BANGALORE URBAN DISTRICT, NO.8, SAHAKARA BHAVAN, CUNNINGHAM ROAD, BANGALORE – 560 052           

C.C.No.514/2012

DATED THIS THE 5^th APRIL 2013

PRESENT

SRI.J.N.HAVANUR, PRESIDENT

SRI.H.M.SHIVALINGAPPA, MEMBER

Complainants: -           

1.     Shri. M.Prabhudeva

S/o. M.Manneppa,

Aged about 48 years,

R/at: No.65, Prakruthi Plaza,

5^th Main Chamarajpet,

Bangalore - 18

2.     Smt.Prathibha.P.

W/o. Shri M.Prabhudeva

Aged about 42 years,

R/at: No.65, Prakruthi Plaza,

5^th Main Chamarajpet,

Bangalore - 18

V/s

Opposite parties: -                 

1.     Manager,

Corporation Bank,

Relief Asset HUM,

Zonal office, 5^th floor,

Nitesh Times square,

No.8, MG Road,

Bangalore-01

2.     Manager,

Corporation Bank,

Chamarajpet branch,

No.24, 3^rd Main, 4^th Cross,

Chamarajpet,

Bangalore-18

3.     The Banking Ombudsman of Karnataka, Reserve Bank of India, Nrupathunga Road,

Bangalore 

ORDER

SRI.J.N.HAVANUR, PRESIDENT

        This is a complaint filed by complainants against the OPs, under section 12 of the Consumer Protection Act, 1986, praying to pass an order, directing the OPs bank to hand over all the original documents of title pertaining to the property belonging to the complainant held as equitable mortgage by deposit of title deeds, and in the event of failure of the bank to hand over the documents, to pay Rs.25,000=00 per month  for illegally and unlawfully withholding the documents.  

2. The brief facts of the complaint can be stated as under.

Complainants are the owners of property, a residential site bearing no.1602 situated at BEML Employees Co-operative Housing Society Limited. Complainants approached the OP bank situated at Chamarajpet branch, Bangalore praying for loan in a sum of Rs.20.00 lakhs i.e. Rs.14.00 lakhs for purchase of site and Rs.6.00 lakhs for construction. The rate of interest for repayment of the amount is 8.5% per annum to be repaid in 180 months in 180 EMIs of Rs.19,625=00 each. Complainants complied with all the conditions imposed by the Bank and also discharged the entire liability. There is no outstanding liability pertaining to the loan borrowed. Complainants have deposited the entire title deeds by creating an equitable mortgage by deposit of title deeds pertaining to the site. Complainant addressed a letter to the OP bank requesting the OP bank to return the entire documents in view of the discharge of loan liability with interest. The bank on 24-1-2011 wrote a letter that the housing loan of Rs.20.00 lakhs as on 31-5-2006 for purchase of site and construction of the house, and that Rs.14.00 lakhs was released, disbursed on 16-6-2006 for purchase of site. Complainants are yet to construct the house as proposed while availing housing loan. Since the loan is utilized only for purchase of site, and to repay the entire loan at interest at 15% per annum from the date of disbursement and if there is a delay in reimbursing the interest, overdue interest at 20% will be charged extra, it is this letter that was questioned by the complainants on 19-12-2011 before the ombudsman. The reply sent by the OP bank indicates that guidelines on corporate home loan including charging of commercial rate of interest. The bank reiterated to state that, clause 15 of the guidelines purported to be the corporate home loan is required to be complied, this finding is wholly inappropriate; the reply given by the ombudsman is without application of mind and contrary to the terms and conditions of the loan. It is incumbent upon the OP bank that the terms and conditions and the scheme guidelines as applicable to corporate home loan should be applied. If such a scheme is being available, the sanction must also accompany the scheme. If the sanction is not accompanied by the scheme, the very sanction of the loan is not only misleading, but unexplainable in regard to the charging of interest. The agreed rate of interest is 8.50% as can be noticed from the document, document no.1 produced the letter sanctioning of loan. The letter dated 24-1-2011 is contrary. The grievance of the complainant is that, in the event of non construction of the building and purchase of the site, as admitted the bank could not and cannot impose interest @ 17.50%. On the reading of the corporate home loan for housing purposes, two clauses are mentioned, which are as (a) construction should commence within 12 months, (b) in case default of construction of house, rate of interest is charged to such loan is COBAR + 0.5% + 3% and the interest to this rate is applicable from the date of initial disbursement of loan. The said clause will have to be read with the other terms and conditions of granting loan. There is deficiency in service, lack of any representation, not sending demand within expiry of 12 months on the sanctioning of loan, interest having being received with the principal amount, as a premature discharge of loan liability, authorities, the bank cannot withhold and call upon payment of 17.50% interest. The action is illegal, unlawful and unjust, so seeks Redressal as a customer for the purpose of seeking return of the original documents, in view of the entire discharge of payment made. Hence the present complaint is filed.

