1

Sagar T.Joy, S/o. T.D Joy, Thottathil House, Perumballor P.O., Muvattupuzha, Ernakulam (Dist.), Pin- 689 673

::

Complainants

(By Adv. George Cherian Karippaparambil, Karippaparambil Associates, H.B. 48, Panampilly Nagar, Kochi- 682 036)

2

T.D.Joy, S/o. Dominic, Thottathil House, Perumballoor P.O., Muvattupuzha, Ernakulam (Dist.), Pin- 686 673

And

O R D E R

Smt.V.K. Beenakumari, Member.

1) A brief statement of facts of this complaint is as follows:

This complaint is filed by Sri.Sagar T.Joy and his father Sri. T.D. Joy alleging negligence, deficiency in service and unfair trade practice on the part of the opposite parties namely M/s.ICICI Finance Company Ltd. consequent to the Loan agreement with the 1^st opposite party- Bank on 17.10.2005. The complainants had availed a home equity loan of Rs.10 lakhs from the 1^st opposite party – ICICI Home Finance Company Ltd., for modification and extension of their residential building. The tenor of repayment of the loan amount was fixed at 120 months (10 years) and the equated monthly instalment (EMI) was fixed at Rs.13,378/-. The date of payment of 1^st EMI was on 07.12.2005 and that of the last or the 120^th EMI was on 07.11.2015. The 1^st complainant personally visited M/s. ICICI Bank Ltd., Muvattupuzha Branch for depositing the funds to ensure sufficient funds in his SB account on the 7^th day of every month to honour the EMI Mandate. The 1^st complainant honoured the entire 120 EMIs without any default. The payment of last EMI was effected on 07.11.2015 and thereafter the 1^st complainant approached the 1^st opposite party-Bank ie., on 11-11-2015 for receiving back the documents relating to the residential property of the 2^nd complainant which were entrusted with the 1^st opposite party-Bank as security. But the 1^st opposite party-Bank intimated the 1^st complainant that the complainants have to pay further 124 EMIs for 10 years and 4 months at the EMI rate of Rs.12,481/- totalling to Rs.15,42,924/- or to pay Rs.7,45,000/- in lumpsum. This information was an utter shock to the complainants. Against the specific terms and conditions in the loan agreement and sufficient funds in the SB A/c. No.022301502567 with the 1^st opposite party-Bank (Muvattupuzha branch), complainants were never informed about any change in interest-rate or about the necessity to pay enhanced EMIs. If the interest rates are enhanced there were sufficient fund in the SB A/c. of the 1^st complainant to honour such changes in the interest rate. Hence, the demand for a lumpsum payment of Rs.7,45,000/- is clearly deficiency in service and an unfair trade practice on the part of the opposite parties. The complainants are not interested in having any home loan transaction with opposite parties and wanted to close the home loan account immediately. It is submitted that the complainants have suffered severe mental agony, loss and hardship due to the unfair trade practice, negligence and deficiency in service on the part of the opposite parties. Hence, it is humbly prayed that this Forum may direct the opposite parties to return the 2^nd complainant's property documents without insisting for the lumpsum payment of Rs.7,45,000/-, to direct the opposite parties not to intimate the name of the complainants as 'defaulters' to M/s. Credit information Bureau India Ltd., (CIBIL), to direct the opposite parties to pay Rs. 5,00,000/- as compensation to the complainants for the mental agony, loss and damages suffered by the complainants due to the unfair trade practice, negligence and deficiency in service on the part of the opposite parties and to direct the opposite parties to pay Rs. 50,000/- towards costs.

2) Notices were issued to the opposite parties and the opposite parties filed their version resisting the contentions raised by the complainants.

