BEFORE THE BANKING OMBUDSMAN, C/O RBI, SAIFABAD, HYDERABAD

Between
Mrs. Una Sasirekha, W/o, Mr. Una Rajeswar Patro
Sashiraj Palace, Door No. 49-27-10,
Madura Nagar, Visakhapatnam—530 016 …………….............. Complainant

And
1) Bank of Baroda Main Branch, Visakhapatnam
represented by it’s Senior Branch Manager,
Door No. 30-15-76, Daba gardens,
Visakhapatnam—530 020

2) The General Manager,

Executive for Public Grievance
(Operations, Services & Planning)
Bank of Baroda-Head Office,
Suraj Plaza -1, 6th floor, Sayajiganj,
Maganwadi, Baroda-390005. ………….……………Respondents

Complaint filed against Bank of Baroda Main branch, Visakhapatnam

For charging prepayment penalty in Housing Loan A/C, taken over by SBI

The complainant respectfully submits her complaint as under:

1) That family members of complainant were the bonafide and valuable customer to the
Respondent No. 1. The family members of complainant were making banking transaction
with Respondent No. 1 for last 15 years. The family members of complainant were also
contributing a lot to the Income A/c of Respondent No. 1 by way of paying commission
for Demand Drafts issued by it for the business need of the family members of the
complainant and operating 2 no interest accounts i.e. current Accounts & some fixed
deposit accounts with the Respondent No. 1.

2) That for the business requirement of Shri Sunil Patro, S/o complainant approached the
Respondent No. 1 for working capital facility to M/S Kamadhenu Traders, which is a
proprietorship concern. Respondent No. 1 considered the request of Shri Sunil Patro,
Proprietor of M/S Kamadhenu Traders and sanctioned a working capital facility for a

1
limit of Rs.7.80 lacs in the form of BOB Byapar Scheme in the year 1999. Complainant
mortgaged the vacant land in plot No. 10, Survey No. 33, Maduranagar, Near
Sankaramatham, Allipuram Ward, Visakhapatnam owned by the complainant to the
Respondent No. 1 as collateral security for the aforesaid working capital facility.
3) That for family need complainant applied for Housing loan to the Respondent No. 1
for construction of residential House on the aforesaid vacant land vide her application
dated 05/05/2002. Considering her application Respondent No.1 pleased to sanction a
Housing Loan facility for Rs.10.00 Lacs payable in 120 months with 12 months
moratorium period and the loan facility was provided to the complainant on 10/06/2002
by way of Term Loan A/C 1144 with Respondent No.1.
4) That complainant started construction of house on the aforesaid plot in due course.
Considering her family need complainant intended to construct further more floors on the
constructed building and requested the Respondent No. 1 for additional Housing Loan of
Rs.10.00 lacs in the month of January 2003. However, it was declined by the Respondent
No. 1 even though the valuation of the mortgaged building was around Rs. 30.00 lacs.
5) That observing bare necessity of further construction in the same building, the
complainant approached State Bank of India at its housing loan mela on 15/02/2003 for
availing loan facility from it to satisfy complainant’s requirement. SBI considered the
request and pleased to sanction Rs. 10.00 lacs as additional loan on take over of existing
Housing Loan of Rs. 10.00 lacs with Respondent No.1.
6) That complainant was in need of fund for further construction of the building and SBI
delayed in releasing aforesaid loan facility; in this circumstance the complainant
approached Indian Overseas Bank for getting immediate loan facility at it’s Housing loan
mela on 29/06/2003. IOB also agreed to sanction aforesaid loan facility as agreed by SBI.
The complainant approached Respondent No. 1 to negotiate the course of release of
property papers of mortgaged property described in Para 2, deposited with Respondent
No. 1 for take over of aforesaid loan facilities of complainant and her son with
Respondent No. 1, by Indian Overseas Bank. In this circumstance, Respondent No. 1
agreed to provide additional Housing Loan Rs. 10.00 lacs to complainant which they had
previously declined and informed the complainant to submit an application in this regard.

