SECTION 88 & ORDER 35 OF CPC- INTERPLEADER SUIT

 

Section 88 & ORDER 35 OF CPC- INTERPLEADER SUIT

 

The Section 88 of Code of Civil Procedure as well as Order XXXV of the said Code contains the provisions relating to Interpleader suits. Whereas, Section 88 contains the criteria and conditions laid down in this regard and also specifies the essential elements of an interpleader suits, Order XXXV contains the procedure. In nutshell, the interpleader suit is a legal safeguard to a debtor and aimed at protecting the rights of individuals and entities who may find themselves caught in the midst of conflicting claims and seeking their due discharge from liability. The details in this regard shall be further delineated below.

A suit cannot be considered an interpleader suit under the Code of Civil Procedure, if the defendants do not assert conflicting claims against each other. The essential ingredients of it thus shall be that the plaintiff must acknowledge the title of one of the defendants or be willing to make payment or deliver the property to the said defendant.

The principles as contained in Section 88 of Code of Civil Procedure may be referred to before proceeding further.

Section 88 of Code of Civil Procedure

Where two or more persons claim adversely to one another, the same debts, sum of money or other property, movable or immovable, from another person, who claims no interest therein other than for charges or costs and who is ready to pay or deliver it to the rightful claimant such other person may institute a suit of interpleader against all the claimants for the purpose of obtaining a decision as to the person to whom the payment or delivery shall be made and of obtaining indemnity for himself:

Provided that where any suit is pending in which the rights of all parties can properly be decided, no such suit of interpleader shall be instituted.

The criteria are as under:

(i)     Subject matter:

There must be some property involved and may relate to similar nature and may include sums of money or moveable /immoveable property capable of being handed over.

(ii)   Multiple Claims: 

There are more than one party who must assert competing claims against each other regarding the common property.

(iii)  Disinterested Claimant: 

Generally, the plaintiff who brings out a lis before a competent court shall be interested party, however, it is not so, in interpleader suit, who may be initiating the suit, but  shall have no claim in the suit property and the plaintiff shall merely seek to ascertain as to who will be the claimant so as to enable the plaintiff to deliver the property or sums to such claimant on proper discharge. No doubt, what is inherent in it is that plaintiff must be in a capacity to deliver the goods to the rightful claimant.

(iv)  Interpleader Action: 

A person claiming property may commence an interpleader action against all the claimants involved. While, the plaintiff shall be seeking to determine as to which claimant is entitled to receive payment or possession of the property and proper discharge of plaintiff from any liability.

               ORDER 35 OF CODE OF CIVIL PROCEDURE

The Order 35 of Code of Civil Procedure may also be referred to in this context, since the principles and procedure of interpleader suit is also contained in it.

Order 35 CPC

1.   Plaint in interpleader suit

In every suit of interpleader the plaint shall, in addition to the other statements necessary for plaints, state-

(a) that the plaintiff claims no interest in the subject-matter in dispute other than for charges or costs;

(b) the claims made by the defendants severally; and

 

(c) that there is no collusion between the plaintiff and any of the defendants.

2.      Payment of thing claimed into Court

Where the thing claimed is capable of being paid into Court or placed in the custody of the Court, the plaintiff may be required to so pay or place it before the he can be entitled to any Order in the suit.

In the interpleader suit the procedure of hearings are contained in Rule 4 of CPC.

 

4. Procedure at first hearing

(1) At the first hearing the Court may-

(a) declare that the plaintiff is discharged from all liability to the defendants in respect of the thing claimed, award him his costs, and dismiss him from the suit; or

(b) if it thinks that justice or convenience so require, retain all parties until the final disposal of the suit.

(2) Where the Court finds that the admissions of the parties or other evidence enable it to do so, it may adjudicate the title to the thing claimed..

(3) Where the admissions of the parties do not enable the Court so to adjudicate, it may direct-

(a) that an issue or issues between the parties be framed and tried, and

(b) that any claimant be made a plaintiff in lieu of or in addition to the original plaintiff, and shall proceed to try the suit in the ordinary manner.

The Rule 6 is as under:

6. Charge for plaintiffs costs

Where the suit is properly instituted, the Court may provide for the costs of the original plaintiff by giving him a charge on the thing claimed or in some other effectual way.

 

Clearly, in terms of the proviso of Section 88 of CPC, in case any legal proceedings are ongoing relating to title or interest between the parties, then, till such determination, interpleader suit cannot be instituted.

