D.Soundararajan,

S/o.J.Devarajan

2. Mrs.S.Jesurathinam,

W/o.D.Soundararajan

19/6, Subash Nagar, FCI Road,

Ganapathy, Coimbatore-6. --- Complainants

Vs.



1. GE Money Financial Services Ltd.

Rep.by its Manager, 36/6 and 7,

1st floor, R.S.Puram, Coimbatore-2.

2. Ahni Thottupura, Area Sales Manager,

GE Money Financial Services Ltd.

1st floor, R.S.Puram, Coimbatore-2.

3. Amutha Ganesan, Team Leader,

GE Money Financial Services Ltd.

133, Mecricar road, R.S.Puram, Coimbatore-2.

4. Santhosh kumar, Loan Advisor,

GE Money Financial Services Ltd.

133, Mecricar road, R.S.Puram, Coimbatore-2. --- Opposite Parties


ORDER

Complaint under Section 12 of the Consumer Protection Act, 1986 seeking direction against the opposite parties to refund a sum of Rs.44,660 to the 1st complainant with interest at the rate of 18% from 1.1.2008, to return 38 blank cheques issued by the 1st complainant in favour of the 1st opposite party, to pay a sum of Rs.1 lakh as compensation for mental agony and to pay cost of the proceedings.

The averments in the complaint are as follows:

1. The 1st complainant is carrying on business at 77, Lakshmi Complex, Cross cut road, Gandhipuram, Coimbatore-12 as a sole proprietor of Great Electronic Centre and dealing in electronic goods. The 2nd complainant is the wife of the 1st complainant and she is assisting him in the abovesaid business. The complainants have availed a mortgage loan from City Financial Consumer Finance India Ltd. Gandhipuram, Coimbatore-12 by creating a mortgage upon the house situated at 19/6, Subash Nagar, FCI road West, Ganapathy, coimbatore-6. The second to four of the opposite parties were frequently visiting the complainants during the last week of December 2007 and made the complainants accept the offer made by the 1st opposite party through 2 to 4th opposite parties by making false and imaginary promises to the effect that the complainants will be given a loan of Rs.40lakhs with the security of the 2nd charge over the house property situated at 19/6, Subash Nagar, FCI road West, Ganapathy, coimbatore-6.

2. On 31.12.07 the 3rd and 4th opposite parties forced the complainants to sign in all blank applications and printed documents without the free will and consent of the complainants. The 2 to 4th opposite parties made the complainants to issue the following cheques

1. Cheque No.974220 dt.10.12.07 for Rs.3000 drawn on Karur vysya Bank

2. Cheque No.754393 dt.31.12.07 for Rs.34,460 drawn on ICICI Bank Ltd.

3. Cheque No.754394 dt.3.1.08 for Rs.7300 drawn on ICICI Bank Ltd.

However the opposite parties did issue any receipt whatsoever. The complainants were made to believe the oral promises of the opposite parties 2 to 4 and that the complainants were sanctioned with a loan of Rs.40 lakhs. The above said cheques were collected with a promise that this is towards processing fee payable towards the loan. The collection of processing fee prior to the actual sanction of the loan itself is an objectionable unfair trade practice adopted by the 1st to 4th opposite parties.

3. The 2 to 4th opposite parties represented that the amount collected through the said cheques were towards processing fee and the 2 to 4th opposite parties gave the complainants photo copies of two demand drafts both dated 31.12.07 one favouring the 1st opposite party for Rs.34,360 and the other for Rs.7185 favour TATA AIG General Insurance Company Ltd. The complainants were totally in the dark as to the break up of the payments and further even as on date they are not able to understand as to why an amount of Rs.7185 was paid to TATA AIG General insurance Co.Ltd. Only a sum of Rs.27 lakhs was sanctioned as loan to them as against the original promised loan of Rs.40 lakhs. Immediately the complainants approached the opposite parties with a request to forthwith cancelled the application for the loan and to return the 38 blank cheques handed over by the complainants to the 3rd opposite party and also requested the refund of Rs.44,660 paid by the complainants towards the so called processing fee.

4. The complainants issued a notice dt.14.2.08 through a Consumer Protection Association namely Tamizhaga Nugarvor Padukappu Iyakkam, Karur. However, none of the opposite parties did respond to the notice issued by the said Consumer Association. The complainant again caused a lawyer’s notice dt.31.3.08 to the 1st to 4th opposite parties and the notice was duly served on the 1st and 2nd opposite parties. However the notice issued to the 3rd and 4th opposite parties were returned ‘unserved’. Even after the receipt of the said lawyer notice the 1st and 2nd opposite parties did not respond.

5. The conduct of 1st to 4th opposite parties in having collected a total sum of Rs.44,660 from the complainants by making false promises without any intention of performing the same amount to deficiency of service as per section12 of the C.P.Act 1986. The 1 to 4th opposite parties misrepresented that a sum of Rs.27 lakhs only sanctioned to the complainants is nothing but a blatant lie since the 1st charge holder of the complainant namely M/s.City Financial Consumer Finance India Ltd. Has not given their consent by way of giving outstanding letter for the proposed creation of 2nd charge in favour of the 1st opposite party.

