PER HON’BLE MR. SUBHASH CHANDRA       

1.     This Revision Petition under Section 21 (b) of the Consumer Protection Act, 1986 (in short, ‘The Act’) assails the order dated 16.11.2012 passed by State Consumer Disputes Redressal Commission, U.T. Chandigarh (in short, ‘State Commission) in First Appeal No. 288 of 2012 arising out of the order dated 25.06.2012 of the District Consumer Disputes Redressal Forum, Forum-I, U.T. Chandigarh (in short, ‘District Forum’) in C.C. No. 683 of 2011.

2.     The brief facts of the case, as stated by the petitioners / complainants (hereinafter referred to as ‘petitioners’) are that they had entered into a loan agreement on 22.08.2016 with the respondent bank for House No. 1115, Sector – 33 C, Chandigarh for Rs.1,90,00,000/- with an E.M.I. of Rs.1,89,903/- per month to be repaid over 180 monthly instalments @ 12% interest p.a.  After some time petitioners approached the respondent bank for transfer of the loan to Punjab National Bank, which was charging a lower rate of interest of 9.75%.  However, the respondent bank persuaded the petitioners to shift to the Money Saver Account for the loan which was stated to be an equally attractive preposition.  As the petitioners desired to take another home loan for House No. 1130, Sector – 33C, Chandigarh for Rs.1,59,99,990/-, they accepted this offer.  A loan account under the Money Saver Scheme which required Rs.1 lakh to be deposited per month along with the E.M.I. for the loan for 89 months was accordingly opened.  This was based on a letter of proposal from the respondent bank (Annexure C 1 before the District Forum, Chandigarh) dated 22.10.2007.  After the petitioners entered into this arrangement, it was subsequently discovered by them that the respondent bank had charged 0.25% as transfer charges on the existing loan for transfer to the Money Saver Scheme.  The petitioners were also required to honour loan agreement dated 13.10.2007 against House No. 1115 with the condition that the terms and conditions of the letter dated 22.10.2007 will be treated as part of this agreement.  The petitioners deposited the stipulated monthly instalments of E.M.I. in both home loans as well as additional deposit of Rs.1 lakh per month as per the agreed terms and conditions.  However, the respondents levied the floating rate of interest and other charges unilaterally without disclosing the same to the petitioners.  As efforts to resolve the issue with the respondent bank did not succeed, the petitioners approached the District Forum, Chandigarh by way of complaint, which was allowed on 25.06.2012, directing the respondent bank to adhere to the terms and conditions in Annexure C1.

3.     This order was challenged before the State Commission by the respondent bank which allowed the appeal and set aside the order of the District Forum vide its order dated 16.11.2012, which is impugned in this revision petition.

4.     The District Forum had held as under:

7] Annexure C-1 is the offer letter issued by the OPs and Ann. C-2 is the Facility Agreement executed between the parties. The relevant portion of Ann. C-1 is reproduced as under: -

"This is in regard to your proposal of home loan under Money Saver. As per your home loan requirement of Rs.2.00 lacs, the EMI comes to 2,36,827/- @11.75% ROI for 15 yrs.  As per money Saver if you deposit Rs.1.00 lacs every month the loan will be closed in 89 months. The amount saved in money saver account every month has to be kept and not to be withdrawn till the loan. After the closure of loan the whole amount can be withdrawn at any time. (Rs.89.00 lacs). The liquidation of amount saved in money saver account will be at your discretion subject to tenure of loan period.

8] Admittedly vide Ann.C-1, the OP Bank has given the option/right to the complainants to make the payment of EMIS plus Rs.1.00 lakh towards the money saver account and consequently, the loan was to be closed/cleared in 89 months. It is settled proposition of law that the agreement Ann. C-2 is not to be read in isolation, but it is required to be read along with Ann. C-1 in harmony.

9] After taking into consideration both the documents Ann. C-1 & C-2, the only conclusion is that the complainant was liable to pay the EMIs of the loan amount along with Rs.1.00 lacs as money saver and subsequently, the loan was to be closed/cleared in 89 months. The fact that the complainants have made the payments of EMIs along with Rs.1.00 lacs towards money saver account regularly and did not commit any default, is not disputed by the OPs.

10] In order to clinch the matter and to come to the conclusion, it will not be out of place to state that the said Agreement Ann. C-2 was executed between the parties subsequent to the letter Ann. C-1. Therefore, the letter Ann. C-1 & C-2 are to be read in consonance with each other and not independently or in isolation.

11] Since there is no provision in the letter Ann. C-1 with regard to floating rate of interest and it speaks only with regard to payment of the EMIs as well as Rs.1.00 lacs towards money saver account for 89 months. Therefore, the OP Bank is not entitled to charge the floating rate of interest arbitrarily @14.54% P.A. instead of Rs.11.75% P.A. as the loan was to be closed/cleared in 89 months only, if the complainant made the regular payment of EMIs along with Rs.1.00 lacs towards money saver account. The OPs in the reply as well as in the written arguments, had not at all disputed that the complainants are not making regular payment of EMIs as well as Rs.1.00 lacs as money saver.

