State Consumer Disputes Redressal Commission
1.Indiabulls Housing Finance Ltd., vs 1.Mr.Harish Kumar on 18 April, 2023
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BEFORE THE TELANGANA STATE CONSUMER DISPUTES
REDRESSAL COMMISSION: HYDERABAD.
FA.NO.502/2018
AGAINST ORDERS IN CC.NO.241/2016 ON THE FILE OF
DISTRICT CONSUMER COMMISSION-III, HYDERABAD
Between:
1. Indiabulls Housing Finance Limited,
Branch office at H.No.16-11-164/A+B,
1st Floor above HDFC,
Moosarambagh, Dilsukhnagar,
Hyderabad-500036, Telangana
Represent by its authorized signatory,
Mr.B.Venkata Subbaiah.
2. Indiabulls Housing Finance Limited,
Regional Office at 3rd Floor, 6-3-334/1,
Park City Plaza, Road No.1,
Banjara Hills, Hyderabad-500034,
Telangana
Represented by its authorized Signatory,
Mr.B.Venkata Subbaiah.
3. Indiabulls Housing Finance Limited,
Having its regd. Office at M-62& M-63,
First floor, Connaought Place,
New Delhi-1110001
Represented by its authorized signatory,
Mr.B.Venkata Subbaiah.
.....Appellants/Opposite
parties
And
1. Mr.Harish Kumar(Died vide LRs)
S/o Tilak Raj kumar, aged about 60 years,
Occ: Business, R/o Plot No.751, Road No.38,
Jubilee Hills, Hyderabad-500033.
2. Mrs. Neeru Kumar
W/o Mr.Harish Kumar,
Aged about 59 years, Occ: Business,
R/o Plot No.751, road No.38,
Jubilee Hills, Hyderabad-500033.
3. Mr. Avnish Kumar,
S/o Mr.Harish Kumar,
Aged about 26 years, Occ: Business,
R/o Plot No.751, road No.38,
Jubilee Hills, Hyderabad-500033.
4. M/s Neerus Ensembles Private Limited,
Office at 3-5-784/1, Rekha House,
King Kothi, Hyderabad-500029
Represented by its Managing Director.
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5. Mrs.Ruchita Kumar,
D/o. Late Harish Kumar,
Aged 42 years, R/o Plot No.751,
Road No.38, Jubilee Hills,
Hyderabad-500033.
6. Mrs.Suchita Ahuja,
D/o Late Harish Kumar,
Aged about 39 years,
R/o H.No.C-201, Upasana Block,
4-1-970, Ahuja Estate, Abids,
Hyderabad-500001.
7. Mrs. Anchal Gupta,
D/o. Late Harish Kumar,
Aged 37 years, R/o D.1/37,
Vasantha Vihar-1, South West Delhi,
Delhi-111057.
[Respondent Nos.5 to 7 are impleaded
Vide orders in IA No.1078/2021 dated 30.11.2021]
.....Respondents/
Complainants
Counsel for the Appellants/Opposite Parties: M/s. Rusheek Reddy
K.V.
Counsel for the Respondents/Complainants: M/s. Sanjay Kishore
QUORUM: HON'BLE SRI V.V.SESHUBABU, MEMBER
& HON'BLE SMT R.S. RAJESHREE, MEMBER TUESDAY, THE EIGHTEENTH DAY OF APRIL TWO THOUSAND TWENTY THREE ******* (Per HON'BLE SMT R.S. RAJESHREE, Member-Non-Judicial) Order:
1. This Appeal is filed by the Opposite parties U/s 15 of Consumer Protection Act, 1986 being aggrieved by the orders passed by the District consumer commission, Hyderabad-III by allowing the complaint and passing the following orders.
To refund the foreclosure charges of Rs.16,14,671.57/-. To pay compensation of Rs.30,000/- and costs of Rs.10,000/-.
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2. For the sake of the convenience, the parties are arrayed as in the original complaint i.e., as complainants and the opposite parties.
