Complaint filed on: 23-09-2022

                                                      Disposed on: 18-04-2023

BEFORE THE DISTRICT CONSUMER DISPUTES

REDRESSAL COMMISSION, TUMAKURU

DATED THIS THE 18^th DAY OF APRIL, 2023

PRESENT

SMT.G.T.VIJAYALAKSHMI, B.Com., LLM., PRESIDENT

SRI.KUMARA.N, B.Sc. (Agri), LLB., MBA., MEMBER

SMT.NIVEDITA RAVISH, B.A., LLB. (Spl)., LADY MEMBER

CC.No.142/2022

Sri,B.M.Sampath S/o Late Munnibasavaiah

Aged about 64 years,

R/of Mallasandra, Tumkur

……………….Complainant/s

(By Smt/Sri. R. Premkumar, Adv.)

                                                V/s

The Manager,

Karnataka Grameena Bank,

(Before Kaveri Grameena Bank0

Mallasandra Branch,

Mallasandra, Tumkur.

……………….Opposite Party/s

(By Sri/Smt. M.C.Prabhu, Adv.,)

:ORDER:

BY SRI.KUMARA.N., MEMBER

This complaint was filed U/s 35 of the C.P. Act to direct the OP to settle the claim by paying the amount of Rs.1,15,772.62plus interest as excess amount being collected towards loan repayment account, & direct the OP to pay Rs.13,000/- plus interest collected as processing charges while granting education loan by violating the RBI guidelines, Rs.25,000/- towards the fees paid to Chartered Accountant to audit the complainant loan account and Rs.5,00,000/- towards compensation for mental agony caused by the OP.

2.       In this case, the OP was the Manager, Karnataka Grameena Bank, before Kaveri Grameena Bank, Mallasandra Branch, and Tumkur (hereinafter called as “OP Bank). 

3.       It is a case of the complainant that the complainant availed two loans i.e. housing loan for Rs.12,00,000/- sanctioned on 26.12.2011 vide loan account No.85003561085 and additional loan of Rs.2,30,000/- sanctioned on 21.09.2015 vide loan account No.85033570505.Later-on the complainant for his son education purpose as a co-applicant availed Educational loan of Rs.13, 00,000/- on 08.08.2014 vide loan account No.85020999107,with interest of 14.50 % pa and repayable in 60 installments @ Rs 39998.00, after one year of completion of course or six months after getting job. The complainant submitted that the OP bank failed to follow mandatory procedures and violated by merging both accounts, even though, said loan accounts are totally different heads, and the said housing loans were cleared by paying principal amount and interest applicable.  The complainant further submitted that the OP/Bank while sanctioning Educational loan, charged service charges as Rs.13,000/- and debited to the loan account which is against to the RBI guidelines and the OP/Bank not considered the moratorium for the period of one year and charged the interest resulted in NPA.  The complainant intended to clear the said educational loan and when the complainant enquired, he got surprised that the OP/Bank merged the housing loan and educational loan & charged extra. The complainant further submitted that, when complainant pointed out the excess charged amount, the OP Bank on 02-06-2018 credited Rs 49582.00 to the complainant loan account by stating as there is an error in calculation, but subsequently on 02-08-2018 & 31-08-2018 an amount of Rs 97930.00 & Rs 91658.00 respectively debited to the complainant loan account without any valid reason. The complainant requested the OP bank to rectify the same, in spite of repeated requests, the OP Bank not rectified and demanded the complainant to pay the excesses charged amount without giving clarity of the loan and issued notice U/s 13(2) of securitization and reconstruction of financial Assets & enforcement of security interest (SARFAESI) act, on 18-12-2017 by including all loan three loan accounts. The complainant up-set because of the attitude of the OP Bank and approached the professional Charged Accountant and audited the entire loan account and came to know that the OP Bank charged excess amount.  The complainant approached the OP Bank and the Regional office of the OP Bank, to rectify the same, but the OP Bank not rectified in spite of many legal notices issued, Hence, this complaint. 

