ORDER

SRI.H.R. SRINIVAS.  PRESIDENT

1.     This is the Complaint filed by the Complainants against the Opposite Parties (herein referred to as OPs) under section 35 of the Consumer Protection Act 2019 for the deficiency in service and unfair trade practice on the part of OP in collecting additional installments from September 2016 onwards and refund the same along with interest at 18% per annum on the accumulated EMI of Rs.13,03,620/- in respect of the three loans obtained by him from OPs and for damages of Rs.1,00,000/- for causing him to undergo mental agony and causing nuisance by sending collection agent s to his house who threatened him and his family members and to award towards litigation expenses and for such other reliefs as the Hon’ble District Commission deems fit.

2.     The brief facts of the complaint are that; complainant borrowed home loan of Rs.21,66,520/- under two loan accounts. 1^st loan account for Rs.18,62,520/- which was disbursed on 31.12.2003 at the interest rate of 7.25% per month and EMI being 144 months of Rs.19,403/- and the 2^nd loan of Rs.3,04,000/- the interest @ 7.25% with EMI of Rs.3167 for the period of 144 months. Again during September 2006, he was sanctioned another sum of Rs.Rs.5,42,850/- towards the home loan with interest at 11% per annum payable in 120 EMI’s of Rs.7,478/-.  He was paying the monthly EMI’s regularly without default. All of a sudden OP increased the installments (EMI) from 144 to 208, in respect of 1^st loan, from 144 month to EMI in respect of 2^nd Loan and from 120 EMI to in respect of 3^rd Loan,  when he sought the rational behind such action OP did not reply the same. Without informing the complainant OP arbitrarily decided to enhance the number of installments. When the same was requested for an explaination there was no convincing responce from OP in increasing the installments. 

3.     By enhancing the number of installments by 64 EMI’s he had to pay Rs.11,54,816/- towards the 1^st loan. Whereas he has already paid Rs.35,69,186/- in respect of the same, and Rs.5,78,459/- in respect of the 2^nd loan and Rs.11,29,337/- in respect of the 3^rd loan up to February 2020. The enhancement of additional EMI’s by OP is arbitrary, illegal, without consent and basis.  He has sent many letters to OP seeking explanation and reason for such an enhancement, but no reply has been sent by OP. The term of the loan ended during November 2016 and by that time Op should have closed the loan account as complainant had paid the entire amount as per the sanction letter. 

4.     Taking the physical condition and inconvenience of the complainant, Ops harassed the complainant to the maximum extent. None of the officers have taken seriously the grievance of the complainant.  On 01.07.2019 OP sent a communication wherein they have intimated that the rate of interest comprises cost of fund, cost of operation/credit card margin termed as bench mark rate and margin.  The RBI’s reporate is the cost of fund to the bank as RBI lends money to the bank at that particular rate of interest. The cost of funds for the bank depends on the RBI Reporate, there cannot be any other calculation in respect of the interest.  By miscalculation against the terms of the loan sanction, OPs have collected additional EMI’s of 49, 48 and 40 installments till February 2020 in respect of 1^st and 2 and 3^rd Loan.

5.     Even OP tried to invoke ‘SARFAESI Act’ which is highly unprofessional, unfair trade and deficiency in service. Op cannot take law in to its hand to collect more money under threat. A legal notice was also issued to the OP. OPs are expecting more money by increasing number of EMI’s. By extending number of EMI’s OPs compelled the complainants to pay more money.  It is stated by RBI that the banks are not passing the benefit of change of rate of interest to its customer, is a clear case of violation of regulation and thereby OPs are making undue profit in housing loan business.  OP has no power to change the rate of interest which is not at all part of the loan agreement to charge extra tax.  Initially, the change of EMI was only 2 or 3 months i.e. 144 to 150.  Again in the year 2017, the installment was increased to 175 which has no rational to the reporate.  OP is bound to keep the accounts in a clean and transparent manner.  By enhancing the number of EMI’s OP squeezes the wealth and health of the customers and borrowers.  It is highly unethical, illegal and against to the morality.  He has to issue a legal notice questioning the enhancing the EMI’s which require scrutiny of the entire loan account. Hence prayed the commission to allow the complaint.