Version of the 1^st opposite party

The complaint filed by the complainants is neither maintainable in law nor on facts, the complaint is filed without any bonafides, and the complaint is filed only with the intention to harass the 1^st opposite party-Bank. The complainant is not a 'consumer' as defined under the Consumer Protection Act, since the complainant never availed any service from the opposite parties for consideration. It is true that the application of the complainants for a home loan was considered and sanctioned vide Loan Account No.LBCOC00001164634 for an amount of Rs.10,12,290/-, the allegation of the complainant that the opposite parties directed the 1^st complainant to take insurance policy is not correct, the complainant himself had taken the life insurance policy. As per the loan sanction letter and the loan agreement with the opposite party Finance Company, the complainant had chosen a floating rate of interest (Adjustable rate of interest) and the complainants were very well aware of the fact that the present interest rate structure would result in fluctuations both in the interest rate and in the loan tenure from time to time. It is admitted that the complainants were prompt in the payment of interest and till 07.11.2015 the complainants had paid regular EMIs at the rate, which was the interest-rate at the time of taking the loan and the complainant is liable to pay the future EMIs as per the repayment schedule, the loan account is still active and the complainants are liable to pay the dues and the opposite party-Bank has the legal right to retain the documents deposited as a part of loan agreement. It is further submitted that the opposite party-Bank had communicated the revision of interest of the loan account as per guidelines of Reserve Bank of India and the subject matter of this complaint is settlement of accounts and hence the Consumer Forum lacks jurisdiction to entertain this complaint and only a Civil Court has the jurisdiction to try this case. The loan accounting process and generation of statement of accounts are strictly under the guidelines of RBI and the opposite party-Finance Company demanded only the amount legally due to them. Therefore the opposite party-Finance Company is also bound to recover the amount due to the bank by adopting legally permissible methods as held by the Hon'ble Supreme Court in Indian Bank Vs. Blue Jaggers Estate Ltd., and other (2011 (1) Civil LJ 242). There is no negligence, service deficiency and unfair trade practice on the part of the 1^st opposite party-Finance Company as mentioned in the complaint. Therefore, the complaint is not maintainable and the complainants are not entitled to get any of the reliefs prayer for. No cause of action has arisen against the 1^st opposite party-Finance Company. No financial loss or mental agony suffered by the complainants. The 1^st opposite party-Finance Company sought for the dismissal of the complaint.

4) Version of the 2^nd opposite party

The 2^nd opposite party-M/s.ICICI Prudential Life Insurance Company Ltd. submitted that this complaint is not maintainable either in law or facts hence liable to be dismissed. The complainant has failed to make out any case of deficiency in service as against the 2^nd opposite party. The 2^nd opposite party is only providing the insurance facilities to its customers and is a separate entity. It is submitted that no cause of action has arisen as against the 2^nd opposite party. Hence the name of the 2^nd opposite party may be deleted from the memo of parties.

5) The following issues emanated for the consideration of this Forum.

Issue No. (i) : Whether the complaints are 'consumers' as defined under Section 2 (1) (d) of the Consumer Protection Act, 1986?

Issue No. (ii): Whether this complaint is maintainable before this Forum?

Issue No. (iii) : Whether the complaints have proved deficiency in service or unfair trade practice on the part of the opposite parties?

Issue No. (iv) : Whether the opposite parties are liable to pay compensation and costs to the complainants?

Issue No. (v) : Whether the complainants are entitled to receive back the complainants property documents from the opposite parties?

6) The evidences in this case consisted of the oral evidence adduced by the 1^st complainant as PW1 and the documentary evidences furnished by the complainants which were marked as Exbt. A1 to A5 and that furnished by the 1^st opposite party-Finance Company were marked as Exbt. B1 to B11. The 1^st opposite party adduced oral evidence through their witnesses DW1 and DW2.

7) The case was posted for final hearing on 21.01.2017 and the Counsel for both sides were heard.