4.       After the complaint registered, the OP Bank appeared through its counsel before this Commission and filed the version stating that complaint filed by the complainant is not maintainable either in law or on facts and the same is liable to be dismissed. The OP bank in its version admitted the fact that the complainant was / is the customer of the OP Bank, and availed two housing loans and one educational loan on 08-08-2014 for Rs 1300000.00 jointly, by the complainant for his son Sri Shashishekar TS, for the purpose of pursuing Master programme in Robotics at University of West, Sweden, the Complainant and his son, on 07-08-2014, mortgaged the one house and two residential sites to the OP Bank  and agreed to repay the said educational loan with interest @ 14.50 % pa, in 60 monthly installments of Rs 39998.00 PM, after one year of the completion of education or Six months after getting job, whichever is earlier, but the complainant and his son not repaid the loan as agreed, and become defaulter from August 2016, till March 2019, till then the complainant was EMI due in a Sum of Rs 404176.00. The OP Counsel in version contended that, the complainant not repaid the availed loans, as agreed at the time of loans sanctioned, and the compliant produced post dated cheques (SBI, Arasikere branch, Hassan district) for Rs 185000.00,Rs 200000.00, Rs 330000.00 dated 05-04-2018, and the complainant not honored the said cheques, and Payments stopped by drawee and the complainant produced one more cheque dated 06-04-2018 for Rs 428100.00, said cheque returned on 19-06-2018, as funds insufficient. The OP counsel contended that, the complainant paid Rs 330000.00 on 07-04-2018, Rs 500000.00 on 02-08-2018, Rs 500000.00 on 06-03-2019 and Rs 600000.00 on 25-03-2019, which was not sufficient to declare the complainant said loan account as proper instead of default, as such the OP Bank initiated recovery proceedings against the complainant as per Bank rules and Norms. The OP counsel further submitted that, legal notice issued by the complainant on 28-05-2019 and 11-07-2022, replied on 12-07-2019 and 28-07-2022, even after the reply the complainant instead of repaying the loan, filed Suite, FR NO; O.S/256/2020 against the OP Bank in Honorable 1^st Addl.Civil Judge (Sr div) Tumkur and the said suit withdrawn by the complainant on 01-07-2022. The OP Counsel denied all other averments made in the complaint and prayed to dismiss the complaint.

5.       The complainant filed his affidavit evidence and got marked the documents at Ex.C1 to C16.  One Sri. Bharathkumar H.T., Branch Manager, has filed his affidavit evidence on behalf of OP.  The counsel for OP marked the documents at Ex.R1 to R15.  We heard the arguments of both the parties in addition to written arguments filed.       

6.       On perusal of pleadings, documents and written arguments submitted by both the parties, the points that would arise for determination are as here under:

1. Whether the complainant proves that, the OP Bank Violated the RBI guidelines?   

2. Whether the complainant proves the deficiency in service on the part of OPs?

3. Is complainant entitled to the reliefs sought for?

7.       Our findings on the aforesaid points are as follows:

Point No.1 & 2:    In the affirmative

Point No.3: In the affirmative for the below

:R E A S O N S:

