TMI Blog2018 (12) TMI 1858X X X X Extracts X X X X X X X X Extracts X X X X ..... cate. The interim order dated March 17, 2017 put the respondent no. 1 upon notice that, should the decision of the respondent no. 1 to charge prepayment penalties found incorrect upon final hearing of the writ petition, interest as charged in respect of the credit card defaults, would be directed to be paid in respect of the deposit made in terms of such order until the refund thereof. Attention of the Court has not been drawn to any order of the Court modifying such order. The respondent no. 1 having been found not to be entitled to the prepayment charges and having received the sum of ₹ 13.35 lakhs in terms of the interim order dated March 17, 2017, the respondent no. 1 will proceed to refund the sum of ₹ 13.35 lakhs received from the petitioner, along with interest, calculated at the rate at which interest is calculated for credit card defaults, commencing from the date of receipt of the sum of ₹ 13.35 lakhs from the petitioner, till the date of refund thereof to the petitioner - Since the direction is for refund of money, the petitioner, amongst other reliefs, is at liberty to execute this order as a decree of the Court. Petition dismissed. - W.P. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bank may have on a borrower. He has drawn the attention of the Court to the subsisting interim order dated March 17, 2017 and has submitted that, if the Court is please to grant the relief as prayed for in prayer a of the writ petition, then, the bank should also be directed to refund the sum of ₹ 13.35 lakhs kept in deposit by the petitioner with the bank in terms of such interim order along with interest accruing on such deposit. He has submitted that, the petitioner be granted the reliefs as sought for. Learned Advocate appearing for the respondent no. 1 has submitted that, the petitioner cannot be treated as an individual borrower within the meaning of the RBI guidelines. He has submitted that, the petitioner cannot be treated as a consumer as, the petitioner had obtained the credit facilities for business purposes. The credit facilities being granted for commercial purposes, the petitioner cannot be treated as a consumer. Moreover, the credit facilities were granted in the name of the proprietorship firm. More so, the petitioner cannot be treated as an individual borrower. In support of his contentions that, an individual who has entered into business transactions c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following circumstances:- a) Default in repayment of loan instalments. b) Non submission/delayed submission of quarterly operative statement and half yearly fund flow statement. c) Non submission/delayed submission of monthly stock/book debts statements and other financial data. d) Excess borrowing in the Cash Credit Account. e) Default in borrowing covenants. According to the petitioner, it had faced various difficulties in enjoying the credit facilities as sanctioned. According to the petitioner, the respondent no. 1 had delayed the sanction process and that, the rate of interest charged by the respondent no. 1 was much higher than the market rate. Apparently, the petitioner approached Standard Chartered Bank who had agreed to take over the credit facilities. Standard Chartered Bank had taken over the credit facilities from the respondent no. 1. It is during the process of such taking over of the credit facilities that, the respondent no. 1 had contended that, the petitioner was liable to pay prepayment charges. The petitioner had disputed such levy. The petitioner had thereafter filed the present writ petition. In the present writ petition, an i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arges for non-maintenance of minimum balances in any inoperative account. Reserve Bank of India by its circular dated May 7, 2014 dealt with the levy of foreclosure charges/prepayment penalty on floating rate term loans. The circular referred to in Part B of the first bi-monthly monetary policy statement, 2014 announced on April 1, 2014. It noted that, such bi-monthly monetary policy statement indicated that, in the interest of the consumers, bank should consider allowing their borrowers the possibility of prepaying floating rate term loans without any penalty. The Reserve Bank of India by such circular advised the banks that, they will not be permitted to charge foreclosure charges/prepayment penalties on floating rate term loans sanctioned to individual borrowers with immediate effect. Therefore, at least with effect from May 7, 2014, banks are not entitled to charge foreclosure/prepayment penalties on floating rate term loan sanctioned to individual borrowers from such date notwithstanding the terms of the sanction. It has been contended that, the petitioner being a sole proprietorship firm cannot be considered to be an individual borrower coming within the purview of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that, any person buying goods or services for commercial use will not be treated as the consumer in any sphere. M/s. Sanjeev Kumar Brothers (supra) and Dr. Hemant Anr. (supra) have to be understood in such context. Reserve Bank of India, when it is advising the banks, by its circular dated May 7, 2014, not to charge any foreclosure charges/prepayment penalties on all floating term loans sanctioned to individual borrowers, with immediate effect, it is not distinguishing between an individual borrower who has obtained the term loan for business exploitation or otherwise. Term loans are granted by banks, both for purchasing a home as also for commercial activities. There being no such distinction in the circular dated May 7, 2014, I am not minded to read the definition of 'consumer' as obtaining in the Consumer Protection Act, 1993 into such circular. They operate in different spheres. In the facts of the present case, the petitioner having foreclosed the credit facilities enjoyed by the petitioner from the respondent no. 1 in October 2016, such foreclosure is governed by the circular dated May 7, 2014 issued by Reserve Bank of India. With effect from May 7, 2014 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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