The right of complainants to approach the Consumer Court despite seeking relief from the Banking Ombudsman, and the bank's obligation to adhere to the agreed-upon interest rate.

ORDER

Mrs. Neena Sandhu, Member - This is an appeal filed by the OP against order dated 3.9.2008 passed by District Consumer Disputes Redressal Forum-I, UT, Chandigarh (for short hereinafter to be referred as District Forum ) passing in complaint case No. 73 of 2008.

2. Brief facts of the case are that the complainants took housing loan of Rs. 13,00,000 from the appellant Bank which was to be paid in 96 EMIs of Rs. 17,724 per month @ 7% p.a (floating). The complainants submitted that as per letter dated 1.12.2004, the rate of interest would be reviewed at the end of three years from the date of final disbursement under the facility but the OP No. 2 intimated the complainant vide their letters dated 22.7.2005, 1.2.2006, 1.7.2006 and 20.1.2004 that the rate of interest has been revised to 7.5%, 8%, 9% and 9.5% respectively. This act of OPs in reviewing and enhancing the rate of interest of home loan before the expiry of three years from the final date of disbursement i.e. 8.12.2004 was totally unwarranted and amounts to deficiency in service. The complainants made representations dated 22.2.2006 and 28.3.2006 to the OPs and also made complaint to the Bank Ombudsman where the OPs agreed that they would not charge higher rate of interest than 7% till 31.3.2007 but in spite of the above said undertaking before Ombudsman, the complainants kept on charging higher rate of interest than @ 7%. The complainants sent legal notice dated 6.7.2007 and many written requests to the OPs but the OPs failed to redress the grievance of the complainants. The illegal action of the OPs in reviewing the rate of interest before the expiry of three years, as agreed, amounts to unfair trade practice and deficiency in service on the part of OPs and hence, the complaint was filed.

3. Reply was filed by the OPs and pleaded that the complainants unconditionally accepted the terms and conditions stipulated by the IDBI Bank and entered into a Home Loan Agreement on 1.12.2004. As per the Home Loan Agreement, the complainants had opted for a floating rate of interest @ 7% p.a. The said rate of interest was subject to resetting of interest rate on the 10th day of April every year. It was pleaded by OPs that in terms of Home Loan Agreement, IDBI had reserved the right to amend any of the terms and conditions of the contract at its sole discretion and said clause reads as under:

"Review of setting of interest rate The interest rate will be reviewed at the end of 3 years from the date of final disbursement under the facility."

It was submitted by the OPs that the aforesaid clause applies to the home loans granted at fixed rate of interest and not at floating rate of interest. It was always the intention of and material term of the grant of facility of home loan that the rate of interest would be floating and not fixed. The error has crept in due to inadvertence as wrong standard format of the draft-sanctioned letter was used. Nevertheless, in the subsequent correspondence and during discussions, this aspect was clarified and the complainants had agreed to the same. In any case, this clause stands modified and amended by signing the home loan agreement. The terms of the loan agreement supersede the conditions of letter of sanction/letter of intent. The loan agreement further provides as follows:

"The Bank shall be in its sole discretion (or having regard to the applicable regulations, conditions in money market or in keeping with its internal policies or regulatory requirements), entitled to revise the interest rate and default interest rate on the home loan without there being any need to assign a reason for such revision and interest and default interest shall thereafter accrue at such revised rate(s)."

It was submitted by the OPs that IDBI relaying on this aforesaid clause and keeping in view the conditions in the money market and in line with the internal policies and regulatory requirements had revised the interest rates from time to time. The revisions was communicate