per annum upto to the loan of Rs.1.10 lakh and 11.10% above the said amount. The loan had to be repaid in 20 years or 70 years of the employee age, whichever was earlier. The respondent opted to continue the facility of repaying the EMI till 70 years of his age. 3. The respondent took premature retirement under the then policy of the Bank on 31.03.2001. On such retirement, the respondent was ordinarily required to clear the entire outstanding loan out of his retirement benefits. However, the respondent sought continuation of the housing loan and some other employees also did the same. The Bank formulated a scheme under which concessional housing loans made available to the serving employees were converted into usual housing loans with interest at the applicable commercial rate. The respondent availed of this scheme whereupon the entire principal and interest liability of the housing loan outstanding on 31.03.2001 was clubbed at Rs.6,00,563/-. But the respondent paid back Rs.1,50,563/- thereby reducing the outstanding loan to the balance of Rs.4.50 lakh to which the commercial rate of interest for housing loan @ 13% per annum was applied. The EMI was accordingly re-worked and fixed at Rs.5,830/- for the remaining months upto October 2014. It was also stipulated in the said scheme that if 50% of the retired employee monthly pension was less than the EMI, the employee had to furnish a deposit with the Bank, the interest on which would be sufficient to meet the difference between EMI and 50% of the monthly pension amount. Since 50% pension of the respondent was Rs.3,300/- per month, he was asked to furnish a term deposit of Rs.3 lakh, interest on which, i.e., Rs.2,625/- per month was also appropriated towards the balance of the EMI. 4. The clause governing the interest on the loan in accordance with the revised/supplementary loan agreement reads as under: agree declare and confirm that further interest with effect from 01.04.2001 on the entire outstanding in my above housing loan account shall be repayable by me with the present commercial rate of interest @ 13% per annum with quarterly rests. I also agree, declare and confirm that the commercial rate of interest shall continue to be paid by me at the rate as and when revised by the Bank till the loan account is closed 5. The petitioner Bank revised the usual/commercial rate of interest on housing loan downwards in October 2003 to 8.25% per annum. The downward revision of interest continued further and such loans came to be offered by other Bank at an interest of 7.75% per annum. Accordingly, the respondent represented to the petitioner Bank in April 2004 to lower the rate of interest on the outstanding loan in accordance with the applicable commercial rate of interest on housing loans prevalent at that time. After about a year of correspondence, the respondent request was allowed, the loan account was recast and the EMI worked out afresh. However, in April 2006, the petitioner Bank informed the respondent that the rate of interest chargeable on his housing loan could not be reduced from 13% per annum and the facility granted to him earlier was not admissible. Accordingly, the Bank debited Rs.53,640/- to the respondent loan account as interest chargeable @ 13% per annum vis vis that actually charged. The respondent represented against this decision. When nothing was done he filed a consumer complaint before the District Forum alleging deficiency in service on the part of the petitioner Bank and seeking reliefs like refund of the amount of Rs.53,640/-, release of the TDR of Rs. 3 lakh, charging interest at floating rate as on 19.04.2006 as against the fixed rate of 13%, compensation of Rs.5,000/- for harassment and cost of Rs.5,500/-. 6. On consideration of the pleadings, evidence, brought forwarded by the parties, the District Forum found the bank guilty of deficiency in service and issued the following directions: (7) The OPs shall, jointly and severally, do the following: (i) To refund the amount of Rs.53,640/- to the complainant for the wrongful debit on account of the arbitrary change in the EMI and other terms and conditions of the loan agreement. (ii) Charge the revised rate/floating rate of interest with effect from 19.04.2006 onwards from the complainant instead of charging the fixed rate

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of interest @ 13% per annum as was being erroneously done present. (iii) To pay compensation of Rs.5,000/- for causing physical harassment, mental agony and pain to the complainant on account of wrongful debit of the excessive amount of interest from the housing loan account of the complainant. (iv) To pay litigation expenses of Rs.5,000/-. (v) To release the FDR of Rs.3.00 lakh, which is already under the lien of the OPs in respect of the housing loan, if the same is not required by the OPs in connection with the part payment of the revised/reduced EMIs for repayment of the housing loan. In addition, the entire housing loan account of the complainant be recast and the revised statement of the said account be supplied to the complainant after due re-scheduling/rephrasing of the account. (8) The aforesaid order be complied with by the OPs, jointly and severally, within a period of six weeks from the receipt of its certified copy, failing which the OPs shall, jointly and severally, pay the sum of rs.63,640/- along with interest @ 18% per annum from the date of filing of the present complaint i.e., 29.04.2009, till the date of realization, besides complying with the order as at

