State Consumer Disputes Redressal Commission
Hdfc Bank Ltd. vs Niranjan Singh Kapoor on 7 May, 2015
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB, DAKSHIN MARG, SECTOR 37-A, CHANDIGARH.
First Appeal No.1360 of 2013
Date of institution : 11.12.2013
Date of decision : 07.05.2015
HDFC Bank Ltd. through its Chairman/Managing Director/Principal
Officer having one of its branch office at Court Road, Amritsar
through its Branch Manager.
......Appellant/Opposite Party
Versus
Shri Niranjan Singh Kapoor s/o Shri Gurcharan Singh Kapoor, R/o
18, Milap Avenue, The Mall, Amritsar.
........Respondent/Complainant
First Appeal against the order dated
8.10.2013 of the District Consumer
Disputes Redressal Forum, Amritsar.
Quorum:-
Hon'ble Mr. Justice Gurdev Singh, President
Shri Baldev Singh Sekhon, Member
Present:-
For the appellant : Shri H.S. Bhatia, Advocate.
For the respondent : Shri Updip Singh, Advocate. JUSTICE GURDEV SINGH, PRESIDENT :
The appellant/opposite party has preferred this appeal against the order dated 8.10.2013 passed by District Consumer Disputes Redressal Forum, Amritsar (in short, "District Forum"), vide which the complaint filed by the respondent/complainant, Niranjan Singh Kapoor, under Section 12 of the Consumer Protection Act, 1986, was allowed with costs of Rs.2,000/- and it was directed to refund the amounts of Rs.1,05,343.39P and Rs.2,66,893.20P, along with First Appeal No.1360 of 2013 2 interest at the rate of 9% per annum from the date of filing of the complaint till the date of payment.
2. The complainant alleged, in his complaint, that he had obtained personal loan against property from the opposite party having account Nos.91076800 and 91079360. He had other accounts with this opposite party under the names and style of M/s Noble Wire, M/s Citizen Cable, M/s Noble Udyog and M/s Sanjog Wire and Cable Industries with credit facilities. The personal loan and the credit facilities had been granted against the mortgage of one single residential property owned by him and situated at 18, Milap Avenue, The Mall, Amritsar. He was forced by the opposite party to close the credit facilities obtained by the said concerns. He told its officials that if he is to shift those accounts to some other financial institution, then the said mortgaged property has to be got released and the personal accounts are also to be shifted, which tentamounts to the forced closure of his personal loan accounts. The officials of the opposite party, who are very hostile to him, told him to transfer all the accounts to the other financial institution. On account of only single property having been mortgaged as security for all the above said accounts, the foreclosure of the accounts resulted in forced closure of accounts and he had to shift to some other financial institution. The sums of Rs.1,05,343.39P and Rs.2,66,893.20P were charged as foreclosure charges in respect of his personal accounts, arbitrarily and at arbitrary rate. He himself never closed those accounts and it was the opposite party, who First Appeal No.1360 of 2013 3 made him to shift those accounts. He made the protest for charging of the said amounts, as foreclosure charges, but the matter was put off by the opposite party on one pretext or the other. This act on its part amounts to deficiency in service and adoption of unfair trade practice and mal-practice; which caused lot of mental tension, agony and harassment to him. He prayed for issuance of directions to the opposite party to refund the said amounts, along with interest at the rate of 12% from the date of receipt till the realization; to pay Rs.1,00,000/-, as compensation; and costs of litigation.
