State Consumer Disputes Redressal Commission
M/S Piramal Capital & Housing Finance ... vs Gaurav Verma on 8 December, 2025
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STATE CONSUMER DISPUTES REDRESSAL COMMISSION
U.T., CHANDIGARH
[ADDITIONAL BENCH]
Appeal No. : 149 of 2024
Date of Institution : 12.04.2024
Date of Decision : 08.12.2025
1. Branch Office Branch Manager (Accounts) Piramal Capital & Housing
Finance Ltd. (Formerly known as Dewan Housing Finance Corporation
Ltd.), SCO-811-812, 2nd Floor, Sector-22A, Chandigarh-160022
2. Registered Office Product Head Piramal Capital & Housing Finance
Ltd. (Formerly known as Dewan Housing Finance Corporation Ltd.),
Warden House, 2nd Floor, SIR P.M. Road, Fort Mumbai-400001
3. Branch Office Branch Manager Piramal Capital & Housing Finance
Ltd. (Formerly known as Dewan Housing Finance Corporation Ltd.), A-
301 & 305, 3rd Floor, Elante Office Complex, Industrial Area, Phase-I,
Chandigarh-160002
4. Registered Office V.P. & Product Head (LAP) Piramal Capital &
Housing Finance Ltd. (Formerly known as Dewan Housing Finance
Corporation Ltd.) Unit No. 601, 6th Floor, Amiti Building, Agastya
Corporate Park, Kamani Junction, Opp. Fire Station, LBS Marg, Kurla
(West), Mumbai-400070 & Present Branch office at Unit No. 6 & 7 (1st
Floor, Raksha Business Centre, Ambala Chandigarh Expy, Zirakpur,
Pincode-140603 through its Authorized Officer, Sh. Ritin Vatrana aged
about 39 years, S/o Sh. Vinay Vatrana, having Mobile No.
9914390107 and Aadhar Card No. 680445095223
....Appellants/Opposite Parties
Versus
Gaurav Verma S/o Sh. Prem Sagar Verma R/o H-243, Shiv Colony, Ward
No. 7, Dharampur, Kalka-134102, Panchkula, Haryana
...Respondent/Complainant
BEFORE: MRS. PADMA PANDEY, PRESIDING MEMBER
SH. RAJESH K. ARYA, MEMBER ARGUED BY :-
Sh. Harsh Chopra, Advocate for the appellants Sh. Gaurav Sharma, Advocate for the respondent 2 PER RAJESH K. ARYA, MEMBER The instant appeal has been filed by opposite parties - Piramal Capital & Housing Finance Limited (appellants herein) for setting aside order dated 07.02.2024 passed by District Consumer Disputes Redressal Commission-I, U.T., Chandigarh (hereinafter to be referred as 'District Commission') vide which, Consumer Complaint bearing No.653 of 2022 filed by the complainant - Sh. Gaurav Verma (respondent herein) has been partly allowed against the appellants (opposite parties) by granting following relief:-
"8. In view of the above discussion, the present consumer complaint succeeds and the same is accordingly partly allowed. OPs are directed as under:-
i) to refund an amount of ₹13,48,825/- to the
complainant alongwith interest @9% per annum from
the date of payment.
ii) to pay an amount of ₹20,000/- to the complainant as
compensation for causing mental agony and
harassment to him.
iii) to pay ₹10,000/- to the complainant as costs of
litigation.
9. This order be complied with by the OPs within 45 days from the date of receipt of its certified copy, failing which, they shall make the payment of the amounts mentioned at Sr. No.(i) &
(ii) above, with interest @12% per annum from the date of this order, till realization, apart from compliance of direction at Sr. No.(iii) above."
