DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II

U.T. CHANDIGARH

Subhash Lal s/o Sh. Jagan Lal, r/o H.No. B-188, Nehru Colony, Sector 53, Chandigarh.

                                                 ---Complainant.

V E R S U S

The HDFC Bank Limited, Plot No. 28, Indl. Area, Phase-I, Chandigarh, through its authorized representative/ Branch Manager.

---- Opposite Party

BEFORE:          SH. LAKHMAN SHARMA                         PRESIDENT

MRS.MADHU MUTNEJA                       MEMBER

                    SH.JASWINDER SINGH SIDHU                   MEMBER

Argued By:  Sh. Varinder Arora, Advocate for the Complainant.

                                Sh. Sandeep Suri, Advocate for Opposite Party.

PER JASWINDER SINGH SIDHU, MEMBER

1]           Complainant has filed the present complaint against the Opposite Party, on the ground that the Complainant purchased one Bullet Royal Enfield Motor Cycle from the authorized dealer M/s Manmohan Auto Store, SCF No. 6, Sector 27-C, Chandigarh vide Bill No. 7108, dated 9.9.2008 for a sum of Rs.73,800/-. The Complainant got a loan sanctioned for Rs.44,000/- through an Agreement No. 13788634 with HDFC Bank and it was agreed that 36 installments of Rs.1984/- per month were to be paid. The remaining amount of money was paid in cash to the Dealer. The Complainant claims that at the time of granting of the loan, the Opposite Party declared that the prevailing rate of interest was between 11%-12% at reducing balance and the same was as per the RBI Guidelines. 

              The Complainant was issued a re-payment schedule by the Opposite Party and the same is annexed as Annexure C-2 from where it was revealed that the Opposite Party was charging an interest at the rate of 34.75% on flat rate basis instead of reducing balance basis. The Complainant claims that under such high rate of interest he would end up paying Rs.27,424/- as interest against the principal amount of Rs.44,000/-, which is against the principle of natural justice and equity. This act of the Opposite Party is also alleged to be an unfair trade practice. The Complainant claims that he is regularly paying the installments and has not defaulted in his re-payment responsibilities.

              Aggrieved of the act of the Opposite Party Complainant approached the Authorities of the Bank to settle the rate of interest but to no avail. After having run from pillar to post, Complainant finally sent a legal notice dated 6.4.2010 to the Opposite Party but no reply to the said legal notice was ever made. Copy of the legal notice and its postal receipt are annexed at Annexure C-3 & C-4.

              The Complainant thus alleging deficiency in service on the part of the Opposite Party prays for the following relief of:-     

[a] directing the Opposite Party to revise the loan account to the rate of interest which was prevailing in the year 2008;

[b] A compensation of Rs.25,000/-  + Rs.15,000/- on account of harassment, mental torture, unfair trade practice, litigation expenses, along with an interest @ 21% p.a. from the date of disbursement of the loan. 

2]           Opposite Party has filed its reply/version contesting the claim of the Complainant and has taken preliminary objections to the effect that the Complainant having availed the said loan and being aware of the terms of finance was required to re-pay the loan as per the Agreement. The Complainant is claimed to have himself placed on record the re-payment schedule in respect of the loan availed.  It is also mentioned that the 1^st installment was payable on 5.11.2008 and now, after 2 years the Complainant is raising the present dispute and hence, the same is time barred. It is also stated that if the Complainant was not satisfied with the same, he should have closed the loan and returned the amount to the Bank. As the tenure as well as the amount of EMI is admitted and the same being agreed, the Complainant has no issue of raising this dispute at this stage.

              On merits, the contents of para 1 are denied for want of knowledge. In reply to para 2, it is admitted that the loan as well as the re-payment schedule is a matter of record and the same was available to the Complainant from the very beginning of the agreement and the Complainant cannot feign ignorance about it after passage of two years. The Bank is charging the EMIs as per the loan agreement. The effective rate of interest charged from the Complainant is _____% and it is denied that the prevailing rate of interest at the time of sanctioning of the loan was between 11 to 12% reducing. The Opposite Party demands that the Complainant be subjected to strict proof in respect of this issue. 

              The contents of Para No. 3 are denied and claimed to be wrong. It is also denied that the rate of interest being charged is 34.75% flat. It is also stated that by no stretch of imagination or computation can the said figure be arrived at. The contents of para 4 & 5 are wrong and denied. In reply to para 6 the same is mentioned to be the matter of record. Finally, Opposite Party claiming no deficiency in service on their part, and having charged the interest as per the agreed terms pray that the complaint be dismissed with cost. A copy of “Loan Application Form,”  temporary certificate of registration,  a copy of loan-cum-hypothecation agreement, copy of promissory note, as well as certificate of relinquishment of all claims, were also  filed but at a later stage.      

