MRS. NEENA SANDHU, MEMBER

            This is an appeal filed by the appellant/OPs against the order, dated            9.9.2010 passed by District Consumer Disputes Redressal Forum-I, UT, Chandigarh (hereinafter to be called as District Forum only) in complaint case No. 1319 of 2009 vide which the OPs were directed to overhaul the entire account of the complainants and charge from them interest @ 11% per annum since the disbursement of loan till 31.8.2009. It was further directed that the OPs would charge interest @ 9.75% per annum w.e.f. 31.8.2009 till the rate of interest/FRR is enhanced in accordance with the agreement. It was further directed that the OPs would pay Rs.50,000/- as compensation for adopting unfair trade practice and another Rs.50,000/- for introducing false evidence in the shape of Annexure R-1 to R-4. The OPs were also directed to give the waiver of Rs.42,135/- and all other waivers/concessions already extended to the complainants.The OPs were further directed to give credit of Rs.31,00,000/-, Rs.5,02,000/-, Rs.49,000/- and Rs.13,49,2000 to the complainants from the dates on which the above said amounts were deposited and the balance due from the complainants were to be reduced to that effect. The OPs were also directed to pay Rs.5,500/- as costs of litigation. The above directions were to be complied with by the OPs within thirty days from the date of receipt of copy of the order failing which the OPs were liable to refund the excess amount so charged from the complainants, as mentioned above, alongwith interest @ 11% per annum since the filing of the complaint i.e. 14.9.2009 till the amount is actually paid to the complainants.

2.         Briefly stated, the facts of the case, are that the complainants availed of a home loan  of Rs.1,22,00,000/- from the OPs for purchase of residential house no. 424, Sector 16, Panchkula, Haryana, which was to be repaid in 240 equated monthly installments of Rs.1,25,926/- per month for 20 years commencing from the month of May, 2007. The OPs disbursed the loan to the complainants, vide two payments of Rs.52,00,000/- and Rs.70,00,000/- on 30.03.2007 into their account, against which the said house was pledged to the formers as security for the loan.  The rate of interest agreed, to be paid, between the parties was @11% p.a. AIR (Adjustable Interest Rate) and the reset period was one month for any change in the said rate of interest.  It was stated that the complainants paid about 27 EMIs to the OPs, and came to know that they had increased the rate of interest from 11% to 12% from June, 2007 to July 2008, 12.75% from August 2008 and 13.50% from September 2008 to January, 2009 and thereinafter reducing it to 13% from the month of February, 2009 onwards but the OPs did not send any interest reset letters to them, during the entire period.  It was further stated that the OPs increased the EMI from Rs.1,25,927 to Rs.1,33,037/- from June, 2009, which was protested by the complainants from time to time, as and when it came to their knowledge.  A letter dated 09.03.2009 was also issued by OP-2 wherein the OPs admitted their follies and announced a waiver of the sum of Rs.42,135/-.  Meanwhile they could not pay the EMIs, in question, on time, as a result whereof the OPs wrote them a letter dated 19.06.2009 showing the dues as Rs.1,28,93,723.34 outstanding and included therein a component of Rs.5,42,349.07, as delayed payment charges, and Rs.2,67,063.27 as incidental charges. It was further stated that, during this period, a theft took place at their residence, which led to the loss of an estimate of Rs.20 lacs. FIR in that regard was also lodged with Panchkula Police Station. It was further stated that the OPs sent the loan recall notice on 23.07.2009 showing an outstanding of Rs.1,30,27,730.62 against the complainants and also asked them to pay the said amount upfront. The officials of the OPs visited the residence of the complainants on 21.08.2009 and it was mutually agreed to between the parties that they would regularize the home loan account by making a payment of Rs.3,52,296/- latest by 31.08.2009, to avoid any further complications and, accordingly, a sum of Rs.3,55,000/- was paid by them to the OPs on 26.08.2009. Thereafter the balance due from them, to be paid to the OPs, was only 2 EMIs and part payment of the 3rd EMI till September, 2009.  It was further stated that the complainants made a payment of Rs.1,28,542/- to the OPs on 09.09.2009.  The OPs issued them a letter dated 09.03.2009, in which they agreed to rectify all outstanding grievances and in token thereof, had also offered to waive overdue amount of Rs.42,135 on payment of outstanding, as on that day being Rs.4,12,890/-.  It was further stated that during the pendency of the complaint on 19.11.2009, they got recorded the statement of the OPs  that all outstanding arrears of the EMIs of the said loan had been paid off by the complainants  and they were no more in default of making any payment.  On 14.01.2010, the complainants had made the payment of a substantial amount of Rs.50,00,000/- towards the repayment of loan amount to the OPs but they failed to reduce the outstanding from their loan account.  It was further stated that the OPs charged a higher variable rate of interest on the loan illegally. It was further stated that the aforesaid acts of the OPs, amounted to deficiency, in service, and indulgence into unfair trade practice. Hence, the complaint was filed.

