ORISSA STATE FINANCIAL CORPORATION vs Markand Charan Sahoo

AGGRIEVED by the order dated 13.11.2007 passed by the Orissa State Consumer Disputes Redressal Commission, Cuttack (for short the ''State Commission '') in C.D. Appeal No. 77 of 2004, Orissa State Financial Corporation (the opposite party before the District Forum) has filed the present petition purportedly under Section 21(b) of the Consumer Protection Act, 1986. The appeal before the State Commission was also filed by the present petitioners against the order dated 24.12.2003 passed by the District Consumer Disputes Redressal Forum, Bhadrak, by which order the District Forum had partly allowed the complaint of the complainant with a direction to recalculate the rate of interest @ 15% for the loan in favour of the complainant and refund the excess amount collected from him and also to refund commission of Rs. 871 paid by the complainant to release the missing draft at Bilaspur. The opposite parties were further directed to pay a sum of Rs. 10,000 as compensation for harassment and cost of litigation with the stipulation that the amount shall be paid within one month from the date of the said order, failing which it shall carry interest @ 10% per annum. The State Commission dismissed the appeal and upheld the order passed by the District Forum

WE have heard Mr. Soumajit Pani, learned Counsel for the petitioner and Mr. Priyabrat Sahu, learned Counsel for the respondent No. 1 and Ms. Shuchi Singh, Counsel for respondent Nos. 2 and 3 and have considered their submissions. Mr. Pani would assail the orders passed by the Fora below as not based on correct appreciation of the facts and circumstances of the case and the evidence and material brought on record, in particular the terms and conditions contained in the sanction letters dated 4/5.6.1991 and dated 16.1.1992. The main plank of his submission is that the loan was sanctioned to the Respondent No. 1-complainant with a clear stipulation that the rate of interest payable would depend upon the rate of interest of the re-financier i.e. SIDBI, which was in turn dependent upon the rate of interest prescribed by the Reserve Bank of India. He has invited our attention to a letter dated 20.1.1992, by which the Respondent No. 1 had accepted all the terms and conditions appearing in the sanction order bearing No. 4416 dated 16.1.1992 for additional loan of Rs. 22,500 and had undertaken to pay interest @ 20% per annum for the term loan of Rs. 2,30,000 since the rate of interest had been enhanced by SIDBI from 9.10.1991. We have carefully gone through the terms and conditions of the first letter dated 4/5.6.1991 contained Clause Nos. 24 and 26, which are relevant clauses of the said agreement in order to decide the question as to what was the interest of rate agreed to between the parties. The said clauses are as under: "24. The sanction is subject to sanction of refinance by IDBI and in case IDBI refinance is not available interest @ 18% shall be payable p.a. 26. (a) Interest @ 15% p.a. shall be payable with half yearly interest ending on 20th June and 31st December with six days grace period of each half year. (b) A penalty of 2% p.a. shall be levied on defaulted amount of principal for the period of such default and is payable along with the normal interest as (a) above. (c) Compound interest shall be charged @ 15% p.a. default interest (int. outstanding) for the period of such default. "

So far as the Clause 24 is concerned, it only deals with a contingent situation that in case the sanctioned loan was not refinanced by IDBI and IDBI refinance is not available, the interest shall be payable @ 18% per annum. Sub-clause (a) of 26 makes it abundantly clear that the interest was payable @ 15% per annum with half yearly interest ending 30th June and 31st December with six days grace period of each half year. In the present case, it is not disputed that the loans sanctioned to the respondent-complainant was in fact refinanced by the SIDBI. There is no stipulation as to the said rate of interest be flexible/floating depending upon the rate of interest charged by the SIDBI as contained in the second sanction letter dated 15.1.1992 for additional amount.

LEARNED Counsel for the petitioner has then invited our attention to a communication No. 1473/REF (50) dated 9.10.1991 issued by Small Industries Development Bank of India to the Chief Executives of all eligible Financial Institutions by which communication the rate of interest was increased by SIDBI in case of road transport operators to 20% per annum. Once we have come to the conclusion that there was no agreement between the parties to pay interest at floating rates depending upon the rate of interest fixed by the SIDBI, any increase in the rate of interest by SIDBI could not affect the existing agreement at best it can be applied and has been rightly applied to the future loans which were sanctioned later on than the said increase of the SIDBI. We are, therefore, of the considered view that insofar as the loan of Rs. 2,30,000 sanctioned vide letter dated 4/5.6.1991, the respondent complainant was liable to pay interest @ 15% per annum only on half yearly basis in terms of the Clause 26(a) while the additional loan of Rs. 22,500 sanctioned vide letter dated 15.1.1992, the petitioner was within its right to charge interest @ 20% per annum. Any extra amount charged by the petitioner towards enhanced rate of interest @ 20% on the amount of Rs. 2,30,000 was unauthorized/illegal and the petitioner must refund the same to the respondent-complainant.

IN view of the above observations, we partly allow the revision petition and the petitioner to refund the excess amount (i.e. in excess of 15% per annum) of interest charged by the petitioner from the respondent on the loan of Rs. 2,30,000 and to pay a compensation of Rs. 5,000 to the respondent for harassment caused to him on account of excess charge. Parties are left to bear their own costs throughout. Revision Petition dismissed.