2026 Supreme(Online)(NCDRC) 401

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
ROHIT BAJAJ & ORS. – Appellant
Versus
ICICI BANK LTD. & ORS. – Respondent
NC/CC/66/2009

A bank's pre-contractual promise to periodically enhance drawing limits is binding. A subsequent standard-form contract that unilaterally deviates from this is an unfair trade practice, and the bank's failure to honor the promise, causing penal interest, is a deficiency in service.

Headnote:(A) Consumer Protection Act, 1986 - Sections 2(1)(c)(i), 2(r), and 14(1)(f) - Unfair trade practice - Deficiency in service - Loan against securities (Kisan Vikas Patra) - Agreement to enhance drawing limit - Penal interest - RBI Master Circular dated 01.07.2008 - Order II Rule 2(3) CPC - Limitation - Cause of action.

(B) Unfair trade practice - A standard form contract executed after the purchase of securities, containing terms inconsistent with pre-agreed commitments regarding interest rate and periodic enhancement of drawing limits, is deceptive and one-sided. Such terms are unenforceable. (Paras 6, 6.1)

(C) Deficiency in service - A bank's failure to honor a pre-agreed promise to enhance drawing limits every six months (to fund monthly interest payments), thereby causing an account to become overdrawn and attracting penal interest, constitutes deficiency in service. (Paras 6, 6.1, 12)

(D) Limitation - The cause of action for failing to enhance drawing limits arises each time the enhancement is due (e.g., every six months), not from the date of the original loan transaction. (Para 5)

Facts of the case:
Complainants invested in Kisan Vikas Patras (KVPs) with a loan from the bank, based on an offer that the bank would charge interest at 6.4% and would enhance the drawing limit every six months according to a specific grid to cover the monthly interest. A formal loan agreement was signed later, which contained contradictory terms giving the bank discretion to vary the drawing limit. The bank subsequently failed to enhance the limits as agreed, leading to the account being overdrawn, for which the bank levied a 2% penal interest. The complainants challenged this as an unfair trade practice and deficiency in service. The Supreme Court had restored the complaint, holding that the cause of action for the failure to enhance drawing limits after September 2008 was distinct from the earlier dispute about the interest rate.

Findings of Court:
The court held that the pre-agreed terms (interest rate of 6.4% and six-monthly enhancement of drawing limits as per the grid) were binding. The contradictory terms in the later standard form agreement were one-sided and an unfair trade practice, and therefore unenforceable. The bank's failure to enhance the drawing limits, which led to the account being overdrawn and the levy of penal interest, was a deficiency in service. The court directed the bank to recast the loan accounts by applying the pre-agreed terms (6.4% interest, enhanced drawing limits as per the grid, and funding monthly interest from the enhanced limits) and only then determine if any penal interest was lawfully due.

Issues: (i) Whether the bank was obliged to enhance the drawing limits every six months as per the pre-contractual agreement, or could it rely on the contrary terms of the formal agreement granting it discretion. (ii) Whether the failure to enhance drawing limits and the subsequent levy of penal interest constituted an unfair trade practice and deficiency in service. (iii) Whether the cause of action for the failure to enhance limits was barred by limitation or by Order II Rule 2 CPC.

Ratio Decidendi: A bank is bound by its pre-contractual promises which form the basis of a consumer's decision to enter into a transaction. A standard-form contract that unilaterally alters these fundamental promises to the detriment of the consumer is an unfair trade practice. The bank's failure to fulfill the promise of periodic enhancement of drawing limits, which directly caused the overdrawn status and penal interest, amounts to a deficiency in service. The cause of action for such repeated failures arises continuously with each six-monthly enhancement cycle.

Result: Complaint partly allowed. The bank was directed to recast the accounts, apply the pre-agreed terms, and refund any amounts (including penal interest) found to be wrongly charged, with 8% simple interest from the date of KVP maturity.

