NCDRC Raps SBI for Arbitrarily Recovering Extra EMIs, Locking Account of Home Loan Borrower
Moneylife Digital Team 02 March 2023
While imposing a litigation cost of Rs10,000 and dismissing a revision petition filed by State Bank of India (SBI), the national consumer disputes redressal commission (NCDRC) stated the overall approach and conduct of the Bank concerning the loan transaction with the complainant was not only high-handed but also deplorable. The Commission also upheld orders passed by the district and state commissions.
In an order, Sudip Ahluwalia, presiding member of NCDRC, says, "...this Commission finds no grounds to interfere with the concurrent decisions of both the fora below. This is so, firstly, for the reason that whatever sought to be urged at this stage on behalf of SBI was never put up as a defence before the district forum in the first place since the matter was heard ex-parte against it after having granted it several opportunities to file its written version, which was not done."  
"Nevertheless, even the documents now relied upon by the Petitioner reveal a sorry state of affairs. The loan agreement between the parties was apparently entered into on 27 February 2004, and the arrangement letter was issued by SBI on the same day. Perusal of the same goes to reveal that the floating rate of interest 'over SBMTLR (state bank medium-term lending rate)' was not mentioned therein and the relevant column was left blank. Needless to repeat, even that agreement was not made available in the district forum, and consequently, could not have been looked into by the state commission," the bench says.
On 27 February 2004, Howrah-based Bijay Kumar Singh obtained a home loan of Rs2 lakh from SBI. It was decided that the Bank would deduct 120 equated monthly instalments (EMIs) of Rs2,340 each totalling a repayment of Rs2.80 lakh. Meanwhile, his salary account was transferred from the Salkia branch to the GT Road branch of SBI. Between 17 April 2004 and 15 July 2013, Mr Singh paid 112 EMIs and only eight EMIs of Rs19,200 were pending. 
However, on 7 January 2013, he received a notice from SBI's GT Road branch claiming an outstanding of Rs24,480 and an increase in EMIs to Rs3,805 from Rs2,400. The notice also asked Mr Singh to submit the original deed. Mr Singh tried to explain to the lender that there was no arrear due from him as claimed by SBI. However, SBI informed him that his outstanding had increased to Rs70,356 as of 15 July 2013.
In his complaint before the district forum, Mr Singh submitted that SBI failed to submit any clear accounts or statements to him, despite repeated requests. It was further averred that SBI continuously threatened to dispossess him if he failed to make the claimed payment. He sought settlement of the home loan account at Rs19,200, which was his actual dues, a compensation of Rs50,000, a cost of Rs20,000 for harassment and a litigation cost of Rs10,000.                  
SBI failed to file its reply before the district forum, so the matter was decided ex-parte. In its order, the forum observed, "We have no hesitation in our mind that SBI acted arbitrarily in charging the complainant with imaginary arrears. We fail to understand how the Bank could enhance the EMI rate from Rs2,400 to Rs3,805 when the 120 EMIs were allotted with Rs2,400 (Rs2,340) as EMI. The conduct of the Bank amounts to gross unfair trade practice when Rs19,200/- only appears due for settlement of the loan…"
SBI challenged the order before the state commission. It contended that it did not get any scope to establish its contention. It also argued that, as of 18 September 2014, it had dues of Rs54,479 from Mr Singh, and there was a floating rate of interest as per the agreement instead of a fixed rate of interest of 8% as contended by the borrower.
Mr Singh informed the state commission that SBI arbitrarily deducted 10 instalments from his salary account after filing its appeal. Thus, he ended up paying 130 EMIs instead of 120 EMIs as stated in the loan agreement.  
On 27 October 2016, the state commission dismissed the appeal filed by SBI. It noted, " regards the claim of the Bank about the floating rate of interest towards the recovery of the bank loan as per the agreement, the claim seems to be an unfounded one as the record is devoid of any copy of the agreement to ascertain the said contention. It is admitted by the counsels from both sides in the course of their arguments that the copy of the agreement was not furnished by SBI before the district forum also. In the absence of the copy of the agreement, we are unable to accede to the floating rate of interest as claimed by SBI."
"Above being the circumstances, we are of view that there is no basis of the overdue amount as claimed by SBI. Moreover, there being apparently no lapse on the part of Mr Singh, the extreme step of blocking the salary account and deducting 10 EMIs in excess of the fixed number of instalments as per agreement putting Mr Singh in extreme economic hardship, indicate only the height of deficiency in service on the part of the Bank..," the state commission observed. 
SBI then challenged the orders before NCDRC. It contended that, as against an EMI of Rs2,430 per month, Mr Singh paid only Rs2,340 each month, leaving a shortfall of Rs90 per month. 
However, the bench observed it was meant to be a deduction at the behest of SBI itself, which apparently made a clerical mistake for which Mr Singh could not be blamed. Further, it says, "The copy of the loan agreement itself was not delivered to Mr Singh to enable him to scrutinise that the relevant entries pertaining to the applicable rate of floating interest had been left blank therein. There is also no record whatsoever of any statement of accounts having been sent to the complainant in terms of para 3 of the arrangement letter issued by the Bank itself."
"...the revision petition found bereft of any substantive merits is dismissed with additional litigation costs of Rs10,000 payable to Mr Singh," NCDRC says.
(Revision Petition No 28 of 2017  Date: 27 February 2023)
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