RAJESH MONGA versus HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED & ORS.
[2024] 3 S.C.R. 1, Supreme Court of India, 2024
Outcome: Dismissed (Dismissed)
Segment: Issues
* Author
[2024] 3 S.C.R. 1 : 2024 INSC 162
Rajesh Monga 
v. 
Housing Development Finance Corporation Limited & Ors.
(Civil Appeal No. 1495 of 2023)
04 March 2024
[A.S. Bopanna* and M.M. Sundresh JJ.]
Issue for Consideration
Whether an adjustable rate of interest on home loan would apply 
based only on the rate of interest being fixed/altered by RBI or the 
rate of interest fixed/ altered by respondent No.1-Bank.
Headnotes
Consumer Protection Act, 1986 – Rate of interest to be 
charged on home loan – Home buyer filed loan application, 
opting an adjustable rate of interest – Manager of the Bank 
assured that the rate of interest would be charged based on 
the Prime Lending Rate of RBI – Loan amount disbursed, 
and thereafter, the rate of interest was revised from 7.25% 
pa to 8.25% pa despite RBI not having changed the Prime 
Lending Rate and was further increased to 10.5% pa though 
no change made by RBI – Consumer complaint – National 
Consumer held that home buyer was bound by the terms 
and conditions of the agreement while the bank was bound 
by various instructions of RBI at the time of signing the 
agreement – Interference with:
Held: Respondent No.1 being a NBFC and as a corporate body 
would be bound by its policies and procedures with regard to 
lending and recovery – Applicability of the rate of interest to be 
charged is a  policy matter and cannot be case-specific unless 
the individual agreement entered into between the parties indicate 
otherwise – When the
parties have signed the agreement, the terms 
agreed therein would bind the parties and the email exchanged 
between the parties cannot override the policy decisions of the 
institution – Having executed the agreement; having agreed to 
the terms and conditions; having received the loan amount, the 
appellant-home buyer cannot raise any objection for the first time
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when the rate of interest was increased after having acquiesced by 
signing the agreement – Further, the appellant having repaid the 
loan amount with interest as per the terms of agreement cannot 
make out a grievance in hindsight and seek refund of the amount 
paid – In view thereof, no error has been committed so as to call 
for interference. [Para 10 – 16]
Case Law Cited
Texco Marketing (P) Ltd. v. TATA AIG General 
Insurance Co. Ltd. [2022] 9 SCR 1031 : (2023) 1 
SCC 428; Debashis Sinha v. R.N.R. Enterprise (2023) 
3 SCC 195; Pradeep Kumar v. Postmaster General 
[2022] 19 SCR 583 : (2022) 6 SCC 351; Board of 
Trustees of Chennai Port Trust v. Chennai Container 
Terminal Private Ltd. (2014) 1 CTC 573 – referred to.
List of Acts
Consumer Protection Act, 1986.
List of Keywords
Adjustable rate of interest; Home loan; Rate of interest being 
fixed/altered by RBI; Prime Lending Rate of RBI; Policies and 
procedures with regard to lending and recovery; Agreement; 
Acquiesced; Unfair trade practice; Policy decisions; Compensation; 
Financial institution.
Case Arising From
CIVIL APPELLATE JURISDICTION : Civil Appeal No.1495 of 2023
From the Judgment and Order dated 10.11.2022 of the National 
Consumers Disputes Redressal Commission, New Delhi in CC No. 
2367 of 2018
Appearances for Parties
Vikas Singh, Sr. Adv., Varun Singh, Akshay Dev, Mohammad Atif 
Ahmad, Nitin Saluja, Ms. Deepika Kalia, Ms. Vaishnavi, Keshav 
Khandelwal, Ms.
Pranya Madan, Pankaj Kumar Modi, Advs. for the 
Appellant.
Aniruddha Choudhury, Ms. Mandira Mitra, Ms. Tushita Ghosh, Rohit, 
Advs. for the Respondents.
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Rajesh Monga v. Housing Development Finance  
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Judgment / Order of the Supreme Court
Judgment
A.S. Bopanna, J.
1.	
