DATE OF FILING : 17/08/16

IN THE CONSUMER DISPUTES  REDRESSAL FORUM, IDUKKI

Dated this the 28th day of September 2018

Present :

SRI. S. GOPAKUMAR PRESIDENT

           SRI. BENNY. K. MEMBER

CC NO. 241/2016

Between

Complainant       :  Joseph J., 

                                                                             Moothedathu House,

                                                                             Kochara P.O., Chettukuzhy,

                                                                             Idukki District.

(By Adv: Vikraman Nair N.G.)

And

Opposite Party                                        :  HDFC Bank Ltd.,

                                                                      Moovattupuzha Branch, Moovattupuzha P.O., 

                                                                      Represented by its Manager.

(By Adv: Shiji Joseph)

O R D E R

SRI. S. GOPAKUMAR (PRESIDENT)

 

The case  of the complainant is that,  

 

In the year 2015, when the complainant was intending to  purchase a car  an agent of opposite party's bank approached him in his house and offered vehicle loan @ 10% per annum in the floating method.  Enticing into the attractive scheme of the loan complainant happened to avail a vehicle of    Rs.10 Lakhs from the opposite party bank and agreed to repay it with              36 instalments @ Rs.32,001/- as EMI.  But at the time of granting the loan complainant noticed that, the opposite party bank sanctioned Rs.9,67,999/- as loan amount and an amount of Rs.32,001/- was with held by them.  More over the complainant further came to know that the opposite party charging other hidden charges in the loan account.  Hence the complainant approached the opposite party bank on 25/07/16 to close the loan amount after successful payment of 13 instalments.  At that time the actual loan outstanding was 6,67,260/-.  But the opposite party bank demanded Rs.7,09,355/- and the complainant paid the amount where the bank demanded it forcibly.  The complainant further averred that, so the opposite party had charged an amount of Rs.42,075/-over and above what was actually due.  The complainant further stated that,  the holding of Rs.32,001/-  at  the  time of availing the loan

                                                                                                                          (Cont.....2)

-2-

and charging of an amount of Rs.42,075/- over and above the loan due, is the gross deficiency in service and unfair trade practice from the part of the opposite party bank and against this the complainant approached this Forum for allowing relief such as to direct the opposite party bank repay the amount which they realized from the complainant additionally and the amount with held by them at the time of sanctioning the loan with interest and with compensation and cost.

 

Upon notice opposite party entered appearance and filed detailed reply version denying the averment of the complainant.  In their version opposite party further contented that the complainant had agreed to collect the fore closure charges in the event the complainant close the loan before the maturity period.  Levying of charges is the contractual and legal right of the opposite party will not come under the purview of 'Consumer Dispute'.  The complainant himself had approached the opposite party by submitting the loan application.  The complainant had very will agreed for the Forum of the agreement and only after getting himself acquaints and satisfied with the contents of the agreement had executed the same.  The agreement executed between these parties is legally binding on them and one of the party cannot by his own acts repudiate the same at his own whims and  fancies.

 

Opposite party further contented that the complainant is liable to pay foreclosure charges of the loan as per the rate stipulated in the schedule.  In this case the complainant voluntarily opted to foreclose the loan on 25/07/16 ie, within one year from the 7th EMI.  Hence the complainant is liable to pay 6% of the principal outstanding for pre-closure along with outstanding amount and interest  payable on that date.

 

Complainant filed proof affidavit  and Ext.P1 to Ext.P3 were marked on his side. On the side of the opposite party Ext.R1 to Ext.R3 were marked.  Ext.P1 is the receipt issued by the opposite party dated 25/07/16, Ext.P2 is the repayment schedule, Ext.P3 is the statement of account, Ext.R1 is the copy of loan application, Ext.R2 is the statement of accounts, Ext.R3  is the copy of resolution of authorisation.

 

Heard both sides,

 

                                                                                                                           (Cont.....3)

-3-

The following points arises for consideration.

 

1 . Whether the opposite parties are entitled to collect pre payment charges?

2 . Whether there is any deficiency in service on the part of opposite parties?

3 . Whether the complainant entitled to refund the pre-payment charges     

     collected by the opposite party and compensation?

 

Points numbers 1 to 3 are considered together for the sake of brevity.

 

The Point:- We have considered the arguments of counsels of both sides and had gone through the materials on record.  The learned counsel relied warily on a copy of Circular of Reserve Bank of India dated May 2014.  Where in it is specifically stated that “Accordingly, it is advised that bank will not be permitted to charge foreclosure charge/pre-payment penalties on all floating rate term loans sanctioned to the individual borrowers, with immediate effect”.  The learned counsel further submitted that the loan in question is a floating loan, and in Ext.P2 loan payment schedule and Ext.P3 loan statement of account interest rate is not specifically stated.  More over the learned counsel further submitted that the opposite party bank with held an amount of Rs.32,001/- and it is against the loan agreement and is an unfair trade practice.

