Chandigarh

StateCommission

A/183/2022

SURAM SINGH RANA & ANR. - Complainant(s)

Versus

ICICI BANK LTD - Opp.Party(s)

AKSHAY RANA

28 Apr 2023

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

1]       Suram Singh Rana, aged about 61 years, son of Lt.      Jagat Ram,

2]       Neelam Rana, aged about 57 years wife of Sh. S. S. Rana,

          Both residents of House No.708, Sector 22-A, Chandigarh.

….Appellants/Complainants.

Versus

I.C.I.C.I Bank Limited, SCO 9-10-11, Sector 9-D, Chandigarh through its Branch Manager.

...Respondents/Opposite parties.

BEFORE:    JUSTICE RAJ SHEKHAR ATTRI, PRESIDENT

               MR. RAJESH K. ARYA, MEMBER

ARGUED BY :-    

Sh. Akshay Rana, Advocate for the appellants.

Sh. Kartik, Advocate for the respondent.

PER  RAJESH  K. ARYA, MEMBER

        This appeal has been filed by the complainants, who are husband and wife (appellant herein), against order dated 19.10.2022 passed by the District Consumer Disputes Redressal Commission-II, U.T., Chandigarh (in short ‘District Commission’), vide which their consumer complaint bearing No.313 of 2019 has been dismissed.

2.      The facts of the case, as culled from the impugned order passed by Ld. District Commission, are as under:-

“2]       The case of the complainants in brief is that they availed home loan of Rs.6,80,000/- from Opposite Party for a term of 120 months at floating rate of interest of 7.75% p.a..  It is averred that as per the loan agreement (Ann.C-1), the equated monthly installment of the loan was calculated at Rs.8072/-including interest of 7.75% per annum for a period of 120 months.  It is stated that the complainants have been paying regular installments, without any default, for the last 10 years, but the OPs subsequently stretched the loan period for further 3 years without any intimation.  It is also stated that as per the loan agreement, the Opposite Party was to intimate the complainant upon any change in the adjustable interest rate, which the Bank did not do.  It is submitted that initially the loan EMI was fixed at Rs.8072/- for a period of 120 months, but the Opposite Party without intimation and written consent of the complainant, extended the said loan tenure for 118 months and reduced the EMI’s from Rs.8072/- to Rs.7873/-. It is also submitted that the complainants have paid Rs.12,06,845/- to the Opposite Party, whereas as per the agreed terms, they had to pay only Rs.9,68,640/- before closing the term loan account and in this way, the complainants had paid an excess amount of Rs.2,38,205/- to the Opposite Party.  It is pleaded that in the year 2014, when the complainants approached the bank for closing the loan account, then the Opposite Party told them that the loan tenure has been further extended for further three years i.e. till 2017 due to change of interest and increased the amount of EMIs. It is also pleaded that thereafter the complainants approached the Opposite Party Bank several times to close the loan account, but due to fear that Opposite Party would declare their account as NPA (Non Profitable Account), so they paid the increased EMI’s.  The complainants also served the Opposite Party with legal notice dated 8.7.2016 (Ann.C-2) for stop charging the EMI and for returning the overcharged amount, but to no avail. Hence, this complaint has been filed alleging the said act & conduct of the Opposite Party as deficiency in service.

3]       The Opposite Party has filed reply and while admitting the factual matrix of the case, stated that the complainant has himself placed on record that copy of the agreement where it has been agreed between the parties that the rate of interest as would be applicable, would be floating rate of interest. It is further submitted that the complainant in paragraph 2 of the complaint stated that the loan was at a floating rate of interest:

                       a. Term period: 120 Months

                       b. ICICI Floating rate of interest (FFF):   7.75%.

         It is stated that the complainant admitted about the knowledge in respect of change of rate of interest in the year 2008. It is also stated that now a totally contradictory stand has been taken by the complainant that he was never informed and was not aware of the change of the rate of interest. It is submitted that the present complaint has been filed in the year of 2019 in respect of an alleged cause of action which has taken place in the year 2008.    It is further stated that even the demand for refund of the amount allegedly having being charged in excess in the loan account has been raised by the complainant in the year 2016 as per the legal notice which has been placed on record by the complainant himself. It is pleaded that it is the settled case that issuance of the legal notice shall not extend the period of limitation, however, even from the date of the legal notice, the present complaint filed in the year 2019 is barred. It is further pleaded that that the complainant has also placed on record the NOC Annexure C-3 wherein it has been stated that the loan account has been closed on account of the payment of the full amount of the loan and that the same is after the date of the legal notice which categorically shows that the complainant was very well satisfied with the rate of interest which had been charged and no dispute existed not had any been raised at that period of time. It is submitted that the change of rate of interest was always in the knowledge of the complainant.  It is denied that any excess rate of interest has been charged or that any excess amount has been paid by the complainant to OP or the complainant is entitled to any refund thereof.  Denying all other allegations and pleading no deficiency in service, the OP has prayed for dismissal of the complaint.”  

