In Brief
The Supreme Court examined whether a bank could levy a 2% pre-closure charge on an educational trust's early repayment of a Rs. 21.6 crore term loan. The bank had already reduced the charge from 2% to 1%. The National Commission unilaterally reduced it further without contractual basis. The Court held that once a loan agreement is signed incorporating pre-payment charges, it binds both parties. A consumer commission cannot unilaterally modify agreed penalties on non-contractual grounds. While the bank's voluntary waiver benefits the borrower, the commission exceeded its authority by imposing different terms. The Court allowed the bank's appeal and granted the complainant liberty to raise calculation errors and renewal charges directly with the bank.
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