Table of Content
1. arguments regarding contract and penal interest (Para 5)
2. court's analysis on pre-contract negotiations (Para 6 , 7)
3. ratio: unfair trade practice in drawing limits (Para 8 , 9 , 10 , 11 , 12)
4. final order and directions for refund (Para 13)

IN THE NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI JUDGMENT RESERVED ON: 15.01.2026 JUDGMENT PRONOUNCED ON: 21.04.2026 CONSUMER COMPLAINT NO. 66 OF 2009 1. Rohit Bajaj, S/o Sri Ramashanker Bajaj 2. Mohit Bajaj, S/o Sri Ramashanker Bajaj 3. Umashankar Bajaj, S/o Sri Sitaram Bajaj 4. Indra Bajaj, W/o Sri Ramashanker Bajaj

5. Anita Bajaj, W/o Sri Umashanker Bajaj

6. Neetu Bajaj, W/o Mohit Bajaj Address of all the above : 7th Floor, Trinity Plaza, 84/1 A, Topsia Road, Kolkata -

700046.

7. Saurav Bajaj, S/o Umashankar Bajaj, Grandson of Lt. Sitaram Bajaj, substituted vide order dated 17.04.2023 R/o Bajaj Kutir, 11-Rajendra Nagar, Patna - 800016.

8.NMLRKJaIHmGaFsEhDaCnBkAar Bajaj, S/o Lt. Sri Sitaram Bajaj R/o : 7th Floor, Trinity Plaza, 84/1 A, Topsia Road, Kolkata - 700046.

... Complainants Versus

1. ICICI Bank Ltd., ICICI Bank Towers, Bandra Kurla Complex, Mumbai - 400051.

2. Mr. K.V Kamath, Chairman-cum-Managing Director, ICICI Bank Ltd., ICICI Bank Towers, Bandra Kurla Complex, Mumbai -400051.

3. Mr. Neelakantan Pillai, Business Head - Loan Against Securities, ICICI Bank Ltd., ICICI Bank Towers, Bandra Kurla Complex, Mumbai - 400051.

4. Mr. Bhaskar Mukherjee, Business Representative (LAS), ICICI Bank Ltd., Shanti Niketan Building, 3rd Floor, Bistupur, Jamshedpur - 831001.

... Opposite Parties BEFORE:

HON'BLE MR. JUSTICE A.P. SAHI, PRESIDENT HON’BLE MR. BHARATKUMAR PANDYA, MEMBER For the Complainants Mr. Devashish Bharuk, Sr. Advocate with Mr. Ravi Bharuka, Mr. Shashank Chamoli, Ms. Soumya & Ms. Yashaswi Agarwal, Advocates For the Opposite Parties Mr. Joy Basu, Sr. Advocate with Mr. Sumit Goel, Ms. Sreeparna Basak, Ms. Sharen Joel & Mr. Anoop George, Advocates

ORDER

PER BHARATKUMAR PANDYA. MEMBER

1.

Heard Mr. Devashish Bharuk, Sr. Advocate for the Complainant and Mr. Joy Basu, Sr. Advocate for the OP Bank. By way of present complaint, complainants have challenged the unfair trade practice and deficiency in service on the part of OP bank in failure to honour their promise and assurance of enhancing the drawing limit at a regular interval of six months so as to absorb the interest accruing on the loan taken by the complainants from the OP Bank towards purchase of KVPs as per the Bank's obligation under the contract between the parties

2. Brief facts of the case and the contentions raised by Senior counsels for the both the parties have been discussed, in detail, in the order dated 26.11.2025 passed by this Commission, which is reproduced below:MLKJIHGFEDCBA

1. Heard Sr. Advocates Mr. Devashish Bharuka for the complainants and Mr. Joy Basu for the OP Bank. The complaint is filed by nine complainants who have grievance/complaint of deficient service of the OP ICICI Bank arising from the same composite transaction. The complaint arises from a transaction between the complainants and the OP Bank of obtaining loan for investment in Kisan Vikas Patra, the repayment of such loan with interest on monthly basis as also the issue of periodic increase in the drawing limits of loan to meet the monthly interest liability through correspondingly increased drawing limit and loan. The primary relief claimed in the present complaint is with regard to the deficiency qua not enhancing the drawing limits though agreed between the parties and thereupon levying penal interest for default in repayment of loan which, as per the complainant, arose only on account of non-enhancing of drawing limits and not advancing corresponding further loan which was in violation of the concluded contract between the parties. Drawing our attention to Annexure A-9 and A-10, it is contended that after discussions and exchange of emails, the Bank agreed that the drawing limit is to be enhanced at 5% of face value of KV

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