BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-I, U.T. CHANDIGARH

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Japji Kaur Cheema d/o Sh.H.S.Cheema r/o H.No.1126, Sector 8-C, Chandigarh.

…..Complainant

                                      V E R S U S

1]      ICICI Home Finance Co. Ltd., SCO 129-130, Sector 9, Chandigarh.

2]      ICICI Home Finance Co. Ltd., ICICI Bank Towers, Bandra-Kurla Complex, Mumabi.

3}      ICICI Prudential Life Insurance Co., 4^th Floor, Stanrose House, Appasaheb Marathe Marg, Prabhadevi, Mumbai.

……Opposite Parties

CORAM:     SH.P.D.GOEL                                                  PRESIDENT

                   DR.(MRS.) MADANJIT KAUR SAHOTA              MEMBER

Argued by:    Sh.Vishal Ahuja, Counsel for complainant.

                        Sh.Sandeep Suri, Counsel for OPs No.1 and 2.              

                        Sh.S.R.Bansal, Counsel for OP No.3

PER P.D. GOEL, PRESIDENT

1.                The complainant has filed the present complaint under section 12 of the Consumer Protection Act (as amended upto date) “hereinafter referred to as the Act”. In short, the facts of the case are that the housing loan of Rs.1,02,68,000/- was sanctioned vide letter dated 27.06.2008. The complainant was also issued life insurance policy No.09690901 with date of commencement as 22.08.2008 as part of the loan agreement against one time premium of Rs.2,68,000/-. The complainant averred that a sum of Rs.19,474/- was refunded to her, out of the premium amount of Rs.2,68,000/-.

                   It is the case of the complainant that after some times, he decided to foreclose the loan. According to the complainant, OPs No.1 and 2 charged Rs.2,30,227/- as prepayment /foreclosure charges from her which was paid under protest as there was no clause in the loan agreement with regard to it.

                   It is further the case of the complainant that she surrendered the insurance policy with the request to OP No.1 to refund the amount of premium  but despite of her repeated requests, only a sum of Rs.1,49,605.09 was credited in her account on 06.05.2009 against Rs.2,48,253/-. According to the complainant, if the amount of premium for a period of 20 years was Rs.2,48,253/- then the premium for 8 months comes to Rs.8275/- only whereas OP No.3 had deducted Rs.98,647.91 out of Rs.2,48,253/-  which is illegal. Ultimately, the complainant served a legal notice dated 03.12.2009 (Annexure C-3) upon the OPs to refund the excess amount charged form her but to no effect. Hence, this complaint.

2.                OPs No.1 and 2 filed written statement and took some preliminary objections. On merits, the advancement of loan of Rs.1,02,68,000/- vide letter dated 27.06.2008 has been admitted. However, it has been pleaded that the prepayment charges were rightly demanded as per sanction letter (Annexure A). As per sanction letter, the complainant shall pay a prepayment charge of 2% on the amount prepaid including the amount prepaid in last one year. Denying all the material allegations of the complainant and pleading that there has been no deficiency in service or unfair trade practice on their part prayer for dismissal of the complaint has been made. 

3.                OP No.3 filed written statement and took some preliminary objections. On merits, it has been denied that it was mandatory to obtain the insurance policy. It has been stated as per the clause 3b(ii) of the terms and conditions of the insurance policy, if there is full repayment of the loan, then the policy holder is entitled for the surrender value. In the present case, after surrender of the insurance policy, the amount of Rs.1,49,505.09 was credited in the account of the complainant. It has further been pleaded that the complainant enjoyed the life cover till the policy was cancelled. Denying all the material allegations of the complainant, prayer for dismissal of the complaint has been made. 

4.                 Parties led evidence in support of their contentions.

5.               We have heard the learned counsel for the parties and have also perused the record.

6.                The admitted facts may be noticed thus ;

a)                That the OPs sanctioned the housing loan of Rs.1,02,68,000/- vide letter dated 27.6.2008 to the complainant.

b)                That OP No.3 issued policy No.09690901 with date of commencement as 22.8.2008.

c)                That the complainant foreclosed the loan.

d)                That OP No.1 charged Rs.2,30,227/- as prepayment/foreclosure charges.

7.                The learned Counsel for the complainant argued that the complainant decided to foreclose the loan. The OPs No.1 & 2 had illegally charged Rs.2,30,227/- as prepayment/foreclosure charges.  It is further argued by the learned Counsel for the complainant that OP No.3 credited the amount of Rs.1,49,605.09 in the account of the complainant against the amount of Rs.2,48,253/-, so the insurance company had deducted Rs.98,647.91 illegally and arbitrarily.

8.                The learned Counsel for OPs No.1 and 2 raised the arguments that as per sanction letter, the complainant was under legal obligation to pay prepayment charges of 2% of the amount prepaid including the amount prepaid in the last one year.

9.                The learned Counsel for OP No.3 raised the arguments that as per Clause 3b(ii) of the terms and conditions of the insurance policy, if there is full repayment of the loan, then the policy holder is entitled for the surrender value, so in the case in hand, after surrender of the insurance policy, the amount of Rs.1,49,505.09 was rightly credited in the account of the complainant.

10.              The arguments raised by the learned Counsel for the complainant that there is no clause in the agreement with regard to foreclosure/prepayment charges is not acceptable in view of the original sanction letter dated 19.6.2008 produced on record. The learned Counsel for the parties had not disputed that the said offer letter for loan facility vide application No.779-0151073 did not bear the signatures of the parties. The letter, referred to above, contains the clause with regard to fees on full & final prepayment, wherein, it has been stated as under :-

“2% on amount prepaid and on all amounts tendered by the Borrower towards prepayment of the loan during the last one year from the date of final prepayment.”

