Important Judgments of the Year 2022 (PART-2)

by admin | Feb 6, 2023 | Legal

Important Judgments of the Year 2022 (PART-2)

We are presenting to you the top 10 judgements of the year 2022. This is the second part. This part has five summarised judgements. To read the full case and judgments, please subscribe to our buying guide for the details. You can find it in ‘Top 10 Judgements-2022’.

Dr Prem Lata, Legal Head VOICE

6. Case: Bharmaputra Biochem Private Limited Vs New India Assurance Company & Anr.

Civil Appeal No. 6943 of 2021/ Decided February 21, 2022

Head Note-The matter cannot be left unresolved because an unnecessary party was added. An unneeded party may be struck down by the court.

The National Consumer Disputes Redressal Commission issued an order on September 27, 2021, by which the complaint was returned unadjudicated for the reason that the surveyor was an unnecessary party in the insurance claim dispute. These facts served as the basis for the appeal before the SC. The claimant or appellant was granted the right to submit a new complaint within 30 days. The insurance company was to be the “sole opposite party for pursuing reparation” while being granted freedom.

7. Amit Katyal Vs Meera Ahuja & others

Civil appeal No. 3778 of 2020/ Decided March 03, 2022

Head Note- Corporate Insolvency Resolution Process (CIRP) proceedings against a builder can be withdrawn if parties settle the issue

In the case of Amit Katyal Vs Meera Ahuja & others, home buyers in the housing project Krrish Provence Estate at Gurgaon had gone against Jasmine Buildmart Pvt. and invoked Section 7 of IBC 2016 before the Adjudicating Authority/NCLT.

But later, the original applicants filed IA No. 18679 of 2022 under Article 142 of the Indian Constitution and Rules 11 and 12 of the National Company Law Tribunal Rules, 2016, requesting permission to end the CIRP proceedings upon receiving payment of Rs. 3, 36, 02,000/- plus applicable interest from the money the appellant had deposited in the registry of this court.

8. Case: Mahaveer Stone Crushing Co Vs Tata Motors Ltd

Civil appeal No 6730 of 2010/ Decided on March 24, 2022

Head Note-Selling Repainted & Repaired vehicles, deficiency of services

Complaint before District Forum Gurgaon under CP Act 1986

That new vehicle was purchased on 10.2.1999
When taken to workshop after five months of purchase, it was observed that vehicle had an accident and was repainted and claimed relief for replacement.
Dealer as well as manufacturer were made parties. Expert on 27.1.2000 confirmed the fact. District forum ordered for replacement with cost of litigation.

9. Experion Developers Pvt. Ltd. Vs Sushma Ashok Shiroor

Civil Appeal No. 6044 of 2019 with Civil Appeal No. 7149 of 2019/ Decided on April 07, 2022

Head Note- SC allowed three fold choices to the home buyer, not been given possession of dwelling within stipulated time

In a case resolved on April 7, 2022, the SC adopts a very lenient stance in favour of homebuyers who put their hard-earned money into a developer’s project but did not receive possession by the deadline.

10. Medicos Legal Action Group Vs Union of India|

SLP (Civil) 19374/2021/Decided on April 22, 2022

Head Note –Speech during Parliament debate is of little relevance

SC Re-affirms its stand on Healthcare service under Consumer law

An organization “Medicos Legal Action Group” had filed a writ petition before the High Court of Bombay as Public Interest Litigation No. 58 of 2021 and prayed before the court to declare that services performed by healthcare service providers are not included within the purview of the Consumer Protection Act 2019.

Comparative Advertisement and Trade mark Law

by admin | Feb 6, 2023 | Legal

Comparative Advertisement and Trade mark Law

A comparative advertisement would always involve the statement that the goods of the advertiser are better in some aspects than that of the competitor. But there is line that an advertiser cannot cross. He cannot disparage or defame the goods of his competitor. It is permissible for an advertiser to advertise and highlight features of his product but the message must clearly be to highlight the superior features of his product while ensuring that the product of his competitor is not disparaged or defamed.

