BEFORE THE DAKSHINA KANNADA DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, MANGALORE
Dated this the 28th February 2014
PRESENT
SMT. ASHA SHETTY : HON’BLE PRESIDENT
SMT.LAVANYA M. RAI : MEMBER
SRI. ARUN KUMAR K. : MEMBER
COMMON ORDER IN
COMPLAINT NO.28 & 30/2013
(Admitted on 24.1.2013)
Mr.Shashiraj.A.,
So Late John Ambat,
Aged 54 years,
Rat D.No.4H,109 D,
6yh Cross Girinagar,
Landlinks, Derebail,
Konchady,
Mangalore 575 008. …….. COMPLAINANT
(Advocate for Complainant: Sri. Deep Raj Ambat)
VERSUS
The Manager,
HDFC Bank Ltd.,
Retail Asset Division,
M.N.Towers, 1 Floor,
Kadri, Mangalore575 002. ……OPPOSITE PARTY
(Advocate for Opposite Party: Sri. M.Chidanand Kedilay)
ORDER DELIVERED BY HON’BLE PRESIDENT
SMT. ASHA SHETTY:
I. 1. The above complaints filed by the complainants are against the very same Opposite parties under Section 12 of the Consumer Protection Act alleging deficiency in service and sought common reliefs. In order to save time we have decided to pass the common order.
The brief facts of the case are as under:
Both the complainants in C.C.No.28 and 30/2013 stated as follows:-
The complainant in C.C.No.28/2013 stated that, he had availed Car/Auto loan from the Opposite Party as per loan account No.15937903 by executing a relevant loan documents/loan papers. It is stated that, at time of availing loan the opposite party has taken several post dated cheques towards monthly instalments for the repayment of the loan amount. On 24.9.2012 the complainant had made the entire payment of Rs.2,61,385/- and foreclosed the loan. On making the said foreclosure, the opposite party has debited a sum of Rs.7,578.01/- towards the prepayment charges at 3% on the outstanding principal amount which is not correct and stated that which amounts to unfair trade practice and further it is stated that pre-closed loan amounts collected from the customers are utilized by the bank to some other customers and not kept in an suspence account without using the same. Hence this complaint.
Similarly in CC.No.30/2013, the complainant stated that he had availed personal loan of Rs.4,00,000/- from the Opposite party as per loan account No.17933130 and the complainant executed relevant loan document papers and also obtained certain cheques towards the monthly installment for the repayment of the loan account. On 12.1.2012 the complainant had made entire payment of Rs.3,03,737.79 and foreclosed the loan but the opposite party has debited a sum of Rs.11,634.98 towards pre-payment charges at 4% on the outstanding principal amount which is not correct and amounts to unfair trade practice as well as deficiency in service. Hence the above complaint filed.
Both the complainants in the above complaints filed the complaint under Section 12 of the Consumer Protection Act 1986 (herein after referred to as ‘the Act’) seeking direction from this Forum to the opposite parties to refund the foreclosure charges paid by complainant in each complaint along with compensation and cost of the proceedings.
II. 1. Version notice served to the Opposite Party by R.P.A.D. Opposite Party in both the complaints admitted that the Complainants have taken loans as mentioned in their respective complaints and also stated that on 24.9.2012 both the Complainants paid the entire loan amount and foreclosed the loan account. It is stated that as per clause mentioned in a loan agreement authorizes the Opposite Party to collect pre-payment charges as mentioned in the schedule of the agreement and thereby they have collected the pre-payment charges under both the loan account and prayed for dismissal of the complaint.
III. 1. In support of the above complaints, all the respective Complainants are examined as CW-1 and answered the interrogatories served on them and produced documents got marked under the ‘Ex.C’ series detailed in the annexure here below. Opposite Parties also examined and filed their counter affidavits and answered the interrogatories served on them and produced documents got marked under the ‘Ex R’ series detailed in the annexure herebelow.
In view of the above said facts, the points now that arise for our consideration in this case are as under:
- Whether the Complainant proves that the Opposite Party has committed deficiency in service?
- If so, whether the Complainant is entitled for the reliefs claimed?
- What order?
We have considered the notes/oral arguments submitted by the learned counsels and also considered the materials that was placed before this Forum and answer the points are as follows:
Point No.(i): Affirmative.
Point No.(ii) & (iii): As per the final order.
REASONS
IV. 1. POINTS NO. (i) TO (iii):
The facts which are admitted is that both the Complainants i.e. one Mr.Shashiraj.A in C.C.No.28/2013 availed car loan from the Opposite Party as per loan account NO.15937903 and executed loan papers and on 24.9.2012 made the entire remaining loan amount of Rs.2,61,385/- and foreclosed the loan. The Opposite Party while foreclosing the loan amount deducted prepayment charges at 3% on the outstanding principal amount. In another loan account No.17933130 the Complainant availed personal loan of Rs.4,00,000/- and on 24.1.2012 made the entire payment of Rs.3,03,737.79 and foreclosed the loan account. The Opposite Party also admitted that they have deducted 11,634.98 towards the prepayment charges on the outstanding principal amount.
