Chandigarh

StateCommission

A/406/2014

Housing Development Finance Corporation Limited (HDFC) - Complainant(s)

Versus

Gaurav Aggarwal - Opp.Party(s)

Shekhar Verma

13 Feb 2015

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

                                                                 

First Appeal No.	:	406 of 2014
Date of Institution	:	31.12.2014
Date of Decision	:	13.02.2015

 

1. Housing Development Finance Corporation Limited (HDFC), Ramon House, H.T. Parekh Marg, Backbay Reclamation, Churchgate, Mumbai – 400020.
2. Housing Development Finance Corporation Limited (HDFC), SCO No.153-155, Sector 8-C, Madhya Marg, Chandigarh – 160008.

……Appellants/Opposite Parties.

Versus

Sh. Gaurav Aggarwal son of Sh. J. S. Aggarwal R/o H.No.2312-A, Sector 42-C, Chandigarh.

 

……Respondent/Complainant.

 

Appeal under Section 15 of the Consumer Protection Act, 1986.

 

BEFORE:   JUSTICE SHAM SUNDER (RETD.), PRESIDENT.

                SH. DEV RAJ, MEMBER.

 

Argued by: Sh. Shekhar Verma, Advocate for the appellants.    

Sh. Gurmohan Singh, Advocate for the respondent.

 

PER DEV RAJ, MEMBER.

              This appeal is directed against the order dated 14.11.2014 rendered by the District Consumer Disputes Redressal Forum-II, UT, Chandigarh (hereinafter to be called  as the District Forum only) vide which, it allowed the complaint  of the complainant and directed the Opposite Parties (now appellants) in the following manner:-

“12]   Hence, in the light of above observations, the present complaint of the Complainant deserves to succeed and the same is accordingly allowed against the Opposite Parties. The Opposite Parties are jointly & severally directed as under:-

 

[a]   To pay back Rs.20,284/- plus Rs.3993/- i.e. total Rs.24,277/- to the Complainant;

[b]   To pay Rs.15,000/- to the Complainant on account of deficiency in service, unfair trade practice and causing mental agony and harassment; 

[c]   To pay Rs.7,000/- as cost of litigation;

 

       The above said order shall be complied within 45 days of its receipt by the Opposite Parties; thereafter, they shall be liable for an interest @18% per annum on the amount mentioned in sub-para [a] & [b] of Para 12 above from the date of institution of this complaint, till it is paid, apart from cost of litigation of Rs.7,000/-.”  

 

2.           The facts, in brief, are that in the month of May 2010, the complainant approached Opposite Party No.2 (HDFC Limited) for a Housing Loan and entered into a Home Loan Agreement on 20.05.2010 (Annexure C-1), for the purchase of a residential plot at Sunny Enclave, Desu Majra, Kharar. It was stated that the type of loan granted by the Opposite Parties was “Residential Plot Purchase Loan-Dual Rate-Monthly Rest” and the total loan amount was Rs.11,11,000/- vide Loan Account No.569459460. It was further stated that the EMI of the loan amount was Rs.11,398/-, which was on reducing basis. It was further stated that in pursuance to the said home loan agreement, the complainant duly paid the EMIs. It was further stated that in the month of March 2014, the complainant made pre-payment of Rs.9,02,615/- vide demand draft No.649065 dated 21.03.2014, as per statement of loan account (Annexure C-2). It was further stated that the Opposite Parties, in an arbitrary and illegal manner, imposed prepayment charges of Rs.20,284/- on the complainant. It was further stated that the complainant approached them (Opposite Parties) and it was informed by the Opposite Parties that this was a policy laid down and, as such, the complainant had to pay such charges while making pre-payment of the loan amount.

3.         It was further stated that the aforesaid act of the Opposite Parties, in charging the pre-payment charges was in clear violation of the Rules and Regulations as laid down by the National Housing Bank Letter/Circular No.NHB(ND)/DRS/Pol-No.43/2011-2012 (Annexure C-4), according to which, no pre-payment levy or pre-closure charges should be levied on the borrowers. It was further stated that the account statement of  loan account of the complainant clearly showed that on 21.03.2014, simple interest on pre-payment charges was calculated to the tune of Rs.1,201/- and on 22.03.2014 to the extent of Rs.3,993/-. It was further stated that the complainant was forced to pay the said interest on pre-payment charges. He paid the same vide cheque No.39543. It was further stated that the aforesaid act of the Opposite Parties was illegal and amounted to mal-practice, which was also condemned by various judgments passed by the Hon’ble Supreme Court of India and the National Consumer Disputes Redressal Commission, New Delhi.  

4.           It was further stated that the aforesaid acts of the Opposite Parties, amounted to deficiency, in rendering service, as also indulgence into unfair trade practice. When the grievance of the complainant, was not redressed, left with no alternative, a complaint under Section 12 of the Consumer Protection Act, 1986 (hereinafter to be called as the Act only), was filed, directing the Opposite Parties to refund Rs.20,284/- charged as pre-closure charges plus Rs.1,201/- & Rs.3,993/- charged as interest thereon plus Rs.100/- as cheque dishonour penalty; Rs.50,000/- as compensation for mental agony and physical harassment and Rs.11,000/- as cost of litigation.