Dr Prem Lata, Legal Head VOICE

Dabur India Ltd. v. Colortek Meghalaya Pvt. Ltd. & Anr. (SC)

An appeal had been filed by Reckitt Benckiser (India) Pvt. Ltd against Hindustan Unilever Limited before the double bench (Coram Hon’ble Mr. Justice Vibhu Bakhru Hon’ble Mr. Justice Amit Mahajan) against the judgment delivered on by single judge of HC of Delhi on 09.11.2021 in the suit bearing 340/2021. Reckitt is aggrieved that the learned Single Judge has rejected its prayer for restraining the ‘HUL’ from broadcasting a TV Commercial (TVC-I’) which according to Reckitt was disparaging its product sold under the trademark ‘HARPIC’, during the pendency of the suit.

High court of Delhi now delivered Judgment on 26.09.2022 in the appeal case FAO (OS) (COMM) 149/2021 and CM Nos. 42068/2021, 42069/2021, 42070/2021 & 42071/2021.

The basic question before the Hon’ble High Court was

“Whether the prima facie view of the learned Single Judge HOLDING that the impugned TVC-1 does not disparage Reckitt’s products or infringes Reckitt’s trademark is correct as per law”.

Facts leading to dispute

Reckitt Benckiser India Private Limited is a company engaged in the manufacturing, packaging, sale and distribution of various fast moving consumer goods such as healthcare products including antiseptic liquid, toilet care products, surface care products, pharmaceuticals, insecticides and food products. It manufactures of a well-known toilet cleaner under the trade mark ‘HARPIC’ in India. Originally it was launched in England in 1920 and subsequently it is being sold in over 47 countries worldwide.

Reckitt states that on 15.03.1979, it registered the word mark ‘HARPIC’ (Application No. 347055) under Class 3. Reckitt also obtained registration for the shape of their bottle used for packaging Harpic branded products in India

HUL is engaged in the business of fast moving consumer goods, primarily of manufacturing, marketing and/or selling of various consumer products, including food and refreshments, cosmetics, toiletries, floor cleaners, toilet cleaners, toilet soaps, washing soaps and detergents. HUL also manufactures and markets a toilet cleaner, which is sold under the trademark ‘DOMEX’.

The dispute arises due to certain advertisements launched by HUL for its product Domex. HUL claims that its product is superior in fighting bad odour in comparison to Reckitt’s product Harpic. Reckitt has instituted the present action, as it claims that HUL’s advertisement campaign disparages and denigrates its product Harpic.

Reckitt has filed the said suit, seeking a decree of permanent injunction restraining HUL from telecasting, broadcasting and publishing five advertisements.

The learned Single Judge restrained HUL from publishing or broadcasting four of the impugned advertisements (one published in print and three available for viewing on the YouTube Channel) but declined Reckitt’s prayer for interim injunction, restraining HUL from publishing ban HUL from broadcasting the impugned TVC-1. The court did not accept that the impugned TVC-1 indicated a prima facie case of disparagement.

The present appeal is confined to the decision of the learned Single Judge to decline Reckitt’s request to interdict the impugned TVC-1.

Allegation by Appellant

The clear message of the advertisement is that Harpic is ineffective as a toilet cleaner; it is ineffective to combat bad odour.It referred the following cases

Dabur India Ltd. v. Colortek Meghalaya Pvt. Ltd. & Anr. (167 (2010) DLT 278 (DB) and Colgate Palmolive Company & Anr. v. Hindustan Unilever Ltd. (2014) 206 DLT 329.

“Although puffery and hyperbole to promote one’s product is permissible, it is not open for any person to denigrate or disparage the goods of another. “

As per the above case it is impermissible for any advertiser to make any untruthful statement in its advertisement. And, the impugned advertisements were untruthful.

He also referred to the decision of the Madras High Court in Gillet India Ltd. v. Reckitt Benckiser (India) Pvt. Ltd. (2018 SCC OnLine Mad. 1126) and contended that in a suit for disparagement, it would be necessary that the disparaging advertisements be restrained, as pecuniary compensation at a later stage would be insufficient to compensate the loss suffered and damage caused due to disparagement.

Counter Reply by HUL

The above allegations were countered by the contesting party HUL. They also referred to the decisions of Court in Colgate Palmolive Company & Anr. v. Hindustan Lever Ltd. as well as Dabur India Ltd. v. Colortek Meghalaya Pvt. Ltd. & Anr. and contended that the law relating to disparagement is well settled. The Appellate Court in Wander Ltd. And Anr. v. Antox India P. Ltd (1990 Supp. SCC 727) contended that

“It is impermissible to interfere with the discretion exercised by the learned Single Judge unless it is shown that the discretion was exercised arbitrarily, capriciously or perversely.”