12] Judged from every angle as well as going through the entirety of the facts & circumstances of the case and document, we are of the considered opinion that the complaint deserves to be partly allowed in favour of the complainants and against the OPs. Accordingly, the complaint stands partly allowed. The OPs are directed to recover the loan amount from the complainants, as per the Offer made by them vide Annexure C-1.  However, the complaint with regard to other reliefs, as prayed for in the Prayer Clause of the complaint, is held to be pre-mature as the loan has yet not been closed.  There is no order as to compensation and costs.

5.     The State Commission, however, vide the impugned order held as under:

10 The pivot of the dispute in the present case, are Annexures C-1 and C-2. According to the complainants the Opposite Parties should have charged interest as per Annexure C-1 but, on the other hand, the contention of the Opposite Parties was that they had rightly charged floating rate of interest, as per the agreement Annexure C-2. After deeply going through Annexures C-1 and C-2, and the contentions of the Counsel for the parties, we find force in the contention of the Opposite Parties that Annexure C-1 was just a introductory letter. Vide this letter the Opposite Parties gave some relaxation to the loanee for repayment of loan to the bank and as per this offer the bank was to charge interest on the loan @11.75% P.A. subject to certain conditions. If there was any change, in any of the conditions the rate of interest was automatically to vary as the complainants took the main loan on floating rate of interest and not on fixed rate of interest. The bank had no reason to charge the interest only @11.75% P.A. as alleged by the complaints, but it was required to charge interest as per the agreement executed between parties. Even otherwise a bare reading of Annexure C-1 reveals that it was just an offer letter written by the Opposite Parties to the complainant- Brij Bhushan wherein he (complainant) mentioned the date as 22.10.2007, and the same could not be said to be an agreement duly executed between the parties. It is pertinent to mention here, that the complainants had not produced the agreement in respect of first loan of Rs.1,90,00,000/-. However, the complainants in their communication to the Opposite Parties vide Annexure C-10 dated 29.1.2010 in para No.2 admitted that the first loan was granted at floating rate of interest. The complainants only placed on record the agreement Annexure C-2, in respect of the second loan of Rs.1,60,00,000. As per the said agreement Annexure C-2 at clause 9 under the heading of Details of The Facility by way of loans- in Tranche 1 (2) (b) the complainants opted Adjustable interest rate. Furthermore at page 66 in clause b(ii) under the heading of Adjustable interest rate it has been mentioned that until varied by ICICI bank in terms of this facility Agreement the borrower/s will pay the adjustable rate of interest 11.75% per annum (i.e. FRR+margin of 1%) plus applicable interest tax or other statutory levies. Thus from this it is proved that the complainants agreed to pay floating rate of interest.

11 Further in the agreement at page 67, the complainants opted clause 3(h) i.e. money saver scheme, which clearly shows that there was no change in the terms and conditions of the main loan agreement. The complainant was liable to pay the floating rate of interest. In this view of the matter, we are of the considered opinion that the District Forum erred while placing reliance on Annexure C-1, which was just an offer letter and it totally ignored the agreement duly signed by the parties. i.e. too after the issuance of Annexure C-1. Hence the order of the District Forum is liable to be set aside being illegal and invalid.

6.     The respondents have contended that the agreement was signed willingly and that this Commission has no jurisdiction over matters of interest that have been charged for loans.  It has been argued that several remedies are available to the petitioners.  It has also been argued that the introductory letter (Annexure C1) is not applicable in the case and that the floating rate of interest had been agreed to under the scheme.  On the contrary, the petitioner has argued that no prudent person would have agreed to the rate of interest which was higher by 2% p.a. over the rate of that was already available with Punjab National Bank.  It has, therefore, been argued that the respondent bank is guilty of unfair trade practice and deficiency in service in offering a scheme on a fixed rate of interest and thereafter treating the loan on a floating rate of interest which was higher than the indicated amount in the proposal letter.

7.     We have heard the learned counsels for both the parties and carefully considered the material on record.

8.     It is the case of the petitioners that they had sought to shift from a House Building loan from the respondents to another loan in order to save on the rate of interest since the respondents had provided the loan at 12% p.a. to be repaid over 180 monthly instalments.  As it had come to their notice that the Punjab National Bank was charging a lower rate of interest of 9.75%, they had been desirous of transferring the loan accordingly.  The petitioner’s case is that the respondents offered the Money Saver Account as an alternative and stated that the loan would be repaid over 89 months with the attendant condition that Rs.1 lakh be deposited per month along with EMI for the loan based on a letter of proposal from the respondent bank (Annexure C1) dated 22.10.2007 which indicated the rate of interest as 11.75%, subject to approval.  The letter dated 22.10.2007 reads as below:

ICICI Bank                                                 22.10.2007

Mr. BrijBhushan

Amar Alloys Pvt. Ltd.

