Aggrieved by the order dated 18.10.2010 passed by the Kerala State Consumer Disputes Redressal Commission, Thiruvananthapuram (for short, ‘the State Commission’) in appeal No. 677 of 2009, Canara Bank, the opposite party in the complaint before the District Consumer Forum, has filed this petition in order to invoke the supervisory jurisdiction of this Commission under Section 21(b) of the Consumer Protection Act, 1986.  The appeal before the State Commission was filed against an order dated 29.09.2009 passed by the District Consumer Forum thereby allowing the complaint and giving certain directions to the opposite party-petitioner to charge interest only @ 7.5 % for the loan availed by the complainants besides directing them to pay a compensation of Rs.2,000/- and Rs.1500/- as cost of litigation.   The State Commission partly allowed the appeal and upholding the finding of the District Consumer Forum holding the petitioner guilty of deficiency in service as also having adopted unfair trade practice and has modified the order passed by the District Consumer Forum with the stipulation that interest @7.5 % p.a. shall be compounded monthly.

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2.      We have heard Mr. Jos Chiramel, learned counsel representing the petitioner-opposite party-Bank but had not the advantage of hearing the say of the respondents-complainants as despite due service of notice and even the respondents having received a sum of Rs.10,000/- in order to enable them to come to this Commission and to defend the present proceedings, they are not represented on record.  One advocate, Mr. Jogy Scaria, appears and states that he is proxy counsel for Mr. M. S. Vishnusarkar, counsel for the respondents, whose Vakalatnama has not been filed on record so far, and that Mr. Vishnusarkar is busy in Supreme Court.  We cannot recognize him even as a proxy counsel representing the respondents.

3.      Mr. Jos Chiramel, learned counsel for the petitioner would assail the impugned order passed by the fora below primarily on the ground that the same are not based on correct and proper appreciation of the material brought on record viz. sanction letter and loan agreement which contain specific stipulation in regard to the rate of interest being ‘floating’ subject to a minimum of 7.5 % per annum and it could be upto @ 3.5 per annum of the Prime Term Lending

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Rate (PTLR).  We would like to reproduce the relevant clause 6 of the agreement here :-

         “6.The borrower/s hereby specifically agree/s to pay interest at 3.25% p.a. below the ongoing PTLR with a minimum of 7.5% p.a. compounded monthly and such interest shall be calculated and charged on the balance in account and be debited to the account and payable every month/quarter/half year and if the interest is not paid, the same shall become compounded with the principal balance outstanding in the account, on such balance and on such successive balances.  The borrower hereby waives notice/information before compounding the overdue amount along with the principal balance outstanding.  The borrower shall become liable to pay further interest from time to time and that the interest payable by the borrower shall be subject to change in the interest rates made by the Bank from time to time pursuant to changes in PTLR.

         The borrower hereby specifically agree/s that he/she/they is/are not entitled to any reduction in the rate of interest agreed by him/her/them at the time of sanction unless there is a reduction in PTLR.”

4.      A bare perusal of this clause would show that the parties consciously agreed that 7.5 % p.a. was the minimum rate of interest and it was subject to change/increase depending upon the increase in the Prime Lending Rate interest.  Prim Lending Rate Interest was enhanced vide communication dated 4.5.2006 effective from 5.5.2006 and going by the stipulations in the agreement, the

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petitioner was well within its right to increase the rate of interest from 7.5 to 9 % and then 9.25 per cent as was done in the case.  In our view, on the face of this material, it cannot be said that the petitioner-Bank has committed any deficiency in service of charging the interest @ 9% or later at 9.25 per cent, least it can be said to have adopted any unfair trade practice in this transaction.  In our view, both the fora below have misdirected themselves by overlooking specific conditions of the agreement, which entitled the petitioner to increase the rate of interest.  We accordingly hold that the orders passed by the fora below have resulted into miscarriage of justice and therefore, need to be set aside and as a consequence, complaint to be dismissed.

5.      In the result and for the above stated reason, the petition is allowed and the order passed by the fora below are hereby set aside. However, in the peculiar facts and circumstances of the case, leaving the parties to bear their own cost.