AVTAR SINGH vs ICICI HFC LIMITED

-THIS is an appeal against the order of District Consumer Disputes Redressal Forum-II. U.T., Chandigarh [hereinafter for short, referred to as District Forum-II], dated 4.3.2004 in Complaint Case No. 499 of 2002, Sh. Avtar Singh v. ICICI HFC Limited.

BRIEF facts of the case as per the complainants are that the complainants applied for a loan of Rs. 1,70,000/- for five years @ 10.75% from ICICI HFC Limited and paid Rs. 850/- as 50% of the processing fee. The complainant was assured by the authorized agent of the O.P. that the loan will be disbursed within 15 days. Even the loan application was filled by this agent in his own hand. The O.P. vide their letter dated 19.9.2001 sanctioned the loan for a period of 7 years @ 12.25% without any consent or request for the same by the complainants. The complainants requested the O.P. to either make the loan for 5 years @ 10.75% as originally requested or make the term as 10 years for adjustable rate. But the O.P. did not accede to his request and nor did the O.P. respondent to the letters dated 4.2.2002 and 4.3.2002 sent by the complainants. On account of non-modification and non-amendment of the terms and conditions of loan the complainants had to arrange loan from private money lenders at high rate of interest and so suffered heavy loss. Hence, the complaint seeking following relief: (a) Refund of Rs. 850/- paid as processing fee. (b) Refund of Rs. 2,000/- as expenses incurred in completing formalities and follow up. (c) Compensation of loss suffered due to payment of higher rate of interest amounting to Rs. 30,500/- (d) Cost of litigation to be paid as Rs. 10,000/- .

The O.P. challenged the maintainability of the complaint because according to them the complainants are not consumers. However, learned District Forum correctly repelled this objection because it is not denied that the complainants have hired the services of the O.P. for consideration partly paid. On merits the complainants version is that the complainants applied for a loan of Rs. 1,70,000/- for a period of 5 years but the rate of interest was not promised to be 10.75% per annum. It is averred that since the loan applied was against property a higher rate was leviable and, therefore, a seven year period loan @ 12.25% per annum was sanctioned. This, as per the complainants, was done keeping in view the profile of the complainants and their paying capacity. It is further stated that as per policy 50% of the processing fee is charged in advance prior to issue of the sanction letter. It is denied that there is any deficiency on the part of O.P.

Learned District Forum-II in their analysis observed that there is no evidence that the agent of the O.P. filed the application form and held that even if he had filled this form it means no deficiency in service on the part of the O.P. as nothing in the form filled was such as was not consented or agreed to by the complainants. Learned District Forum-II held that the loan application (Annexure C-1) was the offer of the complainants seeking loan whereas sanction letter of the O.P. (Annexure C-2) was their counter offer and endorsement on Annexure C-2 and letter at C-3 were the counter offer of the complainants. It held that the O.P. has committed no deficiency in service in not accepting the offer of the complainants because no valid agreement came into existence between the parties and there was no breach of any alleged contract. It further observed that it is normal practice to take 50% the processing fee prior to issue of sanction letter and it held that the issuance of sanction letter makes it clear that the loan application was processed and hence there is no deficiency even on this count. Consequently, the complaint was dismissed.

AGGRIEVED by this order of the District Forum-II the complainants have filed this appeal. The appeal having been taken on board, the record of the complaint case was summoned from District Forum-II and notice was sent to the respondent. Sh. Baljit Singh, S.P.A. appeared on behalf of the appellant whereas Mr. P. Hari Haran, Advocate represented the respondents. Mr. Baljit Singh submitted that in the loan application, loan applied was for a five years term with interest @ 10.75% per annum whereas the O.P. on its own changed these parameters to 7 years and 12.25% per annum rate of interest. He emphasized that since unilateral action could not be taken by the O.P. because of this, he submitted, the complainants had to take loan from a private source and thus suffered a loss of over Rs. 30,000/-. He also submitted that the registered letters of complainants remained unreplied. He prayed for setting aside the impugned order and grant of relief as prayed in the complaint.

