Mr. Mohammed Yousuf Ali v. Sammaan Capital Limited (earlier lndia Bulls), Park City Plaza, 3rd Floor,6-3

Mr. Avinash Desai, leamed Senior Counsel representiug Mr-M Pranav, learned counsel appearing for the petitioner. Mr. Rusheek Reddy K V, learned counsel appearing for the respondent No' 1' ORDER: Qrcr Hon'ble Justice Mousfutmi Btnttacharya)

1. The Civil Revision Petition has been filed against an order passed by the Debts Recovery Tribunal-Il, Hyderabad ('DRT) on

26.L2.2O24 by wtrich the DRT refused to allow a Review Petition filed by the petitioner in respect of its earlier order dated LO.O9-2O24' The DRT had dismissed the petitioner's S.A.No.6O1 of 2OL7 by the order dated 1A.O9.2O24. 2 The petitioner is the Borrower of a loan from the respondent *o'V Sammaan Capital (formerly tndiabutls Housing Finance Ltd') 2 MB|J & GPKIJ CRP.No.74 oJ2O2S )mpany (India) Lirnited ('ARCILJ, who was impleaded by an order dated O4.O2.2O25 in I'A'No-2 of 2o2s in cRp No.74 of 2o2s,on the basis of a Notice of Sare dated 24.o1.2o2s issued by the respondent No.2 stating that the petitioner's Home Loan fiacility had. been assignecr to Edelweiss Asset Reconstruction company Limited u,hich was subseque,try assigned to ARCIL uid,z Registered Assignment Agreement dated o2.L L.2o2g. I 3- The petitioner has chaltenged the impugned order dated LO.O9.2O2.[ whereby the DRT dismissed the SA filed by the petitioner against a Possession Notice dated 1b.o6.2o1s issued by the respondent No. r against the application schedule property under section L7 of The Securitisation and Reconstruction of Financial Assets and Enforcement of security [nterest Act, 2oo2 (.SARFAESI Act)' A Review Application in respect of the a.foresaid order *,as dismissed on 26. 12.2024. 4 A time:line of the relevant facts is stated below: (r) '[he resp<lndent No.I/sammaan capitar offered a Home Equity Loan Facility to the petitioner for Rs. rs lakhs i. 2oo7 on the p.mise that it wourd be repayabre in equated monthry instarments (EMI'.) at the rate of r2o/o per arinum for a tenure of 84 months or seven years. 3 UB,J &, GPK,J CRP.I{o.74 oj2o2s (ii) The respondent'rNo.l obtained the signatures of the petitioner on blank papers by informing the petitioner that the details would be frlled in with fixed rates and the tenure as promised on the premise that it was a regular practice to obtain signatures on an unf,rlled toan agreement for speedy disbursernent of the loan- (iiil The respondent No.l subsequently frlled up the [,oan Agreement rvitli certain altered terms and conditions whereby the interest rpas changed to a floating/adjustable rate of interest as opposed to a [ixed. rate of interest. The respondent No.l also increased the tenure to 144 months or twelve years then to 341 months or' '28 years and 5 months instead of 84 months or seven years as had been promised to tJre petitioner. (iv) The respondent No.l initiall5r entered the payable interest rate in the Loan Agreement as 18%o per annum which included the Internal Prime t,ending Rate of tndiabulls (PLR) at the rate of 14.75o/o + 3.25o/o charged as margin. A copy of the Loan Agreement dated 25-O4-2OO7 was later provided to the petitioner. (v) The respondent No.1 kept the EMI constant at Rs.26,511/- for more than three years i.e., until December, 2O1'O. The petitioner did not question the respondent, being under the impression that the E[{ts as well as the interest rates had been entered into the [.oan Agreement as promised to the petitioner. ("i) The petitioner paid the EMIs tLLl, 2OL2 and sought for closure of loan account as being fully paid and the return of documents which were in possession of the respondent No-l vide I"egal notice dated L4.lO.2OI2. T|1e petitioner then discovered that r-- 4 cRp. ff:lo*"r"i.f;{, the respondent No.l had increased the EMI from r.ts.26,s11/- to Rs.S;O,lS9 l-. ("ii) The petitioner continued to make pavffrerlts till June, 2ols sinc,-' the respondent No. r refused to close the loan account. The petitioner paid Rs.25,lL,gg}/- till June, 2015. (viiil . The respondent No. r. issued a Demand Notice dated 23-o:3.2ol5 under the sARFAESI Act and a possession Notice on 12.Or:.2O15. (ix) The petitioner filed S.A.No-365 of 2o1.5 (renumbered as s:A.Ito-6or of 2oLZ) before the DRT under section tz of the SARFAESI Act wherein the petitioner raised the 1y'ourrd of non- compliance with the Reserve Bank of Inclia {RBI} Guidelines in charging interest to the loan account of the petitioner by the respondent No- 1 as well as changing the t.rnlire .f trre Agreement from the agreed 7 years to 12 years and !;lter to rnore than:2g years. (x) The DRT disposed of the S.A. file<l b;v ttre petitioner on 2O.OL 2OL6 by clirecting the respondent No.1 to re-calr:ulate the account with interest @ 22.550,6 per annum with monthly rests, on the remaining outstanding amount, from trre default date till the payment of trre entire outstancling amount. The p,:titioner filed w.p.No.zgg3 of 2ott: aggrieved by trre said order. (xi) on 21.04.2016, the High court granted inrerim stay of the e-auction/public auction of the petitioner,s h.use. The interim orders continued till disposal of the Writ petition. (xii) t)n 15-09.2022, the High court scjt asi(ie trrc order dated 2o'oljlol6 passed by the DRT a,d remanclecr the rnatter to the 5 MB,J & GP&J CRP'No'74 ol2025 DRT for a fresh consideration of the issues raised by the petitioner including appticability of the RBI Guidelines. (xiii) The DRT dismissed the s.A. fited by the petitioner by the irapugned order dated Lo-o9.2o24- The Review Petition filed by the petitioner was dismissed on 26-L2-2O24-

