State Consumer Disputes Redressal Commission
Vishnu Bansal vs Icici Bank Ltd. on 11 May, 2021
IN THE DELHI STATE CONSUMER DISPUTES REDRESSAL COMMISSION
JUDGMENT RESERVED ON: 15.03.2021
JUDGMENT PRONOUNCED ON: 11.05.2021
COMPLAINT NO. 163/2019
IN THE MATTER OF
MR. VISHNU BANSAL .....COMPLAINANT
VERSUS
ICICI BANK LTD ....OPPOSITE PARTY
CORAM:
HON'BLE DR. JUSTICE SANGITA DHINGRA SEHGAL
(PRESIDENT)
HON'BLE SH. ANIL SRIVASTAVA, (MEMBER)
Present: Mr. Hemant Gupta Counsel for the Complainant.
Ms. Sunakshi Gupta , Counsel for the Opposite Party.
PER: HON'BLE DR. JUSTICE SANGITA DHINGRA SEHGAL,
PRESIDENT
JUDGMENT
[Via Video Conferencing]
1. Brief facts necessary for the adjudication of the present complaint are that in the month of November, 2005, the Complainant applied for a home loan from the Opposite Party. In pursuance of which, on 30.11.2005, a loan agreement was entered into between the parties and a loan amount of Rs. 30,74,100/- was sanctioned at a Floating rate of interest 8.75%. The adjustable margin was minus 1.5%. Thus CC 163/2019 Page 1 of 9 the loan was taken at 7.25% {8.75% being the Floating reference rate on the date of such advance minus 1.5% being the agreed margin}.
2. The said loan was payable in 240 Equated Monthly Installments (hereinafter referred to as "EMI") of Rs. 24,297/- each. The only option made available to the Complainant was to pay the EMI's through Electronic Clearance System (hereinafter referred to as "ECS") towards the loan directly from the bank account of the Complainant.
3. It later transpired that the Opposite Party was initially charging EMI at the rate of 7.25%, however, it later increased the interest rate to 8.75% without informing the Complainant about the said increase. The Interest rate was further increased to 12.25% and the tenure was also increased from 240 months to 331 months as reflected in the repayment schedule dated 20.01.2010.
4. Due to the arbitrariness of the Opposite Party, the Complainant cleared the home loan taken from the Opposite Party by taking another home loan from a different bank.
5. As per the Complainant, an amount of Rs. 1,62,093/- has been charged as an extra amount.
6. The Complainant repeatedly inquired about the change of interest from the Opposite Party, however, he never received a satisfactory reply to the same. Aggrieved by the same, the Complainant approached the Banking Ombudsman on 13.02.1010, however, no progress was made there.
7. Aggrieved by the aforesaid, alleging deficiency of service and unfair trade practice on the part of the Opposite Party, the Complainant approached the District Forum, wherein vide order dated 24.01.2019 the complaint was returned on the want of pecuniary jurisdiction.
CC 163/2019 Page 2 of 9The perusal of the order sheets before the District Forum reflect that the Opposite Party was proceeded Ex-Parte vide order dated 01.03.2011. The Complainant then approached this commission.
8. After the completion of proceedings the final arguments on part of the Complainant were heard and the Opposite Party has filed their written arguments.
9. We have heard the counsel for both the parties and perused through the material on record.
10. The only defence taken by the Opposite Party is that as per the loan agreement, which was signed by the Complainant after understanding it and admitting its contents, it was agreed that the rate of interest was 'floating rate of interest.' It was submitted that since the rate of interest was floating, according to the prevailing rate of interest from time to time, the EMIs were changed. The total Number of EMIs were also increased which was provided by the Agreement itself.
11. The Opposite Party has brought to our notice as per Page 33 and 34 of the complaint which provides the details pertaining to the interest and number of EMIs so payable. The column representing "Total Number of EMIs" is subject to a " * " . The * has been explained at the bottom by mentioning subject to variation of terms of agreement. Thus the EMIs payable of 240 months was open to variation with a change in the rate of interest or the number of EMIs as provided by the latest guidelines.
