Kerala State Co-Operative Bank Ltd vs L.R.Lekha

THIS Revision Petition is filed by Kerala State Co-operative Bank Limited against the Order dated 15.02.2013 Kerala State Consumer Disputes Redressal Commission, Thiruvananthapuram (in short, ''State Commission, Kerala '') in Appeal No. 805/2012.The said decision of the State Commission was passed in the appeal filed against the Order dated 30.04.2012 passed by the District Consumer Disputes Redressal Forum, Thiruvananthapuram (in short, ''District Forum '') in CC No. 225/2010.

FACTS in brief: The Complainants availed a loan of Rs.7,00,000/- from ''The Kerala State Co-operative Bank Ltd ''.( the OP), Karamana Branch for repair and renovation to their building in Perumkadavila Village. The loan was sanctioned on 10.06.2006 that the loan was disbursed in three instalments as 1st of Rs.2,10,000/-, 2nd of Rs.2,801,000/- and 3rd of Rs.2,10,000/- that the loan with interest is to be repaid in 180 monthly instalments, that the interest rate was fixed as 7.25% and the penal interest is attracted only if there is default in payment of principle or interest . The 1st instalment was disbursed on 29.06.2006. The repayment EMIs without any default started by the 1st Complainant. On perusal of 1st Complainant ''s bank account it was found that the OP have charged interest more than agreed rate of 7.25%. It was without notice to the Complainant and against the terms and conditions. On enquiry with the OP, who stated that the higher rate of interest was due to non-receipt re financing from the NABARD. The OP had collected an amount of Rs. 20,216/- in excess than the agreed rate of interest at 7.25% from the Complainant from 29.02.2008 to 30.05.2010. Hence the Complainant asked the OP not to charge interest in excess than that of the agreed rate of 7.25% and to refund the excess amount of Rs.20,216/- and also to pay compensation and cost. But OP denied complainants demand .The OP contended that as the NABARD has stopped the refinancing of loan for rural housing which resulted huge loss to the bank and therefore, the Directors of the bank reviewed the scheme and increased the rate of interest. This decision was conveyed to the Complainant by registered post. The OP has discretion to modify the terms and conditions impose or to add additional terms and conditions that kept considered necessary to protect its interest. Thereafter, the complainant filed a complaint No 225/2010 before District Forum on the ground that OP has committed grave irregularity in collecting excess rate of interest unilaterally and violated the terms and conditions of the agreement which is deficiency in service and unfair trade practice. The District Forum allowed the complaint ordered as : "Opposite Party shall not charge interest in excess than that of the agreed rate of 7.25%. Opposite Party shall tabulate the account on the basis of interest at 7.25% and shall refund the excess amount collected so far in excess of the contractual rate of interest of 7.25% per annum to the Complainants. Opposite Party shall pay Rs.5,000/- as compensation and Rs.2,000/- as cost to the Complainants. "

AGAINST the order of District Forum the respondent preferred an appeal No. 805/2012 before the State Commission. The State Commission relied upon its own decision dated 07.10.2009 F.A. 142/09; the "Managing Director, Kerala State Co-operative Bank, Thiruvananthapuram Vs. P. Arumugharn ". In that appeal the State Commission has taken a view that the Respondent/Complainant who availed the loan is only bound to pay the fixed interest @ 7.25% p.a. so the action of the part of the appellant/opposite parties in demanding and collecting enhanced interest at interest at 9% p.a. is an unauthorised high handed action. On hearing both the parties and perusal of Loan Agreement and records on file the State Commission dismissed the appeal with further cost of Rs.10,00/-.

AGGRIEVED by the order of State Commission the respondent bank filed this revision petition. Heard the learned counsel for Petitioner who contended that; The loan was sanctioned at a concessional rate of interest of 7.25% per annum under the NABARD sponsored Scheme "Rural Housing Loan ". NABARD stopped refinance to the Bank which resulted huge loss to the bank and hence the Board of Directors of the Bank decided to effect an upward revision of interest from 7.25% to 9% for the loans under Rural Housing Loan. It was stated that OP shall have the discretion to modify the terms and conditions to impose or to add additional terms and conditions that kept considered necessary to protect its interest, though the Complainant is not a party in the agreement executed between the NABARD and the petitioner in respect of sanctioning of the funds.

IT is noted from the evidence on record that the petitioner bank has decided to extend the loan facility by enhancing the rate of interest at 9% treating the loan as of an own fund loan so as to give protection to its customers. Accordingly registered notice to RHL Scheme customers providing an opportunity to them either to continue a loan facility with enhanced rate of interest or to close the loan within the time limit specified in the registered notice was given/published.

DISCUSSING the merits of this case , it is clear the Complainants were only bound to follow the agreement executed between the bank and themselves. The agreement did not mention any directions or rules of NABARD. The loan disbursement document is very clear that last loan instalment (3rd) was disbursed on 4/1/2007; but the letter of enhancement of interest of 9% was sent by registered post on 30/1/2008. OP has collected excess interest of Rs. 20216/- from 29/2/2008 to 31/5/2010. It appears that the OP has acted upon its own whims and fancy without any proper directions or rules that has increased the interest abruptly. It amounts to unfair trade practice and OP bank has no right to collect any excessive amount of interest which is a deficiency in service. The OPs have not produced any documents, rules or directions to prove their contentions. Therefore, there is no illegality in the orders passed by the Fora below. Hence, this Revision Petition is dismissed with costs of Rs.10,000/- to be paid to the Complainant. The order should be complied within 60 days otherwise it will carry interest @ 9% per annum till the payment.