State Consumer Disputes Redressal Commission
Hdfc Bank Limited vs Rahul Narula on 18 April, 2024
ADDITIONAL BENCH
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB, CHANDIGARH.
First Appeal No.144 of 2022
Date of institution : 22.02.2022
Reserved on : 02.04.2024
Date of decision : 18.04.2024
HDFC Bank Limited, through its Chairman/Managing Director/Principal
Officer having its branch office at Mall Road, Amritsar.
.....Appellant/Opposite Party
Versus
Mr. Rahul Narula S/o Sh. Tilak Raj R/o 129, Tilak Nagar, Shivala
Mandir Road, Amritsar.
.....Respondent/complainant
First Appeal under Section 41 of the
Consumer Protection Act, 2019 against the
order dated 07.01.2022 passed by the District
Consumer Disputes Redressal Commission,
Amritsar, in CC/671/2018
Quorum:-
Mr. H.P.S. Mahal, Presiding Judicial Member
Mrs. Kiran Sibal, Member Argued by:-
For the appellant : Ms. Niharika Goel, Advocate for Sh. P.M. Goyal, Advocate For respondent : Exparte KIRAN SIBAL, MEMBER The instant appeal has been filed by the appellant/opposite party against the impugned order dated 07.01.2022 passed by District Consumer Disputes Redressal Commission, Amritsar (in short, now "the District Commission"), whereby the complaint filed by complainant against opposite party (in short 'OP'), under Section 12-13 of the FA No.144 of 2022 2 Consumer Protection Act, 1986, was allowed and the following relief has been granted:
"8.In view of the above discussion, this Commission has found the opposite party guilty of deficiency in service in charging the prepayment charges of Rs.4351/- and Rs.13,587/-. Consequently, we allow the complaint with costs and the opposite party is directed to refund Rs.4351/- and Rs.13,587/- alongwith interest @ 9% p.a. from the date of filing of the complaint till realization. Opposite party is also directed to pay compensation of Rs.5000/- to the complainant while litigation expenses are assessed at Rs.3000/- to be paid to the complainant.........".
2. It would be apposite to mention that hereinafter the parties will be referred, as have been arrayed before the District Commission.
3. Brief facts for the disposal of the appeal are that the complainant had obtained vehicle loans from the OP for the sum of Rs.1,70,000/- in April 2014 vide loan account No.40863836 and for the sum of Rs.7,77,000/- in July 2016, vide loan account No.27005181, for the purchase of vehicle i.e. 'Honda City' bearing Registration No.PB 02 CG 6799. The said loans were repayable in 84 and 36 monthly installments respectively and the complainant was repaying the same regularly without any default. The complainant as per RBI fixed guidelines, had made the remaining payment of installments to the OP in onetime payment on 02.06.2018 i.e. before the due date of clearance of the said loan period. But the OP-Bank while issuing the NOC for the said loans, charged Rs.4,351/- and Rs.13,587/- from the complainant arbitrarily against the norms fixed by the RBI. Alleging deficiency in service on the part of the OP, the complainant filed a consumer Complaint before the District Commission and sought directions against the OP to refund Rs.4351/- as well as Rs.13,587/- along with interest @ FA No.144 of 2022 3 12% pa. from 02.06.2018 till its realization and further to pay Rs.50,000/- as compensation and adequate cost of litigation.
4. The complaint was contested by the OP by filing the written reply, wherein it raised certain preliminary objections, which are not required to be reproduced here for the sake of brevity. On merits, the OP stated that the complainant had obtained the said vehicle loans from it and before obtaining the same, he submitted loan application form duly filled and signed by him after accepting all the terms and conditions mentioned therein. It had also been told/explained to the complainant that prepayment of the loan was not allowed upto payment of six EMIs and if he wanted to make prepayment of the loan outstanding, he had to pay prepayment charges (on principal outstanding) as per the schedule attached with the loan application. The complainant after admitted the said condition of prepayment charges, put forth his signature on the loan application form. Thereafter, his request of sanction of loan was approved subject to the conditions and undertaking given by him in application form dated 30.06.2016. The OP further stated that the payment made by the complainant before the due date of clearance of the loan was not disputed but he failed to place on record the alleged RBI Fixed Guidelines. The OP had rightly charged prepayment charges of Rs.4351/- and Rs.13,587/- from the complainant as per terms and conditions mentioned in the loan application form and there was no deficiency in service on its part. After denying the other averments made in the complaint, the OP prayed for dismissal of the complaint. FA No.144 of 2022 4
5. The parties led their evidence in support of their respective contentions and the District Commission after going through the record and hearing learned counsel for the parties, accepted the complaint of the complainant, vide impugned order. Aggrieved with the same the present appeal has been filed by the appellant/OP.
