1. This revision petition has been filed by the petitioner Bank of Baroda against the order dated 12.4.2019 of the State Consumer Disputes Redressal Commission, Punjab, (in short ‘the State Commission’) passed in MA Nos. 2804 of 2018 and 552 of 2019 in FA No. 683 of 2018.
2. Brief facts of the case are that the respondents took a home loan from the petitioner bank. The petitioner bank charged commercial rate of interest after three years as per circular dated 1.10.2016, which allows bank to charge commercial rate of interest, which is roughly 1.5% higher than the rate on which loan was sanctioned.
3. The respondents repaid total loan amount even before the expiry of the total period of loan and the bank accepted repayment without any charges for early repayment. The complainants later on filed a consumer complaint before the District Consumer Disputes Redressal Forum, Jalandhar, (in short ‘the District Forum’) being Complaint No. 217 of 2017 alleging that the bank was not entitled to charge commercial rate of interest on home loan sanctioned to the complainants. The complaint was resisted by the petitioner bank. However, the District Forum allowed the complaint vide its order dated 23.10.2018 and directed the opposite parties bank to refund the extra amount charged on the basis of commercial rate of interest.
4. Aggrieved by the order of the District Forum, the opposite parties bank/petitioners preferred appeal bearing No. 683 of 2018 before the State Commission. The State Commission vide its order dated 12.4.2019 dismissed the appeal.
5. Hence the present revision petition.
6. Heard the learned Counsel for the petitioners at the admission stage. Learned Counsel stated that the bank has charged commercial rate of interest as per master circular which became effective from 1.4.2016 issued by the bank head office wherein the following provision is there:
“In case the borrower fails to complete the construction of House within a period of 3 years from the availment of Home Loan, Branch to charge commercial rate of interest [1 year MCLR + Strategic Premium plus maximum band or Base Rate Plus maximum band (if loan is under base rate system), as the case may be, declared by the Bank for commercial purpose prevailing at the time of default] from the date of first disbursement.
In case the borrower could not construct the House within the stipulated period due to circumstances beyond his/her control or genuine difficulties, Zonal Authority is authorised to waive/refund the commercial ROI on case to case basis and strictly on merits. A suitable undertaking to be obtained from the borrower to construct the House within further period of maximum-2years without attracting commercialROI (as per Annexure-29)”
7. Learned Counsel for the petitioner was asked about the applicability of the circular dated 1.10.2016 on the loan sanctioned in the year 2012. Learned Counsel then presented circular dated 28.1.2010 and stated that the same provision is there in this circular and therefore, applicable on the loan sanctioned in the year 2012.
8. Learned Counsel further drew my attention towards the following provisions in the loan agreement:
“7. Notwithstanding anything contained herein or in the Scheme the said loan or any part thereof to be disbursed shall be withheld and/or further disbursements/payments be stopped without giving any notice, assigning any reason and/or the entire balance thereof outstanding at the time shall at BOB’s option and declaration to that effect, become forthwith due and payable by the Borrower to BOB and BOB will at its option and after notifying the Borrower in that behalf be entitled to enforce its security upon the happening of any of the following events, viz.
(ii) Any representation or statement of the Borrower’s Proposal being found incorrect or the Borrower’s committing any breach or default in the performance or observance of any terms or condition or provision contained in these presents and/or the Borrower’s proposal and/or any other terms or conditions relating to the loan.”
9. On the basis of the above, learned Counsel stated that the construction was not done in three years and therefore, the bank was entitled to charge the commercial rate of interest from the borrower.
10. It was further argued by the learned Counsel that the complainants have purchased many properties by taking loan from different banks. They are purchasing property for making profit. Thus, the complainants are not consumers as they had taken loan for commercial purpose. Learned Counsel stated that certain documents including the cibil of the complainants were filed before the State Commission to impress upon this fact that the complainants were not consumers, however, though the State Commission allowed for filing of these documents, but did not consider these documents in the final judgment as no mention of these documents has been made in the judgment. To support his argument, the learned Counsel relied upon the judgment of the National Commission in Rohit Kapoor v. BPTP Ltd. & 4 Ors., I (2018) CPJ 278 (NC)=Consumer Case No. 567 of 2015, decided on 7.12.2017, (NC).
