State Consumer Disputes Redressal Commission
Smt Pattisapu Manga And Another vs Lic Housing Finance Limited on 16 August, 2012
BEFORE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD F.A.No.169 OF 2011 AGAINST C.C.NO.361 OF 2009 DISTRICT FORUM I VISAKHAAPTNAM Between: 1. Smt Pattisapu Manga W/o P.Harishankar aged 50 years, Housewife 2. Sri Pattisapu Harisankar S/o late P.S.Prakasha Rao, aged 60 yrs, Both are R/o D.No.10-2-3, Flat No.405 Thirumala Heights, Siripuram, Visakhapatnam-003 Appellants/complainants A N D M/s LIC Housing Finance Limited rep. by its Area Manager, D1&D2, II floor, Dwaraka Nagar Main Road, Visakhapatnam-016. Respondent/opposite party Counsel for the Appellants M/s V.Chaitanya Latha Counsel for the Respondent Served QUORUM: SRI R.LAKSHMINARASIMHA RAO, HONBLE MEMBER
AND SRI THOTA ASHOK KUMAR, HONBLE MEMBER THURSDAY THE SIXTEENTH DAY OF AUGUST TWO THOUSAND TWELVE Oral Order (As per Sri R.Lakshminarasimha Rao, Honble Member) ***
1. The unsuccessful complainant is the appellant. She filed complaint seeking for furnishing of the ledger with the rate of interest charged on the loan amount from time to time, for refund of the amount collected towards premia, for payment of difference amount on the matured policy amount, interest on the maturity amount, compensation for suffering mental tension and the loss occasioned due to premature surrender of the insurance policy.
2. The first appellant availed housing loan of `2,00,000/- from the respondent under loan account number 670000908 on10.06.1991.It was agreed that the appellant would pay interest as fixed by the respondent from time to time. The second appellant is the co-applicant and he assigned his insurance policy bearing number 690257353 and the first appellant assigned her insurance policy bearing number 690394295 in favour of the respondent. The respondent increased the rate of interest on par with the increase of the rate of interest made by commercial banks and the respondent failed to reduce the rate of interest as and when the commercial banks salshed the rate of interest below 7.25%. The appellants kept writing to the respondent requesting it to comply with condition no.3(a) of the loan offer letter and they addressed letter dated 25.04.2003 to furnish information of the details of the loan amount such as principal, rate of interest charged and requested the respondent to correct the amount for which there was no reply from the respondent.
3. The respondent informed the appellants on 25.04.2003 that the matter was forwarded to its higher authorities and it would intimate the decision as and when it receives the same. The respondent has sent copy of publication of Eenadu and Hindu News Papers as regards to notice issued to third parties under Securitization Act and threatened the appellants that their photos would be published if they do not pay the amount due, for which the first appellant replied on 18.09.2004 protesting the harassment meted out to them and requested the respondent to dispose of their application. The respondent had sent a recovery agent, Bobji who used to harass the appellants under the guise of recovery of the loan amount.
4. The respondent addressed letter dated 9.09.2004 demanding for a sum of `23,294.53 whereon the appellants approached the respondent on 20.09.2004.
5. The respondent resisted the claim on the premise that at no point of time it had agreed to collect interest at less than 14% p.a. The appellants were not regular in paying the loan installments. The representation dated 25.04.2003 with regard to floating rate of interest was forwarded to the higher authorities for their consideration as the appellants had not chosen to change their scheme of fixed rate of interest and the same was informed to the appellants when they personally visited the office of the respondent. Submitting letters demanding clarification without paying any amount does not make the appellants entitled to any immunity from making the payment. As per clause 10(a) of the loan agreement, the appellants should not let out the premises for commercial purpose.
6. The appellants have become defaulters. The respondent was compelled to surrender the policy of the first appellant and adjust the proceeds towards the outstanding amount due. The policies were matured in March,2008 and the cheque was made in May,2008. The respondent adjusted the amount and returned the documents to the appellants. The appellants violated clause 10 (a) of the loan agreement by letting the premises for commercial purpose.
7. The first appellant had filed his affidavit and the documents, ExA1 to A32. On behalf of the respondents, the Area Manager of the respondent no.1, filed his affidavit but no documents.
