National Consumer Disputes Redressal
Icici Bank Limited vs Karam Chand & Anr. on 27 August, 2019
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 2954 OF 2015 (Against the Order dated 20/08/2015 in Appeal No. 1166/2014 of the State Commission Punjab) 1. ICICI BANK LIMITED ICICI TOWER, NBCC PALACE, BHISM PATAMAH MARG PRAGATI VIHAR THROUGH ITS AUTHORSIED RESPRESENTATIVE MR. ABHISHEK MISHRA NEW DELHI 11003. ...........Petitioner(s) Versus 1. KARAM CHAND & ANR. S/O SH. NAND RAM R/O HOUSE # B-XIII/211, BABA FARID NAGAR, BARNALA, TEHSIL AND DISTRICT BARNALA, PUNJAB - 148101. 2. KAMLA DEVI W/O KARAM CAHND & ANR R/O HOUSE # B-X111/211, BABA FARID NAGAR, BARNALA, TEHSIL AND DISTRICT BARNALA, PUNJAB - 148101. ...........Respondent(s)
BEFORE: HON'BLE MRS. JUSTICE DEEPA SHARMA,PRESIDING MEMBER
For the Petitioner : Ms. Chetna Bhalla, Advocate For the Respondent : Mr. Himanshu Gupta, Advocate
Dated : 27 Aug 2019 ORDER
1. The present revision petition has been filed against the order dated 20.8.2015 in appeal No.1166/2014 of the petitioner against the order dated 9.7.2014 of the District Forum in complaint No.46/2014 of the respondents.
2. The admitted facts are that the complainants/respondents (hereinafter called "the complainants") took a loan of Rs.4 lakh from the petitioner, which was duly sanctioned in their favour and was repayable in 120 installments of Rs.5014/- which was calculated @ 8.75% p.a. The complainants also mortgaged their house against the said loan.
3. The case of the complainants was that the petitioner had shown an amount of Rs.6,31,764/- as payable by them though they were liable to pay only a sum of Rs.6,01,680/-. Their claim was that it has been done by the opposite party with malafide intention to deceive the complainants. When the complainants approached the petitioner, they also threatened them to auction their house in public auction. Despite several visits to the office of the petitioner, 'no dues certificate' was not issued and the documents submitted by
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the complainants against the loan, were also not returned. The petitioner also recovered an excess amount of Rs.30,084/- from them and their request for return of the same was of no consequence. On these contentions, the complaint was filed by the complainants.
4. The only defence taken by the petitioner was that as per the loan agreement, which was signed by the complainants 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. Parties led their evidences before the District Forum. The District Forum after going through the evidences on record gave its finding whereby it allowed the complaint and held as under: -
"It is specifically argued by the Advocate for the CC that it is nowhere mentioned in the loan agreement Ex.-C-1 that the rate of interest is floating and is changeable. We feel that it is also not the case of the OPs that the rate of interest is being charged on floating rates, rather the loan is also taken on fixed rate of interest.
Admittedly, at the time of granting the loan the rate of interest was charged from the CCs at the rate of 8.75% per annum.
We feel that there is no clear column, in column (E) of the loan agreement Ex. C-1 where the interest is decided on floating basis. We further feel that the loan was granted to the CCs absolutely on fixed rate of interest i.e. 8.75% per annum. It is also not the case of the OPs that CC were defaulters or did not pay the instalments on time.
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It is pertinent to mention here that during the arguments OPs have failed to clear in the Forum that how much rate of interest is being charged from the CCs at this stage. Admittedly, CCs have paid all the instalments of loan as per the agreement as this fact is not being denied by the OPs in their version. We further feel that OPs have miserably failed to prove that the amount demanded from the CCs was on account of any variation in the rate of interest. We feel even if OPs are entitled to change the rate of interest it is incumbent upon them to inform the CCs or at least give a notice or prior information and we feel that it is mandatory on the part of OPs.
...
We feel that OPs have failed to bring anything in the version that how much amount is due towards the CC at this stage and in what manner the amount is calculated. The OPs even failed to disclose the outstanding amount.
We further feel that OP have tried to conceal material facts from this forum which further proves deficiency in service on their part. We have perused the entire version filed by the OPs. There is nothing in the version of the OPs that how after a gap of 11 years from the date of sanctioning of the loan OPs demanded more money despite the fact that CCs had paid all the monthly installments and how they retained the documents of the CCs and did not issue the no due certificate to them the version of the OPs is totally silent on the allegation of the CC.