3. The case of the complainant is that, he is the Managing Director of complainant No.4, complainant No.2 is his wife and is also a director of complainant no.4 and complainant No.3 is the son of complainant no. 1 & 2 and that the complainants with a intention to take a home loan approached the opposite party no. 1 to take a home loan for the property situated at plot no.751, H.no.8-2-293/82/F/A/35B in survey no. 433/1 (old) of shaikpet and survey no. 102/1 Hakeempet village within the limits of municipal Corporation of Hyderabad, ward no. 8 block no. 2 road no. 38, jubilee hills, Hyderabad admeasuring 1962sqyds and the loan was sought by complainant no. 1&2 in their personal capacity for the purchase of the above said property and an application was made seeking loan of Rs.8 crores, the opposite party no. 1 insisted that the complainant no. 3&4 be made as Co-applicants and also assured that the terms and conditions of the loan and other terms of repayment and prepayment would not be affected due to addition of complainants 3&4 as co-applicants and based on their assurances the complainants 1&2 have made the complainants 3&4 as co- applicants. After verifying all documents the opposite party no. 1 sanctioned a loan of Rs.8 crores vide loan account no. HHLHYE00071961 and on the blank documents the opposite party obtained the signatures of all the complainants/borrowers and the said loan was sanctioned for purchase of the property vide sale deed bearing number 5571/2015 which was executed in the name 4 of complainant no. 1 and the said sale deed was deposited with opposite party no. 1 for the purpose of security to the loan, and that the EMIs were being paid from the individual accounts of the complainants no. 1&2 and which is reflected in the statement of account.
4. And on 19.02.2016 when the complainants with an intention to foreclose the loan had approached the opposite party, the opposite party directed the complainants to pay Rs.16,14,671.57/- as pre closure charges apart from the principle amount and this was again intimated through letter dt.26.02.2016 this act of opposite party of charging 2.29% as pre closure charges to the individual home loan is contrary to the circular no. 63/2014-15 dt.14.08.2014 issued by the NHB as such the complainants made a representation to the opposite parties through letter dated 19.02.2016 as the opposite parties failed to respond to the letter of the complainants even till 25.02.2016 the complainants were constrained to pay the pre closure charges "under protest" vide letter dated 26.02.2016 while reserving their right to claim back the prepayment charges along with other incidental charges including interest and release of original documents. The opposite party on 01.03.2016 replied to the letter of the complainant clarifying that the NHB and regulatory body has though issued a circular dt.14.08.2014 but had again on. 03.09.2014 had issued another circular wherein it was clarified that wherever one of the applicant is a company the waiver of foreclosure charges would not apply in such cases. As such as complainant no. 4 is a private limited company these complainants 5 were not exempted from foreclosure charges and that their loan would be continued based on the terms of agreement of the loan.
5. The complainant further submits that the opposite party knowing full well about the circular had compelled the complainant no. 1&2 to join complainant no 3&4 as co-borrowers and also assured that the same would not have any effect on the terms and conditions of loan and also on repayment and prepayment conditions. All these acts of opposite party amounts to deficiency of service and which has caused severe hardship to the complainants. As such having no other alternative the complainants are before this commission seeking refund of foreclosure charges collected by opposite party along with interest and compensation.
6. Written Version of Opposite Parties1,2,3:-
The opposite parties 1 to 3 filed their written version while admitting the sanction of loan so also the amount had raised the preliminary objection of peculiarly jurisdiction stating that as the loan availed was Rs.8 crores, and that the District Commission does not have a pecuniary jurisdiction to entertain the complaint, as such the complaint was not maintainable and has to be dismissed on this sole ground. And further pleaded that foreclosure charges that were collected were strictly based upon the terms and conditions of the loan agreement and had extracted clause no. 2.8 of the loan agreement which is as under.
"The borrower shall be entitled to prepay the loan either partly or fully, as per rules of IHFL, including as the prepayment charges, for the time being in force in that behalf 6 however, any prepayment upto 25% of the principal outstanding loan amount on the date of prepayment will not attract any prepayment charges in next 12 months from the date of such payment. In case, the prepayment exceeds 25% of principal outstanding within 12 months from the date of such prepayment then all prepayment amount will attract prepayment charges as stipulated in the schedule".
7. And further stated that NHB circular dt.14.08.2014 states that the housing Finance company shall not charge foreclosure charges/ penalties on all floating rate term loan sanctioned to individual borrowers with immediate effect. Thereafter on 03.09.2014 another circular was issued clarifying that loans in which firm or company is a borrower or co-borrower are excluded from the purview of circular dt.14.08.2014 and that the complainant no 4 which is a private limited company was one of the co-applicant to the loan availed by the complainant no. 1&2 as such they are not exempted from foreclosure charges.