11. Learned Counsel further mentioned that the contract of loan between the borrower and the bank cannot be altered by any Court. Learned Counsel for the petitioner further stated that Section 21-A of the Banking Regulation Act clearly debars all the Courts to interfere with the rate of interest charged by a bank for any loan given for any purpose. In this regard the learned Counsel referred to the following judgments:
“1.State Bank of India v. Yasangi Venkateswara Rao, I (2001) BC 87 (SC)=I (1999) SLT 284, Appeal (Civil) No. 4607 of 1989, decided on 21.1.1999 (SC)
2.Jayant Verma & Ors. v. Union of India & Ors., IV (2018) SLT 273=III (2018) BC 210 (SC), Writ Petition (Civil) No. 134 of 2013, decided on 16.2.2018 (SC).”
12. I have carefully considered the arguments advanced by the learned Counsel for the petitioner and have examined the record.
13. Coming to the first point whether the complainants are consumer, it is seen that the complainants have obtained the services of the bank for getting the loan and the consideration for this service is the payment of interest. The banking services are covered under the Section 2(1)(o) of the Consumer Protection Act, 1986. This Commission in Harsolia Motors v. National Insurance Co. Ltd., I (2005) CPJ 27 (NC)=CTJ 141 (CP) (NCDRC), has taken a view that the banking services are covered under the Consumer Protection Act. It has been held:
“18. Further, what is commercial purpose is discussed by the Apex Court in various decisions.
19. We would refer to few relevant judgments:
In Regional Provident Fund Commissioner v. Shiv Kumar Joshi, (2000) 1 SCC 98, the Court elaborately considered the provisions of Sections 2(l)(d) and 2(l)(o) as well as earlier decisions and held that—
“The combined reading of the definitions of “consumer “ and “service “ under the Act and looking at the aims and object for which the Act was enacted, it is imperative that the words “consumer “ and “service “ as defined under the Act should be construed to comprehend consumer and services of commercial and trade-oriented nature only. Thus any person who is found to have hired services for consideration shall be deemed to be a consumer notwithstanding that the services were in connection with any goods or their user. Such services may be for any connected commercial activity and may also relate to the services as indicated in Section 2(1)(o) of the Act. “
21. The aforesaid ratio makes it abundantly clear that services may be for any connected commercial activity, yet it would be within the purview of the Act.
29. Further, from the aforesaid discussion, it is apparent that even taking wide meaning of the words ‘for any commercial purpose’ it would mean that goods purchased or services hired should be used in any activity directly intended to generate profit. Profit is the main aim of commercial purpose. But, in a case where goods purchased or services hired in an activity which is not directly intended to generate profit, it would not be commercial purpose.”
14. So far as the question of complainants having booked more than one plot/flat it is seen that this Commission has examined this issue in many judgments and have stated that in this regard a commercial purpose will only be understood if the complainant is a regular trader of plots/flats and earns profit from these transactions.
15. In Aashish Oberai v. Emaar MGF Land Limited, Consumer Case No. 70 of 2015, decided on 14.9.2016, this Commission held as follows:
“In the case of the purchase of the houses which a builder undertakes to construct for the buyer, the purchase can be said to be for a commercial purpose where it is shown, by producing evidence, that the buyer is engaged in the business of a buying and selling of houses and-or plots as a trading activity, with a view to make profits by sale of such houses or plots. A person cannot be said to have purchased a house for a commercial purpose only by proving that he owns or had purchased more than one houses or plots. In a given case, separate houses may be purchased by a person for the individual use of his family members. A person owning a house in a city A may also purchase a house in city B for the purpose of staying in that house during short visits to that city. A person may buy two or three houses if the requirement of his family cannot be met in one house. Therefore, it would not be correct to say that in every case where a person owns more than one house, the acquisition of the house is for a commercial purpose.”
