State Consumer Disputes Redressal Commission
Vinod Gupta vs Hdfc Bank Ltd. on 7 December, 2017
FIRST ADDITIONAL BENCH
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB, SECTOR 37-A, DAKSHIN MARG, CHANDIGARH.
Consumer Complaint No.43 of 2016
Date of Institution: 15.02.2016
Order reserved on: 06.12.2017
Date of Decision : 07.12.2017
Vinod Gupta S/o Shri Om Parkash Gupta, D-17, Ranjit Avenue,
Amritsar (Punjab).
.....Complainant
Versus
1. HDFC Bank Ltd. Registered Office at HDFC Bank House,
Senapati Bapat Marg Lower Parel, Mumbai (Maharashtra).
2. HDFC Bank Ltd. through Branch Manager Branch Office at
Kabir Park Amritsar, Punjab.
.....Opposite Parties
Consumer Complaint U/s 17(1)(a) of the
Consumer Protection Act, 1986 (as
amended up to date).
Quorum:-
Shri J. S. Klar, Presiding Judicial Member.
Smt. Surinder Pal Kaur, Member.
Present:-
For the complainant : Sh. Akhilesh Vyas, Advocate For the opposite parties : Sh. Sandeep Suri, Advocate ................................................................................................. (2) Consumer Complaint No.44 of 2016 Date of Institution: 15.02.2016 Order reserved on: 06.12.2017 Date of Decision : 07.12.2017 Gaurav Gupta S/o Shri Vinod Gupta, D-17, Ranjit Avenue, Amritsar (Punjab).
.....Complainant Versus
1. HDFC Bank Ltd. Registered Office at HDFC Bank House, Senapati Bapat Marg Lower Parel, Mumbai (Maharashtra).
2. HDFC Bank Ltd. through Branch Manager Branch Office at Kabir Park Amritsar, Punjab.
.....Opposite Parties Consumer Complaint No.43 of 2016 2 Consumer Complaint U/s 17(1)(a) of the Consumer Protection Act, 1986 (as amended up to date).
Quorum:-
Shri J. S. Klar, Presiding Judicial Member. Smt. Surinder Pal Kaur, Member.
Present:-
For the complainant : Sh. Akhilesh Vyas, Advocate For the opposite parties : Sh. Sandeep Suri, Advocate .................................................................................................
AND (3) Consumer Complaint No.45 of 2016 Date of Institution: 16.02.2016 Order reserved on: 06.12.2017 Date of Decision : 07.12.2017 Poonam Gupta w/o Shri Vinod Gupta, D-17, Ranjit Avenue, Amritsar (Punjab).
.....Complainant Versus
1. HDFC Bank Ltd. Registered Office at HDFC Bank House, Senapati Bapat Marg Lower Parel, Mumbai (Maharashtra).
2. HDFC Bank Ltd. through Branch Manager Branch Office at Kabir Park Amritsar, Punjab.
.....Opposite Parties Consumer Complaint U/s 17(1)(a) of the Consumer Protection Act, 1986 (as amended up to date).
Quorum:-
Shri J. S. Klar, Presiding Judicial Member. Smt. Surinder Pal Kaur, Member.
Present:-
For the complainant : Sh. Akhilesh Vyas, Advocate For the opposite parties : Sh. Sandeep Suri, Advocate ................................................................................................. J. S. KLAR, PRESIDING JUDICIAL MEMBER:-
Since common question of facts and controversy are involved in above referred complaints, hence they are being disposed of together by means of this common order, which shall be pronounced by us in main complaint no.43 of 2016 titled as "Vinod Gupta Vs. HDFC Bank & another".Consumer Complaint No.43 of 2016 3
2. The short facts of the main complaint no.43 of 2016, which has been filed by complainant U/s 17(1)(a) of the Consumer Protection Act 1986 (in short the "Act"), against opposite parties (OPs), are that earlier complaint was filed before District Forum Amritsar, which was returned due to lack of pecuniary jurisdiction.
