Haryana

StateCommission

A/554/2016

ICICI HOME FINANCE LTD. - Complainant(s)

Versus

MANISH JAIN - Opp.Party(s)

SANDEEP SURI

25 Jul 2017

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION HARYANA, PANCHKULA

                                                 

First Appeal No  :      554 of 2016

Date of Institution:      17.06.2016

Date of Decision :       25.07.2017

 

ICICI Home Finance Limited, 2^nd Floor, GT Road, Opposite Hotel MID Town, Panipat.

                                      Appellant-Opposite Party

Versus

 

Manish Jain s/o Sh. Mahabir Prasad, E-17, Industrial Area, Sonipat.

                                      Respondent-Complainant

 

CORAM:             Hon’ble Mr. Justice Nawab Singh, President.

                             Mr. Balbir Singh, Judicial Member.

                                                                                                         

Present:               Shri Sandeep Suri, Advocate for appellant.

Shri Madan Sandhu, Advocate for respondent.

 

                                                   O R D E R

 

BALBIR SINGH, JUDICIAL MEMBER

 

        ICICI Home Finance Limited-Opposite Party, is in appeal against the order dated May 2^nd, 2016 passed by District Consumer Disputes Redressal Forum, Sonipat (for short ‘the District Forum’) whereby complaint filed by Manish Jain-complainant (respondent herein) was allowed. The opposite party/appellant was directed to charge interest on the loan amount at the rate of 11% per annum instead of 16.75% per annum. 

2.                As per version of the complainant, in the month of April, 2008 the opposite party-appellant sanctioned house loan amounting to Rs.24,30,000/-. The complainant approached Sonipat Branch of the opposite party but the loan was sanctioned from Panipat Branch under account No.NHPNP 00000730966. The complainant was told that rate of interest of the opposite party was lower than the other banks and financial institutions. The complainant used to pay instalments of the house loan regularly up to the year 2009. Due to some unavoidable circumstances, the complainant could not deposit instalments of the loan amount for a period of 30 months but on December 15^th, 2011, the complainant made payment of all earlier instalments of the loan amount including interest total amounting to Rs.10,22,647/- vide cheque No.537580. Despite time and again requests of the complainant, the opposite parties did not supply copy of the loan agreement as well as statement of account to the complainant. After December 15^th, 2011, the complainant made payment of installments of the loan amount regularly. Up to the date of filing of the complaint, the complainant had already made payment of an amount of Rs.26,21,743/-  including interest. The opposite party vide notice dated July 6^th, 2015 raised demand mentioning the balance loan amount including interest as Rs.28,38,729/-. 

3.                As per version of the complainant, the opposite party is charging interest from the complainant 6% more than the other banks and financial institutions illegally. At present the opposite party is claiming interest at the rate of 16% per annum whereas rate of interest regarding house loan in other banks and financial institutions is less than 11% per annum. The complainant had also issued legal notice to the opposite party that he was ready to make payment of the total balance loan amount with proper calculation of interest but the complainant received no reply of that legal notice. The complainant has prayed that the opposite party be directed to provide a copy of loan agreement and statement of home loan account to provide balance loan amount calculated on the basis of prevailing rate of interest; to pay an amount of Rs.10.00 lacs for un-necessary harassment and mental agony and financial loss caused to the complainant and an amount of Rs.11,000/- as litigation expenses.

4.                The opposite party in its written version has taken plea that the complaint is not maintainable in the present form; that the Consumer Forum has no jurisdiction to decide this complaint as the loan was advanced for commercial purpose and that the Consumer Forum has no territorial jurisdiction to entertain and decide this complaint. It is admitted fact that an amount of Rs.24,30,000/- was sanctioned by the opposite party as house loan in favour of the complainant against property on March 31^st, 2008. The above mentioned loan amount was availed by the complainant and at the time of sanction, the agreed rate of interest was 17.10% with a variation of -1%. The instalments of the loan amount were to be paid on monthly basis and it was agreed that the opposite parties shall claim floating rate of interest in future. As on December 23^rd, 2015, an amount of Rs.30,40,840/- including interest was outstanding towards the complainant. It is denied that the opposite party ever gave assurance that the interest on overdue payment would be waived of in case the complainant makes payment of Equated Monthly Installments (EMI) regularly. It is pleaded that in fact, the complainant has obtained the loan against property and it is not a simple case of home loan. The interest amount is being claimed in terms of agreement. The opposite party has prayed that the complaint filed by the complainant be dismissed with costs.