He submitted that in the present case, the learned Single Judge had rightly applied the law and declined the interim injunction as, in his view, the impugned TVC-1, viewed as a whole, did not disparage and denigrate Reckitt’s product.

High Court Conclusion with Reasons

Tata Press Limited v. Mahanagar Telephone Nigam Limited, the Supreme Court authoritatively held that commercial speech is a part of the freedom of speech and expression guaranteed under Article 19(1)(a) of the Constitution of India.

The Court also accepted, in unambiguous terms, that advertisements were a part of commercial speech. It is, thus, necessary that fair amount of latitude be available to advertisers. This has also been emphasized in the case of Colgate Palmolive (India) Ltd. v. Hindustan Lever Ltd. Above referred. However, such protection cannot be extended to misrepresentation or where the advertisements fall foul of the validly enacted law.

US Supreme Court in Virginia State Pharmacy Board v. Virginia Citizens Consumer Council, whereby the Court had held that “untruthful speech, commercial or otherwise, has never been protected for its own sake.” and that it saw no obstacle for a State to deal effectively when the commercial speech is “deceptive or misleading”.

Observation and order by the double bench of High Court

In view of the above decided judgments, the court observed as hereunder

We have visually seen the advertisement and find HUL has clearly crossed the line. It not only claims that its products are better than Reckitt’s but it also, prima facie, disparages Reckitt’s product.
The TVC-1 not only projects a message that Domex fights odour for a longer period of time, it also sends a clear message that Harpic does not address the problem of foul smell that emanates from toilets.
It also sends the message that whoever chooses Harpic would have to live with their toilets smelling foul. This is a message that disparages Reckitt’s product and, in our view, cannot be permitted.

Hence By an order dated 01.12.2021 passed by this Court, HUL was restrained from airing the impugned TVC-1. We make the said order absolute. The same shall continue till disposal of the suit.

However none of the observations or views expressed should be construed as final or dispositive of the Reckitt’s claim in the suit. (VIBHU BAKHRU, J)

Referred Cases by Court

PepsiCo. Inc. And Ors. vs Hindustan Coca Cola Ltd. had restated the principles

(1) The intent of the advertisement – this can be understood from its story line and the message sought to be conveyed.

(2) The overall effect of the advertisement – does it promote the advertiser’s product or does it disparage or denigrate a rival product?

(3) The manner of advertising – is the comparison by and large truthful or does it falsely denigrate or disparage a rival product? While truthful disparagement is permissible, untruthful disparagement is not permissible.

Reckitt and Colman India Ltd. vs M.P. Ramchandran and Anr. In that decision the court set out the following propositions:

a) A tradesman is entitled to declare his goods to be best in the world, even though the declaration is untrue.

(b) He can also say that his goods are better than his competitor’s, even though such statement is untrue.

(c) For the purpose of saying that his goods are the best in the world or his goods are better than his competitors’, he can even compare the advantages of his goods over the goods of others.

(d) He however, cannot, while saying that his goods are better than his competitors’, say that his competitors’ goods are bad. If he says so, he really slanders the goods of his competitors. In other words, he defames his competitors and their goods, which is not permissible.

(e) If there is no defamation to the goods or to the manufacturer of such goods no action lies, but if there is such defamation an action lies and if an action lies for recovery of damages for defamation, then the Court is also competent to grant an order of injunction restraining repetition of such defamation.

De Beers Abrasive Products Ltd. and Others v. International General Electric Co. of New York Ltd. and Another

“The statement: “My goods are better than X’s” is only a more dramatic presentation of what is implicit in the statement: “My goods are the best in the world.” Accordingly, I do not think such a statement would be actionable. At the other end of the scale, if what is said is: “My goods are better than X’s, because X’s are absolute rubbish.” then it is established by dicta of Lord Shand in the House of Lords in White v. Mellin [1895] A.C. 154, 171, which were accepted by Mr. Walton as stating the law, the statement would be actionable.”

It is open for a person to claim that he is the best seller in the world or a best seller in the street but it is not open for him to denigrate the services of another.

Guiding principles set by SC through various judgments in a comparative advertisement

An advertisement is commercial speech and is protected by Article 19(1) (a) of the Constitution.
An advertisement must not be false, misleading, unfair or deceptive.
There would be some grey representations of fact but can be permitted only to this extent as glorifying one’s product & protection of Article 19(1)(a) of the Constitution is available. However, if an advertisement extends beyond the grey areas and becomes a false, misleading, unfair or deceptive advertisement, it would certainly not have the benefit of any protection.