Pursuant to order of the National Commission dated 05.11.2015, the instant complaint has been filed before this Forum, which has requisite jurisdiction to try the complaint. Factual backdrop of the matter is that OPs invited investment in Kisan Vikas Patra (KVP) Margin Funding Scheme, introduced by them, wherein 10% amount was to be invested by the applicant for the purchase of KVP and rest of 90% amount was to be provided by the OP bank, as per KVP Margin Funding Scheme, the interest rate chargeable by OP bank on 90% funded money by it was fixed @7%, whereas the KVP have to earn interest at 8% simple or compound interest. The complainant was assured of getting the return after a period of 103 months of 21.01% or tax free return of 13.65%, as per flowchart given to the complainant by OPs. The complainant alongwith two other persons, each invested Rs.3.5 lakhs (Margin money of 10%) in the above scheme of OPs and OP bank granted loan of Rs.31.50 lakhs to each of the above persons enabling them to purchase the KVP through bank worth Rs.35 lakhs, which was then pledged as security with the OP bank. The complainant was assured return from the KVP at an interest @8% simple or compound interest per annum on Rs.35 lakhs. At the same time, availing the bank loan of Rs.31.50 lakhs, Consumer Complaint No.43 of 2016 4 the interest rate was fixed at 7% per annum for the entire period of 103 months. The OP bank informed complainant with regard to revision of rate of interest from 7% to 7.5% with retrospective effect from 28.03.2006. The OP bank again intimated the complainant, vide letter dated 08.04.2006 about the increase of rate of interest from 7.50% to 8% with effect from 24.04.2006. The complainant wrote letter on 15.09.2016 to OP bank protesting the demand of charging of higher interest. The OP bank has arbitrarily increased the rate of interest to 8%, which is not acceptable to complainant. The complainant sent email dated 18.05.2007, which was replied by OP and complainant also sent rejoinder on 24.05.2007. The complainant was shocked to find letter dated 17.10.2008 of the OP bank, wherein rate of interest was revised to 12% with effect from 20.10.2008. The statement of account has been showing in negative figures due to wrong charging of interest by OPs. The complainant has prayed that OP bank be held to be deficient in service and of adopting unfair trade practice and be directed to stop it. The complainant has further prayed for compensation of Rs.20,00,000/- from OP bank for mental harassment and for deficient service. The complainant prayed for directions to OP bank to refund the excess amount of Rs.20,41,612/- taken by it alongwith interest from 20.05.2014 till it is paid, besides costs of litigation.
3. Upon notice, OPs appeared and filed detailed written reply and contested the complaint of the complainant vehemently. Preliminary objections were raised that the dispute pertains to Consumer Complaint No.43 of 2016 5 overdraft/credit limit of Rs.1 crore carrying floating rate of interest at 7%, which is beyond the pecuniary jurisdiction of this Forum. As per Section 21(a) of the Bank Regulation Act, a transaction between a banking company and debtor shall not be reopened by any court on the ground that rate of interest is excessive. The dealing between the parties is purely contractual and parties are bound by the contract entered into between them. The complainant obtained financial assistance for investment in the business, as an overdraft facility and approached OP bank to sanction overdraft limit of Rs.1 crore to him against the collateral security of shares, debentures (herein after referred as Security). The overdraft facility of Rs.1 crore was sanctioned to him and loan cum guarantee agreement dated 20.09.2005 was executed between the complainant and OP bank. The dispute is of commercial transaction and complainant is not consumer. The dispute basically is for rendition of accounts, which is not cognizable by Consumer Forum. It was further pleaded that the OP bank offered the fund purchase of KVP, which could be pledged by complainant for overdraft limit. The said overdraft limit would allow the complainant to transact the facility upto Rs.1 crore, as per the said limit and also withdraw the funds for utilization in his business as and when required subject to availability of limit. The complainant also executed demand promissory note dated 20.09.2005 of a sum of Rs.1 crore. The complainant availed the said overdraft limit against security of KVP from OP no.2 bank. The rate of interest was floating and not fixed, as per agreement of loan Consumer Complaint No.43 of 2016 6 executed between the parties. The complaint was contested even on merits on the above referred premises by OPs. The OPs prayed for dismissal of the complaint.
