Refund of Interest Cannot Be Sought After Consenting to Terms in Loan Agreement

The Supreme Court, in the case of Rajesh Monga v. Housing Development Finance Corporation Limited and Ors. (2024 INSC 162), decided on March 4, 2024, held that after having executed an agreement, having agreed to the terms and conditions, having received the loan amount, and repaying it with interest, an individual cannot raise an objection in hindsight and seek a refund of the amount paid.

The bone of contention in the present case was the adjustable rate of interest which the appellant claimed was misrepresented by the bank employees as dependent on the RBI Prime Lending Rate (PLR) and lesser than other banks. It was the Appellant’s case that the Bank revised the rate of interest to 8.25% despite the RBI not having changed the PLR. The Appellant demanded a refund of the interest amount charged over and above 7.5% per annum from the Bank and upon receiving no relief thereof, approached the National Consumer Disputes Redressal Commission, New Delhi (NCDRC). The present case is an appeal against the order pronounced by the NCDRC.

The Court dismissed the appeal observing that the rate option indicated in the loan application filed by the Appellant was ‘adjustable’. The Court further held that e-mail exchanges between the parties could not override institutional policy decisions of the Bank. The appellant had also failed to put material on record to showcase that he had the option of securing financial assistance from other institutions but was lured by the bank employees through the email causing loss to him and therefore amounting to unfair trade practice for which he was entitled to be compensated.