Some Exciting News

by admin | Feb 6, 2023 | Editorial

Some Exciting News

Let’s start off with something encouraging, shall we? According to data made public by the Ministry of Statistics & Programme Implementation (MoSPI), India’s retail inflation rate reduced slightly from the previous month and continued to fall below the Reserve Bank of India’s (RBI) comfort zone of 2%-6% for another month.

In December, the inflation rate based on the Consumer Price Index (CPI) decreased to 5.72%. Lower food costs, especially the decline in vegetable prices, contributed to keeping inflation within the acceptable range.

Let’s talk about another very significant development. As many of you must already be aware, India has surpassed China as the world’s most populous nation. India’s population was 141.7 crore by the end of 2022, according to forecasts from the World Population Review (WPR). That’s just over 50 lakh more than China’s 141.2 crore estimate from January 17.

India, a nation where 50 percent of people are under 30, is predicted to have the fastest-growing major economy in the world. The UN predicted that the milestone will be attained this year.

The third-largest economy in Asia currently produces enough food for itself. It is the second-largest producer of rice, wheat, and sugar. In addition to being the biggest user of sugar, it is the biggest importer of edible oils. India ranks second in terms of steel and gold consumption and is the third-largest market for the purchase of crude oil. It is also the third-largest domestic aviation market globally.

India is growing by leaps and bounds and is also becoming economically stronger day by day. India is projected to be one of the fastest-growing major economies in the world. Morgan Stanley has said that India’s GDP is likely to more than double by 2031- from the current $3.5 trillion to $7.5 trillion.

I hope you have loved reading the editorial and will continue to support us in bringing the best, interesting and informative articles for your perusal. In the meantime, keep reading the articles we have brought you this month. We discuss D&O Insurance, Solar Rooftop Systems and many more. Do share your thoughts at info@consumer-voice.org.

Until then, happy reading!

Pallabi Boruah

Editor

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The Worst Food Additives for Children

by admin | Feb 4, 2023 | food, resources

The Worst Food Additives for Children

Food additives such as colourings, preservatives, chemicals in food packaging, and so on can have a negative impact on children and cause issues such as hyperactivity and disruptive behaviour. This is due to children’s lower body weight than adults, which serves as a reference point in determining the permissible limits of food additives. In order to restrict your child’s exposure to certain food additives, we have developed a list of these additives, foods that typically contain them, and how to recognise them.

Richa Pande

Food additives are used to keep food fresh, prevent spoilage, and improve its flavour, texture, and appearance. However, some evidence suggests that these additives may have a negative impact on health, particularly in children and the elderly. Similarly, chemicals found in some food packaging could be hazardous to their health. Thus, it is important to educate ourselves about these additives and chemicals and take measures to reduce our exposure to them.

Common Food Additives that can be harmful for kids

Artificial food colours

Food colours are used to enhance the appearance of food products. However, there have been numerous concerns raised in recent years about potential health consequences. According to certain research, food colours such as Blue 1, Red 40, Yellow 5 and Yellow 6 can induce allergic reactions in some people. Many food colours have been related to hyperactivity in children, however another study suggests that this may be due to some children being more sensitive than others. It has also been proven that if children diagnosed with ADHD cut synthetic food colours from their diet, they show decreased ADHD symptoms.

Preservatives

Some food preservatives are also linked with causing hyperactivity in children. A recent study indicates Sodium Benzoate, a preservative commonly used to preserve fruit pulp and purees, jams, pickles, margarine, olives, fruit yogurts, canned vegetables, and salads, etc. can also cause hyperactivity in children.

Always go through the ingredient list in the food labels, and avoid picking the products for your children that have these food additives

INS 102 or Tartrazine
INS 104 or Quinoline Yellow
INS 107 or Yellow 2G
INS 110 or Sunset Yellow
INS 122 or Azorubine
INS 124 or Ponceau Red
INS 127 or Erythrosine
INS 128 or Red 2G
INS 129 or Allura Red
INS 132 Indigotine
INS 133 Brilliant Blue
INS 142 Green S
INS 151 Brilliant Black
INS 200-203 sorbates
INS 210-213 benzoates
INS 220-228 sulphites
INS 280-283 propionates

Nitrates / nitrites

They are commonly used in cured and processed meats as a food preservative and to enhance the meat colour. It has been found that they can interfere with thyroid hormone production and the blood’s ability to deliver oxygen in the body. They have also been linked with gastrointestinal and nervous system cancers.

