Rajesh Monga vs Housing Development Finance Corporation Limited & Ors.

2024 INSC 162 REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.1495 OF 2023

Rajesh Monga .… Appellant(s)

Versus

Housing Development Finance Corporation Limited & Ors. …. Respondent(s)

JUDGMENT

A.S. Bopanna, J.

1. The appellant is before this Court in this appeal

claiming to be aggrieved by the order dated 10.11.2022

passed by the National Consumer Disputes Redressal

Commission, New Delhi (‘NCDRC’ for short) in Consumer

Complaint No. 2367 of 2018. By the said order the NCDRC

Signature Not Verified has concluded that the appellant is bound by the terms and Digitally signed by Nisha Khulbey Date: 2024.03.04 14:16:36 IST Reason:

C.A. No.1495 of 2023 Page 1 conditions of the agreement dated 11.01.2006, while the

respondent was bound by various instructions of the

Reserve Bank of India (‘RBI’ for short), at the time of signing

the agreement dated 11.01.2006. Hence the complaint filed

by the appellant was dismissed. The appellant is therefore

before this Court.

2. The brief facts are that the appellant was in need of

home loan. The respondents No. 2 and 3 being the

employees of respondent No. 1 approached the appellant

during August 2005. The appellant was exploring the option

of securing loan from other financial institutions as well.

The case of the appellant is that respondents No. 2 and 3

being the direct sales agent and the resident manager of

respondent No. 1 - HDFC convinced the appellant that the

rate of interest charged by the respondent No. 1 on home

loan was lesser than what was being charged by ICICI

Bank. In this regard, the appellant relied on an email dated

05.10.2005 from respondent No. 2 to contend that a

comparison was provided in the said email to the appellant

C.A. No.1495 of 2023 Page 2 that the rate of interest offered by respondent No.1 was

cheaper.

3. It is contended that the respondent No. 2, on behalf of

respondent No. 1 had assured that the rate of interest would

be charged based on the Prime Lending Rate of RBI. Based

on such representations the appellant is stated to have

applied for home loan of Rs.3,50,00,000/= (Rupees Three

Crores and Fifty Lakhs) from respondent No.1, which was

sanctioned and the loan agreement dated 11.01.2006 was

entered into. The loan amount was disbursed to DLF

Universal Ltd., in instalments between January 2006 to

December 2007. As per the loan agreement, interest at

7.25% p.a and margin of 3.5 % per annum was provided.

Though this was the position, the grievance of the appellant

is that the respondent No. 1 revised the rate of interest to

8.25 %, despite RBI not having changed the Prime Lending

Rate during 11.01.2006 to 01.05.2006.

4. In spite of the complainant contacting the respondent

No. 2 and other officers, there was no relief, instead, the

C.A. No.1495 of 2023 Page 3 respondent No. 1 raised the rate of interest to 8.75 %, to

9.25% and again to 10.5% though there was no change

made by RBI with regard to the Prime Lending Rate. The

appellant therefore got issued a legal notice dated

27.09.2007 demanding to return the interest amount which

was charged over and above 7.5% p. a. The respondent No.1

vide their reply to the notice dated 09.10.2007 contended

that the appellant through the agreement opted for

‘Adjustable Rate of interest’, as such rate of interest was

varying as per the retail prime lending rate of respondent

No. 1. It is in that background the appellant approached the

Consumer Forum.

5. We have heard Sri. Vikas Singh, learned senior

counsel for the appellant, Sri. Aniruddha Choudhary for the

respondents and perused the appeal papers.

6. The thrust of the contention is that the respondent No.

2 on behalf of respondent No.1 had assured that the interest

charged by respondent No.1 is as per the retail prime

lending rate to be notified by RBI. As such the interest

C.A. No.1495 of 2023 Page 4 which was indicated at 7.25% p.a. can be altered only if the

RBI had altered the rate of interest and not otherwise.

Though, in the agreement it is contained that the rate of

interest would be as per the prime lending rate of interest of

respondent No.1, the same is contrary to the assurance that

was held out to the appellant that such adjustable rate of

interest agreed is only when the rate of interest is varied by

the RBI and not as per the interest to be varied by

respondent No.1. The learned senior counsel for the

appellant in that regard has placed strong reliance on the

email dated 05.10.2005, to contend that such assurance

was made to the appellant.