8. And the opposite party further pleads that the complainants have availed the home loan as equitable mortgage of property being residential property G+1 and further denied that the loan facility was availed by the complainants in their personal capacity and the complainant no. 4 being a private limited company was one of the co-applicant. And further denied that they have advised the complainant to make the complainant no. 3&4 as co-applicants and also denied that the opposite party got the blank document signed and stated that the complainants out of their free will and consent without any coercion, undue influence 7 have been part of the loan application and signed the same as co- borrowers. And that as complainant no 1 signed as managing director of complainant no 4, cannot now be regarded as individual borrower as such the complainant no 4 being a company is liable to pay the foreclosure charges. And prayed that the preliminary objections and the other objections set out together establish that the complainants are not entitled for any reliefs as such the complaint be dismissed with exemplary costs.
9. Before the District Forum, the complainant No.1 got himself examined as PW1 and got marked exhibits A1 to A15. The complainants have examined Sri J.Hanumanth Rao, as PW2 on their behalf. The opposite parties filed their chief affidavit and got examined B.Venkata Subbaiah, as DW1. Ex.B1 and B2 are marked on their behalf. Written arguments are filed by the complainants and the opposite party No.1 to 3 upon hearing both sides the District Forum passed the above orders as referred in Para no.1.
10. Aggrieved by the said orders the opposite parties preferred the present appeal based on the following grounds:
a) That the impugned order of the District Forum suffers from grave infirmities and Illegalities and is wholly without jurisdiction.
b) And that the appellant company is a housing Finance company registered with the National Housing Bank vide registration bearing no. 02.63.005 dt.28.12.2005 and that the appellant company is in a business of providing secured financial assistance.8
c) That the district forum erred in allowing the complaint by failing to consider that the alleged amounts have been collected as per clause 2.8 of loan agreement.
d) The district forum also failed to consider that the total loan availed is Rs.8 crores which is beyond the pecuniary jurisdiction of district forum. District forum erred in concluding the NHB circular dated 14.08.2014 and 03.09.2014 were not applicable to the instant case.
e) The District forum erred in concluding that "when the sale deed is in the individual borrowers name and duly mortgaged to secure the loan it ought to be treated as sanctioned to individual borrowers only "And failed to consider that opposite party No.4/R4 who is a company was also a co-borrower".
f) The District Forum failed to consider that the respondents are bound by the terms and conditions of the loan agreement and also by the circulars issued by the NHB.
g) The District forum erred in not considering the clause no. 2.8 of the loan agreement.
h) The district forum has also failed to appreciate and consider the judgment of the Hon'ble National Consumer Disputes Redressal Commission. Standard chartered bank v/s krishanlal juneja II (2013 CPJ 498(nc)) which is based on similar facts.
And based on the above grounds prayed that the order of the district forum be set aside and the appeal be allowed. Heard the arguments of both sides.
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11. Now the points for determination are:-
1. Whether the impugned order as passed by the District Consumer Commission suffers from any error or irregularity or whether it is liable to be set aside, modified or interfered with in any manner?
2. To what, Relief?
12. Points No.1,2:-
The specific case of the complainants is that the opposite party had charged them foreclosure charges on the home loan, which is in violation of circular No.63/2014-15 dated 14.08.2014 issued by NHB and in support of their case got marked Ex.A1 to A14.
Availing of Home Loan by complainants is not in dispute so, also the loan amount is not in dispute.
Foreclosure of the loan is also admitted. The only dispute is with regard to the foreclosure charges collected by the opposite parties.
13. The opposite parties have opposed the complaint on the following two grounds.
a) Maintainability of the complaint on the ground of pecuniary jurisdiction.
It is the contention of the opposite party that since, the loan availed by the complainants/respondents is Rs.8 crores and which is far beyond the pecuniary jurisdiction, the District Forum had No pecuniary jurisdiction to entertain the 10 complaint and relied upon the Ambrish Kumar Shukla Judgment by the Hon'ble NCDRC.