Aspartame

It is an artificial sweetener present in several sugar-free beverages and some vitamin supplements. It has been found to have negative consequences on the child’s neurological development and to cause increased frequency of mood disorders and frequent headaches.

Antioxidants like BHA and BHT

They are commonly present in butter/oil blends, edible oils (may not be listed on packaging), milk powder, chewing gums, etc. and they can cause symptoms like dermatitis, fatigue, aggressive behaviour, insomnia, and headaches in children.

How to avoid these food additives?

It is crucial to note that these food colours are mostly present in ultra-processed foods, and their consumption in a balanced diet should be limited regardless. Always choose whole foods because they include more key nutrients and are naturally free of food colouring.

Chemicals found in Food Packaging that are harmful for kids

Bisphenols A (BPA) – They are found in the lining of food cans, soda cans, plastic food ware with the number 3 or 7, etc. They can act like the hormone oestrogen and interfere with puberty and fertility. Bisphenols can also increase body fat, and cause problems with the immune and nervous system.
Perfluoroalkyl chemicals (PFCs) – They are commonly found in cardboard food packaging, microwave popcorn bags, wax pastry bags, and commercial household products such as non-stick pans.

How to avoid exposure to chemicals in food packaging?

Avoid microwaving food or beverages in plastic containers. Avoid preparing infant formulas, and storing pumped human milk, in plastic containers whenever possible. Use glass or stainless steel cookware. Avoid plastics with recycling codes 3, 6, and 7.

Home Loan Balance Transfer & Top-Up

by admin | Feb 4, 2023 | loan

Home Loan Balance Transfer & Top-Up

Whenever there is an increase in the repo rate of RBI, the loan of the bank also becomes expensive. In such a situation, the EMI burden increases which affects the budget of the common man’s house. Recently, RBI has increased the repo rate for the fifth time. According to economic analysts, this process has not stopped yet, that is, the repo rate may increase again in the coming times and due to that loans may become costlier. In such a situation, the biggest impact is on the home loan borrowers because it is a long term loan. If you have also taken a loan from the bank and the financial budget of the house has gone awry due to the increasing EMI of the home loan, then here are the measures that can prove helpful for you.

Subas Tiwari

Home Loan Balance Transfer allows you to transfer your outstanding loan from other loan institutions to another Banks/NBFCs at a lower interest rate, this helps in reducing your EMI. Home loan balance transfer or refinancing or simple balance transfer is a process by which you can take advantage of lower interest rate offered by other Banks/NBFCs on existing loans.

How to transfer your home loan?

Taking a home loan makes the process of buying your home easy, but you can also find a home loan that has low interest rates and other value added services. In such a situation, you can transfer your home loan to the lender providing better services. This process of switching or transferring your home loan from one lender to another is called home loan balance transfer.

When should you opt for home loan balance transfer?

Usually, you shift your home loan balance to another lender when you feel the rules of your current lender are unfavourable and are not ready to negotiate. However, you can have many reasons for transfer, but the main reason for balance transfer is high interest rate. This may be due to the presence of many other reasons such as stringent rules, a lot of extra charges and poor customer service.

It is best to transfer home loan balance in the initial years of your term. This is because initially the share of interest in each EMI is much higher than the principal. So, this is the time when you can get the most benefit by falling interest rates. Also, remember that for transferring the balance you may have to pay a fee to the new lender and pay the processing fee again. So, keep these numbers in mind, understand your total benefit and decide accordingly. This guarantees that your balance transfer will actually help you in saving.

How does home loan balance transfer benefit you?

It reduces the burden associated with your repayment, which allows you to pay the loan in a short time.
Your new lender can provide additional benefits such as easy pre-payment and foreclosure at no extra charge. This makes repayment easier.
It provides you better customer service.
Your new lender can provide you with many additional features like top-up loans, which you can use for many things. For example, to decorate your house.

