[Majority decision by Chairperson, Member (G),(P),(GG),(AG) and (T)]

1. The instant information has been filed by Shri Surinder Bhakoo ('Informant') under section 19 of the Competition Act, 2002 ('the Act') against the HDFC Bank Ltd., Auto loan Branch, Chandigarh and HDFC Bank Ltd. ('Opposite Party'), Andheri East, Mumbai for its alleged anti-competitive acts.

2. The facts and allegations in brief as given in the information are as under :

2.1 The Informant had taken a loan of Rs. 15,00,000/- from HDFC Bank as Auto loan at interest rate of 10.91 % for a period of 5 years on 6.3.2009 to purchase a BMW car.

2.2 After paying a few EMIs, the Informant decided to foreclose the account by paying the outstanding amount due to the seemingly high rate of interest being charged by the HDFC Bank. The Informant on 5.11.2009, sent a Cheque to the Opposite Party bearing No. 297309 drawn on Punjab National Bank for Rs. 13,11,561.22 for the payment of full outstanding payment as per the amount schedule supplied to the Informant at the time of the disbursal of loan.

2.3 The Opposite Party returned the above said Cheque to the Informant without assigning any reasons. The Opposite Party also informed the Informant through email to pay the foreclosure charges of Rs. 91,601.73. As per the Informant the Nationalized Banks do not levy the foreclosure charges on the Auto loan whereas the HDFC Bank is demanding the same. The Informant alleged that the above said conduct of the Opposite Party is against the provisions of the Competition Act.

3. The Commission considered the matter in its meeting dated 2.2.2010 and, having formed an opinion under Section 26(1) of the Act that there exists a prima facie case, referred the matter to the Director General (DG) for investigation vide order dated 2.2.2010.

4. The DG, after receiving the direction from the Commission, investigated the matter and submitted his report dated 17.3.2010 to the Commission.

Findings of DG report

5. During the course of investigation, it was submitted by the Opposite Party before the DG that since the case No. 5/2009 facts of which are similar to the instant case is already under investigation by the DG, the instance case may be clubbed with the case No. 5/2009.

6. DG in his report in case No. 5/2009 has concluded that the practice of charging pre payment penalty on early return of loans is found to be anti-competitive in terms of Section 3(3) of the Act. The DG has requested that the present matter should be considered by the Commission in the light of the findings given by him in case No. 5/2009.

7. The Commission, in its ordinary meeting dated 6.4.2010, decided to club the information of the instant case with the information in case No. 5/2009 considering that issues in both the information are substantially similar. It was also decided by the Commission in above meeting that a copy of the DG report be sent to the opposite party for submitting its reply.

Reply of HDFC Bank

8. The Opposite Party filed its reply dated 26.4.2010 and denied all the allegations levelled against it by the Informant. The Opposite Party submitted in its reply that the Informant had never visited its Retail Assets Branch at Chandigarh for the closure of his loan nor ever met with any official of its Bank. As per the averments of the Opposite Party, the Informant, requested, through e-mail dated 05.11.2009, to waive the foreclosure charges completely. The Opposite Party waived certain percentage of the foreclosure charges which was not agreed upon by the Informant. Opposite Party further submitted that after the above said representation the Informant never visited the Bank nor deposited any cheque towards pre-payment of loan account.

9. My Opposite Party also submitted that on 10.04.2010 a representative of the Informant visited its branch and shown his willingness to close the account by pre paying the loan subject to the bank partly waiving the foreclosure charges. Thereafter, a Cheque was given to the Opposite Pa