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Judgment
The present revision petition has been filed against the judgment dated 22.01.2014 of the Rajasthan State Consumer Disputes Redressal Commission, Jaipur (''the State Commission'') in First Appeal no. 1249 of 2012.
The facts of the case as per the respondent/ complainant are that the respondent procured a loan of Rs.85,00,000/- from the petitioner/ opposite party, vide loan account number NJHA100000727837. The respondent got a takeover of this loan by the HDFC Bank on 21.04.2011, as the rate of interest of the petitioner was high. The respondent paid the entire outstanding amount of Rs.55,59,720/- on 21.04.2011 and for the same the petitioner realised from the respondent a sum of Rs.1,17,461.77 as a pre-payment charge at the rate of 2.21%. The petitioner had no right to claim the said amount. The above said act of the petitioner comes in the category of deficiency in service. By presenting the complaint the respondent has prayed that a sum of Rs.1,17,461.77, the amount realised as a pre-payment charges, interest of this amount at the rate of 18% per annum with effect from 21.04.2011 a sum of Rs.1,00,000/- as a compensation for mental tension, Rs.25,000/- for advocate''s fee and Rs.2,000/- for complaint expenses, may be ordered to be given by the petitioner to the respondent.
In reply, the petitioner raised preliminary objections that the loan was taken by Sushma Lekhra and Punit Lekhra and the complaint has been filed by Bhimsen Lekhra and hence, the complaint has not been filed by the remaining co-applicant, therefore, the complaint is liable to be dismissed. It was stated further that in the para-wise reply that a home loan for Rs.85,00,000/- was procured by the respondent from the petitioner for himself and for co-applicants namely, Sushma Lekhra, Banmala Dubey Lekhra and Punit Lekhra at a floating rate of interest from the above-mentioned account number. The respondent deposited the loan amount on 21.04.2011. The respondent paid the principal outstanding sum of Rs.53,15,012/-, late payment penalty of Rs.2,140/-, cheque bouncing charges and other charges of Rs.442/-, interest for the month Rs.23,954.70, pre-payment charges of Rs.1,17,461.77 on the principal outstanding amount at the rate of 2.21% and arrears of instalments of Rs.1,00,710/- till 21.04.2011. In this manner a sum of Rs.55,59,720.77 was outstanding on the respondent and co-applicants which has been paid, which cannot be held as unjust. Hence, there was no deficiency of service on the part of the petitioner therefore, the complaint of the respondent may kindly be dismissed with costs and expenses.
The District Consumer Disputes Redressal Forum II, Jaipur ("the District Forum'') vide its order dated 27.08.2012 noted that "the Reserve Bank of India in its circular dated 05.06.2012, it has, therefore, been decided that Banks will not be permitted to charge foreclosure charges/ pre-payment penalties on home loans on floating interest rate basis, with immediate effect told to close such type of practice with immediate effect by accepting the same as a restrictive practice, hence, the pre-payment charges of Rs.1,17,461.77 which has been realised by the opposite party absolutely comes in the category of deficiency in service".
The District Forum, Jaipur while allowing the complaint has given the following order: "By accepting the complaint of the complainant the opposite party is ordered to pay an amount of Rs.1,17,462/- received in the shape of the pre-payment charges to the complainant along with interest at the rate of 15% per annum with effect from 21.04.2011 till realisation within two months and to pay a sum of Rs.25,000/- as compensation for suffering mental tension and Rs.4,000/- for cost of the complaint".
Aggrieved by the order of the District Forum, the petitioner filed an appeal before the State Commission. The State Commission vide its impugned order dated 28.11.2013 upheld the order of the District Forum and dismissed the appeal by a non-speaking order.
Aggrieved by the order passed by the State Commission, the petitioner filed a revision petition no.1230 of 2013. This Commission vide its order dated 28.11.2013 accepted the revision petition and the order dated 30.01.2013 passed by the State Commission was set aside and the matter was remanded back to the State Commission with the directions to hear the parties on merits and dispose of the appeal by a reasoned order referring to the facts of the case as also the arguments of the respective parties.
The State Commission vide its order dated 22.01.2014 had dismissed the appeal again by a non-speaking order.
