Foreclosure penalty in violation of nhb directive.
dineshchandra
(Querist) 15 March 2015
This query is : Resolved
I foreclosed housing loan (from Non-Banking Finance Company) on 23/10/10 from 'own sources'. The loan was availed in 'individual' capacity. NBFC levied 2% foreclosure penalty, as per loan agreement. Then I got legal advice that in absence of RBI directive prohibiting foreclosure penalty, I had no choice.
Recently I learnt this NBFC actually comes under direct purview of National Housing Bank (not RBI); and NHB circular dated 18/10/10 prohibited collection of said penalty 'with immediate effect' if financed from 'own sources' by 'individual' borrower. On approaching NBFC, it refused to refund this sum. I got legal advice that I have already missed the bus (I should have approached consumer court by 22/10/12). Do I have remedy available; considering that penalty was levied in violation of NHB directive?
Adv. Sagar R. Jadhav
(Expert) 16 March 2015
Date of knowledge is concerned for time limit. Within 2 years from your date of knowledge you can file consumer complaint. Means you can now file complaint for d same
dineshchandra
(Querist) 16 March 2015
Dear Mr. Jadhav, Can not the NBFC plead that this logic offers me (potential complainant) a license to strike at root of 'limitation' philosophy.
Please do not take me otherwise; I just wish to be well-prepared before dragging the NBFC to Court of Law. Thanks.
Jayaraj Poojari
(Expert) 16 March 2015
Upon perusing the said facts, I wish to through in some relevant legal aspects:
1. Answer to your question:
NBFC cannot plead the limitation defence, if it is within the law.
2. Though nothing prevents you from approaching a Consumer Court your claim of "Date of knowledge" as on date will be contested since the NHB circular prohibiting levy of penalty was issued on 18.10.2010, and as such is known to public., which means the Date of knowledge will be construed from that date onwards. The Court may not accept your contention that you knew it only now because the cardinal principle of law states that "Ignorantia juris non excusat" meaning Ignorance of law is no excuse.
2. However, it was not fair & totally illegal on the NBFC's part to refuse the refund of the penalty in view of the NHB circular.
You have the following options to redress your grievance, given in the order of choice:
a) You may approach the Grievance Redressal Officer, whose name and contact details have to be mandatorily displayed in the premises of the NBFC. In case you are not satisfied with the settlement of the complaint by the Grievance Redressal Officer of the NBFC, you may approach the nearest office of the Reserve Bank of India with the complaint. The details of the Office of the Reserve Bank has also to be mandatorily displayed in the premises of the NBFC. In case of an adverse order you may approach either the High Court or the appropriate tribunal based on the adverse order.
Else
b) You may file a civil suit for refund of the penalty before the jurisdictional Court. For this, you may request the court to condone the delay (exceeding 3 years) under section 5 of the Limitation Act. Though a Civil suit takes a longer time, you can claim interest for the penalty paid along with the cost of the suit.
dineshchandra
(Querist) 16 March 2015
Thanks for these valuable inputs. I had already approached Grievance Redressal Officer, who unfortunately directed me back to same official of HFC to look into his own past decision. So I understand I shall approach NHB, and I shall request for condonation of delay for civil suit.
Jayaraj Poojari
(Expert) 17 March 2015
Please issue a legal notice to NBFC, Grievance Redressal Officer, NHB, RBI to refund the penalty within 15 days time citing all your attempts. If not resolved, file a civil suit.
Rajendra K Goyal
(Expert) 17 March 2015
From the given facts your claim has limited scope to succeed. However you must effort to get the refund.
dineshchandra
(Querist) 18 March 2015
Incidently, in judgement for case no. CC/637/2012, District Consumer Disputes Redressal Forum-II, U.T. Chandigarh pronounced in paragraph 8: "Unless specifically provided in the Agreement, the complainant would naturally presume that the loan would be subject to RBI Guidelines, as is the case for all financial transactions by all financial organizations". Please refer below link.
http://164.100.72.12/ncdrcrep/judgement/663614091013004203Raj%20Kumar%20DHFL.htm
Jayaraj Poojari
(Expert) 18 March 2015
When there is a circular clearly prohibiting collecting penalty from NHB, the NBFC has to refund the penalty collected from you with interest. Nothing can stop you. NBFC is regulated by NHB for all housing loan related matters. The concerned NBFC is bound to obey the NHB circular. Claiming unjustified levy of penalty is your right. "Ubi jus ubi remedium"- where there is a right there is a remedy.
dineshchandra
(Querist) 18 March 2015
Dear Sir, I agree with you. In previous post, I was sharing a citation wherein court too acknowledged that it is natural for leyman (like me) to get confused between RBI and NHB jurisdictions (which resulted in delay in my case). Thanks.
T. Kalaiselvan, Advocate
(Expert) 18 March 2015
repeated query, you may visit your thread posted in forum and this section too for more answers.
