Central Bank of India Found Liable by NCDRC for Overcharging EMI

June 19, 2024

The National Consumer Disputes Redressal Commission, under the stewardship of Inder Jit Singh,
reiterated that banks are not authorized to unilaterally alter the agreed EMI amount. Additionally, the
commission emphasized that issues not raised in initial pleadings cannot be brought up in subsequent
higher courts if they were not framed earlier.

BRIEF FACTS OF THE CASE

The complainant, an employee of Hindustan Aeronautics Lucknow, maintained loan installments
with Central Bank/Bank, which were deducted from his salary account without fail. Originally slated to conclude on June 30, 2015, the bank unilaterally raised the monthly installment from
Rs. 7,566 to Rs. 8,766 without providing any explanation. This arbitrary action was deemed
illegal, constituting unfair trade practice and service deficiency by the complainant.

Despite this,the complainant complied with the increased payments, ultimately settling the loan. However,
upon requesting their documents, the bank withheld them, causing distress. Subsequently, the
complainant lodged a complaint in the District Forum, which ruled in their favor. Dissatisfied,
the Bank appealed to the State Commission, but their appeal was dismissed. Consequently, the
bank filed a revision petition before the National Commission.

CONTENTION OF THE BANK

The bank contended that a simple calculation error had led to the discrepancy between the actual EMI and the amount stated in the District Forum’s decision. As per the terms and conditions of the Loan Agreement, the correct EMI amount was asserted to be Rs. 8,566, not Rs. 7,566. Contrary to the District Forum’s ruling, it was argued that there had been no increase in the agreed-upon interest rate. The Statement of Account presented before the District Forum was referenced to substantiate this assertion, indicating a consistent interest rate throughout the loan tenure. The bank emphasized Article 2.6(c) of the Loan Agreement, which conferred the bank with the authority to adjust the EMI amount to ensure timely loan repayment.

OBSERVATIONS BY THE COMMISSION

The Commission noted that the bank’s assertion that the correct EMI amount was Rs. 8,776 lacked substantiation, as the loan agreement explicitly stated the EMI amount as Rs. 7,566. Moreover, the bank’s acknowledgment and acceptance of the lower EMI amount for a significant duration of 82 months underscored their miscalculation, constituting a deficiency in service on the bank’s part. Additionally, the bank’s failure to raise the plea of mistake before the District Forum or State Commission was highlighted. The Commission referenced the precedent set in Deepak Tandon & Anr. vs. Rajesh Kumar Gupta, which ruled that if a plea was not raised in the initial pleadings and no findings were made by the lower courts, it could not be raised later in a higher court due to a lack of factual basis.

Consequently, the Commission upheld the conclusions reached by the State Commission and District Forum, finding no grounds for intervention. As a result, the revision petition was dismissed.

Posted and reproduced in Public Interest by

Adv. Sulaiman Bhimani Legal Consultant

Expert in RERA & Consumer Matters, Co-operative Scty Matters,

Deem Conveyance, Family Matters, and Property Disputes.

Human and Civil Rights Campaigner

President Citizens Justice Forum https://citizensjusticeforum.in