Hence, the present revision petition. -2-
We have heard the learned counsel for the parties. Learned counsel for the petitioner has contended that the impugned order passed by the State Commission is in violation of the provisions of law, justice, equity and fair play. The impugned order passed by State Commission is in complete disregard of the order dated 28.11.2013 passed by this Commission in the matter of ICICI Home Finance Company Ltd., vs Bhima Sen Lekhra bearing RP no. 1230 of 2013. The State Commission in-spite of specific directions from this Commission to decide the matter by a reasoned order, again has chosen to pass the impugned order and dismissed the appeal by a non-speaking and cryptic order. It seems that only as a formality, State Commission added one paragraph recording the factum that matter is remanded back pursuant to directions dated 28.11.2013 of this Commission and alongside on merit virtually passed the same order dated 30.01.2013, which was also set aside by this Commission.
Further, the complaint is bad for non-joinder of parties. The loan was taken by Mr Bhim Sen Lekhra, Mrs Sushma Lekra, Mr Puneet Lekhra and Ms Banmala Dubey but complaint has been filed by the respondent Mr Bhimsen Lekhra only, while Mrs Sushma Lekhra, Mr Puneet Lekhra and Ms Banmala Dubey have not been made party to the present proceeding and in the absence thereof, complaint is not maintainable for non-joinder of necessary parties.
The State Commission failed to appreciate that as per the terms of the said loan agreement, the petitioner is entitled to charge amount towards pre-payment charges, if any loan is pre-paid before the term of facility. It is pertinent to mention that the clause with respect to pre-payment charges as mentioned in the agreement was not even in question by the complainant while signing the agreement and taking loan and while repaying the loan along with the pre-payment charges. The State Commission failed to appreciate that home loan agreement was entered into between petitioner and respondent herein and other co-applicants out of free will and mutually agreed terms and the respondent has specifically agreed that in the event of pre-payment he/ they shall be liable to pay charges upon the principal outstanding loan amount. Hence, petitioner is well within its right to charge pre-payment charges.
Learned counsel for the respondent, however, argued in favour of the impugned orders and stated that the Reserve Bank of India vide their circular dated 05.06.2012 as also the Competition Commission vide orders dated 03.12.2010 and 22.03.2011 have stated that charging of pre-closure charges amounts to unfair trade practice and hence, the amount as pre-payment charges should be refunded to the respondent. Further, the complaint was filed by Mr Bhimsen Lekhra as the primary loan applicant.
We have gone through the record. The loan agreement filed on record was signed by the complainant. On reading of the same, we find that the loan had been taken by four co-applicants and the complaint has been filed only by Bhim Sen Lekhra. Offer letter to the four applicants clearly indicates that the fees on full and final pre-payment would be as under: Fees on Full and Final pre-payment 2% on amount prepaid and on all amounts tendered by the borrower towards pre-payment of the facility during the last one year from the date of final pre-payment.
It is also an admitted fact that as per the terms and conditions of the loan agreement on pre-payment, the complainant/ respondent and his co-applicant had paid the amount of Rs.1,17,462/- as pre-closure charges from 21.04.2011. The present complaint is an after-thought and anattempt to take back the amount paid as pre-closure charges.
Learned counsel for the petitioner has drawn our attention to the four citations of the National Commission:
In RP no. 239 of 2012 - Shishir Tiwari vs M/s Dewan Housing Finance Corporation Ltd., decided on 27 August 2014 a Coordinate Bench has held as under: th 7. We may note that the respondent is a non-banking financial company and as such would be governed by the regulations of National Housing Bank formed under the control and guidance of the RBI. The circular dated 19.10.2011 of the National Housing Bank, a copy of which is placed on file, which is relied on by the learned counsel contains instructions of the National Housing Bank to the housing finance companies regarding not charging of the prepayment levy or penalty on pre-closure of housing loans under certain situations w.e.f. the date of issue of the circular, i.e., 19.10.2011 whereas the housing loan as well as the pre-closure thereof in question are of prior period. In view of this, the petitioner cannot get any benefit from this circular. It may not be out of context to mention here that even though the RBI guidelines as such do not directly apply to the non-banking finance companies, the RBI has also issued instructions regarding removal of pre-closure penalty / charges by the banks vide its circular dated 5.6.2012. This circular of the RBI, a copy of which has been placed by the petitioner on record, also came into effect from the date of its issue, i.e., 5.6.2012. 8. Learned counsel has also referred to the order dated 22.3.2011 passed by the Competition Commission of India under section 27 of the Competition Act in which it has directed the concerned non-banking finance company, namely, India Bulls Financial Services Ltd., New Delhi under section 27 of the Competition Act to stop the practice of levying pre-payment penalty on the foreclosure of the loans against purchase of properties. We have gone through this order of the Competition Commission of India passed under the Competition Act but it does not provide the desired relief to the petitioner as such. In any case, keeping in view the need for such regulation, both the RBI and the National Housing Bank have already issued instructions for removal of pre-payment penalty on the foreclosure of housing loans to the respective institutions under their control but these instructions are applicable for foreclosures of housing loans prospectively, i.e., during the period from the date of issue of those circulars.