3. After the service of notice, OPs no.1 and 2 have appeared through their counsel, and one K.Badrinarayana, Assistant Manager has appeared for OP no.3. OP no.2 has filed version and OP no.1 has filed a memo adopting version of OP no.2 as his version.

4. The averments of version of OP no.2 can be stated as under:

The complaint of complainant is not maintainable either in law or on facts; it is true that, complainants are the owners for the property bearing residential site no.1602 situated at BEML Employees Cooperative Housing Society Ltd, Bangalore. Complainants approached OP no.2 for CORP home loan for a sum of Rs.20.00 lakhs and out of which Rs.14.00 lakhs for purchase of site and Rs.6.00 lakhs for construction of house on the site purchased. Complainants have agreed to pay the said CORP home loan in 180 EMIs of Rs.19,695=00 each. The rate of interest for purchase of site and construction of house at the time of sanction was at Rs.8.50% per annum on floating basis subject to revision from time to time, the said rate of interest is not for purchase of site. The interest applicable to different types of loan are at different rates. It is incorrect to state that, complainants have complied with all the conditions imposed by the bank and it is not correct to state that they have discharged the entire loan liability. It is false to state that, there is no outstanding loan liability pertaining to the loan availed and it is not correct to state that statement of accounts indicates the repayment of entire loan amount. Complainants are still due and liable to pay to OP no.2 in a sum of Rs.4,63,042=00. It is true that, complainants have deposited the original title deeds pertaining to the property purchased by them to put up new residential house from the loan availed from the OP no.2 and created the mortgage of the subject property in favour of OP no.2. The said equitable mortgage created is still subsisting. Complainants have approached the OP no.2 for housing loan i.e. for purchase of site and construction of house. Complainants have failed to act in terms of the said loan and complainants having availed the said loan for purchase of site and construction of house have failed to construct the house on the site purchased and hereby committed the breach. From the above it is clear that the complainants by making false representation to avail the benefit of housing loan have availed the CORP home loan for purchase of site and thereby they have committed the breach of terms of the sanction and liable to pay interest at commercial rate. After came to know the breach committed by complainants in not complying the terms of loan the OP no.2 bank called upon complainants to pay the said loan with commercial rate of interest at 17.15% applicable for purchase of site. Since complainants have failed to utilize the loan availed for the purpose for which the same was granted OP no.2 has rightly called upon complainants to repay the entire loan with interest at Rs.17.15% per annum. Complainants instead of complying the demand made by the OP no.2 they filed a complaint before the Banking Ombudsman of Karnataka, Reserve Bank of India, Nrupatunga Road, Bangalore in complaint registered no.201112002001619 on similar averment and allegation made in the present complaint. The OPs no.1 and 2 have filed detail objection before the banking ombudsman. Complainants have duly acknowledged the credit sanction intimation dated 16-6-2006. The banking ombudsman Karnataka by appreciating the response contentions raised by the OPs was pleased to close the complaint filed by complainants holding that complainants have failed to abide by stipulated terms and conditions of the CORP home scheme guidelines by an order dated 19-1-2012. The banking ombudsman of Karnataka by its order dated 19-1-2012 has confirmed that complainants have violated the stipulations of the housing loan and thereby liable to pay interest at commercial rate. On this ground along the complaint filed by complainants is liable to be dismissed. The 2^nd complainant on the very same ground for the very same relief before this forum is not maintainable. Complainants after dismissal of the above complaint have got issued a legal notice making false allegations against the OPs and threatened to initiate criminal proceedings before the magistrate court for seizure of documents. OPs have sent suitable reply. It is an undisputed fact that, the loan in question was granted for purchase of site and construction of house. Complainants have not constructed the house and committed the breach. In view of the admitted facts that complainants have not complied the terms of the CORP home loan they are not entitled for the benefit available for the CORP home loan and liable to pay interest at commercial rate for purchase of site. For no fault of the OPs, complainants are not entitled to blame them. OP no.2 being a nationalized bank has no personal or private interest and they are acting only in accordance with the guidelines of the Reserve bank of India. The contention of complainants that the agreed rate of interest is at Rs.8.50% is not correct. It is not correct to state that, the bank is not entitled to impose interest at 17.50% for non construction of the house by complainants. Complainants having confirmed the terms and conditions of the loan have also executed a letter of under taking, it is not correct to state that complainants are ignorant and there is no customer explanation and it is false to state that there is deficiency in service on the part of the OPs. In fact, there is no deficiency in service or there is any breach of terms on the part of the OPs. As on 15-5-2012 complainants are still due and liable to pay in a sum of Rs.4,63,042=00 i.e. interest applied upto 15-5-2012. Complainants instead of making the said payment have filed the false case with a malafide intention to have wrongful gain. This forum has no jurisdiction to entertain the complaint since the loan in question availed is not yet cleared by complainants. There is no cause of action to file the complaint. Hence it is prayed to dismiss the complaint with cost in the interest of justice and equity.