6.     Upon the service of notice, OP-1, 2 and 3 appeared before the commission through their advocate and filed the version by OP-1 adopted by OP-2 and 3. In the version filed, it is contended that the complaint filed is false, no grounds made, vexatious, liable to be dismissed in limine. There is no cause of action mentioned in the complaint and further the complaint is barred by limitation.  As per the averments, the repayment of the loan to be completed over during September 2016, whereas the complaint is filed on 07.03.2020 which is clearly barred by time prescribed under Section 69 of the Consumer Protection Act 2020.  Hence filing of the complaint beyond two years of the cause of action, is liable to be dismissed in the very beginning. 

7.     Merely writing letters to OP bank do not give raise any fresh cause of action. Complainant approached OP on various occasions seeking home loan facility. For each loan sanctioned, a separate application was obtained. After due verification of the application a sum of Rs.18,62,520/- was sanctioned on 30.08.2003 under loan account No.LBBNG00000540338 with a floating rate of interest at 7.25%.  The 2^nd loan of Rs.3,04,000/- was sanctioned on 31.01.2004 with loan account No. LBBNG00000685952 with floating rate at 7.25% and the 3^rd loan of Rs.5,42,000/- at the rate of 11% floating interest. Since the rate of interest is a floating one it is subject to fluctuation as per the guidelines of the RBI.

8.     Complainant has executed the loan agreement, in respect of the three loans agreeing to repay the same in EMI’s and have affixed signature.   The repayment of each loan was by way of auto debit from his SB Account No.000201045556. Complainant did not ensure sufficient amount in his account to honour the EMI mandate. Hence for insufficient funds the mandate was dishonoured, for which extra charges were levied. Since the complainant defaulted in payment of the EMI’s, it became NPA and the loan was recalled on 25.04.2018.  Since the complainant did not pay the amount in spite of recall notice, it has to issue notice under Section 13(2) of the SARFAESI Act demanding the complainant to pay Rs.10,37,766/- on 10.05.2018.  Inspite of it, as on the date of filing of the version also complainant did not pay the amount and regularize the loan account. Instead of making the payment towards the loan account, complainant has filed this complaint making false allegations. OP has reserved his right to take suitable action to recover the amount.  On every occasion whenever the interest rate was changed the same was intimated to the complainant by sending him the interest reset letter.  Complainant was aware of the change of rate of interest and also the appropriation of EMI’s towards the principle and interest and also obtained interest certificate to claim income tax rebates every year. 

9.     The rate of change of interest is calculated in respect of floating rate of interest as per the guidelines of the RBI.  The same depends on the market interest rates.  If the market rate increases, customer repayment amount increases. When the interest rate falls the amount of payment will also fall. The floating rate of interest is made up of two parts. The index and spread. The complainant is not entitle for the refund of the amount claimed in the prayer column as he is seeking refund of the installments paid from 2016 onwards along with interest.   The present complaint is not maintainable as this complaint is filed prior to the new Act of 2019 coming into effect wherein in the earlier Act the jurisdiction of the consumer forum was only up to Rs.20,00,000/-. Hence this complaint cannot be entertained on the point of pecuniary jurisdiction. By denying each and every para of the complaint, OP prayed the Commission to dismiss the complaint with exemplary cost.

10.   In order to prove the case, both parties have filed their affidavit evidence and produced documents. Arguments Heard. The following points arise for our consideration:-

1) Whether the complainants have proved deficiency in service on the part of the Opposite Parties?

2) Whether the complainant is entitled to the relief prayed for in the complaint?

11.   Our answers to the above points are:-

POINT NO.1 :   In the Affirmative.

POINT NO.2 :   Partly in the Affirmative.

                        For the following.

REASONS

POINT No.1:-

12.   On perusing the complaint, version, documents, evidence filed by the both the parties, it becomes clear that, complainant borrowed loan of Rs.18,62,520/- Rs.3,04,000/- and Rs.5,42,850/- a totaling = 27,09,370/- to be paid in 144 installments with interest of 7.25% in respect of 1^st two loan accounts, in 120 monthly installments in respect of the 3^rd loan with 11% in respect of the 3^rd loan.

13.   It is the specific case of the complainant that, he has paid the installment as and when it became due along with interest and the entire loan amount ought to have been completed in the said installments, whereas, OPs received 166 installments in respect of first loan, 165 installment in respect of second loan and 133 installments in respect of the third loan against 144 installments of 1^st and 2^nd loan and 190 installments in respect of the 3^rd loan. It is also his case that, the loan amount borrowed from him in respect of three loans is Rs.27,09,370/-. Whereas amount paid by him is Rs.45,22,521/- and a sum of Rs.18,13,151/- has been paid as interest component. Inspite of it, OPs arbitrarily without bringing to his knowledge and obtaining his consent, has enhanced the installments from 144 in respect of the 1^st loan to 208, and 48 installments in addition to 144 installments in respect of the second loan and 40 installments in addition to the 120 installments against the 3^rd loan which is highly arbitrary and much against to the loan sanction letter. 