8. The District Forum dismissed the complaint on the premise that the respondent had not committed to charge interest slashed rate and that the appellants had been defaulters as also that the appellants had not denied the statement of the respondent that the appellants had used the premises for commercial purpose.
9. The complainants have filed appeal contending that the District Forum had failed to consider the documents in proper perspective and it had misinterpreted the loan offer letter and that the respondents had admitted that they had increased rate of interest to 14.5% which the District Forum failed to consider.
10. The points for consideration are :
i) Whether the opposite parties collected floating rate of interest?
ii) Whether the opposite parties have arbitrarily deducted premium?
iii) Whether the opposite parties delayed to credit the policy proceeds to the loan account of the appellants?
iv) Whether the opposite parties have not returned the documents to the complainants in reasonable time?
v) To what relief?
11. POINT NO.1 TO 4: The appellants applied for sanction of housing loan to the extent of Rs.2 lakh and the respondent had sanctioned the amount 67under loan account number 670000908 on10.06.1991. The appellants executed loan offer letter wherein the terms and conditions for repayment of the loan are incorporated. The appellants contend that the respondents charged them floating rate of interest against the terms of the agreement whereas the respondents claim that they had not agreed to charge fixed rate of interest. Clause 3 of the Loan Offer Letter reads as under:
3. (a) The rate of interest will be 14% p.a. (Fourteen percent per annum) payable monthly. Notwithstanding the rate of interest stipulated above, you shall pay to the Company interest at such rate as shall from time to time be fixed by the Company and intimated to you but such rate shall not be at any point of time exceed the rate at which loans are advanced by Commercial Banks.
(b) In case of delay or default in payment of instalment of interest/equated monthly instalment and/or premia on the policies assigned as collateral security, an additional interest @ 3% p.a. (Three percent per annum) will be payable on the entire balance of principal then outstanding with effect from the due date of the concerned instalment of Interest/EMI/Premia so long a such instalment of interest/EMI/premia remain/s unpaid.
(c) The stipulation in sub-clause (b) of this clause for payment of additional interest over and above the stipulated interst as herein provided in case of default in punctual payment of instalment of interest/EMI/premia is part of the primary contract between you and the Company and not a stipulation by way of penalty.
12. The period of loan stipulated by Clause 5 of the Loan Offer Letter extends over 20 years and the loan amount can be paid as provided for by Clause 5 either by Equated Monthly Installments OR Out of the Maturity Proceeds of Endowment Policies OR by equated monthly installments and maturity proceeds of Endowment policies. The rate of interest mentioned in the Loan Offer Letter is 14% p.a. payable monthly.
13. It was agreed that the appellant would pay interest as fixed by the respondent from time to time. The second appellant is the co-applicant and he assigned his insurance policy bearing number 690257353 and the first appellant assigned her insurance policy bearing number 690394295 in favour of the respondent.
14. The respondent informed the appellants through its letter dated 12.03.2005 that they are due an amount of `42,557.32 as on 12.03.2005. The appellants informed the respondents that they would close their account. The respondent had given reply dated 7.03.2006 informing the appellants that the outstanding due from them was `1,03,896//- and after deducting a sum of `18,322/- the amount payable by them is `85,573/- and that the LIC informed it that the assigned policies were in lapsed condition and until they are revived it would not accept the premium. The respondent through its letter dated 22.11.2006 demanded the appellants an amount of `97,810/- on or before 28.11.2006 in order to close the account failing which the appellants were informed that the assigned policies would be surrendered in order to close the loan account. Thereafter, the appellants through letters on 10.07.2007 and 2.08.2007 requested the respondent to furnish the details of the loan amount due. The respondent had not furnished the details of the loan amount sought for.
15. The respondent surrendered the insurance policy bearing number 69039295 pertaining to the first appellant during the month of April,2007 and received an amount of `1,12,065/- and did not intimate the same to the appellants . Due to premature closure of the insurance policy the appellants are deprived of an amount of `1,00,000/-. The appellants continued to pay the premia till February,2003 without any late fee. The appellants requested the respondent to inform them the outstanding amount as on 31.10.2007 or 31.12.2007 so as to enable them to clear the entire loan. The respondent had sent letter dated 11.03.2008 by furnishing details of the amount due but failed to reveal the rate of interest charged.