5. The averment of version of OP no.3 can be stated as under:

The third OP is an authority appointed under the banking ombudsman scheme 2006 framed and introduced by the RBI. On receipt of the complaint under the banking ombudsman scheme 2006, the OP no.3 dealt with it in accordance with the provisions of the said scheme. On enquiry from the concerned bank, it was found that loan was sanctioned to the complainant under crop home scheme, since the complainant had failed to construct house within 24 months, the bank has charged commercial rate of interest in terms of the said corp home loan scheme. Having regard to these facts and after examination of the record placed by the parties, this OP had closed the complaint dated 19-12-2011in terms of clause 13 (a) of the banking ombudsman scheme, 2006. The averment of the complainants that this OP has without application of mind closed the complaint is baseless and totally denied and the complainants are put to strict proof of the same, and the complaint has been filed before this forum despite knowing the fact that this OP is meant for providing inexpensive and expeditious resolution of complaint against the banks. Hence, the complaint is liable to be dismissed in limine in terms of the provisions of section 26 of the CP Act. The forum may please dismiss the complaint as against this OP with cost under section 26 of the CP Act.

6. So from the averments of the complaint of the complainant and objection of the OPs no 1 to 3, the following points arise for our consideration.

1.                           Whether the complainants prove that, the action of the OPs in charging the interest at the rate of 17.50% is illegal, unlawful and unjust?

2.                           If point no.1 is answered in the affirmative, what relief, the complainants are entitled to?

3.                           What order?

7. Our findings on the above points are;

          Point no.1:  In the Negative

Point no.2:  In view of the negative findings on the

Point no.1, the complainants are not entitled to any relief as prayed in the complaint

          Point no.3:  For the following order

REASONS

          8. So as to prove the case, the complainant no.1 has filed his affidavit by way of evidence and produced five copies of documents with list dated 13-3-2012. On the other hand, one K.Rathnakara Shetty, Chief Manager working in OP no.2 office has filed his affidavit on behalf of the OP no.1 and produced ten copies of documents alongwith list dated 17-5-2012 and three copies of documents alongwith a memo dated 18-12-2012. We have heard the arguments of both parties, and we have gone through the oral and documentary evidence of both sides in between line.

