ORDER

SRI.H.R. SRINIVAS, PRESIDENT

1.      This is the complaint filed by the complainants against the Opposite Party (herein referred to as OP) under Section 12 of the Consumer Protection Act, 1986 for the deficiency of service in calculating interest excess and collecting the amount from them to the extent of Rs.10,00,000/- and for refund of the said amount and Rs.5,00,000/- towards compensation for causing harassment, inconvenience, mental agony and for Rs.50,000/- towards expenses of transportation, telephone charges and legal charges and other reliefs as the commission deems fit.

2.      The brief facts of the complaint are: that the complainant 1 and 2 are husband and wife. They jointly availed housing loan and for interiors, painting works of property No.2010, ‘E’ block, Sahakaranagar, Kodigehalli, Bangalore on 24.01.2006.  The amount of loan obtained by them was Rs.2500,000/-. At the time of sanctioning the loan agreement was executed wherein they agreed to pay interest at 8.75% per annum to be cleared in 156 EMI of Rs.27,965/- being the EMI.  The term of loan fixed for 13 years. They were regularly remitting the instalment without single default. Inspite of it, OP was demanding additional payment of monthly installments and extended the further period of payment by charging excessive rate of interest which was not at all communicated to them. Further OP started deducting Rs.33,000/- as monthly installments in excess what was agreed to by charging exorbitant interest, which was violative of the terms and conditions of the sanction of housing loan, and also against to the guidelines,  issued by Reserve Bank of India.  On the repeated request and demands to furnish the account statement the complainant came to know that without any justification and without their consent OP has rephrased the terms and conditions of the loan by extending the period of repayment and enhancing the rate of interest without their consent.

3.      Further as per the terms and conditions, the interest rate is 8.75% per annum. They were not informed regarding floating rate of interest which varies from time to time and the same was not informed to them in writing and also interest charged an opposed to the RBI guidelines. The term loan availed by them for the purpose of interior work of their house was obtained by mortgaging the house.  In view of this, OP is not liable to levy interest more than at 8.75% on the borrowed amount. It is contended that complainant is maintaining good relationship with OP more than 13 years and repaying the installments regularly without fail.

4.      It is further contended that complainants are retired persons and insisted OPs to close the loan account in the month of April 2019 OP charged and started collecting Rs.6,000/- excessively which is unfair.  A legal notice was also issued to Op requesting them to modify the rate of interest of the loan and also requested them to reduce the rate of interest and requested to refund the excess amount recovered from their account and also to return the documents from title given to the bank at the time of obtaining the loan. Even after receipt of the legal notice, OP neither issued the reply nor complied the demand.  OP has charged exorbitant rate of interest which is against to the terms and condition to the agreement RBI regulations which clearly amounts to unfair trade practice, deficiency in service besides illegality.    Initially OP fixed the installment amount at the rate  of interest in respect of the housing loan. While closing the loan without proper intimation extended the period of loan and charged higher rate of interest. Under Section 21 and 35-A of the Banking Regulation Act 1935 it is the duty of OP to charge of interest reasonably. Further penal interest would be charged only once for one period of defaulted and presumed it ought to be aware of the relevant fact including prevailing conditions which would invite policy decisions. Whereas, OP bank has neglected the guidelines and policy in respect of levying higher interest. Under these circumstances, prayed the commission to allow the complaint.

5.      Upon the service of notice, OP appeared before the commission and filed its version, contending that the complaint is not maintainable either in law or on facts. It is filed with a mala fide intention of securing unlawful gain. There is no grounds for filing this complaint. The relief sought cannot be granted by this commission and it is barred by the principles of waiver, estoppel, acquiescence  and this complaint do not fall within the definition of deficiency of service under Consumer Protection Act. The complainant has suppressed material facts before this Commission. It is contended that the complainant has not come forwards with an explanation and reason as to how he is entitle for relief of refund of Rs.10,00,000/- collected in excess, Rs.8,00,000/- for compensation for harassment and inconvenience and Rs.50,000/- for other expenses. 

6.      It is contended that , the complainants borrowed Rs.25,00,000/- on 06.02.2006 agreeing to pay adjustable rate of interest i.e. 8.75% + margin 0.75% = 9.50% p.a. Agreement was also executed in that respect wherein the rate of interest is of floating rate of interest. The floating rate of interest is liable to be subject to changes.  It was agreed by the complainant the said amount of Rs.25,00,000/- together with interest would be repaid 156 EMI’s. They also stated therein that subject to variation in terms of the agreement.  It is also mentioned in Clause No.2.2(b) of the loan agreement clearly states that: “in the event of the borrower opts for adjustable interest rate offered by ICICI bank, the rate of interest applicable in the said loan and at the rate of execution of the agreement and the terms applicable to such adjustable interest rate are as stated in schedule B.” explained the manner and detail of the loan that has been disbursed  to the complainants. There is no dispute which is stated that the complainants have opted for adjustable rate of interest i.e. floating rate of interest. Now the complainant cannot retract from the terms and conditions of the loan agreement and it is binding on both the parties.  The floating rate of interest as a transparent  rate which gets renewed from time to time throughout the tenure of the loan.  Benchmark-I –Base” which is used to determine the rate of interest for floating rate loans is linked to OP Banks cost of funds and appropriate cost of operations for the relevant period, credit charge and margin. As cost of funds is one of the components of I-Base, any change in cost of funds would therefore impact all customers whose loans are linked to I-Base.