4. The complainant tendered in evidence his affidavit Ex.C-A alongwith copies of documents Ex.C-1 to Ex.C-14 and closed the evidence. As against it, OPs tendered in evidence affidavit Vijayender Srivastava authorized representative Ex.OP-A and affidavit of Rajesh Bhatia Ex.OP-B alongwith document Ex.OP-1 and closed the evidence.
Facts of Consumer Complaint no.44 of 2016
5. Shorts fact of complaint no.44 of 2016, which has been filed by complainant U/s 17(1)(a) of the Consumer Protection Act 1986 (in short the "Act"), against opposite parties (OPs), are that earlier complaint was filed before District Forum Amritsar, which was returned due to lack of pecuniary jurisdiction. The instant complaint has been filed before this Forum, which has requisite jurisdiction to try the complaint. It is further averred that OPs invited investment in Kisan Vikas Patra (KVP) Margin Funding Scheme, introduced by them wherein 10% amount was to be invested by the complainant for the purchase of KVP and rest of 90% amount was to be provided by the OP bank. As per KVP Margin Funding Scheme, the interest rate chargeable by OP bank on 90% funded money was fixed @7%, whereas the KVP have to earn interest at 8% simple or compound interest. The complainant invested Rs.3.5 lakhs (Margin money of 10%) in the above scheme of OPs and OP bank granted loan of Consumer Complaint No.43 of 2016 7 Rs.31.50 lakhs to complainant enabling him to purchase the KVP through bank worth Rs.35 lakhs, which was then pledged as security with the OP bank. At the same time on availing the bank loan of Rs.31.50 lakhs, the interest rate was fixed at 7% per annum for the entire period of 103 months. The OP bank informed complainant with regard to revision of rate of interest from 7% to 7.5% with retrospective effect from 28.03.2006. The OP bank again intimated the complainant, vide letter dated 08.04.2006 about the increase of rate of interest from 7.5% to 8% with effect from 24.04.2006. The complainant wrote letter on 15.09.2016 to OP bank protesting the demand of charging of higher interest. The OP bank has arbitrarily increased the rate of interest to 8%, which is not acceptable to complainant. The complainant sent email dated 18.05.2007, which was replied by OP and complainant also sent rejoinder on 24.05.2007. The complainant was shocked to find letter dated 17.10.2008 of the OP bank, wherein rate of interest was revised to 12% with effect from 20.10.2008. The complainant has prayed that OP bank be held to be deficient in service and adopting unfair trade practice and be directed to stop it. The complainant has further prayed for compensation of Rs.20,00,000/- from OP bank for mental harassment and for deficient service. The complainant prayed for directions to OP bank to refund the excess amount of Rs.20,41,612/- taken by it alongwith interest from 20.05.2014 till it is paid, besides costs of litigation.
Consumer Complaint No.43 of 2016 8
6. Upon notice, OPs appeared and filed detailed written reply on the similar averments, as pleaded in Consumer Complaint no.43 of 2016 and prayed for dismissal of of the complaint.
7. The complainant tendered in evidence his affidavit Ex.C- A alongwith copies of documents Ex.C-1 to Ex.C-14 and closed the evidence. As against it, OPs tendered in evidence affidavit Vijayender Srivastava authorized representative Ex.OP-A and affidavit of Rajesh Bhatia Ex.OP-B alongwith document Ex.OP-1 and closed the evidence.
