RAJESH MONGAversusHOUSING DEVELOPMENT FINANCE CORPORATION LIMITED & ORS.

                   [2024] 3 S.C.R. 1 : 2024 INSC 162

                   Rajesh Monga
                         v.
Housing Development Finance Corporation Limited & Ors.
                       (Civil Appeal No. 1495 of 2023)
                                04 March 2024
              [A.S. Bopanna* and M.M. Sundresh JJ.]

                           Issue for Consideration
       Whether an adjustable rate of interest on home loan would apply
       based only on the rate of interest being fixed/altered by RBI or the
       rate of interest fixed/ altered by respondent No.1-Bank.

                                  Headnotes
       Consumer Protection Act, 1986 – Rate of interest to be
       charged on home loan – Home buyer filed loan application,
       opting an adjustable rate of interest – Manager of the Bank
       assured that the rate of interest would be charged based on
       the Prime Lending Rate of RBI – Loan amount disbursed,
       and thereafter, the rate of interest was revised from 7.25%
       pa to 8.25% pa despite RBI not having changed the Prime
       Lending Rate and was further increased to 10.5% pa though
       no change made by RBI – Consumer complaint – National
       Consumer held that home buyer was bound by the terms
       and conditions of the agreement while the bank was bound
       by various instructions of RBI at the time of signing the
       agreement – Interference with:
       Held: 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 – Applicability of the rate of interest to be
       charged is a policy matter and cannot be case-specific unless
       the individual agreement entered into between the parties indicate
       otherwise – When the parties have signed the agreement, the terms
       agreed therein would bind the parties and the email exchanged
       between the parties cannot override the policy decisions of the
       institution – Having executed the agreement; having agreed to
       the terms and conditions; having received the loan amount, the
       appellant-home buyer cannot raise any objection for the first time


* Author
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     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 – In view thereof, no error has been committed so as to call
     for interference. [Para 10 – 16]

                             Case Law Cited
          Texco Marketing (P) Ltd. v. TATA AIG General
          Insurance Co. Ltd. [2022] 9 SCR 1031 : (2023) 1
          SCC 428; Debashis Sinha v. R.N.R. Enterprise (2023)
          3 SCC 195; Pradeep Kumar v. Postmaster General
          [2022] 19 SCR 583 : (2022) 6 SCC 351; Board of
          Trustees of Chennai Port Trust v. Chennai Container
          Terminal Private Ltd. (2014) 1 CTC 573 – referred to.

                               List of Acts
     Consumer Protection Act, 1986.

                            List of Keywords
     Adjustable rate of interest; Home loan; Rate of interest being
     fixed/altered by RBI; Prime Lending Rate of RBI; Policies and
     procedures with regard to lending and recovery; Agreement;
     Acquiesced; Unfair trade practice; Policy decisions; Compensation;
     Financial institution.

                           Case Arising From
     CIVIL APPELLATE JURISDICTION : Civil Appeal No.1495 of 2023
     From the Judgment and Order dated 10.11.2022 of the National
     Consumers Disputes Redressal Commission, New Delhi in CC No.
     2367 of 2018
                        Appearances for Parties
     Vikas Singh, Sr. Adv., Varun Singh, Akshay Dev, Mohammad Atif
     Ahmad, Nitin Saluja, Ms. Deepika Kalia, Ms. Vaishnavi, Keshav
     Khandelwal, Ms. Pranya Madan, Pankaj Kumar Modi, Advs. for the
     Appellant.
     Aniruddha Choudhury, Ms. Mandira Mitra, Ms. Tushita Ghosh, Rohit,
     Advs. for the Respondents.
[2024] 3 S.C.R.                                                        3

            Rajesh Monga v. Housing Development Finance
                     Corporation Limited & Ors.

                Judgment / Order of the Supreme Court

                               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 has concluded that the appellant is bound by
     the terms and 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 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
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     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 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 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
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            Rajesh Monga v. Housing Development Finance
                     Corporation Limited & Ors.

     insurer 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 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 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
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     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 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 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
[2024] 3 S.C.R.                                                               7

             Rajesh Monga v. Housing Development Finance
                      Corporation Limited & Ors.

     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, 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 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.
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          (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 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, 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
[2024] 3 S.C.R.                                                         9

            Rajesh Monga v. Housing Development Finance
                     Corporation Limited & Ors.

     demonstrate that it was a 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.


     Headnotes prepared by: Nidhi Jain                 Result of the case:
                                                        Appeal dismissed.