7.      Further the spread between the I Base and the actual rate of interest (ROI) offered to the customer is called  as “Margin”. Any change in the ROI is on account of the changes in the I-Base. The final rate offered to a customer is a function of the benchmark rate and the margin associated with the loan applicable to the customer. There was no excess interest levied to complainant’s loan account at any point in time. Whenever there is an increase in rate of interest, the OP increase tenure of the loan to its customers, subject to permissible limits, in order to avoid burdening the customer with  higher EMI the same has been mentioned in the loan agreement duly signed by the complainants at the time of disbursement. In case the customer wishes to reduce the tenure he may opt to increase the EMI or make a part prepayment or a combination of both. Further, whenever there is an increase or decrease in interest rate change in tenure or EMI the reset letters were sent by bank to customer’s communication address towards the intimation of same.

8.      It is contended that as per the revised RBI guidelines, customer’s have option of migrating to benchmark marginal cost of fund based lending rate (MCLR) which is available for existing customers. The cusotmers can opt for MCLR 1Y where the reset of benchmark will be at the interval of 1 year.  Customer has the option to reprice loan account to new benchmark and margin. Customer has to visit an asset serving branch and execute a conversion agreement and pay the applicable conversion fee plus service tax on principle outstanding. The changed rate would apply upon execution of the conversion agreement and payment of fees. Upon perusal of statement of the accounts of the complainants loan account it can be observed that on numerous occasions, payment mandates  have returned unpaid on the captioned loan accounts. Accordingly, cheque bounce charges and overdue charges were levied as per terms and conditions of the loan agreement.

9.      It is further stated in the version that through the complainants have claimed that they were regularly paying the EMI without any default the same is untrue as the complainant have defaulted many a times as the cheque issued by them were dishonoured for which bank had to levy cheque bounce charges and overdue charges and penalties.  In view of this there is no cause of action for the complainants to file the complaint and hence prayed the commission to dismiss the complaint.

10.    In order to prove the case, complainant filed affidavit evidence and produced documents. Arguments Heard. The following points arise for our consideration:-

1. Whether the complainants have proved deficiency in service on the part of the opposite party?

2. Whether the complainants are entitled to the relief prayed for in the complaint?

11.    Our answers to the above points are:-

POINT NO 1: In the Affirmative

POINT NO 2 : Partly in the affirmative

                      For the following.

REASONS

POINT NO 1:

12.    It is not in dispute that the complainants borrowed loan of Rs.25,00,000/- from OP towards the housing loan by executing necessary loan documents and agreement which is produced by the complainant as per Ex. P1. It is the case of the OP also that as per Ex.P1 and schedule B attached to it, complainants have agreed to pay interest at 9.5% p.a. (adjustable rate of interest i.e. ICICI bank floating reference rate 0.75% + 8.75% = 9.50%) It is also mentioned there in the terms of repayment is 156 months at the rate of EMI Rs.27,965/- and the EMI to commence from 10.03.2006 and the first date of first EMI is 10.04.2006 the cheque dishonoured/ missed payment charges is Rs.450/-.  When this is taken in to consideration,  it is a floating rate of interest + adjustable rate of interest which amounts to 9.50% p.a. 

13.    This loan was sanctioned on 02.02.2006 Ex. P2 is the loan sanction letter in that respect  it also requires the complainant to pay three EMI of Rs.3,859/- and for the month of February and Rs.5,857/- for the month of march. It also prescribes many conditions which the complainants have agreed. It is to be noted here that,  the complainants was disbursed the money.

14.    It is the contention of the complainants that OP has charged excess interest then what is agreed and collected the same to the extent of Rs.10,00,000/- which OP is bound to repay the same. Upon perusing the account statement commencing from 06.02.2006 till 10.05.2015 the balance struck in respect of the debit and credit according to it, the outstanding mentioned in Rs.98,657/- till then it is almost 9 years wherein complainants have repaid the amount. Some of the cheques given have been bounced for which the OP has levied the charges. Nearly 110 instalments have been paid as per the account extract.  It is also mentioned therein as loan finance recovery that the current outstanding is Rs.98,657.63 receivable which with an amount accrued interest Rs.15,985/- and the future principle from 25.05.2015 is mentioned as Rs.23,25,073/-. Rate of interest mentioned therein is 16.50% and additional interest 24% and at the end of 110 installments a sum of Rs.33,53,489/- have been paid and future installment is 254 and the amount Rs.83,77,287/-. 