16. The rate of interest charged by the respondent is floating rate of interest as clause 3 of the loan offer letter indicates the agreement for charging rate of interest not below the rate of interest charged by commercial banks. The respondent contends that it had not charged the rate of interest below 14% at any time. The appellants have repeatedly requested the respondent to furnish them the details of the amount paid and the amount due so as to know the rate of interest charged by the respondent. The respondent has not furnished the details of the loan amount to the appellants. In reply to the letter requesting the respondent to let them know the nature of rate of interest whether fixed or floated , the respondent has submitted that the request made by the appellants was forwarded to their higher authorities and the respondent has not denied nor informed the appellants that they were in the fixed rate of interest scheme.
17. Except stating that the appellants were informed that they were in fixed rate of interest scheme when the appellants approached the respondent in person, the respondent has not adduced evidence in this regard. The appellants had denied that they were informed at any time about the rate of interest scheme. In absence of specific understanding or agreement between the parties about charging of fixed rate of interest, the inevitable inference can be drawn is that the rate of interest agreed to be charged is floating rate of interest and not the fixed rate of interest. Once it is decided that the appellants are in the floating rate of interest scheme, the amount payable by them towards the loan would be less than the amount collected by the respondent.
18. The respondent addressed letter dated 9.09.2004 demanding the appellants to pay an amount of `23,394.53 . The appellants submitted that instead of clarifying the matter as to charging of floating rate of interest or fixed rate of interest, the respondent addressed another letter dated 12.03.2005 informing the appellants that the amount due from them was `42,557.32 and vexed with the attitude of the respondent, the appellants requested the respondent to close their loan account. The respondent informed the appellants that they became defaulters since March,2004 and for closure of their loan account a sum of `97,810/-
was required to be paid by them. Thereafter, the appellants had sent two reminders on 10.07.2007 and 2.08.2007 seeking details of the principal and interest charged thereon which the respondent failed to furnish to them.
19. The respondent surrendered the insurance policy bearing number 690394295 during April,2007 and received a sum of `1,12,065/-. The learned counsel for the appellants had submitted that the respondent did not intimate the appellants about the surrendering the insurance policy and due to premature surrender of the insurance policy the appellants suffered loss to the tune of `1,00,000/-. The letter dated 11.03.2008 whereto statement of account was enclosed show Rs..71,797.70 towards loan, `577/-
towards premium for fire insurance, `39,690.30 towards loan amount, `8,013.60 towards premium. The rate of interest charged whether the fixed rate of interest or floating rate of interest is not mentioned in the statement of account.
20. The learned counsel for the appellant submitted that the respondent deducted amount towards premium in respect of a surrendered policy whereas it is the contention of the respondent that the LIC had not accepted for the surrender of the policy without the premium is being paid. The respondent has not produced any document from the LIC as to its refusal for surrender of the insurance policy. The respondent received an amount of Rs.21,369.60 towards premium which according to the learned counsel for the appellants had not been credited to the loan account nor was paid to the LIC as the policies were in lapsed condition. The premium payment certificate shows that the appellants directly paid the amount to the LIC in order to revive the insurance policies. Thus the amount collected by the respondent towards the premium remained with the respondent.
21. As per the terms of the loan offer letter, if the appellants commit default successively for two installments, the respondent has got right to demand for total outstanding due and the respondent invoked the clause by demanding for `97,810/- as on 22.11.2006. However, the respondent had not surrendered the insurance policy bearing number 690394295 pertaining to the first appellant in order to close the loan account and it surrendered the insurance policy in the month of April,2007 for surrender value of `1,12,065/-.