7. The learned senior counsel for the appellant has relied

on Texco Marketing (P) Ltd. v. TATA AIG General

Insurance Co. Ltd., (2023) 1 SCC 428, wherein the issue

considered was with regard to an exclusion clause in an

insurance policy which materially altered the nature of the

contract. It was observed in this regard that insurance

contracts are standard form contracts wherein the insurer

C.A. No.1495 of 2023 Page 5 being the dominant party dictates its own terms and the

consumer has weak bargaining power and as such the

contracts are one sided. The concept of freedom of contract

loses some significance in a contract of insurance. Such

contracts demand a very high degree of prudence, good

faith, disclosure and notice on the part of the insurer, being

different facets of the doctrine of fairness. The bench

consisting of two Hon’ble judges was of the opinion that one

cannot give a restrictive or narrow interpretation to the

provisions relating to unfair trade practices as given under

the Consumer Protection Act, 1986. The Court’s finding

against one of the parties qua the existence of unfair trade

practice has to be transformed into an adequate relief in

favour of the other, particularly in light of Section 14 of the

1986 Act. Once, the State Commission or the NCDRC, as

the case may be, comes to the conclusion that the term of a

contract is unfair, particularly by adopting an unfair trade

practice, the aggrieved party has to be extended the

resultant relief which is further strengthened by Sections 47

C.A. No.1495 of 2023 Page 6 and 49 of the 2019 Act. It was also observed that under

sub-section (2) of Sections 49 and 59 of the Consumer

Protection Act, 2019 the State Commission and the NCDRC,

respectively, may declare any terms of the contract being

unfair to any consumer to be null and void and there exists

ample power to declare any terms of the contract as unfair,

if in its opinion, its introduction by the insurer has certain

elements of unfairness.

In Debashis Sinha v. R.N.R. Enterprise (2023) 3 SCC

195, the dispute was regarding amenities promised by the

real estate developers in their brochures/advertisement

which were not delivered by them. It was noted that once

the NCDRC arrived at a finding that the respondents

therein were casual in their approach and had even resorted

to unfair trade practice, it was its obligation to consider the

appellants' grievance objectively and upon application of

mind and thereafter give its reasoned decision. If at all, the

appellants had not forfeited any right by registration of the

sale deeds and if indeed the respondents were remiss in

C.A. No.1495 of 2023 Page 7 providing any of the facilities/amenities as promised in the

brochure/advertisement, it was the duty of NCDRC to set

things right.

8. In Pradeep Kumar v. Postmaster General (2022) 6

SCC 351, in those facts and circumstances it was found by

this Court that fraud was committed by an officer and

employee of the post office. It was held that the Post Office,

as an abstract entity, functions through its employees.

Employees, as individuals, are capable of being dishonest

and committing acts of fraud or wrongs themselves or in

collusion with others. Such acts of bank/post office

employees, when done during their course of employment,

are binding on the bank/post office at the instance of the

person who is damnified by the fraud and wrongful acts of

the officers of the bank/post office and such acts within

their course of employment will give a right to the

appellants to legally proceed for injury, as this is their only

remedy against the post office. Thus, the post office, like a

bank, can and is entitled to proceed against the officers for

C.A. No.1495 of 2023 Page 8 the loss caused due to the fraud, etc. but this would not

absolve them from their liability if the employee involved

was acting in the course of his employment and duties.

9. From a perusal of the above noted cases, it would

disclose that they are circumstances where certain aspects

were contained in the agreements in question, but a

contention was raised contrary to the same and this Court

had rejected such contention. The learned senior counsel

would however contend that though the parties may have

agreed on certain aspects in the agreement, what is

important is the intention of the parties and any

correspondence exchanged between the parties as a prelude

to the transaction before executing the agreement will be

relevant to know the intention of the parties. It is in that

regard contended that the email dated 05.10.2005 was prior

to the agreement dated 11.01.2006 and as such the said

intention should be gathered and given effect to. In order to

persuade us to accept this contention, the learned senior

counsel for the appellant has relied on the decision in

C.A. No.1495 of 2023 Page 9 Board of Trustees of Chennai Port Trust v. Chennai

Container Terminal Private Ltd. (2014) 1 CTC 573

wherein it was contended that the petitioner therein had

granted licence to Respondent No. 1 therein for the

development and maintenance of Chennai Container

Terminal in terms of Licence Agreement entered into

between parties in 2001. Contentions were raised that pre-

contractual correspondence cannot be relied upon as the

correspondence fructified into a contract. It was held that

while English jurisprudence is clear on the aspect of pre-

contractual correspondence losing its significance once the

contract comes into existence, a straightjacket formula

cannot be applied in India as there may be people from

different states and different languages as their mother

tongue whose wishes culminate into a contract which is

drafted and concluded in a foreign language.