Home Loan Balance Transfer – Eligibility Conditions

Any employed, self-employed professional or self-employed businessman can apply for home loan balance transfer. Although all the lenders have different eligibility conditions, some similar conditions are as follows:

Applicant should be Indian and age between 21 to 60 years. Whereas, self-employed persons are eligible for transfer till the age of 65 years.
Your credit rating is not only good during the loan application, but the rating should not be low till the time of transfer, otherwise banks can reject your application.
Applicant has been working in one company for some years or in case of self-employment, the applicant’s business has been going on for some years. This period is usually 2 years.
You must have the ability to pay every month or the minimum salary required.
Some banks may also require an applicant’s minimum family income.

Knowing the advantages of a house loan balance transfer, let’s now examine the bank or NBFC’s procedure for carrying it out.

Submit an application to your current lender

When you are ready for balance transfer, then it is important to inform your lender through the application. There will be a letter or form in this application. In both cases, prepare your application carefully and describe the reasons for the transfer. If it is a form, make sure that you fill it in correctly.

Take NOC or MoU

After completing the initial formalities, your lender will contact you to give you a Consent Letter or No-Objection Certificate (NOC). This document is very important, because when you give your application, then your new lender will ask you for this document.

Assign Your Document

When you have received the NOC, you can contact your new lender and hand over all your documents to him. Apart from submitting the required documents like NOC and KYC, you may also have to submit a copy of your property document, loan balance statement and interest statement and filled application form.

Get Confirmation from Old Lender

After submitting all your documents to the new lender, wait for the final confirmation from your old lender regarding the closure of your loan account. This proves that the loan contract has expired as per the terms of the loan contract.

Pay the applicable full fees and start afresh

Now, all you have to do is sign the contract with the new lender and pay the outstanding fees. Once this is complete, you can repay the EMI for the next month. This complete guide can help you easily transfer the balance of your home loan to the lender of your choice. After this, you will be able to take benefits like the affordability and flexibility offered by your new lender.

What is the step-by-step procedure for taking a home loan?

Approval of home loan involves several stages. However, these are completed quickly, after which the loan is disbursed in a few days.

To avail a home loan, the following steps are to be followed –

Step 1. Applications

The first step is to fill the application form with some details like name, phone number, PIN code, employment type, etc. The Bank / NBFC representative will contact you to further the application process.

Step 2. Assemble the document

Bank / NBFC representative will come to your house to take the necessary documents for home loan, these documents are

Documents of property to be mortgaged.
Identity proof – Aadhaar, PAN, Voter ID, Passport, Driving License, etc.
Address proof – latest utility bill, any identity proof with your permanent address, etc.
Latest salary slip or Form 16.
Bank account statement.
Evidence of business presence.

Step 3. Document Processing and Verification

The lender will process and authenticate your document. They can contact your office or related organization to confirm your employment or business.

In this phase, they will check your CIBIL score and credit report.

Your loan application will move to the next stage only when all the documents are in order, and your CIBIL score and credit report are satisfactory.

Step 4. Approval Letter

After completing the above steps, you will receive an acceptance letter. The acceptance letter usually includes the following information –

Loan amount
Interest rate
Interest Rate Type – Fixed or Variable
Repayment period

The acceptance letter may also include other terms, conditions and policies of your loan. To accept their offer, you have to sign a copy of this letter and give it to your lender.

Step 5. Payment of security fees

After signing the acceptance letter, you will have to pay a one-time security fee. The lender may ask you to pay this fee in advance.

Step 6. Checking legal and technical information

The lender will check the legal and technical information before disbursing the loan. They will also send their representative to inspect the house.

Step 7. Loan Agreement and Disbursal

You will receive the original agreement letter, after thorough investigation from the lender. Finally, the company will disburse your home loan as per the terms.

Interest rate-how are they fixed by Banks/NBFCs?

What is MCLR?

RBI governs the lending rates in India for financial transactions by financial institutions. Earlier, RBI used to follow a system known as BASE RATE in which RBI would decide the Base Rate & all FIs would follow that rate as the Minimum Lending Rate (MLR).

Since April 2016, RBI has changed the system to fix Base Rate to Marginal Cost (of funds based) Lending Rate (MCLR). There are set guidelines in RBI for revising this rate every month based on several factors including borrowing rates & the REPO rate.

FLOATING RATE OF INTEREST: This is the lending rate charged to a loan borrower that is based on MCLR. Any change in MCLR will automatically affect the floating rate (increase or decrease). But the borrower enjoying a floating rate will not usually feel because when MCLR goes up, the tenure also goes up & vice versa. So when there is no change in the floating rate, the EMI stays fixed as it was though there would be a change in the floating rate which will affect/benefit the borrower in the rate of interest charged on his loan account.