8. The complainant counsel argued that, the complainant availed two housing loans i.e. housing loan for Rs.12,00,000/- sanctioned on 26.12.2011 vide loan account No.85003561085 and Rs.2,30,000/- sanctioned on 21.09.2015 vide loan account No.85033570505 and Later- the complainant, for his son education purpose as a co-applicant availed Educational loan of Rs.13,00,000/- on 08.08.2014 vide loan account No.85020999107, with interest of 14.50 % pa and repayable in 60 installments @ Rs 39998.00, after one year of completion of course or six months after getting job, accordingly the repayment should start from 08-08-2017, but the OP Bank without any intimation, started recovery process from 08-08-2016 by fixing EMI of Rs 40130.71 and violated the contract of loan. The complainant cleared and closed the said two housing loans by paying interest and principle amount, as charged by the OP Bank on 07-04-2018 and the complainant intended clear the education loan availed and when made enquiry the OP Bank Manager advised the complainant to pay Rs 330000.00, and the complaint paid Rs 330000.00 on 07-04-2018, and the OP Bank Manager issued the statement of account, to the complainant, wherein loan outstanding as on 02-06-2018 was Rs 1661590.00, but the OP Manager on the said statement endorsed in writing that closing balance as on 13-06-2018 was Rs 1807015.00. The complainant shocked, because the OP Bank charged excess of Rs 145425.00 and the complainant requested the OP Bank Manager for clarification, of such differences, but the OP Bank never clarified and this act of OP Manager Leads to unfair trade practices. The Complainant counsel submitted that, because of the high interest charged by the OP bank without considering the moratorium period of the education loan, and charged processing fee of Rs 13000.00, which were against to the RBI guidelines. The complainant approached the OP Bank several times to issue sanction letter of Educational loan availed for Rs.13,00,000/- on 08.08.2014 vide loan account No.85020999107, but the OP Bank, not issued nor replied, instead issued notice unlawfully, under SARFAESI Act on 18-12-2017. The Complainant approached the OP bank several times for clarification and issued many notices, and the OP Bank; never clarified regarding interest charged and forced the complainant to pay the amount charged illegally. The complainant approached the professional charted accountant and get audited the said loan account by paying fee of Rs 25000.00, accordingly the OP Bank charged excess amount of Rs 115772.62 in the form of compound interest without considering moratorium period as per RBI guidelines. The Complainant counsel further submitted that, the complainant paid total amount of Rs 2383849.00 (On 02-08-2017  Rs 13000.00, On 09-03-2018 Rs 2278.00, On 07-04-2018 Rs 330000.00, On 02-06-2018 Rs 271.00, on 02-08-2018 Rs 500000.00, On 06-03-2019 Rs 500000.00, On 25-03-2019 Rs 600000.00, On 03-08-2022 Rs 300000.00, On 06-12-2022 Rs 150000.00). The complainant counsel submitted that The OP Bank quoted different Loan account number as 42141107000114 instead of 85020999107 and quoted different interest rates as 14.50% in loan account statement and 13.5% as in CIBIL report, this is unfair trade practice of the OP Bank. The complainant counsel prayed to allow the complaint and award compensation as prayed. The complainant in their affidavit has reiterated the averments of the complaint and produced 16 documents, Ex C1, copy of the Public Housing loan scheme- sanction  cum communication of OP Bank letter Dated 19-12-2011, Ex C2, copy of sanction  cum communication of OP Bank letter dated 11-09-2015,Ex C3, Copy of the OP Bank letter Dated 09-04-2018,regarding closure of two housing loans, Ex C4 Copy of the OP Bank reply letter dated 13-06-2018 to the complainant, that, the sanction letter containing signature of you and your son , he is not available with us,  EX C5 copy of the CIBIL report Dated 25-11-2022, where in stated as Educational loan Sanctioned was Rs 130000.00, EMI Rs 53082.00, repayment term 84 months, interest rate 13.50 %,  Ex C 6  copy of the statement of loan account Number 85020999107, dated 25-03-2019, stated drawing power 2755500.00, Ex C7, RBI Guidelines on Educational Loan, Ex C8, copy of the loan account Number 85020999107 dated 13-06-2018, wherein the closing Balance was Rs 1661590.00, and the OP Bank Manager, endorsed in writing as closing balance Rs 1807015.00, Ex C9 copy of the OP Bank wrongly calculated interest of Rs 49582.00 as difference, Ex C 10, copy of notice served under SARFAESI Act dated 18-12-2017,  Ex C 11, Audited Report of Charted Accountant and Fee of Rs 25000.00 paid receipt, Ex C12 and C13, Legal notices dated 11-07-2022 and 10-08-2022, Ex C14, copy of Reply Notice dated 28-07-2022, Ex C 15,copy of OP Bank Letter to the complainant, offering loan settlement, where in Loan Account number changed to 42141107000114, Ex C16, copy of RBI guidelines dated 12-05-2014, Ex C 17, copy of audited Report of charted accountant up to 13-06-2018.

