National Consumer Disputes Redressal
Idbi Bank vs Dr. Aswani Kumar Srivastava on 7 April, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 2632 OF 2010 (Against the Order dated 02/03/2010 in Appeal No. 1866/2009 of the State Commission Karnataka) 1. IDBI BANK 328, Ashwini Complex, 1sr & 2nd Floor, (Oppp. Spencer's Super Market), 6th Main. 80 Feet Road, Indiranagar Bangalore Karnataka ...........Petitioner(s) Versus 1. DR. ASWANI KUMAR SRIVASTAVA R/At No. 406, 9th Main, HRBR 1 Block Bangalore - 560043 Karnataka ...........Respondent(s)
BEFORE: HON'BLE MR. JUSTICE AJIT BHARIHOKE, PRESIDING MEMBER HON'BLE MRS. REKHA GUPTA, MEMBER For the Petitioner : Mr. Pratap Sanghi, Advocate For the Respondent : Mr.Madhur Dhingra, Advocate Dated : 07 Apr 2015 ORDER JUSTICE AJIT BHARIHOKE, PRESIDING MEMBER This revision petition is directed against the order of Karnataka State Consumer Disputes Redressal Commission, Lucknow (in short, "State Commission") dated 2.3.2010 whereby the State Commission concurred with the findings of District Forum and confirmed the following directions :-
"The complaint is allowed. The opposite party - Bank is directed to refund/pay Rs.3,49,488/- (pre-payment charges) to the complainant within 30 days from the date of this order. In the event of non-compliance of order within 30 days the said amount carries an interest @ 12% p.a. from the date of this order till payment/realization.
The complainant is also entitled for Rs.2,000/- towards cost of the present proceedings from the opposite party.
2. Briefly stated facts relevant for the disposal of the revision petition are that the respondent filed a consumer complaint in District Forum, Bangalore alleging that he approached the petitioner/opposite party Bank for home loan for purchase of a plot and raising construction thereon. In the initial negotiation it was made clear that the loan is required not only for purchase of plot but for construction on the site. According to the complainant vide letter dated 12.1.2008 opposite party sanctioned loan of Rs.1,75,00,000/- for purchase of vacant plot. The complainant availed of the loan and purchased the vacant site at HRBR-1 Block, Bangalore and commenced construction. After obtaining necessary permissions for construction the complainant applied for further loan of Rs.65,00,000/- for construction. The petitioner/opposite party, however, declined to sanction the construction loan. The complainant thus approached other lending agency and secured the loan. The complainant, thereafter, approached the opposite party for pre-closure of the loan of Rs.1,75,00,000/- and cleared the loan. On 27.6.2008 complainant received a letter from the petitioner Bank claiming Rs.3,49,488/- as prepayment penalty. The complainant paid said amount under protest. Thereafter, vide letter dated 3.7.2008 the complainant sought refund of the said amount. The opposite party refused to refund the amount as also the processing charges Rs.78,652/-. Claiming this to be deficiency in service the complainant approached the Consumer Forum seeking refund of Rs.3,48,488/- plus Rs.78,652/- besides compensation of Rs.1,00,000/- for mental agony.
3. The petitioner/opposite party resisted the complaint and in the written statement denied the allegations of the respondent/complainant.
4. Learned District Forum on consideration of the pleadings and the evidence partly allowed the claim and directed the petitioner/opposite party as noted above.
5. Being aggrieved of the order of the District Forum the petitioner approached the State Commission and the State Commission concurred with the order of the District Forum and dismissed the appeal.
6. We have heard Shri Pratap Singhal, Advocate for the petitioner and Shri Madhur Dhingra, Advocate for the respondent and gone through the record.
7. The plea of the petitioner is that the Foras below have failed to appreciate that there was no deficiency in service as the pre-closure penalty was charged from the respondent/complainant in terms of the loan agreement which was in consonance with the guidelines of the Reserve Bank of India applicable at the relevant time. In support of this contention, he has drawn our attention to the loan sanction letter as also the letter of Chief Manager, Reserve Bank of India dated 25.11.2008 addressed to all Scheduled Commercial Banks/All India Financial Institutions.
9. We find merit in the above contention. Petitioner Bank has placed on record copies of the letters dated 6th March, 2007 and 25th November, 2008 respectively written by Chief General Manager, Reserve Bank of India addressed to All Scheduled Commercial Banks/All India Financial Institutions (excluding RRBs). By these letters, the Chief General Manager, RBI has drawn the attention of the Scheduled Commercial Banks/All India Financials Institutions to the Circular of the RBI providing guidelines for Fair Practice Code for Lenders-Disclosing all information relating to processing fee/charges. The letter dated 6th March, 2006 refers to the RBI Circular dated 5.5.2003 whereas the letter dated 25th November, 2008 refers to the RBI Circular dated 6th March, 2007. The subject loan was obtained by the respondent/complainant in January, 2008. Therefore, the RBI Circular mentioned in the letter dated 25.11.2008 is relevant. The contents of said letter are reproduced as under: -
"All Scheduled Commercial Banks/All India Financial Institutions (Excluding RRBs) Dear Sir, Guidelines on Fair Practices Code of Lenders-Disclosing all information relating to processing fees/charges Please refer to our Circular DBOD No.Leg.BC.65/09.07.005/2006-07 dated March 6, 2007 wherein banks/FIs were advised that loan application forms in respect of all categories of loan irrespective of the amount of loan sought by the borrower should be comprehensive. It should include information about the fees/charges, if any, payable for processing, the amount of such fee refundable in the case of non-acceptance of application, pre-payment options and any other matter which affects the interest of the borrower, so that a meaningful comparison with that of other banks can be made and informed decision can be taken by the borrower.