In case the borrower wants the benefit of reduced EMI consequent to a reduction in the floating ROI, he needs to approach his Bank/NBFC to avail the benefit in which case the tenure of the loan (remaining period of loan) goes up accordingly.

FIXED RATE: This is the lending rate which is charged to a borrower that stays fixed irrespective of change in MCLR. NBFCs do not usually encourage from Fixed Rate to Floating Rate but encourage vice versa.

PRIME LENDING RATE: While it is mandatory to pass on the benefits under the MLR system (followed by banks), the same is not true under the Prime Lending Rate system followed by NBFCs. Under the PLR system, when RBI effects changes in MCLR, the PLR rate is kept unaffected as the NBFCs absorb the marginal increase. When MCLR is reduced, the PLR is kept intact & the benefit, if any, is passed on to the borrower on payment of additional Process fees after a written request is made for the same. This is true of each decrease in PLR. So NBFCs are free to set their PLR of their choice.

It is left to the prospective borrower to negotiate the interest rate deftly with the Bank/ NBFC to obtain the best rate for himself.

Meet the need of money by taking Top-Up on Home Loan

When most of us suddenly need money, personal loan is the easiest route. The reason for this is because the banks give loans in a short time. But, there are many cheaper options available in the market as compared to personal loans. For taking a loan at a cheaper interest, you can approach a top-up or gold loan on a home loan. If you have taken a home loan, you can easily talk to the bank and top-up it on that loan. The interest rates of top up loans are slightly higher than home loans but much lower than personal loans.

What is the Top-Up Home Loan?

This mainly allows one to avail a loan amount on a home loan. Banks offer this loan to customers already taking home loans, given their financial standing. However, top-up facility can be availed only after 6 to 12 months of taking home loan.

So it’s better than a personal loan

Top-up loans can be used for any purpose. If you renovate the house, you will also get the benefit of income tax. Top-up loans can also be used for children’s education, daughter’s wedding or for purchasing additional properties. This loan is taken in addition to the existing home loan, so along with the payment of the home loan, the monthly instalments of the top up loan have to be paid.

Determination of loan amount

Banks generally offer 65 to 70 percent of the property’s current value (including home loans) as top-up loans. For this, the banks get the property appraised. The maximum amount of a top-up loan depends on the individual lenders. The more the home loan is paid, the more top-up loan you get.

Key features and benefits of top-up loans

It is available at a low rate of interest: This loan is available at a low rate of interest, due to which it is economical and easy to pay. You can avail a higher amount with a small adjustment in your EMI.

It has a longer tenure: On a top-up loan, you can enjoy the same long-term convenience as a home loan. This reduces the value of EMI, making it easier to repay further.

It provides quick money: The eligibility criteria for this loan is normal and its disbursal is also easy to process. This ensures that you can apply to get the money whenever you need it.

It does not require a separate application: When you take a top-up loan, you do not need a separate request. This application process is simple and fast.

It provides tax benefits: Interest paid on top-up loans is tax free under Section 24 of the Income Tax Act. To take advantage of this, you have to prove that the top up loan will be used to buy, build, improve or renovate the residential property. If you use the loan amount for the education of your children, you can still avail this rebate.

Here are some ways in which you can use top up loan:

Home renovation and expansion
Buying furniture for your home
Upgrading soft furnishing and home appliances
Structural changes and repairs
Fixing plumbing or wiring

How to quickly apply for a Home Loan Top-Up?

Complete loan eligibility: When you take this loan, you also get an offer for home loan balance transfer. Generally, lenders review your previous payment history and total home loan amount before accepting your previous payment history. The amount of top-up loan also depends case by case. If the value of your property is high, then Banks/NBFCs gives top-up loan which is more than the amount of your home loan.

Fill the application form: To apply for this loan, you can choose between online and offline medium. It is easy to apply online and you have to submit a basic form which you can fill in minutes. However, it is important to enter your details correctly for easy processing.

You may have to submit a copy of the original KYC document and your property paper. Before applying, you should get the information about the documents required for the home loan, which you will have to submit as soon as possible so that the approval for the loan can be obtained quickly. After this, Banks/NBFCs will review your application and will disburse the amount directly in your account. With this information, you can easily apply for a top-up loan and make full use of it.

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