NCDRC Holds HDFC Bank Liable For Deficiency In Service

The Revision Petition was filed challenging the Tamil Nadu State Consumer Disputes Redressal Commission order which had dismissed the appeal filed against the District Consumer Disputes Redressal Forum, Coimbatore.

Brief Facts:

The Complainant took a gold loan of Rs. 48,500 in October 2008 from an HDFC Bank branch, using his 8-sovereign gold as collateral. Upon assessment of his jewellery, the Bank established a Loan Account in his name. After deducting a processing fee of Rs. 500, the Bank granted the loan at an interest rate of 16.5% per annum. Three months after procuring the loan, the Complainant approached the Bank to close the loan account. Instead of allowing closure, the Bank Authorities advised that if the Complainant paid the interest for that period, the gold loan could be extended. The Complainant complied and paid the interest.

In March 2009, the Complainant revisited the Bank branch, insisting on finalizing the loan account by repaying the loan amount along with interest. The Complainant made multiple visits to the Bank for this purpose. Towards the end of April 2009, the Complainant received a letter accompanied by a draft of Rs. 29,092.29. The letter informed him that his jewellery had been sold in an auction, and after offsetting the Bank's dues, the remaining amount was returned to him.

In response to the said auction, the Complainant sent a legal notice in May 2005 to the Bank, asserting that his gold jewellery, worth over Rs. 1 Lakh, was unlawfully sold without prior notice. However, the Bank did not respond to the notice, leading to the subsequent filing of the complaint.

The Complainant filed a complaint against HDFC Bank, seeking the return of his 8-sovereign gold jewellery after having received Rs. 48,500 from him to settle his loan account. Additionally, he demanded compensation for emotional distress, compensation for engaging in unfair business practices, and compensation for legal expenses.

The District Commission had allowed the complaint and directed HDFC Bank to return the gold jewellery to the Complainant after receiving Rs. 48,500/- with interest @16.5% per annum, pay compensation of Rs. 25,000/- and litigation cost of Rs. 3,000/-. The State Commission had dismissed the appeal but modified the order of the District Commission to the extent that instead of returning gold jewellery to pay the value of 8 sovereign gold as on today.

Contentions of the Bank:

The Bank contended that there was no deficiency in service, as they had approved a loan of Rs. 48,500/- for the Complainant at an interest rate of 16.5% per annum. This loan was granted against the Complainant's pledge of 8 sovereigns of gold jewellery. The loan was extended in October 2008. The Bank claimed that the complainant failed to make the required monthly interest payments and did not take any action to settle the loan account within three months.

It contended that in February 2009, a notice was issued to the complainant, requesting the closure of the loan account, but they received no response. Subsequently, in March 2009, the Bank issued another notice to the complainant, notifying them of the impending auction of their pledged gold ornaments. Prior to the auction, the Bank provided a pre-sale notice as stipulated in the loan agreement. Following the auction, the Bank sold the gold ornaments to recover the outstanding loan amount. After deducting the loan balance, the Bank issued a bank draft to the complainant, returning the remaining amount of Rs. 29,092.29.

Observations of NCDRC:

The NCDRC observed that both the District and State Commissions reached concurrent decisions that the pre-sale notice was sent to an incorrect address, not matching the address as documented in the Loan Agreement. Moreover, the notice contained an incorrect loan account number. This was seen as a deliberate, arbitrary, and unlawful action on the part of HDFC Bank. Thereby, resulting in a deficiency of service on the part of HDFC Bank.

Further, it placed reliance on decisions of the Supreme Court in the cases of Rubi (Chandra) Dutta vs. United India Insurance Company Ltd. and Loudres Society Snehanjali Girls Hostel vs. H & R Johson (India) Ltd. and held that NCDRC lacks jurisdiction and authority to set aside concurrent findings of facts made by two Lower Commissions forums under its revisional jurisdiction.

The Commission concluded that HDFC Bank failed to dispute the findings of the Lower Commissions.

Case Title: HDFC Bank Ltd & 3 Ors. vs. Ravi Kumar

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