MANAGER, CATHOLIC SYRIAN BANK LTD vs P.L.THOMAS

THIS appeal is directed against the order passed by the District Forum, Thrissur in O.P. No. 1189/ 96. Opposite parties are the appellants.

SHORTLY stated the allegations in the complaint are as follows. The complainant availed of overdraft facility of Rs.1,00,000/-on 26.3.1993 from the opposite party hereinafter referred to as the Bank for short, and interest was charged at 14% per annum. When the complainant approached the Bank on 22.8.1996 for closure of account an amount of Rs. 6,510/- was collected from the complainant. According to the complainant it was an excess collection. The complainant was told that since he availed another loan of Rs. 2,00,000/- and rate of interest applicable to both the loans would be 21.5% in view of the instructions given by the Reserve Bank of India. This collection was made when closing the overdraft facility and the action of the opposite party is illegal and wrong and the complainant is entitled to refund to excess collection by way of compensation. The opposite parties filed a version. It is averred that as per the direction of the Reserve Bank of India the rate of interest to be charged on multiple credit facilities availed of, by the same person is the rate applicable to the amount of the loan clubbed together. Since the amount of two loans exceeded Rs. 2 lakhs interest at 21.5% per annum has been collected. This has been levied clubbing both loans from15.5.1995 the date of the second loan. The complainant is bound to pay interest at the rate fixed by the Reserve Bank of India from time to time.

The District Forum took the view that the collection is illegal and in that view passed an order directing the opposite parties to refund Rs. 6,510/- together with interest at 22.75% from 22.8.1996 and another amount of Rs. l,000/- as compensation. Aggrieved by the said order this appeal has been preferred.

LEARNED Counsel appearing for the opposite parties/appellants contended that there is no allegation of deficiency and therefore, District Forum was in error in granting relief to the complainant. He also contended that on merits also the complainant has no case since the complainant is liable to pay interest at the rate fixed by the Reserve Bank of India from time to time. According to the contract entered between the complainant and the opposite parties the rate of interest stipulated originally was 17.25% but it was reduced to 14% as per the instructions given by the Reserve Bank of India. It is not in dispute that when the second loan was taken the rate of interest stipulated was 14%. LEARNED Counsel also submitted that with effect from 18.10.1994 the Reserve Bank of India revised the rate of interest according to which rate of interest was fixed in respect of sums upto 2 lakhs at 14% and above 2 lakhs @ 21.25% per annum. He admitted that the second one was a housing loan and that the Bank initially treated this as separate loan and continued to levy interest only at the rate of 14%. However on 15.9.1995 a Circular was issued by the Reserve Bank of India which is evidenced by Ext. B4 which stipulated that if there are two or more loans in the name of the same person those loans have to be clubbed together for the purpose of fixing rate of interest and rate of interest applicable to the total loan has to be applied and so calculated the complainant was liable to pay an excess amount of Rs. 6,510/- and when the complainant came to close account it was collected and therefore, there is no deficiency in service on the part of the opposite party in making excess collection. It is also the case of the Bank that on intimation given to the complainant on this position he came and closed the first loan on 22.8,1996. Learned Counsel appearing for the respondent submitted that no notice has been given to the complainant about the enhancement of the loan and the first intimation given by the Bank in regard to the clarification by the Reserve Bank was on 19.7.1996. He also contended that the enhancement based on the clarification and instruction made by Reserve Bank of India cannot be made applicable to the customer who had no notice of enhancement with retrospective effect. He also submitted that if he had the notice of alleged clarification he would have closed one account.

AS regards the contention that there is no averment of deficiency raised in the complaint by learned Counsel for the Bank, we must say that there is a specific averment in the complaint that the action of Bank in collecting Rs. 6,510/- in excess is wrong and illegal. Though specific word deficiency is not used allegation of deficiency can be spelt out from the above allegation. In the circumstances we hold that the complaint is not bad for want of necessary averment of deficiency in the complaint. Coming to the merits we feel that the Bank is not justified in enhancing the rate of interest based on a clarification made by the Reserve Bank of India. No notice was issued to the complainant about enhancement and clubbing together of all the loans. There is also no evidence in this case that the agreement provided that the complainant will be liable to pay interest which is fixed by the Reserve Bank of India from time to time. We had occasion to consider this aspect in O.P. 69 of 1996 and we have expressed our opinion that such enhancement without notice to the party in the absence of specific provision in the agreement stipulating for such enhancement in accordance with the instructions issued by the Reserve Bank of India from time to time under Section 21 of the Banking Regulation Act cannot be made binding on the customer. In the circumstances the view taken by the District Forum that the collection of Rs. 6,510/- is not justified appears to be correct and we uphold that finding. However District Forum awarded interest at 22.75% for which we do not find any justification. In the complaint itself what was claimed was only interest at 18%. In our view interest at the rate of 12% from 22.8.1996 would meet the ends of justice. We also find award of further compensation of Rs. 1,000/- is also not justified. In this context we may refer to the decision of the National Commission in Lakshmivilas Bank Ltd. v. P.R. Krishnan, I (1995) CPJ 43 (NC), where the National Commission observed there is no justification in awarding both interest and compensation together. In the circumstances, we vacate that direction. We direct the parties to bear their respective costs here. Appeal partly allowed.