Unilaterally Increase Of Loan Tenure, Delhi District Commission Holds ICICI Bank Liable

Brief Facts:

The Complainant entered into a loan agreement with the ICICI Bank for a loan amount of Rs. 20,00,000/-, disbursed by cheque, with an additional sum paid through RTGS on 05.03.2009. The Complainant maintained timely monthly EMI payments until December 2015. Subsequently, financial difficulties arose, causing a delay in the remaining instalments. In August 2016, upon visiting the bank to address the defaulted instalments, the Complainant discovered that the bank unilaterally extended the loan repayment tenure from 10 to 20 years without the Complainant's consent. Despite objections, the bank claimed adherence to RBI guidelines and insisted on maintaining the extended tenure. Feeling aggrieved, the Complainant approached the District Consumer Disputes Redressal Commission-II, Delhi (“District Commission”) and filed a consumer complaint against the bank.

The Complainant contended that out of the scheduled 120 instalments, 112 were already paid (amounting to Rs. 27,92,731/-), leaving only 8 instalments. However, the bank increased the tenure to 325 months and insisted on charging interest for the extended period, bringing the total payable amount to Rs. 18,65,000/-. The Complainant alleged that the bank's refusal to allow a full and final payment, insisting on charging interest for an extended period, was illegal and violated the loan agreement.

In response, the bank contended that the Complainant initially availed a loan facility of Rs. 20,30,427/- at a floating interest rate. The loan tenure was extended for an additional 10 years as per Clause 10 of the agreement, allowing for an increase in tenure when there is an increase in the interest rate. The bank argued that this provision, duly signed by the Complainant at the time of disbursement, permitted the extension of the loan tenure to prevent customers from being burdened with higher EMIs.

The bank further stated that the Complainant frequently defaulted on EMI payments, with several issued cheques being dishonoured. According to the bank, the Complainant was informed about the increase in loan tenure through various letters.

Observations by the District Commission:

The District Commission noted that the cheques submitted by the Complainant for EMIs were frequently dishonoured, leading to the imposition of cheque bouncing charges and penalties for delayed payments. The District Commission acknowledged that, in accordance with the agreement, the bank was well within its right to penalize the Complainant for defaulting on payments and demand compensation for dishonoured cheques. Therefore, the imposition of charges by the bank was deemed legitimate by the District Commission.

About the extension of the tenure of instalments, the bank contended that the Complainant was informed through various letters. However, the District Commission held that there was no concrete proof or evidence provided by the bank substantiating this claim. While acknowledging that the bank increased the EMIs to alleviate financial pressure on the Complainant, the District Commission held that such an extension of tenure cannot be undertaken arbitrarily and without explicit communication to the Complainant.

Therefore, the District Commission held the bank liable for unilaterally increasing the loan tenure without informing the Complainant. Consequently, the District Commission directed the bank to compensate the Complainant with a sum of Rs. 25,000/- within three months from the date of the order. Failure to comply within the stipulated time frame will result in the imposition of Rs. 25,000/- at an annual rate of 4% until full realization.

Case Title: Vijay Kumar Chauhan vs ICICI Bank Limited

Case Number: CC/80/2017

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