BRANCH MANAGER, LIFE INSURANCE CORPORATION OF INDIA vs RENU MEHROTRA

THIS is an appeal against the judgment and order dated 22.4.2000 passed by District Consumer Forum, Allahabad, in Complaint Case No. 275 of 1997. The facts of the case are as follows.

SMT. Renu Mehrotra, complainant was sanctioned a housing loan of Rs. 2,05,000/- by the opposite party in March, 1991. The loan was repayable with interest @ 15.5% p.a. The opposite party had sanctioned the loan vide its letter dated 27.3.1991. On 14.11.1995 an amount of Rs. 3.00 lacs was paid back to the opposite party and the rest payment amounting to Rs. 69,170/- was made on 28.9.1996 and nothing remained to be paid. The amount of loan and the interest thereon thus paid to the opposite party was based on the calculation made by the opposite party according to which the rate of interest was 15.5% per annum. After this payment was made the complainant wanted to take back the document of security which had been deposited with the opposite party but the opposite party on one pretext or the other did not return the security/guarantee documents. As per terms and conditions of the loan the opposite party was bound to return the documents relating to security/guarantee which they had failed to do, inspite of the entire payment made to them along with the interest due. A claim was, therefore, lodged before the District Consumer Forum for issuing directions to the opposite parties to return the security/guarantee papers. An amount of Rs. 10,000/- was also claimed as compensation for mental torture along with cost of the proceedings. In their written statement before the District Consumer Forum the opposite parties admitted that a loan of Rs. 2.05 lacs was sanctioned to the complainant for construction of house under M.I. Scheme on 1.10.1991. The offer of the loan was made on 1.4.1991 and the prevailing rate of interest on the loan amount was 15.5% but later on the rate of interest enhanced from 15.5% to 17.5% per annum vide central office circular dated 1.10.1991. As the loan offer was accepted by the complainant on 1.10.1991, the revised rate of interest @ 17.5% was applicable to her as per provisions of para 4 of the loan offer applicable to the scheme which clearly states that the complainant will pay interest at such increased rate as shall be fixed from time to time by the Corporation. It was admitted by the opposite parties that a sum of Rs. 3,69,170/- was deposited towards the loan account by the complainant on 14.11.1995 and 28.9.1996. It was due to clerical mistake that the interest was calculated on the loan amount @ 15.5% per annum and when the final account was prepared the mistake was taken note of and as such interest @ 17.5% was charged and calculated on the loan amount and now a sum of Rs. 19,733/- is due to the complainant as on 26.11.1997. This was the reason that security documents could not be released to the complainant and the fact was intimated to her on 19.10.1996. The loan amount was not fully liquidated and, therefore, there was no deficiency in rendering the service. It was also stated that the complainant is not a consumer and the opposite parties were entitled to correct their mistake however, belated.

The parties filed their evidence before the District Consumer Forum who after hearing decreed the claim and ordered that the opposite parties shall return the documents of the security to the complainant within a period of one month. A compensation of Rs. 500/- and cost of proceedings amounting to Rs. 400/- were also awarded to the complainant.

AGGRIEVED of this order the opposite parties have come in this appeal. Application for condonation of delay was also filed by the appellant stating therein that certified copy of the order passed by the Forum dated 22.4.2000 was received in the office of the appellant on 19.5.2000. The application was accompanied with affidavit filed by R.D. Misra, Manager (Legal) of the appellants. In the said affidavit it has been stated that on receipt of the copy of the judgment on 19.5.2000, the appellant took immediate steps for filing the appeal and the delay was, therefore, not intentional. However, the application for condonation of delay was opposed by the respondent and in the affidavit filed by Smt. Kasturi Kapoor on behalf of the respondent it has been stated that there has been intentional negligence in the matter of filing the appeal and the delay has not been explained. We find that the appeal was filed on 9.6.2000 and there is delay of few days only and it has been explained that on receipt of the copy of the order steps were taken by the office to file the appeal. The ground for condonation of delay appears to be satisfactory and the cause shown is sufficient. The delay is, therefore, condoned.