5. The petitioner has challenged the impugned order on the ground that the DRT erroneously consid.ered the documents filed by the respondent No.1 as those Frled by the petitioner.

6. [-earned Senior Counsel appearing for the petitioner assails the impugned order dated 1O.O9.2O24 on the ground that the DRT faited to consider the issue of violation of the RBI Guidelines by the respondent No.l despite the entire record of the proceedings being available to the DRT for comptete adjudication of the matter- Senior Counsel subrnits that the DRT erred in holding that the respondent No.l had not vioLated the RBI Guidelines since the intimations and filed by the notices of change of interest rates and loan tenure wer€ petitioner himself. senior counsel further submits that tJ:e DRT failed to consider the fact of new (lower) rates of interests being offered to new customers and that the DRT also failed to adjudicate on wleether financial ipstitutions have the jurisdiction to change the rates of interest in violation of the RBI Guidelines and of the National HousinlB4ard (l{r{B). 6 MB,J & eP&i CRP..l\Io.74 of 2O25 7 - l-earned counser appearing for the respondent No. r/samman capital sr:eks to sustai, the impugned. order on the ground that the responderlt No.1 usually follows a policy of floating rates of interest in respect ol'tl1e amounts lent to the Borrowers. Counsel submits that the petiti()ner had availed housing toan facility with a limit of Rs.lS lakhs against mortgage of the secured asset which was to be repaid in 144 equal monthly instalments for l2 years. Counsel submits that the petitioner':; loan account was declared as- a Nor:-performing Asset (NPA) by the respondent No.1 on account of l:he pet.itioner,s flailure to repay the loan amount- The respondent lrlo.l w-as hence constrained to initiate proceerlings under the sAr{rrAESI Hct including for possession for t[re secured asset under Rure g(r ) of rhe Security lnterest (E,forcement) Rute s, 2oo2. counsel seeks to rely on the EMI Calculator revailable on the website of the responclent No. I to show the total interer;t payabre for the loan by applying fixed irrterest at the ra.te of L2Yo, 14.75c/o and I8%o rvith a tenure cr{ T yeal-s and 12 years, respectively. counsel submits that an amor.rnt of Rs.35,2g,3o9/_ is outstanding from the petitioner.as on 2S.|O.ZO2S. 7 UBrJ E'GPICTJ CRP.No.74 of 2025

8. We have considered the submissions made on behalf of the parties.

9. The following facts are undisputed as may be evident from the material produced before this court.

10. The petitioner claims to be a'tailor and an illiterate person. The respondent No.l/Sammaan Capital offered the petitioner a Home Equity Loan for an amount of Rs.15 lakhs (Rupees Fifteen Lakhs Only)'on the promise that the interest rate would be fixed at L2o/o with a tenure of 84 months or seven years and took the petitioner's signatures on blank papers. The originat [,oan Agreement dated