5.                Both the parties have led evidence in support of their respective claims.

6.                After hearing arguments, vide impugned order dated May 02^nd, 2016 the complaint filed by the complainant was allowed directing the opposite party to claim interest from the complainant at the rate of 11% per annum instead of 16.75% per annum. The prayer of the opposite party to claim floating rate of interest was declined.

7.                Aggrieved with the impugned order dated May 02^nd, 2015, the opposite party has filed the present appeal with a prayer to set aside the impugned order and to dismiss the complaint.

8.                We have heard learned counsel for the parties and perused the case file.

9.                During the course of arguments, it was a common case of both the parties that the opposite party sanctioned an amount of Rs.24,30,000/- as home loan, against property, under account No.NHPNP 00000730966 on March 31^st, 2008. It is also admitted fact that in the month of April, 2008, the above mentioned loan amount was availed by the complainant. It is also an admitted fact that the complainant made payment of installments of the loan amount regularly up to the year 2009 and thereafter deposited an amount of Rs.10,22,647/- vide cheque No.537580 on December 15^th, 2011 and made payment of installments of the loan amount with interest up to December 15^th, 2011. The problem arose regarding deposit of the remaining installments of the loan amount as the complainant came to know from a letter dated May 01^st, 2015 (Annexure C-8) issued by the opposite party that interest was being claimed by the opposite party at the rate of 16.75% per annum.  It is also admitted fact that out of the total loan amount advanced, the complainant had made payment of an amount of Rs.26,21,473/- including interest prior to the date of filing of the complaint. Vide legal notice dated July 06^th, 2015, the opposite party raised demand of an amount of Rs.28,38,729/- as balance unpaid loan amount including interest. The opposite party in its written version has taken plea that as on December 23^rd, 2015, an amount of Rs.30,40,840/- was outstanding towards the complainant including interest amount.

10.              The complainant has already made payment of more than the actual principal amount of Rs.24,30,000/- and still as on December 23^rd, 2015, an amount of Rs.30,40,840/- was shown due towards the complainant. All it happened due to interest claimed by the opposite party on rates higher than the other banks and financial institutions. Opposite Party has taken plea that a loan agreement was executed before sanction of the loan amount.  The complainant has taken plea that he requested number of times for providing him copy of the loan agreement with account statement and he was ready to make payment of the remaining loan amount in lump sum also but the opposite party did not provide copy of the loan agreement or statement of account. The opposite party has also admitted that loan agreement was executed and has taken plea that copy of the loan agreement was provided to the complainant. It is strange that despite requests of the complainant time and again and even after taking plea in the complaint, the opposite party neither provided copy of the loan agreement nor statement of loan account to the complainant nor adduced the loan agreement in evidence.

11.              During the course of arguments, learned counsel for the complainant has drawn our attention upon the document, Annexure R-1, issued by the opposite party with an offer to sanction an amount of Rs.24,30,000/- as home loan with certain terms and conditions mentioning rate of interest at the rate of 14.75% per annum. This letter bears the signatures of the complainant and other co-borrowers. Learned counsel for the opposite party has argued that the above mentioned document should be considered as loan agreement as terms and conditions, mentioned in the letter, were accepted by the borrowers by putting signatures on the bottom of the letter without mentioning date and complete particulars. On the basis of this letter, the complainant availed home loan facility from the opposite party. We feel that in fact when there was transaction regarding an amount of Rs.24,30,000/- as home loan, there should have been proper documentation. The loan agreement also should have been executed instead of issuance of a letter with offer to sanction the loan amount. This process used by the opposite party might have been helpful to create confusion. Anyhow, the complainant put his signatures on the sanction letter, Annexure R-1, and availed home loan facility. Much discussion is not needed on this point of controversy as it is an admitted fact that the complainant availed home loan facility up to an amount of Rs.24,30,000/-. The main controversy in between the parties in this case is regarding rate of interest claimed by the opposite party.