8) Issue No.(i) The 1^st issue to be decided is whether the complainants are 'consumers' as defined under Section (2) (1) (d) of the Consumer Protection Act, 1986. There is no dispute regarding the fact that the 1^st complainant had availed a Home loan amount of Rs.10,12,290/- from the 1^st opposite party ICICI Home Finance Company Ltd. on 17.10.2005, by fixing the tenor of repayment of the loan with interest at 120 months (ie., 10 years) and equated monthly instalment was fixed at Rs.13,378/-. The 1^st opposite party-Finance Company is engaged in 'banking' business. The 1^st opposite party-Finance Company contended that the complainants never availed any 'service' from them for consideration. The above contention is found not admissible in view of the decision of the Hon'ble Supreme Court reported in AIR 2000 Supreme Court 2181 wherein it was held that the banks are engaged in different types of business and banking is a 'service'. Again the Hon'ble Supreme Court in the case of Standard Chartered Bank Ltd. Vs. Dr.Raman reported in III (2006) CPJ 01 Supreme Court it was held that Banking is a 'service' within the purview of Section 2 (1) (0) of the Consumer Protection Act, 1986. By issuing home loan to the complainants, under an agreement to repay the amount with interest, the 1^st opposite party-Finance Company had offered banking service to the complainants and also in view of the decisions of the Hon'ble Supreme Court cited above, we find that the complainants are 'consumers' coming within the meaning of Section 2 (1) (d) of the Consumer Protection Act, 1986 and the 1^st opposite party-Bank is a 'service provider'. Thus, the 1^st issue is decided in favour of the complainants.

9) Issue No. (ii)

The 1^st opposite party-Finance Company raised a contention that the subject matter of this complaint related to “settlement of account” which requires elaborate scrutiny of volumes of records and this Forum lacks jurisdiction to entertain an issue relating to settlement of accounts. The 1^st complainant had promptly repaid the entire house loan amount along with interest, in 120 equated monthly instalments starting from 07.12.2005 and ending on 07.11.2015. After paying the last EMI ie., 120^th EMI on 07.11.2015, the complainants approached the 1^st opposite party -Finance Company on 11.11.2015 with a request to return their residential property documents which were entrusted with the 1^st opposite party – Finance Company. But, on 11.11.2015 the complainants were informed that they have to either repay further 124 EMIs at the EMI rate of Rs. 12,481/- totalling to Rs. 15,42,924 or to pay Rs.745000/- if the amount is paid in lumpsum. The complainants case is that they were never informed about any change in interest rate or about the necessity to pay enhanced EMIs for 124 months and the demand was made by the 1^st opposite party-Finance Company on 11.11.2015 without even intimating about the changing rates of interest or about the enhanced EMIs during the repayment period of 10 years that the above act of the 1^st opposite party-Finance Company amounted to deficiency in service and unfair trade practice on the part of the 1^st opposite party-Finance Company. The 1^st opposite party-Finance Company on the other hand contended that the matter involved in this complaint related to settlement of accounts between the complainants and the 1^st opposite party-Finance Company. It is to be noted that the complainants approached this Forum claiming compensation for the deficiency in service and unfair trade practice and requested the return of the documents in the circumstance that the complainants had paid the entire 120 EMIs fixed by the 1^st opposite party-without any default. This Forum is considering and adjudicating mainly the question relating to deficiency in service or unfair trade practice, if any, committed by the 1^st opposite party and not deciding any issue relating to settlement of accouts. It is open for both the complainants and the 1^st opposite party-Bank to file a suit before the Civil Court to settle the accounts between them as held by the Hon'ble Supreme Court in the case of Geekay Agro Park (P) Ltd. and Another Vs. State Bank of Mysore reported in (2008) CTJ 561 SC. In the above case, the Hon'ble Supreme Court also held that a Consumer Forum can award compensation for the deficiency in service of the trader or service provider. In view of the above decision of the Hon'ble Supreme Court we find that this Forum has ample jurisdiction to consider and adjudicate the issue relating to deficiency in service or unfair trade practice if any on the part of the opposite parties under the provisions of the Consumer Protection Act, 1986. The 2^nd issue is thus decided against the opposite parties.

