State Consumer Disputes Redressal Commission
Dr.Nadeem Hussian S/O.Nauman Ali ... vs Development Credit Bank Ltd., Rep. By ... on 31 October, 2012
BEFORE THE A BEFORE THE A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION: AT HYDERABAD. FA.No.764/2011 against C.C.No.36/2010 District Forum-II, Hyderabad. Between Dr.Nadeem Hussian S/o.Nauman Ali Aged 44 years, R/o.H.No.5-4-410 & 412, 1st floor, Taj complex, Nampally, Hyderabad, Occ:Dentist. ..Appellant/ Complainant And Development Credit Bank Ltd., rep. By its Manager N.Sunil Kumar, Office at Chirag Ali Lane, Hyderabad. Respondent/ Opp.party Counsel for the Appellant : M/s Rakesh Sanghi Counsel for the Respondent : Mr.C.Srinivas QUORUM: THE HONBLE JUSTICE SRI D.APPA RAO, PRESIDENT SMT.M.SHREESHA, HONBLE MEMBER, AND SRI S.BHUJANGA RAO, HONBLE MEMBER.
WEDNESDAY, THE THIRTY FIRST DAY OF OCTOBER, TWO THOUSAND TWELVE Order (Per Smt.M.Shreesha, Honble Member) *** Aggrieved by the order in CC 36/2010 on the file of District Forum-II, Hyderabad, the complainant preferred this appeal.
The brief facts as stated in the complaint are that the complainant was sanctioned a personal loan of Rs.10,00,000/- which was dispersed to the complainant on 17-6-2006 and the complainant submits that the contracted interest is 6.6% p.a. on a diminishing balance method which has to be repaid within 48 EMIs. It is the complainants case that when he analysed the transactions, he found that the interest charged by the opposite party bank was 3-4% per month and he was charged documentation and processing charges, account statement charges, cheque bouncing charges amounting to 10% of the value of the cheque, swap charges, foreclosure charges and other miscellaneous charges. It is the complainants case that any payment should be adjusted towards principle and interest component but the opposite party adjusted the earlier instalments of EMIs towards payment of interest component alone and upon recovering the entire interest component for the complete loan period of around four years in advance , opposite party herein is adjusting all subsequent instalments of EMI towards payment of principle component with front end method of calculating interest. The complainant submits that as per the Apex court judgement in AIR 2001 Page 3095, opposite party bank should charge the rate of interest as per periodical notifications of RBI and submits that the opposite party bank has made him sign a standard form contract wherein the said clause are violative of the aforementioned judgement of the apex court. The internal rate of return should determine whether the interest charged by the opposite party is usurious or not. The RBI has issued two circulars on 21-10-2003 with respect to credit card loans and personal loans and another circular on 087-2004 whereby all the banks were entitled to charge penal interest and were given certain liberties with respect to charging interest on credit card transactions. It is the complainants case that the opposite party bank is charging excessive rate of interest and as per the statement of account dated 23-2-2009 the complainant has to pay Rs.4,13,163/- towards the outstanding loan amount despite having already paid Rs.8,40,000/- out of the total amount of Rs.10,00,000/- which according to the complainant amounts to unfair trade practice and he seeks the following directions against the opposite party
i) to direct the opposite party to render accounts to the complainant in respect of the Personal Loan account No.BLN000600001236 in the manner as laid down in the Constitutional bench judgement of the Honble Supreme Court of India reported in AIR 2001 SC at page 3095 by disclosing the actual rate of interest being charged from the complainant and being posted as the internal rate of return in the books of the opposite party
ii) to pass an order holding that the charging of usurious rates of interest on monthly rests by the opposite party bank from its loanee including the complainant herein in excess of the Prime Lending Rate fixed by the Reserve Bank of India from time to time under the RBI Act 1934 and the Banking Regulation Act, 1949, constitutes an unfair Trade practice and is Usurious illegal and excessive as per the ratio of the judgement of the Apex court reported in AIR 2001 SC at page No.3095
iii) to pass an order declaring that the usurious interest being illegally charged by the opposite party herein from the entire comity of its loanees including the complainant herein in violation of the Usurious Loans Act 1918 is illegal, arbitrary and violative of the provisions contained in 2(g) Sec.2(nnn) and Section 2 of the Consumer Protection Act, 1986.
iv) To pass an order directing the opposite party to create a corpus for refunding the excess interest amount and interest Tax (camouflaged under various innocuous and deceptive prefixes) collected from the entire comity of its loanees including the complainant herein, in accordance with the ratio of the judgement of the Honble Supreme Court of India reported in AIR 2004 SC at Page No.2615.
v) Costs of the subject proceedings be awarded; and
vi) Such further or, other orders as this Honble Forum deems fit and proper in the circumstances of the case.
It is the opposite partys case that the complainant is not a consumer and they filed an affidavit stating that the bank had sanctioned the personal loan for Rs.10,00,000/- and on 17-6-2006 has given the loan agreement to the complainant in which all the terms and conditions and interest rates are laid down.
