O R D E R<br /> <br /> M.R. DEVAPPA, PRESIDENT<br /> <br /> Briefly stated the case of the complainant is as follows;<br /> <br /> 1. That the complainant being the regular customer of the opposite party bank, with the intention of purchasing Mahandra Jeep for his Agriculture activities has approached the opposite party for loan. <br /> <br /> 2. The opposite party after satisfying all the requirement and by following all the procedure has sanctioned the vehicle loan of Rs.2,50,000/- on 17-5-2004 on the basis of agriculture finance. And the loan agreement was also entered in to wherein minimum rate of interest leviable on the loan is indicated as 9% and loan repayable in 5 years equal installment and afterwards the complainant purchased Mahindra Jeep bearing KA 12 N 840.<br /> <br /> 3. That on the very next due date to pay the 1st year installment with 9% interest the complainant to his surprise was told by the opposite party that he is liable to pay 11% p.a. instead 9% as shown in the agreement and when the complainant told the opposite party that he would pay only 9% interest but not 11% interest, the bank authorities advised the complainant to approach higher authorities, accordingly the complainant met a higher officer and complained about the enhancement of interest for which the higher officer replied that it was the mistake at the time of mentioning the interest in the computer and informed the complainant that he should pay 11% interest and later they would look in to the matter and appropriate decision would be taken.<br /> <br /> 4. That the complainant after payment of full and final loan amount before maturity period reminded the opposite party as well as their higher officer about their assurance made in regard to the payment of interest and requested the authorities to reduce the interest from 11% to 9% but no reply was sent by the opposite party hither to and therefore he has approached the Forum praying following relief;<br /> <br /> a) Directing the respondent to refund the 2% of excess amount collected on loan amount of Rs.2,50,000/- to the complainant with 12% interest thereon.<br /> b) Compensation of Rs.5,000/- for mental agony and sufferings.<br /> c) Cost of the complaint and any such other relief deed fit.<br /> <br /> 5. The complainant has filed the following documents;<br /> <br /> 1. Xerox copy of the loan agreement<br /> 2. No due certificate from the respondent.<br /> 3. Legal notice<br /> 4. Extract of the loan repayment<br /> <br /> 6. Upon admitting the complaint notice was ordered to be sent to the opposite party namely the Manager, Syndicate Bank, Bhagamandala, Madikeri.<br /> <br /> 7. On receipt of the notice the opposite party appeared through his advocate and filed version and has taken following contentions and prayed for dismissal of the complaint;<br /> <br /> 1. That there is no consumer dispute between the complainant and the opposite party or deficiency of service by them and the averments made in the complaint are denied except those specifically admitted to herein.<br /> <br /> 2. That the Forum has no jurisdiction since there is a banking ombudsman under a special enactment to look in to grievances against banks. <br /> <br /> 3. That it is true that the complainant was a regular customer of the opposite party for several years and the other averments regarding the sanction of loan are also true, but it is denied that the rate of interest was only 9%.<br /> <br /> 4. That the complaints paragraph 3 that “the complainant has got surprise” or that the opposite party demanded 11% interest or advised him to approach higher officer or that the complainant approach the higher officer or that the higher officer replied that it was the mistake at the time of feeding of interest to the computer or that he assured the complainant that after payment of the full amount with 11%, they will look in to the matter are all denied as false. <br /> <br /> 5. That it is true that the complainant caused a legal notice, the opposite party being an institution required some time to respond, however the complainant in the meanwhile has approached the Forum.<br /> <br /> 6. That the opposite party having treated the loan for purchase of Jeep as agricultural advance so as to give the benefit of half yearly compounding interest in place of monthly interest as in case of other vehicle loans, accordingly the complainant agreed to repay the same in five yearly installments of Rs.50,000/- with effect from 17-5-2005 together of interest at the minimum of 9% p.a. and over due interest of 2% p.a. in case of default and execute necessary agreement. That the interest was fixed at 2% less than the PLR that was 11% at the time of the loan. Subsequently the PLR vent up to 11.25% with effect from 16-5-2006, 11.50% with effect from 23-8-2006, 11.75% with effect from 13-1-2007, 12.25% with effect from 6-2-2007, and 13% with effect from 11-4-2007 ( the PLR has gone up to 13.5% with effect from 2-7-2008, but the complainant had cleared the loan on 21-6-2008).<br /> <br /> 7. That the interest was with half yearly as applicable to all agricultural loans and it was floating according to the RBI guidelines and therefore the opposite party levied interest based on the prime lending rate (PLR) as provided in clause 4.0 (page 3) of the agreement, hence the opposite party has no intention what so ever to charge or recover any excess interest and 11% interest was charged only from 11-4-2007 and not from earlier period.<br /> <br /> 8. That the opposite party bank is a Nationalized one and has to go by the RBI guidelines and as such there could not be any differential treatment to the complainant.<br /> <br /> 8. The opposite party has filed the following documents;<br /> <br /> a) Loan papers <br /> b) Request letter for loan/ credit facility <br /> c) Confirmation of delivery of machinery / vehicles <br /> d) Particulars of assets and liabilities of loanee <br /> e) Agricultural loan application and agreement for raising loan <br /> f) Standard table showing floating interest rates (monthly compounding ) on advances (other than export credit) linked to PLR with effect from 1-4-2004.<br /> g) Statement of account (load ledger sheet)<br /> h) Bank circulars containing the RBI guidelines <br /> i) Circular bearing no.055-2004-B.C.CRD<br /> <br /> 9. Both the parties have filed their affidavit in lieu of examination in chief.