In loans governed by a variable base rate, banks are permitted to adjust the repayment tenure or number of installments to accommodate interest rate fluctuations without it being considered a deficiency in service, provided such terms are part of the loan agreement.

This appeal has been preferred by the appellant/complainant- Jaswinder Singh against the order dated 13.05.2022 passed by District Consumer Disputes Redressal Commission, SBS Nagar (in short ‘District Commission’), whereby the complaint filed by the complainant under the Consumer Protection Act (in short ‘the Act’) was allowed and opposite parties were directed to pay Rs.28,209/- which has charged excess from complainant by the opposite parties with interest @6% from the date of deposit i.e. 15.12.2010 till its realization. The opposite party was also directed to pay Rs.5,000/- as compensation including litigation.

It would be apposite to mention that hereinafter the parties will be referred, as have been arrayed before the District Commission.

2. Briefly stated facts of the complaint are that the complainant hired the services of the complainant obtained the loan of Rs.41.10. lakh in the name of firm A.L.Coldforge Pvt. Ltd. to foreclose the loan with other financer (ICICI) and the same was acknowledged by the opposite party. The opposite party also charged Rs.34,000/- being processing fee on 15.12.2010 for sanction the said loan as Balance Transfer Case. However, the opposite party disbursed only Rs.7 lacs and balance amount of Rs.34.10 lakh was denied by the opposite party by stating the discrepancy in the property document. Vide letter dated 27.12.2010, the complainant was informed that his loan of Rs.7 lakh has been disbursed against the property account number and the payable installment is Rs.9,643/-. The installment was to be started from 07.02.2011, which the complainant started paying. The complainant number of times requested the opposite party to refund the processing fee out of Rs.34,000/- and letter dated 12.07.2016 was submitted. The complainant also filed a complaint with Banking Ombudsman on 16.08.2016. The Banking Ombudsman, in response to the said complaint, vide letter dated 23.09.2016 informed the complainant that the Bank has initiated the refund of processing fee on pro-rata basis amounting to Rs.28,209/- and the same will be credited on or before 21.09.2016. The complainant again claimed refund of Rs.28,209/- along with interest from 03.12.2010 through email communication dated 15.09.2016 and in reply to that the opposite party stated that they have initiated the refund of processing fee on pro-rata basis, which will be credited on or before 21.09.2016. The complainant alleges that the opposite party charged a processing fee of Rs.34,000/- despite disbursing only Rs.7,00,000/- as loan against property, and failed to refund the excess amount of Rs.28,209/-, amounting to deficiency in service, negligence, and unfair trade practice. It is further contended that the respondent charged interest above the agreed base rate of 11% p.a. without executing any fresh agreement for the reduced loan amount, and continued to rely upon the earlier agreement executed with A. L. Coldforge Pvt. Ltd., later incorporating the complainant’s individual name in communications. The complainant also submits that although the repayment schedule initially reflected 120 installments, the opposite party subsequently revised the tenure to 144 installments in the account statement dated 18.01.2017 and levied interest contrary to norms. Despite requests for execution of a fresh agreement and pre-closure of the loan, the opposite party failed to take appropriate action. It is further averred that the opposite party, being governed by RBI guidelines, could not arbitrarily alter the rate of interest or loan terms, including tenure and installment amounts,