Chandigarh

StateCommission

A/134/2023

INDIABULLS HOUSING FINANCE LTD - Complainant(s)

Versus

RAVI KUMAR S/O SH BANARSI DASS - Opp.Party(s)

PARAS MONEY GOYAL AND MOHIT GARG AND AJIT SINGH

11 Oct 2023

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

 

Appeal No.	:	134 of 2023
Date of Institution	:	12.06.2023
Date of Decision	:	11.10.2023

 

 

 

 

 

 

1]      India Bulls Housing Finance Ltd. Registered Office at 5^th Floor, Building No.27, KG Marg, Connaught Place, New Delhi-110001.

2]     India Bulls Housing Finance Limited, Regional Office: SCO 337-338, Ground Floor, Sector 35-B, Chandigarh through its Manager.

….Appellants/Opposite Parties.

Versus

1]      Sh. Ravi Kumar S/o Sh. Banarsi Dass R/o H.No.3023, Tribune  Colony, Sector 29-D, Chandigarh.

2]      Smt. Sonia W/o Sh. Ravi Kumar R/o H.No.3023, Tribune Colony, Sector 29-D, Chandigarh.

 

...Respondents/Complainants.

BEFORE:   JUSTICE RAJ SHEKHAR ATTRI, PRESIDENT

                MR. RAJESH K. ARYA, MEMBER

ARGUED BY :-  

Ms. Niharika Goyal, Advocate for the appellants.

Sh. Sandeep Bhardwaj, Advocate for the respondents.

PER  RAJESH  K. ARYA, MEMBER

                    This appeal has been filed by the opposite parties – India Bulls Housing Finance Ltd. (appellants herein) against order dated 21.03.2023 passed by District Consumer Disputes Redressal Commission-I, U.T., Chandigarh (in short ‘District Commission), vide which, consumer complaint No.805 of 2022 filed by the complainants  – Ravi Kumar & Sonia (respondents herein) has been partly allowed against the appellants by directing them to refund the excess amount charged as increased rate of interest from the respondents with interest @9% p.a. from the respective dates of charging the same; pay ₹20,000/- as compensation for causing mental agony and harassment; pay ₹10,000/- as costs of litigation and also to issue certified breakups of the amount received from the respondents at the time of closing the loan. The order has been directed to be complied with within a period of 30 days from the date of receipt of its copy, failing which, the awarded amount was to attract penal interest @12% p.a. besides payment of litigation costs.

2]             Briefly stated the facts as narrated in the impugned order passed by the District Commission are that the respondents availed loan services from the appellants, who sanctioned a loan in favour of appellant No.1 to the tune of Rs.6,08,000/- against Plot No.150 Kings Valley, Gulabgarh Road, Derabassi, Punjab vide Sanction letter dated 8.12.2016 with  settled rate of interest @9.45%.  The said loan was to be paid in 180 installments of Rs.6,336/- per month. On 1.12.2018, the appellants changed the rate of interest from 9.45% to 12.8% per annum towards the loan  in question without prior consent of the respondents, which affected the respondents drastically as the EMI had increased from 180 to 327/322,  meaning thereby the respondents had to pay more than 20 lacs approximately in lieu of ₹6.08 lakhs whereas as per loan agreement, respondent No.1 was bound to pay ₹11,40,480/- for ₹6,08,000/-.  It was alleged that the changes made by the appellants was highly unjustifiable.  Respondent No.1 visited the office of the appellants numerous time to know under which guidelines the changes were made but of no avail.

3]                The opposite parties (appellants herein) chose not to appear before the District Commission despite due service of notices, hence, they were proceeded exparte vide orders dated 26.10.2022.

4]                However, alongwith the appeal, certain documents have been annexed, on the basis of which, the appellants have argued the case. However, no application to place on record the said documents to be read into evidence has been filed.

5]                We have heard the counsel for the parties and have also gone through the grounds of appeal, impugned order and the record of the District Commission and also the documents annexed with the appeal & the written arguments filed by the respondents. However, the appellants did not file any written arguments.