The opposite party filed IA 85/2010 U/s.12(3) of Consumer Protection Act, 1986 seeking direction from the District Forum to reject the complaint on the ground that the Forum does not have jurisdiction to entertain the same.
The District Forum allowed this IA and dismissed the complaint on the ground that the Forum has no jurisdiction to entertain the complaint.
The learned counsel for the appellant/complainant contended that the complaint is squarely covered by the Apex court judgments in AIR 2000 SC 2181, AIR 2004 (SC) P-184 and P-448 and also AIR 2007 SC P-1819 wherein the apex court has dealt with jurisdiction of the Consumer Fora and the maintainability of the complaint.
The learned counsel for the respondent/opposite party submitted that as the prayer in the complaint is with respect to charging of rates of interest allegedly in excess of the prime lending rate fixed by the RBI under the Banking Regulation Act, the relationship amounts to a debtor-creditor relationship which is beyond the purview of Consumer Protection Act, 1986.
Fixing of interest rates by the RBI is a statutory function performed under the Banking Regulation Act and also the Consumer Fora cannot give a direction for creating a corpus for refunding the excess interest amount and interest tax collected from the comity of its loanees including the complainant herein as prayed for by the appellant/complainant.
The learned counsel for the appellant had referred to the judgement of the apex court in AIR 2000 SC 2181, in which the Apex court had dealt with the subject whether bank giving overdraft facility to its clients can be termed as service and has concluded that it is a service rendered by a bank and any such deficiency in this service would fall within the ambit of Consumer Protection Act. But that is not so in the instant case where alleged charging of excess rates of interest together with the other aspects of the prayer do not fall within the definition of service and cannot be construed as deficiency in service. The learned counsel referred to the judgement of the Apex court in AIR 2004 (SC ) P-184 and 448 stating that the Fora constituted under the Consumer Protection Act cannot dismiss the complaints at the initial stage itself without examining the legal issues of the maintainability of the complaint. But in the instant case, the District Forum has gone into Section 12(3) of the Consumer Protection Act, which reads as follows:
On receipt of a complaint made under sub Section (1), the District Forum may, by order, allow the complaint to be proceeded with or rejected.
In the instant case as the directions sought for in the prayer of the complainant do not fall within the ambit of Section 2(1)(o) of the Consumer Protection Act and cannot be defined as service, the District Forum has rightly observed at the threshold itself that the complaint itself is not maintainable. Though the learned counsel argued that as per the judgement in AIR 2007 SC P-1819, the jurisdiction of the Consumer protection Act is vast, still we reiterate that the directions sought for in the prayer of the main complaint do not fall within the ambit of the Consumer Protection Act, 1986.
Now we rely on the judgement of the apex court which observed in the appeal filed by HONGKONG SHANGAI BANK, CITI BANK, STANDARD CHARTERED BANK v. NCDRC as follows:
A bench of Justice B.N. Agrawal and Justice G.S. Singhvi suspended a Dec 12, 2008 ruling of the National Consumer Disputes Redressal Commission (NCDRC).
The commission's order had sought implementation of its July 7, 2007 order, which had ruled that 'charging of interest rates in excess of 30 percent per annum from credit card holders by banks for the former's failure to make full payment on the due date or paying the minimum amount due, is unfair trade practice'.
The apex court suspended the order on a joint plea by Hong Kong and Shanghai Bank, Citibank and Standard Chartered bank that charging interest rates between 36 to 49 percent from credit card defaulters by them was fair.
When the banks first approached the Supreme Court in September 2008, it had not stayed the NCDRC order because the order was yet to be put in operation.
The NCDRC had ordered implementation of its July 2007 ruling on a plea by consumer rights body Awaj.
The banks in their joint appeal gave over two dozen reasons for charging high interest rates. They included the charges made on calls by the service centre for persuading people to take a credit card.
Among the other reasons that the banks cited for charging penal interest - the interest rate charged by the bank or lending institution from the borrower if he misses a repayment - included cost of processing, cost for setting up a new card in operating system, cost of courier and embossing the card, cost of providing phone banking and internet banking services, cost of sending monthly statements, cost of waiving charges for service reasons, cost of marketing and promotional offers, and cost of rewards and loyalty programmes.
Keeping in view the aforementioned judgement, when there is a contractual agreement between two parties, the complainant is bound by the terms of the contract and the contention of the appellant/complainant that it is a standard form and that the terms are of unfair trade practice cannot be construed termed as deficiency in service as he has already signed the contract and is bound by terms and moreover the directions prayed for cannot be adjudicated by this Commission and therefore we see no reasons to interfere with the order of the District Forum which has dismissed the complaint at the threshold on the ground of maintainability. The complainant is at liberty to approach the appropriate forum to ventilate his grievance. The time spent in these proceedings will not come in the way of limitation.
For the aforementioned reasons, this appeal fails and is accordingly dismissed.
No costs.
Sd/-PRESIDENT.
Sd/-MEMBER.
Sd/-MEMBER.
JM Dt.31-10-2012