State bank of india vs usha vaid and others

PRESENTLY SBI DOESNOT TAKE ANY PREPAYMENT CHARGES, WHEN YOU HAVE PRECLOSED IS THE QUESTION AND WHETHER ANY COURT HAVE GIVEN THE DIRECTION. THE ACTION CAN BE TAKEN ACCORDINGLY, YOU CAN APPROACH THE COURT NOW AND REQUEST THEM TO WAIVE THE PRECLOSOURE CHARGES.

I hope by now you would have figured out that National Housing Bank circular dated 19/10/11, RBI circular dated 05/06/12 and Competition Commission of India order dated 22/03/11 bars banks / NBFCs from charging fore closure penalty. This applies to borrowers who are natural persons, not juristic persons (e.g. company)...

 

Date of decision: 27.04.2007

 

 

 

Appeal No.07/130

 

(Arising fromthe order dated 15.11.2006 passed by District Forum(North East) Nand Nagari,Delhi in Complaint Case No.219/2005)

 

 

 

 

 

 

 

State Bank ofIndia Appellant

Through its Asst.General Manager, through Ms. RuchiKolhi,

G.T. Road,Shahdara, advocate.

Delhi.

 

 

Versus

 

 

1.Dr.(Mrs.) Usha VaidRespondent.

126, Surya Niketan,

New Delhi.

AND

 

1/4992, Loni Road, Shahdara,

Delhi.

2.Ms. Shilpa Vaid,

126, Surya Niketan

New Delhi .

 

 

 

 

CORAM:

 

 

 

JusticeJ.D. Kapoor, ...President

 

Ms.Rumnita Mittal Member

 

 

 

1.Whether reporters of local newspapers be allowed to see thejudgment?

 

 

 

2.To be referred tothe Reporter or not?

 

 

 

Justice J.D. Kapoor, President(ORAL)

 

 

 

 

 

1.In December 2002, a joint loan application wassubmitted by respondents for loan of Rs.23,76,913/-. Before release of the loanthey were asked to sign blank forms and applications. Whereafter the loan wasreleased in the shape of three drafts and handed over to Standard CharteredBank. Since the bank was charging much less interest from the new consumer butdid not give this benefit to the respondents though her case was falling in thefloating rate of interest category and since ICICI Bank was charging lesserrate of interest, the respondent got transferred the loan to ICICI Bank.Appellant bank issued an advertisement to the effect that they were passing lowrate of interest to housing loan customers with no pre-payment charges. Inspiteof this they charged Rs.42,300/- as pre-payment charges. Feeling aggrieved therespondents filed instant complaint before District Forum for refund of thesaid amount.

2.Vide impugned order dated 15.11.2006, theDistrict Forum allowed the complaint of the respondents with the direction tothe appellant to refund aforesaid amount and also to pay Rs.1,000/- ascompensation and Rs.500/- as cost of litigation.

3.Feeling aggrieved the appellant has preferredthis appeal.

4.Perusal of the impugned order shows that theDistrict Forum has referred to and relied upon clause 4 of the agreement, whichforms part of the original agreement but later on scored it off. This clauseclearly mentions that pre-payment charges of 2% and the amount showingpre-payment shall be levied when the loan is pre closed for the reasons to takeoffer by another bank. District Forum also relied upon the view taken by thisCommission that 2% pre payment charges could not be levied on the basis ofcircular issued by the appellant bank.

5.The aforesaid reasons given by the DistrictForum have been assailed by the counsel for the appellant. At first instancethe counsel for the appellant has contended that there was no circular issuedby the appellant bank as referred in the impugned order and the only contractbetween the appellant and respondent was the loan agreement whose clause 4specifically stipulated that pre-payment charges @2% of the amount saypre-payment charges shall be levied when the loan is so closed by taking overof another bank.

6.Even if we assume for the sake of argument thatthe contentions being raised by the counsel for the appellant are correct stillthe fact remains that the said sum could not have been claimed by the appellantbank as it was not pre-payment but taking over. Moreover the ICICI Bank wascharging only 7.25% interest while appellant bank was charging 9% and even if1% demanded by the appellant would have been paid respondent would have paid 8%which was still higher than the market rate. It was a case of a consumer havingtaken loan from some other bank namely Standard Chartered Bank, which was gottransferred to the appellant bank and thereafter the loan from the appellantbank was got transferred to the ICICI Bank for the obvious reasons that therate of interest was much lower in the ICICI Bank.

7.Any consumer availing such a loan always availsservice of those banks which charge lesser rate and if he is not aware of thelesser rate being charged by particular bank and avail the service ofgovernment bank which normally and ordinarily is supposed to charge not morethan what the private banks are charging and if at later stage he finds thatgovernment bank is charging much higher rate of interest he would naturallymake request for transfer of the loan amount and therefore such a requestcannot come within the ambit of terminology of pre-payment as it has to bedeemed a case of take over.

8.Thus from any aspect we may examine the matterclause 4 was not applicable in the given facts and circumstances of the case.Foregoing reasons persuade us to dismiss the appeal being devoid of merit, asthe impugned order does not suffer from any infirmity. It appears that thegovernment bank is indulging in unfair trade practice and this amount wascharged as punishment to the consumer who sought transfer of the loan amount tosome other banks who were giving lower rate of interest. Such a conduct is notexpected atleast from Government bank.

9.No bank or for that purpose finance companiescan be allowed to indulge in restrictive trade practice by binding the consumerto go on availing loan even if rate of interest charged by the said bank ismuch higher than the other banks and any such clause which operates adverselyto the consumer like clause 4 has to be held as void and therefore notenforceable.

 

 

 

 

 

 

10.The order be complied within one months from thedate of receipt of this order.

11.BankGuarantee/FDR, if any, furnished by the appellant be returned forthwith.

 

12.A copyof this order as per the statutory requirements be forwarded to the partiesfree of charge and also to the concerned District Forum and thereafter the filebe consigned to Record Room.

 

Announcedtoday on 27th day of April 2007.

 

 

 

 

 

(Justice J.D. Kapoor)

President

 

 

 

 

 

 

(RumnitaMittal)

Member

SC refused to grant SLP which challenged above verdict. Pls. refer the attachment.