25.O4.2OO7 was pot provided to the petitioner contemporaneously- A copy of the Agreernent uras provided to the petitioner much later' The respondent No.1 informed the petitioner that the details including the interest rates and the tenure for the loan would be filled up in the Loan Agreement as prornised. The Loan Agreement which forms part of the records specifically reflects the interest rate to be 18%o per

11. The respondent No.1 subsequently frlled up the [,oan Agreement with altered terms and conditions which were made known to the 8 MB,J & GPK,J CRp.No.T4 of 2O2S petitioner at a subsequent point of time. The changes made by the responde.t No.1 to the Loan Agreement urere as follows: (i) florrting/adjustable rate of interest (insteacl of a irxed rate of interest) (iil in_ir:iar payable interest rate (pre - EMI interest rate) as 18('/o per annUm (iii) increase of the tenure of the agreernen t to L44 rnonthsl l2 years (instead of seven years as offered to thc petitioner). 12- The respondent No.I kept the EMI constant at lis.26,5 rL/- for more than three years i.e., titt December, 2olo. Thc: petitioner paid the EMIs till 2012 until the EMI was irrcr.easecl ftom Rs.26,5Lr/_ to Rs'3O, L591-. On coming to knon, of the irir:i-ease in the rate of EMI in 2OI2, the lrctitioner sought to close the loan account and demanded the return of the documents which \ rei-e in possession of the respondent No.l. The letter addressecl by the petitioner to the respondent No.1 on t4.lo.2ol2 seeking closure of the loan account and returri 'ff documents is part of the recorcrs. Sincc, t6e respondent No.l threatened the petitioner with coercive action, the petitioner continued t, make payments till June, 2cr ls. The last payment was made on O9.O6.2015. 9 M,.,J & GPX'J cPP.tb.74 oJ2O25 13. The petitioner had paid Rs'25,11,890/- (Rs'27 '76'500/- inclusive of charges and fees) by June, 2015. From an account statement provided by the respondent No.l dated 04.07'2015, the petitioner discovered that out of Rs.25,1 1,89O/- paid towards the loan over 8 years, the respondent No.L had adjusted Rs.24,21,2551- towards interest and only Rs.9O,634/- towards the principal amount' The material document shows that the remaining principal due by July, 2015 was Rs- L4,Og,3661-' Apart from the material document' Paragraph No.24 of the writ affidavit in wP No-7883 of 2016 f,rled by the petitioner also reflects the amounts paid by the petitioner in terms of the L,oan Agreement, rvhich are set out below: [,oan Amount Amount rePaicl Amount adjusted tou'ards principal Amount adjusted towards interest Principal Outstanding Balante payable/ Future Installments Rate of Interest : Rs.15,OO,OOO/- : Rs.25, Ll,89Ol- : Rs.9O,634/- ; Rs.24,2I,2551- : Rs.14,09,366/- : Rs.73,39,406/- :25-55o/o L4. It would be clear from a perusal of the account statement of the respondent No.1 that by July, 2oL5, the respondent No'1 was adjusting Rs.17g.97/- towards the principat amount and Rs.29,98O'O3/- towards interest from the EMI of Rs.3o, Lsg l- paid by the petitioner. This was being done by increasing the interest rate from L}o/o to 25'55o/o and the i- 10 MB|J &, G,PK,J CRP.No.74 of 2O2S tenure fr<lm 12 years to 341 months i.e., appr.oximately 2g years and 5 months. 15- Frorn a conjoint reading of the documents, it would also be crear that since the inception of repa5rment, i.e. April, 2ooz up to Januar5r, 2otl, the interest rates and roan tenure were changed almost eight times until Janttary, 2alr and 13 times till l{ovemher, 2oI4, while the EMI remained constant- The respondent No.l failed to produce any documentsr bsfqr. the Debts Recovery Tribunal or in the writ petition liled by the petitioner to shou, that the respon,Jr:nt No. r kept the petitioner informed of the changes in the interest rates and the tenure of the loan at the material points oi time. 16' [t is also unclisputed that out of the loarr sanction of Rs.15 lakhs, only an am<>unt of Rs. L4,4g,TT2l_ was disbursed lt1. the respondent No. 1 to the petiboner and the barance of Rs.50,22.s/- uras recovered upfront towards va'ious crrarges. The materiar rlocument, rryhich is part of records, sh:ows that after paying an anr.unt of Rs.25 ,LL,ggo/ - lRs-27,76,5cr0/- if charges and fees are incruded), ilre current principal outstanding is still being shorvn as Rs. 14,Og.366/_. L7 - Thus, ihe petitioner's contention that the petitioner u,as kept in the dark with re:spect to the frequent changes; in the interest rate merits consideratiorL' Ttre petitioner's etrgument befor-r: the DRT of violation of t "L. 11 ".".ff":irZi*:#! the RBI Guidelines and tlre National Housing Board ('NHB'} Guidetines shoutd have been glven d.ue weightage particutarly in light of the High Court allowing W.P.No.7883 of 2OL6 on 15.O9 .2022 by setting aside the order of the DRT dated 20-01.2016 and directing the DRT to consider the issues afresh including that of the RBI Guidetines. 18- In the impugned order dated 1O.O9.2O24, the DRT erroneously concluded that there was no violation of tl:e RBI Guidelines- The conclusion was based on the erroneous assumption that the petitioner himself had filed the photo copies of letters addressed by the respondent to the petitioner intimating him about the changes in the interest rate and EMI amounts from May 2OO7 to August 2013 whereas in reality the documents had actually been frled by the respondent No.1 as part of its Aclditional Counter Aflidavit dated 26.O2-2OL8. The Tribunal should have noted that the respondent No.l had failed to provide any proof of service or evidence that the letters had indeed been sent to and received by the petitioner.

