Date of Filing:08-11-2017
Date of Order:06 -12-2019
BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM – I, HYDERABAD
P r e s e n t
HON’BLE Sri P.VIJENDER, B.Sc. L.L.B., PRESIDENT
HON’BLE Sri K.RAM MOHAN, B.Sc. M.A L.L.B., MALE MEMBER
HON’BLE Smt. CH. LAKSHMI PRASANNA, B.Sc. LLM., LADY MEMBER
Friday, the 6th day of December, 2019
C.C.No.467 /2017
Between
Vummadi Rama Subba Reddy,
S/o.Late Narsimha Reddy, aged about 65 years,
Business and agriculture
Presently residing at 3/201-1, Saikuteer Road,
Proddutur, YSR Kadapa District – 516360 ……Complainant
And
- The Chief Manager, Union Bank of India,
Pavani Plaza Commercial Complex,
6-2-984, Rajbhavan Road, Khairatabad,
Hyderabad -500004
- The Branch Manager, Union Bank of India,
Secunderabad Station Road,
9-4-1402 to 1403, Regimental Bazar,
(Aadj.to Sikh Gurudwara) Secunderabad,
Hyderabad -500 025
- The Regional Manager, Union Bank of India,
2nd floor, Prestage Rai Towers,
Panjagutta Road, Opp: NIMS,
Hyderabad – 500 082 ….Opposite Parties
Counsel for the complainant : Mr.K.Venkateswarlu
Counsel for the opposite Parties : Mr.A.V.S.S.Prasad
O R D E R
(By Sri P. Vijender, B.Sc., LL.B., President on behalf of the bench)
This complaint is preferred under Section 12 of C.P. Act 1986 alleging that opposite parties indulged an unfair trade practice by collecting excess rate of interest on the housing loan availed by the complainant, hence a direction to opposite parties to issue a correct statement of account of by calculating interest at 8.25% fixed as per the sanctioned letter and to award compensation of Rs.1,00,000/- for causing inconvenience and mental agony to the complainant and further sum of Rs.25,000/- towards cost of this complaint.
- Complainant’s case in brief is that originally he availed a housing loan from the PNB Housing Finance later switched over to City Bank on 3-03-2004 thereafter in the month of December, 2015 accepted the offer of opposite party No.1 to sanction the housing loan with lesser rate of interest at 8.25% P.A. He submitted an application form to opposite partyNo.1 and after scrutiny opposite party No.1 sanctioned housing loan of Rs.6.71 Lakhs on 12-12-2005 indicating fixed rate of interest at 8.25% P.A. The said housing loan was repayable by 180 EMIs of Rs.6,504/- each commencing from February, 2006. After availing of the loan he repaid the outstanding loan of City bank with pre-closer charges on 19-1-2006. While paying the EMIs the complainant in the year 2007 noticed that opposite parties are collecting higher rate of interest under floating rate. Hence he raised an objection by way of letter dated 2-1-2007 and requested opposite partyNo.1 to charge rate of interest at fixed one. Opposite party No.1 promised to adjust the future EMI’s and not to collect interest under floating rate and believing the same complainant paid the installments regularly to opposite party without default. He obtained statement of account in the year 2016 and noticed that opposite parties are collecting interest at different rates ranging from 9% to 13.5% which is irregular and contrary to the sanction order. Hence he brought the same to the notice of opposite partyNo.1 who informed that the loan account was shifted to opposite partyNo.2 branch and advised him to contact opposite partyNo.2. Hence on 11-08-2016 complainant delivered letter to opposite partyNo.2 requesting to charge interest at 8.25% fixed rate only and to re-credit the amount already charged and collected from him. To the said letter opposite partyNo.2 gave a reply on 10-1-2017 with incorrect facts and grounds.
Aggrieved with the grounds raised in the reply dated 10-1-2017 the complainant approached Banking Ombudsman with a complaint on 22-04-2017. But the said complaint was closed on 2-6-2017 giving liberty to complainant to approach other legal authority for Redressal of grievance.
Opposite parties have not furnished correct statement of account and they charged higher rate of interest till September, 2017 hence complainant himself got prepared statement of account with fixed rate of interest at 8.25%. The actions of opposite party in collecting excess rate of interest which is higher than the fixed rate of interest offered to the complainant at 8.25% P.A in the sanctioned letter amounts to unfair trade practice and failure to act upon his representations amounts to deficiency of service. Hence the present complaint for the above mentioned reliefs.