15.    Further complainants have produced the repayment schedule commencing from 10.04.2006 till 10.07.2036 for 364 instalments.  Notice has been issued by the complainants to OP which was received as per the postal acknowledged but the same has been replied. It is to be noted here that at the time of sanctioning the loan to the complainant, the rate of interest i.e. floating rate of interest plus adjustable rate of interest as agreed by the complainant at 9.50%. The rate of interest to the loan was sanctioned in the year 2006 and till 2009 the rate of interest almost remained constant.  From then onwards it started raising and it reached peak of 12 to 13% during 2014 and 2015 afterwards it got reduced drastically due to economy of the country and due to the policies and guidelines issued by the Government of India and RBI and NHB (National Housing Board).

16.    When this is taken into consideration the interest levied by OP in respect of the floating rate of interest to the loan obtained by the complainant is too exorbitant. It is to be observed here that the principle of loan borrowed in the year 2006 is Rs.25,00,000/-.  Even as on 25.05.2015 by adjusting the amount paid, enhancing the rate of interest at 16.5% that to against the property till the balance is shown as at the end of 110 installment is Rs.33,59,489/- including interest and principal, which is nothing but day light robbery by the banks. Which is to be deprecated in all possible manner.  In view of this the rate of interest levied by the bank is highly exorbitant and much against to the guidelines issued by the RBI NHB.

17.    Further OP has not produced the relevant documents to show to the commission what was exactly the rate of interest in respect of floating rate of interest towards the housing loan at relevant point of time. It is true that as per the floating rate of interest scheme as and when the RBI/ Government of India raised rate of interest, the bank has to pass on the same to the borrowers.  When once it is done there will be a change either in the quantum of EMI or in the number of EMI’s.  Usually the banks to accommodate its customers and not to burden them by insisting them to pay more amounts towards EMI usually they extend the number of monthly installments, so that the borrower is also helped and further the bank would get more interest for the extended monthly installments. 

18.    An option ought to have been given to the borrower either to enhance the amount of monthly installment or to retain the same by extending the period of repayment. However the consent of the borrower had to be obtained. Further any rate of change of interest whether upward or downward has to be intimated to the borrower as per the guidelines of the RBI.  No such averments and proof has been made by the OPs regarding intimating the change of rate of interest and so also increasing in the number of EMI’s. In view of this we find there is defy in service by OP on both counts.  Hence we answer POINT NO.1 IN THE AFFIRMATIVE.

POINT NO.2:

19.    In the result OP is only entitle to get the interest on the amounts sanctioned as loan to the complainants i.e. on Rs.25,00,000/- as per the agreed rate of interest from the commencement of the loan repayment period and further to the enhanced interest as per the guidelines of the RBI in that respect.  

20.    Hence it is a floating rate of interest and the rate to be levied to the complainants is as per the rate of interest as prescribed by the RBI from time to time and recover the same from the complainants and not any amounts in excess to the whims and fancies of OP.

21.    In this complaint complainant has sought Rs.10,00,000/- as the amount he has paid as extra interest for which no documentary proof is provided.

22.    The act of OP made the complainants to approach this commission by spending their time, money and energy. Further they have undergone mental agony, physical hardship. For which we direct OPs to compensate a sum of Rs.50,000/- and further sum of Rs.10,000/- towards litigation and miscellaneous expenses. In view of this, we answer POINT NO.2 PARTLY IN THE AFFIRMATIVE and pass the following:-

ORDER

1. The complaint is partly allowed with cost.
2. OP is directed to calculate interest at the agreed rate of interest from the commencement of the loan repayment period and also to calculate the interest as and when enhanced or decreased by the RBI notifications and if the same is reduced the same has to be carried out without waiting for the written consent of the borrower and to file fresh memo of calculation to this commission within 30 days from the date of receipt of this order intimating the amount of interest levied, the date on which the interest was changed as per RBI guidelines and adjusting the same to the amount paid by the complainant and to strike the balance as on the date of filing of this complaint.
3. Upon filing the above memo of calculation the complainant has to go through the same and after satisfying themselves pay the same to OP and in case again there is difference in the amount to be paid they have to approach this commission. 
4. OP is directed to pay Rs.50,000/- towards mental harassment and agony and Rs.10,000/- towards cost of the litigation expenses to the complainants.
5. OP is hereby directed to comply the above order within 30 days from the date of receipt of this order and submit the compliance report to this Commission within 15 days thereafter.
6. Send a copy of this order to both parties free of cost.

Note: You are hereby directed to take back the extra copies of the Complaints/version, documents and records filed by you within one month from the date of receipt of this order.

(Dictated to the Stenographer over the computer, typed by him, corrected and then pronounced by us in the Open Commission on this day the 05^th day of February 2022)

MEMBER                                  PRESIDENT

ANNEXURES

1. Witness examined on behalf of the Complainant/s by way of affidavit:

Copies of Documents produced on behalf of Complainant/s:

Ex P1: Copy of the loan agreement

Ex P2: Copy of the communication letter.

Ex P3: Copy of Statement of account.

Ex P4: Copy of the legal notice

Ex P5: Postal acknowledgment

2. Witness examined on behalf of the Opposite party/s by way of affidavit:

RW-1: - Nil -

Copies of Documents produced on behalf of Opposite Party/s

- Nil -

MEMBER                  PRESIDENT

RAK*