THE respondent has filed affidavit and other papers. We have heard the learned Counsel for both the parties. The learned Counsel for the appellant has argued that the rate of interest was 15.5% on the loan advanced to the complainant but the same was subject to revision depending upon the instructions of the Reserve Bank of India and the interest was enhanced to 17.5% on the loan which was released on 1.10.1991. It was also argued that Life Insurance Corporation was a statutory body and all the loans are sanctioned on the rates fixed by the Reserve Bank of India. The complainant was immediately informed about the clerical mistake occurred in the documents. On the other hand the learned Counsel for the respondent has argued that loan was taken by the complainant at the mutually agreed rate of interest of 15.5% per annum. The entire re-payment alongwith interest was made and only thereafter the complainant was informed that she has to pay interest @ 17.5% per annum instead of 15.5% p.a.

WE have also gone through the copies of the documents placed in the case file of the appeal. The controversy involved in the appeal is that the complainant is not a consumer and the opposite party had a right to increase the rate of interest from 15.5% to 17.5% p.a. as per instructions of Reserve Bank of India. In regard to point that the complainant is not a consumer, it is clear from the documents that the complainant was sanctioned a loan of Rs. 2,05,000/- and the interest was payable to the opposite party. The opposite party has also admitted that the amount of loan was repaid and the interest initially charged @ 15.5% was also deposited by the complainant. As provided in Sub-section (d) of Section 2 of the Consumer Protection Act, a consumer has been defined "who hires or avails of any service for a consideration which has been paid or promised or partly paid and partly promised or under any system of deferred payment and includes any beneficiary or such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such service is availed of with the approval of the first mentioned person. Service includes the provisions of facilities in connection with banking, financing, insurance etc. as defined in Sub-section 2(o) of the Act. The respondent took loan from Life Insurance Corporation for consideration in the shape of interest and such consideration was paid by the complainant. WE, therefore, held that the complainant is without any doubt a consumer of the opposite parties.

IN regard to the controversy on interest payable @ 17.5% and not @ 15.5% the appellants have placed reliance in the replication filed by the complainant before the District Consumer Forum wherein she has admitted that she had undertaken to pay interest at such increased rates as shall from time to time fixed by the Corporation and intimated to her. The appellants have also placed reliance on Annexure-2 of the memo of appeal in which it has been shown that the interest on loan from 1.10.1991 on MI House Scheme from Rs. 2 lacs to Rs. 5 lacs would be 17.5% but this fact was intimated to the complainant only on 19.10.1996 and by that time she had paid the principal amount and had also deposited the amount against the interest. Therefore, the plea of appellants clerical errors have cropped up and the same can be removed even belatedly cannot be accepted. Because of the clerical errors committed on the part of appellants, the complainant cannot be allowed to suffer. The worst aspect of the matter was that the appellants were silent for a period of 5 years on this issue. As per of their own admission of the appellants the loan offer was made to the complainant on 1.4.1991 at the prevailing rate of interest. The loan offer was accepted by the complainant on 1.10.1991. It was the duty of the appellants to have informed the complainant of the increased rate of interest. The appellants have not been able to prove by any document as to how the rate of interest was increased from 15.5% to 17.5% p.a. on the orders of Reserve Bank of INdia because no RBI circular or instructions are on record. IN case the opposite party had decided to increase the rate of interest the same should have been intimated to the complainant at the time of disbursement of loan and the opposite parties should not have sat over the matter for five years and during the intervening period they had accepted the deposits from the complainant implying that the rate of interest continued to be 15.5%. The complainant took the loan on the firm commitment from the opposite parties that the rate of interest was 15.5% p.a. The complainant may not have accepted the loan offer if she had been given the understanding that the rate of interest would be 17.5%. Further she was not even informed about the alleged revision of the rate of interest at any time from the date of release of loan till the date of entire repayment with interest on 28.9.1996. Even in their correspondence with the complainant the opposite parties have been advising the complainant to pay the dues calculated with interest @ 15.5% p.a. Therefore, it was unfair for the opposite parties to have claimed excess interest which was never mutually agreed between the two parties. Since the opposite parties have taken a consideration from the complainant in the form of interest and have not returned the security documents, they have committed deficiency in the service towards the complainant. The judgment and order of the District Consumer Forum are perfectly right and need not be interfered with. The appeal is liable to be dismissed. ORDER The appeal is dismissed and the judgment and order dated 22.4.2000 passed by District Consumer Forum, Allahabad, are confirmed. Appellants shall also pay to the complainant an amount of Rs. 2,000/- as cost of this appeal. Let copy as per rules be made available to the parties. Appeal dismissed.