6. Notice of the appeal was issued to the respondent/complainant, but he did not appear despite service and was proceeded against exparte vide order dated 18.07.2022.
7. We have heard learned counsel for the appellant and have gone through the written arguments submitted by him. We have also perused the record of the case.
8. Learned counsel for the appellant vehemently contended that the District Commission has failed to appreciate that the appellant/OP has not done anything contrary to what was mutually agreed by the parties. The execution of the loan agreement at the time of advancement of the loan is a contract itself and it was both pleaded and proved before the District Commission that the contents of the said agreement were read over and explained to the respondent/complainant and in acknowledgment of the same the complainant had put his signature on the same. As such, the contract is binding upon the respondent/complainant. The learned counsel further contended that the District Commission has gravely erred in passing the impugned order, since reliance has been placed on the judgment passed by the Hon'ble Supreme Court in the matter of State Bank of FA No.144 of 2022 5 India Vs. Usha Vaid, which relate to home loan and the interest category was "Floating". The judgment is not applicable to the loans wherein the interest category is fixed. The learned counsel further argued that as per circulars dated 07.05.2014 and 02.08.2019, the Reserve Bank of India permitted to charge foreclosure charges/prepayment charges except on "Floating Rate Term Loan Sanctioned to Individual borrowers, for purpose other than business". The learned counsel further stated the vehicle loans taken by the complainant were under fixed rate categories and as such the reliance by the District Commission on the judgment in the case of 'Usha Vaid'(Supra) was erroneous. He further argued on the similar lines as stated in the written reply and prayed for acceptance of the present appeal by setting aside the impugned order.
9. We have given thoughtful consideration to the contentions raised by learned counsel for the appellant.
10. The factual matrix of the case is that the respondent/complainant had obtained the said vehicle loans from appellant/OP for his vehicle i.e. Honda City Car bearing Registration No.PBN-02-CG-6799, vide account No.400863836 for Rs.1,70,000/-, Ex. C-2, and vide account No.27005181 for Rs.7,77,000/- Ex. C-3. It is not in dispute that the respondent/complainant had paid the installments of both the loans account regularly and he repaid the entire loan amount prior to the actual date of clearance of the said loans, for which the appellant/OP charged prepayment charges to the tune of Rs.4351/- and Rs.13587/-. The respondent/complainant alleged that the FA No.144 of 2022 6 appellant/OP arbitrarily charged the said charges against the guidelines issued by the Reserve Bank of India. Alleging deficiency in service on the part of the appellant/OP, the respondent/complainant filed consumer complaint before the District Commission, which has been allowed in his favour vide impugned order as above. Aggrieved with the same the present appeal has been preferred by the appellant/OP.
11. The grievance of the appellant/OP is that the District Commission has failed to appreciate the fact that the appellant/OP has not done anything contrary to what was mutually agreed by the parties and the Bank has rightly charged the prepayment charges as per the terms and conditions of the loan agreement. It has been further submitted that the District Commission has wrongly relied on the judgment of Hon'ble Supreme Court in the case of 'State Bank of India Vs. Usha Vaid', which is not applicable to the facts and circumstances of the present case. The only question for adjudication before us is whether the appellant/OP has rightly charged the prepayment charges upon foreclosure of the loan, from the respondent/complainant or not? To determine the said point, we have perused the pleadings, evidence placed on record by the parties as well as case law relied upon by the District Commission. The case of the appellant/OP is that the Bank has right to charge the foreclosure/prepayment charges as per the terms of the loan agreement executed between the parties, which is binding upon the parties. In support of its version, the appellant/OPs relied on Clause 3.2 of Agreement for Auto Loan, Ex. OP1/3, which was FA No.144 of 2022 7 executed between the parties. The said clause of the agreement is reproduced as under:-
"3.Repayment and Payment of Dues:-
3.1............................