Sector-26, Chandigarh.

Dear Sir:

                   This is in regard to Money Saver product.  As per your loan requirement of Rs.2.00 lacs for 15 years, your monthly EMI comes to Rs.2,38,827/- at 11.75% ROI (subject to ROI approval).  As per calculation of Money Saver product if Rs.1.00 lacs are saved every month in money saver account, the loan will be closed in 89 months.  The amount saved in money saver has to be kept till the closer of loan and thereafter the amount saved can be withdrawn at any time.

9.     As per this letter, the rate of interest offered was 11.75%, subject to approval, and the loan was to be closed in 89 months with the condition that the Money saved in the account would be withdrawn only after closure of loan.  The petitioners contend that there was no mention of a floating rate of interest in the letter of proposal.  The petitioners state that thereafter the loan was charged @ 14.54% p.a. which was the floating rate of interest.  This rate was substantially higher than the rate of interest indicated in the letter dated 22.10.2007 (Annexure C1).  The petitioners, therefore, contend that the respondent bank is guilty of unfair trade practice since it has now been claimed that the communication dated 22.10.2007 was only a proposal and that the rate of interest was determined subsequently. The petitioners aver that there was deficiency in service in that the rate of interest and the kind of interest i.e. fixed rate or floating rate indicated was different as applied by the respondent bank.  It is also contended that the floating rate of interest was not agreed to and that no prudent person would have agreed to a rate of interest that was 2% higher than the available rate of interest in the market from another bank.  It is their contention that they had agreed to the Money Saver loan scheme only because they had to take another House Building loan for another house.  They have, therefore, prayed that the order of the State Commission in First Appeal No. 288 of 2012 dated 16.11.2012 be set aside and the order dated 25.06.2012 in C.C. No. 683 of 2011 of the District Forum 1, U.T. Chandigarh be affirmed.

10.   The respondent bank has argued that consumer fora cannot go into issues of interest on loans and that the loan agreement in question was signed voluntarily and by free will of the petitioners.  The letter dated 22.10.2007 (Annexure C1) was only a proposal and has been erroneously interpreted by the petitioners who have contested the rate of interest.  It is, therefore, contended that the order of the State Commission be upheld and the revision petition be dismissed.

11.   The issue before this Commission is whether the respondent bank is guilty of unfair trade practice and deficiency in service in having provided a loan to the petitioners which incorporated a floating rate of interest which was much higher than the rate of interest that had been indicated under the Money Saver Scheme in the proposal letter. While it is true that the petitioners approached the respondent bank to recast its loan in view of the higher rate of interest as compared to other loans available in the market as e.g. from the Punjab National Bank, it is also a fact that the respondent bank submitted a proposal through letter dated 22.10.2007 (Annexure C1 before the District Forum).  For the respondent bank to now contend that this letter was a mere proposal is not correct since it was on the basis of the proposal in this letter that the petitioner made up his mind to consider shifting to the Money Saver Loan scheme.  While it is true that this letter mentions that the rate of interest under the scheme would be 11.75% and that the rate of interest (ROI) would be subject to approval, the action of the bank in proposing particular rate of interest and thereafter adopting a different, higher rate of interest, certainly amounts to an unfair trade practice and deficiency in service.  It cannot take the view now that the rate of interest indicated was only a proposal since its proposal should have been based on the finalized rate of interest in order to obviate any ambiguity or confusion in the matter. It should also have been specific in indicating in its proposal letter whether the rate of interest levied would be a fixed rate of interest or a floating rate of interest. By not doing so and by now claiming that the indicated rate of interest was only a proposal, the respondent bank is certainly responsible for having conveyed an impression of a loan that was ultimately not an attractive as was projected.  In this view of the matter, the action of the respondent bank has to be construed as an unfair trade practice and a deficiency in service.

12.   The District Forum has harmoniously read Annexures C1 and C2 and arrived at a considered decision and has ordered accordingly.  The respondent bank is not entitled to charge the floating rate of interest at 14.54% p.a. instead of 11.75% p.a. indicated in the proposal letter dated 22.10.2007.

13.   On the contrary, the State Commission’s appreciation of the contention of the respondents that Annexure C1 was a mere introductory letter on the basis of a bare reading is an erroneous interpretation and appreciation of the facts.  The fact that the State Commission notes that Clause 3H of the Money Saver Scheme mentions that there was no change in the terms and conditions of the main loan agreement and that the petitioner was liable to pay the floating rate of interest makes the order incorrect since the shift from one loan scheme to another at a higher rate of interest under a scheme that promise to be more attractive through an ostensibly lower rate of interest is clearly incomprehensible to a prudent man making a rational choice.

14.   In view of the foregoing, we find merit in the revision petition, which is accordingly allowed.  The order of the State Commission in First Appeal No. 288 of 2012 is set aside and the order of the District Forum in C.C. No. 683 of 2011 is hereby affirmed.  There shall be no order as to costs.