South Chennai District Commission Holds IDFC First Bank Liable For Deducting EMIs During Covid Moratorium

Brief Facts:

A. Rajagopalan (“Complainant”) had entered into a registered loan agreement with IDFC First Bank (“Bank”) by hypothecating his car. The loan amount was Rs. 7,29,088/- and he agreed to pay equated monthly instalments (EMI) of Rs. 17,730 for 60 months. He regularly paid the instalments without default until March 2020. In March 2020, the government announced a lockdown due to the COVID-19 pandemic, and a moratorium was declared on loan repayments from 01.03.2020 to 31.08.2020. During this moratorium, the bank unexpectedly deducted two EMIs on 19.06.2020, leaving the complainant with very little funds to survive during the lockdown. The complainant sent multiple notices to the bank, but there was no response. The bank also presented additional EMIs after the moratorium period without proper notification, causing financial difficulties to the complainant. Aggrieved, the complainant filed a consumer complaint in the South Chennai District Consumer Disputes Redressal Commission (“District Commission”).

The bank contended that they applied the moratorium only after the complainant bounced an EMI payment in April 2020. They argued that the complainant did not communicate his desire to avail of the moratorium and had not contacted the bank’s customer care services for the same. The bank claimed that they re-presented the EMI because of insufficient funds, and they had applied moratorium for April and May 2020, even though the complainant had not requested it. They insisted that the complainant was liable to pay interest for the EMI amount for the period from May 2020 to August 2020 and cheque bounce charges from September 2020.

Observations by the Commission:

The District Commission acknowledged that there was a deficiency in service on the part of the bank. It primarily attributed the deficiency to the bank’s inconsistent actions during the moratorium period. While the complainant had regularly paid EMIs until March 2020, a dispute arose when the bank unexpectedly deducted EMIs during the government-declared moratorium period, which was in place from 01.03.2020 to 31.08.2020 due to the COVID-19 pandemic. Further, the District Commission noted that these actions of the bank have adverse financial consequences faced by the complainant. The bank’s deductions during the moratorium period left the complainant with limited funds, particularly during a lockdown when many financial resources were constrained. This situation caused significant financial hardship to the complainant.

Furthermore, the District Commission held that the bank’s failure to respond to the notices sent by the complainant added to the perceived deficiency in service. The District Commission found that the bank’s lack of communication and resolution of the issue, despite multiple notices from the complainant, demonstrated a lapse in customer service.

Consequently, the District Commission directed IDFC First Bank, to pay compensation of Rs. 50,000 to the complainant for the deficiency in service and the mental agony experienced by the complainant. Additionally, a sum of Rs. 5,000 was awarded towards the cost of litigation. The bank was given a timeframe of 8 weeks from the date of receiving the order to make this payment. In case of non-compliance, the compensation amount of Rs. 50,000 would carry interest at the rate of 9% from the date of receiving the order until the date of realization.

Case: A. Rajagopalan vs IDFC First Bank

Case No.: Consumer Complaint No.94/2021

Advocate for the Complainant: M/s. C. Raja

Advocate for the Respondent: M/s. T K M Sai Krishnan

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