9. The OP counsel argued that, the OP Bank functioning as per the norms and rules of RBI, and recovery proceedings followed, when the complainant, not repaid the EMIs fixed in availed three loans and become NPA (Two housing loans and One Educational Loan). The complainant filed this complaint to harass the OP and prayed to dismiss the complaint with cost. The OP bank counsel produced documents, Ex R1, Copy of the Housing loan Rs 1200000.00, sanction communication & terms & conditions letter of OP Bank letter dated 26-12-2011,  Ex R2, copy of simple mortgage deed, Ex C3 Copy of the additional Housing loan Rs 230000.00, sanction communication & terms & conditions letter of OP Bank letter dated 21-09-2015 & simple mortgage deed, Ex R4, Copy of the Educational loan of Rs 1300000.00, sanction communication & terms & conditions letter of OP Bank , wherein the Rate of interest 14.50%, loan shall be repayable in 07 years, which includes moratorium period of 02 years and one year or 06 months after getting the job, whichever is earlier, Ex R 5, copy of the simple mortgage deed, Ex R 6 statement of the loan account statement (42141107000114) dated 26-12-2022, wherein balance due was Rs 162168.82,  Ex R7 Reply Notice Dated 12-07-2019Ex R8 to R11, postal acknowledgements, Ex R12 copy of the detailed order sheet of  FR NO; O.S/256/2020 against the OP Bank in Honorable 1^st Addl.Civil Judge (Sr div) Tumkur, ExR13 & R14, copy of the legal Notices & Reply dated 11-07-2022 & 28-07-2022 respectively.

10. The OP Bank, in its version contended that, that complainant instead of repaying loan, filed the Suit on 04-08-2020; FR NO; O.S/256/2020 against the OP Bank in Honorable 1^st Addl.Civil Judge (Sr div) Tumkur, said defense, not considered, since the said suit withdrawn by the complainant on 01-07-2022 by filing memo dated, 28-01-2022, as Withdraw the suit filed by the plaintiff, as Jurisdiction lies before Consumer forum (EX R12).

11. On perusal of the RBI, Education Loan Scheme Guidelines No.RPCD.PLNFS.BC.NO.83/06.12.05/2000-01, Dt:28.04.2001, wherein Page No.4, under Eligibility Criteria 4.1.b Studies Abroad, and page No.6 of Para-10 Repayment stated as; repayment holiday/Moratorium, Course period + 1 year or 6 months after getting job, whichever is earlier, Para-12, Processing Charges – states that No processing/upfront charges may be collected on education loans. The documents submitted by the complainant Ex.C.6 and Ex C.8, which were copy of the educational loan account No.85020999107,         statement of account, evidenced by OP Bank charged Rs 13,000.00 and debited to the complainant loan account and loan repayment started from 08-08-2016, without considered the moratorium period by the OP Bank, which proves that the OP Bank violated the RBI guidelines and circular on Educational loans.

12. As, alleged by the complainant, that the OP Bank, not clarified the excess interest charged, the complainant documents Ex C15, and the OP Bank document Ex R6, wherein educational loan account number reflected as 42141107000114, instead 85020999107, which proves that loan account number changed by the OP Bank without the consent or notice of the complainant. The reply notice of the OP Bank (Ex C14 & Ex R14), admitted that, the legal notice, dated 28-05-2019 issued by the complainant regarding the clarification sought, and Ex C12 & Ex C13, legal notices of the complainant also for seeking clarification on educational loan availed and interest charged, which proves that the complainant approached the OP Bank, several times for seeking clarification and intended to clear said loan on 07-04-2018, but the OP Bank not reacted nor provided required information to the complainant, which is proved by the complainant document, Ex C4 of the OP Bank reply letter dated 13-06-2018 to the complainant, that, the sanction letter containing signature of you and your son , he is not available with us, and on contrary the OP Bank, produced the same document, (Ex R4), wherein, the Educational loan of Rs 1300000.00, sanctioned, the Rate of interest 14.50%, loan shall be repayable in 07 years, which includes moratorium period of 02 years and one year or 06 months after getting the job, whichever is earlier, accordingly OP Bank has to initiate repayment schedule from 08-08-2017, as per the loan agreement. But the OP Bank initiated repayment schedule process from 08-08-2016 by fixing EMI of Rs 40130.71 (EX C6, EX C8) and violated the contract of loan, and in the CIBIL report Dated 25-11-2022, (EX C5) reflected as Educational loan Sanctioned was Rs 130000.00, EMI Rs 53082.00, repayment term 84 months, interest rate 13.50 %, this act of OP Bank, leads to deficiency in service and unfair trade practice.