2] In brief, the case of the complainant before the District Commission was that the complainant applied for a loan from opposite 3 party No.1 amounting to ₹2,96,37,089/-. The said loan was availed against Property (LPA Scheme), which was sanctioned by opposite parties No.1 & 2 on the basis of repaying capacity of borrower on individual basis each (Annexure C-2). The complainant availed this loan from opposite party No.2 and taken over all Cash Credit Facility from Punjab National Bank, Branch Chandi Mandir, Pinjore, Haryana with amount of ₹2 crores only whereas opposite party No.2 was bound to deposit rest of sanctioned amount of ₹96,37,089/- in the complainant account. Opposite Party No.2 had given rest of the amount in three monthly installments to the complainant after sending a legal notice through counsel, which amount was to be deposited in the account of complainant by opposite parties No.1 & 2 in time (Annexure C-3). It was further stated that during Covid-19 or under the moratorium period, opposite party No.4 extended the EMI's by more than 14 fresh EMI's in the running of loan instead of charging only interest amount on outstanding loan amount from the complainant during the Covid-19, while the loan was regularly being paid by the individual loan applicant. The complainant annexed a calculation sheet as according to him, interest must be charged by opposite party No.4 from the complainant on the outstanding amount during the Covid-19. It was further stated that the cause of action arose among the parties due to charging of foreclosing charges of 4% on the outstanding loan amount without mentioning the same in the letter of offer and acceptance generated on 31-Aug-2018. It was further stated that by not mentioning in the generated offer and acceptance letter, the opposite parties purely concealed the actual facts and mislead the complainant at the time of sanctioning the loan. It was further stated that the charges imposed by opposite party No.4 on the complainant was ₹11,42,843/- plus GST amount of ₹2,05,982/- and these amounts were completely wrong. It was further 4 stated that the relation among the parties pertained to business only. It was further stated that the complainant applied foreclosing application on 15.03.2022 with cheque of ₹1,180/- but opposite party No.4 failed to deliver foreclosure letter within the time limit and had charged one-month late payment charges from the complainant for their own defective services. It was further stated that the complainant was being harassed from the beginning by the opposite parties.
3] On the other hand, the opposite parties in their reply filed before the District Commission, while admitting the factual matrix of the case, pleaded that the loan was not a Housing loan but loan against property- commercial. It was stated that the benefit of waiver of Foreclosure charges was not available to the complainant under the RBI/MSME guidelines. While referring to page 37 which deals only with home loans, the opposite parties further stated that the repayment was being made from the current account of M/s Prem Auto Care and as such, the benefit of waiver was not available to the complainant. It was further stated that 20% financial assistance, as alleged, had neither been specified nor the same was applied for nor the complainant had specified as to what the same referred to. It was further stated that the complainant availed the benefit of moratorium period and he was given the benefit of ex gratia interest credit amounting to ₹24,570/-. It was further stated that moratorium benefit was availed by the complainant and EMIs were deferred as per the RBI guidelines during the period of the moratorium.
4] The parties led evidence in support of their respective cases before the District Commission.
55] The District Commission after hearing arguments and considering the documentary evidence on record partly allowed the consumer complaint, as stated above.
6] The order has been assailed by the opposite parties primarily on the ground that the District Commission failed to consider the RBI Circular dated 02.08.2019 (Annexure A-4), which clearly stipulates that "Banks shall not charge foreclosure charges/prepayment penalties on any floating rate term loan sanctioned, for purposes other than business, to individual borrowers with or without co-applicant(s)." It is contended that the Circular squarely applies to the present case since the loan was admittedly taken for commercial purposes and was a takeover/repayment of a cash-credit facility. It is further submitted that the binding nature of RBI Circulars has been upheld in Central Bank of India v. Ravindra and others (2002) 1 SCC 367 and M/s Sardar Associates & Ors. v. Punjab & Sind Bank & Ors., (2009) 8 SCC 257. The opposite parties also argue that the District Commission failed to appreciate their preliminary objections including lack of pecuniary jurisdiction as the loan amount exceeded ₹50 lakh and non-maintainability of the complaint due to non-joinder of the other co-applicants. They further contend that the complainant had raised no objection and lodged no protest at the time of payment of foreclosure charges and the complaint is an afterthought, unsupported by any "deficiency in service" on their part. According to them, the complainant is estopped from raising such issues at this belated stage. It is also argued that the appellants acted strictly in accordance with the contractual terms and mere levy of foreclosure charges does not constitute any breach. Lastly, it is stated that the directions in the impugned order effectively rewrite the loan agreement, contrary to the settled law, including the decision in Shree Ambica Medical Stores & Ors. v. 6 The Surat People's Co-operative Bank Ltd. & Ors. (Civil Appeal No. 562 of 2020). Further reliance has been placed on the judgment of Hon'ble National Consumer Disputes Redressal Commission, New Delhi in case titled 'HDB Financial Services Ltd. Versus M/s Somanis & Anr.', Revision Petition No.1065 of 2021 decided on 29.08.2024. Lastly prayer for setting aside the impugned order and dismissal of the consumer complaint has been made by the appellants.
