M.D.Ramachandran Nair vs Banking Ombudsman
2023 Latest Caselaw 3794 Ker

                    IN THE HIGH COURT OF KERALA AT ERNAKULAM
                                     PRESENT
                      THE HONOURABLE MR. JUSTICE AMIT RAWAL
            THURSDAY, THE 30TH DAY OF MARCH 2023 / 9TH CHAITHRA, 1945
                              WP(C) NO. 173 OF 2012
PETITIONER/S:

                M.D.RAMACHANDRAN NAIR
                AGED 47 YEARS
                S/O. LATE P.S.DIVAKARAN NAIR, DIVAN'S BUILDING, KARIMPATTA ROAD,
                PALLIMUKKU, KOCHI-682 016.

                BY ADVS.
                SRI.K.S.DILIP
                SMT.ANUSHA NAIR
                SMT.P.J.FLONY
                SMT.G.LEKHA
                SRI.SAJU N.A.
                SRI.A.S.SAJUSH PAUL



RESPONDENT/S:

      1         THE BANKING OMBUDSMAN (KERALAM LAKSHADWEEP & MAHE)
                RESERVE BANK OF INDIA, THIRUVANANTHAPURAM-695 033.

      2         STANDARD CHARTERED BANK
                KOCHI BRANCH, HDFC HOUSE, M.G.ROAD, RAVIPURAM,       KOCHI-682 015,
                REPRESENTED BY ITS BRANCH MANAGER.

      3         UNION OF INDIA
                MINISTRY OF FINANCE, SASTRI BHAVAN, NEW DELHI-100 001, REPRESENTED
                BY ITS SECRETARY.

      4         ADDL.R4 RESERVE BANK OF INDIA,
                BAKERY JUNCTION, P.B NO.6507, THIRUVANANTHAPURAM - 695 033, INDIA.
                REPRESENTED BY ITS REGIONAL DIRECTOR. [ADDL.R4 IS IMPLEADED AS PER
                ORDER DATED 09/03/2022 IN I.A:1/22 IN WP(C) 173/2012]

                BY ADVS.
                MILLU DANDAPANI
                SMT.SREEKALA KRISHNADAS
                SMT.SREEKALA KRISHNADAS
                SRI.C.VIVEK
                MANU S., ASG OF INDIA




      THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 30.03.2023, THE

COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
 WP(C) NO. 173 OF 2012
                                        2


                             JUDGMENT

Order of the Ombudsman dated 29.9.2011 relegating the

petitioner to approach the competent court for alleging deficiency

of service is under challenge in the present writ petition.

2. Succinctly, the facts in brief are that the petitioner had

originally availed a home loan of Rs.85,40,000/- on 24.11.2006 by

executing certain documents. Thereafter the petitioner, on his

request was sanctioned with a loan against property of Rs.150

lakhs. The petitioner intended to pay the entire loan amount by

giving an offer on 11.8.2010 before expiry of three years from the

final disbursal of the loan amount. Respondent bank charged the

pre-closure charges @ 4.41%.

3. Petitioner's grievance is that as per the clause 10 of

the conditions of the sanction letter, respondent bank was liable

to charge only 2.5% in case of pre-close of the loan after three

years and three years would be determined from the original loan

sanctioned in 2006, for the reason that as per the certificates

pertaining to principal/interest, respondent bank had been

charging the interest of the first home loan and therefore the

period of three years is required to be construed from that date

and not from the date of the sanctioning of Rs.150 lakhs ie., on

30.11.2007. Netiher the counsel was permitted to appear and WP(C) NO. 173 OF 2012

therefore these facts could not be agitated to and prays that the

matter be set aside and remitted to the Ombudsman as the

Ombudsman had the power to interfere with regard to charging

of the interest as per the provisions of the banking Scheme of

2006 then in vogue.