19. F\rrther, in tl:e impugned order, the DRT found that the petitioner had failed to particularize the violation of the RBI Guidetines. However, ttre material papers indicate the specific violations. These are: (i) RBI circular dated 2a.O9.2OO6 issuing Guidelines on Fair Practices Code for Non-Banking Financial Companies (NBFCs) /'\. issued in exercise of powers conferred under section 4s L of Ihe Reserve Bank of India Act, 1934. The circular provides in ()lause (iii)(a) that NBFCs should give notice to the borrower of any change in the terms and conditions, including disbursement schedule, interest rates, service charges, prepayment charges etc. (ii) RBI circular dated o2.ol.2oo9 on directions to NBFCs for the prrrpose of regulating the'credit system of the country. clause (a! provides that the Board of each NBFC shall adopt an interest rate model by taking into account rele'ant factors sr-Lch as cost of funds, margin and risk premium etc. and determine the rate of interest to be charged for loans and advances- Further, the rationare for charging different rate of inr-91g51 to different categories of borr-orners shall be disclosed to the borrower i, the application 'form and communicated ex::licitly in the sancdon letter. clause (c) provides that the rate of interest shourd be annualizrd rates so that the borrower is aware of the exact rates which wourd be charged to the ac(:ount. (iiil RBI circular dated o2-oz.2ot2-Master c'cular on Fair Practices code. clause 2(e)(iii)(a) of the circular provides that the NtsFCs should give notice to the borrower in the'ernacular language or in a language understood by the borrower of any change in the terms and conditions including disbursement schedule, interest rates, service charges and prepa5rment charges etc. (iv) RBI circular on Master Direction - Rese^,e Bank of tndia (lntr:rest Rate on Adva,ces) Directions ,20r.6 datecr 03.03.2016. clattse 8(bl(i) pro'ides that the credit risk premium charged to an e xisting borrower shall not be increasecl e.\cept crn account 13 MB,J &G.PK,J CRP.No-74 of 2O25 of deterioration in the credit risk prolile of the customer or change in tenor premium. (v) NHB Guidelines on Fair Practices Code for HFCs (Housing Finance Companies) dated 05.09.2006. Clause 3-5 provides that HFCs shall inf-orm the customer whenever there is a change in the interest rates on their products. ("i) NHB Master Circular to all Housing Finance colporations dated 11.1O.2O1O revising ttre Guidelines on Fair Practices code for HFCs. Clause a.l(iv)(b) of the Guidelines provides that the I{FCs should give notice to the borrou,er of any change in the terms and conditions including disbursement schedule, interest rates, service charges, prepaJiment charges or other applicabl.e fee/ charges etc.