13. On perusal of the documents (EX C6 & Ex C8), Educational loan, statement of account, the OP Bank, for the period 08-08-2014 to 31-08-2016 charged interest amount of Rs 414565.00, instead of simple interest amount of Rs 364883.56, i.e. Rs 49681.00 excess interest charged by the OP Bank, similarly for the period 01-03-2018 to 31-08-2018, accrued interest was Rs 125104.78, but the OP Bank charged Rs 189588.82, i.e. Rs 64484.00 excess charged, which was evidenced by the Charted Accountant Report  (Ex C11 and Ex C17). The OP Bank charged total of Rs 114165.00 as extra or excess.

14. Section 35A of the Banking Regulations (BR) Act empowers RBI to issue directions to banking companies. Such directions are statutory in nature. Section 35A is extracted below:

“35A. Power of the Reserve Bank to give directions – (1) Where the Reserve Bank is satisfied that – (a) in the public interest; or (a) in the interest of banking policy; or

(b) to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors or in a manner prejudicial to the interests of the banking company; or

(c) to secure the proper management of any banking company generally, it is necessary to issue directions to banking companies generally or to any banking company in particular, it may, from time to time, issue such directions as it deems fit, and the banking companies or the banking company, as the case may be, shall be bound to comply with such directions.

(2) The Reserve Bank may, on representation made to it or on its own motion, modify or cancel any direction issued under subsection (1), and in so modifying or cancelling any direction may impose such conditions as it thinks fit, subject to which modifications or cancellation shall have effect.”

15. Educational Loan Scheme is a socially and economically relevant loan scheme from the Indian Banking industry. Rightly, the RBI has included education loans as part of the priority sector lending of Banks. It aims to provide need-based finance to meritorious student for taking up higher education. The RBI is responsible for deciding the lending criteria for banks in India. It has decided to include Educational loans as a priority sector in lending from banks. The Education loan is like any other loan for which the bank looks for the credit-worthiness of the borrower before lending the loan to them.

RBI guidelines for Education loan:

• The RBI insists that the banks grant the Education loan to meritorious students. The word meritorious is a relative term which is assumed if the student has qualified for the entrance exam to professional and technical courses.

• It also considers students who have secured admission to good colleges in terms of their placement history thus reflecting the future employability of the students through their campus recruitment.
• Section 80E of the Income-tax Act claims that the interest part of the loan can be claimed as a subsidy while filling for the Income Tax. Apart from this law, the CSIS scheme provides full interest subsidy during the moratorium period for economically weaker section.

• Loans must be divided into secured and unsecured loans depending on the amount granted. For loan amount less than 4 lakhs, no collateral is required while for loan amount above 4 lakhs, a security deposit is required in the form of collateral.

• Banks also offer a moratorium period just after the completion of the course during which the borrower might look for a job to start repayment soon after the completion of the period.

• Interest rates decided by the RBI depends upon whether you are taking an Education loan for India or abroad. Students securing admission to high rated Educational institutes in India need to pay a comparatively lower interest rate. Interest rates mainly comprise of fixed and floating rates in general. While banks in India provide loans at a floating rate of interest for study in Indian colleges, foreign loans are offered at fixed interest rates.

• RBI rules for Educational loan repayment include paying back the loan in the form of EMI as soon as the moratorium period gets over. According to experts, EMI of a person should not exceed fifty percent of one’s salary. The repayment should be completed within a maximum tenure of 8-15 years soon after the grace period. In rare cases when a student obtains another loan for a course taken up soon after the original course completion, the repayment period can be extended depending on the time until the next course is completed.           

16. The Reserve Bank of India, chiefly known as RBI, is India's central bank and regulatory body responsible for regulation of the Indian banking system. It is under the ownership of Ministry of Finance, Government of India. In the light of the RBI circular; RPCD.PLNFS.BC.NO.83/06.12.05/2000-01 Dated, April 28, 2001, stated as

• (iv) Loans upto Rs.4 lakh may be advanced at interest rate not exceeding PLR of the bank. Above Rs.4 lakh, the interest rate may be PLR + 1%.

• 10. REPAYMENT: Repayment holiday/Moratorium: Course period + 1 year or 6 months after getting job, whichever is earlier.

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• 12. PROCESSING CHARGES: No processing/ upfront charges may be collected on educational loans.

