Anil Bansal Vs. Indiabulls Housing Finance Limited. and Others

Case No. 34 of 2023 Page 1 of 10 COMPETITION COMMISSION OF INDIA Case No. 34 of 2023 In Re: Anil Bansal Informant Director of M/s Karmyogi Hotels & Buildcon Pvt. Ltd. Office at: 1013, New Delhi House, Barakhamba Road, New Delhi And Indiabulls Housing Finance Limited Mr. Sameer Gehlaut, Ex-Chairman Mr. Subhash Sheoratan Mundra, Chairman Mr. Gagan Banga, Vice-Chairman & Managing Director Mr. Ashwani Kumar Hooda, Deputy Managing Director, Mr. Sachin Chaudhary, Executive Director & Chief Operating Officer Mr. Mukesh Garg, Chief Financial Officer Mr. Ashwin Mallick, Head, Liabilities & Treasury Mr. Ramnath Shenoy, Head, Analytics & Investor Relations Mr. M.S. Walia, National Sales Head Mr. Hemal Zaveri, Head, Banking Mr. Rajiv Gandhi, Head, Commercial Credit Mr. Somil Rastogi, Chief Compliance Officer Mr. Naveen Uppal, Chief Risk Officer Mr. Shailesh Kumar Yadav, Collections Head, Mortgages Mr. Niharika Bhardwaj, Head, Human Resources Mr. Mukesh Chaliha, Head, Operations Mr. V Vijay Kiran,Head, Credit (Retail) Mr. Vineet Jaiswal President, Legal All other Directors/Executives, Senior Officers/Persons involved in business of M/s Indiabulls Housing Finance Ltd. Opposite Parties 1 to 20 All at 5th Floor, Building No. 27, KG Marg, Connaught Place, New Delhi – 110001 Also at: A/34, IInd Floor Lajpat Nagar II New Delhi - 110024 Case No. 34 of 2023 Page 2 of 10 CORAM Ms. Ravneet Kaur Chairperson Mr. Anil Agrawal Member Ms. Sweta Kakkad Member Mr. Deepak Anurag Member Order under Section 26(2) of the Competition Act, 2002 1. The present Information has been filed by Mr. Anil Bansal, director of M/s Karmyogi Hotels & Buildcon Ltd (‘Informant’) under Section 19(1)(a) of the Competition Act, 2002 (‘Act’) alleging contravention of the provisions of Section 3(1), 3(2), 4(2)(a)(ii) and 4(2)(c) of the Act by Indiabulls Housing Finance Limited (‘OP-1’) and its officers (OP-2 to OP-20), all collectively referred to as ‘other OPs’. OP-1 and other OPs are collectively referred to as ‘OPs’. 2. OP-1 is stated to be a company that claims expertise in providing loans against property. Other OPs are the ex-Chairman, Chairman, Vice Chairman, Managing Director, Executive Director, Financial Officer, and other officers of OP-1 and are/were responsible for the day-to-day business operations of OP-1. These individuals are alleged to have been directly involved in the promotion, sales and marketing activities of OP-1. Facts and Allegations as stated in the Information 3. The Informant has alleged that it was induced to believe by the OPs through misleading and deceptive advertisements that they are a prominent entity offering loans against property at the most favourable interest rates. 4. Based on the representations and advertisements made by OP-1, the Informant entered into an agreement to avail a Loan against Property (LAP) at a floating rate of interest from OP-1. It availed two LAP facilities. The first loan was sanctioned on 01.03.2013 Case No. 34 of 2023 Page 3 of 10 at an annual interest rate of 13.25% per annum (‘First Loan’) for which an Equated Monthly Instalment (‘EMI’) amount of ₹3,21,180/- was fixed; the period of repayment being 120 months. The Informant availed another LAP facility at a floating rate of interest of 13.25% per annum from OP-1 on 01.06.2013 (‘Second Loan’). The First Loan and Second Loan are collectively referred to as ‘Loans’. EMI for second loan was fixed at ₹60,316/- with a total repayment period of 121 months. 5. The Informant received various email communications during 2013 to 2023 whereby OP-1 is alleged to have increased its benchmark rate/Floating Reference Rate (LFRR). 6. During the period, the Informant sent an email to OP-1 on 30.04.2015, wherein the Informant requested OP-1 to furnish the loan statements for both the Loans since he intended to settle the respective accounts. The Informant again forwarded the said email to OP-1 on 01.06.2015. The Informant sent similar emails on 27.04.2016, 19.07.2016, 14.06.2017, 19.06.2017, 18.09.2017, 23.10.2017 and 25.03.2023 to the OP reiterating its request to furnish the loan statements/clearance certificate for the Loans in order to settle the respective accounts or otherwise reduce the exorbitant amount of rate of interest charged from the Informant. Despite these requests, OP-1 neither provided the Informant with account statement for the Loans nor communicated the outstanding loan amount payable by the Informant. 7. The Informant lodged criminal complaints against OP-1 in June 2018 over frequent increase in interest rates on loan accounts on account of breach of trust. On 13.05.2019, the Informant also sent a legal notice to furnish the statement of accounts. 8. The Informant has alleged that it was assured that the interest rate charged on the Loans would be based on OP-1’s LFRR but it had been consistently increasing the LFRR. The unilateral increase in the LFRR has led to an increase in the number of instalments. 9. The Informant has averred that the last instalment on 03.03.2023 was duly paid but OP- 1 failed to issue no-dues certificate or acknowledgment letter of the loan. The Informant sent an email on 25.03.2023 in this regard. The Informant has alleged that OP-1 is unlawfully demanding further EMIs for additional months without providing any justification. It is further threatening the disposal of the mortgaged property if these Case No. 34 of 2023 Page 4 of 10 additional payments are not made. On 27.03.2023, OP-1 provided repayment schedule for the Loans indicating increase in EMIs by several additional months as against the repayment schedule shared alongwith the letter dated 16.03.2013 and 20.06.2013 shared with the Informant. The Informant lodged another criminal complaint for financial fraud on 27.03.2023. 10. The Informant has averred that according to the RBI Circular dated 24.05.2007 and the master circular dated 02.07.2012, the interest rate cannot be modified, reviewed, or altered without prior notice and consent from the borrower. Moreover, in line with the RBI Guidelines dated 22.01.2009, the interest rate should be expressed on an annualized basis to ensure the borrower's awareness of the exact interest rate applicable to them. The interest rate must not be excessive, as stated in the RBI circular dated 24.05.2007. 11. The Informant has alleged that the loan agreement conspicuously lacks any provision for the revision of interest on a monthly basis or any duration shorter than a month and that OP-1 had an obligation to disclose that the LFRR would increase progressively and in an exorbitant manner. However, contrary to this obligation, OP-1, through its representatives, intentionally assured and convinced the Informant and the general public that the floating interest rate was favourable for obtaining the loan, as it was portrayed to be a low-rate option with the possibility of future interest rate reductions. 12. The Informant has averred that the intention of OP-1 is to limit consumer mobility and curtailment of their options. The Informant has also alleged that OP-1 entices potential new clients by encouraging them to secure loans under floating rate of interest scheme and profiting out of it. The Informant has tabulated the comparison of RBI repo rate and interest charged by OP-1. S. No. Month and Year of Change Repo Rate Interest charged by OP-1 1. May, 2013 7.25% 13.25% 2. September, 2013 7.50% 14.50% 3. December, 2013 7.75% 14.50% 4. January, 2014 8.00% 14.50% 5. January, 2015 7.75% 14.50% 6. March, 2015 7.50% 14.50%