2024 Supreme(SC) 1263

SUPREME COURT OF INDIA
BELA M. TRIVEDI, SATISH CHANDRA SHARMA, JJ.
Hongkong And Shanghai Banking Corp. Ltd – Appellant
Versus
Awaz & Ors. – Respondents
Civil Appeal No. 5273 of 2008, Civil Appeal No. 5294 of 2008, Civil Appeal No. 5627 of 2008, Civil Appeal No. 5278 of 2008, Civil Appeal No. 6679 of 2008
Decided on : 20-12-2024

IMPORTANT POINTS
(1) Administrative policy decisions of Banks, do not constitute provisions/facilities of banking which may come under umbrella of ‘service’, defined under Section 2(1)(o) of Consumer Protection Act, 1986.
(2) Rate of interest charged by banks, determined by financial wisdom and directives issued by Reserve Bank of India, and duly communicated to Credit Card holders from time to time, cannot be in any manner unconscionable or unilateral.

Headnote:

(A) Consumer Protection Act, 1986 – Sections 2(1)(d), 12(1)(b) and 13 – Civil Procedure Code, 1908 – Order I Rule 8 – Consumer Complaint – Maintainability – Requirement of obtaining prior permission from Commission, for any consumer to act in a representative capacity, can in no way be dispensed with – Consumer Complainant fails to disclose any deficiency in service or violation and is in fact a public interest litigation in guise of a purported consumer dispute – Even otherwise, administrative policy decisions of banks, do not constitute provisions/facilities of banking, which may come under umbrella of ‘service’, defined under Section 2(1)(o) of Consumer Protection Act, 1986 – A policy decision pertaining to rate of interest and trade practices carried out by banks across the country, is a regulatory function within specific statutory domain of Reserve Bank of India and cannot come under purview of judicial scrutiny by National Commission – When a person signs a document which contains certain contractual terms, that normally parties are bound by such contract – -It is for parties to establish an exception in a suit – When a party to contract disputes binding nature of signed document, it is for him to prove terms, in contract, or circumstances in which he came to sign documents, need to be established – National Commission had no jurisdiction to re-write terms of contract entered between banks and credit cardholders, which parties have mutually agreed to be bound by – Contract, being a creature of an agreement between two or more parties, is to be interpreted giving actual meaning to words contained in contract and it is not permissible fo Court to make a new contract, however reasonable, if parties have not made it themselves. (Paras 43, 45, 46, 64 and 65)

(B) Banking Regulation Act, 1949 – Sections 21A and 35A – Contract – Scope of Judicial Review – Terms of a contract executed between two parties, are not open to judicial scrutiny unless same is arbitrary, discriminatory, mala fide or actuated by bias – Courts cannot strike down terms of a contract because it feels that some other terms would have been fair, wiser or logical – Once terms of Credit Card operations were known to complainants and disclosed by Banking Institutions before issuance of Credit Cards, National Commission could not have scrutinized terms or conditions including rate of interest – There is no question of RBI being directed to impose any cap on rate of interest, either on banking sector as a whole, or in respect of any one particular Bank, contrary to provisions contained in Banking Regulation Act and circulars/directions issued thereunder. (Paras 62, 63, 69 and 71)

(C) Consumer Protection Act, 2019 – Sections 2(47) – Unfair Trade Practice – Any trade practice which is adopted for the purpose of promoting sale, use, or supply of any goods, or for provision of any service, by adopting any unfair method or unfair or deceptive practice, has to be treated as ‘unfair trade practice’ – Whether an act can be condemned as an unfair trade practice, or not, key is to examine ‘modus operandi’ i.e. whether there is any false statement/ misrepresentation, or deception – In present context, pre-conditions of ‘deceptive practice’ and unfair method’ are manifestly absent – Banks have in no manner made any misrepresentation, to deceive credit card holders – Upon availing facility of credit cards, customers, are made aware of the most important terms and conditions, including rate of interest that shall be charged by Banks – Even on merits, Reserve Bank of India, has made it clear that there exists no material on record, to establish that any bank has acted contrary to policy directives issued by RBI – Even otherwise, there is not even a single averment so as to establish how charging of rates of interest upon default by credit card holders, without a standardized rate, is usurious and constitutes unfair trade practice – Mere inflation in rates of interest cannot be construed as a practice, intended to cause loss or injury. (Paras 68 and 69)

Facts of the case:

Captioned set of appeals arise out of the common Judgment & Order dated 07.07.2008 passed by National Consumer Disputes Redressal Commission, Delhi in Complaint Case No. 51/2007 and Revision Petition No. 1913/2004. No appeal has been preferred from either of the parties, in Revision Petition No. 1913/2004. National Commission proceeded with prima-facie view that charging of interest at rates ranging from 36% to 49% p.a. is exorbitant and amounts to exploitation of the borrowers/debtors and is usurious

Findings of Court:

There is not even a single averment so as to establish how charging of rates of interest upon default by credit card holders, without a standardized rate, is usurious and constitutes an unfair trade practice. Mere inflation in the rates of interest cannot be construed as a practice, intended to cause loss or injury.

Result : Appeals allowed.