17. Moratorium period is Course period plus Holiday Period of one year, and Simple interest is to be charged during the study period and moratorium period till commencement of repayment. Servicing of interest during study period and the moratorium period till commencement of repayment is optional for students. The accrued interest during the moratorium period and course period is added to the principle and repayment is fixed in Equated Monthly Installments (EMI). If full interest is serviced before the commencement of repayment; EMI is fixed based on principle amount only.

18. The Credit Information Bureau (India) Limited (CIBIL) is the most popular of the four credit information companies licensed by Reserve Bank of India, to function as credit Information Company. CIBIL Score is a three-digit numeric summary of your credit history. The score is derived using the credit history found in the CIBIL Report (also known as CIR i.e Credit Information Report). A CIR is an individual’s credit payment history across loan types and credit institutions over a period of time. CIBIL score, calculated based on your credit behavior as reflected in the ‘Accounts’ and ‘Enquiries’ section of your CIR, ranges between 300-900. A score above 700 is generally considered good.

19. Honorable High court of Karnataka, Bangalore, in the writ Appeal No 12 of 2022 (GM-RES), Canara Bank (E-Syndicate bank) V/s Shekar BS & Ombudsman RBI, held that, in our considered opinion a customer would be eligible for reduction immediately on the RBI issuing circular and the Bank cannot impose additional conditions.

20. Honorable Supreme court of India, in the case of M/S Sardar Associates & Ors vs Punjab & Sind Bank & Ors on 31 July, 2009, while answering question on whether the guidelines issued by the Reserve Bank of India are binding or not, relayed on judgment of the Constitution Bench of Honorable Supreme court of India, in Central Bank of India v. Ravindra and Others [(2002) 1 SCC 367] in the following terms:

"55... (5) The power conferred by Sections 21 and 35-A of the Banking Regulation Act, 1949 is coupled with duty to act. The Reserve Bank of India is the prime banking institution of the country entrusted with a supervisory role over banking and conferred with the authority of issuing binding directions, having statutory force, in the interest of the public in general and preventing banking affairs from deterioration and prejudice as also to secure the proper management of any banking company generally. The Reserve Bank of India is one of the watchdogs of finance and economy of the nation. It is, and it ought to be, aware of all relevant factors, including credit conditions as prevailing, which would invite its policy decisions. RBI has been issuing directions/circulars from time to time which, inter alia, deal with the rate of interest which can be charged and the periods at the end of which rests can be struck down, interest calculated thereon and charged and capitalised. It should continue to issue such directives. Its circulars shall bind those who fall within the net of such directives. For such transaction which are not squarely governed by such circulars, the RBI directives may be treated as standards for the purpose of deciding whether the interest charged is excessive, usurious or opposed to public policy."

And Opinioned that, ".....RBI directive have not only statutory flavour, any contravention thereof or any default in compliance therewith is punishable under sub- section (4) of S. 46 of the Banking Regulation Act, 1949".

21. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was formulated with an intent to empower banks to recover Non-Performing Assets (NPAs) without the intervention of a court. SARFAESI Act is a law that allows Indian banks and financial institutions to sell or auction the assets/properties of credit defaulters without any intervention from the courts. The provisions of this Act apply to outstanding loans above Rs.1 lakh, which are classified as NPAs. The SARFAESI Act isn't applicable for: The NPA loan accounts amounting to less than 20% of the principal and interest. Money or security issued under the Indian Contract Act or the Sale of Goods Act, 1930. Any rights of the unpaid seller under Section 47 of the Sale of Goods Act, 1930. Any conditional hire-purchase, sale, lease or any other contract in which no security interest has been created. Any properties that are not liable to attachment or sale under Section 60 of the Code of Civil Procedure, 1908.

22. Concept of Unfair Contract; The consumer protection Act 2019,  'Unfair Contract' is defined under Section 2(46) and it refers to any contract between a consumer and a manufacturer or service provider or trader whose terms brings about a significant change in the consumer rights under the Act. These terms are namely such as:

• Requirement of excessive security deposits by the consumer in for facilitating the performance of obligations under the contract.
• Imposing penalty for breach of contract on the consumer which is not in proportion with the loss suffered due to such breach.
• Not accepting early debt repayment along with the applicable penalty.
• Allowing one of the parties to terminate the contract without any reasonable cause or unilaterally.
• Entitling one party to assign the contract to the detriment of the consumer and without his consent.
• Imposing unreasonable condition, obligation or charge on the consumer that puts him in a disadvantageous position.