12.              As per discussions above in detail, the situation is now quite clear. It is evident from the documents Annexure C-10 and C-11, that the house loan amount was sanctioned in favour of M/s Mahavira Enterprises firm of the complainant on March 31^st, 2008 mentioning rate of interest as 11.50% per annum. It is evident from the document Annexure C-10 that the total balance loan amount Rs.14,75,000/- was deposited by the borrower with the bank on April 07^th, 2008. In fact, after receiving payment of the loan amount sanctioned by the opposite party, an amount of Rs.14,75,000/- was deposited to clear the balance loan amount advanced by The Sonepat Urban Co-Operative Bank Limited.

13.              In the document Annexure R-1, proposal regarding sanction of the loan amount, the agreed rate of interest is mentioned as 14.75% per annum. It is also mentioned in the document Annexure R-1 that rate of interest will be floating. In this way, earlier loan amount advanced by The Sonepat Urban Co-Operative Bank Limited was sanctioned regarding the same property for the same purpose at the rate of 11.50% per annum and in the document Annexure R-1 mentioned above, agreed rate of interest is mentioned as 14.75% per annum and version of the opposite party itself is that the opposite party started charging interest at the rate of 17.10% with a variation of 1% per annum.  

14.              Version of the complainant is that if the rate of interest as mentioned in document Annexure R-1 or as mentioned in written version would have been in the knowledge of the complainant certainly borrower would not have taken decision to get sanctioned the loan amount from the opposite party and to make prepayment of loan amount already sanctioned.  On the other side version of the opposite party is that the proposal for sanction of the loan (Annexure R-1) was signed by the complainant as well as his mother and sister after going through the contents of the document and they were properly informed regarding existing rate of interest of the house loan and that rate of interest will be charged on floating rate in future.

15.              From the facts and circumstances of this case, version of the complainant appears to be believable. Certainly it cannot be expected from a person of ordinary prudent also to take decision to get the house loan amount sanctioned with interest at the rate of 14.75% per annum or at the rate of 17.10% per annum, more particularly, when he is already availing loan facility to the tune of Rs.15.00 lacs from another bank on payment of interest at the rate of 11.50% per annum. It will be pertinent to mention here that after receiving payment of the loan amount sanctioned from the opposite party, the complainant deposited an amount of Rs.14,75,000/- in The Sonepat Urban Co-Operative Bank Limited and got the plot released from hypothecation.  It appears that all it could be possible as the complainant was allured by the opposite party by misrepresentation and concealing material facts and obtained signatures of the borrowers upon the document Annexure R-1. At the cost of repetition, it will also be pertinent to mention here that loan term agreement or any other document executed regarding sanction of the loan amount has not been adduced in evidence by the opposite party except the proposal to sanction the home loan (Annexure R-1). Borrower is not a highly educated person.  Even the print of Annexure R-1 is also such which is not easily readable. 

16.              Rate of interest of home loans and other loans are fixed by the nationalized banks and even by the private banks on the basis of guidelines issued by Reserve Bank of India from time to time. It will be pertinent to mention here that rate of interest as per guidelines issued by Reserve Bank of India `on home loans in State Bank of India in the year 2013 was 10.15% and existing rate of interest on home loans sanctioned in the year 2017 is 8.35%. The opposite party is charging interest with much more higher rate than the other nationalized as well as private banks. The opposite party could not make it clear that what criteria is being used by the opposite party regarding fixation of rate of interest in connection with home loan. No such document has been placed on the file. In the memorandum of appeal, the rate of interest which is floating being charged from time to time by the opposite party is mentioned in para No.4. It is mentioned that during the period from July, 2008 up to November, 2015, the rate of interest on home loan remained in between 14.75% to 17.50%. So, it clearly appears that the opposite party is not charging interest on house loan as per guidelines issued by Reserve Bank of India from time to time. Record on the file shows that the complainant was given information regarding change in rate of interest only once vide letter dated May 01^st, 2015 (Annexure C/8).  Through, this letter the complainant was informed that the floating rate of interest has been decreased 0.25% per annum w.e.f. April 10^th, 2015 and after decrease, now rate of interest for home loan has been revised to 16.50% per annum. Except the letter Annexure C-8, the complainant never received any information regarding change of rate of interest.