2
Accordingly, complainant submitted one application and availed additional Housing Loan
of Rs. 10.00 lacs by way of Term Loan account No. 1037, on 21/07/2003.
7) That M/S Kamadhenu Traders was incurring loss in it’s business in 2003 and the
complainant had borrowed Rs. 8.00 lacs from Shri Sunil Patro, S/o Complainant and
Proprietor of M/S Kamadhenu Traders by way of family borrowing. The complainant
requested Respondent No. 1 to provide further Housing Loan of Rs. 10.00 lacs by which
she can repay back the family borrowing of Rs. 8.00 lacs to her son Shri Sunil Patro,
Proprietor M/S Kamadhenu Traders, which she had already utilized for construction and
furnishing of the building on the land described in Para 2 and in return Sunil Patro can
repay back the total dues of M/S Kamadhenu Traders to Respondent No. 1 and close the
account i.e. OD 4107 with the Respondent No. 1. But Respondent No. 1 declined to
provide further Rs.10.00 lacs Housing Loan as described hereinabove. Rather,
Respondent No. 1 was informed that the limit availed by M/S Kamadhenu Traders may
be transferred to some other firm, which signifies monopolistic attitude of Respondent 1.

8) That in response to previous correspondence with State Bank of India the complainant
got an offer from State Bank of India to Provide Rs. 30.00 lacs Housing Loan on the
above property by way of take over of Rs. 20.00 lacs Housing Loan from Respondent 1.
Compelled with negative response from Respondent No. 1 with regard to Rs. 30.00 lacs
Housing Loan as discussed in Para 7 and getting a positive response from State Bank of
India, complainant intended to switch over to State Bank of India and accordingly
requested to Respondent No. 1 to hand over all the property papers deposited with
Respondent No. 1 with regard to the mortgage created as per Para 2 on receipt of Rs.
20.00 lacs from State Bank of India and rest amount from the complainant by way of
cash. Accordingly, all the above loan accounts with Respondent No. 1 were closed on
25/09/2003 and complainant availed Housing Loan facility of Rs. 30.00 lacs with State
Bank of India, Dwaraka Nagar Branch, Visakhapatnam on the same day. However,
Respondent No. 1 charged Rs. 50,000/- as prepayment penalty in the above two
housing loan account, which was paid to them for closer of those account with them,
is unjust. This is only by way of coercion to a customer, which is voidable as per law.
Therefore, it was to be returned back to complainant on her request under Section 72 of

3
Indian Contract Act. However Respondent No. 1 is adamant to repay back the above
claim to the complainant.
9) That complainant also submitted her above complaint to Respondent No. 2 for
redressal of her grievance. However, Respondent No. 2 also expressed his inability for
waiver of aforesaid prepayment penalty paid to Respondent No. 1.

10) That Rs. 1000/- was debited from the Savings Bank account of the complainant i.e.
SB 17212 with the Respondent No. 1 as the document verification charges for above two
Housing Loan accounts on 25/09/2003 without the consent of the complainant. It is also
unjust to the complainant.
PRAYER
The complainant prays before Hon’ble Banking Ombudsman for an order against
Respondent No. 1 & 2 for recovery of Rs.50000/- (Rupees fifty thousand only) paid to
Respondent No. 1 as prepayment penalty, Rs. 1000/- (Rupees one thousand only) debited
from the SB A/C 17212 with Respondent No. 1, Rs. 5000/- (Rupees five thousand) as
cost and any other order as Hon’ble Banking Ombudsman thinks fit.

Place:
Date: COMPLAINANT

4
BEFORE THE BANKING OMBUDSMAN, C/O RBI, SAIFABAD, HYDERABAD

Complaint No. 03/2004

Between
Mrs. Una Sasirekha, W/o, Mr. Una Rajeswar Patro
Sashiraj Palace, Door No. 49-27-10,
Madura Nagar, Visakhapatnam—530 016 …………….............. Complainant

And
1) Bank of Baroda Main Branch, Visakhapatnam
represented by it’s Senior Branch Manager,
Door No. 30-15-76, Daba gardens,
Visakhapatnam—530 020

2) The General Manager,

Executive for Public Grievance
(Operations, Services & Planning)
Bank of Baroda-Head Office,
Suraj Plaza -1, 6th floor, Sayajiganj,
Maganwadi, Baroda-390005. ………….……………Respondents

Written Submissions by the complainant

The complainant most respectfully submits her Written Submission as follows:

The complainant denies all the facts stated in the version filed by the Respondent No. 1
excluding which are admitted in the complaint.