20. The above paragraphs would make it evident that there are several Circulars/Guidelines of the RBI and NHB which are instructive of the fair practices which are to be followed by a NBFC like the responden.t No. 1. 2l - [n essence, the Guidelines stipulate that the borrower rnust be kept informed of any changes made by the lender to the loan a.greement initially agreed upon and executed between the parties' The purpose is that the borrower should be kept informed and made a.ware of the financial implications and obligations associated with the Ioan transaction. The RBI Guidelines ensure transparency and L4 MB,J & cPIgJ CRP.No.74 of 2O25 provide an opportunity to the Borrower to transfer the Ioan to another [,ender, il'the Borrower is not satisf,red with tlie changes made to the Loan Agrr:ement.

22. The impugned order dated 10.09,2024 passed by the DRT is required t'r be placed in context of the u'd.isputed facts. w.p.No.7gg3 of 2oL6 filed by the petitioner was a[ou,,ed by t]re High court on 15'09-2022 by directing the DRT to consider the issues raised by the petitioner rrfresh by giving an opportunity of hearing to the parties. 23' Pursuant to the said order, the petitioner prociuced the entire set of documents fcrrtrting part of the record tilcd bv i,he petitioner and the respon'lents in the writ Petitiorr, beforc the l-iI{T a.ccomparried by an application i-e., I.A.No.1929 of 2o2s i, S.A.No.6or of 2ol7 /Permission petiti.n which rvas allowed by the DRT by an order dated 05' 1o.2o23. The Index from the permission petition makes it clear that the documents rrred by the petitio,er a.r. pages 29I -3o4 were part of the l\dditional Counter Aflidavit fited by the respondent No.1 in w. P. M. P. No . I oo29 of 20 r 6 in w. p. No.7883 of 20 L6 on 26 .o2.2o 1 8.

24. Howel.er, the DRT records at paragraph No. i2 of the impugned order dated LO.O9.2O2+ rhat the applicarrt. (the petitioner) filed of the letters addressed tr-r thc petitioner by the photocopies 15 UB,J &' GPK,J CRP.No.74 of 2O2S respondent No.l giving intimation about the changes in the interest rate and the EMI amounts from M"y, 2OO7 to August, 2013. Hence, the DRT mistakenly assumed that the letters of the respondent No' 1 had been duly communicated to the petitioner since the petitioner himsetf had filed these documents by way of the Permission Petition' The DRT consequently held that tl.e petitioner had received these documents and tryas a.ware of the changes in the terms of the loan' [n realit5r, the petitioner hacl not been informed of these changes and the atleged documents/letters referred to by the DRT in paragraph No'12 of the impugned order dated 10.09.2024 were filed by the respondent No.l at a belated stage. The letters of intimation were in any event denied b-v the petitioner-

25. The error appsrent trom the recorci, i.e., that the petittoner was aware of the changes in the interest rates at all relevant points of time since the relevant letters were filed by the petitioner himself' goes to the root of the matter. The error strikes at the foundation of the petitioner's contention that the respondent No.l had unilaterally changed the interest rates and the loan tenure without informing the petitioner and thus the petitioner had been deprived of his choice of whether to terminate the loan agreement and shift to another lender or not. The error on the par:t of the DRT also led to the consequential

1./\ 16 cRp.ff:l42t"if;'i finding that the respondent No.I did not violate any of the RBI Circulars or NHB Guidelines u4rich forrn the ccrcr of the dispute in SA. No.6C|1 of 20l'/ f,rled b_y rhe petitioner. 26' The petitioner liled Review IA No.r229 of 2024 under section 22(21(el cf The Reco'ery of Debts Due to tsanks and Financial Institutiorrs Act, 199s ('1993 ActJ before rhe DRT Lo rectify the error apparent r>n the fa.ce of the record by requesting the DRT to review its order dated Lo.og.20'24. The DRT rejected rhe Revier.u Apprication by passing the order dated 26.12.2024. 27' The impugned oi'der failed to tai;e irrt.o consicleration that changes irr the interest rates and the rretrv.,r,lo,"rrr,:i rates of interest provided tr> ne\^' customers were facts unk-novrn to the petitioner resulting irt violation of the relevant RBI and NHB Guidelines which are binding on the respondent No.l. The DRT thus faited to exercise appropriate discretion in consiclering the petitiorrer's undisputed lack of agency blr reason of his lack of knou,ledge itr ciioosing to decide the future course of action as to whether to conti,ue to remain being bound to the respondent No- 1 0r to seek closure ot his transactiona.l relationship with the respondenr No.l. The DRT also f,ailed to consider that while Financial Institutions harre the discretion to fix the T7 .*,.ff":i.Ifif;"' rate of interest, they remain. bound by the Guidelines issued by the RBI and NHB: Sardar Associates Vs. hmjab & Sind Bankl. The RBI Guidelines have statutory force and are mandatory and binding in nature: Centrcil Bank of Ind.ia Vs. Rauindra2. 2A. As stated above, the palpable error apparent on the face of the record is that the fact that the petitioner had chosen to file the documents of irrtimation, coloured the DRT's vieu' of the entire proceedings and led to a conclusion which was erroneous both on facts as well as in [aw.