Facts of Consumer Complaint no.45 of 2016
8. Shorts fact of complaint no.45 of 2016, which has been filed by complainant U/s 17(1)(a) of the Consumer Protection Act 1986 (in short the "Act"), against opposite parties (OPs), are that OPs invited investment in Kisan Vikas Patra (KVP) Margin Funding Scheme, introduced by them, wherein 10% amount was to be invested by the complainant for the purchase of KVP and rest of 90% amount was to be provided by the OP bank. As per KVP Margin Funding Scheme, the interest rate chargeable by OP bank on 90% funded money was fixed @7%, whereas the KVP have to earn interest at 8% simple or compound interest. It is further averred that OP bank informed complainant with regard to revision of rate of interest from 7% to 7.5% with retrospective effect from 28.03.2006. The OP bank again intimated the complainant vide letter dated 08.04.2006 about the increase of rate of interest from 7.5% to 8% with effect from 24.04.2006. The complainant wrote letter on Consumer Complaint No.43 of 2016 9 15.09.2016 to OP bank protesting the demand of charging of higher interest. The OP bank has arbitrarily increased the rate of interest to 8%, which is not acceptable to complainant. The complainant sent email dated 18.05.2007, which was replied by OP and complainant also sent rejoinder on 24.05.2007. The complainant was shocked to find letter dated 17.10.2008 of the OP bank, wherein rate of interest was revised to 12% with effect from 20.10.2008. The complainant has alleged deficiency in service and unfair trade practice on the part of OPs and has prayed that OP bank be held to be deficient in service and adopting unfair trade practice and be directed to stop it. The complainant has further prayed for compensation of Rs.20,00,000/- from OP bank for mental harassment and for deficient service. The complainant prayed for directions to OP bank to refund the excess amount of Rs.20,41,612/- taken by it alongwith interest from 20.05.2014 till it is paid, besides costs of litigation.
9. Upon notice, OPs appeared and filed detailed written reply on the similar averments, as pleaded in Consumer Complaint no.43 of 2016 and prayed for dismissal of of the complaint.
10. The complainant tendered in evidence affidavit of Vinod Gupta, GPA of complainant Ex.C-A alongwith copies of documents Ex.C-1 to Ex.C-14 and closed the evidence. As against it, OPs tendered in evidence affidavit Vijayender Srivastava authorized representative Ex.OP-A and affidavit of Rajesh Bhatia Ex.OP-B alongwith document Ex.OP-1 and closed the evidence. Consumer Complaint No.43 of 2016 10 Main Order:
11. We have heard the learned counsel for the parties at considerable length and have also examined the record of the case. We take up the main complaint no.43 of 2016 for adjudication of above cases, as all the cases are common in facts and controversy. Affidavit of Vinod Kumar Gupta in support of his averment is Ex.C-A on the record. He testified that original complaint was filed before the District Forum Amritsar, but due to lack of pecuniary jurisdiction, matter came up before the National Commission New Delhi and eventually, as per order of the National Commission dated 05.11.2015, the complaint was filed before this Forum, which has the requisite jurisdiction. This witness has proved copy of order of National Commission Ex.C-2 dated 05.11.2015. The flow chart showing the statement is Ex.C-3 on the record. Annualized interest cost is recorded at the top as 7% and different interest rates have been charged from time to time thereafter. On third page of flow chart Ex.C-3, interest is recorded as 8.40% and again 7%. The customer approval sheet is Ex.C-4 on the record dated 20.09.2005. This is the basic document on the record. This document has proved that it was executed by complainant and Kamalkant employee of OP with regard to Kisan Vikas Patra Margin Funding Scheme. Rate of interest is mentioned as 7% in customer approval sheet Ex.C-4 on the record. The counsel for OPs relied upon clause 5 of loan agreement-cum-guarantee to the effect that bank was competent to vary or revise the rate of interest by intimating to the borrowers Consumer Complaint No.43 of 2016 11 subsequently. The base of the case of the OPs is on clause 5 of the loan agreement-cum-guarantee executed between the parties in this case, whereby bank is competent to revise the rate of interest. The submission of counsel for OPs is that clause 5 of the agreement makes it clear that floating rate of interest was applicable in this case and as such OP bank is competent to revise rate of interest as per the circumstances prevailing. Ex.C-5 is copy of letter sent by OPs to complainant on 08.04.20006, raising rate of interest from 7.5% to 8% with effect from 24.04.2006. Ex.C-5/A is letter addressed to complainant 21.09.2006 regarding revision of rate of interest. The complainant sent protest vide Ex.C-6 to Manager of OP bank for enhancing the rate of interest unfairly. Ex.C-7/A to 7/H are the emails sent by OP bank to complainant in this regard. Ex.C-8 is letter sent to Poonam Gupta, one of the complainants in other complaints, by OP bank dated 27.09.2008 stating that in view of rising rate of interest, OPs are constrained to revise the rate of interest on overdraft account at 12% with effect from 20.10.2008. Ex.C-9 is the depository document. Ex.C-10 is the transaction statement. Ex.C-11 is the copy of statement of account of complainant. The complainant based his case on the above referred evidence only.