5.           The Opposite Parties, in their written version, admitted the grant of housing loan to the complainant as well as charging of pre-payment charges.  It was stated that as per the circular issued by National Housing Bank on 26.9.2011 (Annexure R-1), the loans for purchase of plots were to be classified as housing loans provided the loanee raised construction over the plot within three years from the date of disbursement of loan.  It was further stated that the circular dated 19.10.2011, relied upon by the complainant, clearly envisaged benefit of waiving prepayment charges only in case of housing loans. The Opposite Parties also referred to Master Circular dated 01.07.2013 (Annexure R-2) issued by the Reserve Bank of India. It was further stated that the complainant did not raise construction over the plot nor furnished any proof regarding construction of a house over the said plot, hence the Opposite Parties rightly charged the pre-payment charges. It was further stated that in the absence of any construction, the loan availed of by the complainant could not be termed as housing loan. It was further stated that during personal meetings with the complainant, this fact was made clear to him and he agreed to pay prepayment charges but he chose not to disclose it before the District Forum.

6.           It was further stated that after payment of prepayment charges and that too without any reservation, at this stage, the complainant was estopped in law to impugn the action taken by the Opposite Parties in terms of the valid concluded contract and statutory mandate issued by the Reserve Bank of India and National Housing Bank. It was further stated that the Opposite Parties did not charge interest over the pre-payment charges and the interest was charged on outstanding principal loan amount for the days of the month when the loan was repaid (Annexure R-4). It was further stated that neither there was any deficiency, in rendering service, on the part of the Opposite Parties, nor they indulged into unfair trade practice. The remaining averments, were denied, being wrong.

7.           The complainant filed replication wherein, he reiterated all the averments, contained in the complaint and repudiated the same, contained in the written version of the Opposite Parties. 

8.           The Parties led evidence, in support of their case.

9.           After hearing the Counsel for the parties, and, on going through the evidence, and record of the case, the District Forum, allowed the complaint, as stated in the opening para of the instant order. 

10.         Feeling aggrieved, the instant appeal, has been filed by the appellants/Opposite Parties.

11.         We have heard the Counsel for the parties and, have gone through the evidence, and record of the case, carefully. 

12.         The Counsel for the appellants/Opposite Parties submitted that prepayment charges could be imposed in accordance with Clause 2.8 of the agreement. He further submitted that in the application for housing loan, 2% charges were mentioned but that application was not on record. He further submitted that the application formed part of the Agreement. He further submitted that circular regarding non-payment of prepayment charges related to housing loan and not to loans for the plots.

13.         The Counsel for the respondent/complainant submitted that Clause 2.8 of Home Loan Agreement (Annexure C-1) relating to “Prepayment”, stipulated that “The Borrower shall be entitled to prepay the loan, either partly or fully, as per rules of HDFC including as to the prepayment charges, for the time being in force in that behalf.” He further submitted that as per National Housing Bank Circular No.NHB(ND)/DRS/Pol-No.43/2011-2012 dated 19.10.2011 (Annexure C-4), prepayment levy or pre-closure charges were not to be levied on the borrowers on pre-closure of housing loan. He further submitted that the aforesaid instructions came into being with immediate effect and since the loan was pre-closed in March, 2014 the instructions aforesaid were applicable and no pre-closure charges could be levied.

14.        It is evident that loan in the sum of Rs.11,11,000/- was granted to the respondent/complainant on 20.05.2010 regarding which Home Loan Agreement (Annexure C-1) was executed. The loan was to be repaid in monthly instalments @Rs.11,398/- each per month and the said loan was on reducing basis. Schedule-I of the Home Loan Agreement indicated the product as Resident Land Purchase Loan-Dual Rate-Monthly Rest. Clause 2.2 of Schedule-I indicated that applicable rate of interest was 8.25% (fixed) per annum under Monthly Rest. The respondent/complainant  made prepayment of Rs.9,02,615/- vide demand draft dated 21.03.2014 and the appellants/Opposite Parties imposed prepayment charges of Rs.20,284/-. The appellants/Opposite Parties also charged simple interest on prepayment charges in the sum of Rs.3,993/-.

15.         It is further evident from Clause 2.8 of the agreement that the appellants/Opposite Parties could levy prepayment charges. Clause 2.8 of Home Loan Agreement (Annexure C-1), being relevant, is extracted hereunder:-

“2.8 Prepayment.

The Borrower shall be entitled to prepay the loan, either partly or fully, as per rules of HDFC including as to the prepayment charges, for the time being in force in that behalf.”