29. It is significant that even in the present proceedings before this Court the arguulent extended by the respondent No.l is that the respondent No.1 w,as entitted to appty a routine rate of interest for the amount advanced to the petitioner. The petiti.oner's argument has always been that the relevant Guidelines and Directions governing the basis of calculating the interest rate should be comptied with though Financial Institutions have the discretion to determine the rate of interest. The respondent No.l, white exercising its discretion to determine the interest rate, has faited to exercise the discretion as required by law in terms of the relevant Guidelines and Directions of t (zoog) 8 scc 257 ' (zooz) 1 scc 367 1 \ I 18 MB,J & oPX,J CRP.No.74 oJ2025 the RBI Etnd NHB. The Written Subnrissions filed by the petitioner before the, DRT specifically outlines the violations of the RBI and NHB Guideline:S corrrnitted by the respondent No.l.

30. It s.rould arso be ctarified that section 2 t A of rhe Banking Regulatiorr Act, r94g ('tg4g ActJ which irnposes an embargo on Courts in respect of scrutiny of the interest rates clrarged by Banking companie:i, is not applicable ro the present case. The petitioner has not challenged the interest rates imposed bv tlr.e respondent No.1, bqt seeks interryentiorr of the Writ Court on tire DRT's failure to address the violaticns of the RBI ancr NHB Guicrelines committed by the respondenr- No-l. Further, ttre 1949 Act crocs r;ct irii-ectr1, apply to NBFCs inctuding the respondent No.l w{rich arc primarily regutated by the RBI under the Lg34 Act. chapter III ts of . the 1934 Act ernpowers the RBI to control and supervisc NtlFCs including setting up prudential norms and directions for their opr:rations. [n this context, it :;hould arso rerevant to rnentioi-r that ti:e DRT noted in the order dated ro.og.2o24 in paragraph No.16 that the RBI Guidelines provide tha.t the rate of interest to be ctiarged flor a loan should invariably be macle knorvn to the Borrower in the loern agreement itself besides keelring the Borrorver informed of the cha.ngc in interest rates f ,rr, from tim<: to time. / L9 UB,J & GPK,J CRP.No.Z4 ot2O25

31. Having reached the aforesaid conclusions, the DRT should automatically han'e held that the respondent No.l violated the RBI Guidetines in failing to keep the petitioner informed of the changes in interest rates and loan tenure. The conclusion of the DRT is all the more specious since the respondent No.l failed to discharge its obligation of proving that the intimations were sent to and received by the petitioner urith regard to the changes in the interest rates and the tenure of the loan.

32. From a perusal of the account staternent it would be clear that by July, 2O1\ the respondent No.l was adjusting Rs.L78.97/- towards principal and Rs.29,98O.O3/- tou,ards interest from the EMI of Rs.3O, l5g / - being paid by the petitioner. This was being done by increasing the interest rate from L8o/o to 25.55o/o and the tenure from 12 years to 341 months i.e., approxirnately 28 years and 5 months without the petitioner's knowledge and without any information furnished to the petitioner contrary to the mandatory guidelines issued by the RBI and the NHB.

