Whether a consumer is entitled to transaction costs debited by the bank? written by Prapti Kothari student of Institute of Law, Nirma university



An account with the Appellant Bank was operated by M/S Brindavan Agro Industries Pvt Ltd. (respondent). The bank debited the relevant transaction costs, namely the TEV study and the service tax fees, to the consumer’s account. The penultimate request for approval was sent to the Head Office which had the appropriate authority to grant the approval for such loans of substantial value.

The consumer raised objections; however, to the deduction of transaction fees because the bank was only entitled to do so once the loan had been approved. Due to the purported delay of the bank in permitting access to credit as well as the fact that the consumer had obtained financial assistance from other banks, the consumer demanded a refund of the specified amount on the basis of losses incurred.

Again, through e-mails, he recapitulated his demand application. The access to credit was, nonetheless, granted within three months of the final revised application. When the bank’s officers confronted the customer with the demanded letter of sanction for the credit facilities, the consumer manifested the letters of sanction granted by the other banks. The consumer lodged an application that authorized the State Commission in ordering the Bank to pay the balance of the transaction costs besides the interest. However, the appeal against such an order was dismissed before the National Commission.


Whether the Respondent was entitled to transaction costs debited by Bank?


Section 17 of the Consumer Protection Act, 1986


The court, therefore, observed that the decisions of the State Consumer Disputes Redressal Commission (SCDRC) and National Consumer Disputes Redressal Commission (NCDRC) endured from patent illegitimacy and that their directions were subsequently set aside. The Bank decided, however, to reimburse some amount, from the transaction costs by intimating the customer through an email but in its e-mail, the customer had not approved such an offer.
Accordingly, the Consumer was qualified to a reimbursement of the amount conveyed to the Consumer by the Bank’s decision instead of an exemption of TEV charges in its totality. The demand was to award half of all the fees, thus the total sum of the fees to be taken into account and not the fees under a specific heading. In addition, the bank was ordered to provide a refund within two months of the date of the order.


The Bank’s facilities were used for cash credit services, which in turn entitled the respondent to hold a position of ‘consumer’ under the Act.
The consumer was evidently an old and a regular customer of the appellant bank, who requested more than Rs. 40 crores of credit facilities and it was shocking that he was oblivious of the Bank’s operation, policies and procedures because for many years he had been affiliated with the bank. It was not acceptable to acknowledge unfamiliarity with the Bank’s process and its Circular. The customer was conscious of the transaction costs and demanded that the transaction costs be waived; thus, the transaction costs were debited by the bank in accordance with the authorization granted by the consumer.

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