Karnataka

Belgaum

CC/308/2014

Krishna V Byaahatti. - Complainant(s)

Versus

The Manager, Dewan Housing Finance CorportionLtd - Opp.Party(s)

P.G.Kone

18 May 2015

ORDER

(Order dictated by Shri. V.S. Gotakhindi, Member.)

ORDER

          U/s. 12 of the C.P. Act, the complainant has filed the complaint against O.P. alleging deficiency in Banking service for charging exorbitant interest on Housing loan etc.,

          2) O.P. in the version denying the deficiency in service contend that contents of complaint are false, baseless, frivolous, vexatious, misleading and specifically denied, further contending that complaint is not tenable deserve to be dismissed. The O.P. further contended and admitted that the complainant approached for the loan and same was sanctioned and there was an agreement wherein it was agreed for the monthly installment of Rs.5,948/- for a period 9 years and Rs.2,817/- for a period of 11 years with an agreed interest at 9% P.A. subject to variation in the rate of interest as enumerated in the loan agreement. The O.P. also contended that as per the terms and conditions of the loan agreement it is binding on the complainant and also the increasing rate of interest as per the agreement. This O.p. denies that they have not disclose the rate of interest from October 2013, that they have charged higher rate of interest of 8% P.A., violated the terms and conditions of the RBI and also denied that the complainant has approached the O.P. seeking details of interest charge and that the O.P. has not heed to the request made etc.,

          3) The complainant has filed affidavit and some documents are produced. Officer of the O.P. finance has filed his affidavit and some documents are produced.

          4) For both parties written arguments are filed and also we have heard both learned counsel and perused the records.

5) Now the point for our consideration is that whether the complainant has proved deficiency in service on the part of the O.P. and is entitled to the reliefs sought?

6) Finding on the point is partly in affirmative for the following reasons.

REASONS

          7) The complainant has filed the complaint alleging deficiency of service on the part of O.P. that he has availed the loan in the month December 2014 for a period of 20 years by making necessary application and got sanctioned Rs.5,44,000/- at the rate of 9% variable interest as agreed in the agreement between both parties. The complainant further alleged that on the date of letter of offer that is dated 28/10/2004 the EMI for period of 9 years as per the agreement is Rs.5,948/-. The complainant further contended that since 2004 he is regular paying the EMI’s still September 2013 and in the month of September 2013 the complainant found that the respondent charge interest rate which was exorbitant at the rate of 18% P.A. and the complainant approached the O.P. to issue details of repayment of loan amount on 21/12/2013 and accordingly he obtained the statement and noticed that the rate of interest increasing from 10.25% P.A. to 18% P.A. still September 2013 and from October 2013 still January 2025 the rate of interest has been exorbitantly increase and in the statement no rate of interest shown. The complainant further contended that the respondent has charged 8% P.A. higher interest than agreed without notice to the complainant and trying to extract more money. The complainant further alleged that the EMI from October 2013 to June 2025 is on the visualization and imagination and gone on increasing without base of future market and have violated the norms of RBI in charging the rate of interest etc.,

          8) The O.P. on the other hand O.P. in the version denying the deficiency in service contend that contents of complaint are false, baseless, frivolous, vexatious, misleading and specifically denied, further contending that complaint is not tenable deserve to be dismissed. The O.P. further contended and admitted that the complainant approached for the loan and same was sanctioned and there was an agreement wherein it was agreed for the monthly installment of Rs.5,948/- for a period 9 years and Rs.2,817/- for a period of 11 years with an agreed interest at 9% P.A. subject to variation in the rate of interest as enumerated in the loan agreement. The O.P. also contended that as per the terms and conditions of the loan agreement it is binding on the complainant and also the increasing rate of interest as per the agreement. This O.p. denies that they have not disclose the rate of interest from October 2013, that they have charged higher rate of interest of 8% P.A., violated the terms and conditions of the RBI and also denied that the complainant has approached the O.P. seeking details of interest charge and that the O.P. has not heed to the request made etc.,

          9) The complainant has produced the statement of account, loan agreement issued by O.P. finance and agreed between the parties respectively. Wherein on letter of offer-Acceptance copy dated 28/10/2004 it can be seen that as shown below.

Loan amount	Interest Rate	EMI (Rs)	EMIs	Admin Fees	Interest Type	Int Rest
Rs.544,000	9%	9 Years=EMI 5948 11 years=EMI2817	240	Rs.4080	Variable	Monthly

 

          10) The table is for convenience of the forum. Further that the statement produced by the complainant which shows the rate of interest charged by the O.P. from October 2004 wherein we can see that from 9% the rate of interest went on varying upto 18% that on 1^st September 2013 and rest type column shows monthly. The one more contention of the complainant is that from September 2013 the O.P. has already calculated the EMI to be paid in future still January 2025 on imaginary base of interest. One of the document produced by the complainant is the legal notice issued to the O.P. on 13/3/2014 for which the O.P. on 18/3/2014 reply and in the said reply the O.P. at para No.2 has contended that abiding the guidelines of reserve bank of India the O.P. has increase the rate of interest and it has been inform to the complainant on several occasions and denied the other allegations of the notice issued by the complainant.