Consequently, it is held that the said sanction letter is a part of the agreement, so the complainant is estopped from raising the plea that she is not liable to pay 2% as foreclosure/prepayment charges. The OPs have also produced on record the terms and conditions. The condition No.18 of the terms and conditions reads as under :-

“The Borrower/s shall not, without the approval of the Lender (which approval may be given subject to such terms and conditions as may be stipulated by the Lender including payment of minimum prepayment amount, prepayment charges or discounted interest and/or any other charges, plus applicable interest tax or other statutory levy), prepay the outstanding principal amount of the facility in full or in part, before the Due Dates. In the event any part prepayment of the facility is permitted by the Lender, the Lender shall be entitled to amend the repayment schedule/amount of installment(s) as specified in the Application Form(s) and the Borrower/s shall thereafter make payment of the installments as per such amended Application Form(s).”

11.               During the course of arguments, the learned Counsel for the OPs made a reference to the letter dated 19.10.2011 of National Housing Bank with regard to prepayment penalty on preclosure of housing loans, whereby, the decision has been taken that hereafter housing finance companies should not charge prepayment levy or penalty on pre-closure of housing loans, if the loan is on the floating interest rate basis and where the housing loan is on fixed interest rate basis and the loan is pre-closed by the borrowers out of their own sources.

12.               Admittedly, the letter dated 19.10.2011 is prospective in nature, so it will not have retrospective effect. More so, the perusal of the said letter makes it ample clear that housing finance companies are asked not to charge prepayment levy or penalty on pre-closure of housing loans after 19.10.2011, as in the said letter, the specific words has been used that hereafter, housing finance companies should not charge prepayment charges. This also means that the said letter has only a prospective effect and not retrospective effect. Therefore, the complainant cannot draw any advantage out of the said letter.     

13.           Now, it is clear that in case of full and final payment, prior to the date of normal expiry, the loanee shall be liable to pay 2% on the amount prepaid and on the amount paid by the borrower towards the repayment of the loan from the date of final payment. It is also clear that at the time of advancing/taking the loan, a sanction/offer letter dated 19.6.2008 was issued to the complainant, in which, it was mentioned that the loan would be advanced at floating rate of interest. It was also mentioned therein that in case of full and final prepayment, the OPs would have a legal right to charge foreclosure charges on full and final amount and also on the amount tendered by the borrower towards the prepayment from the date of final payment. The word ‘foreclosure’ actually means and used for the prepayment of the loan before the expiry of actual duration. The mere change of nomenclature of ‘foreclosure charges’ instead of ‘prepayment charges’ did not make the payment by the complainant at the time of prepayment of loan as illegal. Reliance placed on the judgment of own State Commission in Appeal No.417 of 2010 decided on 12.7.2011 titled as ICICI Bank Limited Vs. Hitesh Harjani.

14.           Admittedly, the payment of Rs.2,30,227/- was on account of prepayment/foreclosure charges. Therefore, as per sanction letter dated 19.6.2008 and also as per condition No.18 of the terms & conditions of the loan agreement, the OPs had a legal right to charge foreclosure charges. There is no dispute that in the instant case, the amount of Rs.2,30,227/- had been charged by the OPs-bank on account of foreclosure charges/prepayment charges, as the loan was paid before the expiry of the same. The court is to gather the intention of the parties and in view of this, it is held that the OPs intended to charge prepayment charges, as per the sanction letter dated 19.6.2008 and also as per condition No.18 of the terms & conditions of the loan agreement. Therefore, it is held without any hesitation that the OPs had a legal right to charge Rs.2,30,227/- on account of prepayment charges, as per the sanction letter and also as per the terms & conditions contained in the agreement, referred in para supra(s). More so, it is not disputed that the sanction letter was not signed by the parties to the lis i.e. complainant and the authorized signatory of the bank – OPs. Since, the complainant is signatory to the sanction letter which contains clause with regard to prepayment charges along with rates applicable, referred to above, so it is held without any hesitation that the demand raised by the OPs-bank of Rs.2,30,227/- on account of foreclosure charges/prepayment charges is legal and genuine.

15.           The OP No.3 has raised the plea that as per Clause 3b(ii) of the terms and conditions of the insurance policy, if there is full repayment of the loan, then the policy holder is entitled for the surrender value, so in the case in hand, after surrender of the insurance policy, the amount of Rs.1,49,505.09 was rightly credited in the account of the complainant. Admittedly, the OP No.3 has not produced on record any terms and conditions of the insurance policy that in case of full repayment of the loan, then the policy holder is entitled for the surrender value. The OP No.3 has also not filed any evidence on the file that how, the OP No.3 had deducted Rs.98,647.91. According to the complainant, if the amount of premium for the period of 20 years was Rs.2,48,253/- then the premium for 8 months comes to Rs.8275/- only whereas OP No.3 had deducted Rs.98,647.91.  The said averment is supported by the affidavit of the complainant, whereas, the OP No.3 had not supported the reply filed by it by the affidavit of competent officer. In view of this, we are of the opinion that the ends of justice would be well served if the direction is issued to OP No.3 for refund the amount of Rs.98,647.91 minus Rs.8275/- = Rs.90,372.91.

16.           As a result of the above discussion, the complaint is dismissed qua OPs No.1 and 2. The complaint is accepted qua OP No.3 only and the OP No.3 is directed to make the payment of Rs.90,372.91 to the complainant along with interest @ 12% p.a. from the date of filing of the complaint till its realization and Rs.10,000/- as costs of litigation within one month  from the date of receipt of the certified copy.

17.              The certified copies of this order be sent to the parties free of charge. The file be consigned.