It is pertinent to mention here that even manager of the OPs failed to give reply of the legal notice sent by the CCs. We are surprised that why the OPs are bent upon to withhold or conceal the material facts from the CCs as well as from this Forum. No cogent, reliable and trustworthy evidence brought on record by the OPs that how any type of amount is outstanding against the CCs despite the fact that he has paid all the 120 installments in time. Further there is no clear cut column in the agreement Ex. C-1 that the rate of interest charged on floating basis. We further feel that even if the rate of interest was to be charged on floating basis it was -5- incumbent upon the OPs to communicate the CCs time to time about the variation in the rate of interest.
It is admitted fact that CC had been paying the installments to the tune of Rs.5,014/- per annum without any default."
5. In the appeal wherein this order is impugned by the petitioner, after hearing the arguments, the State Commission also dealt with the issue whether the rate of interest on the sanctioned loan was floating rate of interest or a fixed rate of interest i.e. 8.75% p.a. and accordingly EMIs were settled, the argument of the petitioner that it was a floating rate of interest, was dismissed on the basis of the evidences led by the parties and after perusing the record and hearing the arguments of learned counsel for both the parties, the State Commission has held as under: -
"10. No doubt that the loan was sanctioned in the year 2003 but the last payment made by the complainant according to the statement of account Ex. OP-2, the last cheque bouncing charges were added on 3.4.2014. Ultimately, the complainants calculated the amount what was due against them as per the EMI and what amount has been charged by the OPs only then they came to know that excess amount has been charged by the OPs and accordingly he filed this complaint on 9.7.2014. Therefore, the complaint was within the limitation. The counsel for the appellants/OPs was unable to convince before this Commission how the complaint is not within limitation.
12. It has been argued by the counsel for the appellants that the District Forum has wrongly observed to charge the interest @ 8.75% p.a. only. The loan was not disbursed at fixed rate of interest, rather, it was on a floating adjustable interest rate and pri-EMI was fixed 8.75% and the statement of account Ex. C-5 also -6- shows that there was variation in the rate of interest from time to time. It had decreased as well as increased. The same is apparent from the schedule given by the Ops. The rate of interest was 8.75% upto 1.1.2004 then it deceased to 8.25% from 1.1.2004 to 1.1.2005 and from 1.2.2005, it was 8.75% upto 1.7.2005 and from 2.7.2005 it was 9.25% upto 1.4.2006. From 1.5.2006 to 1.7.2006, it was 9.75% w.e.f. 1.8.2006 to 1.1.2007 10.75%, 1.2.2007 to 1.4.2007 11.25%, 1.5.2007 to 1.6.2008 13.25%, 1.7.2008 to 1.10.2008 14%, 1.11.2008 to 1.1.2009 14.75%, 1.2.2009 to 1.7.2009 14.25%, 1.8.2009 to 1.10.2010 13.25%, 1.11.2010 to 1.10.2011 13.75%, 1.1.2011 to 1.4.2011 14.25%, 1.5.2011 to 1.7.2011 15%, 1.8.2011 to 1.10.2011 15.50% and so on and it increased upto 16.25% and accordingly, the amount was claimed by the Ops from the complainant. It has been argued by the counsel for the respondents/complainants that even if we take that the rate of interest was floating rate of interest then according to RBI instructions, the same cannot be increased without notice to the loanee so that the loanee may decide whether he wants to continue his loan account with the same bank or wanted to shift to some other bank. Whereas the counsel for the appellants has stated that according to judgment of the Hon'ble Supreme Court reported in (2003) 2 SCC 15 Syndicate Bank versus r. Veeranna and Others" in which it was observed that if agreement makes express provision for enhancement of rate of interest, the bank need not put borrower on notice to charge higher rate of interest on the basis of the agreement. He has also referred to the Hon'ble Punjab & Haryana High Court in Civil Writ Petition No. 21186 of 2008 Mrs. Surender Kaur versus Punjab Financial Corporation, decided on 12.1.2010 wherein it was observed that Courts are not resorts to provide holidays against enforcements of loan. He has also relied upon the judgment of the Hon'ble Supreme Court in Civil Appeal No. 4214 of 1982 Corporation Bank Vs. D.S. Gowda and Anr., decided on 20.6.1994 : (1994) 5 SCC 213 wherein it has been observed that Courts are precluded from subjecting transactions entered into between banks and borrowers from scrutiny. They cannot reopen any account maintained by the Bank relating to transaction with its customers. However, if rate of interest is in violation of the RBI directions then Courts disallow such excess interest and can give relief to party.-7-
In case, there is increase in FRR from time to time whether it can be followed without notice to the customer. A reference can be made to the judgment dated 7.7.2008 passed by the Hon'ble National Commission in C.C. No. 51 of 2007 " Awaz, Punita Society, Ambawadi, Ahmedabad versus Reserve Bank of India" wherein question arose whether RBI can issue any directions with regard to rate of interest to the other banks. Role of the RBI has been mentioned under Section 35-A of the Banking Regulation Act, 1949, which provided as under:-
"35-A. Power of Reserve Bank to give directions.- (1) Where the Reserve Bank is satisfied that-
in the public interest; or (aa) in the interest of baking policy; or to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors or in a manner prejudicial to the interests of the banking company; or to secure the proper management of any banking company generally, it is necessary to issue directions to banking companies generally or to any banking company in particular, it may, from time to time, issue such directions as it deems fit, and the banking companies or the banking company, as the case may be, shall be bound to comply with such directions.