Issue No. (iii)

The complainants Sri. Sagar T. Joy and his father Sri. T.D. Joy had availed Home loan of Rs.10,12,290/- from the 1^st opposite party – ICICI Home Finance Company Ltd. Exbt. A1 is the Home equity loan agreement dated 14.10.2005 containing 28 pages where in all pages, except in page Numbers 25, 26 and 28, are signed by both the complainants, strangely enough this loan agreement is not seen signed by any of the officials of the ICICI Home Finance Company Ltd. Exbt. A2 is the welcome letter dated nil issued by 1^st opposite party – Home Finance Company Ltd., to the complainants intimating that EMI is Rs.13,378 beginning from the month of December for 120 months and the type of interest is Floating and that delay in payment of dues will attract additional interest of 24% or as mentioned in Loan agreement whichever is higher. Exbt.A3 is Home Assure Proposal Form issued on 14.10.2005 by the 2^nd opposite party - ICICI Prudential Life Insurance. Exbt. A4 included Home Assure Policy document received by the 1^st complainant Sri. Sagar T.Joy on payment of Rs.12,296/- which amount is inclusive of Home assure single premium amount of Rs.11,155/- and service Tax and Education cess of Rs.1138/- Exbt. A5 is the account statement of 1^st complainant's SB account No 022301502567 with M/s.ICICI Bank Ltd., Muvattupuzha branch for the period from 07.10.2005 to 31.03.2010 and the operative account statement as on 26.11.2015 for the period from 01.04.2010 to 26.11.2015. The 1^st complainant as PW 1 deposed before this Forum that he had paid the entire 120 EMIs without any default during the 10 year-period that after 07.11.2015 there were no EMIs to be paid by the 1^st complainant, that he was never informed about the changing rate of interest. The above statement/contention of the complainant was objected to or resisted by the 1^st opposite party – Finance Company stating that Exbt. B3 to B9 documents are the communications which were issued to the complainant informing about the changes in the rate of interest or Floating reference rate (FRR) and and that the complainants are pretending ignorance despite receipt of the above 7 communications dated 15.04.2011, 08.07.2011, 10.10.2011, 07.07.2012, 17.10.2013, 01.07.2015 and 12.01.2016. The 1^st opposite party contended that there is a large volume of communications and the 1^st opposite party is not in a position to produce all communications. We find that the 1^st opposite party has not produced even a single acknowledgment of the complainant in token of having received any of the above 7 communications. It goes to prove that these 7 communications were not actually communicated to the complainants as claimed by the 1^st opposite party.