14.   He has also corresponded with the OPs in respect of levying the higher interest which is to be noted here that the all the loans granted sanctioned and disbursed to the complainant is towards the housing loan on a floating rate of interest.  It is to be noted here that the rate of interest in respect of housing loan has been frequently changed in view of the RBI guidelines. The same has to be passed on to the customer/the borrower as and when change was affected without waiting for the borrower to make representation as held in WRIT PETITION NO.42815/2019 (GM-RES) IN MR.SHEKAR BS VS CHIEF GENERAL MANAGER SYNDICATE BANK AND ANOTHER ON THE HON’BLE HIGH COURT OF KARNATAKA AT BENGALURU. 

15.   Whenever, there is an increase in the rate of interest than the agreed once either the borrower has to pay more amount per EMI or else to keep the same amount and increase the number of EMI’s.  In case the number of EMI’s are increased as has been done in this case, the bank would get the benefit out of it by way of interest for the balance of amount throughout the said period.  In case, there is a decrease in the interest rate than if the same amount of installment is continued, than there is every likelihood the loan being cleared much earlier than the prescribed EMI’s.  As per the correspondences made by the OP with the complainant there is enhancement of the rate of interest even during 2016, 2017, 2018 and 2019, though the RBI has reduced the rate of interest drastically.  It is also mentioned in the letter dated: 25.04.2018 that whenever increase in the rate of interest the increase in the tenure of the loan to their customer subject to permissible limits in order to avoid burden on the customer with higher EMI and the same has been mentioned in the loan agreement duly signed by the borrower at the time of disbursement. In case the borrower wishes to reduce the tenure, he may opt to increase the Emi or make a part payment or a combination of both. Whenever, there is an increase or decrease in the interest rate change in tenure or EMI the reset letter were sent to the borrower by the bank to the communication address for information. 

16.   The reset of bench mark will be at interval of one year and six months. Borrower has to reprise the loan account to new bench mark and margin. Since the complainant has not paid the amount from April 2018 onwards, and some of the EMI’s were missing, additional penalty or overdue charges were levied.  OP has also admitted that they have received the installments of 166 each in respect of the first two loans, and 134 in respect of the 3^rd loan against 210, 208 and 176 installments. Hence they had to issue legal notice demanding to pay the remaining amount.

17.   OP has also produced number of letters informing the rate of change of interest and also the interest certificate every year to facilitate the complainant to claim rebate of income tax in respect of paying the interest and principle of the housing loan with the income tax department. 

18.   It is the bounden duty of the OP to obtain the consent of the borrower in respect of enhancing the tenure of the EMI’s or his request to pay higher amount of the installment to cover the interest portion whenever it was hiked. On perusing the letters written by the complainant the interest has been exorbitantly levied to the extent of  13.5% during October 2016 , 13.1% during November 2015, 12.85% during May 2017, 12.6% during December 2017 and 12.5% during April 2018, September 2018, December 2018. Whereas the interest in respect of the home loan has been reduced by the RBI and the same has to pass over to the consumers/borrowers as the RBI has kept the reporate i.e. the interest payable by the bank to the amount borrowed from it by the RBI at a lower level. When considering this the interest charged and the extension of EMI”s from 144 to 210 and 208 and from 120 to 175 is highly unbecoming on the part of the OPs as by doing so it would get more interest from the complainant which is unethical unfair trade practice. Hence we answer POINT NO.1 IN THE AFFIRMATIVE.

POINT NO.2:

19.   It is to be noted here that, though initially the agreement between the parties was to pay the principle and interest in installment of 144 EMI’s in respect of the 1^st two loans and in 120 months in respect of the 3^rd loan. As already pointed out, if there is an increase in the rate of interest naturally the outgo towards the principle will be less and towards the interest will be more if the same amount of installment is continued.  Then there will elongation of the tenure of the payment of the loan.  In this case the complainant has not enhanced the installment amount whenever there is a change of rate of interest on the higher side which has resulted in short payment, that means the amount for the borrowed loan could not be cleared within 144 EMI’s. 

