IMPORTANT POINT
No prudent investor would give a free hand to the banker to raise the rate of interest which would affect his investment.

M.B. Shah, President—It is the case of the complainant that ICICI Bank (hereinafter referred to as the Bank) had adopted unfair trade practice by alluring the complainants to take loan at a fixed rate of interest varying between 6.25% to 6.40% by pledging Kissan Vikas Patras (KVPs for short) and when the complainants were trapped in, the bank demanded increased rate of interest on the loan amount given to the complainants and also unjustifiably deducted Processing Fee to the tune of Rs. 6,69,465/-.

2. The complainants, in their complaint, have alleged that relying upon discussions held with the concerned Bank officials over a period of three months as also relying upon the terms and conditions of the proposed KVP scheme contained in the written communications, each of the eight complainants who are family members, proceeded to invest Rs. 20 lakh (margin money of 10%) in the scheme. As against such investment, the Bank granted a loan of Rs. 1.80 crore to each of the complainants enabling each one of them to purchase KVPs (through the Bank) worth Rs. 2 crore which was then pledged as security with the Bank. Thus, the complainants were assured returns from the KVP at an interest rate of 8% per annum on Rs. 2 crore each whereas at the same time, availing the Bank loan of Rs. 1.8 crore at an interest rate of only 6.4% per annum for the entire period of 103 months. Eventually, the complainants were to receive a net gain of almost Rs. 60 lakh on their initial investment of Rs. 20 lakh that is a four- fold gain within a period of 103 months (8 years and 7 months ).

3. The complainants further contended that all the activities relating to purchase of KVPs on behalf of the complainants was done by the Bank itself. The complainants merely deposited the margin money. The Bank thereafter added the loan amount, purchased the KVPs and pledged the same to itself.

4. The complainants withdrew a total sum of Rs. 1.10 crore from their different PPF accounts for depositing the margin money with the Bank. It is their contention that in their PPF accounts, they were getting Compound Interest at the rate of 8% per annum and the same was also tax-free, whereas interest on the KVP is taxable.

5. After the loan was sanctioned and the KVPs were purchased, the complainants were made to fill up and sign a standard format paper supplied by the Bank. The complainant signed the said documents under the presumption that the terms and conditions agreed upon by the Bank in writing, by issuing different letters and E-mails, would be made applicable.

6. On the rosy picture drawn by the Bank officials, the complainants invested money in the KVP Scheme of the Bank. Thereafter, by its letter dated 19.5.2006, the Bank informed the complainant with regard to the revision of the rate of interest from 7% to 7.75% per annum with retrospective effect from 15.4.2006. In spite of lodging various protests against upward revision of rate of interest, the complainants were informed that from December 2006, the rate of interest was enhanced from 7.75% to 9.50% per annum. It is their say that by such unfair trade practice adopted by the Bank, the complainants are ruined. Hence, the complainants have prayed that:

(1) The Opposite Parties (the Bank and its officers) be declared guilty of deficiency in service and of adopting unfair trade practices, and be directed to stop such practice in future;

(2) Compensation of Rs. 1 crore be awarded for the unfair trade practice adopted by the bank which has caused undue harassment, mental agony and suffering to the complainants.

(3) The Opposite Parties be directed to refund a sum of Rs. 6,69,465/- deducted from the complainants’ account as Processing Fee with interest thereon; and,

(4) The Bank be directed to recover interest at the rate of 6.40% per annum with respect to the loan granted to the complainants against the KVP Scheme of the Bank;

Written submissions of the Opposite Parties:

7. It is contended by the Opposite Parties:

(i) that t