(2) The Reserve Bank may, in representation made to it or on its own motion, modify or cancel any direction issued under sub-section (1), and in so modifying or cancellation shall have effect."
And that question came for the consideration before the Hon'ble Apex Court in the case "Central Bank of India vs. Ravindra & Ors. (2002) 1 SCC 367 wherein the Hon'ble Supreme court observed as under:
"50. Though we have answered the question of law before us, but we cannot leave the matter at that alone without sounding notes of caution, lest our view of the law should be misconstrued and misapplied. Before we do so, it would be appropriate to refer to the decision of this Court in 'Corporation Bank vs. D.S. Gowda' in some detail.-8-
51. The Banking Regulation Act, 1949 empowers the Reserve Bank on it being satisfied that it is necessary or expedient in the public interest or in the interest of depositors or banking policy to do so, to determine the policy in relation to advances to be followed by banking companies generally or by any banking company in particular and when the policy has been so determined it has a binding effect. In particular, the Reserve Bank of India may give directions as to the rate of interest and other terms and conditions on which advances or other financial accommodation may be made. Such directions are also binding on every banking company. Section 35 also empowers the Reserve Bank of India in the public interest or in the interest of banking policy or in the interest of depositors (and so on) to issue directions generally or in particular, which shall have binding with effect from 15.2.1984. Section 21-A has been inserted in the Act, which takes away power of the Court to reopen a transaction between a banking company and its debtor on the ground that the rate of interest charged is excessive. The provision has been given an overriding effect over the Usury Loans Act, 1918 and any other provincial law in force relating to indebtedness."
14. In para No.55 of the judgment, it was further observed as under: -
(5) The power conferred by Sections 21 and 35A of the Banking Regulations Act, 1949 is coupled with duty to Act. Reserve Bank of India is the prime banking institution of the country entrusted with a supervisory role over banking and conferred with the authority of issuing binding directions, having statutory force, in the interest of public in general and preventing banking affairs from deterioration and prejudice as also to secure the proper management of any banking company generally. The Reserve Bank of India is one of the watchdogs of finance and economy of the nation. It is, and it ought to be, aware of all relevant factors, including credit conditions as prevailing, which would invite its policy decisions. RBI has been issuing directions/circulars from time to time which, inter alia, deal with rate of interest which can be charged and the periods at the end of which rests can be struck down, interest calculated thereon and charged and capitalised. It should continue to issue -9- such directives. Its circulars shall bind those who fall within the net of such directives. For such transaction which are not squarely governed by such circulars, the RBI directives may be treated as standards for the purpose of deciding whether the interest charged is excessive, usurious or opposed to public policy and ultimately the Hon'ble Apex Court laid down as under:
(a) The Apex Court has noticed instances of unscrupulous, unfair and unhealthy dealings without generalizing the same. The Court has specifically observed that instances of unscrupulous, unfair and unhealthy dealings can be multiplied. But such issues are left open to be adjusted upon in appropriate casers as and when they actually arise for decision. The present case is an instance of charging usurious rate of interest, which is unfair trade practice.
(b) The Banking Regulations Act, 1949 empowers Reserve Bank to lay down the policy in the public interest and it has binding effect on the banks. The Reserve Bank of India is entitled to give directions as to rate of interest to be charged and other terms and conditions on which advances or other financial accommodation may be made.
(c) The power conferred by Sections 21 and 35-A of the Banking Regulations Act, 1949 is coupled with duty to Act. the Apex Court considered the RBI as a watching of finance and economy of the nation, and presumed that it ought to be aware of the relevant factors including the prevailing credit conditions, which would invite its policy decision.
(d) Charging of interest should be reasonable. Further, penal interest can be charged only once for one period of default and therefore cannot be permitted to be capitalized. It would be opposed to public policy.
(e) The Court has specifically stated that unscrupulous banks may resort to charging of interest even on monthly rests. It is, therefore, required to be clarified that such unscrupulous banks should not be permitted to charge interest on credit cards on monthly rests.