The copies of agreed terms & conditions of housing loan dated 06/05/2002 and
21/07/2003 as described in the version is not the agreement which are bilaterally agreed
with free consent; rather all are the monopolistic letter addressed to complainant, issued
by the Respondent No. 1 for acceptance under coercion and undue influence, for
providing Housing loan facility. Therefore it is voidable in nature, which is signed by the
complainant. So Complainant rescinds it and the amount recovered vide alleged terms
and condition dated 21/07/2003 is required to be returned to the Complainant U/s 72 of
the Indian Contract Act.

5
Alleged letter of terms & conditions dated 06/05/2002 (copy of which is enclosed with
the version of the Respondent No. 1) is not signed by the complaint. Therefore, the
prepayment penalty amount recovered from complainant vide hereinabove letter is illegal
and the amount collected by the Respondent No. 1 in this way is required to be returned
to the complainant.

The Version ‘The bank is incurring a lot of inconvenience due to the unilateral act of the
customer, that is why the banks are charging penal charges in case of full repayment’ is
strongly opposed. This is because most of the banks are not imposing such condition at
present. So it is not the bare need to impose such condition. Secondly, processing charges
and documentation charges have been collected from the complainant i.e. of Rs. 5,200/-
in toto, which compensate the expenses incurred by the Respondent No. 1 in
documentation and processing including the handling charges. The copy of statement of
account in both the account is enclosed as proof of it. Thirdly, the Respondent No. 1 has
charged the interest on the loan amount, by which the Respondent No. 1 has recovered
the required income on it’s investment i.e. Housing Loan facility provided to the
complainant. Prepayment of full loan facility with update interest by the complainant has
not made the Respondent No. 1 to incur any loss. Rather, it has facilitated the Respondent
No. 1 to reinvest the same in some other prudent/ potent projects.

It is also a monopolistic in nature of the Respondent No. 1 that when other bank i.e. State
Bank of India is providing the required Rs. 30.00 lacs Housing Loan facility on the same
project, the Respondent No. 1 has declined the same, which compelled the Complainant
to switch over to State Bank of India for availing Rs. 30.00 lacs Housing Loan facility
and prepayment of the total loan outstanding of Respondent No. 1 was made by State
Bank of India on 25/09/2003, by way of take over the aforesaid Housing Loan Facilities
from Respondent No. 1. This signifies the ulterior motive of the concerned official of the
Respondent No. 1.

It is also significant to submit that with the vindictive motive only the Respondent No. 1
has debited Rs. 1,000/- as the document verification charges, illegally from the Savings

6
Bank Account of the complainant with the Respondent No. 1. This is because no
document verification charge has been debited in the Housing loan account i.e. Term
Loan A/C 1144 since it’s operation from 10/06/2002. As per rule, if it is required to be
debited, then it should be debited prior to the closer of the account. However, the alleged
document verification charge for Housing Loan account has been debited from some
other account without the consent of the account holder. Thus it is unjust and illegal.
Therefore same is required to be repaid to the complainant.

In view of the above facts the complainant pays before the Hon’ble Banking Ombudsman
for an order against Respondents for recovery of Rs. 50,000/- (Rupees fifty thousand
only) the amount paid as the prepayment penalty and Rs. 1,000/- debited from the
Savings bank account with interest @ 10% per annum and Rs. 5,000/- as cost and any
other order the Hon’ble Banking Ombudsman deems fit.

Place: Visakhapatnam
Date:
COMPLAINANT

Encl: 1) copy of the statement of account for A/C No. 1144.

2) copy of the statement of account for A/C No. 1037
3) Copy of the debit advice of Rs. 1,000/- debited from SB A/C. 17212