LAW

(i)          In one of the earliest case captioned as Asan Ali Vs Sarada Charan Kastagir SA No. 1625 & 1686 of 1919, Calcutta High Court has held in para 11 that:

“11. In case of Nanji Koer Vs Unatul Patul 13 IND CAS 40 in the year 1911 “A” brought a suit against “B” for rent. The defence was that she held the land as tenant of “C”.  “B’s defence was investigated & overruled on merit and a decree was passed in favor of “A”.  “B” then  brought a suit for declaration that “C” and A” was her landlord. It was held that the suit being interpleader suit was not maintainable”.

(ii)          The Bombay High Court in a matter reported as Mangal Bhikaji Nagpase vs. State of Maharashtra (1997) 99 BOMLR 91A

 

“7. It will have, therefore, to be seen as to whether, firstly, the suit as filed was maintainable. It will be seen that in the present suit, the plaintiff is not an outsider. In an interpleader suit, the contest is between the defendants for title and the plaintiff has got nothing to do with that contest. In this respect, Rule l(a) or Order 35 of the Code of Civil Procedure mandatorily requires the plaintiff to state that he claims no interest in the subject matter in dispute other than for charges or costs. Now, if we were to see the plaint in the present matter, such statement is very conspicuously absent and, indeed, even if there is any trace of such a statement by stretching the averments, the subsequent application made vide Exhibit 32 gives a complete goby. In that application, the plaintiff displays a marked interest in the suit property. This position is obtained from Rule 4 also where, in the very first hearing, the Court can grant a declaration discharging the plaintiff from all the liability of the defendants and ask the defendants to interplead, by framing necessary issue/s. Where, therefore, the plaintiff claims any interest in the concerned property, the interpleader suit has to necessarily fail”

 

(iii)        The Patna High Court in a matter captioned as & reported as Syed Shamshul Haque v. Sitaram Singh & Ors. AIR 1978 PAT 151

“In our view, the only option given to the court in Sub-rule (2) and Sub-rule (3) of Rule 4 is either to decide the question of title on the basis of admissions of the parties or on the basis of evidence adduced in ordinary manner in any suit, after framing issues and transposing any of the claimants as plaintiff. In the instant case, the plaintiff, respondents 1 to 3 had been transposed to the category of plaintiffs from which it is obvious that the court was not in a position to adjudicate on the basis of admissions of any of the parties and it proposed to proceed under Sub-rule (3) of Rule 4 of Order XXXV of the Code. The trial Court had even framed issues on the basis of the pleadings saying as to whether plaintiffs Nos. 1 to 3 or defendant No. 2 are entitled to the paddy crops in dispute. Of course, it further added as to which of the two sides had been in possession of the disputed land. In the instant case, the dispute relating to the paddy crops from the land which itself was being claimed by both the parties, cannot be decided without deciding title to the land in question. In our opinion, in view of the mandate under Sub-rule (3) of Rule 4 of Order XXXV, it was incumbent upon the trial court to try the suit in the ordinary manner, which means it had also to decide the question of subsisting title in respect of the land from which the crops in question have been harvested”. 

(iv)       The Punjab & Haryana High Court in a matter reported as Jugal Kishore & Anr. v. Bhagwan Das  AIR 1990 P&H 82 on closer analysis of Order XXXV Rule 5 of CPC has held as under:

“According to the said provisions, the tenant could not sue his landlords for the purposes of compelling them to interplead with any persons other than persons making claim through such principals or landlords. Admittedly, in the present case defendants Nos. 4 to 19 are not claiming through the landlords defendants Nos. 1 to 3. They claim themselves to be the owners of the shop in dispute and have denied the rights of defendants Nos. 1 to 3. In these circumstances, the said provisions of O.35, R. 5, CPC, were clearly attracted and the tenant here could not maintain the suit against the landlords i.e. defendants Nos. 1 to 3 compelling them to interplead with defendants Nos. 4 to 19. In Yeshwant Bhikaji’s case (AIR 1940 Bom 414) (supra), it was held that "a tenant is not permitted to deny his lessor's title at the commencement of the tenancy and, therefore, in order that an inter-pleader suit may lie, the claim of the party other than the landlord must be consistent with the title of the landlord at the commencement of the tenancy in question".

(v)         The Punjab & Haryana High Court in a matter captioned as Neeraj Sharma v. The District Sangrur Khadi Gram Civil Revision No. 3973 of 2001 (O&M) have clarified that agents and tenants are not allowed to file interpleader suits against their principals and landlords, as per the principles of Order XXXV Rule 5 of the Code of Civil Procedure. Thus, what follows is that any claim, right and interest in the property without reference to the landlord and demanding rent, shall not be maintainable.

