While upholding an order passed by the state commission, the national consumer disputes redressal commission (NCDRC) directed L&T Housing Finance Ltd to pay Rs3 lakh compensation with 6%pa (per annum) interest and Rs25,000 cost for failing to return the original title deeds of a borrower in a home loan case.
In
an order last week, the NCDRC bench of Justice Ram Surat Ram Maurya (presiding member) and Bharatkumar Pandya (member) says, "If the appellant (L&T Housing Finance) could not search the documents even after expiry of more than five years, it cannot be expected that it (c)an search the documents now. Therefore, the state commission has rightly directed the appellant to pay compensation of Rs3 lakh to the complainant for misplacing the documents."
The bench was hearing an appeal filed by L&T Housing Finance challenging an order passed by the Karnataka state consumer disputes redressal commission.
Bengaluru-based Shailaja NK obtained a home loan of Rs6.50 lakh from L&T Housing Finance. To obtain the loan, she deposited the title deed and 10 other necessary documents with the lender to create an equitable mortgage of the loan.
Due to the financial crunch, Ms Shailaja wanted to sell her house, for which she required copies of the title deeds. On 8 March 2017, she sent a letter to L&T Housing Finance and also paid the requisite fees for obtaining certified copies of the title deeds and the documents deposited with the lender.
After that, she sent various reminders, but L&T Housing Finance failed to supply the documents on one pretext or the other. On 9 April 2018, the lender sent a letter to Ms Shailaja informing that the original title deeds and the documents had been misplaced and they would be supplied to her as soon as they were traced.
Ms Shailaja deposited 11 original documents, but L&T Housing Finance alleged that she had deposited only four original documents. In the loan agreement, 180 equated monthly instalments (EMIs) were fixed, against which she paid 182 EMIs. L&T Housing Finance also informed that due to an increase in the interest rate, the tenure of the loan was increased to 195 months and also issued a letter on 7 August 2018 disclosing that an amount of Rs4.10 lakh was overdue.
Then, Ms Shailaja approached the state commission and filed a complaint against the lender.
During the hearing before the state commission, L&T Housing Finance contended that Ms Shailaja had submitted only four original documents and was ready to recreate them and supply them to her. Regarding excess interest charged, it stated that Ms Shailaja had opted for a floating rate of interest. Due to a change in the company's prime lending rate (PLR), the rate of interest was accordingly changed, resulting in the change of the EMI tenure. L&T Housing Finance also argued that the home loan was sanctioned in the joint names of Ms Shailaja, Venugopal Nair and Jagadish, but the two were not made parties, resulting in the complaint suffering from non-joinder of necessary parties.
In its 5 July 2022 order, the state commission held that Ms Shailaja deposited the documents with L&T Housing Finance in 2004. "She sought certified copies of the documents in June 2017, but the lender could not trace out the documents up to 2022."
It held that L&T Housing Finance was deficient in service and directed it to pay Rs3.25 lakh to Ms Shailaja.
Aggrieved by the order, L&T Housing Finance approached NCDRC. The bench observed that L&T Housing Finance stated they were willing to create the lost documents. It is stated that the lender is still searching for the lost documents. "L&T Housing Finance has failed to comply with the directions of the state commission to return the documents. In the reply filed in the complaint, it is stated that it is still searching the documents."
Talking about the increase in loan repayment tenure to 195 months from 180 months, NCDRC noted Ms Shailaja had not disputed the fact that the tenure increased due to guidelines issued by Reserve Bank of India (RBI) and as per terms and conditions of the loan agreement, and instead she applied for foreclosure of the loan.
"In any case, Ms Shailaja has not claimed any relief in this respect. Therefore, the state commission directed the lender to return the title deeds after the discharge of the loan. As far as the question of non-joinder of the necessary party is concerned, it is admitted by L&T Housing Finance that the loan was sanctioned in the joint names of Ms Shailaja, Mr Nair and Mr Jagadish. She has no grievance against the co-borrowers nor has any allegation been made by the lender against them. Therefore, they are not necessary parties," the bench ruled.
Referring to two orders passed by NCDRC and a district forum, the counsel for L&T Housing Finance contended that the loanee of a financial institution is not a consumer.
However, the bench clarified that these two judgements referred by the counsel of L&T Housing Finance are not applicable to the facts of the case for the reason that in the instant case, Ms Shailaja had taken a housing loan. "Therefore, there is a relationship of consumer and service provider between L&T Housing Finance and Ms Shailaja. The order passed by the state commission does not suffer from any illegality or irregularity and the appeal deserves to be dismissed."
(First Appeal No978 of 2022 Date: 31 October 2023)