17.              We feel that when the rate of interest is being changed by the opposite party without following the guidelines issued by Reserve Bank of India from time to time, in that eventuality, the opposite party should have issued prior notice to the complainant and other borrowers also regarding change of rate of interest. Due to the above mentioned faults on the part of the opposite party, the complainant had to suffer big monetary losses and had to face un-necessary harassment and mental agony for such a long period.

18.              During the course of arguments, learned counsel for the complainant has argued that the floating rate of interest should have been fixed by the opposite party following the guidelines issued by Reserve Bank of India from time to time like other nationalized as well as private banks. Even if there was any proposal to raise rate of interest, the opposite party should have issued prior notice to the complainant. Learned counsel for the opposite party has argued that in the document Annexure R-1, it is mentioned in clear words that rate of interest shall be floating and each and every time when rate of interest is changed, there is no legal requirement to issue notice to the borrowers. In support of his this contention, learned counsel for the opposite party has placed his reliance upon a decision of Hon’ble National Consumer Disputes Redressal Commission, New Delhi in case 2015(3) C.P.J. 507, ICICI Bank (Home Loan) & another vs. Ganga Singh Shekhawat and a decision of State Consumer Disputes Redressal Commission, Haryana, Panchkula in First Appeal No.457 dated June 03th, 2015 decided on October 06^th, 2015 titled Anil Gupta and another vs. ICICI Bank Limited and others.

19.              We have closely perused the above cited case laws. As per facts of the above cited case laws, house loan amount was advanced by ICICI Bank Home Loans and findings were given that there was no necessity to issue notice to the borrower at the time of change of floating rate of interest. In the above mentioned cases, findings were given like this because floating rate of interest is changed in ICICI Bank and other banks as per guidelines issued by Reserve Bank of India from time to time. In our view, the above cited case laws are of not much help to the opposite party in this case as facts and circumstances of the case in hand are somewhat different. As per facts of the case in hand, loan was sanctioned by ICICI Home Finance Limited and not by a bank. Moreover, rate of interest has not been changed by the opposite party as per guidelines issued by Reserve Bank of India. In case, the opposite party was willing to increase the rate of interest against the guidelines issued by Reserve Bank of India, certainly the opposite party should have sent intimation to the complainant and other borrowers in this regard. Anyhow, from the decision of Hon’ble National Commission in case law referred above, it is clear that nationalized banks as well as private banks are required to follow the guidelines issued from time to time by Reserve Bank of India regarding the fixation of rate of interest. Facing this situation, learned counsel for the opposite party has argued that the loan amount has been advanced by ICICI Home Finance Limited which is a finance company and not a bank and finance company has right to increase rate of interest from time to time. The opposite party did not place on the file any such rule or provision of law authorising the opposite party to increase rate of interest as and when liked. In the document/proposal for sanction of the loan amount, Annexure R-1, placed on the file only it is mentioned that the rate of interest will be floating. The circumstances mentioned above clearly indicate that a great injustice has been done with the complainant by the opposite party. The opposite party allured the complainant to obtain house loan from the opposite party with the assurance that the rate of interest shall be below the rate of interest in other banks as well as Sonepat Urban Co-Operative Bank Limited, from where the complainant had already obtained the house loan amount.   It could be possible due to concealment or true facts and misrepresentation to the complainant by the opposite party.