(vi)       The Supreme Court in a matter reported as Rohit Singh Vs State of Bihar ( Now state of Jharkhand) (2006) 12 SCC 734, has held that a counter-claim directed solely against the co-defendants cannot be maintained. The Apex Court has further stated that by filing the counter-claim, the litigation cannot be converted into some sort of interpleader suit. The Apex Court stated in para 21 as follows;

“21. Normally, a counter-claim, though based on a different cause of action than the one put in suit by the plaintiff could be made. But, it appears to us that a counter-claim has necessarily to be directed against the plaintiff in the suit, though incidentally or along with it, it may also claim relief against the co-defendants in the suit. But a counter-claim directed solely against the co-defendants cannot be maintained. By filing a counter-claim the litigation cannot be converted into some sort of an interpleader suit. Here, Defendants 3 to 17 had no claim as against the plaintiff except that they were denying the right put forward by the plaintiff and the validity of the document relied on by the plaintiff and were asserting a right in themselves. They had no case even that the plaintiff was trying to interfere with their claimed possession. Their whole case was directed against Defendants 1 and 2 in the suit and they were trying to put forward a claim as against the State and were challenging the claim of the State that the land involved was a notified forest in the possession of the State. Such a counter-claim, in our view, should not have been entertained by the trial Court.”

_{The aforesaid discussion if seen in a  broad canvas, then, what emerges is that  whereas principles of interpleader suit is contained in section 88 of Code of Civil Procedure, while procedure is entailed in Order XXXV of CPC  The object of the provision is to accord a safeguard to the such honest individuals who seeks to discharge their liability without being condemned in as much as such persons does not claim any vested interest in the property  and the payment to the claimant itself may be in dispute. It is thus imperative that such persons are accorded leverage and protection from likely excessive costs due to delay. The appellate remedy is also available to any person under Order XLIII of CPC, in case he does not succeed in the court at the first instance.}

                                                                           _-------

_{Anil K Khaware}

_{Founder & Senior Associate}

_{Societylawandjustice.com}

CREDIT CARD & HIGH RATE OF INTEREST: NOT A CONSUMER DISPUTE

 

CREDIT CARD & HIGH RATE OF INTEREST: NOT A CONSUMER DISPUTE

The Supreme Court has recently on 20^th December 2024 has categorically ascertained the details in respect of payment of interest by the credit card holder to the concerned bank/company in a matter captioned as HONGKONG AND SHANGHAI BANKING CORP. LTD. Versus AWAZ & ORS. CIVIL APPEAL NO. 5273 OF 2008. Whether the alleged excessive rate of interest shall fall within the domain of Consumer Protection Act 1986 or the amended Act? The bunch of appeals has arisen out of the common Judgment & Order dated 07.07.2008 passed by the National Consumer Disputes Redressal Commission, Delhi (NCDRC) in Complaint Case No. 51/2007 and Revision Petition No. 1913/2004.

 

The National Commission proceeded with the prima-facie view that the charging of interest at rates ranging from 36% to 49% p.a. is exorbitant and amounts to the exploitation of the borrowers/debtors and is usurious, had framed the following issues:

i. Whether the Reserve Bank of India (RBI) is required to issue any circular or guidelines prohibiting the Banks/Non-Banking Financial Institutions/money lenders from charging interest above a specific rate?

ii. (a) Whether banks can charge the credit card users interest at rates from 36% to 49% per annum if there is any delay or default in payment within the time specified?

(b) Whether interest at the above-stated rates amounts to charging usurious rates of interest?

 

The appellant (HSBCL) have challenged the correctness of the Impugned Order dated 07.07.2008, whereby the National Commission has held that the charging of interest at rates beyond 30% by the banks/non-banking financial institutions, from credit card holders, upon delay or default in payment, constitutes an unfair trade practice and that penal interest could be charged only once for one period of default and the same shall not be capitalized. The conclusive observation under challenge, passed by the National Commission is as under:

(i) Charging of interest rates in excess of 30% p.a. from the credit card holders by banks for the former’s failure to make full payment on the due date or paying the minimum amount due, is an unfair trade practice.

(ii) Penal interest can be charged only once for one period of default and shall not be capitalized.

(iii) Charging of interest with monthly rests is also an unfair trade practice.