11) The 1^st opposite party-Finance Company contended before this Forum that the complainants approached the 1^st opposite party-Finance Company without clearing the entire EMIs and that the loan account is still 'active' and the complainants are liable to pay the dues, that the 1^st opposite party has a legal right to retain the documents deposited as a part of loan agreement, that the 1^st opposite party- Finance Company is functioning under the guidelines and Regulations of Reserve Bank of India and that the complainants availed the loan amount at Floating rate of interest. The complainants did not challenge the above contention of the 1^st opposite party- Finance Company. Therefore there is no dispute regarding the fact that the complaint availed loan at Floating rate of interest. It is also true that the 1^st opposite party- Finance Company is at liberty to follow the guidelines of Reserve Bank of India in respect of the Floating Reference Rate (FRR) as held in the unreported case in ICICI Bank Ltd. Vs. Maharaj Krishan Dutta & Ors (in Civil appeal No.5928/2015. It is contended by the 1^st opposite party-Finance Company that they demanded only the amount legally due to them and the 1^st opposite party is also bound to recover the dues by adopting all legally permissible methods. The Floating Reference Rate on the date of execution of the Exbt. A1 agreement was 8.75% per annum. Clause B of the Ext. A1 agreement provides that the interest rate shall be re-set quarterly based on the then prevailing FRR and the borrower shall pay interest at such reset rate. Clause C of Exbt. A1 agreement provides that all future or further adjustable interest rates applicable shall be applied on the 1^st day of the month following the quarter in which FRR is changed. In the instant case the interest rate is not seen fixed quarterly during the tennure of the repayment for 10 years. The 1^st opposite party through Sri. Vibin, the Legal manager adduced oral evidence as DW1 and he was specifically asked about the change in the interest rate in the years 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013 and 2014. He was not aware of the change in the interest rate during the above years. However, he was aware of the interest rate of 8.25% at the time of execution of the Exbt.A1 agreement during the year 2005 and that there was change of interest rate during the year 2011. It was also deposed by the DW1 that it is not mandatory to intimate the borrower about the change in the interest rate. We are not at all inclined to accept the above deposition in view of the guidelines on the operational aspects of Benchmark Prime Lending Rate (BPLR) issued vide IBA on 02.11.2003 of Reserve Bank of India that “greater degree of transparency” needed in providing the actual interest rates changes to borrowers, that the banks should “continue” to provide information on maximum and minimum interest rates charged together with the Benchmark PLR”. In the instant case DW1 could not say the change in the interest rate since the interest rates were not reset quarterly and the changes in the interest rates were also not communicated to the borrower/complainant at any time during the 10 years repayment period. In fact the bank officials were sleeping over the matter during the 10 year repayment period. The 1^st complainant was keeping a habit of depositing the required amount on the 7^th of every month for clearing the EMI amount during the relevant period of 10 years of repayment. The 1^st complainant was never intimated during such visits about the changes in the interest rate. The 1^st opposite party submitted before this Forum that in their website there were adequate publications regarding the same. But, nowhere in the A1 agreement there was any such direction to look the website of the 1^st opposite party to know about the changes in the interest rates. The Reserve Bank of India required a greater degree of transparency in providing the changes in the rate of interest. It is also required by the Reserve Bank of India that the banks should continue to provide information on maximum-minimum interest together with BPLR. It is evident that the 1^st opposite party- Finance Company is guilty of severe deficiency in service in not intimating the applicable or actual interest rates from time to time. There is no transparency at all in regard to the communication about the actual interest rates applicable from quarter to quarter or from year to year period. More over the 1^st opposite party not cared to produce the relevant circulars of the Reserve Bank of India to prove and justify their case in levying exorbitant interest.

12) It is true that the 1^st opposite party has produced Exbt. B10 repayment schedule as on 05.09.2016 showing the variation in the interest rate. The 1^st opposite party - Finance Company also adduced oral evidence through their witness Sri. Rajesh Mathew, Deputy Manager, from the ICICI Bank Ltd., Thiruvananthapuram as DW2. He deposed before the Forum that no acknowledgment cards are kept in the Bank to evidence that Exbt. B3 to B9 communications were served on the complainants, that he came to know about this case only in the month of June, 2016 after the account of the complainant was declared as Non Performing Account (NPA), that he is not aware of the correctness of the amount of the debt to be recovered from the complainants and that the communications in Ext.B3 to B9 are kept in the bank in electronic form. Thus the 1^st opposite party- Finance Company failed to establish that the complainants were duly intimated about the changes in the interest rate during the repayment period of 10 years. We find that the complainants successfully proved severe deficiency in service on the part of the 1^st opposite party – Finance Company.

13) Another contention raised by the 1^st opposite party- Finance Company is that the tenure of the loan was increased subject to permissible limits, inorder to avoid burdening the customer with higher EMI's. The complainant as PW 1 deposed before this Forum that if such higher EMIs were intimated to him, he would have paid such EMI's and closed the loan. In the instant case the increase in the EMI's was intimated to the complainants after 10 years, that too after paying the entire 120 EMI's, i.e., on 11.11.2015. Thus, there is considerable and unpardonable delay in intimating the increase in EMI's to the complainants. The above delay amounted to deficiency in service and the unilateral fixation of further 124 EMIs amounted to unfair trade practice on the part of the 1^st opposite party- Finance Company . Thus the issue No. (iii) is decided in favour of the complainants and against the 1^st opposite party-Finance Company.