20.   In view of this, complainant has not placed sufficient material before the commission to show that he has paid Rs.13,03,620/- additionally, over the amount due to the OP in respect the loan borrowed by him.

21.   Further OPs ought to have properly assessed the rate of interest payable by the complainant as and when there was a change in the rate of interest and ought to have reset the installments and the tenure with the consent of the borrower which it has not done.  Had the OP done the same this situation would not have arisen.  Hence we are of the opinion that OP to directed to redo the calculation from the very inception of the sanctioning and disbursing the loan to the complainant and calculate the interest as and when raised or lowered and adjust in the monthly installments paid towards the interest and the principle amount and to strike a balance accordingly till 144 installments in respect of the 1^st two loans and till 112 installments in respect of the 3^rd loan. Afterwards, if the payment made by the complainant fell short, to pay the interest and the principle, then the complainant has to make good the same. In this direction OP has to take into consideration the additional installment paid by the complainant.

22.   It is to be noted here that, OP has issued a letter recalling the loan amount dated 25.04.2018 wherein it is mentioned that, a total sum of Rs.10,37,643/- is still due /outstanding as on 23.04.2018 and called upon the complainant to pay the said amount within 7 days failing which the matter would be delt with under SARFAESI Act treating the loan as a Non-performing asset.  It is also mentioned therein that in respect of first loan the balance is Rs.6,67,938/- in respect of 2^nd loan Rs.2,55,220/-, and in respect 3^rd loan Rs.1,14,485/-.

22.   As pointed above, OP has to calculate the amount and inform the complainant as to exactly what is the amount payable for which complainant has to verify the same and pay the balance of amount to the Op to clear the loan amount.  In this direction we direct OP to file the memo of calculation to this commission within 30 days from the date of receipt of this order. Further making the complainant to approach this commission by engaging his advocate by spending his time, money and energy we direct the OP to pay a sum of Rs.10,000/- towards litigation expenses and Rs.25,000/- as damages for causing him mental agony physical hardship and strain. Hence we answer POINT NO.2 PARTLY IN THE AFFIRMATIVE and  pass the following:

ORDER

1. The complaint is partly allowed with cost.
2. OPs are jointly and severally hereby  directed to file the memo of calculation to this commission within 30 days from the date of receipt of this order as printed in Para 21 of this order.
3. OPs are directed to pay Rs.25,000/- towards damages for mental harassment and agony and Rs.10,000/- towards cost of the litigation expenses to the complainants.
4. OP is hereby directed to comply the above order within 30 days from the date of receipt of this order and submit the compliance report to this Commission within 15 days thereafter.
5. Send a copy of this order to both parties free of cost.

Note: You are hereby directed to take back the extra copies of the Complaints/version, documents and records filed by you within one month from the date of receipt of this order.

(Dictated to the Stenographer over the computer, typed by him, corrected and then pronounced by us in the Open Commission on this day the 08^th day of MARCH 2022)

MEMBER                                PRESIDENT

ANNEXURES

1. Witness examined on behalf of the Complainant/s by way of affidavit:

Copies of Documents produced on behalf of Complainant/s:

Ex P1: Copy of the loan recall notice dated 25.04.2018..

Ex P2 to P4: Copy of the term and condition of loan account.

Ex. P5: Copy of the  letter addressed by complainant to OPs.

Ex P6: Copy of the calculations arrived by complainant.

Ex P7: Communication from OP.

Ex P8: Copy of calculations arrived in respect of loan account.

Ex P9: Copy of repayment schedule by OP.

Ex P10: Copy of calculations arrived in respect of loan account.

Ex P11: Copy of repayment schedule by OP.

Ex P12: Copy of calculations arrived in respect of loan account.

Ex P13: Copy of repayment schedule by OP.

Ex P14: Copy of calculation explaining cost of fund and cost of operation.

Ex P15: Copy of loan agreement.

Ex P16: Copy of interest and payment up02/2020.

Ex P17: Copy of calculation of interest and payment upto 11/2020.

2. Witness examined on behalf of the Opposite party/s by way of affidavit:

RW-1: Sri Premjith R, Manager of OPs Bank.

Copies of Documents produced on behalf of Opposite Party/s

Ex R1: Power of attorney executed by OP.

Ex R2: Copy of the letter in respect of rate of change of interest.

Ex R3: Copy of reply issued by OP.

MEMBER                        PRESIDENT

RAK*