The Appellants before the Supreme Court have assailed the aforesaid finding of NCDRC and have contended that determining the reasonability and ‘fixing of the maximum or the minimum rates of interest’, is the exclusive function of the RBI, a statutory authority responsible for the regulation of the Indian Banking system. It was submitted by the appellant that the observations of the NCDRC is in the teeth of the statutory bar under section 21 A & 35 A of the Banking Regulation Act, as it expressly bars courts/tribunals to re-open transactions between banks, on the question that the rates of interest are excessive and empowers the RBI to formulate directions, as befitting the public interest, proper management and banking policies of the country.

It was thus further contended that the order passed by the NCDRC have encroached the statutory domain of the RBI and that is against the mandate of the Constitution and contrary to the legislative intent of the Reserve Bank of India Act, 1934. It was also submitted that in the guise of public interest litigation (PIL) a consumer complaint was preferred and the same is not in consonance with the prescription of Complaint u/s 12 r/w 13 of the Consumer Protection Act, 1986 and as such the consumer complaint was wrongly entertained by NCDRC and the same is beyond its inherent jurisdiction.

The original complainants before the NCDRC, arrayed before the Supreme Court as Respondents nos. 1 to 3  before the NCDRC, have also preferred a cross-Appeal bearing CA. 6679/2008, against the Impugned Judgment dt. 07.07.2008 contending that the NCDRC has only partly allowed their complaint, and ought to have also adjudicated upon a benchmark restriction for the rates of interest charged by banks from credit card holders. It is contended that the rates of interest charged by the banks from its credit cardholders is usurious and exploitative in nature, and in contravention of the circulars issued by the Reserve Bank of India. The Complainants claim that they represent the public at large, as a voluntary consumer association voicing against the usurious rate of interest charged by the banks, which is a deficiency in service in banking and constitutes an unfair trade practice, in terms of the Consumer Protection Act, 1986.

 

It is argued on behalf of the Complainants that there ought to have been a Notification passed by the Reserve Bank of India, fixing a maximum ceiling rate of interest for all banks, and in pursuance thereto had approached the National Commission by filing the Consumer Complaint no. 51 of 2007. It was thus prayed that the Appellant be permanently restrained from charging excessive interest and service charges, de-hors the Prime Lending Rate, and the directions issued by the Reserve Bank of India. It was further prayed that all banks who have issued credit cards to the Respondent no. 3 and members of the Respondent no.1 be directed to refund the amount of interest, claiming the same to be more than Rs. 5 Crores.

 

Submissions of appellants/BANKS

(i)          It was submitted that the Appellant, and Respondent nos. 5, 6 and 7 are foreign banks carrying on the business of banking in India under the provisions of the Banking Regulation Act, 1949 and are scheduled commercial Banks as notified by the Reserve Bank of India. The allegations raised by the Complainant that the rate of interest, charged by banks from its credit card holders, constitutes an unfair trade practice, is erroneous. It was submitted that there is no whisper to suggest that adopting of any unfair methods, or deceptive means to promote the sale, use or supply of any goods or for providing any service. As banks have neither indulged in any unfair trade practice nor have done anything wrong so as to bring them within the trap of Section 2(r)(l)(i) to 2(r)(l)(x).

 

(ii)        The NCDRC has barely acted on the assumption that banks are indulging in unfair trade practices without any corresponding facts to that effect. The NCDRC has observed that rates of interest charged by banks is an unfair trade practice, while ignoring as to what are the scope of the definition under section 2(1)(r) of the Act. The assumption that alleged charging of  excessive interest being unfair trade practice in as much as the Banking Regulation Act, 1949 requires that the RBI shall discharge certain functions in the public interest and if the RBI does not discharge such functions, it would amount to unfair trade practice, is erroneous.

(iii)       The appellant had submitted that administrative policy decisions as regards the determination of interest on credit cards and the regulation of the banks are within the specific statutory domain of the RBI. The List I of Seventh Schedule of the Constitution of India had conferred upon the RBI, the powers of subordinate legislation to formulate directives, circulars, and administrative policies, having statutory force and being binding on all Banks from time to time1 Moreover, the Preamble of the Reserve Bank of India Act, 1934 enlists the endeavour of the RBI to " secure monetary stability in India, having a modern monetary policy framework to meet the challenge of an increasingly complex economy, while maintaining price stability is the endeavour of the Reserve Bank of India.

(iv)          The observations by the NCDRC that the rate of interest, in excess of 30% per annum is an unfair trade practice, is per se illegal and transgression to the domain of RBI and runs contrary to the legislative intent of the Banking Regulation Act, 1949.

