BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, MYSORE-570023

CONSUMER COMPLAINT NO.342/2017

DATED ON THIS THE 13^th APRIL 2018

      Present:  1) Sri. H.M.Shivakumara Swamy

B.A., LLB., - PRESIDENT  

                     2) Sri. Devakumar.M.C.                   

                                                B.E., LLB., PGDCLP   - MEMBER

Sri. Devakumar,M.C.

Member

1.     The complainant filed the complaint under Section 12 of the Consumer Protection Act 1986, against the opposite parties alleging unfair trade practice and seeking a direction to refund Rs.60,521/- with interest at 18% p.a. and also to refund the excess interest amount received on first E.M.I. of Rs.20,588/- and to pay compensation of Rs.1,00,000/- for the mental agony, hardship caused with litigation expenses and such other reliefs.

2.     The complainant availed loan of Rs.12,11,680/- from O.P.1, by mortgaging his property.  The E.M.I. for repayment was fixed at Rs.20,588/- and the same was paid promptly.  The O.P.1 demanded and received the first E.M.I. amount immediately after three days of disbursal of the loan amount with interest for the entire month instead of three days which is alleged as unfair practice by O.P.1.

3.     The complainant unable to pay the loan amount, decided to sell his mortgaged property for a sum of Rs.29,00,000/- and entered into an agreement on 30.03.2017, by receiving an advance amount and agreed to receive the balance amount at the time of registration of the Sale Deed.  Thereby the complainant was constrained to pre-close the loan availed with O.P.1, made the representation to O.P.1, on 19.07.2017 seeking permission forpre-closure and without insisting for pre-closure charges and to give deduction of excess interest amount collected with first E.M.I. amount.
4.     The complainant arranged his own funds for pre-closure of the loan, without borrowing loan from Bank/other financial institutions.  Therefore complainant is not liable to pay any pre-closure charges to O.P.1 as per the terms and conditions, enshrined at clause No.1a.  Thus the demand of Rs.12,48,033/- inclusive of pre-closure charges was alleged as illegal and unfair practice.

5.     The complainant paid the entire amount (Rs.12,48,033/-) on 27.07.2017, as per the demand letter dt.15.07.2017 through a D.D. drawn on Syndicate Bank, St.Philomena’s College Campus Branch, Mysore.  Thereby, the aggrieved complaint alleged the unfair trade practice and filed the complaint seeking reliefs.

6.      The O.P.1, upon service of notice represented through his Counsel, but failed to file objections.

7.      The O.P.2, despite of service of notice, remained absent and hence placed exparte.

8.      To establish the facts, the complainant lead evidence by filing affidavit with several documents.  Filing written arguments, the counsel for the complainant submitted oral arguments.  Perused the material on record and posted for orders.
9.     The points arose for our consideration are:-

1. Whether the complainant established the unfair trade practice by the opposite parties for collecting pre-closure charges as against the terms and conditions of the loan agreement and  thereby he is entitled for the reliefs sought?
2. What Order?

10.    Our findings on the aforesaid points are as follows:

Point No.1 :- Partly in the affirmative

Point No.2 :- As per final order for the following reasons.

:: R E A S O N S ::

11. Point No.1:- The opposite party No.1 issued loan of Rs.12,11,680/- to the complainant subject to the terms and conditions attached to the loan sanction letter.  Pleading his inability, the complainant, sought permission for pre-closure of the loan without levying preclosure charges and other charges and also requesting a deduction to the extent of interest collected on first instalment.

12. Considering request letter by the complainant, the O.P.1, vide letter dt.15.07.2017, demanded a sum of Rs.12,48,033/- inclusive of broken period interest, E.M.I. overdue, interest on E.M.I. overdue, preclosure charges and applicable taxes etc.,

13. Based on the Demand letter dt.15.07.2017, the complainant vide D.D.No.723209 dt.27.07.2017 paid a sum of Rs.12,48,033/- to the O.P.1.  However, based on the most important terms and conditions at clause No.1a to the loan sanction letter dt.23.10.2016.  The demand made by O.P.1 for pre-closure charges was alleged illegal and unfair.  Hence the complaint.

14. On perusal of the document titled as “Most Important terms and conditions” attached to the Loan Sanction letter dt.23.10.2016, in case of fore-closure, charges at 2%(plus applicable taxes) shall be applicable for the loan prior to loan repayment period under fixed rate of interest, where the loan is pre-closed by borrowing from Bank/HFC/NBFC/Financial Institution i.e. where the pre-closure is not through own funds.

15. In the case on hand, the complainant has made arrangement of funds for pre-closure of loan availed by him, with opposite parties, by entering into an agreement in respect of his mortgaged property on 30.03.2017.  This is supported with the registered document executed by the complainant on 01.09.2017.  Thereby the complainant established that, he has arranged own funds to repay the loan amount for pre-closure, without availing loan from Bank/HFC/NBFC/Financial Institution.  As such, as per clause 1a of the most important terms and conditions, the complainant is not liable to pay any pre-closure charges.  In view of the same, the opposite parties demand for payment of pre-closure charges with other charges is not justified and collection of the same is held as illegal.  Accordingly, the point No.1 is answered partly in the affirmative.

16. Point No.2:-  With the above observations in point No.1, we  proceed to pass the following order:-

:: O R D E R ::

1. The complaint is allowed in part
2. The opposite parties are hereby directed to refund the excess amount Rs.60,521/- with interest at 10% p.a. from  the date of filing the complaint, till payment, within 30 days of this order.  In default, to pay penalty of Rs.50/- per day until compliance.
3. The opposite parties shall pay Rs.3,000/- compensation for the unfair trade practice and Rs.2,000/- towards the cost of proceedings to the complainant within 30 days of this order.  Failing to pay, shall pay interest at 10% p.a. on the said total sum of Rs.5,000/- until payment.
4. In case of default to comply this order, the opposite parties  to undergo imprisonment and also liable for fine under section 27 of the C.P.Act, 1986.

5. Give the copies of this order to the parties, as per Rules.

(Dictated to the Stenographer transcribed, typed by her, transcript corrected by us and then pronounced in open court on this the 13^th April 2018)

                                     (H.M.SHIVAKUMARA SWAMY) 

                                                 PRESIDENT     

                                              (DEVAKUMAR.M.C.)

                                                   MEMBER