 

On the other hand the learned counsel for the opposite party vehemently argued that the complainant is liable to pay foreclosure charges based on clause 2.1 of the loan agreement.  More over the complainant voluntarily opted to foreclosure the loan on 25/07/16 ie, within one year from 7th EMI.  The counsel further argued that as a matter of fact the 36 EMI was fixed by remittance of the advanced EMI which fell due on 05/07/15 itself and the advance EMI was with held as agreed between the parties and the amount was disbursed after with holding one advance EMI.

 

The dispute in that matter is that whether the penal charges received by the opposite party from the complainant is as per terms and conditions and whether the opposite party withhold one EMI unlawfully.  On perusal of the statement of account Ext.R2 it is very clear that the EMI of the said loan started on 05/07/15.   The amount the opposite party withhold  is adjusted on the    first    EMI    subsequently     complainant     started     payment    of    EMI

                                                                                                                        (Cont.....4)

-4-

 

from 05/08/15.  In the first entry of Ext.R2 mentioned as “Due for instalment amount”.  On evaluation of the entries in Ext.R2, the Forum is convinced that the amount which is allegedly withhold by the opposite party bank at the time of disbursing the loan, is adjusted as the first EMI on 05/07/15, and the complainant started payment on second EMI onwards EMI is calculated as 36 instalments including the withhold amount.  Hence the allegation against the opposite party regarding the withhold of one EMI, is not withstanding and the act of the opposite party concerning this matter cannot attribute any unfair trade practice or deficiency in service.

 

Then the issue regarding the realisation of Rs.42,074/- by way of          pre-closure charge.  In this issue the learned counsel relied upon the circular of Reserve Bank of India dated 7th May 2014.  On going through the circular produced by the complainant at the time of hearing, Forum convinced that  this circular  is applicable to all floating loans.  The circular specifically stated as, “it is advised that banks will not be permitted to charge fore-closure charges/ pre-payment penalty on all floating rate terms loans sanctioned to individual borrowers, with immediate effect”.  The learned counsel for the complainant further relied upon a Judgement of Kerala State Consumer Disputes Redressal Commission reported in 2018 CPJ Part 2 Vol.I decided in the matter of M.Renji Kurien Vs Indus Ind Bank Ltd.,   In this case also the Honourable State Commission decided the matter on the basis of the above said circular of Reserve Bank of India.  In this judgement the Honourable State Commissioner Disputes Redressal Commission  reitrated the direction of the RBI  in the said circular in point No. 2 and 3 as Ext.P12 true copy of the circular issued by the Reserve Bank of India dated May 7,  2014.  wherein it is provided that the bank will not permitted to charge foreclosure charge, pre payment penalty on floating rate term loan, sanctioned to individual borrowers”.  At this juncture a crucial question arises whether the loan in question is a fixed or floating loan.  On finding out a solution in this issue we had gone through the evidence on record submitted by both the parties.  On perusing Ext.R2  loan statement of  account we can see that in the heading “Interest Rate and Type” is stated as Fixed.  That means the loan of the complainant under the category of  fixed and not floating.  The difference between the fixed loan and floating loan is specifically described  by the learned counsel for the opposite party that the rate of interest is fixed for the entire loan period.   In case  floating loan the

                                                                                                                          (Cont.....5)

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rate of interest  will be varied depend upon market fluctuations.  Hence as per Ext.R2 the rate of interest is fixed and the loan is categorised as fixed loan.  Hence the directions of the RBI circular discussed above cannot be applicable in this matter.  Hence complaint dismissed.

 

Pronounced in the Open Forum on this the 28th day of September, 2018.

 

                                                                                                   Sd/- 

                                                                                      SRI. S. GOPAKUMAR (PRESIDENT)

                                                                                                          Sd/-                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

             SRI. BENNY. K.  (MEMBER)

 

APPENDIX

 

Depositions :

On the side of the Complainant :

PW1               - Joseph Joseph

On the side of the Opposite Party :

DW1              - Syam

Exhibits :

On the side of the Complainant :

Ext.P1            -  The receipt issued by the opposite party dated 25/07/16

Ext.P2            -  The repayment schedule

Ext.P3           - The statement of account

On the side of the Opposite Party :

Ext.R1  - The copy of loan application

Ext.R2 - The statement of accounts

Ext.R3  - The copy of resolution of authorisation.

 

 

                  Forwarded by Order,

 

 

                       SENIOR SUPERINTENDENT