9. One M.Prabhudeva, who being the complainant no.1 has deposed in his affidavit stating that, he and his wife are the absolute owners of the property, a residential site bearing no.1602 situated at BEML Employees Co-operative Housing Society Limited and they approached the OP no.2 for loan in a sum of Rs.20.00 lakhs i.e. Rs.14.00 lakhs for purchase of site and Rs.6.00 lakhs for construction of house, and the rate of interest for the said loan was 8.5% p.a. and the loan was to be repaid in 180 months installments i.e. Rs.19.625=00 per month, they complied with all the conditions imposed by the OP no.1 and 2 and also the entire loan amount was discharged together with interest, and there was no outstanding liability pertaining to the loan borrowed by them. A statement of accounts shows that, the loan amount borrowed has been repaid completely and written a letter to the bank requesting to return the entire title documents in view of the fact that, the entire loan liability together with interest was paid. The bank by a reply dated 24-1-2011 informed that out of the total housing loan of Rs.20.00 lakhs; Rs.14.00 lakhs was released, disbursed on 16-6-2006 for purchase of site and that the construction was not undertaken, so the interest for the entire loan would be 15% per annum from the date of disbursement of the loan amount, that in case of delay in payment of interest of 15% interest at 20% would be charged extra. They wrote a letter dated 19-12-2011 to the OP no.3 questioning the arbitrary act of the OPs no.1 and 2, the OP no.3 sent a reply. The finding of the 3^rd OP is totally improper and their grievance is that the bank could not and cannot impost interest at 17.50% in the event of non construction of building. In the event of non construction of the building there should have been intimation by the bank within 12 months, since it has not been intimated by the bank, the action of the bank is improper. When there is no liability to pay 17.5% interest, the statement of objections are contrary to the terms entered into between the bank and themselves and there is deficiency of service on the part of the OPs, so it is prayed to direct the bank to hand over all the original title documents to him and to pay Rs.25,000=00 per month towards compensation for illegally and unlawfully withholding the title documents evenafter the entire loan liability has been discharged by them.

10. By a careful reading of the averment of the complaint and evidence of the complainant no.1 as mentioned above, it is made manifest that, the complainant no.1 has tendered his evidence in accordance with the averments of the complaint. Let us have a look at the relevant documents of the complainants, so as to know whether the oral testimony of the complainant no.1 stands corroborated by documentary evidence or not. Document no.1 of the complainant list dated 13-3-2012 is the copy of sanction of loan order of OP dated 9-6-2006 in the name of complainant and as per the said letter, it is transpired that, the complainants were sanctioned Rs.20.00 lakhs loan i.e. Rs.14.00 lakhs for purchase of site, and Rs.6.00 lakhs for construction of house, and they have granted 180 months by granting of EMIs of Rs.19,695=00 at 8.50% p.a. on floating rate basis subject to revision from time to time, and that sanction letter contained terms and conditions of the bank. Document no.2 is the copy of statement of account of the complainants issued by the OP bank and that statement of account shows that, the complainants have cleared the loan of Rs.14.00 lakhs by paying the loan amount alongwith interest.  Document no.3 is the copy of letter of OP dated 24-1-2011 addressed to the complainants stating that, after sanction of loan of Rs.20.00 lakhs for purchase of site and construction of house, a sum of Rs.14.00 lakhs was released and they are yet to construct the house, since the loan is utilized only for purchase of the site, so they are requesting to pay the loan amount with commercial rate of interest, presently 17.15% p.a. from the date of disbursement and if there is delay in reimbursing the amount 2% interest per annum will be charged extra. Document no.4 is the copy of reply letter of complainant no.1 addressed to the bank dated 31-1-2011 stating that, he has purchased a site in good intention to construct a residence, but with financial constraints, he is not able to build the residence till today, he will make arrangements to clear it at the earliest, but with the same rate of interest as per the sanction. Document no.5 is the copy of the complaint of complainant submitted to the banking ombudsman of Karnataka dated 19-12-2011 questioning the charging of commercial rate of interest. Document no.6 is the copy letter of the banking Ombudsman dated 19-1-2012 in favour of complainant stating that the bank has charged commercial rate of interest by invoking clause 14 of the Corp Home Scheme guidelines and the complainants have failed to abide by the stipulated terms and conditions, so they are not proceedings further with the complaint in terms of clause 13 (a) 8 (1) (2) of the Banking Ombudsman Scheme, 2006. Document no.7 of the complainants is the copy of letter of the Deputy General Manager of the bank addressed to the Assistant General Manager of the Bank praying to lodge the subject complaint of the complainant. Document no.8 is the copy of guidelines of Corp Home loan for housing purpose and on page 3 at clause of 14 of the said documents, it is stated as under; “In case of default in construction of house, rate of interest is charged to such loan is COBRAR +0.50% +3% and the interest at this rate is applicable from the date of initial disbursement of loan”. Last document of the complainant is the copy of undertaking letter given by the complainants in favour of the bank dated 16-6-2006 which is signed by both complainants.