<br /> <br /> 10. Having regard to the averments in the complaint and the version of O.P and the documents relied on by the respective parties the following points arise for determination;<br /> <br /> 1. Whether the complainant is a consumer and the dispute brought by him is a consumer dispute or not ?<br /> <br /> 2. Whether this Forum has jurisdiction to try the dispute?<br /> <br /> 3. Whether the opposite party bank has committed deficiency in service ?<br /> <br /> R E A S O N S<br /> <br /> 11. Answer to issue no.1 and 2:- There is no doubt as such about the activities of the bank and financial institution have been brought under the purview of consumer Protection Act 1986 as held by various authorities in this regard because they are supposed to render service to the public at large and the public as consumers can avail the services of the banking institutions and if there is any deficiency in service on the part of the banks or banking institutions such disputes can be brought before the forum to seek the grievances redressed of the consumers and the case under hand is one of such dispute and the Forum can very well entertain the dispute. Therefore issue no.1 and 2 are held positively holding that the complainant being a loanee is a service availer and therefore he is the consumer and the dispute brought by him can be considered as a consumer dispute. <br /> <br /> 12. Answer to point no.3 :- The advocate for the complainant contended that the hiking of interest shall only be done by notifying with the complainant. In this case the complainant was not at all informed and the bank authorities have unilaterally enhanced the interest which is not permissible and also submitted that the opposite party has issued circulars in the form of guidelines to the benefit of their own banks and therefore it cannot be considered as the guidelines issued by the RBI and further submitted the guidelines referred by the opposite party are not applicable to agricultural loans. <br /> <br /> 13. As against the above submissions the O.P’s advocate drew the attention of us to clause 4 and clause 6 of the agreement entered between the bank and the complainant and also para 2 of the guidelines issued by the RBI dated 30-1-2004. The PLR at 11% is made applicable with effect from 17-5-2004 according to the advocate of O.P and the advocate for OP has also invited the attention of the Forum to para 10 of the annexure 2 wherein PLR has been explained at length.<br /> <br /> 14. We have carefully gone through the agreement entered between the complainant and the bank authorities. The relevant portion in regard to the interest i.e., clause 4 of the agreement is reproduced hereunder.<br /> <br /> “That the borrower(s) shall pay interest on the loans to be calculated on the daily balances in the loan accounts(s) with monthly/quarterly/half yearly or to her rests according to the practice of the Bank and as per the guidelines issued by RBI from time to time as may be applicable at the rate of …….. % above the Prime Lending Rate/ Prime Term Lending Rate of the Bank rising and falling therewith or at such other rate as may be decided by Bank from time to time, with a minimum of 9% per annum”.<br /> <br /> 15. And like wise clause 5 of the agreement is also relevant therefore the same is also reproduced hereunder;<br /> <br /> “ The borrower(s) agree to pay overdue interest at 2% p.a. over the agreed rate or at such rate as may be fixed by the Bank from time to time and notified on its notice board compounded quarterly/ half yearly/ yearly basis and also pay periodical inspection charges, incidental charges etc. at the rates prescribed by Bank”.<br /> <br /> 16. The wordings of the clause 4 clearly indicate that the complainant being the loanee has agreed to pay the floating interest but at any rate it cannot be said that it is a fixed interest because it is worded in the clause that the borrower shall pay interest on the loan to be calculated on the daily balances in the loan accounts with monthly/quarterly/ half yearly/ yearly or other rest according to the practice of the bank and as per the guidelines issued by the RBI from time to time, but the 9% interest per annum is indicated as minimum which means that the interest cannot be levied less than 9% and the bank authorities reserve the right of enhancing the rent in consonance with guidelines to be issued by the RBI and therefore the complainant cannot plea that the bank authorities have agreed to PLR at 9%, p.a. only. Hence, the argument of the complainant’s advocate that the opposite party cannot levy interest above 9% falls to ground in view of the circulars issued by Syndicate Bank wherein the RBI guidelines have been referred by the higher authorities of Syndicate Bank. The computer generated statement of account (loan ledger sheet) is also produced for perusal of the Forum, which we have perused. <br /> <br /> 17. As contended by the advocate for O.P we have gone through clause 4 and clause 6 of the agreement in question and also the guidelines issued on 30-1-2004 and 17-5-2004 wherein PLR is hiked at 11% and page 10 of annexure 2 of the guidelines is also perused by us and by following the guidelines the opposite party bank has enhanced the interest which cannot be considered as illegal. And it cannot be said that they have unauthorisedly enhanced the interest as discussed supra the bank has reserved the option to enhance the rent which is very much reflected in clause 4 and 6 of the agreement which has been referred by us in preceding paragraph. Therefore, no illegality can be attributed to the action taken by the opposite party in enhancing the interest. Of course the minimum interest of 9% is mentioned in the agreement but that does not mean the bank authorities cannot enhance the interest as the complainant has opted for floating interest which is very much reflected in clause 4 of the agreement. Hence, there is no merit in the case of the complainant and the complainant has failed to substantiate his case in regard to deficiency committed by opposite party and as such we answer point no.3 negatively holding that the bank authorities have not committed any deficiency in service on their part and proceed to pass the following order.<br /> <br /> O R D E R<br /> <br /> The complaint is dismissed. The parties to bear their own cost.<br /> <br /> Communicate the order to the parties.<br /> <br /> Dictated to the Stenographer. Got it transcribed and corrected. Pronounced in the open Forum on this 13th day of January 2009.<br /> <br /> <br /> (M.R. DEVAPPA), (K.S. PRASAD), (A.S. HEMALATHA),<br /> PRESIDENT MEMBER MEMBER<br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br />