- A written version filed by opposite party No.2 is adopted by opposite party No.1 &3. In the written version opposite parties have denied the allegation of unfair trade practice and deficiency of service on their part. Their stand is complainant was sanctioned a housing loan of Rs.6,71,000/- on 12-12-2005 with interest at 8.5% i.e, below 2.25% bank prime lending rate and it works out at 10.75% which is in accordance with the bank lending rate in terms of RBI guidelines. The complainant was informed about the change of interest rate from time to time. The opposite parties have to follow RBI guidelines while charging interest, the rate of interest in the sanctioned letter dated 12-12-2005 is altered and the authenticity of same is not there. The rate of interest applicable as on the date of sanction of letter is fixed ROI is 9% and floating rate of interest is 8.5% is as per IC No.7039 dated 5-5-2004. The rate of interest as per the documents is applicable to floating rate of interest only and demand promissory note signed by the complainant the rate of interest shown is 8.50% i.e, 2.25% below the BPLR. After availment of loan the complainant has not paid EMIs regularly and sometimes he paid once in three months. The complainant’s loan account became NPA two times on 30-6-2016 and 31-1-2017. The arrears shown is not due to rate of interest change but it is on account of non-payment of installments regularly and it resulted charging of penal interest on the amount due. The penal interest was charged on account of complainant’s account becoming non-performing asset as per the RBI guidelines. The loans are based on floating rate of interest and rate of interest was linked to bank prime lending rate initially and later on changed to base rate and then to MCLR as per RBI guidelines.
The bank has changed base rate in July, 2010 and to MCLR as on 1-4-2016 and complainant in spite of request of several occasions did not agree to change to base rate and insisted changing the fixed rate of interest at the time of sanction of loan to the complainant. BPLR of the bank was 10.75% and it was changed to 11.25% on 1-5-2006 and despite information to the complainant to change base rate and then to MCLR he did not agree and insisted to charge fixed rate of interest only. Complainant has not represented bank for 9 long years. The representations submitted by the complainant was replied by opposite party No.2 on 10-1-2017 asking the complainant to change to floating rate of interest linked to MCLR but he did not adhered to it. The complainant approached Banking Ombudsman with written complaint on 22-4-2017 and after considering version of the opposite parties the said complaint was closed. The collection of rate of interest on the housing loan of the complainant is as per bank guidelines and floating rate of interest and irregularities to the account of the complainant occurred on account of non-payment of installments regularly.
The opposite parties have not caused any inconvenience to the complainant and there was no unfair trade practice and deficiency of service on the part of the opposite parties relating to complainant’s housing loan account. Hence the complaint deserves to be dismissed.
In the enquiry the complainant got filed his evidence affidavit reiterating the material facts of the complaint and to support the same got exhibited fifteen (15) documents. Similarly for the Opposite Parties evidence affidavit Chief Manager of opposite party No.2 branch is got filed and substance of the same is in line with the stand taken in the written version. Six (6) documents are exhibited for the opposite parties.
On a consideration of material brought on the record for both sides the following points have emerged for consideration .
- Whether the complainant could make out a case of either unfair trade practice or deficiency of service on the part of the opposite parties ?
- Whether the complainant is entitled for the reliefs prayed for ?
- To what relief?
Point No.1: Complainant’s case in essence is he was sanctioned housing loan of Rs.6,71,000/- with fixed rate of interest at 8.25% P.A but after disbursement of the loan the opposite parties started charging interest at floating rate differently from year to year. Ex.A1 is the loan sanctioned letter wherein fixed rate of interest is shown is 8.25% P.A at monthly rests. In the written version the opposite party has categorically stated that the rate of interest in the sanctioned letter dated 12-12-2005 is altered and the authenticity of authorization is not at the alteration. The complainant’s claim is he paid the installments regularly but opposite party has categorically stated that the complainant after availment of the loan has not paid the installments regularly and on two occasions the subject loan account became non-performing asset and it was upgraded twice on 22-7-2016 and on 26-4-2017 and on account of it penal charges were imposed on the outstanding amount. This has not been denied by the complainant in the evidence affidavit. Ex.A1 sanctioned letter also says penal interest at 2% will be levied on the defaulted installments. It is evident from the written version of the opposite party that the complainant is an Ex-Bank employ and well versed with the rate of interest being charged by the bank. It is evident from the