7] On behalf of the respondent-complainant, it has been contended that the District Commission has given very well detailed and reasoned judgment, which cannot be overlooked and the District Commission has discussed all the issues/contentions raised by the appellants. It has further been stated that the foreclosure amount charged from individual applicant by the financial institution is against the guidelines given by Reserve Bank of India in which, it is given that banks will not be permitted to charge foreclosure charges on all floating rate term loans sanctioned to individual borrowers and also the financial institution did not mention in the generated offer and acceptance letter which is against the circular of National Housing Bank Circular No.63/2014-15 and 66/2014-15 dated 14.08.2014 and 03.09.2014. It has further been stated that such loans shall continue to be governed by already sanctioned terms and conditions but in the offer and acceptance letter there is no such condition. It has further been stated that the financial institution failed to give assistance of 20% to the respondent as per the government instructions during the Covid-19 period on loan amount, if being paid by the borrower to the financial institution regularly and the respondent is a regular paying customer and thus, it applies on all loans. It has further been stated that it is clear that the foreclosure charges and also other charges taken by financial 7 institution are against the policy in question and are also illegal. It has further been stated that the respondent has not only suffered mental agony and harassment but has also been forced to knock the doors of Consumer Fora. Lastly prayer for dismissal of the appeal with costs has been made by the respondent-complainant.
8] We have heard the Learned Counsels for the parties and have also gone through the record, the impugned order and the written arguments of the parties very carefully.
9] It is pertinent to mention that the respondent - complainant took a term loan which, on the face of the file and the letter of offer produced as Annexure C-2, was sanctioned on 31.08.2018 on a variable interest rate for a tenure of 15 years (180 EMIs). The complainant challenged, inter alia, (i) the levy by the bank of foreclosure/pre-payment charges on prepayment/ foreclosure of that loan and (ii) alleged denial/defective application of Covid- 19 moratorium/relief and other incidental charges. The District Commission held that the loan fell within the scope of RBI/NHB instructions which prohibit levy of foreclosure charges on floating-rate term loans sanctioned to individual borrowers and therefore, the foreclosure charges were illegally levied; the District Commission also found that moratorium relief had been granted in the account for Covid-19 period. The appellants have challenged those findings on multiple grounds in this appeal as already stated above. The following issues arise for consideration of this Commission:-
1. Whether the District Commission was right in treating the loan as falling within the RBI/NHB directions which bar foreclosure/pre-
payment penalty on floating-rate term loans sanctioned to individual borrowers?
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2. Whether the District Commission erred in law in ignoring the contention that the loan was for business/commercial purpose and so the waiver did not apply?
3. Whether preliminary objections (pecuniary jurisdiction; non-joinder of co-applicants) raised by the appellants were sustainable?
4. Whether the denial of relief is barred by estoppel/waiver because the complainant did not object at the time of payment?
5. Whether the District Commission was wrong in finding deficiency in service?
Issues - 1 and 2:
10] As regards the first issue, it may be stated here that the critical factual foundation for applying the RBI/NHB guidelines is the nature of the sanctioned loan and its contractual terms. The District Commission examined Annexure C-2 i.e. the letter of offer and acceptance and noted that the loan was sanctioned on 31.08.2018 on a variable interest rate for 180 EMIs and tenure of 15 years. Those facts are undisputed on the record. The appellants' plea that the loan was not a housing loan but a commercial loan/takeover of a cash-credit facility is inconsistent with the terms of the offer/acceptance actually generated by the lender and placed on record. Where the written offer and acceptance describe the loan in the manner found by the District Commission, appellants - NBFC cannot be permitted to re-characterize the transaction simply because the borrower used the proceeds in a particular business manner. The starting point is the written contract. The District Commission has correctly relied on Annexure C-2. 11] The District Commission correctly applied the governing regulatory guidance. The RBI master circular (reproduced at para 6.4 in the 9 District Commission's order) clearly states that banks shall not be permitted to charge foreclosure charges/pre-payment penalties on floating rate term loans sanctioned to individual borrowers. The essential elements for applicability are (a) floating/variable rate term loan and (b) borrower being an individual (i.e. protection intended for individuals). Both elements are satisfied on the present record. The loan was a floating/variable rate term loan (Annexure C-2) and the respondent/complainant is an individual borrower whose loan documentation was in his/individual name (the District Commission so found and the appellants have not produced contemporaneous documentation contradicting that finding). Therefore the bar on levy of foreclosure charges applies to this loan. 12] Moreover, during the course of arguments before us, Counsel for the respondent/complainant supplied copy of Individual Loan Statement of the respondent/complainant dated 14.04.2022, which further proved beyond any reasonable doubt that loan was in the individual name of the respondent/complainant - Gaurav Verma alongwith other co-applicants and the appellants illegally, wrongfully and arbitrarily charged foreclosure charges amounting to Rs.11,40,072 including other charges, totaling Rs.13,45,985/- in the said account, which was totally against the RBI/NHB guidelines. Even the Schedule appended to the Loan Agreement dated 31.08.2018, Annexure A-5, placed on record by the appellants themselves by moving IA/170/2025, clearly shows that the said loan was in the name of Gaurav Verma and the co-applicant Richa Verma, in individual capacity though being LAP Commercial for repaying the cash-credit facility availed by the respondent-complainant from Punjab National Bank, Pinjore and also RBL. It also stands corroborated from the Loan Application Form, 10 Annexure A-6, again placed on record by the appellants by moving IA/264/2025.