3.     The order of the Ld. District Commission has been assailed on the ground that same suffers from several patent irregularities as the Ld. District Commission while passing the said order did not appreciate the settled laws laid down by this Commission in case of ICICI Bank Limited Versus Surinder Singh, 2009 (4) CLT 621 whereby this Hon'ble Commission after considering the relevant rules and provisions held that intimation regarding the change of higher rate of interest by the bank is mandatory to be given and in case the intimation is not given in writing then the bank is not entitled to charge increased change of interest. It has further been stated that in a similar situated circumstances, Punjab State commission in case titled as Prem Singh Badwal Versus ICICI Bank Ltd. held that the F.R.R (Floating rate of interest) is governed by the instructions 2.4, 2.6 and 2.11 issued by R.B.I and as per the said instructions, it is mandatory on the part of bank to take written consent before revising the floating rate of interest applicable to the loan account to their customers. It has further been stated that in the present case, neither any such intimation nor any written consent was taken from the appellants before revising the floating rate of interest. It has further been stated that  Ld. District Commission did not appreciate the fact that the opposite party has not even placed a single document vide which it proves that the appellants/complainants were informed about the increased rate of interest. It has further been stated that the appellants/complainants were not having the receipt slips of the notice at that time and due to that it could not be placed on record and thus, the same has been found and are being annexed with the appeal as Annexure A-3 & Annexure A-4 respectively. It has further been stated that the appellants raised issue with regard to increased EMIs with the opposite party vide notice dated 08.07.2016 and the bank told the appellants that they would close their account as soon as possible and as a result, the loan account was closed in March, 2017. It has further been stated that the appellants were never informed about the increased rate of interest which is indispensible thing on the part of the opposite party. It has further been stated that  as per Master Circular of R.B.I vide its letter dated 01.07.2014, it specifically states that as per instructions no: 2.4, 2.6 and 2.11, a written consent is required to be taken by the bank whenever they reset the floating rate of interest applicable to the loan accounts of their customers. It has further been stated that the Hon'ble Apex Court in case Collector, Land Acquisition, Anantnag & Anr. Versus Mst. Katiji & Ors., (1987) 2 SCC 107, has held that in matter of condonation of delay the court should take liberal view and thus, the Ld. District Commission should have taken the liberal view while deciding the application of condonation of delay. Lastly, the appellants have prayed for allowing the complaint by setting aside the impugned order.

4.      On the other hand, on behalf of the respondent – ICICI Bank Ltd., it has been argued that the Ld. District Commission, while dismissing the complaint of the appellants, after considering the documentary evidence on record, rightly held that the appellants were in the knowledge of increase of interest rate in his loan account and also agitated this matter with the respondent – Bank and ultimately got the Loan Account closed in March, 2017, where-after, there was no logic to send the alleged legal notice in respect of the closed loan after a long period of more than two years on 11.04.2019. It was further argued by the Ld. Counsel for the respondent that the loan account was closed by the appellants on payment of the full loan amount, for which, No Objection Certificate was also issued by the respondent. It has further been stated that the loan account was closed by the appellants post issuance of the legal notice, which shows that the complainant was very well satisfied with the rate of interest which the respondent charged and they did not raise any dispute at the time of closing the loan account. It has further been stated that the complaint of the appellants was rightly dismissed by the Ld. District Commission. 

5.      We have given our thoughtful consideration to the arguments raised by the learned counsel for both the sides and have also gone through the material available on record.