16. In another case, Kavit Ahuja v. Shipra Estate Ltd. & Jai Krishna Estate Developers Pvt. Ltd., I (2016) CPJ 31 (NC), wherein three flats were booked by the complainant, this Commission held the complainant to be a consumer within the meaning of Section 2(l)(d) of the Consumer Protection Act, 1986 and held as follows:
“In the case of the purchase of houses which the service provider undertakes to construct for the purchaser, the purchase can be said to be for a commercial purpose only where it is shown that the purchaser is engaged in the business of purchasing and selling houses and/or plots on a regular basis, solely with a view to make profit by sale of such houses. If however, a house to be constructed by the service provider is purchased by him purely as an investment and he is not undertaking the trading of houses on a regular basis and in the normal course of the business profession or services in which he is engaged, it would be difficult to say that he had purchased houses for a commercial purpose. A person having surplus funds available with him would not like to keep such funds idle and would seek to invest them in such a manner that he gets maximum returns on his investment. He may invest such funds in a Bank Deposits, Shares, Mutual Funds and Bonds or Debentures etc. Likewise, he may also invest his surplus funds in purchase of one or more houses, which is/are proposed to be constructed by the service provider, in the hope that he would get better return on his investment by selling the said house(s) on a future date when the market value of such house(s) is higher than the price paid or agreed to be paid by him. That by itself would not mean that he was engaged in the commerce or business of purchasing and selling the house(s).
7. Generating profit by way of trading, in my view is altogether different from earning capital gains on account of appreciation in the market value of the property unless it is shown that the person acquiring the property was engaged in such acquisition on a regular basis and it was by way of a business activity.
8. As observed by the Hon‘ble Supreme Court in Laxmi Engineering Works (supra), what is a ‘commercial purpose’ is a question of fact to be decided in the facts of each case and it is not the value of the goods that matters but the purpose for which the goods brought are put to. The same would be equally applicable to for hiring or availing services.
9. In any case, it is not appropriate to classify such acquisition as a commercial activity merely on the basis of the number of houses purchased by a person, unless it is shown that he was engaged in the business of selling and purchasing of houses on a regular basis. If, for instance, a person has two-three children in his family and he purchased three houses one for each of them, it would be difficult to say that the said houses were purchased by him for a commercial purpose. His intention in such a case is not to make profit at a future date but is to provide residential accommodation to his children on account of the love and affection he has for his children. To take another example, if a person has a house say in Delhi but he has business in other places as well and therefore, purchases one or more houses at other places where he has to live presently in connection with the business carried by him, it would be difficult to say that such acquisition is for commercial purpose. To give one more example, a person owning a house in a Metropolitan city such as Delhi, or Mumbai, may acquire a house at a hill station or a place, which is less crowded and more peaceful than a Metropolitan city, in my view, it cannot be said that such acquisition would be for commercial purpose. In yet another case, a person may be owning a house but the accommodation may not be sufficient for him and his family, if he acquires one or more additional houses, it cannot be said that he has acquired them for commercial purpose. Many more such examples can be given. Therefore, it cannot be said that merely because of the complainant had agreed to purchase three flats in the same complex the said acquisition was for a commercial purpose”.
17. This Commission in Rajesh Malhotra & Ors. v. Acron Developers & 2 Ors., II (2016) CPJ 125 (NC), First Appeal No. 1287 of 2014, decided on 5.11.2015 has held as follows:
“12. Therefore, in order to determine whether the goods are purchased for commercial purpose, the basic pre-requisite would be whether the subject goods have been purchased or the services availed of with the prime motive of trading or business activity in them, for the purpose of making profit, which, as held in Laxmj Engineering (supra) is always a question of fact to be decided in the facts and circumstances of each case”.
18. Therefore, it cannot be said that the complainants are not consumers. The judgment of this Commission in Rohit Kapoor v. BPTP Ltd. & 4 Ors. (supra), is by a single Member Bench, whereas the judgment in Rajesh Malhotra & Ors. v. Acron Developers & 2 Ors. (supra) is the judgment given by the Division Bench. Hence I will be going along with the judgment given by the Division Bench. So far as the Circular dated 1.10.2016 of the head office of Bank of Baroda relied by the learned Counsel for the petitioner is concerned, this circular is of 2016 and has been made effective w.e.f. 1.4.2016, whereas the loan was sanctioned in the year 2012, therefore this circular cannot be made applicable in the present case. Learned Counsel has stated that even the circular dated 28.1.2010 also mentions the same condition, but it is seen that only the following is mentioned in this circular:
“(iv) Purchase of plot of land, subject to the condition that a house will be constructed thereon within years or upto the period allowed by Development authority, whichever is earlier, from the date of purchase of plot, without restoring to penal interest. Please note that there is no exclusive scheme for purchase of plot under home loan product and provision of plot is apart of home loan project. As such, only a reasonable part of the total home loan eligibility should be sanctioned/disbursed for purchase of plot, keeping margin for construction of house over the plot.