MR. P. Hari Haran, Advocate submitted that the application form at no place mentions the rate of interest as 10.75% per annum. He added that the sanction letter from the beginning refers to interest rate of 12.25% per annum. He further added that there is no evidence on record to prove that a lower rate of interest was offered to the complainants. He next submitted that if the rate of interest was not agreeable the complainants were at liberty to go to any other institution for obtaining loan. Referring to para 7 of the impugned order the learned Counsel submitted that there was never any valid contract between the parties and, therefore, there is no question of any breach of contract or deficiency in service. He highlighted that until offer and acceptance are complete no contract can be in place. He thus defended the order as being legal, just and fair. In response Mr. Baljit Singh referred to para 3 of the written statement of the O.P. wherein, he submitted, that the O.P. has admitted increasing the loan term period from 5 to 7 years. He also referred to the sanction letter and submitted that the loan sanctioned was housing loan and not loan against property. He reiterated that the terms and conditions for the applied loan were 5 years of time and interest @ 10.75% per annum. We have gone through the evidence on record and have also listened to the arguments of both sides. The controversy in this case is relating to the processing of the loan application and subsequent breach of contract, if any.

IT is undisputed that the complainants applied for a loan for Rs. 1,70,000/- for a term of 5 years which the complainants averred was to be at 10.75% per annum rate of interest. Though the O.P. has denied offer of this rate of interest and even the loan application no where mentions so, the O.P. have failed to give out any other rate for this amount of term period or prove that interest @ 12.25% was acceptable to the complainants. IT is well known that the interest rate of loan varies with the term of the loan and such schemes are well advertised and known hence, it was for the O.P. to give out details of the 5 years terms loan rather than deny the offer of interest @ 10.75% per annum. The application form neither indicates the loan is sought for housing or it is against property but the sanction letter clearly indicates the loan is a housing loan and hence it cannot lie in the mouth of the O.P. to now say that since the loan was against property it was to attract higher rates of interest. IT also indicates that the housing loan attract lower rates of interest and as such lends credence to the averments of the complainants that they were offered loan at an interest rate of 10.75% per annum. In view of this backdrop sanction of a loan for 7 years with interest @ 12.25% per annum against an application for loan for 5 years at a lower rate of interest cannot be termed as processing. The learned District Forum-II has rightly said that the application for loan is the offer and sanction letter of the O.P. is a counter offer. A mere counter offer of loan cannot be later construed by the same Forum as processing of the loan application. Thus we are of the view that the loan application of the complainants was never processed and, therefore, the charging of Rs. 850/- from the complainants as processing fee is illegal. The complainants are thus entitled to the refund of this amount.

NOW coming to the fact whether there was any contract for loan or not. We find that the application is for a different plan of loan and the sanction is for a different plan. Both the plans proposed by the complainants and the subsequent revised proposal made vide endorsement on the sanction letter and vide dated 3.3.2002 were not acceptable to the O.P. and plan offered by the O.P. vide their sanction letter was not acceptable to the complainants. It is nowhere on record as evidence that the O.P. ever offered or agreed to the plan listed in the loan application. Thus apparently no contract came in place and, therefore, the complainant cannot claim any damages/relief against the O.P. for break of any contract. There is clearly no deficiency in service on the part of the O.P. in this regard. In view of the foregoing the impugned order does not stand legal scrutiny and is, therefore, set aside. The appeal is partly allowed. The O.P. is directed to refund the amount of Rs. 850/- charged as processing fee along with interest at the rate of 6% per annum w.e.f. 3rd April, 2002 i.e., one month after the date of the registered letter dated 3rd March, 2002 sent by the complainants to the O.P., till payment. The O.P. is further directed to pay Rs. 300/- as costs of litigation to the complainants. We further direct that this order be implemented within two months of its receipt. The complaint stands disposed of in aforesaid terms.

Copies of this order be sent to the parties free of charges. Complaint disposed of.