Invalid Prepayment Charges, Delay In Loan Cheque Delivery, Chandigarh District Commission Directs PNB Housing Finance To Refund And Pay Compensation

The District Consumer Disputes Redressal Commission-I (Chandigarh) bench comprising Pawanjit Singh (President), Surjeet Kaur (Member) and Suresh Kumar Sardana (Member) held PNB Housing Finance Ltd. liable for imposing prepayment charges on the loan and delay in delivery of loan cheque. The bench directed it to refund the deducted amount, and pay Rs. 10,000/- compensation and Rs. 8,000/- litigation costs.

Brief Facts:

Mr. Subash Chander Gupta and his wife, Mrs. Manu Gupta, (“Complainants”) sought a housing loan of Rs.70,00,000/- from PNB Housing Finance Ltd. (“Finance Company”). The loan was sanctioned for a total amount of Rs. 70,19,525/- with a tenure of 180 months. The loan carried a floating fixed 9.50% interest per annum for the first year, followed by a floating rate of interest for the remaining repayment period. Later with a delay, the loan amount cheque was handed to the Complainants by the Finance Company. Despite the delay in providing the cheque, the Finance Company imposed an interest on the Complainants, amounting to approximately Rs. 6000/-. 

Additionally, in April 2018, the Complainants made a prepayment of Rs. 45,00,000/- to the loan account. The Finance Company imposed prepayment charges of Rs. 1,55,000/-, calculated at 3% + GST. However, instead of depositing the entire prepayment amount, the Finance Company deposited Rs. 43,46,146/- charging the prepayment charges. Despite reminders, the Finance Company did not reverse the prepayment charges, leading the Complainants to deposit the extra amount of Rs. 1,29,427.89/- with the Finance Company. The Complainants made several communications with the Finance Company but didn't receive a satisfactory response. Feeling aggrieved, the Complainants filed a consumer complaint in the District Consumer Disputes Redressal Commission-I, U.T. Chandigarh (“District Commission”). The Finance Company didn't appear before the District Commission. Therefore, it was proceeded against ex-parte.

Observations by the Commission:

The District Commission perused an email confirming the prepayment and Loan Amortization Schedule and found a disparity between the amount paid by the Complainants and the recorded entry by the Finance Company. This difference between the entries amounted to Rs. 1,55,000/-. Furthermore, the District Commission referred to RBI guidelines dated 02.08.2019 which explicitly state that NBFCs should not impose foreclosure charges on floating-rate term loans for non-business purposes to individual borrowers. The District Commission observed that the act of the Finance Company in charging foreclosure fees from the Complainants, in contravention of these guidelines, constituted a deficiency in service on its part. Additionally, the delay in providing the sanctioned loan amount cheque and the subsequent imposition of interest from 13.02.2018 to 16.02.2018, despite the delayed handing over of the cheque, was held to be unfair. Therefore, the District Commission held the Finance Company liable for deficiency in services and unfair trade practices.

Consequently, the District Commission directed the Finance Company to refund an amount of ₹ 1,55,000/-, along with ₹ 6,000/-, to the Complainants, with interest at the rate of 9% per annum from the date of filing the complaint onwards. Further, it was directed to pay ₹ 10,000/- to the Complainants as compensation for mental agony and harassment and ₹ 8,000/- as the costs of litigation. 

Case Title: Subash Chander Gupta and another vs PNB Housing Finance Ltd. and another

Case No.: CC/786/2021

Advocate for the Complainant: Shri Sanjeev Sharma

Advocate for the Respondent: None

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