(v) above 7. Aggrieved by this order of the District Forum, the Bank went up in appeal before the State Commission, which dismissed the appeal by its impugned order dated 24.09.2010. This resulted in the present revision petition being filed by the petitioner Bank. 8. We have heard Mr. Ram Gupta learned counsel for the petitioner and respondent in person and gone through the documents brought on record. Counsel for the petitioner and the respondent have also submitted their written arguments, which we have considered. 9. The main ground urged by Mr. Gupta on behalf of the petitioner Bank is that the scheme allowing the retired employees (who took voluntarily retirement in 2001) the facility of repaying the housing loan till they attaining the age of 70 years was a beneficial scheme and provided for fixed interest @ 13 % per annum with quarterly rests. Therefore, such employees, including the respondent, could not be allowed the further benefit of lower rate of interest when the prevalent rate of interest on housing loan fell because of the general market conditions. The second limb of Mr. Gupta argument is that the clause relating to interest provided for fixed rate of 13% with quarterly rests. While the Bank was entitled to revise the rate of interest upward under this clause it did not mean that the interest rate according was variable/floating and not fixed. Thirdly, the respondent admitted in his letter dated 29.07.2007 that the rate of interest (13% per annum) was fixed. Finally, Mr. Gupta has argued that the complaint was time-barred as the complaint was filed after two years from the letter dated 19.04.2005. 10. On the other hand, Mr. Sharma, the respondent in person has submitted that the Bank had failed to explain the calculation of the amount of Rs.53,640/- that was debited to the respondent account despite this Commission direction. Moreover, the basic point regarding the rate of interest chargeable on the re-structured housing loan with effect from 01.04.2001 was governed by clause 4 (b) of the loan agreement. This clause specially provided for ommercial rate of interestas and when revised by the Bank till the loan account was closed. If the Bank could rely on this clause to claim that it could charge higher rate of interest if the commercial rate of interest went up it was equally bound to charge lower prevailing commercial rate/rates of interest depending on the market condition. Further, having accepted this argument of the respondent to re-work the interest liability in April 2005 the Bank could not unilaterally revise this in violation of clause 4 (b) of the Agreement and debit Rs.53,640/- to the complainant loan account. 11. It may notice at the outset that in paragraph 9 of the impugned order, the State Commission has dealt with the question if the complainant was barred by limitation. The State Commission findings on this issue are reproduced below: t is also argued by the learned counsel for the appellants that the complainant/respondent had been informed vide letter (Annexure C-16) dated 19.04.2006 declining his request for reduction in the rate of interest and therefore, the

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complainant/respondent should have challenged the same within two years i.e. by 19.04.2008. He, however, filed the present complaint on 29.04.2009 and according to the learned counsel for the OPs/appellants, the complaint is barred by time. The learned counsel for the complainant/respondent in this respect has argued that Annexure C-16 was not the end of the matter because the complainant filed a representation and correspondence continued between the parties as the case of the complainant remained under consideration. When the complainant requested the OPs/appellants through his letter dated 09.11.2006, he was informed on 21.11.2006 through letter (C-24) that the OPs/appellants were reexamining the matter and would advise him shortly. Thereafter, the OPs/appellants issued a letter C9-25) on 05.12.2006 informing the complainant that the matter was under consideration of appropriate authority. The representation of the complainant against the letter dated 19.04.2006 was, therefore, still under consideration and had not been decided by the OPs/appellants when the present complaint was filed. The counsel for the respondent/complainant then referred to Annexure C- 20, which is a letter sent by the OPs/appellants to the Secretary, Banking Ombudsman, New Delhi, in the concluding paragraph of which, it was mentioned that the ex-employee were informed about the actual position vide their letter dated 08.10.2007 and aggrieved by the said letter, the complainant has lodged the present complaint with him. In the next para, it is mentioned that they have already explained the reasons to Shri Sharma (complainant/respondent) for charging fixed rate of interest on his housing loan vide letter dated 08.10.2007 etc., etc. It means that the complainant was informed by the OPs vide letter dated 08.10.2007 and the matter had not finally ended on 19.04.2006 on the issuance of the letter (C-16). Otherwise also, it is a continuing cause of action whereby every month fixed rate of interest is being charged from the complainant instead of floating rate of interest as agreed to between the parties and the complainant giving fresh cause of action every month and therefore, the present complainant cannot be said to be barred by time 12. It is thus clear that the contention that the complaint was barred by limitation under section 24A of the Consumer Protection Act, 1986 is not valid. 13. As regards the substantive issue on whether the rate of interest re-worked the housing loan was the fixed rate of 13% per annum with quarterly rest, a plain reading of clause 4 (b) of the loan agreement would clearly show that this was not the case. Mr Gupta has argued that the Bank had the right to revise the rate of interest upwards under this clause. Clearly this would negate the very basic agreement that the rate of interest was fixed at 13% per annum. Both the Fora below have held that given the facts, the Bank was not justified in charging interest @ 13% per annum fixed when the relevant clause provided for otherwise. The material brought on record on this issue confirmed the validity of the respondent stand and also the findings of the Fora below. There is no ground for us to take a different view. 14. However the directions of the District Forum to release the TDR of Rs.3 lakh cannot be upheld. The basic point of the complainant is regarding the rate of interest to be charged on the re-worked housing loan. The other elements of the scheme availed of by the respondent/complainant, namely, only 50% of the monthly pension being applied towards the payment of EMI, etc., cannot be altered by the directions of the Consumer Fora because there is no deficiency in service in relation thereto. If only 50% of the respondent pension is to be applied towards the payment of EMI, it is necessary that the payment of the balance of the EMI be also duly secured. 15. In conclusion, the revision petition is partly allowed while maintaining the findings of the Fora below regarding deficiency in the service on the part of the petitioner Bank in charging interest at the rate of 13% per annum irrespective of the provisions of the relevant clause of the loan agreement. The petitioner Bank shall therefore, credit back the sum of Rs.53,640/- to the housing loan account of the respondent and

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recalculate the EMI in accordance with the commercial rate of interest prevalent from time to time. The other relief of compensation of Rs.5,000/-to the respondent is maintained. The petitioner is also directed to pay a total cost of Rs.10,000/- to the respondent relating to the proceedings before this Commission.

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ANUPAM DASGUPTA

PRESIDING MEMBER

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SURESH CHANDRA

MEMBER

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