(f) The Court has observed that most of the banks press into service long-running documents wherein the borrowers fill in the blanks, at times without caring to read what has -10- been provided therein, and bind themselves by stipulations articulated by the best of legal brains. In our view such practice also would be an unfair trade practice.
(g) Further, despite our repeated suggestions, the learned counsel for the RBI failed to find out what could be considered as usurious rate of interest on the basis of which the RBI had issued circulars to banks. There was no response except to say that with regard to rate of interest RBI has deregulated the same.
15. The RBI has issued its circulars from time to time, how the rate of interest is to be changed. In its circular No.DBO D.Dir. BC.5/13.03.00/2006-07 dated 1.7.2006, the loans up to Rs.2 lakh carry the prescription of not exceeding Benchmark Prime Lending Rate (BPLR) and on loans above Rs.2 lakh, banks are free to determine the rate of interest subject to BPLR and spread guidelines. In the same circular dated 1.7.2006, it has been mentioned how the interest rates are to be fixed, is referred as under: -
"Banks have the freedom to offer all categories of loans on fixed or floating rates, subject to conformity to their Asset-Liability Management (ALM) guidelines. In order to ensure transparency, banks should use only external or market-based rupee benchmark interest rate for pricing of their floating rate loans products. The methodology of computing the floating rates should be objective, transparent and mutually acceptable to counterparties. Banks should not offer floating rate loans linked to their own internal benchmarks or any other derived rate based on the underlying. This methodology should be adopted for all new loans. In the case of existing loans of longer/fixed tenure, banks should reset the floating rates according to the above method at the time of review or renewal of loans accounts after obtaining the consent of the concerned borrower/s"
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 abovesaid method after obtaining the consent of the concerned borrower. The same provision was -11- 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 abovesaid 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 floating rate of interest of loans. In another judgment Hon'ble National Commission reported in 2012(4) CPJ 415 (NC) IDBI Bank Ltd. (M/s) versus 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 theRBI 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."
-12-6. This order is impugned before me. It is settled principle of law that under Section 21 (b) of the Consumer Protection Act, 1986. This Commission has a limited jurisdiction. The Commission is not required to re-appreciate and reassess the evidences and then reach to its own conclusion on the facts of the case. The limited jurisdiction vested in this Commission under Section 21 (b) of the Act is to see whether there is any jurisdictional error or miscarriage of justice. The Commission cannot take a different view than the view taken by two Foras below and which are concurrent in nature. It has been so held by Hon'ble Supreme Court in the case of Mrs. Rubi (Chandra) Dutta Vs. M/s United India Insurance Co. Ltd. 2011 (3) Scale 654. The relevant paragraph is reproduced as under: -
"Also, it is to be noted that the revisional powers of the National Commission are derived from Section 21 (b) of the Act, under which the said power can be exercised only if there is some prima facie jurisdictional error appearing in the impugned order, and only then, may the same be set aside. In our considered opinion there was no jurisdictional error or miscarriage of justice, which could have warranted the National Commission to have taken a different view than what was taken by the two Forums. The decision of the National Commission rests not on the basis of some legal principle that was ignored by the Courts below, but on a different (and in our opinion, an erroneous) interpretation of the same set of facts. This is not the manner in which revisional powers should be invoked. In this view of the matter, we are of the considered opinion that the jurisdiction conferred on the National Commission under Section 21 (b) of the Act has been transgressed. It was not a case where such a view could have been taken by setting aside the concurrent findings of two fora."-13-
7. Hon'ble Supreme Court has further held in the case of Lourdes Society Snehanjali Girls Hostel and Ors. Vs. H & R Johnson (India) Ltd. and Ors. (2016 8 SCC 286 as under:
"The National Commission has to exercise the jurisdiction vested in it only if the State Commission or the District Forum has failed to exercise their jurisdiction or exercised when the same was not vested in them or exceeded their jurisdiction by acting illegally or with material irregularity. In the instant case, the National Commission has certainly exceeded its jurisdiction by setting aside the concurrent finding of fact recorded in the order passed by the State Commission which is based upon valid and cogent reasons."
8. In the present case it is apparent that there is a concurrent finding of facts to the effect that the loan sanction to the complainants was of the nature of loan sanctioned at a fixed rate of interest @ 8.75% and the findings are based on the cogent evidences. Learned counsel has failed to point out any material on record which could show that the Fora below has exercised its jurisdiction wrongly orthere is a jurisdictional error or that the findings are perverse meaning thereby that not based on the evidence on record. No instance of miscarriage of justice has been pointed out. The revision petition has no merit and the same is dismissed with no order as to cost.
......................J DEEPA SHARMA PRESIDING MEMBER