16.        The respondent/complainant had placed reliance on National Housing Bank Circular No.NHB(ND)/DRS/Pol-No.43/2011-2012 dated 19.10.2011 (Annexure C-4), contending that no prepayment charges were payable. The relevant provision in the aforesaid circular relating to payment of prepayment charges is extracted hereunder:-

“…………………

1. Where the housing loan is on floating interest rate basis (pre-closed through any source).
2. Where the housing loan is on fixed interest rate basis and the loan is pre-closed by the borrowers out of their own sources.

…………………””

17.        As per the aforesaid provisions, if the loan was on floating rate basis and the account was closed through any source, the pre-closure levy or penalty could not be imposed. The aforesaid provisions, further stipulate that where there is fixed interest rate and the loan was pre-closed by the borrowers out of their own sources,  in that case, the pre-closure levy or penalty could not be imposed.

18.         In the instant case, as per Clause 2.2 relating to “Interest”, of Schedule-I appended to Home Loan Agreement, the applicable rate of interest was 8.25% (fixed) per annum under monthly rest. Therefore, in view of the rate being fixed, the respondent/complainant could have the benefit of non-levy of pre-closure charges, if the loan was pre-closed by him out of his own sources. The respondent/complainant is, however, silent as to whether he pre-closed the loan account out of his own sources or not.

19.         The contention of the appellants/Opposite Parties is that the loan obtained by the respondent/complainant was for a plot and the same did not constitute housing loan. In support of their contention, the appellants/Opposite Parties placed reliance on Circular No.NHB(ND)/DRS/Pol-No.41/2011-12 dated 26.09.2011 (Annexure R-1), which envisaged, as to under which heads of account, the loans would be housing or non-housing. Sr. No.4 of Illustrative List of loans, which can be classified as housing loans, appended to the aforesaid Circular dated 26.09.2011 stipulates that “loans for purchase of plots for construction of residential dwelling units provided a declaration is obtained from the borrower that he intends to construct a house on the said plot with the help of bank/HFC finance or otherwise, within a period of three years from the availment of the said loan, shall be a housing loan.” Since in the instant case, no such declaration has come, on record, it has to be assumed that the loan was non-housing loan and pre-closure charges were payable. However, the District
Forum did not agree with the contention of the appellants/Opposite Parties as is evident from Para 10 of its order that the Opposite Parties should have placed, on record, their office circular clearly indicating the rate of prepayment charges, according to which, the same was asked to be deposited by the respondent/complainant and in the absence of any such document, the applicability of 2% as prepayment charges on the outstanding principal amount could not be believed to be just and fair. Therefore, while on the basis of National Housing Bank Circular and a categoric stipulation, in the Home Loan Agreement, prepayment charges were payable but action of the appellants/Opposite Parties in charging the same was rightly held to be not valid by the District Forum in the absence of production of any document by the Opposite Parties regarding the rate of such charges.

20.         In the circumstances aforesaid, the order of the District Forum for refunding Rs.20,284/- plus Rs.3,993/- totaling Rs.24,277/- to the respondent/complainant due to lack of evidence regarding percentage of pre-closure charges has to be upheld.

21.         However, there was no justification for awarding compensation in the sum of Rs.15,000/- by the District Forum, for alleged unfair trade practice and causing mental agony and physical harassment to the respondent/complainant. As such, this part of the order, awarding compensation, has to be set aside.

22.         In our considered opinion, the interest @18% per annum, awarded by the District Forum, in default of compliance of the impugned order within the stipulated period, is on the higher side and the same needs to be  reduced. Interest @12% per annum, instead of 18%, would meet the ends of justice. Thus, the order of the District Forum, has to be modified, to the extent indicated above.

23.         No other point, was urged, by the Counsel for the parties.

24.         For the reasons recorded above, the appeal is partly accepted, with no order as to costs. The order of the District Forum is modified, in the following manner:

1. The appellants/Opposite Parties are directed to pay back Rs.20,284/- plus Rs.3,993/-, totaling Rs.24,277/-, to the respondent/complainant, as awarded by the District Forum.
2. The appellants/Opposite Parties are further directed to pay Rs.7,000/- as cost of litigation to the respondent/complainant, as awarded by the District Forum.
3. The order be complied with by the appellants/Opposite Parties, within a period of 45 days, from the date of receipt of a certified copy thereof, failing which, the amount mentioned in Clause (i), above, shall be payable by the appellants/Opposite Parties alongwith interest @12% per annum, instead of 18% per annum, from the date of filing the complaint i.e. 27.05.2014, till actual payment, besides payment of cost of litigation.
4. All other directions, given and reliefs granted by the District Forum, in the impugned order, subject to the modification, aforesaid, which are contrary to and, in variance of this order, shall stand set aside.

25.         Certified copies of this order, be sent to the parties, free of charge.

26.         The file be consigned to Record Room, after completion.

Pronounced.

February 13 , 2015.

Sd/-

[JUSTICE SHAM SUNDER (RETD.)]

PRESIDENT

 

 

Sd/

[DEV RAJ]

MEMBER

 

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