- 1 - NC: 2025:KHC:16585 WP No. 29212 of 2019 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22ND DAY OF APRIL, 2025 BEFORE THE HON'BLE MR JUSTICE SURAJ GOVINDARAJ WRIT PETITION NO. 29212 OF 2019 (GM-RES) BETWEEN: 1. SHRI. VIJAY B RAMNANI S/O. LATE. B J RAMNANI, AGED ABOUT 57 YEARS R/AT NO. 726, CMH ROAD, INDIRNAGAR, BANGALORE 560038 2. SMT. SANGEETA VIJAY RAMNANI W/O. SHRI. VIJAY B RAMNANI, AGED ABOUT 47 YEARS R/AT NO. 726, CMH ROAD, INDIRNAGAR, BANGALORE 560038 …PETITIONERS (BY SRI. ROHIT V.R. ADVOCATE FOR SMT. JAYASREE NARASIMHAN., ADVOCATE) AND: 1. RESERVE BANK OF INDIA CONSUMER EDUCATION AND PROTECTION CELL, 10/3/8, NRUPATHUNGA ROAD, BANGLAORE 560001. THROUGH ITS ASST. GENERAL MANAGER 2. THE MANAGER INDIABULLS CONSUMER FINANCE LIMTED (FORMERLY KNOWN AS IVL FINANCE LIMITED) 102, 3RD FLOOR, PRESTIGE SIGMA, VITTAL MALLYA ROAD, BANGALORE 560001. Digitally signed by SHWETHA RAGHAVENDRA Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:16585 WP No. 29212 of 2019 ALSO AT INDIA BULLS FINANCE CENTRE, 4TH FLOOR, TOWER 1, ELPHINSTONE ROAD, MUMBAI 400013 …RESPONDENTS (BY SRI. T. SURYANARAYANA., ADVOCATE FOR R1; R2-SERVED) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF MANDAMUS OR ANY OTHER APPROPRIATE WRIT OR ORDER DIRECTING THE R-1 TO GIVE EFFECT TO ITS CIRCULAR DTD.14.07.2014 AT ANNX-'F' AND CIRCULAR DTD.1.7.2015 AT ANNX-'G' AND DIRECT THE R-2 TO REFUND THE AMOUNT OF RS.18,24,586.1/- (RUPEES EIGHTEEN LAKHS TWENTY FOUR THOUSAND FIVE HUNDRED AND EIGHTY SIX AND ONE PAISE ONLY) i.e. RS.13,79,648.84/- (RUPEES THIRTEEN LAKHS SEVENTY NINE THOUSAND SIX HUNDRED AND FORTY EIGHT AND EIGHTY FOUR PAISE ONLY) TOWARDS FORECLOSUR CHARGES AND RS.2,48,336.80 BEING GST AT RATE OF 18% ON THE FORECLOSURES CHARGES AND RS.1,96,600.48 (RUPEES ONE LAKH NINETY SIX THOUSAND SIX HUNDRED AND FORTY EIGHT PAISE ONLY) AS ADIDTIONAL PENALTY FOR THE PERIOD BETWEEN 03.04.2019 TO 08.04.2019, ALONG WITH INTEREST AT THE RATE OF 18% PER ANNUM AND ETC. THIS WRIT PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE SURAJ GOVINDARAJ ORAL ORDER 1. The petitioners are before this Court seeking for the following reliefs: i. To issue a writ of Mandamus or any other appropriate writ or order directing the R1 to give effect to its circular dated 14.07.2014 at Annexure- F circular dated 11.7.201 at Annexure-G and direct - 3 - NC: 2025:KHC:16585 WP No. 29212 of 2019 the R2 to refund the amount of Rs.18,24,84.1/- (Rupees Eighteen Lakhs Twenty Four Thousand Five Hundred and Eighty Six and One Paisa only) i.e., Rs. 13,79,648.84/- (Rupees Thirteen Lakhs Seventy Nine Thousand Six Hundred and Forty Eight and Eighty Four Paisa only) towards foreclosure charges and Rs. 2,48,336.80 being GST at rate of 18% on the foreclosure charges and Rs.1,96,600.48 (Rupees One Lakhs Ninety Six Thousand Six Hundred and Forty Eight Paisa only) as additional penalty for the period between 03.04.2019 to 08.04.2019, along with interest at the rate of 18% p.a. and ii. Issue a writ of certiorari or other appropriate writ or order quashing the email communication dated 09.02.2021 by R1 (Annexure-W) or such other further relief/s as this Hon’ble Court may deem fit in the circumstances of the case. 2. The grievance of the petitioner is that the petitioner having prepclosed the loan availed from respondent No.2, respondent No.2 levied foreclosure charges at the rate 5% of the barrowed amount which was subsequently reduced to 2.5% at the request of the petitioner, which the petitioner contends it is contrary to the circular issued by respondent No.1- RBI at Annexure-F and G. It is in that background, that the petitioners are before this Court seeking for the aforesaid reliefs. - 4 - NC: 2025:KHC:16585 WP No. 29212 of 2019 3. A co-ordinate bench of this Court has delt with a similar aspect vide its order dated 17.09.2024 in Smt.Sangeeta Vijay Ramnani & another vs. Reserved Bank of India & another in WP NO.47837/2018 categorically stating that the borrower would be entitled to the benefit of the circular/s which have been issued by the RBI. 4. In that view of the matter, I am of the considered opinion that the above writ petition would have to be allowed and a further