3.2 The Borrower (s) may, prepay the whole or any part of the outstandings of respective Loans (Including Interest, other Dues, fees and charges herein) by giving a notice in writing to that effect. The Borrower(s) would have to give minimum written notice of 30 days expressing his intention to prepay the Loan amount, unless the same is waived in writing by the Bank. The prepayment shall take effect only when the actual payment is received by the Bank and interest and other charges would be leviable till the end of the month in which the prepayment is actually effected. In such an event the Bank will levy prepayment charges as mentioned in the Schedule or any rate which is applicable at that times as per Bank's policy on the Dues outstanding."
On the other hand, the case of the complainant is that he was never apprised with the said terms of the agreement by the OP-Bank. But we do not agree with the said plea of the respondent/complainant as he had duly signed the said agreement, as a result of which the loan agreement is to be treated like a contract. Another point raised by the respondent/complainant in its complaint is that as per the Guidelines of the Reserve Bank of India, the OP-Bank cannot charge any foreclosure/prepayment charges from the loanee. However, he failed to place on record any such guidelines/circular issued by the Reserve Bank of India. On the other hand, the appellant/OP has placed on record, Annexure A-8, attached with the present appeal i.e. Circular dated 02.08.2019 issued by the Reserve Bank of India regarding "Levy of Foreclosure Charges/Pre-payment Penalty on floating Rate Terms Loans". A perusal of the said circular itself shows that the Bank shall not charge foreclosure charges/Pre-payment Penalties on any floating rate term loan sanctioned, for purposes other than business, to individual FA No.144 of 2022 8 borrowers with or without co-obligant(s). Now, question arises that whether in the present case, the said loans were sanctioned under floating or fixed rate of interest? The appellant/OP has placed reliance on the agreement of Autoloan, Ex.OP1/3, wherein under the column "Loan Details" it has been specifically mentioned "(A) Fixed Interest Rate" and the rate of interest is shown as 10.50% p.a. Accordingly, it has been duly established on record that the said vehicle loans were sanctioned on fixed rate of interest and not on floating rate of interest. As such, the said circular dated 02.08.2019 of RBI regarding 'Levy of Foreclosure Charges/Pre-payment Penalty' is not applicable in the present case as it only applies where the term loan is being sanctioned on floating rate of interest. Hence, we are of the considered view that the appellant/OP had rightly charged the foreclosure/prepayment charges as per the terms of the agreement. The District Commission has overlooked the said aspect while passing the impugned order. Moreover, the reliance on the Judgment in the case of 'Usha Vaid (Supra)' by the District Commission is not applicable to the facts of the present case as in the referred case, the matter relates to home loan and the interest category was "Floating", whereas in the present case the vehicle loans have been taken under fixed rate of interest category. As such, the impugned order passed by the District Commission is liable to be set aside.
12. Sequel to our above discussion, we allow the appeal of the appellant and the impugned order of the District Commission is hereby FA No.144 of 2022 9 set aside. Resultantly, the complaint filed by the complainant is also dismissed.
13. The appellant had deposited a sum of Rs.17,000/- at the time of filing of the appeal with this Commission. This amount, along with interest which has accrued thereon, if any, shall be remitted by the Registry to appellant/OP by way of demand draft/crossed cheque after the expiry of 45 days from the date of receipt of certified copy of this order, in accordance with law.
14. The appeal could not be decided within the stipulated period due to heavy pendency of Court cases.
(H.P.S. MAHAL) PRESIDING JUDICIAL MEMBER (KIRAN SIBAL) MEMBER April 18, 2024 (dv)