The appellant is before this Court in this appeal claiming to be 
aggrieved by the order dated 10.11.2022 passed by the National 
Consumer Disputes Redressal Commission, New Delhi (‘NCDRC’ 
for short) in Consumer Complaint No. 2367 of 2018. By the said 
order the NCDRC has concluded that the appellant is bound by 
the terms and conditions of the agreement dated 11.01.2006, 
while the respondent was bound by various instructions of the 
Reserve Bank of India (‘RBI’ for short), at the time of signing 
the agreement dated 11.01.2006. Hence the complaint filed by 
the appellant was dismissed. The appellant is therefore before 
this Court.
2.	
The brief facts are that the appellant was in need of home loan. 
The respondents No. 2 and 3 being the employees of respondent 
No. 1 approached the appellant during August 2005. The appellant 
was exploring the option of securing loan from other financial 
institutions as well. The case of the appellant is that respondents 
No. 2 and 3 being the direct sales agent and the resident manager 
of respondent No. 1 - HDFC convinced the appellant that the rate 
of interest charged by the respondent No. 1 on home loan was 
lesser than what was being charged by ICICI Bank. In this regard, 
the appellant relied on an email dated 05.10.2005 from respondent 
No. 2 to contend that a comparison
was provided in the said email 
to the appellant that the rate of interest offered by respondent No.1 
was cheaper.
3.	
It is contended that the respondent No. 2, on behalf of respondent 
No. 1 had assured that the rate of interest would be charged based 
on the Prime Lending Rate of RBI. Based on such representations the 
appellant is stated to have applied for home loan of Rs.3,50,00,000/- 
(Rupees Three Crores and Fifty Lakhs) from respondent No.1, which 
was sanctioned and the loan agreement dated 11.01.2006 was 
entered into. The loan amount was disbursed to DLF Universal Ltd., 
in instalments between January 2006 to December 2007. As per 
the loan agreement, interest at 7.25% p.a and margin of 3.5 % per 
annum was provided. Though this was the position, the grievance of
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the appellant is that the respondent No. 1 revised the rate of interest 
to 8.25 %, despite RBI not having changed the Prime Lending Rate 
during 11.01.2006 to 01.05.2006.
4.	
In spite of the complainant contacting the respondent No. 2 and 
other officers, there was no relief, instead, the respondent No. 1 
raised the rate of interest to 8.75 %, to 9.25% and again to 10.5% 
though there was no change made by RBI with regard to the Prime 
Lending Rate. The appellant therefore got issued a legal notice dated 
27.09.2007 demanding to return the interest amount which was 
charged over and above 7.5% p. a. The respondent No.1 vide their 
reply to the notice dated 09.10.2007 contended that the appellant 
through the agreement opted for ‘Adjustable Rate of interest’, as such 
rate of interest was varying as per the retail prime lending rate of 
respondent No. 1. It is in that background the appellant approached 
the Consumer Forum.
5.	
We have heard Sri. Vikas Singh, learned senior counsel for the 
appellant, Sri. Aniruddha Choudhary for the respondents and perused 
the appeal papers.
6.	
The thrust of the contention is that the respondent No. 2 on behalf of 
respondent No.1 had assured that the interest charged by respondent 
No.1 is as per the retail prime lending rate to be notified by RBI. As 
such the interest which was indicated at 7.25% p.a. can be altered 
only if the RBI had altered the rate of interest and not otherwise.
Though, in the agreement it is contained that the rate of interest 
would be as per the prime lending rate of interest of respondent 
No.1, the same is contrary to the assurance that was held out to the 
appellant that such adjustable rate of interest agreed is only when 
the rate of interest is varied by the RBI and not as per the interest 
to be varied by respondent No.1. The learned senior counsel for 
the appellant in that regard has placed strong reliance on the email 
dated 05.10.2005, to contend that such assurance was made to 
the appellant.
7.	