directions to be issued to the Reserve Bank of India to take action against the Banks, Financial Institutions and/or the like who do not comply with the circular issued by the RBI in terms of the applicable law. 5. In the present case, the petitioner being a good borrower has come forward to repay the loan before its due date and it is this action on part of the petitioner which is sought to be misused by respondent No.2 by levying foreclosure charges. It would only mean that respondent No.2 does not - 5 - NC: 2025:KHC:16585 WP No. 29212 of 2019 want the petitioner to make prepayment of the loan amounts and make such payment as per the tenure of the loan. The reason for the same according to the counsel for the petitioner is that the Bank is happier to have an existing customer pay the interest amount till the tenure of the loan is completed rather that spend money on acquiring a new customer. His submission is also that the manner of calculation of the Equated Monthly Installment is also skewed in favour of the bank since all the initial EMI’s are predominantly adjusted towards interest and very less amount is adjusted towards Principal, as such the Bank insist of the payments to be made as per the schedule. In this case the Petitioner realizing that most of the payments are going towards the interest wanted to preclose the same so as not to make payment of unnecessary interest. 6. Respondent No.2 ought to have been happy to receive the loan amount at the earlier time than that it was due. The respondent No.2 by making - 6 - NC: 2025:KHC:16585 WP No. 29212 of 2019 applicable foreclosure charges of 5% is essentially trying to dissuade any borrower from prepaying the loan which is not in the interest of the economy or the Country but is only in the interest of the Ban/financial institutions. 7. This aspect having been brought to the notice of the RBI, it was but required for the RBI to have taken action against the respondent No.2 for levying foreclosure charges which respondent No.2 was not entitled to in terms of the aforesaid circulars at Annexure-F and G. 8. It was also required for the RBI to have considered this aspect of appropriation of Interest and Principal in the EMI payments so as to bring about a level playing field, If the contention of the learned counsel for the Petitioner is correct the Bank or financial institution cannot collect the interest for the entire tenure of the loan in the initial period and thereafter appropriate the EMI’s towards Principal due. This appears to be a genuine Grievance on part of the - 7 - NC: 2025:KHC:16585 WP No. 29212 of 2019 Petitioner which would have to be looked into and a proper guideline for appropriation of Principal and interest, which is equitable to both the borrower and lender would have to be issued after a study thereof by the concerned experts at the RBI. 9. In that view of the matter, I pass the following; ORDER i. The writ petition is allowed. ii. A certiorari is issued, a email communication dated 09.02.2021 by respondent No.1 at Annexure-W is quashed. iii. A mandamus is issued, directing respondent No.1 is directed to give effect to the circular dated 14.07.2014 at Annexure-F, circular dated 11.7.201 at Annexure-G and direct the R2 to refund the amount of Rs.18,24,84.1/- (Rupees Eighteen Lakhs Twenty Four Thousand Five Hundred and Eighty Six and One Paisa only) i.e., Rs. 13,79,648.84/- (Rupees Thirteen Lakhs - 8 - NC: 2025:KHC:16585 WP No. 29212 of 2019 Seventy Nine Thousand Six Hundred and Forty Eight and Eighty Four Paisa only) towards foreclosure charges and Rs. 2,48,336.80 being GST at rate of 18% on the foreclosure charges and Rs.1,96,600.48 (Rupees One Lakhs Ninety Six Thousand Six Hundred and Forty Eight Paisa only) as additional penalty for the period between 03.04.2019 to 08.04.2019, along with interest at the rate of 18% p.a. iv. Respondent No.1-RBI is directed to initiate such action as his permissible under law against respondent No.2 for not having complied with the circular at Annexure-F and G within 30 days from the date of receipt of the copy of this order. Sd/- (SURAJ GOVINDARAJ) JUDGE SR List No.: 1 Sl No.: 59