DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, KOZHIKODE

PRESENT: Sri. P.C. PAULACHEN, M.Com, LLB    : PRESIDENT

Smt. PRIYA.S, BAL, LLB, MBA (HRM) :  MEMBER

Sri.V. BALAKRISHNAN, M Tech, MBA, LL.B, FIE: MEMBER

Friday the 29^th day of December 2023

CC.155/2022

Complainants

1.               Subramaniyan,

Edakkattil (HO),

Muttanchery. P. O,

                        Narikkuni,

Kozhikode – 673585

2.               Jisha. M,

W/o. Subramaniyan,

Edakkattil (HO),

Muttanchery. P. O,

                        Narikkuni,

Kozhikode – 673585

Opposite Party

                          Manager,

GIC Housing Finance Ltd,

                          4^th Floor,

Holiday City Centre Building,

Opp. Kurusupally, Bank Road,

Kozhikode – 673001

            (By Adv.  Sri. P. K. Soman)

ORDER

By Sri.V.BALAKRISHNAN  - MEMBER

            This is a complaint filed under Section 35 of the Consumer Protection Act, 2019.

2. The case of the complainants, in brief, is as follows:

The complainants approached the opposite party for a housing loan and that was sanctioned on 24/12/2018 for an amount of Rs. 22 lakhs including the Future General Insurance Premium of Rs. 67,860/-. The purpose of the loan was to construct the residential building. The loan re payment period was fixed as 300 months with EMI of Rs. 11,841/-. Even though an amount of Rs. 22 lakhs was sanctioned, the opposite party paid an amount of Rs. 19,93,506/- only towards the total amount. Thereafter when the complainants approached them for balance amount the officials advised to apply for an additional loan amount of Rs. 5 lakhs more, so as to complete the house construction.

3. In addition to that the officials of the opposite party also demanded an amount of Rs. 45,000/-, as insurance premium payment, for which the complainants were not ready to pay. At the time of availing the loan the opposite party had already deducted an amount of Rs. 67,860/- as insurance premium and there is no reason or justification on the part of the opposite party to demand an additional insurance premium from the complainants. In the above circumstances, they approached HDFC Bank, Calicut to take over the loan liability with the opposite party and foreclosure of the mortgage. HDFC Bank then issued a cheque in favour of the opposite party in respect of the loan amount, which was due and payable by the complainants. When the opposite party was approached to do foreclosure of the mortgage, they insisted the complainants to pay an amount of Rs. 47,048/- as additional premium amount for foreclosure. The demand for this additional premium by the opposite party amounts to deficiency of service and unfair trade practice. Finally the complainants were constrained to make the payment under protest on 17/01/2022 and receipt of payment was received. Such an act of the opposite party caused much mental agony and hardships to the complainants. 
4. The complainants have approached this commission to give a direction to the opposite party to refund the amount of Rs. 47,048/- with 12% interest and to pay Rs. 10,000/- as compensation towards the financial loss, hardships and mental agony suffered.
5. The opposite party resisted the contentions of the complainants by filing version. Rs. 22 lakhs was sanctioned based on the valuation of the property mortgaged, age of the loanees, income of the loanees and period of loan. The opposite party specifically mentioned that all the terms and conditions of the loan sanctioned were known in advance to the complainants and they had signed the loan offer letter. Loan was sanctioned for Rs. 24 lakhs including general insurance amount of Rs, 67,680/-. The total instalment was fixed as 300 months, rate of interest 9.25% per annum (fixed rate for 61 months and there after floating rate). EMI amount was fixed as 18,841 payable in 300 instalments. Foreclosure conditions were also stated in loan sanction letter. The complainants availed the loan under in fixed and floating combination rate. For 161 months it was in fixed rate of interest and the remaining period with floating rate of interest. If the complainant desires to close the loan in the fixed rate interest period the foreclosure conditions specifically mention that the charges should be 2% plus additional taxes and levy charges that might be applicable from time of the outstanding amount of prepayment through re finance.
6. In the case of floating rate of interest the loan condition specify that no prepayment charges shall be payable on account of part or full payments.
7. According to opposite party, the complainant had pre closed the loan availed by them within the period of fixed rate of interest that is within the 61 months period. The loan was also closed through the method of takeover by the HDFC bank and not by complainant’s own fund. So the complainants are not entitled to get any refund or interest or any compensation. Hence the opposite party prays for the dismissal of the complaint.
8. The points that arise for determination in this case are;                                                                                                                                        1) Whether there is any deficiency of service or unfair trade practice on the part of the opposite parties, as alleged?

                2) Reliefs and costs.