14) Issue No. (iv)

We find that there is severe deficiency in service and unfair trade practice on the part of the 1^st opposite party- Finance Company for the reasons stated in the foregoing paragraphs. Therefore the complainants on the side of the 1^st opposite party are entitled to get compensation for the deficiency in service and unfair trade practice and also for the mental agony suffered by the complainants. The 1^st opposite party has intimated recovery proceedings against the complainant under the SERFAESI ACT. It is pertinent to note that the stringent recovery action was taken against the complainant who had personally ensured the EMI amount every month during 10 year- repayment period and who had promptly paid the entire 120 EMI's fixed by the 1^st opposite party – Finance Company for a period 10 long years of repayment. The unilateral decision of the 1^st opposite party- Finance Company to increase the EMI's for further 124 months inflicted severe mental pain to the complainant. It is submitted by the complainants that they have to approach the Debt Recovery Tribunal (DRT) to get a stay of the attachment of the property of the complainants. We also note that the recovery proceedings were taken by the 1^st opposite party – Finance Company during the pendency of this complainant before this Forum. The Counsel for the 1^st opposite party submitted that there is no bar to take such coercive steps. But, we find that there is impropriety in taking such hasty recovery proceedings during the pendency of this complainant. It is seen that all the actions were taken without intimating the change of interest, without getting the consent of the complainant to increase the EMI's for such a long further period of 124 months. Thus the 1^st opposite party is guilty of non-compliance of Natural Justice principle which is a constitutional right available to all borrowers including the complainants. Considering the above facts and circumstances of the case, we find that the complainants are entitled to get exemplary compensation which we fix at Rs.10,00,000 (10 Lakh Rupees).

15) Issue No. (v)

In the facts and circumstances stated in the foregoing paragraphs we find that the complainants are entitled to receive back the property documents without insisting for the lumpsum payment of Rs. 745,000/- since the above demand is raised without complying with the natural justice principles.

16) The complainants sought for a direction of this Forum to direct the 1^st opposite party- Finance Company not to intimate the name of the complainants as defaulters to M/s. Credit Information Bureau India Ltd. (CIBIL). We find the above request is genuine we also find that it is not just proper and fair to report to CIBIL that the complainants are 'defaulters' especially when the complainants had promptly paid the entire 120 EMI's fixed by the 1^st opposite party – Finance Company during 10 year-repayment period. Therefore we direct the 1^st opposite party- Finance Company not to report to CIBIL the names of the complainants as defaulters. If the 1^st opposite party – Finance Corporation has already reported the names of the complainants as defaulters to CIBIL, the 1^st opposite party -Finance Company shall take necessary steps to withdraw such report within 30 days from the date of receipt of a copy of this order.

17) It is seen that the complainants have spent their valuable time and money to contest this case before this Forum for redressing their genuine grievances. We find that the complainants are entitled to get the costs. Therefore the 1^st opposite party- Finance Company shall pay Rs.10,000/- towards costs of the proceedings to the complainants.

18) In the result this complaint is allowed and we direct as follows:

1. The 1^st opposite party-Finance Company shall return the property documents in SY No. 502/2A, Marady village, Muvattupuzha Taluk, Ernakulam (Dist.), without insisting for the lumpsum payment of Rs. 7,45,000/-.

2. The 1^st opposite party- Finance Company shall withdraw the intimation of the names of the complainants to CIBIL as defaulters, if any, within 30 days from the date of receipt of a copy of this order.

3. The 1^st opposite party- Finance Company shall pay Rs.10,00,000/- (10 lakhs) to the complainants towards exemplary compensation.

4. The 1^st opposite party- Finance Company shall pay Rs.10,000/- to the complainants towards costs of the proceedings.

5. The 2^nd opposite party -Insurance Company is absolved from any liability since no deficiency in service is established against them by the complainants.

6 The above orders shall be complied with, within 30 days for the date of receipt of a copy of this order.

Pronounced in the open Forum on this the 9^th day of February 2017.

Sd/- Beena Kumari, V.K., Member

Sd/- Cherian K. Kuriakose, President.

Sd/- Sheen Jose, Member.

Forwarded/By Order

Senior Superintendent.

Date of Despatch of this Order ::

By Post ::

By Hand

A P P E N D I X

Complainant's Exhibits :-

Opposite party's Exhibit :-

Depositions

PW1 :: Sagar T. Joy

DW1 :: Vibin M.R

DW2 :: Rajesh Mathew

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