The understanding of the loan repayment process, floating rate of interest, and the responsibility for additional expenses incurred in transferring a loan to another agency.

ORDER

S.B. Sawarkar, Member - This appeal takes an exception to an order dated 20.7.2010 passed by District Forum, Kolhapur in consumer complaint No. 30/2010 filed by Dr.Himmatsinh Narayanrao Shinde, complainant now appellant against the LIC Housing Finance Company Ltd., Kolhapur-opponent now respondent.

2. It was complaint of the appellant that on 14.7.2005 he took a loan of Rs. 11,90,000 from the respondent with floating rate of interest with duration of 20 years for construction of his house. EMI was Rs. 9,627 at 7.5% rate of interest and appropriate agreement was made between the parties. During the further payment of EMIs when the rate of interest got increased, repayment duration was extended without making any change in the EMI. The complainant when on 20.7.2007 inspected his statement of repayment he found that out of EMI of Rs. 9,627 only Rs. 193 was adjusted towards repayment of principal whereas remaining amount was getting adjusted towards interest. He felt that with this speed it was absolutely impossible to repay the loan. He also found that the liquidation date of the loan had extended to 1.7.2045, indicating that the appellant will have to pay the EMI till the age of 80 years.

3. As the rate of interest again increased, appellant made a request to reduce the repayment duration to 10 years hence, EMI was raised to Rs. 10,246 which was paid by the appellant. Upon his request for reduction of repayment duration, he was directed to submit Income Tax Returns by the respondents and was asked to pay Rs. 170 for re-agreement and was also told that if the repayment duration was to be reduced, the EMI would get increased to Rs. 12,930. Appellant appropriately paid post-dated cheques, but he was not given copy of the agreements in spite of repeated requests.

4. The appellant also complained that when the rate of interest was reduced from 10.25 to 9.75 without giving any caution or information to the appellant, EMI was reduced from Rs. 12,930 to Rs. 11,264 and the liquidation date was increased to May 2025. The complainant/appellant was prepared to pay Rs. 18,000 per month to get himself acquitted of the loan but he was told that if he pre-closes the account, he was required to pay the penalty charges. Appellant felt it to be insulted and therefore, transferred his loan from respondent to Axis Bank for which he was required to spend Rs. 35,000 extra. Appellant, therefore, made a complaint that he is a victim of respondent's scheming and respondent had created a scheme to keep the appellant perpetually under pressure of the loan and, therefore, attributed deficiency of service to the respondent and demanded the amount of Rs. 3,53,710 plus Rs. 35,000 spent for transferring the loan and Rs. 5 lakh as compensation for agony and expenditure.

5. Opponent/respondent repudiated the allegations of the complainant/appellant and had stated that the appellant had taken a loan of Rs. 11,90,000 with floati g rate of interest and duration of 20 years for which appropriate agreement was made. After taking of loan as the rate of interest started rising and went to almost 9.75 (from 1.2.2007) because of which the entire amount of EMI started getting adjusted in appropriation of interest only. Therefore, respondent increased EMI from Rs. 9,627 to Rs. 10,246 and recovered the difference of amount from the complainant. Likewise, when the complainant/appellant requested to reduce the duration of the loan, he was appropriately asked to submit Income Tax Returns and making a special case, EMI was raised to Rs. 12,930 and regular EMIs were accepted from him through cheques and ECS. But thereafter, rate of interest got fluctuated to 12.25% p.a. to 11.75% and also got reduced to 9.75% p.a. Accordingly, EMI was adjusted towards payment of interest and repayment of principal loan amount. Appropriately recovery charges and fines for bouncing of cheque payment and delay of EMIs were recovered from the appellant and he was informed of the action taken by the