23.   In this case, the complainant availed two housing loans and one educational loan for his son, higher study purpose from the OP Bank, and cleared the both the housing loans by paying premium and interest amount, is not disputed and which was admitted facts, The dispute is only with respect to the educational loan availed, wherein the OP Bank not considered the moratorium period and charged, compound interest and process charge, which were debited to the complainant educational loan account, which is against to the RBI guidelines of Educational loans and the OP Bank violated RBI guidelines.

24.     In the above discussion, the Complainant availed education loan on 08-08-2014 from the OP Bank and repayment should start from 08-08-2017 by fixing EMIs, by considering the total loan sanctioned i.e. Rs 13,00,00.00 and accrued interest ( Rs 13,00,000.00 + simple interest from the date of sanction i.e. 08-08-2014) but the OP Bank by violated RBI guidelines and the educational loan agreement and fixed EMI of Rs 40,130.71, on 08-08-2016 with interest of 14.50 % and charged compound interest resulting, by 08-08-2017 the EMI became Rs 53082.39, and charged excess interest of Rs 1,14,165.00 and debited to the complainant loan account. The complainant intended to clear the said educational loan availed and approached the OP Bank on 07-04-2018 and paid the loan amount of Rs 3,30,000.00 and requested the OP Bank to give loan sanction letter of said loan for clarification, but the OP Bank not clarified and denied, and forced the complainant to repay as per the OP Bank charged. The Complainant issued several legal notices and filed suit in Honorable 1^st Addl.Civil Judge (Sr div) Tumkur to get the relief, and to take clarification, but by considering jurisdiction, the complainant withdraw the suit filed and approached this commission. The complainant from 07-04-2018 to 06-12-2022 paid total amount of Rs 23,83,849.00 towards said loan account and the statement of loan account filed by the OP Bank, dated 26-12-2022, wherein balance due was Rs 1,62,168.82, which includes the OP Bank paid the Advocate fee of Rs 6500.00 and Rs.1,000.00 for its counsel on 28-10-2022 and 08.04.2022 respectively (Ex.R6).

25.     By considering the above discussions, and material evidence placed by the complainant, we are of the opinion that the, OP Bank violated RBI guidelines and loan agreement entered between the OP Bank & the complainant, the complainant charged processing fees of Rs.13,000.00 and charged excess interest of Rs 1,14,165.00 and debited to the complainant loan account, Not clarified the complainant regarding interest charged, compelled the complainant to repay the loan as per the OP Bank charged by issuing notice, under SARFAESI Act, and the complainant shocked after seeing  different / irrelevant   data as, interest rate of 13.50 % instead of 14.50 %, with EMI of Rs 53082.00, in the CIBIL report Dated 25-11-2022, which leads to deficiency in the service and unfair trade practice on the part of the OP Bank. The complainant suffered mentally and forced to engage counsel for the litigation resolve by paying money and wasting valuable time in attending courts. The Complainant got audited the said loan account from the Charted accountant by paying Rs. 25,000.00 professional fee and prayed to repay, but it is not appropriate, hence the OP/Bank is not liable to repay fee of Rs 25,000.00 paid by the complainant to the Charted accountant. The OP Bank is liable to repay the excess Charged interest of Rs 1,14,165.00 and Rs.13,000.00 charged towards processing fee, and  Litigation cost of Rs 10000.00, to the complaint. The complainant prayed to award Compensation of Rs 5,00,000.00, but it’s appropriate to award punitive damages of Rs 25,000.00. In the result, we proceed to pass the following;

:O R D E R:

The OP Bank is ordered to Pay Rs 1,14,165.00 and Rs.13,000/-, with interest of @ 8% pa from 31-08-2018. The OP Bank is further ordered to pay Rs 10,000.00 Litigation cost & punitive damages of Rs.25,000.00, within 45 days of this order, otherwise it carry fine of Rs 150.00 per day.

The OP Bank is directed to adjust the complainant balance due of Rs. 1,62,168.82 from the ordered amount and issue NO DUE CERTIFICATE to the complainant by paying balance amount to the complainant.

Furnish the copy of order to the complainant and opposite parties at free of cost.