The learned senior counsel for the appellant has relied on Texco 
Marketing (P) Ltd. v. TATA AIG General Insurance Co. Ltd., 
(2023) 1 SCC 428, wherein the issue considered was with regard 
to an exclusion clause in an insurance policy which materially 
altered the nature of the contract. It was observed in this regard 
that insurance contracts are standard form contracts wherein the
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insurer being the dominant party dictates its own terms and the 
consumer has weak bargaining power and as such the contracts 
are one sided. The concept of freedom of contract loses some 
significance in a contract of insurance. Such contracts demand a 
very high degree of prudence, good faith, disclosure and notice 
on the part of the insurer, being different facets of the doctrine of 
fairness. The bench consisting of two Hon’ble judges was of the 
opinion that one cannot give a restrictive or narrow interpretation 
to the provisions relating to unfair trade practices as given under 
the Consumer Protection Act, 1986. The Court’s finding against one 
of the parties qua the existence of unfair trade practice has to be 
transformed into an adequate relief in favour of the other, particularly 
in light of Section 14 of the 1986 Act. Once, the State Commission 
or the NCDRC, as the case may be, comes to the conclusion 
that the term of a contract is unfair, particularly by adopting an 
unfair trade practice, the aggrieved party has to be extended the 
resultant relief which is further strengthened by Sections 47 and 
49 of the 2019 Act. It was also observed that under sub-section 
(2) of Sections 49 and 59 of the Consumer Protection Act, 2019 
the State Commission and the NCDRC, respectively, may declare 
any terms of the contract being unfair to any consumer to be null 
and void and
there exists ample power to declare any terms of the 
contract as unfair, if in its opinion, its introduction by the insurer 
has certain elements of unfairness.
In Debashis Sinha v. R.N.R. Enterprise (2023) 3 SCC 195, 
the dispute was regarding amenities promised by the real estate 
developers in their brochures/advertisement which were not delivered 
by them. It was noted that once the NCDRC arrived at a finding that 
the respondents therein were casual in their approach and had even 
resorted to unfair trade practice, it was its obligation to consider the 
appellants’ grievance objectively and upon application of mind and 
thereafter give its reasoned decision. If at all, the appellants had not 
forfeited any right by registration of the sale deeds and if indeed the 
respondents were remiss in providing any of the facilities/amenities as 
promised in the brochure/advertisement, it was the duty of NCDRC 
to set things right. 
8.	
In Pradeep Kumar v. Postmaster General (2022) 6 SCC 351, in 
those facts and circumstances it was found by this Court that fraud 
was committed by an officer and employee of the post office. It was
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held that the Post Office, as an abstract entity, functions through 
its employees. Employees, as individuals, are capable of being 
dishonest and committing acts of fraud or wrongs themselves or in 
collusion with others. Such acts of bank/post office employees, when 
done during their course of employment, are binding on the bank/
post office at the instance of the person who is damnified by the 
fraud and wrongful acts of the officers of the bank/post office and 
such acts within their course of employment will give a right to the 
appellants to legally proceed for injury, as this is their only remedy 
against the post office. Thus, the post office, like a bank, can and 
is entitled to proceed against the officers for the loss caused due to 
the fraud, etc. but this would not absolve them from their liability if 
the employee involved was acting in the course of his employment 
and duties.
9.	
From a perusal of the above noted cases, it would disclose that 
they are circumstances where certain aspects were contained in 
the agreements in question, but a contention was raised contrary to 
the same and this Court had rejected such contention. The learned 
senior counsel would however contend that though the parties may 
have agreed on certain aspects in the agreement, what is important 
is the intention of the parties and any correspondence exchanged 
between the parties as a prelude to the transaction before executing 
the
agreement will be relevant to know the intention of the parties. It 
is in that regard contended that the email dated 05.10.2005 was prior 
to the agreement dated 11.01.2006 and as such the said intention 
should be gathered and given effect to. In order to persuade us to 
accept this contention, the learned senior counsel for the appellant 
has relied on the decision in Board of Trustees of Chennai Port 
Trust v. Chennai Container Terminal Private Ltd. (2014) 1 
CTC 573 wherein it was contended that the petitioner therein had 
granted licence to Respondent No. 1 therein for the development 
and maintenance of Chennai Container Terminal in terms of Licence 
Agreement entered into between parties in 2001. Contentions were 
raised that pre-contractual correspondence cannot be relied upon 
as the correspondence fructified into a contract. It was held that 
while English jurisprudence is clear on the aspect of pre-contractual 
correspondence losing its significance once the contract comes into 
existence, a straightjacket formula cannot be applied in India as 
there may be people from different states and different languages as
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their mother tongue whose wishes culminate into a contract which 
is drafted and concluded in a foreign language.
