ORDER

THIRU.S.KARUPPIAH,PRESIDING JUDICIAL MEMBER.

(Dictated in open court) 1. The 1st complainant is a company and 2nd& 3rd complainant are individuals who are husband and wife. The complainants availed banking service of the opposite party’s bank and also obtained financial assistance of Rs.23,45,00,000/-. The EMI for the above loan is Rs.34,66,844/- which payment started from 10.06.2014. During May-2015 the complainants wanted to foreclose the loan. But the opposite party demanded Rs.49,19,341/- as prepayment penalty-cum-foreclosure charges. The above demand is against RBI guidelines. The complainant executed home loan agreement with the bank but levying foreclosure charges amounted to deficiency in service and unfair trade practice and hence filed this consumer complaint claiming Rs.49,19,341/-

with interest along with compensation of Rs.10,00,000/-. The opposite party contended that the RBI circular is not applicable to the complainant and it is applicable only to individual persons who availed home loan.,but this impugned loan was availed by the company and this loan was sanctioned against rent recoverable.

2. In this matter both sides filed proof affidavit and Ex.A1 to A7, B1 and B2 were marked. Subsequently the complainant did not file written argument and did not advance any oral arguments. Written argument of the opposite party received and the oral argument was also heard.

3. Now, the Point for consideration is:

1. Whether the complainants are liable to pay the foreclosure charges?

4. Discussion on the Point:

It is an admitted fact that the complainant availed a loan facility from the opposite party bank. It is also an admitted fact that they want to foreclose the above loan for which they were asked to pay the foreclosure charges. It is the contention of the complainant he is exempted from paying such foreclosure charges as the loan was availed as a home loan and the RBI circular is applicable to him. The above RBI circular is marked as Ex.A3 and the relevant portion is reproduced hereunder DBOD.NO.107/13.03.00/2011-12 dated 05.06.2012 on ‘Home loans -levy of fore-closure charges/pre-payment penalty,.

A reference is invited to Part B of the First Bi-monthly Monetary Policy Statement 2014-15 announced on April 1, 2014 proposing certain measures for consumer protection. It was indicated that in the interest of their consumers, bank should consider allowing their borrowers the possibility of prepaying floating rate term loans without any penalty. Accordingly it is advised that bank will not be permitted to charge foreclosure charges/pre-payment penalties on all floating rate term loans sanctioned to individual borrowers with immediate effect.

5. In the last line it has been specifically mentioned that exemption from foreclosure charges were available only to individual borrowers. In this case as per the memorandum of title deed the loan which is marked as Ex.A2, the loan was availed and mortgage was executed only by M/s.Vishaal Promoter Private Limited representing by the Managing Director N.Bhuvaneswari W/o. R.Ilangovan. Even in the loan application the bank has sanctioned the loan only to M/s.Vishaal Promoters Private Limited, Mr.Ilangovan and Mrs.Bhuvaneswari. So, the loan was not borrowed by individual borrowers but by the company itself through its Managing Partners as such the above RBI guidelines is not applicable.

6. Furthermore, in Ex.A2 memorandum of deposit of title deeds it has been clearly mentioned by the company that they availed the loan for the purpose of business. So, the loan was availed not to construct any home but, for the purpose of business it cannot be termed as a home loan and the contention of the complaint is liable to be rejected in this regard. Moreover the complainant has stated, he executed a home loan agreement, but no such agreement is filed in th