Ex.A2 that on 2-1-2007 itself the complainant raised an objection with regard to collecting interest at floating rate on his housing loan account. Despite that the opposite parties have not responded the complainant informing him that rate of interest being charged in terms of sanctioned letter. Though Ex.A1 sanctioned letter refers interest at 8.25% which is an alteration to a naked eye demand prone stated to have contain interest rate at 8.50%. The opposite party who is admittedly in the custody of demand prone ought to have filed it to substantiate the said version. Even assuming for a moment that rate of interest on Ex.A1 sanctioned letter is altered from 8.5 to 8.25% still it refers fixed rate of interest agreed to be charged by the opposite parties while sanctioning the loan. The contention of opposite party is the rate of interest agreed by the bank to the complainant is 8.5% P.A which is below of 2.25% of bank prime lend rate and according to which rate of interest works out at 10.5% on the date execution of documents. But none of the documents filed by the opposite parties mention’s that rate of interest works out at 10.5% P.A and complainant has agreed for it while availing the loan. The opposite party referred to the internal circular dated 5-5-2004 which is an applicable up to IC No.7372 dt.8-5-2006. As already said these circulars are not forming part of loan documentation of the complainant and they are not binding on the complainant. The opposite party having pleaded that the demand prone and loan agreement reveals that rate of interest at 8.5% and it is floating rate of interest and not fixed rate of interest has not filed the said documents which are admittedly in their custody. No explanation is coming from the opposite parties for not filing the demand prone out and loan agreement which are the material documents and it amounts to suppression of the same. When a party to the proceeding suppression of material documents presumption is required to be raised against the party that if those documents are placed they will go against the interest of the party who suppressed to file it. Hence the stand of the opposite party that the date of interest agreed by the complainant at the time of sanction of letter was 8.5 % and it works out at 10.5% has no legs to stand. Thus it is evident from the document placed on record by the complainant that the opposite party having offered fixed rate of interest to the complainant at 8.25% started collected floating rate of interest differently over the years and it amounts to unfair trade practice and failure to consider the complainant’s request to switch over to agreed fixed rate of interest by way of Ex.A2 letter amounts to deficiency of service. Hence point is answered infavour of the complainant.
Point No.2: Findings of this Forum to point No.1 are that the opposite parties have indulged unfair trade practice and caused deficiency of service hence they are directed calculate interest on the loan amount of the complainant at 8.25% P.A from the date of sanction letter and adjust the amount collected by way of floating rate of interest to the outstanding amount and issue a revised statement of account showing outstanding amount payable by the complainant. Opposite parties caused mental agony to the complainant by not acceding to his request. Hence liable to pay a compensation and costs to the complainant .
Point No.3: In the result, the complaint is allowed in part directing the opposite parties to calculate fixed rate of interest on the loan amount of the complainant at 8.25% P.A from the date of sanction letter and adjust the amount collected by way of floating rate of interest to the outstanding amount and issue a revised statement of account showing outstanding amount payable by the complainant and to pay to the complainant a sum of Rs.25,000/- towards compensation for mental agony and also to pay a sum of Rs.5,000/- towards cost of the complaint.
Time for compliance: 30 days from the date of service of this order.
Dictated to steno, transcribed and typed by her, pronounced by us on this the 6th day of December , 2019
LADYMEMBER MALEMEMBER PRESIDENT
APPENDIX OF EVIDENCE
Exs. filed on behalf of the Complainant:
Ex.A1- sanction letter of Union Bank of India dt.12-12-2005
Ex.A2- letter to the bank by complainant dt.02-01-2007
Ex.A3-letter to the bank by complainant dt.11-08-2016
Ex.A4-reply from the bank dt.10-01-2017
Ex.A5- letter by complainant to the Ombudsman dt.22-04-2017
Ex.A6-Banking Ombudsman order dt.2-6-2017
Ex.A7- Statement of accounts
Ex.A8- self statement of complainant
Ex.A9- sanction letter issued by Citybank dt.3-3-2004
Ex.A10- sanction letter dt.19-05-2001 issued by PNB Housing Finance Ltd dt.19-05-2001
Ex.A11-copy of the demand promissory note signed by me for a fixed rate of 8.5% dt.19-01-2006
Ex.A12- Housing loan agreement signed by me dated 19-01-2006 of Union Bank of India dt.19-01-2006
Ex.A13- application form for loan
Ex.A14- letter issued by Union Bank of India to banking Ombudsman dt.24-05-2017
Ex.A15- letter of request for foreclosure of loan account issued by Citibank dt.17-01-2006
Exs. filed on behalf of the Opposite parties
Exs.B1 to B4 are statement of accounts in various dates
Ex.B5- IC No.7039 dated 5-11-2004
Ex.B6: IC No.7372 dated 08-05-2006
LADYMEMBER MALEMEMBER PRESIDENT