3.         Reply was filed by OPs, wherein, it was stated that the complainants had purposely not placed on file the complete filled in copy of the agreement.  It was stated that as per the agreement, the loan was granted on a variable rate of interest.  FRR/ICICI Bank Floating Rate had been duly notified, from time to time to the complainants and was also notified to the RBI as well as the general public. No objection was raised by the complainants at any time. The complainants had been given the benefit of a variation of 0.75% on the FRR which would vary from time to time.  It was further stated that the payments made by the complainant were strictly in conformity with their contractual obligations, and they were defaulters in paying the dues and were given the benefit of waiver of the over due amount of Rs.42,135/- provided they cleared all the outstanding installments of Rs.4,12,890/- but they did not do so. It was further stated that the complainants were approached by the representative of the OPs time and again, to clear the dues, but they refused to do so. The complainants did not pay the amount as per the loan recall notice.  It was further stated that the OPs had the right to adjust the loan against the loan recall amount, at any stage.  All other allegations, levelled by the complainants, in the complaint, were denied. It was further stated that there was no deficiency, in service, on the part of the OPs nor they indulged into unfair trade practice.

4.         The parties led evidence, in support of their case.

5.       The learned District Forum, allowed the complaint, in the manner, referred to, in the opening para of this order.  

6.         Aggrieved by the order, passed by the learned District Forum, the appellants/OPs, filed the instant appeal. 

7.         We have heard Sh. Sh. Sandeep Suri, Advocate for the appellants/OPs, Sh. Sh. Neeraj Pal Sharma, Advocate, for the respondents, and, have perused the record, carefully.

8.                     The learned Counsel for the appellants/OPs contended that the complainant availed of home loan of Rs.1,22,00,000/- from the OPs and the rate of interest agreed to be paid, between the parties was @11% p.a.  (floating rate) ( i.e. FRR +/- margin of .75%+applicable interest tax and other statutory levies).  It was contended that the standard terms and conditions for facilities for/against properties at page 18 of the agreement Annexure C-2 defines, FRR or ICICI Bank floating Reference Rate to mean the percentage rate per annum decided by the ICICI bank, from time to time, and announced/notified by it (ICICI bank) as its floating reference rate.  It was further contended that the loan availed of by the complainants was on floating rate of interest and the rate of interest was charged from them as prevalent, at that time, in the market. It was further contended that regarding this change in the rate of interest, the OPs had duly informed the complainants by sending the letters, Annexure R-1 to R-4 and also by publishing it into the newspaper and making it online.  It was further contended that although the FRR is constant for the bank, for all the customers. However, the rate of interest as applicable to each customer would change from time to time depending upon the particular agreement entered into with him. It was further contended that moreover, the loan advanced to each customer depends upon various factors, on a percentage, which is linked to FRR i.e. the same may increase or decrease the FRR by adding or subtracting the agreed percentage points from the same. Hence a change in FRR results in changes in the applicable rate of interest as also it results in different rates of interest being applicable to different customers. Thus, the applicable loan for every loanee/customer, shall not be the same, for the same FRR. Hence the Forum erred in holding that the OPs indulged into unfair trade practice in so far as fixing FRR and different rate of interest with respect to different customers. He further contended that the order of the District Forum, being illegal, is liable to be set aside.