3. The opposite party filed detailed written reply before the District Forum, in which it admitted that the complainant had availed personal loan against the property from it and was having the accounts, so mentioned in the complaint. It also admitted that it charged Rs.1,05,343.39P and Rs.2,66,893.20P, as foreclosure charges in respect of those loan accounts. While denying the other allegations made in the complaint, it pleaded that the complainant himself was interested to shift his all loan accounts to another financial institution; namely, Indiabulls, for which he himself and Sanjogta Kapoor moved an application before it. All the formalities for taking over of the loan by the other financial institution were completed and all the original papers were handed over to Ashwani Kumar, who was authorized to receive the same, vide letter dated 7.7.2010. On account of shifting of the loan accounts to the other financial institution, it suffered huge/substantial loss. A sum of Rs.64,14,369/- was to be repaid in respect of loan account First Appeal No.1360 of 2013 4 No.91079360 in 249 monthly instalments and the loan amount of Rs.25,00,000/- was to be repaid in respect of loan account No.91076800 in 286 months. That loan account was shifted within 42 months of the advancement of the loan. The complainant himself had executed loan-cum-hypothecation agreement and as per clause 8.1 thereof, he had undertaken to pay the pre-payment charges, as applicable, from time to time. The amounts, in dispute, were imposed as pre-payment charges as per that Agreement with the consent of the complainant. The complainant has concealed the true facts from the District Forum and no cause of action has accrued to him to file this complaint. There was no deficiency in service on their part and the complainant is not a "consumer". The loan obtained by him was purely commercial nature and, as such, he has no locus-standi to file this complaint. The same is barred under Section 41(h) of the Specific Relief Act. He has not come to the District Forum with clean hands and is guilty of suppression of material facts. Therefore, he is not entitled to any such relief. It prayed for the dismissal of the complaint with exemplary costs; having been filed with a mala fide intention.
4. Both the sides produced evidence in support of their respective averments before the District Forum, which after going through the same and hearing learned counsel on their behalf allowed the complaint, vide aforesaid order.
5. We have heard learned counsel for both the sides and have carefully gone through the records of the case.
First Appeal No.1360 of 2013 5
6. It was submitted by the learned counsel for the opposite party that it was wrongly held by the District Forum that the complainant was not liable to pay any such pre-payment charges on the transfer of the loan accounts to the other financial institution. The facts of the judgment, so relied upon by the District Forum, were different from the facts of the present case. The complainant himself had entered into Loan Agreement, Ex.R-6, whereby he had agreed to pay such pre-payment charges by virtue of clause 8.1. In order to confuse the matter, he referred to the credit facilities obtained by him in the names of other concerns. The only dispute involved in the present case is regarding the transfer of the personal loan account to the other financial institution. Once having agreed to pay the pre- payment charges, he cannot turn around and say that no such charges could have been recovered from him. In these circumstances, the findings recorded by the District Forum are liable to be set aside. In support of his argument, he placed reliance on the judgment of the State Commission U.T., Chandigarh passed in FA No.46 of 2012 decided on 10.5.2012 (H.D.F.C. Bank and another v. Yash Paul Singla and others).
7. On the other hand, it was submitted by the learned counsel for the complainant that after taking into consideration the evidence produced on the record and the judgments cited in the impugned order, it was correctly held by the District Forum that no such amount was recoverable from the complainant, as the prepayment charges and the opposite party by recovering those charges were deficient in First Appeal No.1360 of 2013 6 service and adopted unfair trade practice. There is no ground for setting aside the well reasoned order passed by the District Forum. In support of his argument, he relied upon the judgment of the State Commission, Delhi passed in FA No.810 of 2009 decided on 24.7.2013 (STANDARD CHARTERED BANK LTD. v. ASHISH AGGARWAL & MRS. ALKA AGGARWAL).
8. The facts are not disputed in this case. It is very much clear from the letters dated 15.6.2010 proved on the record as Ex.C-2 and Ex.C-3 that the opposite party on the loan accounts against the property obtained by the complainant from it, recovered prepayment charges at the rate of 4.41% on the outstanding principal, as per the Agreement entered into between them. The opposite party in order to prove that the amounts, so mentioned in those letters, were the loan amounts recoverable from the complainant proved on record the Statement of Accounts Ex.R-1 and Ex.R-2. The only question, which arises for determination for the decision of the present appeal is, whether the opposite party could have recovered any such prepayment charges?
9. The District Forum while answering this question in favour of the complainant relied upon the judgment of the Competition Commission (Neeraj Malhotra v. Deutsche Post Bank Home Finance). We are not able to lay our hands on that judgment as the full citation was not given in the judgment. The District Forum took into consideration the finding recorded by that Competition Commission to the effect that there should be no prepayment First Appeal No.1360 of 2013 7 charges on migration of loan to another lender and levy of prepayment charges amounts to unfair and restrictive trade practice. That judgment of the Competition Commission is not binding on this Commission. The District Forum also relied upon one judgment of the Hon'ble Delhi High Court (DLF Ltd. v. Punjab National Bank). The full citation of that judgment was also not given in the judgment and, as such, we could not find the judgment in order to appreciate the facts thereof or what was the ratio of that judgment?
