More Than One Year Delay In Resolving Dispute Regarding Foreclosure Charges, Ambala District Commission Holds IDFC First Bank Liable

Brief Facts:

The Complainants obtained two loans against a property from IDFC First Bank (“Bank”) amounting to Rs. 56,20,000/- and Rs. 73,80,000/-. The loans were repayable over 137 months with EMIs of Rs. 67,164/- and Rs. 88,197/- respectively. Despite regular payments, the Complainants sought to clear both loans early, relying on the loan conditions which promised no foreclosure charges for personal use. However, the Bank demanded foreclosure charges, contrary to the agreed terms and RBI norms.

The Complainants approached the State Head of the Bank who assured them of resolving the matter but caused delays exceeding 12 months. The Bank further exacerbated the situation by delaying the issuance of a foreclosure letter and introducing unnecessary demands for bank statements.

Feeling aggrieved, the Complainants filed a consumer complaint in the District Consumer Disputes Redressal Commission, Ambala, Haryana (“District Commission”) against the Bank and its State Head. The Bank and the State Head didn't appear before the District Commission for the proceedings.

Observations by the District Commission:

The District Commission acknowledged that the Bank's demand for foreclosure charges contravened the RBI circular which prohibited the imposition of foreclosure charges on floating-rate term loans to individual borrowers. However, the principal amounts remained with the Complainants during this period. It was held that the principal amount potentially earned interest, had they been invested elsewhere.

Therefore, while the District Commission declined to order a refund of the entire interest amount, it held the Bank liable for delaying the resolution of the matter from April 2022 to March 2023. As a result, the District Commission held the Bank and its State Head liable to compensate the Complainants for this delay. They were directed to pay a compensation of Rs. 80,000/- to the Complainants. Additionally, the Bank was directed to cover the Complainants' litigation expenses amounting to Rs. 5,000/-.

Case Title: Suraj Prakash Jindal and Anr. vs IDFC First Bank and Anr.

Case Number: 261 of 2023

Date of Pronouncement: June 14^th, 2024