33. Even if we disregard the opposing contentions made on behalf of the petitioner and the respondent No.l/Sammaan Capital, the very fact that the respondent No.l was unable to produce concrete 2A MB,J & GPK,J CRP.No.74 of 2025 evidence of the selviee of notices/intimations given to the petitioner of the intere:;t rate and the tenure of the Agreerrrent being changed eight times fronr April 2ooz - January 2011 and t3 times till November, 2OL4 thereby altering the terms/interest rate from l8yo to 2S.SSV' would put the obligation di.rectly on the respondent No.l to dislodge the allegation of th.e violation of the RBI cuidelines. 34- We c.eern it important to note that the facts in the present case raise irnportant concerns of lending entities taking undue advantage of illiterate/semi-illiterate customers. Although, the loan agreement binds the llarties by way of mutual contracttr.al obiigations, it is often found that tlee orieinal agreement is twea!.,ecl nr i-r:.r.nslbrnred beyond recognition rn'it.hout any knowledge or conscnt of the borrow-er. By the tirne the bOrrower is made a.!r'are of the changes, i,*- is too late for the borrower to take an informed decision to seek ciosur.e of their account and move to another lender. Further, the bcr.rower also finds himself/herself to be in a financial stranglehr:lci rr,,ithout the necessary resources to move away from an exploitatir,'e lentler- Irr several cases, the borrower fails to read the fine print or the final version of the loan agreelnent and is taken b_y surprise wheit calleci upon to make unustrally krrge repayments. 1/ uBrJ & G,PX,J CRP.No-74 of 2025 35. At the cost of repetition, the respondent No.l changed the 2L interest rate. eight times from April, 2OO7 until January, 2OlL and more than thirteen tirnes titt November, 2OL4. The tenure of the Agreement was also changed from twelve years to twent5r eight years- I

36. levy of lnterest, though contractual, must conform to the tests of reasonableness ancl fairness. Interest is intended to compensate the lender for the use of nloney and not for operating as a mechanism to suffocate the borrower through excessive compounding-

37. The tabulated calculation given above would show the amount payable by the petitioner in terms of the loan Agreement dated 25.O4.2OO7 is Rs.36,70,a981- '*'hich is also admitted b)' the respondent No.l in the Memo dated 06.10.2025 placed before this Court. Since the petitioner has already paid an arnount of Rs.25, Ll,8gO | -, the maximum outstanding amount should be Rs.8,93,598/ - and not Rs.35 takhs as alleged by the respondent No'1 in Memo dated 23.10.2025 placed before this Court.

