreement executed by and between the parties plays a vital role in determining the disputes arising between them. The case of the complainant is that the OP-Bank cannot change the rate of interest and it is only 8% p.a. which was fixed at the time of execution of the agreement. The contention of the OP-Bank is that the rate of interest is subject to revision from time to time in terms of agreement and the said rate of interest has been so changed in accordance with terms of the agreement. In the context of such argument and counter –argument it is to be seen whether the change of rate of interest by the OP-Bank upon loan taken by the complainant is effected strictly in terms of the agreement executed between the parties. A copy of that agreement, which is called sanction letter, is filed herein by the complainant and the same is marked as exhibit No.2. The loan was advanced to the complainant and the floating rate of interest is applicable to the loan as per the terms of agreement. Such rate of interest is subject to change in the discretion of the OP-Bank and the relevant provision goes thus -

“the rate of interest is subject to revision from time to time and you shall be deemed to have notice of changes in the rate of interest whenever it is due to changes in SBAR or without change in SBAR displayed /notified at / by the Branch / published in the newspapers / made through entry of interest charged in the passbook / statement of account sent to you etc. and you are liable to pay such revised rate of interest. The bank has the option to reduce or increase the EMI or extend the repayment period consequent upon changes in interest rates”.

            From the terms and conditions of the agreement as referred to above, it is clear that the rate of interest applicable to the loan taken by the complainant can be subject to revision from time to time. But, there is a proviso which is required to be fulfilled by the OP-Bank before enhancing the rate of interest. The proviso requires the Bank to give a notice of changes regarding rate of interest to the complainant. If no notice is given to the complainant, any change regarding rate of interest will be unlawful. But, such notice need not be actual notice; it may be a constructive notice. The provision of agreement as referred to above, lays down that the complainant will be deemed to have notice of such change provided some positive acts are performed by the OP-Bank. These positive acts on the part of OP-Bank include–(1) display and notification of such change by the concerned Branch (2) publication of such change in the newspaper (3) intimation of such change made through entry of interest changed either in the passbook or in the statement of account which is required to be sent to the debtor. If all these conditions are fulfilled by the OP-Bank, it is only at that time the debtor is deemed to have the notice of the change of rate of interest. If no importance is attached to the fulfillment of these conditions, the change of rate of interest does not become lawful and in that case such change is not applicable to the complainant.

            Let us see now, whether the OP-Bank has fulfilled the requisite condition for effecting change of the rate of interest. No document whatsoever has been placed on record by the OP-Bank to prove that the rate of changes which occurred from time to time was displayed or notified by the OP-Bank. No copy of newspaper has been placed on record to show that such change was published in the newspaper. The OP-Bank is required to send the statement of account with entry of interest therein to the complainant i.e. the debtor. But, no document has been placed before the Forum to show that they have sent such statement of account to the complainant. One statement of account has been filed on record by the complainant and the same is marked as exhibit No.5. On perusal of exhibit No.5 it is revealed that a uniform rate of interest i.e. 13.75% has been all along charged against the complainant. So, regard being had to all these facts and circumstances, we feel no difficulty to say that the OP-Bank has not complied with the terms & conditions of the agreement while enhancing the rate of interest as applicable to the loan taken by the complainant. So, the OP-Bank is found deficient in service in this regard.

            There is still left to be considered another aspect of deficiency in service on the part of OP-Bank. On behalf of the OP-Bank, two documents have been filed and they are marked as exhibit Nos. ‘A’ & ‘B’. Exhibit No. ‘A’ is a document which shows the rate of interest applicable to the complainant with its effective dates. It shows that the rate of interest as applicable to the loan of the complainant varies from 8% to 13.8% during the period from 12.5.2010 to 5.10.2015. Exhibit No. ‘B’ is a circular relating to interest rate applicable to car loan under SBI Ezee Car Loan and SBI Advantage Car Loan till 30.4.2010. It is laid down therein that the special interest rate was 8% (fixed) for the 1^st year, 10% (fixed) for the 2^nd & 3^rd year and from 4^th year onwards, applicable card rate as on date of sanction on the floating rate basis. The applicable card rate is 11.25% p.a. for 4^th & 5^th year. But, exhibit No. ‘A’ demonstrates that more than 14% p.a. has been realized as interest from the complainant for 4^th & 5^th year, whereas it should have been 11.25% p.a. Ld. Lawyer appearing for the OP-Bank has contended that the rate of interest i.e. 11.25% p.a. for 4^th & 5^th year was applicable on the date when the circular was issued i.e. on 29.4.2010. But, it is not applicable to the loan of the complainant and interest has been charged on the basis of card rate prevailing during the 4^th & 5^th year of issue of the loan. We do not agree to the submission of Ld. Lawyer. It is specifically mentioned in the said circular that from the 4^th year onward the card rate on the date of sanction will be applicable. On the date of sanction of the loan i.e. in the year 2010 – the card rate as was applicable then was 11.25% p.a. But, this rate of interest has not been made applicable to the complainant and the Bank has charged more than that i.e. 14% p.a. during that period from the complainant as is seen from the exhibit No. ‘A’. A further perusal of the statement of account, exhibit No.5, also goes to demonstrate that the Bank has realized more interest, i.e. 13.75% from the complainant instead of 8% which should have been interest for the 1^st year of loan, as per circular (Ext. ‘B’). To charge more interest than what is laid down in the circular is undoubtedly a gross deficiency in service on the part of OP-Bank and the OP-Bank cannot do it.

            By issuing a notice to the complainant, the Bank has charged Rs.34,390/- from the complainant. A threat has also been given to the complainant to the effect that the car of the complainant will be seized unless the said amount is paid to the Bank. It is the case of the complainant that he has made payment of entire loan amount with interest as agreed upon and that the Bank is claiming Rs.34,390/- from him due to enhancement of rate of interest. We have already made it clear that the claim of enhanced interest by the OP-Bank is not lawful and also not in keeping with the terms of the agreement. Given the circumstances, the OP-Bank is found to be not entitled to recover Rs.34,390/- from the complainant and the notice dt. 22.6.2017 issued on behalf of the OP-Bank seems to be not a legal and valid one.

            Upon what have been discussed above, it is found that the OP-Bank is guilty of deficiency in service and therefore the complainant is entitled to get relief which is granted as hereunder.

            In the result, the case succeeds.

            Hence,

                                                O R D E R E D

            that the complaint case be and the same is allowed on contest against the OP-Bank with cost, which is quantified at Rs.2,000/-.

            Notice bearing No.PBD/98 dt. 22.6.2017 issued by the OP-Bank to the complainant is hereby quashed as being illegal and invalid. OP-Bank is hereby directed to close the loan account being No.31168263822 of the complainant and also to return the documents, if any, of the complainant, as there is no further amount due to the OP-Bank from the complainant. Prayer of the complainant for refund of Rs.848/- is not granted. The OP-Bank is further directed to pay a sum of Rs.3,000/- as compensation to the complainant for mental pain and agony arising from the slapping of illegal and invalid notice upon him. Compensation amount and litigation costs as mentioned above will be paid by the OP-Bank within a month of this order, failing which the compensation amount will bear interest @ 12% p.a. until full realization of the said amount.

            Let a plain copy of this order / judgment be furnished to the parties concerned forthwith free of cost.