          11) The first and foremost point before us to be decided is that whether there is an exorbitant interest/ or interest charge is beyond the agreed rate of interest in the agreement. It is clear on the face of the statement of loan produced by the complainant wherein we can very well noticed that the rate of interest is gone on increasing from 9% to 18% and on the first page still the page No.8 of the statement. For the allegations of the complainant that the O.P. has not supplied any document or norms of RBI to show that the extent of variable in the interest and that according to the RBI norms the O.P. has charged the said interest at the rate of 18%. The O.P. has denied the said contention but has not produced a single piece of document before the forum to show that the rate of interest as alleged by the complainant is not excess and the same is as per norms of RBI. The O.P. has also denied that the complainant has not approached the O.P. seeking document but it can be seen from the document produced by the complainant that the complainant has approached the OP. and the O.P. has supplied the statement of accounts. This itself shows that the complainant has approached the O.P. seeking explanation and documents for charging excessive. The second point raised by the complainant and to be considered by the forum is that whether on imaginary and visualization of the market rate and variable market interest the O.P. can calculate the rate of interest. The O.P. contention in the affidavit and objection is that the rate of interest charged as per sole discretion in decreasing or increasing the rate of interest and as per clause No.2.2 of loan agreement. If at all it was discretion of the O.P. to charge the rate of interest and also as per the agreement it also the duty of the opponent is to inform the complainant in regards to variation in the market rate but before increasing the rate of interest we have noticed that as per the submission made by both the parties no documents are coming forth the increase rate of interest and charged by the O.P. is known to the complainant. More over, as per the agreement the interest rate is 9% and there are 2 different period as shown in the table supra the installment of Rs. 5,948/- is for the period of 9 years and Rs.2,817/- for the period of 11 years. If we observe the statement of loan from the December 2004 the EMI amount shown is Rs.5948/- still June 2007 and if we observe the above front page of every page the interest rate from October 2004 till April 2007 is increased from 9% to 14% and from June 2007 the EMI amount is charged for Rs.6,384/- till 2008 and from October 2008 the amount is Rs6,720/- till July 2011 and from August 2011 the amount is Rs.7,110/- till October 2013. The O.P. has utterly failed to show that there is a variability in the market rate of interest so they have increase the rate of interest and charged the same to the complainant and also have failed to show that the RBI have increase the rate of interest and it has varied from 9% to 18% which beyond the agreement entered between the parties.

          12) The another point to be considered that the O.P. has calculated the future interest till January 2025. On one breath the O.P. denies the contention of the complainant that they have not violated the RBI nor they have gone beyond the agreed rate of interest but we can find that on imaginary basis the complainant the O.P. has already calculated the future rate of interest and have entered the EMIs in the statement. Nobody can predicate what would be the market rate of interest for the financial year as per the own contention of the O.P. that market rate of interest varies. Hence predicating the future and the charging interest prior to any financial year except the present financial year can be considered to be visualized and same is imaginary.

          13) The complainant has also produced the memo along with the paper publication that is the new Sunday express and also Samyukta Karnataka News paper dated 15/3/2015 respectively. Wherein the O.P. has given a paper publication styled as demand notice against the complainant demanding for loan balance and to attached the property under securitization and reconstruction of the financial assets. The O.P. knowing very well that the complainant has approached this forum seeking justice and also during the pendancy of the complaint the O.P. has gone to the extent to seize the property. The O.P. may be right on his part that in case of default in non payment of loan by their barrowers the O.P. can very well attach the property and auction the same, as in this case the complainant has stopped making payment of installments from September 2013 as he himself admits in the complainant but it is also to be noted that from the date of obtaining the loan the complainant is regularly paying the EMIs to the O.P. and it is not the case of the O.P. that the complainant is in default from 2004 to September 2013. Hence, taking extreme steps and issuing demand notice in the paper against the complainant in our opinion is pre mature and upon that the reason that the complainant has stopped paying the EMIs to the O.P. is for excess charging of interest by the O.P. without prior notice to the complainant and the complainant has proved that the O.P. has charged excess interest which is beyond the agreed rate of interest.

          14) The complainant has filed application along with the interrogatories and the copy has been received by the O.P. but the O.P. has not answered the interrogatories of the complainant. The complainant has produced document in support of the allegation against the O.P. as discussed the supra. In one of the decision reported in 2015 (2) CPR 172 (NC) wherein the Hon’ble National Commission held

“Consumer Protection Act, 1986-Section 15,17,19,21-Banker’s Book of Evidence Act, 1891-Bank Account Statement of-Nature of-HELD-Statement of account certified statement under Banker’s Book of Evidence Act, 1891-Presumption of truth attached with it-Evidence has to file to rebut this. [Para 9]”

          15) In the present case on hand the complainant had come up with the statement of loan account wherein clearly shows the excessive interest charge as alleged by the complainant and to rebut the evidence the O.P. has not produced a single document before the forum as to how the O.P. arrived at interest rate and what is exactly variable according to them means. The decision quoted supra under the heading;

Important Point – Documentary evidence will always get preponderance over oral submissions.

          16) The O.P. except oral submissions that the excess interest/the interest which they have charge is according to the market prevailing rate and also according to norms of R.B.I. but they have not produced any document to show the same. On the other hand the complainant has produced sufficient document and statement of account of loan as per the decision quoted supra in this case the documents are preponderance over oral submissions of O.P.

          17) Thus, charging exorbitant interest/or interest charge is beyond the agreed rate of interest in the agreement by O.P. is unjust and illegal. Accordingly, following order;

ORDER

          The complaint is partly allowed.

          The O.P. is hereby directed to charge interest at the rate of 10.25% P.A. as per loan agreement from September 2013 on the remaining loan amount to be paid by the complainant.  The O.P. is also hereby directed to refund excess interest amount charged at the rate of 8% P.A. from July 2011 till today.

          The O.P. is hereby directed to pay compensation of Rs.5,000/- to the complainant.

          Further, O.P. shall pay a sum of Rs.2,000/- to the complainant towards costs of the proceedings.

Order shall be complied within 30 days from the date of the order.

(Order dictated, corrected & then pronounced in the Open Forum on this 18^th day of May 2015.)

          Member                    Member            President.

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