9.         It was contended by the learned counsel for the respondents/complainants that the complainants availed of a home loan  of Rs.1,22,00,000/- from the OPs to be paid in 20 years through 240 equated monthly installments of Rs.1,25,926/- per month and the interest agreed to between the parties was @11% p.a. AIR (Adjustable Interest Rate) and the reset period was one month for any change in the said rate of interest.  It was further contended that when the complainants paid 27 EMIs towards the loan amount, the OPs, without giving any prior intimation, to them, increased the rate of interest from 11% to 12% from June, 2007 to July 2008, 12.75% from August 2008 and 13.50% from September 2008 to January, 2009 and thereafter reducing it to 13% from the month of February, 2009 onwards.  The OPs also increased the EMI from Rs.1,25,927 to Rs.1,33,037/- from June, 2009 and subsequently vide letter dated 09.03.2009 announced a waiver of a sum of Rs.42,135/-.  It was further contended that the complainants could not pay the EMIs in question on time, on which the OPs vide letter dated 19.06.2009 showed the dues as Rs.1,28,93,723.34 as outstanding and included a component of Rs.5,42,349.07 as delayed payment charges and Rs.2,67,063.27 as incidental charges. Thereafter the OPs sent the loan recall notice on 23.07.2009 and showed an outstanding of Rs.1,30,27,730.62. Subsequently as per mutual agreement between the complainants and the officials of the OPs, the complainants in order to regularize the home loan account and to avoid any further complications paid a sum of Rs.3,55,000/- to the OPs on 26.08.2009. Thereafter the balance due from them to be paid to the OPs was only 2 EMIs and part payment of the 3rd EMI till September, 2009.  It was further submitted that the complainants made a payment of Rs.1,28,542/- to the OPs on 09.09.2009.  It was further contended that the OPs vide letter dated 09.03.2009 agreed to rectify all outstanding grievances and offered to waive overdue amount of Rs.42,135 on payment of outstanding as on that day being Rs.4,12,890/-.  Even during the pendency of the complaint on 19.11.2009, the OPs  made statement that all outstanding arrears of the EMIs of the said loan had been paid off by the complainants  and they were not defaulter anymore qua the OPs.  It was further contended that despite payment of a substantial amount of Rs.50,00,000/- on 14.01.2010, towards repayment of the loan amount,  the OPs did not reduce the outstanding from their loan account.

10.                   From the perusal of the record, it is evident, that the complainant took a Home loan of Rs.1,22,00,000/- from the OPs with a floating rate of interest. In this respect an agreement C-2 was duly executed between the parties. It was also admitted by the Counsel for the complainants that the loan was availed of by the complainants on floating rate of interest. As per Clause 9 2(b) of this agreement the FRR was 11.75% on the date of agreement, and until varied by the OP bank, in terms of the facility agreement the complainants were liable to
pay adjustable  rate of interest @11% p.a. i.e. FRR+/- margin of .75% plus applicable interest tax and all other statutory levies. The standard terms and conditions at page 18 of the agreement aforesaid define FRR or ICICI bank floating reference rate, to mean the percentage rate per annum decided by ICICI bank, from time to time, and announced/notified by the ICICI bank at its floating reference rates. Since, admittedly, the Home loan taken by the complainants, as per the agreement aforesaid, was at floating rate of interest, the OPs were entitled to charge the same.  The District Forum apparently misread the terms and conditions of the agreement, and came to conclusion, that the OPs were only entitled to charge interest @ 11% p.a. and not at the floating rate.  The findings of the District Forum being against the terms and conditions of the agreement C-2, are erroneous and stand reversed.