12. The counsel for the Opposite Party has relied on ICICI Bank Ltd. V/s Maharaj Krishan Datta & Ors. passed by the Hon'ble Supreme Court of India on 03.08.2015. The relevant portion of the aforesaid judgment is reproduced below:-
CC 163/2019 Page 3 of 97. Mr P. Chidambaram, learned Senior Counsel appearing in this matter on behalf of the appellant Bank submitted that a housing loan can be advanced either on a fixed rate of interest or on a floating rate of interest. In cases of floating rate of interest, the rate of interest is not fixed and varies from time to time with the changes in the economic environment and resultant changes in the borrowing cost of the Bank. For calculating such rates of interest, a benchmark rate is adopted, which in the present case is the floating reference rate (FRR). The interest payable by the borrower is determined by adding or subtracting the margin percentage from such a benchmark rate as agreed between the parties.
10. Mr Chidambaram further pointed out that the grievance of the complainants was that the rate of interest has increased and wanted to continue to pay a fixed rate of interest, since the rates of interest have gone up. According to him, the National Commission has wrongly fixed the rate of interest irrespective of an increase or decrease in FRR, which is clearly erroneous in law. If that is accepted, then the sanction letter and the entire agreement would be rendered nugatory and otiose. The National Commission could not have changed or altered the terms of contract between the parties when the contract is in accordance with the RBI Guidelines.
11. The learned Senior Counsel also pointed out that the National Commission has only discussed about one clause of the loan agreement while deciding the matter and has interpreted it in isolation and without taking into account other terms of the contract. It is settled law that a contract has to be read as a whole and the terms of the contract cannot be read or construed in isolation.
He also submitted that the Bank has to follow the RBI Guidelines especially Schedules A and B thereto, and the Bank must be given liberty to act in the matter in accordance with the guidelines so issued by RBI from time to time. Fixed rate, floating rate and other rates which have been mentioned in the Guidelines and the CC 163/2019 Page 4 of 9 right which has been given to the banks in respect of floating reference rate (FRR) has also to be followed in all cases by the Bank.
13. After hearing Mr P. Chidambaram, learned Senior Counsel in the matter and also after hearing Respondent 1 appearing in person, we find that the grounds advanced before us by Mr P. Chidambaram, learned Senior Counsel, in our opinion, have to be accepted and accordingly we allow the appeal, set aside the order [Icici Bank Ltd. v. Maharaj Krishan Datta, 2014 SCC OnLine NCDRC 824] so passed by the National Commission and confirm the order so passed by the State Commission. The concession, which has been given by Mr P. Chidambaram on behalf of his client in favour of the respondents are not curtailed by us. The benefit of the order of the National Commission will go in their favour as conceded by Mr P. Chidambaram, learned Senior Counsel on instructions from his client.
13. Relying upon the dicta of the Hon'ble Apex Court we can conclude that in cases of floating rate of interest, the rate of interest on the loan keeps fluctuating to the benchmark which is adopted being the Floating Reference Rate. These interest rates are changed only after the Reserve Bank of India directs the banks to do so.
