Punjab-Haryana High Court
Seema Tulisan vs India Housing Finance Ltd And Another on 9 April, 2013
Author: Ritu Bahri
Bench: Hemant Gupta, Ritu Bahri
CWP No. 17501 of 2012 (O&M) -1-
IN THE HIGH COURT OF PUNJAB & HARYANA AT
CHANDIGARH
CWP No. 17501 of 2012 (O&M)
Date of decision: 09.04.2013
Seema Tulisan ...Petitioner
versus
India Housing Finance Ltd and another ...Respondents
CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA
HON'BLE MS. JUSTICE RITU BAHRI
Present: Ms. Hemlata Thakur, Advocate
for the petitioner
Ms. Kiran Bala Jain, Advocate
for the respondents.
RITU BAHRI, J.
The present writ petition under Articles 226/227 of the Constitution of India is for quashing of letter dated 12.06.2012 (P-7) and for issuance of direction to the respondents to refund the foreclosure charges of the loan as per the guidelines of R.B.I (P-5).
A loan of Rs.2.41 crore was sanctioned to the petitioner vide letter dated 28.08.2010 (P-1) with the rate of interest @ 8.5% from 01.10.2010 to 31.03.2011 and @ 9.5% from 01.04.2011 to 31.03.2012. Thereafter, the rate of interest was changed from fixed to floating. The interest rate was @ 14% from 01.04.2012 till the foreclosure of the account i.e 07.06.2012. The copy of schedule of loan agreement is Annexure P-2. The term loan was to repay in 84 (7 years) equated monthly installments. The petitioner decided to close the loan account prior to the actual period and applied with respondent No.2 for foreclosure Kumar Vimal 2013.04.26 12:23 I attest to the accuracy and integrity of this document Chandigarh CWP No. 17501 of 2012 (O&M) -2- of loan account HHL CH-00071904 vide application dated 07.06.2012 by depositing the outstanding amount as shown by respondent No. 2 in the statement of petitioner's account (P-3). Respondent No.2 issued NOC (P-
4). The petitioner applied for the waiver of the foreclosure amount as per the instructions of RBI (P-5), vide letter dated 05.06.2012 (P-6). Respondents vide their letter dated 12.06.2012 refused to waive/refund of foreclosure charges on the ground that the petitioner has not closed the account from her own source of funds (P-7).
Reference has been made to Annexure P-5 i.e. the guidelines issued by R.B.I on 05.06.2012 where, as per sub clause 3, it has been decided that the banks will not be permitted to charge foreclosure charges/pre-payment penalties on home loans on floating interest rate basis, with immediate effect.
Ms. Kiran Bala Jain, learned counsel for the respondents has made reference to the written statement in which preliminary objection has been taken that the writ petition is not maintainable against the private company. The foreclosure charges have been levied in accordance with the policies and guidelines issued by National Housing Bank, which is a regulatory body monitoring the functioning of Housing Finance Companies. Ms. Jain, learned counsel for the respondents submits that the petitioner had availed the loan facility on floating rate of interest after 31.03.2012 i.e. @14% per annum. The petitioner was bound by the agreement that foreclosure charges @ 2% + Service Tax shall be applicable to the petitioner while availing the loan from the respondents. The foreclosure charges have been levied as per the guidelines issued by National Housing Bank and circulars dated 19.10.2011 (R-3) and Kumar Vimal 04.04.2012 (R-4). The relevant clause of the loan agreement read as 2013.04.26 12:23 I attest to the accuracy and integrity of this document Chandigarh CWP No. 17501 of 2012 (O&M) -3- under:-
"Clause No. 2.6 of the Schedule clearly provides under the heading "charges" Sub Clause (d) Foreclosure charges @ 2% + ST (Service Tax), which has been duly agreed to by the petitioner at the time of availing of the financial facility from the respondents."
It is not disputed between the parties that the petitioner had taken loan on fixed and floating rate of interest. The Petitioner was paying floating rate of interest, when the amount was prepaid. As per circular dated 19.10.2011 (R-3), issued by National Housing Bank, the Banks have been directed not to charge pre-payment levy or penalty on pre-closure of housing loan under the following situations:-
"(a) Where the housing loan is on floating interest rate basis (pre- closed through any source).
(b) Where the housing loan is on fixed interest rate basis and the loan is pre-closed by the borrowers out of their own sources."
After going through the above two conditions, it is made out that if the house loan is on floating rate of interest then the foreclosure penalty cannot be imposed falling in clause (a) of the circular relied upon by the respondents. On the other hand, if the house loan was on a fixed rate of interest, only then the second condition that the borrower should pay the loan from its own source has to be satisfied. The case of the petitioner falls in condition (a) and is in consonance with the guidelines issued by R.B.I on 05.06.2012 (P-5) which reads as under:-
"3. The removal of foreclosure charges/prepayment penalty on home loans will lead to reduction in the discrimination between existing and new borrowers and competition among banks will result in finer pricing of the floating rate home loans. Though many banks have in the recent past voluntarily abolished pre-payment penalties on floating rate home loans, there is a need to ensure uniformity across the banking system. It has, therefore, been decided that banks will not be Kumar Vimal 2013.04.26 12:23 I attest to the accuracy and integrity of this document Chandigarh CWP No. 17501 of 2012 (O&M) -4- permitted to charge foreclosure charges/pre-payment penalties on home loans on floating interest rate basis, with immediate effect."
A joint reading of Annexure P-5 and Annexure R-3 leads to a conclusion that the petitioner was paying floating rate of interest on the date of pre-deposit of the loan amount and thus, the petitioner could not be charged foreclosure charges.
In view of the above, letter dated 12.06.2012 (P-7) is set aside and respondents are directed to refund the foreclosure charges of the loan account, as per guidelines issued by National Housing Bank on 19.10.2011 (R-3) within one month of the receipt of the copy of the order. Thereafter, the petitioner shall be entitled to the same interest @ 14% p.a. as was being charged on the date of pre-payment of the amount.
Accordingly, the present petition is allowed.
(HEMANT GUPTA) JUDGE (RITU BAHRI) JUDGE April 09, 2013 G.Arora/Vimal Kumar Vimal 2013.04.26 12:23 I attest to the accuracy and integrity of this document Chandigarh