Since the compliance of the undertaking rests with the borrower, Branches are required to incorporate suitable covenants in the loan documents at the time of sanction, to enable them to recall the loan and/or charge higher rate of interest, ab initio, in the event of non-compliance by the borrower with his undertaking.
In this background, or the benefit of the branches, we would like to clarify the issue as under:
In case the borrower fails to construct the house within a period of three years from the availment of the said finance:
(i)Branch to charge commercial rate of interest (PLR/BPLR plus maximum band declared by the Bank) from the date of first disbursement.
(ii)Branch to recall the loan and recover total loan with revised interest.”
19. From the above, it is clear that there were clear instructions that the branches were authorised to charge commercial rate of interest if the construction was not made within three years, however, the branches were also advised to incorporate suitable covenants in the loan documents. In the present case, it is seen that neither in the loan sanction letter dated 30.4.2012 nor in the loan agreement dated 30.4.2012 there is any clause mentioning that if the construction is not made within three years, the commercial rate of interest will be charged. So even if there are internal guidelines of the bank to charge commercial rate of interest in case the construction is not made within three years, the same was not communicated to the complainants either in the loan sanction letter or in the loan agreement. Thus, there is no agreement between the parties that if the construction is not completed within three years, the complainants will be liable to pay commercial rate of interest. In my view and on the basis of circular of head office of the bank, the branch is not authorised to charge commercial rate of interest until the same is incorporated in the loan sanction letter or in the loan agreement. The District Forum has disallowed charging of commercial rate of interest by the bank on the ground that there was no question of construction being even started, within three years from the sanction of loan as the complainants could not get the plot during this period from the improvement trust. The same argument has been accepted by the State Commission. The learned Counsel agreed that the plot has been given to the complainants only in the year 2015 which is clearly after a lapse of three years after sanction of loan. Thus, prima facie there seems to be no illegality in the order of the District Forum or the State Commission. Moreover, against the concurrent finding of facts given by the Fora below, this Commission cannot reassess the facts at the stage of revision petition as held by the Hon’ble Supreme Court in Mrs. Rubi (Chandra) Dutta v. United India Insurance Company, II (2011) CPJ 19 (SC)=IV (2011) SLT 303=2011 (3)
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Scale 654, wherein the following has been observed: “Also, it is to be noted that the revisional powers of the National Commission are derived from Section 21(b) of the Act, under which the said power can be exercised only if there is some prima facie jurisdictional error appearing in the impugned order, and only then, may the same be set aside. In our considered opinion there was no jurisdictional error or miscarriage of justice, which could have warranted the National Commission to have taken a different view that what was taken by the two Forums. The decision of the National Commission rests not on the basis of some legal principle that was ignored by the Courts below, but on a different (and in our opinion, an erroneous) interpretation of the same set of facts. This is not the manner in which revisional powers should be invoked. In this view of the matter, we are of the considered opinion that that the jurisdiction conferred on the National Commission under Section 21(b) of the Act has been transgressed. It was not a case where such a view could have been taken, by setting aside the concurrent finding of two Fora.” 20. Now coming to the question of Section 21A of the Banking Regulation Act, it is seen that this section provides that Courts cannot interfere in respect of the interest being charged by the bank on the ground that interest is excessive. The District Forum or the State Commission has not passed its respective order on the basis that interest being charged was excessive. The fact is that there is no mention of charging commercial rate of interest in the loan agreement or in the loan sanction letter, therefore, the agreed rate of interest i.e.12.25% has not been disturbed either by the District Forum or by the State Commission. Thus, in the present case, there is no question of violation of Section 21 A of the Banking Regulation Act. 21. Based on the above discussion, I do not find any merit in the present revision petition and accordingly revision petition No. 1944 of 2019 is dismissed at the admission stage. Revision Petition dismissed.