'Changing loan repayment schedule without consumer’s consent illegal'

Ramkrishan Upadhyay
Tribune News Service
Chandigarh, November 24

Stating that changing repayment schedule of a loan by a finance company without a consumer’s consent is illegal, the District Consumer Disputes Redressal Commission penalised ICICI Home Finance Company Limited for violating the RBI guidelines. The commission directed the firm to examine and reset the loan account of the complainant in light of the RBI circular.

The commission also directed the company to pay Rs20,000 compensation for causing mental agony and harassment and Rs10,000 as cost of litigation to the complainant.

Ranjit Singh Sohal, a resident of Sector 40, had raised a loan of Rs12,47,511 in February 2008 from the finance company (opposite party), which was to be repaid in 10 years i.e. 120 months at monthly EMI of Rs19,936.

As per the offer letter, the rate of interest was floating in nature i.e. adjustable, which was fixed at 14.75% per annum. The complainant had been regularly depositing the EMI without fail. As per the terms of the loan, the last instalment was to be paid and the account was to be closed on May 1, 2018. No default was made by the complainant. When the complainant visited the office of the opposite party on June 25, 2018, he was handed over a repayment schedule according to which the loan period was increased by 53 months and he needed to pay the instalments till September 1, 2022.

The complainant alleged that the decision was unilateral. He was neither given any intimation of increase in rate of interest or EMIs nor did he consent to it. It was a clear violation of the Banking Regulation Act, 1949, circular issued by the Reserve Bank of India and the law laid down by various adjudicatory bodies.

He alleged that despite requests, the opposite party did not withdraw from its stand. The complainant alleged deficiency in service and unfair trade practice on part of the firm and sought relief.

The opposite party contested the consumer’s complaint and justified its decision. It said any consent was not required from the complainant as the parties were bound by the terms and conditions of the agreement.

After hearing the arguments and examination of records, the commission noted that the opposite party had violated the circular of the RBI, under whose control the company functions. The commission said as per the RBI guidelines and the judgment of the Apex Court, the consent of the borrower has to be taken so that he might opt to continue with the loan account or close/shift the account.

As such, the opposite party is proved to have indulged in deficiency in service and unfair trade practice. In view of the above discussion, the complaint succeeds and the same is accordingly partly allowed.

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