Besides the above, this Commission vide its orders dated 21.5.2013 in the Revision Petition No.2163 of 2011 [Nitin Vashishth and Gagan Vashisth Vs. Central Bank of India] and another order passed on 11.3.2014 in Revision Petition No.1629 of 2008 [S. Seshadri & Another Vs. The Housing Development Finance Corporation Ltd.], has held that the parties are bound by the terms and conditions of the loan agreement and as such charging of pre-closure penalty by the concerned bank/finance companies cannot be termed as illegal. Situation of course would be different if levying of such pre-closure is removed or declared as irregular/illegal by the concerned regulatory authority. The issue in question, therefore, is no longer res integra.
In RP no 3855 of 2011 - Standard Chartered Bank vs Krishan Lal Juneja, decided on 12 April 2013, a Coordinate Bench held as under: th 6. Perusal of aforesaid documents clearly reveals that complainant along with his son and daughter in law agreed to pay for pre-closure of the account and learned State Commission has wrongly come to the conclusion that complainant and his son and daughter in law have not signed this agreement. It has rightly been observed by the learned State Commission that had these terms and conditions been signed by the complainants, his son and daughter in law, it is binding on them. As these terms and conditions have been signed by the complainant, his son and daughter in law, the complainant was bound to pay pre-closure charges as per the agreement and OP/ petitioner has not committed any deficiency in demanding pre-closure charges. Learned District Forum rightly dismissed the complaint and learned State Commission has committed error in allowing complaint and directing refund of pre-closure charges along with compensation.
In RP no. 2163 of 2011 - Nitin Vashisth and Gagan Vashisth vs Central Bank of India and Ors , decided on 21 May 2013 a Coordinate Bench has held as under: st 10. On the other hand, it has been contended by learned counsel for the respondents that petitioners are bound by terms and conditions of the agreement in respect of the loan. In the instant case, petitioners'' account was taken over by the State Bank of India and for that reason, respondents charged 1% extra as pre-payment/ foreclosure charges in view of the specific guidelines of the respondents-Bank.
State Commission, while allowing the appeal in the impugned order has observed; " Admittedly, the complainants availed the loan facility from the opposite parties in between 04.03.2008 to 31.12.2008. The circular relied upon by the opposite parties is dated 31.12.2008 which is fully applicable in the instant case. Thus, the amount which has been charged on account of foreclosure, cannot be termed as a deficiency in service on the part of the opposite parties. The District Consumer has failed to appreciate the controversy involved in the case and as such the impugned order cannot sustain.
In view of our aforesaid discussions, this appeal is accepted, the impugned order is set aside and the complaint is dismissed".
As per Circular of the respondents'' bank which find mentioned in the impugned order of the State Commission, the borrower has to pay 1% on outstanding amount if account is taken over by other bank/FIs.
Thus, petitioners are bound by terms and conditions of the agreement in respect to the loan. In our view the impugned order passed by the State Commission is based on correct analysis of the facts and appreciation of the evidence and the same cannot be termed as erroneous. Thus, we do not find any infirmity or ambiguity in the impugned order passed by the State Commission. Accordingly, we do not find any merit in the present petition and the same is hereby dismissed with no order as to cost.
The citations quote above Supra are squarely applicable to the case on hand.
A perusal of the note clearly reveals that the complainant and the other three co-applicants have taken a loan and signed the loan agreement and further, the complainant has filed this complaint singly, while the other three co-applicants have not been arrayed as parties. In the absence of non-joinder of necessary parties the complaint is not maintainable. Further both the parties are bound by the terms and conditions of the loan agreement and as such pre-closure penalty by the concerned bank cannot be termed as illegal and deficiency of service. The respondent had admittedly paid Rs.1,17,462/- as per agreement on 21.04.2011. 23, In view of the above, the revision petition is allowed and the orders of the lower Fora are set aside and the complaint is dismissed.