(v)         The NCDRC can’t supplant itself as the regulator of the banking systems in the place of RBI, since, there is a clear bar under section 21A of the Banking Regulation Act, 1949. The section 21A and 35A of the Banking Regulation Act, 1949 are enabling provisions for the RBI and mandate it to give directions/guidelines to banks/banking companies, in the public interest. Section 21A in specific, creates an embargo upon courts/tribunals to re-open and adjudicate upon transactions on the ground that the rate of interest is excessive.

(vi)       The rates of interest on credit card dues are neither usurious nor do they constitute a practice that is unfair, arbitrary or unreasonable. The practice of charging any interest on credit cards dues is such that credit card generally carry an interest rate on an annualised basis (Annual Interest Rate-APR). The interest due is calculated only on unpaid balances. If any customer pays the entire amount due within the due date of payment, they are not charged any interest. The penalty or cost of such interest is incurred only, if there is default and that is necessary with a view to costs incurred by the bank of non-performing loans or bad debt and to meet acquisition costs etc and hence it is not unreasonable.

(vii)     The interest is charged by the bank in accordance with the circulars issued by the RBI and cannot be construed as unfair trade practice, as the interest is paid, only, by those who default in making payments of their credit-card bills, after having reaped the benefits of free credit for specified periods ranging between 17-55 days. Those, who do not make payment of the entirety of their dues on each bill, and then on the balance dues has to be saddled with the terms of payment. When the terms and conditions for charging of rates of interest or charges applicable thereto are duly informed to all customers by the bank and further when the customers are duly conveyed the standard set of conditions for the issuance and usage of credit cards and responsibilities of the card holders are duly defined and when all relevant information as regards fee, charges applicable on credit cards, finance charges and withdrawal limits are provided at the time of the generation of each monthly bank/billing statement, thus, no unfair trade practices could be alleged, more so, from the day one the customer is made aware, that, in the event of delay in making  payment, liability of interest payment shall arise.

COMPLAINANT’S VERSIONS

(i)          The terms and conditions laid down by the Banks, at the time of issuance of the credit cards, constitute a unilateral, and one-sided contract. The characteristics associated with a contract, such as freedom of contract and consensus are absent from such contracts, which makes such terms unfair and unconscionable. The term “unfair contracts” has been defined under section 2(46) of the Consumer Protection Act, 1986 and include all such contracts that have terms which cause significant change in the rights of such consumer. It is submitted that the unilateral terms of the banks, in charging such excessive rates of interest, is such an unfair contract.

(ii)   The banks have been charging rates of interest on credit cards in excess of their Benchmark Prime Lending rate (BPLR) on credit limits of less than Rs. 2 Lakhs, in contravention to the annual policy 2003- 2004.

(iii)          A person aggrieved by the excessive rates of interest cannot be rendered helpless and by virtue of section 2 of the Banking Regulation Act, 1949, the operation of other laws is not expressly barred. It is the grievance of the Complainants that since the person who opens a bank account with a Bank, is a consumer of the bank’s facilities, the provisions of Consumer Protection Act, 1986 and the Consumer Forums are the necessary medium for grievance redressal.

CONTENTIONS OF RBI

On behalf of the RBI, it is submitted that in terms of the regulatory guidelines issued vide Master Direction-Credit Card & Debit Card-Issuance and Conduct dated April 21, 2022 as on March 07, interest charged on credit cards shall be justifiable having regard to the cost incurred and the extent of return that could be reasonably expected by the card user. Moreover, it is also canvassed on behalf of RBI after placing reliance on L.Chandra Kumar vs Union of India & Ors. [1997] 3 SCC 261 that whereas the  Supreme Court under Article 32 and the High Courts’ under Article 226 of the Constitution of India  have the power of judicial review of statutory instruments. It is not within the executive domain of the National Commission to judicially review the circulars/directives and hold that the policy contained therein is invalid. The National Commission is bound to accept the policy contained in the circulars as valid and cannot question the policy decision of the Reserve Bank not to impose a ceiling on the rate of interest to be charged by the Banks on the credit card transactions.

                              FURTHER ANALYSIS

(1) The Supreme Court in a matter captioned as Keshav Lal Khemchang & Sons Pvt. Ltd & Ors. Vs Union of India [2015] 4 SCC 770 has held that the Parliament of India, under List I of the Seventh Schedule of the Constitution of India had conferred upon the Reserve Bank of India, the powers of subordinate legislation to formulate directives, circulars, and administrative policies, having statutory force and being binding on all Banks from time to time.