3]           Parties led their respective evidences.

4]           Having gone through the entire complaint, version of the Opposite Party, the evidence of the parties and with the able assistance of the ld. Counsel for the parties, we have come to the following conclusions.

5]           In the present case, the fact with regard to a loan amount of Rs.44,000/- availed by the Complainant on 5.11.2008 is admitted by the Opposite Party. However, the main issue is with regard to the rate of interest being charged by the Opposite Party. The objections of the Complainant are to the effect that the rate of interest being charged is much higher than the prevailing rate of interest as charged by other financial institutions at the time of sanctioning of the loan. The claim of the Opposite Party that as the Complainant has entered into an agreement and the same is signed by him, hence the Complainant cannot back out from the promise he has made and such an agreement cannot form the basis of any dispute. At the same time while trying to quote the effective rate of interest being charged the column has been left blank as “---%”. This compels us to believe that the opposite party is itself not sure about the rate of interest being charged. The allegation of the complainant about charging of interest at the rate of 34.75% is proved right from the “Schedule” document submitted by the opposite party.  

6]           It is important to visit the reply/ version of the Opposite Party which is approximately a one and a half page document which neither bears the complaint number nor the title of the complaint is written properly. Secondly the opening paragraph of this document neither mentions the name of the person tendering the reply/ version on behalf of the Opposite Party nor does it disclose whether he is authorized to do so. Thirdly the signatures of the representative also do not carry the official stamp which could identify the name and designation of the person appending his signatures on the said reply/ version. At the same time the signatures are appended on the line where it is written “FOR THE PETITIONERS”. In such circumstances, the reply/ version of the Opposite Party as available on the file is a bundle of confusion and incomplete facts. Such a reply/ version does not deserve to be believed. Hence, the reply/ version of the Opposite Party not being in proper order is out rightly ignored.         

7]           In the absence of any proper defence by the Opposite Party with regard to the averments of the complaint the entire complaint of the Complainant goes unrebutted. However, on going through the Loan Application Form it is revealed at page 2 in the column under the heading “Additional Information” it is mentioned that the “interest rate is 22.5% p.a. and loan processing fee would be 600% of the loan amount”. Whereas while going through the Schedule appended with the Loan Agreement under the heading “Loan Details” clearly mentions the rate of interest at 34.74% p.a. and under the heading “Charges”, the processing charges are mentioned as 620% of the loan amount. We fail to understand that under what provision or guidelines the Opposite Party Bank can charge such an exorbitant rate of interest as well as the processing charges to such an extent. Such kind of practice of the Opposite Party amounts to a high decree of unfair trade practice on its part. As the two documents the Loan Application Form and the Schedule of the Loan, are in contradiction to each other, hence neither of them can be believed. The complainant has submitted  copies of the judgments both titled Awaz and ors Vs Reserve Bank of India , published as 534, 2008(1) CPC (NC) and 232, 2008(3) CPC (NC) respectively. Though these judgments are related to charging of interest by the banks, at the rate of 36%-49% on credit cards, however the present case is with regard to a Two wheeler loan. At the same time the observations of the Hon’ble National Commission, about charging of interest at a rate much higher than the BPLR i.e Basic Prime Lending Rate by the banks amounts to Unfair Trade Practice, are to be honored.     

8]           In the light of above observations, the complaint in its totality succeeds against the Opposite Party. Hence, we allow the present complaint and direct the Opposite Party to:-         

[a] Refund (Rs. 18,282) 2/3^rd of the amount of interest (Rs.27,424/-) recovered illegally by the Opposite Party;

[b] Pay Rs.25,000/- towards compensation for deficiency in service, as well as unfair trade practice.

[b]          Rs.7,000/- as cost of litigation;

9]           The above said order shall be complied within 30 days of its receipt; thereafter, the Opposite Party shall be liable for an interest @18% per annum on Rs.43,282/- till it is paid, besides for the cost of litigation.

10]          Certified copy of this order be communicated to the parties, free of charge. After compliance file be consigned to record room.

Announced

17^th February, 2012.                                                                     Sd/-

 (LAKSHMAN SHARMA)

PRESIDENT

Sd/-

 (MADHU MUTNEJA)

MEMBER

Sd/-

(JASWINDER SINGH SIDHU)

MEMBER