Banks cannot collect EMI if loan has not been disbursed: Dispute Redressal Forum

Thane: Rejecting an argument by SBI that it was not at fault in recovering monthly installments on “disbursed” housing loan, the Dispute Redressal Forum here has asked the bank to refund the entire EMI charged unduly for 20 months from a policeman and directed it to pay him Rs 50,000 as compensation for deficient services. [caption id=“attachment_1010937” align=“alignleft” width=“380”]  Home loan. Representational Image[/caption] In their order, issued last week Forum President MY Mankar and members Madhuri Vishwarupe and ND Kadam directed the bank to make the payment to complainant Rajendra Sadashiv Pardesi, within the next 40 days or else pay interest on the sum at 6 percent p.a. till its realisation. The new panel has adopted an innovative system by which it directs both the complainant and the respondent to file an affidavit before a specified date as regards the compliance of the Forum order which tracks the pendency in the compliance which was not happening earlier. In his complaint, the policeman told the Forum that the bank had sanctioned him a housing loan and issued a cheque for Rs 5,61,000 on July 23, 2007 which he handed over to ACP (Police Welfare) on 25 July 2007. After the issue of the cheque, the bank began recovering the EMI amount of Rs 7,672 from September 01 2007 till March 2009 after which he was informed by the Police Welfare Authority that the loan amount was not received. On enquiry, the complainant came to know that the cheque of Rs 5,61,000 handed over by him to the Police Welfare Authority, was not presented for collection till 31 March 2009 and hence, on request of the complainant a fresh cheque was issued to him in April, 2009, the Forum was informed. Even though the loan amount was not actually disbursed to the complainant till March 2009, the recovery of the housing loan principal and interest at the rate of 10 percent was made by the bank. This was in breach of the loan agreement condition that interest is to be charged on the outstanding amount of the disbursed housing loan. Since the loan was not actually paid to the complainant, the recovery of principal amount and interest was not proper. Hence the complainant filed a complaint claiming refund of principal amount, interest recovered, compensation and cost of the complaint, aggregating to Rs 2,28000. In their order, the Forum said it was the duty of the complainant’s welfare authority to deposit the said cheque for collection, which they appear to have not done. Also, the Forum said that a letter from the bank in October 2009 relating to information of housing loan of the complainant, clearly states that the “bank is charging interest on outstanding amount, on the disbursed portion of loan on daily reducing balance.” On careful consideration of this interest charging clause, it makes amply clear that interest is admittedly to be charged and recovered on the disbursed loan amount only. The plain dictionary meaning of disbursement is pay out money. In this case, even if the loan cheque was handed over to the complainant, same was not presented for collection, the Forum said. The order further said, “In this regard it is to be mentioned that the opponent has not brought any kind of evidence on record regarding the recovery of loan amount. Besides, they have also not brought on record, whether the interest charged and recovered from 01 September 2007 to 31 March 2009, was adjusted subsequently, after encashment of the fresh loan cheque issued in March, 2009. Further, they have also failed to confirm whether the recovery of the principal loan amount of Rs 5,61,000 was started afresh from 1 April 2009 i.e. after encashment of fresh cheque or balance loan as at 31 March 2009 was continued further. In absence of these vital details, the Forum is compelled to consider the loan recovery documents produced by the complainant with reference to their prayer as such, since, the opposite party has failed to file up-to-date evidence of loan recovery.” It further said that the contention of the opposite party to the effect that the complainant negligently failed to confirm in time, whether loan cheque collected by him was actually debited to his loan account, though, prima facie looks sound, but it is the opponent who neglected to confirm for 20 months, whether its cheque liability was fulfilled. Instead of reconciling their accounts of cheques issued but not presented for payment, they preferred starting recovery without payment. This act of the opposite party is undoubtedly deficient, the Forum added, while awarding the compensation to Pardesi. PTI