12. The OPs tendered in evidence affidavit of Vijayender Srivastava authorized representative Ex.OP-A on the record. This witness reiterated the version of OPs on oath, as enshrined in the written reply. He stated that OP bank is competent to revise the rate of interest, as per the terms and conditions of loan agreement and Consumer Complaint No.43 of 2016 12 demand promissory note dated 20.09.2005. Ex.OP-1 is the statement of account of complainant. Counsel for OPs contended that the transaction is commercial in nature and complainant is not consumer. It was further submitted that OP bank approved 90% of the amount for purchase of KVP, which was pledged with it as security for reassurance of the loan amount funded by it to complainant. The contention of counsel for OPs is that OP bank is competent to revise the rate of interest, as per loan agreement and promissory note executed by complainant himself.
13. From critical appraisal of entire evidence on the record of all the cases and hearing the respective submissions of counsel for the parties, we proceed to decide all the cases. The matter is not res integra, as the Hon'ble National Commission has already decided this type of matter in case titled as "Rohit Bajaj & others Vs. ICICI Bank Ltd. & others" II(2008)CPJ-271(NC). The National Commission has held in this authority that "bank allured complainants to take loan at fixed rate by pledging Kissan Vikas Patras- Complainants when trapped in, increased rate of interest demanded and processing fee deducted unjustifiably- Tactics adopted by bank amount to unfair trade practice- Subsequent agreement, after trapping complainants cannot be relied upon- Standardized contracts are pretended contracts- Signatures obtained on dotted lines not really represent substantial agreement with terms in it- Consumer Fora empowered of curing mischief adopted by one of contracting parties- Terms of contract in specified Consumer Complaint No.43 of 2016 13 form if unjustified/unilateral, it cannot be termed as intentional contract- Complainant's signatures taken on printed Form, without explaining terms and conditions - Relying upon flow chart given by Bank, if loan is taken, KVPs pledged, Bank cannot change its stand- Breach of promise amounts to unfair trade practice- Bank directed to discontinue with unfair trade practice." The National Commission discussed the matter in detail in the cited authority and held that standardized contract are pretended contracts and signatures obtained on dotted lines not really represent the substantial agreement with terms in it. The terms of contract in specified form if unjustified/unilateral, it cannot be termed as intentional contract. Relying upon flow chart given by bank, it was held by the National Commission that if loan is taken, KVPs pledged, bank cannot change its stand. Breach of promise amounts to unfair trade practice. The matter has again been settled by the National Commission in case titled as "HDFC Bank Limited Vs. Surinder Kumar Goyal" II(2011)CPJ-229(NC), wherein the National Commission has held that bank charging interest at 8% rather 7% interest p.a. on amount of loan availed by complainant in Kisan Vikas Patra Margin Funding Scheme. The National Commission has held that contention of HDFC Bank that promissory note states that bank may revise the rate of interest, which was not acceptable to the National Commission. The National Commission has held in the cited authority that primary condition of grant of loan contained in customer approval sheet, mentioned rate of interest as 7%. No Consumer Complaint No.43 of 2016 14 condition of rate of interest being of floating nature or could be varied with passage of time, as mentioned in customer approval sheet. It was held that interest could not be varied without prior consent of complainant. The National Commission has emphasized on this point in the cited authority that it does not