13] Further the appellants rely on the argument that the transaction was for commercial purpose and that the RBI circular does not apply to loans taken "for purposes other than business" or to sole-proprietorship concerns/non-individual entities. No doubt, these two points are decisive. The District Commission found on the document, Annexure C-2 that the loan was a housing loan (term loan, variable rate, 15 years). The form and terms of sanction are the most reliable indicator of the contractually agreed nature of the loan. The appellants cannot avoid the consequences of their own sanction documentation by later asserting that the borrower used the funds for a commercial purpose.
14] The NHB clarification quoted by the District Commission (which points out that sole proprietorships/HUFs are not to be treated as "individual borrowers" for these circulars) is a narrow carve-out that does not operate on the facts here. The District Commission, after considering the clarification and evidence before it, correctly concluded the borrowing was within the protective ambit of the circular. The appellants did not place on record unambiguous loan documents showing that the borrower was a sole-proprietorship concern or HUF for the purpose of the sanction; the registration of the account and the nature of sanction are determinative and support the District Commission. The appellants' reliance on broader contractual freedom or on case law emphasizing the sanctity of contract cannot prevail where a statutory/regulatory direction prohibits a contractual term or the levying of a particular charge in the circumstances shown here. Regulatory directions issued by the RBI and NHB that protect retail/individual borrowers from pre-payment penalties on floating rate term 11 loans are intended to override contractual clauses which would otherwise defeat that policy objective.
15] The case of the respondent/complainant is fully supported by the judgment of Hon'ble Delhi High Court in the case of Raj Kumar Kohli and another Versus Reserve Bank of India and another, W.P.(C) 11281/2017 decided on 21.10.2019. The case before the Hon'ble National Commission was that the petitioners were first sanctioned a ₹180-lakh loan on 30.11.2009, secured by an equitable mortgage over petitioner No.1's Punjabi Bagh property. Although the loan was disbursed on 15.12.2009, respondent No.2 repeatedly closed the existing loan account and opened new ones with enhanced limits ₹270 lakh in 2010, ₹480 lakh in 2013 and ₹600 lakh in 2014. After seeking closure of the ₹600 lakh loan in December 2014, the petitioners received back their title deeds. In April 2015, they discovered for the first time that foreclosure charges had been levied each time a loan account was closed. They issued a legal notice on 16.04.2015, to which respondent No.2 replied on 05.05.2015, claiming the RBI circular on waiver of foreclosure charges did not apply because the loans were for business purposes and earlier closures pre-dated the circular. The petitioners disputed this stance through a rejoinder and subsequent letters asserting entitlement to RBI's foreclosure-waiver benefits. 16] Thus, the core grievance of the petitioners in that said case was that respondent No.2, which was a non-banking financial company, had imposed foreclosure charges qua its loan account without appreciating the fact that a proprietorship concern does not, in law, have an existence separate from its owner who is an individual. The Hon'ble High Court held in Paras 15 & 15.1, inter alia, as under:-
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"15. According to me, the Circular would be applicable even to the last loan account which had a sanctioned limit of Rs.600 lakhs. The reason why I say so is that a proprietorship concern is not a juridical entity, which is separate from its proprietor. It is not in dispute that the petitioner No.1 is the proprietor of the proprietorship concern which goes by the name 'India Sales Corporation'. Petitioner No.2 is the wife of petitioner No.1, who is W.P.(C) 11281/2017 Pg. 5 of 6 concededly, a co-borrower. 15.1 Furthermore, if I were to accept the stand of the respondents, then, one would have to insert the words in para 2 of the Circular which would have to hold out that loans sanctioned to individual borrowers for business purpose were not entitled for waiver of foreclosure charges......."