19.              From the facts and circumstances, as discussed above, it clearly appears that a great injustice has been done with the complainant by the opposite party by misrepresentation, concealment of facts and using clever tactics. The complainant deserves sympathy of this Commission as well as of others. At present, the opposite party is charging interest from the complainant at the rate of 16.50% and existing rate of interest of house loan in State Bank of India, these days as per guidelines issued by Reserve Bank of India is 8.35%. It also will be pertinent to mention here that now a days getting sanction of house loan is not so much difficult, rather daily advertisements are there in the newspapers as well as through electronic media inviting the public persons to obtain house loan with cheaper rate of interest.

20.              The complainant was having a plot for hypothecation to get the home loan amount sanctioned and economical condition of the complainant was never so low to consider him in capable to make payment of installments of the loan amount.

21.              During the course of arguments, learned counsel for the opposite party also argued that after addition of Section 21A of the Act w.e.f. 15.02.1984 the courts are left with no power to reopen a transaction between a bank/company and its debtors on the ground that rate of interest charged is excessive. On this point of controversy, findings have been given by Hon’ble National Commission in Ganga Singh Shekhawat’ case (Supra) that after insertion of Section 21A after amendment in the Act, the courts are left with no power to re-open a transaction between a banking company and its debtors on the ground that the rate of interest charged is excessive.

22.              Cited case law above is not of much help to the opposite party in this case. Section 21A has been inserted in Banking and Financial Services Act, relating to the transactions in between a banking company and its debtors. The opposite party claims itself a financing company and not a bank. We want to make it clear that in case findings are given that the guidelines of Reserve Bank of India are not applicable to the opposite parties regarding floating rate of interest, in that situation certainly Courts as well as this Commission has right to interfere in such type of financial transactions regarding rate of interest more particularly when rate of interest has been fixed and increased from time to time by concealment of facts, misrepresentation and using clever tactics like in the case in hand.  A financial company certainly cannot be given liberty to charge rate of interest as and when likes and the same is also even without informing the debtors. It is a fit case where interference of this Commission is needed to remove the genuine grievance of the complainant.

23.              Learned District Forum has given findings that the opposite party is entitled to charge interest at the rate of 11% per annum instead of floating rate of interest. We feel the findings of the learned District Forum in this regard need to be modified. When there is an agreement in between the parties regarding floating rate of interest, in that eventuality, findings cannot be given that the opposite party should charge interest at fixed rate of interest.  Findings of the learned District Forum regarding awarding interest at the rate of 11% per annum stands modified.

24.              Keeping in mind the above mentioned circumstances, we feel in this situation when everybody in public life is facing such type of difficulties, it becomes the duty of the court as well as of this Commission also to pass some effective, meaningful, relief giving and purposeful orders which should be based on equity and helpful for providing justice that is also natural justice. We feel courts as well as this Commission should pass orders as the situation demands and should not hesitate to come out a little out of the tight cordon of rules and procedure also if the situation so demands. It is not so difficult to decide a case but certainly it is not so easy to provide justice.  Under the provisions of Consumer Protection Act, 1986 it is purposely provided that provisions of the Civil Procedure Code and Indian Evidence Act shall not be strictly applicable in the proceedings of complaints under this Act and complaints shall be decided summarily. 

25.              Keeping in mind all these circumstances, findings are given that the opposite party shall be entitled to charge interest from the complainant at the floating rate of interest as per guidelines issued by Reserve Bank of India from time to time since the date of sanction of the loan amount. The opposite party shall prepare fresh ‘Statement of Account’ claiming floating rate of interest from the complainant as fixed by State Bank of India on the basis of guidelines issued by Reserve Bank of India from March 31^st, 2008 onwards. The opposite party after calculation of the total amount due, charging interest at floating rate, shall provide ‘Statement of Account’ to the complainant showing the total amount due, within a period of two months from the date of receipt copy of this order so that the complainant may be able to make payment of the balance loan amount. With these findings, the appeal stands disposed of accordingly.

 

Announced: 25.07.2017

(Balbir Singh) Judicial Member

(Nawab Singh) President

 

CL