 

(2)  The Supreme Court in the Central Bank of India Vs Ravindran [2002] 1 SCC 367 has observed that “With effect from 15.2.1984, Section 21A has been inserted in the Act, which takes away power of the court to reopen a transaction between a banking company and its debtor on the ground that the rate of interest charged is excessive. The provision has been given an overriding effect over the Usurious Loans Act, 1918 and any other provincial law in force relating to indebtedness. According to Supreme Court all transactions, that may not be squarely governed by such circulars, the RBI directives may be treated as standards for the purpose of deciding whether the interest charged is excessive, usurious or opposed to public policy.

(3) The Supreme Court in Pratibha Pratisthan Vs Canara Bank (2017) 3 SCC 712 has held that a trust, whether registered under the Indian Trust Act, or the State Trust Registration Act, is not a person ‘person’ as defined under Section 2(1)(m) of the Consumer Protection Act, 1986, and & therefore not a consumer and consequently cannot invoke provisions or file a consumer dispute under the provisions of this Act

FINDING OF SUPREME COURT

The Supreme Court has held in Hongkong & Saanghai Banking Corporation (Supra) In Para no.59, 65, and 66 are as under:

“59. In addition, we are also of the considered view, that an endeavour to cap the rate of interest charged by banks and dictating the need for a Benchmark Prime Lending Rate, drawing parallels with other economies across the world, whilst failing to trust the prudence of the Reserve Bank of India which has been entrusted with the fundamental responsibility of regulation of the monetary system and banking business is unwarranted.

 

“65. Therefore, when a person signs a document which contains certain contractual terms, that normally parties are bound by such contract; it is for the parties to establish an exception in a suit. When a party to the contract disputes the binding nature of the signed document, it is for him to prove the terms, in the contract, or circumstances in which he came to sign the documents, need to be established20. Hence, the National Commission had no jurisdiction to re-write the said terms of the contract entered between the banks and the credit cardholders, which the parties have mutually agreed to be bound by”.

 

“66.     Even otherwise, it is not the case of the Complainants or as adjudicated by the National Commission, that the decision by the Reserve Bank of India, being a statutory authority whilst imposing interest acts contrary to public good, public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations”.

 

The Supreme Court in Homgkong & Saanghai Banking Corporation (Supra) has also referred to in para 67 as under:

67. In addition, thereto, in the case of Colgate Palmolive (India) Ltd. Vs MRTP Commission [2003] 1 SCC 129, had laid down five ingredients before a trade practice could be an “unfair trade practice”, as under:

(1) There must be a trade practice [within the meaning of Section 2(u) of the Monopolies and Restrictive Trade Practices Act].

(2) The trade practice must be employed for the purpose of promoting the sale, use or supply of any goods or the provision of any services.

(3) The trade practice should fall within the ambit of one or more of the categories enumerated in clauses (1) to (5) of Section 36A

(4) The trade practice should cause loss or injury to the consumers of goods or services.

(5) The trade practice under clause (1) should involve making a statement whether orally or in writing or by visible interpretation.

 

In para 69 therefore it is concluded as under:

 

“69. In the present context, the pre-conditions of ‘deceptive practice’ and unfair method’ are manifestly absent. The Banks have in no manner made any misrepresentation, to deceive the credit card holders. Upon availing the facility of the credit cards, the customers, are made aware of ‘the most important terms and conditions’, including the rate of interest, that shall be charged by the Banks. Even on merits, the Reserve Bank of India, has made it clear that there exists no material on record, to establish that any bank has acted contrary to the policy directives issued by the RBI. Even otherwise, there is not even a single averment so as to establish how the charging of rates of interest upon the default by credit card holders, without a standardized rate, is usurious and constitutes an unfair trade practice. The mere inflation in the rates of interest cannot be construed as a practice, intended to cause loss or injury”.

 

Therefore, the Supreme Court has held that the question of directing the RBI to act against any bank does not arise, in the facts and circumstances of the present case. Thus, it was also held that there is no question or need of any direction to the RBI to impose any cap on the rate of interest, either on the banking sector as a whole, or in respect of any one particular bank, contrary to the provisions contained in the Banking Regulation Act, and the circulars/directions issued thereunder. The order passed by the NCDRC in Awaz & Ors. Vs Reserve Bank of India was therefore set aside and appeal filed by the bank stands allowed.

                                           ------

                                  Anil K Khaware

Founder & Senior Associate

Societylawandjustice.com