10.	 Having perused the precedents on which reliance was placed, we 
are of the opinion that the same does not come to the aid of the 
appellant. In the instant case, at the outset, it is to be noted that 
the respondent No.1 being a NBFC and as a corporate body would 
be bound by its policies and procedures with regard to lending and 
recovery. In that regard, the applicability of the rate of interest to 
be charged is also a matter of policy and cannot be case-specific 
unless the individual agreement entered into between the parties 
indicate otherwise.
11.	 In that backdrop, a perusal of the fact situation in the instant case will 
disclose that the appellant filed the loan application on 16.09.2005. 
It was indicated therein that the ‘Rate option’ is ‘Adjustable’, which 
discloses that, what was opted is an Adjustable Rate of Interest, which 
will depend on the increase or decrease of the rate of interest. The 
issue however is as to whether such an Adjustable Rate of Interest 
will apply based only on the rate of interest being fixed/ altered by 
RBI or as to whether the Rate of Interest fixed/ altered by Respondent 
No.1 - HDFC will apply in respect of the loan transaction. It is in that 
regard contended that respondent No.2, representing respondent No. 
1 - HDFC
had made a tabulation comparing the rate of interest to 
represent that it is beneficial to the appellant and had explicitly indicated 
in the email dated 05.10.2005 that- “PLR is decided by RBI, whereas 
FRR is decided by the individual Bank, HDFC is the only Institution 
working on PLR”. It also indicated that in other banks like ICICI there 
is a clause that the change in FRR is on sole discretion of the bank.
12.	 The agreement dated 01.11.2006 executed between the parties inter 
alia provides as follows;
“1.1 (e). The expression ‘rate of interest’ means the 
Rate of interest referred to in Article 2.2 of this Agreement 
and as varied from time to time in terms of this Agreement. 
(h) The expression ‘Adjustable Interest Rate’ or “AIR” 
means the interest rate announced by HDFC from time to 
time as its retail prime lending rate and applied by HDFC 
with spread, if any, as may be decided by HDFC, on the 
loan of the borrower pursuant to this Agreement.
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(i) The expression “Retail Prime Lending Rate” or ‘RPLR’ 
means the interest rate announced by HDFC from time 
to time as its retail prime lending rate.
2.2 (a). Until and as varied by HDFC in terms of this 
Agreement the AIR applicable to the said loan as at the 
date of execution of this agreement is as stated in the 
Schedule. is as stated in the Schedule.	
3(f). HDFC may vary its retail crime lending rate from time 
to time in such manner including as to the loan amounts 
as HDFC may deem fit in its own discretion.”
13.	 At the threshold, it can be noted that the appellant is not an illiterate 
person to take the benefit of the precedents relied upon. On the 
other hand, when it is contended that the appellant had the option 
of securing loan from other banks and that being misled by the email 
had entered into the transaction, would by itself indicate that the 
appellant was worldly wise. In such circumstance when the parties 
have signed the agreement dated 01.11.2006, the terms agreed 
therein would bind the parties and the email exchanged between 
the parties cannot override the policy decisions of the respondent 
No.1 institution. In order to contend that the appellant has been 
misled or that the earlier representation will constitute unfair trade 
practice, the appellant ought to have raised such contention when 
the agreement was to be signed.
14.	 Having executed the agreement; having agreed to the terms and
conditions; having received the loan amount, the appellant cannot 
raise any objection for the first time when the rate of interest was 
increased after having acquiesced by signing the agreement. Further, 
the appellant having repaid the loan amount with interest as per the 
terms of agreement cannot make out a grievance in hindsight and 
seek refund of the amount paid.
15.	 That apart, though it is contended that the appellant had the option 
of securing financial assistance from other institutions but was lured 
by respondent No.2 through the email and therefore amounts to 
unfair trade practice causing loss to the appellant, due to which he is 
entitled to be compensated, there is no material on record or evidence 
tendered to establish that the appellant had in fact approached any 
other financial institution which had agreed to sanction loan or to

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demonstrate that it was a better bargain and if taken from such 
institution the appellant was in a better position.
16.	 Therefore, if all these aspects of the matter are kept in perspective 
and the order passed by the NCDRC is perused, we are of the 
view that no error has been committed so as to call for interference. 
Accordingly, the appeal is dismissed with no order as to costs.
17.	 Pending application, if any, stands disposed of.
Headnotes prepared by: Nidhi Jain
Result of the case: 
Appeal dismissed.