6.      Before going to the merits of the case, we would like to first decide a Miscellaneous Application bearing No.937 of 2022 moved by the appellants for placing on record additional evidence. Vide this application, the appellants intend to place on record receipt slips of the notice as Annexure A-3 & Annexure A-4 respectively, which were not part of the record before the Ld. District Commission. In the application, it has been stated that the said documents were received after the said consumer complaint was reserved and accordingly, the appellants did not get the opportunity to place them on record. It may be stated here that neither the respondent contested the application nor filed any reply to the same. Moreover, the documents intended to be placed on record as Annexure A-3 & A-4 are the receipts of the legal notice served upon the respondent by the appellants. The application is allowed. The documents are taken on record subject to just exception of the case. MA/937/2022 stands disposed of accordingly.

7.      Now coming to the merits of the case, the sole ground which the appellants have raised is that neither any intimation nor any written consent was taken from the appellants before revising the floating rate of interest and therefore, charging of revised interest by the respondent – Bank is deficiency in rendering service and unfair trade practice on its part. In this regard, it may be stated here that undisputedly, as per Clause 2.2(b) of the Loan Agreement, Annexure C-1, in the event of the borrower opting for the adjustable interest rate offered by ICICI Bank, the rate of interest applicable to the loan as at the date of execution of the agreement and the terms applicable to such adjustable interest rate were as stated in Schedule B appended to the said agreement. Further as per definition of “Adjustable Reference Rate (FRR)” as provided in the said Schedule B – Terms and conditions applicable to the loan with adjustable interest rate, under Clause (A), the expression “Adjustable Reference Rate (FRR) means FRR and the margin, if any, as specified by ICICI Bank and set out, applicable as the interest rate on the loan of the borrower pursuant to the agreement. As per Clause (E), the ICICI Bank Floating Reference rate was 7.75% per annum (as on the date of execution of the Loan Agreement) and Adjustable Rate of interest: ICICI Bank Floating Reference Rate was +/-  .25% p.a. = 7.5 % p.a.; Pre EMI Interest was 7.5% p.a.; Term of repayment  of loan was 120 months and EMI was Rs.8,072/-. Next document is Schedule 1 appended to the Loan Agreement, which shows that the appellants obtained total loan amount of Rs.6,80,000/-. The appellants also signed a Declaration dated 05.06.2004 in this regard. It is also not in dispute that the appellants paid the entire loan amount and vide letter dated 18.03.2017, Annexure C-3, the respondent – Bank issued No Due Certificate to the appellants. The relevant paras of the said letter, inter-alia, reads thus:-

“We would like to certify your captioned Home Loan of Rs.680000 (“Facility”) availed by you and co-applicant Mrs. Neelam Rana, has been repaid in full and there are no further dues payable under the Facility.

We also wish to inform you that we have no claim or right whatsoever against you with respect to the Facility and against House #708, 2^nd Floor, Sector-22a, Chandigarh, Chandigarh – 160022, to the extent secured for the Facility.”

8.        Bare perusal of documentary evidence on record makes it abundantly clear that the appellants were in the knowledge of the interest rate being floating one depending on the ICICI Bank Floating Reference Rate, which could increase or decrease. It is commonly understood that a floating interest rate is one that changes periodically: the rate of interest moves up and down, or "floats," reflecting economic or financial market conditions. Often, it moves in tandem with a particular  because it can vary over the duration of the debt obligation. In the instant case, the appellants never raised any dispute qua the change in the rate of interest being floating rate of interest up-till July 2016, by which date, they had paid the substantial amount towards the loan amount to the respondent – Bank. It was very much in their knowledge in the year 2004 that the rate of interest is floating rate of interest and had it been their grievance, they would have approached the respondent – Bank then and there. Thus, undoubtedly, the rate of interest was floating one subject to change on the basis of increase or decrease in FRR and EMIs could be varied by the respondent Bank from time to time on account of variation of adjustable amount, due to increase in the rate of interest, as the loan was taken on floating rate of interest. In our view, the appellants/complainants were bound by the terms and conditions, of the Loan Agreement. It is settled law that the Consumer Fora cannot alter the terms and conditions, agreed to between the parties. The agreement is required to be interpreted, in accordance with the terms and conditions, contained therein. From day one i.e. the date on which loan agreement was executed and the appellants signed each and every page of the Loan Agreement, they were fully aware and in knowledge of the terms and conditions of the Facility and that the rate of interest was adjustable/floating interest rate. Now at later stage, they could not agitate the issue qua increase in the interest rate, which changed from time to time based on change in FRR. Now after closing the loan account in the year 2017, the appellants tried to find a cause to approach the Consumer Commission for a relief, to which they are not entitled to. Moreover, mere sending of legal notices in the year 2016 and 2019, alleging overcharging by the respondent Bank, will not be enough much less cogent and convincing evidence to establish that the appellants were not aware of the interest rate being the floating one. Now at this stage, averment made that neither any intimation nor any written consent was taken from the appellants before revising the floating rate of interest is an afterthought.