10. It was made very much clear by the Hon'ble Supreme Court in Makine Container Services South Private Limited v. Go Go Garments (AIR 1999 SC 80) that the Contract Act applies to the complaints filed under the Consumer Protection Act, 1986. The opposite party proved on record the Loan Agreement, which was executed in its favour by the complainant, as Ex.R-6. This Agreement was executed by him at the time of obtaining the loan in dispute. The relevant clause thereof is reproduced below:-
"8.1 The Borrower may prepay the whole or any part of the outstanding Loan Facility. The Borrower shall, at the time of such prepayment, not be liable to pay any prepayment charges if the loan has been repaid from his own savings and/or by his employer. However, if the Loan Facility is prepaid by any other bank, financial institution, housing finance company taking over the loan facility, the Borrower agrees to First Appeal No.1360 of 2013 8 pay prepayment charges at such rates as applicable from time to time."
11. It is very much clear from this clause of the Agreement that the complainant had agreed to pay prepayment charges in case the loan was not repaid from his own savings and the same was taken over by the other financial institution.
12. Learned counsel for the complainant has placed reliance on Ashish Aggarwal's case (supra) in support of his contention that no such prepayment charges could have been recovered from the complainant. It is pertinent to note that it was "home loan", which was in question, in that case and the instructions regarding the pre- payment penalty/foreclosure charges regarding home loans were issued by the Reserve Bank of India, vide RBI/2011-12/589 DBOD. No. Dir. BC.107/13.03.00/2011-12 dated June 5, 2012. As per those instructions, the foreclosure charges regarding home loans were to be treated, as restrictive practice deterring the borrowers from switching over to cheaper available source. The present is a case, which does not pertain to the home loan and it was a loan obtained by the complainant against the property.
13. We tried to go through the instructions issued by the Reserve Bank of India regarding foreclosure charges/prepayment penalties. We are not able to find any such instruction, which bars the recovery of foreclosure charges/prepayment penalty on the loans obtained against the properties at the rate agreed between the parties. There are instructions of the Reserve Bank of India contained in RBI/2013- First Appeal No.1360 of 2013 9 14/582 DBOD. Dir. BC. No.110/13.03.00/2013-14 dated May 7, 2014, vide which the banks were stopped from charging foreclosure charges/prepayment charges on all Floating Rate Term Loans sanctioned to the individual borrowers with immediate effect. Firstly these instructions were issued in the year 2014, whereas we are dealing with a case pertaining to the year 2010 and secondly it is very much clear from the Loan Agreement, Ex.R-6 that it was not Floating Rate Term Loan.
14. The position was made very clear by the State Commission U.T., Chandigarh in Yash Paul Singla's case (supra). The facts of that case were similar to the facts of the present case. It was held in that judgment that the prepayment charges were not applicable in case the borrower prepaid the full outstanding amount out of his own sources and where the loan is transferred to another financial institution, then those charges are certainly payable.
15. The ratio of this judgment fully applies to the facts of the present case. The loan, in dispute, was neither "home loan" nor Floating Rate Term Loan. Therefore by virtue of the above reproduced clause of the Agreement, the complainant was liable to pay the prepayment charges and those were legally recovered from him. The District Forum committed an illegality by recording a finding to the contrary and such a finding cannot be sustained.
16. In the result, the appeal is allowed, the order passed by the District Forum is set aside and the complaint filed by the complainant is dismissed.
First Appeal No.1360 of 2013 10
17. The appellant/opposite party deposited the sum of Rs.25,000/- at the time of filing of the appeal on 11.12.2013. It deposited another sum of Rs.2,17,959/- on 3.1.2014 in compliance of the order dated 20.12.2013. Both these sums along with interest which has accrued thereon, if any, shall be remitted by the registry to the appellant/opposite party by way of a crossed cheque/demand draft after the expiry of 45 days of the sending of certified copy of the order to the parties.
18. The arguments in this case were heard on 29.4.2015 and the order was reserved. Now, the order be communicated to the parties.
19. The appeal could not be decided within the statutory period due to heavy pendency of court cases.
(JUSTICE GURDEV SINGH) PRESIDENT (BALDEV SINGH SEKHON) MEMBER May 07, 2015 Bansal