22. The insurance policy belonging to the second appellant was matured during the month of March, 2008. The respondent received the proceeds of the policy a sum of `1,34,340/- and deducting therefrom an amount of `3,785/- the respondent has sent cheque for `1,30,555/-
to the second appellant on 18.08.2008 which the second appellant received under protest. The respondent appropriated the proceeds of the insurance policy belonging to the first appellant in the month of April,2007 and it had chosen to return the documents to the appellants on 5.06.2008. The learned counsel for the appellants contends that the documents were returned to the appellants after much pursuation and repeated demands by a letter which was antedated. Even if it is considered that the respondent had returned the documents to the appellants in the month of June,2008 it would amount to deficiency in service on its part as the obligation cast upon it to return the documents immediately after the loan amount was received was not discharged.
23. The appellants claimed the amount mentioned as under:
i) Approximate excess amount collected by the opposite party over and above the eligible rate of interest. Rs.1,50,000.00
ii) Amount collected towards premiums Rs. 21,369.00
iii) Interest on Rs.21,369.60 @ 24% p.a. from 21.4.07 till 2.6.09 Rs. 10,862.00
iv) Approximate loss of benefits Rs.1,00,000.00
v) Interest on the maturity amount Rs.1,34,340/- from 1.4.08 till 18.8.08 @ 24% p.a. Rs. 12,278.00
vi) Difference of amount payable on the matured policy amount payable by the O.P. Rs. 3,785.00
vii) Interest on Rs.3,785/- from 19.8.08 Rs. 714.00 till 2.6.09 @ 24% p.a.
viii) Compensation for causing mental agony and financial hardship Rs.4,00,000.00
ix) Costs of the complaint Rs. 10,000.00
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Total Rs.7,09,008.00
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24. As regards the excess collected amount, no doubt the respondent is liable to refund it to the appellants subject to the attending facts and circumstances. The appellants executed loan offer letter on 4.07.1991. Till the year,2003 the appellants had not chosen to seek for details of their loan payment particulars. The housing loan charged by commercial banks was fluctuating and at no point of time it could be said that the rate of interest remained stable. The calculation made by the appellants as to excess payment of amount on the premise of floating rate of interest @7.5% is not made on the basis of any tenable evidence. As such the excess amount collected by the respondent has to be calculated by the respondent.
25. The appellants are entitled to the amount received towards premium by the respondent a sum of `21,369/-. We do not propose to award interest on the amount or interest on maturity amount of `12,278/-as we are inclined to award compensation.
26. Insofar as the amount claimed as compensation, the Supreme Court held in State of Gujarath vs Shantilal Mangaldas AIR 1969 SC 634 that compensation to mean..In ordinary parlance the expression compensation means anything given to make things equivalent; a thing given to or to make amends for loss recompense, remuneration or pay, it need not therefore necessarily in terms of money. The phraseology of the Constitutional provision also indicates that compensation need not necessarily be in terms of money because it expressly provides that the law may specify the principles on which, and the manner in which , compensation is to be determined and given . If it were to be in terms of money along, the expression paid would have been more appropriate.
27. In Charan Singh vs Healing Touch Hospital and others 2000SAR(Civil) 935 the Apex Court stressed the need of balancing between the compensation awarded recompensing the consumer l and the change it brings in the attitude of the service provider. The Court held While quantifying damages , consumer forums are required to make an attempt to serve ends of justice so that compensation is awarded, in an established case, which not only serves the purpose of recompensing the individual, but which also at the same time aims to bring about a qualitative change in the attitude of the service provider. Indeed calculation of damages depends on the facts and circumstances of each case. No hard and fast rule can be laid down for universal application. While awarding compensation, a Consumer Forum has to take into account all relevant factors and assess compensation on the basis of accepted legal principles, on moderation. It is for the Consumer Forum to grant compensation to the extent it finds it reasonable, fair and proper in the facts and circumstances of a given case according to established judicial standards where the claimant is able to establish his charge.
28. Taking into consideration of the circumstances we award an amount of Rs.30,000/-
towards compensation.
29. In the result, the appeal is allowed setting aside the order of the District Forum.
Consequently, the complaint is allowed. The opposite party is directed to pay the excess collected amount and refund the amount of `21,369/- collected toward premium of the insurance policy as also pay an amount of `30,000/- towards compensation and `3,000/- towards costs. Time for compliance four weeks.
Sd/-
MEMBER Sd/-
MEMBER Dt.16.08.2012 KMK*