6]                Counsel for the appellants have vehemently argued, by relying upon the Loan agreement i.e. Annexure A-4 placed on record along with the appeal that as per schedule attached with the agreement, the loan amount is Rs.6,08,500/- and adjustable rate of interest is 9.45%. As such rate of interest of the loan was floating rate of interest and not the fixed rate of interest and on the basis of this document, the appellants can increase the rate of interest without the consent of the respondents, which has been done in the present case.

7]                On the other hand, Counsel for the respondents has relied upon Condition No. 2.1(d) of the loan agreement (Annexure A-4) being placed on record by the appellants along with the present appeal and has argued that as per this condition, the appellants may change the applicable rate of interest, at its sole discretion with prospective effect but it has a rider that it can be done with prior written communication which needs to be acceptable by the borrower.

8]                The appellants are relying upon the documents attached with the appeal to say that prior written communication about the change of interest was given to the respondents vide Annexure A-5 with the appeal i.e. letter dated 06.02.2017, 13.06.2018, 17.04.2018, 16.08.2018 and 30.09.2018. However, no documentary evidence has been placed on record with these letters in order to prove that these letters were actually sent to the respondents and were received by them.  The stand of the respondents is that no prior communication, as relied upon by the appellants, was sent or received by them. When the counsel for the appellants was asked about the mode of sending and proof of receiving the letters by the respondents, he failed to justify as to how these letters were sent to the respondents and also failed to justify as to when were these letters received by the respondents. In the absence of any proof of sending and receiving of the letters by the respondents, these documents cannot be relied upon at the appellate stage.

9]                Admittedly the appellants have sanctioned the loan amount of ₹6,08,500/- and the same was to be repaid in 180 equal installments of ₹6,336/-. The date of commencement of the loan was 10.12.2015 and the loan was to be repaid in equal monthly installments of ₹6,336/- till 10.12.2030. The respondents were required to pay total amount of ₹11,40,480/- to the appellants which means an amount of ₹6,08,500/- is to be paid as principal amount and ₹5,31,980/- as interest. The interest amount was to keep on changing being the adjustable rate of interest. The appellants issued a letter dated 01.12.2018, Annexure C-2, to the respondents according to which the appellants changed margin by 80 basis points (i.e. 0.80%) (per annum) and mentioned the revised rate of interest as FRR 17.6(%)-4.8 Margin (%)= 12.8% p.a. The rate of interest was increased from 9.45% to 12.8% straightway. The appellants failed to prove on record any document so issued by the competent authority including RBI on the basis on which the interest has been increased by 3.35%. It is high headedness of the appellants that they themselves increased the rate of interest in disregard to condition no.2.1(d) of the agreement without prior written communication. Even otherwise, the appellants have to give prior communication before changing the rate of interest, which they never did.

10]              It may also be stated here that letter dated 01.12.2018  cannot be said to be a prior communication because a close reading of the said letter shows that vide this letter, the respondents were informed about the change of interest, which had already been done. This letter further proves unfair trade practices on the part of the appellants as this letter is totally silent about the number of EMIs to be revised, whereas the appellants only mentioned the effect of revision as aforesaid on the tenure of the loan while the EMI amount would remain the same i.e. ₹6,336/- per month, as before. The appellants failed disclose the revised tenure of loan to the respondents. Counsel for the appellants also failed to justify as to why the tenure has been revised unilaterally rather than increasing the amount of the installment as per revised rate of interest. This practice proves that the complete information has not been provided to the respondents.

11]              It is already established on that after receiving letter dated 01.12.2018, the respondents approached the appellants and when no satisfactory reply was given, they sent legal notices, Annexure C-4 to C-11, which were not replied by the appellants and as such, the respondents were forced to close the loan and No Due Certificate dated 09.04.2019 was issued to them. However, while issuing the No Due Certificate, the appellants did not mention the principal amount and interest amount received from the respondents, which clearly amounted to unfair trade practice.