Further in Paras 15.2 and 16, the Hon'ble High Court has held as under:-
"15.2 Therefore, the benefit of the provisions of the Circular would have to be extended by respondent No.2 to even the last loan account.
16. Accordingly, respondent No.2 is directed to refund the foreclosure charges/pre-payment penalty imposed qua the last loan account. Respondent No.2 will remit the amounts charged in that behalf within two weeks from the date of receipt of a copy of this order."
However, the facts of the case 'HDB Financial Services Ltd. Versus M/s Somanis & Anr.' (supra), relied upon by the appellants are distinguishable as the loan was obtained by the complainant in the said case was on behalf of the proprietorship firm and not in an individual capacity. The District Commission, therefore, correctly held that the foreclosure charges were 13 levied in contravention of the regulatory guidelines and such levy amounted to deficiency in service.
Issues - 3:
17] The appellants have additionally objected that the District Commission lacked pecuniary jurisdiction because the original loan amount exceeded ₹50 lakh and also raised non-joinder of other co-applicants. In this regard, it is pertinent to mention here that the complainant before the District Commission sought specific relief in respect of wrongly levied foreclosure charges and ancillary relief (refund/adjustment/compensation). The District Commission recorded and exercised jurisdiction after considering the relief sought. The appellants did not establish that the relief sought exceeded the statutory pecuniary limit applicable to the District Commission at the relevant time or that the District Commission's exercise of jurisdiction was otherwise vitiated.
18] Further the objection qua non-joinder of co-applicants does not defeat the complaint where the grievance was against a service provider and the respondent/complainant had sought redress for deficiency of service in respect of his account. The respondent/complainant personally suffered the charge; the dispossession of a remedy on that basis would be an over- technical approach contrary to the consumer law object of effective redress. The District Commission was entitled to proceed against the service provider NBFC given the subject matter of the complaint. Thus, for these reasons the preliminary pleas of lack of jurisdiction and non-joinder are not persuasive.
Issues - 4:
19] The appellants contend that the respondent/ complainant is estopped from raising the issue because he did not protest at the time of 14 payment of the foreclosure charges and thus, the complaint was an afterthought. This submission is totally unconvincing. The question before the District Commission was whether a deficiency in service occurred. The absence of an immediate contemporaneous protest does not change the legal character of an unlawful charge; it may be relevant to quantum of interest or costs but it does not defeat the complainant's right to have an unlawful charge set aside and refunded. Accordingly, the estoppel plea does not defeat the substantive claim.
Issues - 5:
20] Given the established regulatory prohibition on levying foreclosure/pre-payment penalty on floating-rate term loans to individuals, collection of such a charge in the circumstances is a clear maladministration and amounts to a deficiency in service. The District Commission correctly characterized it as such. The appellants' argument that they acted according to contract cannot prevail where the applicable regulatory instruction prohibits the practice; public regulatory obligations governing banking practice defeat inconsistent private contractual terms in this consumer-protection context. The District Commission examined the account statement and found that the appellants had granted the benefit of the moratorium and had credited an ex-gratia interest amount of ₹24,570/-. The appellants' challenge on this point is, therefore, answered by the District Commission's factual finding based on the records. On the present record, there is no basis to disturb that finding. In our considered view, the District Commission rightly found the foreclosure charges to be illegal and constituted deficiency in service.15
21] In view of the thorough, reasoned and legally sound analysis undertaken by the District Commission, this Commission finds no ground to interfere with the impugned order.
22] For the reasons recorded above, the appeal being devoid of any merit is dismissed with no order as to costs.
23] Pending application(s), if any, in this appeal also stands dismissed having been rendered infructous.
24] Certified copies of this order be sent to the parties free of charge. 25] File be consigned to Record Room after completion. Pronounced 08.12.2025.
(PADMA PANDEY) PRESIDING MEMBER (RAJESH K. ARYA) MEMBER *Ad* 16