BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-I, U.T. CHANDIGARH

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Complaint  Case No :1464 of 2009

Date  of  Institution  :   30.10.2009

                                Date  of    Decision  :   24.02.2010

Damanpreet Singh Chand, 2233, Sector 44-C, Chandigarh.

….…Complainant

V E R S U S

1]     The Manager, HSBC, SCO No.1, Sector 9-D, Chandigarh.

2]     M/s HSBC Pragati Finance, through Branch Manager, HSBC, SCO No.1, Sector 9-D, Chandigarh.

                                                ..…Opposite Parties

CORAM:    SH.JAGROOP SINGH MAHAL               PRESIDENT

                DR.(MRS) MADHU BEHL                      MEMBER

Argued by:       Sh.Narinder Pal Sharma, Adv. for complainant.

                        Sh.Sandeep Suri, Advocate for OPs.

PER SH.JAGROOP SINGH MAHAL, PRESIDENT.

                                Briefly put, the complainant took personal loan of Rs.50,000/- from OPs at the flat rate of interest of 31% per annum repayable in 36 equated monthly installments of Rs.2681/- each.  He paid the EMIs regularly from 1.5.2008 to 1.4.2009 amounting to Rs.32,172/- and thereafter visited the OP No.2 for closure of his loan account whereupon he was asked to deposit a total sum of Rs.43,050/-.  It is averred that when the complainant enquired from OP as to how this amount was calculated, he was told that the rate of interest was 49.18% per annum and not 31%.  It is also averred that the rate of interest as 49.18% was not reflected in the agreement nor it was explained at the time of granting loan.  However, the complainant fearing any unreasonable penalty by the OPs and to avoid any further complications, deposited the amount of Rs.43,050/- under protest and the OP refunded a sum of Rs.136.99 only towards excess amount on the closure of the loan account.  It is further averred that the OPs illegally charged from him a sum of Rs.16,000/- on account of exorbitant rate of interest, Rs.500/- charged in excess as processing fee and Rs.2000/- as pre-payment charges at the rate of 4%.  The complainant took up the matter with OPs for refund of the said amount charged in excess from him but to no avail. Hence, this complaint alleging the above act of OPs as gross deficiency in service and unfair trade practice due to which he had to under go mental tension, physical harassment and financial loss.

2]             OPs filed joint reply and admitted the factual matrix of the case.  It is denied that OP Bank has charged excessive rate of interest or any amount from the complainant.  It is stated that the rate of interest as charged by the OP Bank was 31% flat as per the agreement entered into between the parties.  The other charges like pre-payment charges and processing fee were also charged as per the agreement.  Denying rest of the allegations and any deficiency on the part of OPs, it is prayed that complaint be dismissed. 

3]             Parties led evidence in support of their contentions.

4]             We have heard the ld.Counsel for the parties and have perused the record.   

5]             The contention of the complainant is that he had requested for a loan of Rs.50,000/- which was sanctioned to him regarding which a personal loan agreement was executed but he was paid only a sum of Rs.46,767/- , as is reflected in the account statement now marked Annexure G. The contention of the Learned Counsel for the complainant is that though the OP is charging interest from other customers’ @13 % or 14% p.a., yet he agreed that as per the agreement he is liable to pay interest @31% p.a.  His contention further is that though the prepayment charges cannot be recovered by the OP bank, which is an unfair trade practice, yet he is ready to pay the same @4% p.a. as mentioned in the agreement Annexure A. The Learned Counsel further argued that the complainant has paid a sum of Rs.32,172/- through installments from 1.05.2008 to 2.04.2009 which is reflected through his account statement copy of which is Annexure G but thereafter when the account was to be closed they demanded from him a sum of Rs.43,050/- which was deposited vide Annexure B on 15.04.2009.  The Learned Counsel argued that infact the OPs have charged interest @49.18% p.a. instead of 31% p.a.  The Learned Counsel for the OP has refuted this contention but we are of the opinion that the complainant has rightly submitted the facts. Presuming that the loan was Rs.50,000/- carrying interest @31% p.a., it was disbursed to the complainant on 4.04.2008 and was repaid in total on 15.04.2009 vide Annexure B. The complainant therefore utilized the amount for 13 months.  Calculating the interest on the amount of Rs.50,000/- for 13 months @31% p.a. comes out to Rs.16,790/-.  Adding 4% prepayment charges even on the total amount of Rs.50,000/- comes out to Rs.2000/- in addition to which the OPs have charged Rs.1000/- as processing charges.  Worst-cum-worst, the total amount would not be exceeding Rs.50000+16790+ 2000+1000=Rs.67,790/- but the OPs have recovered from the complainant a sum of Rs.32172+43050 i.e. Rs.75,222/- which shows that under the  garb of interest @ 31% p.a. the OPs have charged interest at an exorbitant rate of 49% p.a. which is an unfair trade practice.

6]             The OPs have advanced a sum of Rs.46,767/- to the complainant as reflected from Annexure G.  The OPs have not been able to produce any document to suggest if the amount in excess of the above was advanced to the complainant.  The OPs therefore cannot charge interest on a higher amount.  The rate of interest cannot be charged by the OP in excess of 31% p.a. It is not the case of the OP, if any of the installments was not paid in time.  They cannot therefore charge any amount towards delay in the payment of the installments.  They can charge prepayment charges on the amount which remained due on 15.04.2009 on which date the entire prepayment was made by the complainant and also the processing fee of Rs.1000/- as mentioned in loan agreement Annexure A.

7]             In view of the above discussion, we are of the opinion that the present complaint must succeed. The same is accordingly allowed.  The OPs are directed to overhaul the total account of the complainant and charge interest @31% p.a. on the amount of Rs.46,767/- advanced by them.  They shall also charge processing fee of Rs.1,000/- and prepayment charges @4% p.a. on the amount due from the complainant on 15.04.2009.  The amount charged excess shall be paid by the OPs to the complainant within 30 days from the receipt of the copy of the order alongwith litigation costs of Rs.5,000/-. Since the OPs are adopting an unfair trade practice of charging interest at a higher rate but showing that the amount has been charged at a lower rate they are directed to pay Rs.10,000/- as compensation. The entire amount shall be paid to the complainant within 30 days from the receipt of the copy of this order failing which they would be liable to pay interest @12% p.a. on the excess amount charged by them with effect from 16.04.2009 and on the amount of compensation and litigation costs with effect from the date of institution of the present complaint i.e. 30.10.2009, till the entire amount is paid to the complainant.

                Certified copies of this order be sent to the parties free of charges.  The file be consigned.