stand to common sense that a person would obtain a loan for investment in KVP at rate of interest which ultimately will result in a loss to him rather than getting any benefit after maturity. The above cited authority has arisen on the basis of Kisan Vikas Patra Margin Funding Scheme by the Bank with regard to loan. This authority has come into force after amendment introduced in the Act in the year 2002, which amendment came into force w.e.f. 2003. Consequently, the contention of OPs is that this is commercial transaction stands overturned on the basis of law laid by the National Commission in the above said authority. As the facts in the cited authority are identical to the facts of the case in hand, the controversy in the cited authority arose in the year 2005 after amendment in the Act in the year 2002 and hence the contention of OP is not accepted by us that complainant is not consumer on account of overdraft facility. The National Commission placed reliance upon customer approval sheet in the cited authority taking it as basic document to determine rate of interest. The customer approval sheet in the case in hand has mentioned rate of interest as 7% and it is not recorded in it that it is floating rate of interest and could be varied with the passage of time. The facts of the cited authority are, thus, directly applicable Consumer Complaint No.43 of 2016 15 alongwith ratio of law laid down therein to the controversy of above cases.
14. As per law laid down by the National Commission in "HDFC Bank Limited Vs. Surinder Kumar Goyal" (Supra) and "Rohit Bajaj & others Vs. ICICI Bank Ltd. & others" (Supra), we hold that OP bank is not entitled to increase the rate of interest from 7% as agreed in the customers approval sheet between the parties. It does not stand to common sense that complainant would obtain loan for investment in KVP at rate of interest, so as to suffer loss rather than getting any benefit after its maturity.
15. Consequently, we accept all the above complaints and passed the below noted orders therein:
(1) Complaint no.43 of 2016: This complaint is accepted and OPs are directed to refund the amount charged by them in excess of interest @7% per annum to the complainant in this case and to credit the above referred amount to the account of the complainant and to charge interest only @7% per annum.
The complainant is held entitled to compensation of Rs.1,00,000/- for mental harassment and deficient service on the part of OPs and Rs.30,000/- as costs of litigation from OPs in this complaint.
(2) Complaint no.44 of 2016: This complaint is accepted and OPs are directed to refund the amount charged by them in excess of interest @7% per annum to the complainant in this case and to credit the above referred amount to the account of Consumer Complaint No.43 of 2016 16 the complainant and to charge interest only @7% per annum. The complainant is held entitled to compensation of Rs.1,00,000/- for mental harassment and deficient service on the part of OPs and Rs.30,000/- as costs of litigation from OPs in this complaint.
(3) Complaint no.45 of 2016: This complaint is accepted and OPs are directed to refund the amount charged by them in excess of interest @7% per annum to the complainant in this case and to credit the above referred amount to the account of the complainant and to charge interest only @7% per annum. The complainant is held entitled to compensation of Rs.1,00,000/- for mental harassment and deficient service on the part of OPs and Rs.30,000/- as costs of litigation from OPs in this complaint.
16. Arguments in this complaint were heard on 06.12.2017 and the order was reserved. The certified copies of the order be communicated to the parties, as per rules.
17. The complaint could not be decided within the statutory period due to heavy pendency of court cases.
(J. S. KLAR) PRESIDING JUDICIAL MEMBER (SURINDER PAL KAUR) MEMBER December 07, 2017.
(MM)