Now the point for consideration is that, the Opposite Parties arbitrarily collected prepayment charges from the Complainants which amounts to unfair trade practice and also illegal. The Opposite Party on the contrary contended that at the time of entering into an agreement, as per the clause No.3 of the said agreement the Complainant was agreed to pay the prepayment charges in other words authorizes the Opposite Parties to collect prepayment charges and thereby they collected the prepayment charges.
On perusal of the oral as well as documentary evidence available on record, that the point for consideration is that, whether the bank is entitled to charge prepayment charges/foreclosure charges on the customer herein the Complainants? The answer is negative. Because in view of the principle laid under many number of reported judgments, we are of the clear opinion that collecting the foreclosure charges from the banking institutions are illegal. In this connection, the following citations are self explanatory.
The Delhi State Consumer Disputes Redressal Commission, New Delhi in State Bank of India versus Usha Vaid (Dr) and Another reported in II (2008) CPJ 166; and another case in Karnataka State Consumer Disputes Redressal Commission, Bangalore in M.Anees-UR-Rahman and Others versus Jammu and Kashmir Bank Limited and Others reported in III (2008) CPJ 178; and another case in Karnataka State Consumer Disputes Redressal Commission, Bangalore in S.Krupanidhi Educational Trust versus Union Bank of India reported in III (2009) CPJ 82.
It is specifically held that, the collecting prepayment charges is illegal and also observed that no bank for that purpose finance companies can be allowed to indulging restrictive trade practice by binding the consumer to go on availing loan even if rate of interest charges by the said bank is much higher than the other banks and any such clause which operates adversely to the consumers like clause has to be held as void and not enforceable in law. Even the Hon’ble Supreme Court also upheld the orders passed by the different State Commissions. Under these circumstances, even if there is a clause in the agreement for payment of pre-closure charges the said charge not enforceable in law and which amount to unfair trade practice.
Therefore taking in view of the matter, the pre-closure charges collected by the Opposite Party Bank in the above complaints are without any authority of law. Hence, the Opposite Party bank is bound to refund the said amount with the interest. There are no logical reasons for collecting pre-closure charges and the Complainants are entitled for refund of the pre closure charges along with interest.
In view of the aforesaid discussions, we are of the opinion that under both the loan account number the Opposite Parties are hereby directed to refund foreclosure prepayment charges collected from the Complainants along with interest 12% per annum from the date of fore closure of the amount and also pay Rs.2,000/- each as costs of the litigation expenses. Payment shall be made within 30 days from the date of this order.
In the present case, interest considered by this Forum itself is compensation and therefore, no separate amount for compensation is awarded.
In the result, we pass the following:
ORDER
The complaints are allowed. Opposite Party i.e. H.D.F.C. Bank Ltd., represented by its Manager/Authorized Signatory shall refund foreclosure prepayment charges collected from the Complainant in Loan Account No. 15937903 in CC.No.28/2013 and No. 17933130 in CC.No.30/2013 along with interest 12% per annum from the date of fore closure of the amount and also pay Rs.2,000/- each as costs of the litigation expenses. Payment shall be made within 30 days from the date of this order.
Copy of this order as per statutory requirements, be forward to the parties and file shall be consigned to record room.
(Page No.1 to 8 dictated to the Stenographer typed by him, revised and pronounced in the open court on this the 28th day of February 2014)
PRESIDENT MEMBER MEMBER
ANNEXURE
Witnesses examined on behalf of the Complainant in CC.No.28 & 30/2013:
CW1 – Mr. Shashiraj.A – Complainant .
Documents produced on behalf of the Complainant in CC.No.28/2013:
Ex C1: 19.11.2012: Legal notice.
Ex C2: 4.12.2012: Reply notice.
Ex C3:24.9.2012: Receipt for payment of Rs.2,61,385/-
Ex C4:24.9.2012: Letter issued by the O.P. to the complainant.
Documents produced on behalf of the Complainant in CC.No. 30/2013:
Ex C1: 19.11.2012: Legal notice.
Ex C2: 12.1.2012: Receipt for payment of Rs.3,03,737,79.
Ex C3:12.1.2012: Letter issued by the O.P. to the complainant.
Ex C4:Statement of loan account and repayment schedule issued by the O.P. to the complainant.
Witnesses examined on behalf of the Opposite Party in CC.No.28 & 30/2013:
RW-1: Mr.Kiran Kidiyoor, Assistant Manager of Opposite Party.
Documents produced on behalf of the Opposite Party in CC.No.28 & 30/2013:
Ex R1:23.12.2010: Loan Agreement.
Ex R2: Account statement.
Ex R3:Notarized Copy of the G.P.A.
Dated:28-02-2014 PRESIDENT