14. However, we deem it appropriate to refer to the dicta of the Hon'ble National Commission in ICICI Bank Limited vs. Karam Chand and Ors., decided on 27.08.2019 bearing case number Revision Petition No. 2954 of 2015, wherein the Hon'ble National Commission held as follows:-
14. ........Therefore, whenever there is any change in the floating rate, it should be in conformity to Asset-
Liability Management (ALM) guidelines and in the case of existing loans for longer/fixed tenure, the Banks should re-fix the rates according to the above said CC 163/2019 Page 5 of 9 method after obtaining the consent of the concerned borrower. The same provision was retained in the Circular dated 1.7.2009 and in the Circular dated 1.7.2010 as well as in the Circular dated 2.7.2012. The complainant was advanced the loan on floating rate of interest. In case there was change in the floating rate of interest on loans then the above said formula was to be adopted, while fixing the rate of interest and taking the consent of the concerned borrower whether he wants to continue the loan with the enhanced rate of interest or he could adopt for other option i.e. closing of the account or shifting of the account, therefore, information/consent of the borrower is the predominant clause while changing the floating rate of interest. In the certificate of interest, which Ops have placed on the record with regard to the change of floating FRR from time to time, no reference of conformity to their Asset-Liability Management (ALM) so that it should be objective transparent and mutually accepted to counter (concerned) parties. The OPs in their written reply has stated in para (No. 4) of their reply on merits that same was published on the website of the Bank and informed the customer at large through the newspaper, therefore, there are no pleadings whether any personal notice was delivered upon the complainant to check transparency and mutually acceptable, therefore, the Ops bank has not complied with the RBI instructions with regard to change in the CC 163/2019 Page 6 of 9 floating rate of interest of loans. In another judgment Hon'ble National Commission reported in MANU/CF/0532/2012 : 2012 (4) CPJ 415 (NC) IDBI Bank Ltd. (M/s.) v. Subhash Chand Jain & Anr. in which it was again observed that concept of floating rate of interest flows from the regulation of rate of interest by the RBI guidelines and not arbitrarily by the service provider without informing or telling the reasons for increasing the rate of interest in general terms and not that there is inflationary market. Every discretion has to be exercised judicially so as to make persons understand fully as to the reasons and ground for increasing the rate of interest and not arbitrarily under the garb of floating rate of interest."
15. Relying on the above mentioned dicta of the Hon'ble National Commission it flows that even if the Opposite Party has been given the right to change the rate of interest charged on the loan, it does not automatically confer a power upon the Opposite party to increase or decrease of interest without apprising the borrower/Complainant about the change in interest charged or the number of EMIs. In simple terms, an opportunity must be afforded to the Borrower before changing the floating rate of interest.
16. Returning to the facts of the present case, the Opposite Party had the power to change the rate of interest charged or change the number of the EMIs, however, the Complainant was never apprised about the fact that the rate of Interest had been increased or the number of the EMIs has been changed. The Opposite Party was duty bound to CC 163/2019 Page 7 of 9 disclose the aforesaid information to the Complainant in order to provide the complainant the option to either close the account or shift the account.
17. Consequently, we are of the view that the increase or decrease by the in the interest rates by the Opposite Party without taking the consent from the borrower/complainant amounts to Unfair Trade Practice.
18. Keeping in view the facts of the present, we allow the following reliefs as prayed for by the Complainant:
I. We direct the Opposite Party to pay an amount of Rs. 1, 62, 093/- along with interest as per the following arrangement:
A. An interest @ 6% calculated from the date of institution of the present complaint i.e. 14.02.2019 till 11.05.2021 (being the date of the present judgment);
B. The rate of interest payable as per the aforesaid clause (A) is subject to the condition that the Opposite Party pays the entire amount on or before 30.06.2021; C. In case the Opposite Party fails to refund the amount as per the aforesaid clause (A) on or before 30.06.2021, the entire amount is to be refunded with an interest @ 9% p.a. calculated from 14.02.2019 till the actual realization of the amount.
II. In addition to the aforesaid and taking into consideration the facts of the present case, the Opposite Party is also directed to pay to the complainant A. A sum of Rs. 50,000/- as cost for mental agony and harassment;
B. And the litigation cost to the extent of Rs. 50,000/-.
CC 163/2019 Page 8 of 919. Applications pending, if any, stands disposed of in terms of the aforesaid judgment.
20. A copy of this judgment be provided to all the parties free of cost as mandated by the Consumer Protection Act, 1986. The judgment be uploaded forthwith on the website of the commission for the perusal of the parties.
21. File be consigned to record room along with a copy of this Judgment.
(DR. JUSTICE SANGITA DHINGRA SEHGAL) PRESIDENT (ANIL SRIVASTAVA) MEMBER Pronounced On:
11.05.2021 CC 163/2019 Page 9 of 9