In the instant case, the complainant had availed a home loan of Rs.8 crores, but the claim of the complainant is only for the foreclosure charges of Rs.16,14,671.57/- which is well within the pecuniary jurisdiction. That apart in Woods Birch Hazel Residents Association Vs The Managing Director, Bengal United Credit, Belani Housing Company ltd., the Calcutta High Court has made it is clear that the the claimed amount alone shall be taken into consideration, but not the aggregate amount of goods or services and also the compensation claimed at. The Hon'ble High Court in this Judgement clearly and vividly discussed various judgements of the Hon'ble Supreme Court including the Hon'ble NCDRC. Two of the earlier judgements of the Hon'ble NCDRC which are prior to Ambrish Kumar Shukla case goes to show that the claim made under the complaints alone shall be taken into consideration, but not aggregate value of the goods or services and the compensation claimed if any.
Further observed that if the judgement in Ambrish Kumar Shukla is taken into consideration, it is nothing, but denying the justice to common man who is having redressal only with regard to the particular aspects of the claim and is no way concerned with the total value of the goods or services in that particular complaint. In para nos.45 & 46 of the judgement, the Hon'ble High Court categorically observed that Ambrish Kumar Shukla case was not so far approved by the Hon'ble Supreme Court particularly with 11 regard to the pecuniary jurisdiction of the Consumer Fora as set out under the 1986 C.P.Act.
In view of the above discussion we are of the considered opinion that the District Forum had pecuniary jurisdiction to entertain the complaint. Hence, we do not find any error in the order of District Forum to the point of pecuniary jurisdiction.
b) Now with regard to the foreclosure charges the opposite party had contended that complainant No.4 is a private limited company and being represented by its managing director had also signed the loan agreement as one of the borrower and in view of the circular No.66/2014-15 dated 03.09.2014 complainant No.4 cannot be treated as individual and the said circular clears the ambiguity with regard to the individual borrower and company for better clarification the relevant portion of the circular is reproduced here under.
The issue have been examined by us. It is clarified that the provisions of the circular are applicable in respect of all floating rate term loans sanctioned to individual borrowers by HFCs, irrespective of the date of sanction, and prepaid on or after August 14, 2014. The provisions of the said circular cover both part as well as full pre-payments. Further, the applicability of the said circular is on foreclosure charges/pre-payment penalties in respect of all floating rate term loans sanctioned to individual borrowers 12 loan in which company, firm, etc., is a borrower or co- borrower, therefore, is excluded from its purview.
A perusal of same clearly establishes that the circular had made it clear that the exemption of foreclosure charges is not applicable in cases where a firm or company is either the borrower or even a co-borrower. As such abiding the said circular the opposite party had collected the foreclosure charges.
Opposite parties being governed by the National Housing Bank is bound to follow the guidelines issued from time to time and cannot be expected to act in violation of the above circular. As such the act of opposite parties in charging foreclosure charges is in accordance with the circular issued as such at no stretch of point the same can be termed as illegal or deficient.
14. And further that apart in the loan agreement at clause no. 2.8 there is a specific mention that pre-payment charges would be applicable at a specific rate, having consented to the same the complainant now cannot go contrary to the terms of contracts agreed at the time of availing the loan. The complainant had alleged that at the time of availing loan the opposite parties bank had insisted to make complainant no.4 as co-borrower, but however there is no such proof filed hence, the said contention of the complainant cannot be believed. The District Forum had given a finding that since the circular has come after a lapse of four years of availing of the loan by the complainant the same shall not be applicable but the said ambiguity has been specifically cleared 13 by the wordings used in the circular "irrespective of the date of sanction, and prepaid on or after 14.08.2014".
Based on the foregoing discussion we feel that the act of collecting foreclosure charges by opposite parties cannot be termed as illegal, unfair or deficient, in fact the opposite parties had acted in accordance with the guidelines of the National Housing Bank. The District Forum had erred in concluding the legal acts of opposite parties as unfair.
Hence, the appeal is allowed by setting aside order of the District Forum and the complaint stands dismissed.
Dictated to steno; transcribed and typed by him; corrected and pronounced by us in the open court on this 18th day of APRIL 2023.
SD/- SD/-
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MEMBER (M-J) MEMBER (M-NJ)
Dt: 18.04.2023
PMK*