9.      The appellants/complainants, in their complaint, have themselves admitted that the floating rate of interest would be applicable to the loan amount. It is apparent on record that the appellants had been paying the EMIs in accordance with the same, which further shows that they were aware of the change of EMIs. They were also aware that the interest was being charged on floating rate. In Schedule B appended to the Loan Agreement, under Clause (D) – Amortisation, the appellants were having the option to go in for amortization of the loan, which they did not opt for.  It may be stated here that whenever there is an increase in rate of interest, the tenure of loan is normally increased, subject to permissible limits, in order to avoid burdening the customer with higher EMI. However, if the EMI is not adequate to cover the interest payment, Bank is entitled to increase the EMI amount suitably and this is so mentioned in the facility/loan agreements duly signed by the customer at the time of disbursement. We are further in agreement that in case, customer wishes to reduce the tenure, customer may opt to increase the amount of EMI or make a part prepayment or a combination of both. As regards intimation qua change in interest rate, the Hon’ble Apex Court in Syndicate Bank’s case (supra) has held as under:-

“The High Court while holding that the party is bound to pay the interest at the agreed rate took the view that the bank could not automatically change the increased rate of interest merely on the basis of rise of interest on account of RBI circulars. It is not a case of automatically charging the increased rate of interest; change of higher rate is based on agreement between the parties. The high Court was clearly in error in holding that the principles of natural justice were violated on the ground that the defendants were not put on notice before enhancing the rate of interest when the parties are bound by the terms of the contract.”

10.    Similar is the view held by Hon’ble National Commission in ICICI Bank Vs. Ganga Singh Shekhawat case (supra), wherein it was held that “Thus, it becomes clear that even without notice petitioner was entitled to enhance rate of interest on the basis of rise of interest by RBI”.

11.    It may also be stated here that the issue qua floating rate of interest has already been dealt with by this Commission, under similar situation and facts, in the cases of ICICI Bank Limited Vs. Ashwani Bhalla, Appeal No.188 of 2019 decided on 13.12.2021; Gurmeet Singh Vs. ICICI Home Finance Limited & others, Appeal No.74 of 2020 decided on 29.11.2021 and ICICI Bank Limited & Anr. Vs. Naresh Kumar Sharma, Appeal No.89 of 2019 decided on 25.02.2022, whereby, the said appeals were accepted and the orders impugned were set aside. It is not out of place to mention here that the as per the settled law, the Consumer Fora cannot go into the issue of rendition of accounts as held in the cases of Bihar State Housing Board Vs. Chairman-cum-Managing Director and others, (1996) CPJ 228 (NC) and Vishal Roadways Vs. Economic Traders (Gujarat) Ltd., (1998) NCJ (NC)-539.

12.    Not only above, the Hon’ble National Commission, in case titled ICICI Bank Limited Vs. Vishnu Bansal, First Appeal No.454 of 2021, decided on  23.11.2022 has, inter-alia, held in Para 10 that “….Even otherwise, monthly installments were being deducted from the complainant’s bank account towards repayment of his home loan and he was servicing his loan on a regular continuing basis. A reasonable man of ordinary prudence in the normal course would be aware of his repayment schedule(s), when the deductions were being made from his own bank account….” Therefore, in our opinion too, such an argument regarding not informing the appellants does not reflect much merit in the present case and context.  Therefore, the judgment in case ICICI Bank Limited Versus Surinder Singh (supra) relied upon by the appellants is of no help being distinguishable on facts. Thus, the appellants have miserably failed to make out any case of deficiency in rendering service or unfair trade practice on the part of the respondent-Bank.

13.    For the reasons recorded above, the appeal, being devoid of any merit, is dismissed with no orders as to costs.  

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

15.    File be consigned to Record Room after completion.

Pronounced.

28.04.2023.

(RAJ SHEKHAR ATTRI)

PRESIDENT

(RAJESH K. ARYA)

MEMBER

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