11.                   The next question, that arises for consideration, is, as to whether, the OPs notified the complainants, the floating rate of interest, from time to time, as per the terms and conditions of agreement C-2.  In the written reply, in clear cut terms, it was stated by the OPs, that they notified the floating rate of interest from time to time.  Himendra Singh, Manager of ICICI Bank, who filed his affidavit, by way of evidence also in clear-cut terms stated that FRR/ICICI floating rate had been duly notified from time to time.  The averments contained in the written reply, and in the affidavit of Himendra Singh, are duly corroborated from the letters R-1 dated April 10, 2007,  R-2 dated July 1, 2009, R-3 dated January 01, 2009 and R-4 dated November 30, 2009, written to  Vipul Kumar Vohra, one of the complainants, by the appellants. These letters clearly prove that Vipul Kumar, was duly intimated about the change of interest from time to time.  Two of these letters were sent to Vipul Kumar at his Chandigarh address and two at his U.S.A. address. It is evident from C-2, C-3 and C-4 that Vipul Kumar Vohra was giving his different addresses. C-3 was sent to Vipul Kumar Vohra at his Chandigarh address. C-4 letter was sent to him by the bank at his Panchkula Address.  The bank has to send notices to its customers, whose number may run in lacs.   The bank cannot be expected to send notices to the customers, through Register A.D., in every case.  Since notices R1 to R4 were sent by the bank to Vipul Vohra, one of the complainants, in the ordinary manner, it could not be expected to have any proof thereof. Since the letters R1 to R4, regarding the change of rate of interest were sent to Vipul Kumar Vohra, one of the complainants, by the officials of the bank, in the due discharge of their official duties, presumption of correctness to such acts of the officials, is attached. It is not known as to how the District Forum, came to the conclusion, that R1 to R4, were fabricated by the bank.  In our opinion R1 to R4, letters are genuine.  The findings of the District Forum, that the complainants were not notified about the change of rate of interest, from time to time, and that the letters R1 to R4, were fabricated being erroneous, are reversed.

12.                   Even otherwise, the Hon’ble Supreme Court of India in case of Syndicate Bank Vs. R. Veeranna and others (2003)2 SCC page 15  held that if there is provision for enhancement of rate of interest in the agreement, between the parties, then the bank concerned need not to  send notice to the borrowers before charging higher rate of interest as per the agreement. The relevant observations of the Apex Court in para 7 of the report read as under;

            “The High Court while holding that the party is bound to pay the interest at the agreed rate took the view that the bank could not automatically charge the increased rate of interest merely on the basis of rise of interest on account of the RBI circulars. It is not a case of automatically charging the increased rate of interest; charge of higher rate is based on agreement between the parties .  The High Court was clearly in error in holding that the principles of natural justice were violated on the ground that the defendants were not put on notice before enhancing the rate of interest when the parties are bound by the terms of the contract. The application of the principles of natural justice cannot be read into the express terms of contract.”

Thus, the OPs have charged the interest on the loan amount in pursuance of terms and conditions of the agreement C-2, executed between the parties, of which the complainants were well aware being the  signatories to the same.  The principles of law, laid down, in the aforesaid case, is fully applicable to the facts of this case.

13.                   The contention of the complainant that the bank could not charge different rate of interest from different customers for the same loan, for the same time, has no merit, because the rate of interest would vary from customer to customer as the loan advanced to each customer depends upon percentage over and above the FRR agreed to between the parties, while taking the loan.  Moreover, grant of fresh loan depends upon various factors, including the market  conditions, financial status of a person, CIBIL Reports, Guarantors, Usage, etc prevalent at any particular period of time.   Even otherwise, it does not fall within the domain of the Consumer Foras, to decide as to at what rate the bank should grant loan of a particular category to a particular customer.  Directions by the Consumer Foras, to the bank to grant a particular  category of loan, to a particular customer, at a particular rate of interest, would mean interference into internal management and functioning of the bank.  The findings of the District Forum, in this regard, being erroneous are reversed.

14.                   The findings of the District Forum to the effect that the OPs indulged into unfair trade practice, are not based on the correct appreciation of evidence and law, on the point.  The same, being factually and legally unsustainable, are liable to be set aside.

15.                   For the reasons recorded above, the appeal is accepted, with no order, as to costs and the impugned order is set aside.

16.               Copies of this order be sent to the parties, free of charge.