4. On the other hand, learned counsel appearing on behalf

of the respondent Bank submitted that clause 10 of the terms and

conditions of the sanction letter are unambiguous, for, the offer

for pre-closure of the loan was not made after three years of the

disbursal of the amount Rs.150 lakhs ie., from 30.11.2007 but

request was made on 11.8.2010 before three years. Therefore the

interest @ 4.41% was correctly and rightly charged.

5. I have heard the learned counsel for the parties and

appraised the paper book. The relevant portion of the order of

the Ombudsman reads thus:

Complaint against Standard Chartered Bank, Kochi Branch - Complaint No.A/16298SCB/7

Please refer to your complaint on the captioned subject received on June 21, 2011. On taking up the matter with the bank, they have advised as under:

(1) Home loan (A/c No.45132046) was sanctioned to you in November 2006 for Rs.8540000/- which was fully disbursed on March 21, 2007. This account was pre- closed during the month of December 2007.

(ii) Loan Against Residential Property (LARP)( A/C Nos 47139706/43405048984) You had applied for a LARP loan and the same had been sanctioned, based on the application form WP(C) NO. 173 OF 2012

and other relevant documents submitted to the bank, for Rs. 1,50,00,000 vide sanction letter dated November 30, 2007. A portion of the amount sanctioned vide the LARP loan was utilized to pre-close the above mentioned Home loan account (45132046). Based on your request to pre-close the Home Loan account a PTQ was issued to you on July, 30, 2010 with the applicable pre-payment charges of 4.41% (including the service tax). The pre- payment closure fee applicable for the Home loan was clearly mentioned in the terms and conditions (No.10) of the sanction letter duly accepted by you under signature. The bank has also refunded to you an amount of Rs.56104.07 being excess interest levied.

2. A copy of bank's letter dated August 29, 2011 along with the enclosures is furnished for your information. As such we do not observe any deficiency in service on the part of the bank and the complaint is closed in terms of Clause 13(a) of the Banking Ombudsman Scheme 2006.

3. It is further advised that the appeal option under the Scheme is not available for complaints closed under the said clause of the Banking Ombudsman Scheme 2006. You are, however, at liberty to approach any other forum for the redressal of your grievance.

3. This is issued as per the orders of the Banking Ombudsman.

6. The order in my view appears to be justifiable and

correct as if at all the petitioner was aggrieved, that the bank had

been deficient in service, could have availed the remedy provided

under the Consumer Protection Act and not under the

Ombudsman. Regarding the factual aspect, clause 10 would be

the determining factor for charging the 4% charges. The same

reads as under:

10. If you preclose the entire loan outstanding amount, you shall pay to the bank a pre-closure free at the rate of 4% ad valorem on the principal outstanding amount for the first 3 years from the date of final disbursal. In case you wish to pre-close after 3 years, there will be a fee of 2.5% on the WP(C) NO. 173 OF 2012

principal outstanding at the time of such closure.

7. It is a matter of record that the home loan was sanctioned

in 2006 with a separate sanction letter and loan against the

property separately on 30.11.2007. While disbursing the amount

of Rs.150/- lakhs, the outstanding dues of the home loan were

adjusted. Therefore the period of three years has to be construed

from 30.11.2007 and not from 2006. In this view of the matter,

the Bank had rightly charged the interest @ 4.41% as foreclosure

charges, strictly as per clause 10 of the terms and conditions of

the loan.

The writ petition sans merit and is accordingly, dismissed.

SD/-

sab                                              AMIT RAWAL

                                                    JUDGE
 WP(C) NO. 173 OF 2012


PETITIONER'S EXHIBITS:

P1: COMPLAINT FILED BEFORE THE 1ST RESPONDENT P2: ORDER ON COMPLAINT PASSED BY 1ST RESPONDENT P3: CERTIFICATE OF PRINCIPAL AND INTEREST P4: CERTIFICATE OF PRINCIPAL AND INTEREST P5: CERTIFICATE OF PRINCIPAL AND INTEREST P6: CERTIFICATE OF PRINCIPAL AND INTEREST