9. The first complainant was examined as PW1 and Exts A1 to A4 were marked on the side of complainants. Exts B1 to B3 were marked on the side of opposite party.
10. Heard both sides. Argument notes are also filed.
11. Point No.1: The complainants have approached this Commission seeking a direction to opposite party to refund an amount of Rs. 47,048/- collected as loan foreclosure charges with 12% interest. Compensation to the tune of Rs. 10,000/- for hardship and mental agony suffered is also demanded.
12. PW1 has filed the proof affidavit and deposed in terms of averments in the complaint. Ext A1 is the copy of loan offer letter issued by opposite party, Ext A2 is the copy of cheque receipt issued by opposite party to the complainants, Ext A3 is the letter issued by opposite party to the complainants and Ext A4 is the copy of another cheque receipt issued by the opposite party to the complainants. Ext B1 is the loan offer letter, Ext B2 is the copy of Disbursement Memo issued to complainants and Ext B3 is the copy of letter showing details of insurance amount refunded to the complainants.
13. The main contention of the complainants is that the act of collecting foreclosure charges of the loan by the opposite party amounts to deficiency of service and unfair trade practice. Ext A1 (sale as ExtB1 ) shows the details of loan sanctioned by the opposite party to the complainants. The loan repayment period is 300 months with rate of interest 9.25% per annum (fixed for 61 months and there after Floating Rate Basis). In the ANNEXURE attached to Ext B1, the terms and conditions of premature closure of the loan account are also clearly stated. As per clause 6(a) no. pre-payment charges shall be payable on account of part of full pre-payment in case of Housing Loans with Floating Rate of interest. Clause 6(c) stipulation states about Fixed and Floating (Variable) Rate of Interest loan (Combined rate). Conditions 6(c)1 clearly states that foreclosure charges shall be 2% of the outstanding amounts being so pre-paid which is applicable in period of availing fixed rate interest in combination rate systems. It is an admitted fact that these conditions as shown in ANNEXURE of Ext B1 were signed by the complainants and known to them earlier.
14. In the present case, the loan was sanctioned on 24/12/2018. As per Ext A2 the foreclosure cheque was presented on 31/12/2021. The effective period of fixed rate of interest is 61 months. So the complainants had executed the foreclosure steps within the fixed rate applicable period. So as per the already admitted and signed loan offer letter conditions, the complainants are bound to pay the foreclosure charges. So the Levying foreclosure charges by the opposite party is legal. That being the position, no deficiency of service or unfair trade practice can be attributed against the opposite party.
15. The circular of RISERVE BANK OF INDIA RB1/2019 – 20/9 DBR. Dir. BC No. 08/13. 03.00/2019-20 dated 02/08/2019 is about Levy of Foreclosure charges/ Pre-payment penalty. This circular prohibits the banks in receiving foreclosure charge/ pre-payment penalties in case of Floating Rate Terms Loans. As per this circular also, the complainants here in are eligible only if they had initiated the foreclosure steps after 61 months of sanctioned date of loan. The allegation that the complainants were not informed properly about the terms and conditions cannot be countenanced since Ext B1 is  signed and admitted  by both the complainants.
16. With the above evidence in hand, we find that the complainants could not establish any deficiency of service or unfair trade practice on part of opposite party. Consequently the complainants are not entitled to seek the re-payment of foreclosure  charges or claims  any.
17. Point No. 2: In view of the finding on the above point, the relief sought for is not allowable and complaint is only to be dismissed.

In the result, the complaint is dismissed. However, no order as to costs

Pronounced in open Commission on this, the 29^th day of December, 2023.

Date of Filing:  01/07/2022

                                   Sd/-                                                               Sd/-                                                          Sd/-

                           PRESIDENT                                                  MEMBER                                               MEMBER

APPENDIX

Exhibits for the Complainant :

Ext.A1 – Copy of loan offer letter issued by opposite party.

Ext.A2 – Copy of cheque receipt issued by opposite party to the complainants.

Ext.A3 – Letter issued by opposite party to the complainants.

Ext.A4 - Copy of another cheque receipt issued by the opposite party to the complainants.

Exhibits for the Opposite Party

Ext.B1 – Loan offer letter

Ext.B2 – Copy of Disbursement Memo issued to complainants

Ext.B3 – Copy of letter showing details of insurance amount refunded to the complainants.

Witnesses for the Complainant

PW1 - Subramaniyan, (Complainant)

                                           Sd/-                                                              Sd/-                                                  Sd/-

                                   PRESIDENT                                                 MEMBER                                       MEMBER

True Copy,      

                                                                                        Sd/-

                                                       Assistant Registrar.