2. It has come to our notice that some banks levy in addition to a processing fee, certain charges which are not initially disclosed to the borrower. It may be mentioned that levying such charges subsequently without disclosing the same to the borrower is an unfair practice.
3. Banks/FIs are therefore advised to ensure that all information relating to charges/fees for processing are invariably disclosed in the loan application forms. Further, the banks must inform 'all-in-cost' to the customer to enable him to compare the rates charged with other sources of finance."
10. On reading of the above, it is clear that at the relevant time as per the RBI Guidelines there was no bar on having conditions regarding pre-payment of loan but the Banks were obliged to disclose all information regarding the processing fee and prepayment charges etc. Petitioner has place on record copy of the sanction letter dated 24th July, 2010 which clearly indicates that in the event of pre-payment of loan, the extra interest @ 2% shall be charged. The relevant condition is reproduced as under: -
"2% on amount prepaid and on all amounts tendered by the borrower towards payment of the facility during the last one year from the date of final payment."
11. From the above, it is clear that the petitioner Bank was within its right to charge pre-payment penalty and the Bank has charged interest on pre-payment as per the terms and conditions agreed between the parties. Thus, the bank cannot be said to have committed deficiency in service.
12. Learned Shri Madhur Dhingra, Advocate for the respondent at the outset has conceded that under ordinary course of circumstances in view of the terms and conditions agreed between the parties the bank would have been justified in claiming pre-closure penalty as at the relevant time such act would not have been violative of RBI Guidelines. In the instant case the loan of Rs.1,75,00,000/- was sanctioned on the understanding that on the complainant obtaining sanction for construction, further construction loan of Rs.65,00,000/- would be sanctioned. To support this contention, learned counsel for the complainant has drawn our attention to his email dated 11.1.2008 addressed to the petitioner Bank. Learned counsel has contended that since the petitioner Bank refused to sanction the construction loan, the complainant per force was compelled to approach other financial institution to arrange for the loan and was forced to pre-pay the loan obtained from the petitioner Bank.
13. We are not convinced with the above argument. On perusal of copy of the loan application placed on record we find that the complainant Dr. Ashwani Kumar Srivastava had applied for loan of Rs.1,75,00,000/- for purchase of a plot. There is no whisper of further loan of Rs.65,00,000/- for construction or any understanding in this regard in the application. On perusal of the sanction letter dated 12.1.2008 we find that vide this letter the petitioner Bank has sanctioned home loan for purchase of site for the amount not exceeding Rs.1,75,00,000/- to the complainant and the sanction letter clearly stipulated for 2% penalty of loan being pre-paid through other HFC/Financial Institution/Bankers. Neither the loan application nor the sanction letter indicate that there was any understanding between the parties that on the complainant having obtained the sanction for construction, further loan of Rs.65,00,000/- would be sanctioned to the complainant. Merely because a day before the receipt of sanctioned letter the respondent/complainant sent an email to the official of the petitioner Bank seeking clarification with regard to extension of loan to cover construction on the same rate, it cannot be said that there was an understanding between the parties that in the event of the complainant obtaining construction approval, further loan of Rs.65,00,000/- for construction would be extended to cover the cost of construction at the same rate of interest. At best, the said email of the complainant can be treated as counter proposal. If the complainant was not satisfied with the sanction letter wherein there was no mention of any implied promise to sanction further loan for construction, the complainant could easily have refused to act upon the sanction letter. The complainant after having accepted and getting the loan amount released, now cannot back out of the contract with the opposite party and say that there he was forced to pre-pay the loan.
14. In view of the discussion above, it is clear that the petitioner Bank was well within its rights in charging the pre-closure penalty from the respondent/complainant in terms of the loan agreement. Therefore, by no stretch of imagination it can be said that the petitioner was deficient in service particularly when there was no RBI instructions against the charging of pre-closure penalty at the relevant time. The Foras below have ignored the above aspect of the case. Therefore, their orders being against the factual matrix are not sustainable.
15. We, therefore, allow the revision petition, set aside the impugned orders and dismiss the complaint.
......................J AJIT BHARIHOKE PRESIDING MEMBER ...................... REKHA GUPTA MEMBER