38. In Surya Deu Roii Vs. Ram Chnnder Rai3, the Suprerne Court held that the supervisory jurisdiction of a High Court empowers the High Cqurt not only to quash or set aside the impugned proceedings, I \ '1zoor; G scc 67s 22 -) MB,J & GPK,J jud'gment or order but atso to make such direcrion" ffi" ::!.'ff" crrcumsternces of the case would warrant. shali.tti shyam shettg vs. Rajendra shankar pattta neried on &trya Deu .Rai(supra) and reinforced that a Hulh Court under Article 227 of the Constittttion of India can, apart frorn annulling the proceedings also substit_ute'the impugned order witlL the order which the inferior court ought to have made. In the present case, the impugned orders passecl by the DRT merit interferen<:e. 39' The cases reried on behalf of the responcrent No.l/Sammaan capital on the maintainability of this CRp and o' the issue of the cRp being barrc:d by linritation are required to be piaced rn c.nrext. 40' K' Sreedhar u- Raus Constructions Prtuate Ltd..s r,vould be applicable where a parer approaches the High court challenging an order passed by the DRT under section 17 of the SARFAESI Act, 2oo2 on merits without first hling Jbr review of the DRT order under section 22 (21 (e) of The Recovery of Debts and Bankruptc5r Act 1993. The petitioper herein had duly filed a review- application before the DRT for rectif.l,ing the final order dated 1o.o9.2o24 which culminated in the rejection order dated 26'L2'2o24' tJnited Bank of Indin u. satyautati '!\tndon6 is factuaJly o (zoro) 8 scc 32r) t lzozll tt scc 1(;9 t (zoro) 8 scc 11o I MB,.I & GPKrJ CRP.No.74 oJ2025 distingUishabte since the petitioner first approached the DRT under 23 section lT of the SARFAESI hct,2OO2. The petitioner in fact filed an S-A. under section 17 of the said Act challenging the notices issued under sections 13 (21 and (a) of the SARFAES[ Act, 2OO2- +t. Jai Stngh and. others u. Municjpal Corporation of Delhf, is also not appticable since the petitioner has not challenged the impugned orders on merits but o1 the ground that the DRT faited to exercise jurisdiction under section 22 (21(e) of the 1993 Act- 42, Stantdard. chnrterecl Bank u. MSTC Limiteds is relevant for a review application being filed beyond the prescribed period of timitation' [n the present case, the DRT passed final orders in the petitioner's S'A' on LO.O1.2O24 and the petitioner fil.ed the review appLication within 30 days on O7. LO.2O24. A perusal of the inward stamp dated 07.LO'2O24 on the review application (IR No.l229 of 2o2al would ctarify the aforesaid fact' Chnirman, State Bank of India u. MJ Jamess and tI'P' Jal Nigam and another u. Jaswant Singh and. anotherlo retied upon by the respondent for the proposition that payment of EMtrs by the petitioner without protest would amount to acquiescence and the petitioner cannot challenge the interest qates and tenure period would not be relevant as the doctrine of l 'lzoroy 9 scc 38s tlzozoy 13 scc61s '(zozzl 2 scc 301 'o (zooo) 11 scc 4G4 I 24 _) MB,J & GPK,J CRP.No.74 of 2O2S acquiescence would only apply rvhere a party having a right, stands by and sees another party proceeding to cleal with the disputed subject matter in a manner which is inconsistent- rn'ith the right of the hrst party. 43' Acqrriescence also requires the party concerned lraving knowledge and being aware of the violation but failing to take any- steps u'ith regard to the same' The specific case of the petitioreer in the present case is that the respondent No.l changed the interest rates and the tenure period without th,= notice or knowleclge of the petitioner. 44' The fact of the current principal outstanrring being reflected as Rs.14,O9,3O6/- despite the petitioner ha.ring nrade payntent of an amotrnt, o[ Rs.25,l l,g9o/- (Rs.27 lakhs wil-h chargcs aild l-ees included] and after :.he respondent No. r had recoverecl this amount, would be inconsiste,t with the respondent No- 1 now seeking to recover Rs.1,oo,o7,87s/- from the petitioner. Thc: responcrent No.1 has arrived at the outsr-anding amount by extending the loan telrure period from 12 ,rars to 213 years- The amounts sought tcr be recovered from the petitioner and the tenure period would result in the petitioner forever remaining in debt to the respondent No.1. ) \ I t \ 25 MB,J &, GPrrJ CRP.No.Z4 of 2O2S

45. tt should also be mentioned that the parties were given several opportunities to settle the matter. However, the respondent stuck to Rs.35 Lakhs.hs the amount outstanding from the petitioner. The amount of Rs.35 l,akhs was based on the altered terms of the original loan agreernent including the interest rate and tl:e tenure of the loan.

46. The High Court would thus be justifred in exercising its jurisdrction und.er Article 227 of the Constitution of India. . :

47. The above facts and reasons constrain us to hold' that the DRT committed. an error in refusing the relief to the petitioner by way of the impugned order dated 1O.O}.2O24 and holding that there was no violation of the RBt Guidelines therein. The dismissal of the petitioner's Review Application on 26.12,2024 also merits interference in view of the error apparent on the face of the record i.e.,. the DRT treating the documents filed by the petitioner as being documents emanating from the petitioner as opposed to the documents of the respondent No.1.

48. We have no d.oubt that the High Court possesses supervisoly jurisdiction to correct the errors in judgments rendered by district Courts/Courts lower in the hierarchy under Article 227 of the I 26 ,*.ff.:iolr"if;;! Constitution of India. we thus, deem it fit to set aside the orders dated 1O.O'1.2O24 ancl 26.L2.2O24 passed b;,' the DRT , inter alia., for f,ailing to n<>tice tlr.e violation of the RBI Guidelines

49. cRP.ltlo.74 of 2025, along with all connected applications, is alrorved in terms or the above' sD'- tJtidifJ+tE8a+sE / ,/TRUE COPY'I OFFICER 'o ", . rhe D ebts Rec9.v:rv II? T:l-::ilis$ei i Effi ii !! 4. One CC;to Sri L' Aravind Ret 5. Two CD GoPies ::l xGrur*l*1l x,'x**tl3'"Yo (DRr-r ur;ib u nat) ABK /PSL Vr I I \ HIGH COURT DATED: 2910112026 ORDER CRP.No.74 ot 2O2S p I 'rt0 t'12fi .L ( t ALLOWING THE CRP * ""a(t Xrt