10. Having perused the precedents on which reliance was

placed, we are of the opinion that the same does not come

to the aid of the appellant. In the instant case, at the outset,

C.A. No.1495 of 2023 Page 10 it is to be noted that the respondent No.1 being a NBFC and

as a corporate body would be bound by its policies and

procedures with regard to lending and recovery. In that

regard, the applicability of the rate of interest to be charged

is also a matter of policy and cannot be case-specific unless

the individual agreement entered into between the parties

indicate otherwise.

11. In that backdrop, a perusal of the fact situation in the

instant case will disclose that the appellant filed the loan

application on 16.09.2005. It was indicated therein that the

‘Rate option’ is ‘Adjustable’, which discloses that, what was

opted is an Adjustable Rate of Interest, which will depend

on the increase or decrease of the rate of interest. The issue

however is as to whether such an Adjustable Rate of Interest

will apply based only on the rate of interest being fixed/

altered by RBI or as to whether the Rate of Interest fixed/

altered by Respondent No.1 - HDFC will apply in respect of

the loan transaction. It is in that regard contended that

respondent No.2, representing respondent No. 1 - HDFC

C.A. No.1495 of 2023 Page 11 had made a tabulation comparing the rate of interest to

represent that it is beneficial to the appellant and had

explicitly indicated in the email dated 05.10.2005 that- “PLR

is decided by RBI, whereas FRR is decided by the individual

Bank, HDFC is the only Institution working on PLR”. It also

indicated that in other banks like ICICI there is a clause

that the change in FRR is on sole discretion of the bank.

12. The agreement dated 01.11.2006 executed between the parties inter alia provides as follows;

“1.1 (e). The expression ‘rate of interest’ means the Rate of interest referred to in Article 2.2 of this Agreement and as varied from time to time in terms of this Agreement.

(h) The expression ‘Adjustable Interest Rate’ or “AIR” means the interest rate announced by HDFC from time to time as its retail prime lending rate and applied by HDFC with spread, if any, as may be decided by HDFC, on the loan of the borrower pursuant to this Agreement.

(i) The expression “Retail Prime Lending Rate” or ’RPLR’ means the interest rate announced by HDFC from time to time as its retail prime lending rate.

2.2 (a). Until and as varied by HDFC in terms of this Agreement the AIR applicable to the said loan

C.A. No.1495 of 2023 Page 12 as at the date of execution of this agreement is as stated in the Schedule. is as stated in the Schedule.

3(f). HDFC may vary its retail crime lending rate from time to time in such manner including as to the loan amounts as HDFC may deem fit in its own discretion.”

13. At the threshold, it can be noted that the appellant is

not an illiterate person to take the benefit of the precedents

relied upon. On the other hand, when it is contended that

the appellant had the option of securing loan from other

banks and that being misled by the email had entered into

the transaction, would by itself indicate that the appellant

was worldly wise. In such circumstance when the parties

have signed the agreement dated 01.11.2006, the terms

agreed therein would bind the parties and the email

exchanged between the parties cannot override the policy

decisions of the respondent No.1 institution. In order to

contend that the appellant has been misled or that the

earlier representation will constitute unfair trade practice,

C.A. No.1495 of 2023 Page 13 the appellant ought to have raised such contention when

the agreement was to be signed.

14. Having executed the agreement; having agreed to the

terms and conditions; having received the loan amount, the

appellant cannot raise any objection for the first time when

the rate of interest was increased after having acquiesced

by signing the agreement. Further, the appellant having

repaid the loan amount with interest as per the terms of

agreement cannot make out a grievance in hindsight and

seek refund of the amount paid.

15. That apart, though it is contended that the appellant

had the option of securing financial assistance from other

institutions but was lured by respondent No.2 through the

email and therefore amounts to unfair trade practice

causing loss to the appellant, due to which he is entitled to

be compensated, there is no material on record or evidence

tendered to establish that the appellant had in fact

approached any other financial institution which had

agreed to sanction loan or to demonstrate that it was a

C.A. No.1495 of 2023 Page 14 better bargain and if taken from such institution the

appellant was in a better position.

16. Therefore, if all these aspects of the matter are kept in

perspective and the order passed by the NCDRC is perused,

we are of the view that no error has been committed so as

to call for interference. Accordingly, the appeal is

dismissed with no order as to costs.

17. Pending application, if any, stands disposed of.

…………….…………………J. (A.S. BOPANNA)

..………….…………………J. (M.M. SUNDRESH)

New Delhi, March 04, 2024

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