IMPORTANT POINT
Bank cannot charge interest above terms of agreement.

Anupam Dasgupta, Presiding Member—This revision petition challenges the order dated 24.09.2010 of the Union Territory Consumer Disputes Redressal Commission, Chandigarh (in short, ‘the State Commission’) in appeal no. 175 of 2010. By this order, the State Commission dismissed the appeal of the appellant Bank and affirmed the order dated 11.03.2010 of the District Consumer Disputes Redressal Forum II, Chandigarh.

2. The respondent was the complainant before the District Forum. As an employee of the petitioner Bank at Chandigarh, he availed of housing loan of Rs. 5 lakh from the Bank’s Zonal Office at Panchkula. The equated monthly installment (EMI) for repayment of the loan was Rs.2780/-. The rate of interest was concessional at 5.10% per annum upto to the loan of Rs.1.10 lakh and 11.10% above the said amount. The loan had to be repaid in 20 years or 70 years of the employee’s age, whichever was earlier. The respondent opted to continue the facility of repaying the EMI till 70 years of his age.

3. The respondent took premature retirement under the then policy of the Bank on 31.03.2001. On such retirement, the respondent was ordinarily required to clear the entire outstanding loan out of his retirement benefits. However, the respondent sought continuation of the housing loan and some other employees also did the same. The Bank formulated a scheme under which concessional housing loans made available to the serving employees were converted into usual housing loans with interest at the applicable commercial rate. The respondent availed of this scheme whereupon the entire principal and interest liability of the housing loan outstanding on 31.03.2001 was clubbed at Rs.6,00,563/-. But the respondent paid back Rs.1,50,563/- thereby reducing the outstanding loan to the balance of Rs.4.50 lakh to which the commercial rate of interest for housing loan @ 13% per annum was applied. The EMI was accordingly re-worked and fixed at Rs.5,830/- for the remaining months upto October 2014. It was also stipulated in the said scheme that if 50% of the retired employee’s monthly pension was less than the EMI, the employee had to furnish a deposit with the Bank, the interest on which would be sufficient to meet the difference between EMI and 50% of the monthly pension amount. Since 50% pension of the respondent was Rs.3,300/- per month, he was asked to furnish a term deposit of Rs.3 lakh, interest on which, i.e., Rs.2,625/- per month was also appropriated towards the balance of the EMI.

4. The clause governing the interest on the loan in accordance with the revised/supplementary loan agreement reads as under:

“I agree declare and confirm that further interest with effect from 01.04.2001 on the entire outstanding in my above housing loan account shall be repayable by me with the present commercial rate of interest @ 13% per annum with quarterly rests. I also agree, declare and confirm that the commercial rate of interest shall continue to be paid by me at the rate as and when revised by the Bank till the loan account is closed”.

5. The petitioner Bank revised the usual/commercial rate of interest on housing loan downwards in October 2003 to 8.25% per annum. The downward revision of interest continued further and such loans came to be offered by other Bank at an interest of 7.75% per annum. Accordingly, the respondent represented to the petitioner Bank in April 2004 to lower the rate of interest on the outstanding loan in accordance with the applicable commercial rate of interest on housing loans prevalent at that time. After about a year of correspondence, the respondent’s request was allowed, the loan account was recast and the EMI worked out afresh. However, in April 2006, the petitioner Bank informed the respondent that the rate of interest chargeable on his housing loan could not be reduced from 13% per annum and the facility granted to him earlier was not admissible. Accordingly, the Bank debited Rs.53,640/- to the respondent’s loan account as i