12]              It may be stated here that the banks/financial institutions are supposed to give the documents pertaining to loan immediately after sanctioning of the loan without any delay and also to intimate about change in rate of interest if any during the continuation of the loan along with supporting documents. The consent of the consumer is also to be taken before change of rate of interest so as to confirm whether the consumer wants to extend the tenure of the loan by keeping the amount of the installment same or wants to increase the amount of installment by keeping the tenure of the loan same. The banks/financial institutions have also to give statement of account towards the total amount paid up by the consumer towards the principal loan, interest and charges levied if any before closing of the loan by the consumer in order to bring fair banking services into practice. The appellants, in the present case, have failed to prove the fair banking services rendered towards the respondents. We deem it appropriate to refer to the dicta of the Hon'ble National Consumer Disputes Redressal Commission, New Delhi, in “ICICI Bank Limited vs. Karam Chand and Ors.”, Revision Petition No.2954 of 2015 decided on 27.08.2019, wherein the Hon'ble National Commission held, as follows:-

“........Therefore, whenever there is any change in the floating rate, it should be in conformity to Asset-Liability Management (ALM) guidelines and in the case of existing loans for longer/fixed tenure, the Banks should re-fix the rates according to the above said method after obtaining the consent of the concerned borrower. The same provision was retained in the Circular dated 1.7.2009 and in the Circular dated 1.7.2010 as well as in the Circular dated 2.7.2012. The complainant was advanced the loan on floating rate of interest. In case there was change in the floating rate of interest on loans then the above said formula was to be adopted, while fixing the rate of interest and taking the consent of the concerned borrower whether he wants to continue the loan with the enhanced rate of interest or he could adopt for other option i.e. closing of the account or shifting of the account, therefore, information/consent of the borrower is the predominant clause while changing the floating rate of interest. In the certificate of interest, which Ops have placed on the record with regard to the change of floating FRR from time to time, no reference of conformity to their Asset-Liability Management (ALM) so that it should be objective transparent and mutually accepted to counter (concerned) parties. The OPs in their written reply has stated in para (No. 4) of their reply on merits that same was published on the website of the Bank and informed the customer at large through the newspaper, therefore, there are no pleadings whether any personal notice was delivered upon the complainant to check transparency and mutually acceptable, therefore, the Ops bank has not complied with the RBI instructions with regard to change in the floating rate of interest of loans. In another judgment Hon'ble National Commission reported in MANU/CF/0532/2012 : 2012 (4) CPJ 415 (NC) IDBI Bank Ltd. (M/s.) v. Subhash Chand Jain & Anr. in which it was again observed that concept of floating rate of interest flows from the regulation of rate of interest by the RBI guidelines and not arbitrarily by the service provider without informing or telling the reasons for increasing the rate of interest in general terms and not that there is inflationary market. Every discretion has to be exercised judicially so as to make persons understand fully as to the reasons and ground for increasing the rate of interest and not arbitrarily under the garb of floating rate of interest."

Thus, relying on the above mentioned dicta of the Hon'ble National Commission, it flows that an opportunity must be afforded to the Borrower before changing the floating rate of interest. Therefore, in our considered opinion, the consumer has a right to know about the rate of interest being charged at the time of sanctioning the loan and also as and when changed by the financial institutions and further to know the amount it has paid under different heads i.e. principal, interest and charges if any at the time of closure of the loan.

13]              In view of above, we are of the concerted view that the impugned order passed by District Commission is well based, legal and valid in the eyes of law and as such, this Commission finds no reason to interfere in the same.

14]              For the reasons recorded above, the appeal being devoid of any merit is dismissed with no orders as to costs.

15]              Certified copy of this order be sent to the parties free of charge.

16]              File be consigned to the Record Room after completion.

Pronounced.

11.10.2023.

(RAJ SHEKHAR ATTRI)

PRESIDENT

 

(RAJESH K. ARYA)

MEMBER

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