11. At this stage, it is relevant to have a look at the material evidence of the OPs. One K.Rathnakara Shetty, Chief Manager working in OP no.2 office has stated in his affidavit that, after sanction of loan of Rs.20.00 lakhs, the complainants have failed to utilize the loan for construction of house, so they are liable to pay interest at commercial floating rate, the complainants are still due and liable to pay in a sum of Rs.4,63,042=00, the complainants have failed to pay the said outstanding amount to the OP, and the say of the complainants that, they have complied the conditions imposed by the bank and there is not outstanding liability in respect of the said loan is not correct. The complainants have committed breach of terms and conditions of the corp home loan and not utilized the loan for the purpose, for which it was availed and they are not entitled to any relief. The complainants have not disclosed the true facts, and they have not come to this forum with clean hands, the said act of the complainants is nothing but to escape from their liability to pay the amount due. So they are not entitled to any relief, so the complaint be dismissed with cost.

12. The OPs have produced copy of documents. The documents of the OPs are the same documents which were produced by the complainants. The OPs have produced the copy of Corp home scheme introduced as per H.O. CIR370/1998 dated 1-12-1998, and in that document on page 10 at relevant clause 15, it is stated as under; “In case of default in construction of house, rate of interest to be charged to such loan is 18.25% and shall be collected from the date of initial disbursement of loan”.

13. By making careful scrutiny of the material evidence of both parties, it is unambiguously clear that, after sanction of loan of Rs.20.00 lakhs by OPs bank for purchase of the site and construction of the house, the complainants have availed only Rs.14.00 lakhs towards purchase of site, but they did not take loan of Rs.6.00 lakhs for construction of the house. The complainants have paid the entire amount of Rs.14.00 lakhs, as per the statement of accounts produced. When the complainant prayed to release the title documents to the OPs bank, the OPs bank have informed the complainant to pay the loan amount with commercial rate of interest, and the complainants have refused to pay the balance amount. It is an admitted fact between the parties that, the complainants have signed all the documents of the OP including letter of undertaken, agreeing to pay interest at 8.5% p.a. on floating rate basis subject to revision from time to time. After agreeing to terms and conditions of loan availed, the complainants are not entitled to challenge the rate of interest charged by the OP bank. Further, it is an undisputed fact that, the loan was sanctioned to the complainants by OPs for purchase of the site and construction of house together, but the complainants have not constructed the house and have availed only partial loan towards purchase of the site only. In fact, the complainants have not complied the terms and conditions of Corp Home Loan, as per the terms and conditions of the loan sanctioned in favour of the complainants. So under the circumstances, the complainants are not entitled to challenge the rate of interest charged by the OPs bank. As per the documents of the OPs, it is reveled that, the complainants are due and liable to pay in all a sum of Rs.4,63,042=00 to the OPs bank. Unless and until, the complainants clear the said balance of loan amount, they are not disentitled to take title documents. So viewing the case of the complainants, on the back ground of the documents of both parties, it is made crystal clear that, the OPs bank has acted strictly in accordance with the terms and conditions of the loan sanctioned in the name of the complainants and also guidelines of the bank rules and regulations and there is no negligence and deficiency of service on the part of the OPs in claiming the balance amount from the complainants. On the other hand, the complainants are negligent in not availing the house loan properly. After having signed documents of OPs bank by the complainants by availing the house loan agreeing to the terms and conditions of loan availed, the complainants are not entitled to raise any voice against the OPs bank. The OPs bank is having every right to charge interest as per the guidelines of the bank rules and regulations and also terms and conditions of the housing loan sanctioned in the name of the complainants. So, under the circumstances, we hold that, there is no negligence or deficiency of service on the part of the OPs in claming the amount due from the complainants. The oral evidence of the complainant no.1 that, the action of OP in charging the interest at 17.50% interest is illegal, unlawful and unjust is not corroborated by any clear cogent and consistent material evidence. The complainants who knock the doors of this forum seeking relief have failed to prove this point satisfactorily, and accordingly, we answer this point in a negative.

          14. In view of the negative findings on the point no.1, the complainants are not entitled to any relief as prayed in the complaint. So, we answer this point in a negative. In the result, for the forgoing reasons, we proceed to pass the following order.

ORDER

          The complaint of the complainant is hereby dismissed. So, under the circumstance, both parties shall bear their own cost.

          Supply free copy of this order to both parties.  

          Dictated to the Stenographer, got it transcribed and corrected, pronounced in the Open forum on this the 5^th day of April 2012.

MEMBER                                 PRESIDENT