K. SURESH Vs. ASSOCIATES INDIA FINANCE SERVICES LTD.

JUDGEMENT

(1.) THE application is filed under Section 45QA of the Reserve Bank of India Act, 1934 ("the Act") seeking directions from this Bench to refund the excess amount of interest Rs. 1,06,326 collected, together with interest at the rate of 9 per cent. per annum from November 22, 2003, till the date of payment.

(2.) SHRI P.C. Harikumar, learned Counsel for the applicant in support of the pleadings submitted that the applicant borrowed a sum of Rs. 3,85,588 on July 10, 2002, as against the sanctioned loan of Rs. 4,00,000. The said loan shall be repayable in 10 years commencing from August 5, 2002 and the interest to be calculated at the rate of 9 per cent. per annum on the diminishing balance method. The applicant paid 15 instalments of Rs. 8,269 regularly. The respondent -company even after receipt of Rs. 1,40,573 (Rs. 8,269 x 17 instalments) as against the loan of Rs. 4,00,000. The respondent demanded further a sum of Rs. 5,57,326 without any basis or calculations. The applicant had paid the money and got released the documents mortgaged with the company. As per calculations the applicant has to pay a sum of Rs. 4,51,000 only, however the respondent -company has collected Rs. 5,57,326, hence the applicant had paid an excess of Rs. 1,06,326. Learned Counsel submitted that as per the provisions laid down for nidhi companies they should not collect interest more than 9 per cent. per annum if the loan is obtained on the scrutiny of mortgage of property. Thus, the respondent -company has collected excess interest by violating all norms, regulations and notifications of the RBI. In view of the above, he requested this Bench to direct the respondents to refund the excess amount of Rs. 1,06,326.

(3.) IT is a fact that the applicant having availed a sanctioned loan of Rs. 4,00,000 from the respondent-company in June 2002, vide loan agreement No. 870944 which the applicant was liable to repay along with interest thereupon by way of equated monthly instalments. As per the terms of the agreement, mutually agreed upon between the applicant and the respondent-company the said loan amount was to be repaid along with the interest computable at the rate of 22 per cent. per annum. The applicant has foreclosed the said loan. The contention of the applicant that the respondent assured that after payment of 15 instalments the instalment amount would be reduced and the interest would be charged at the rate of 9 per cent. per annum is totally false and devoid of any merit. On the contrary it is against the written stipulations as envisaged in the loan agreement executed between the applicant and the respondent -company. In view of these reasons the application is devoid of merits and liable to be dismissed.