The averments in the counter of opposite parties are as follows:

6. The complaint is vexatious frivolous and wholly unsustainable in law. The complainant approached this opposite party for obtaining mortgages loan through its agents. Based on the application given by the complainant through the agent, the opposite party processed for the loan. At the time of application the complainant had mentioned that the original title deeds are with the M/s.City financial Bank, wherein the customer had obtained mortgage loan for an amount of Rs.20 lakhs. The said City Financial Bank, whose loan amount is to be paid by the opposite parties, has not been made a party to this proceedings. The complainants approached the 4th opposite party for mortgage loan based on the property, which had already been mortgaged to Citi Financial Ltd. Based on the request the loan documents were processed by the opposite parties. It was specifically made known to the complainants that the quantum of sanctioning of loan is subject to obtaining of the title clearance, obtaining of property value from independent property assessor and other formalities. It was also informed to the complainants that at no point of time the processing fee and others would be returned after processing of the loan. The quantum of 40 lakhs were never spoken or assured.

7. The allegation that they were kept in dark as to why an amount of Rs.7185 was paid to TATA AIG GIC company is not true. It was clearly mentioned to the complainant that insurance is taken for the property and the above amount is paid the same. It is true that an amount of Rs.27 lakhs was sanctioned. But it is false to state that the complainant had cancelled the loan. After sanctioning of the loan and the complainant was supposed to hand over the outstanding letter and list of original documents with M/s.Citi Financial which they failed to comply.

8. The complainant had received what he soughtt from the same bank the BT did not take place and therefore demanded the return of the charges already paid to this opposite party. There is no deficiency of service committed by this opposite parties as alleged by the complainants. And there is no mental agony caused to the complainans. If any has been those have been claimed on imaginary claims. The cause of action mentioned is not correct and the same is disputed by this opposite party. There is no deficiency in service on the part of the opposite parties and it is not liable to pay the compensation as claimed in the complaint.

9. The complainants and opposite parties have filed Proof Affidavits along with A1 to A8 was marked on the side of the complainants and Ex.B1 to EX.B15 was marked on the side of the opposite parties.

The point for consideration is



Whether the opposite parties have committed deficiency in service? If so to what relief the complainants are entitled to?





ISSUE 1

10. The case of the complainant is that the opposite parties approached the complainant and forced him to accept the loan offer made by the 1st opposite party through 2 to 4th opposite parties by making false and imaginary promise and obtained 3 cheques from the complainant for a total amount of Rs.44,660 for which no receipts were issued. Only a sum of Rs.27 lakhs was sanctioned as against the original promised loan of Rs.40 lakhs.

11. The case of the opposite parties is that the quantum of Rs.40 lakhs were never spoken or assured only an amount of Rs.27 lakhs was sanctioned, after sanctioning of the loan, the complainant failed to comply the terms and conditions.

LOAN AMOUNT:

12. Ex.B1 is the application submitted by the complainant where the complainant insisted for a loan of Rs.40 lakhs. In the 2nd page of this document in the column: “ Loan Required is mentioned as Rs.40,00,000”. Moreover even after receiving the legal notice the opposite parties did not respond. Hence it is proved that the complainant has approached the opposite parties for the loan amount of Rs.40 lakhs only.

PROCESSING FEE:.

13. The case of the complainant is that the opposite parties can collect only 3,000 as processing fee. But this was denied by the opposite parties. As per Ex.B1 and B15 it is very clear that the opposite parties can collect only 3000 as processing fee. In Ex.B1 under the head “Processing Fee Details only Rs.3000 is mentioned as processing fee. Ex.B15 is a Disbursal Memo containing details about the processing fee and administration fee in which details are given. The extract of relevant portion is given below:

………

F Processing Fees(with application)- Instrument 1 Instrument 2

Received upfront &

-Instrument type Cheque

-Instrument number 974220

-Bank name KVB Bank

-Branch Coimbatore

-Instrument date 10.12.07

--Amount(Rs) 3,000/-

G.a) Administration fees-To be deducted from

Disbursement 34,360



14. Further the row “F” and G-a” of Ex.B15 clearly distinguishes the amount of processing fees Rs.3000 and administration fees Rs.34,360/-. Hence the opposite parties can have no right to withhold the amount by stating that it has been mentioned in terms and conditions. Further the administration fees has to be deducted from the loan amount at the time of disbursement of loan amount which is also transparent from “G.a)of Ex.B15. Therefore the opposite parties under no stretch of imagination can take a stand that the amount is not refundable. The collection of a huge sum of Rs/44,660 is purely unjust enrichment of the opposite parties as they gain a large sum at the cost of the complainants.

INSURANCE:

15. The opposite parties did not produce any documents for Rs.7300 which they claim to be received from the complainant for insurance. No documentary evidence has been produced by the opposite parties that the insurance has taken in favour of the complainant’s property. Even if the insurance is taken by the opposite parties such amount will be refunded by the insurance company if the insurance is not availed. Hence it is clear that the insurance has not taken by the opposite parties but they got an amount of Rs.7300 from the complainant to deceit the complainant.


In fact the opposite parties filed memo dt.22.6.09 submitted a DD for Rs.7185 dated 31.12.07 and also submitted cheques bearing Nos.754380 to 92, 754395 to 98 and 754401 to 754422 totalling 37 cheques. Hence it is clear that insurance has not been taken by the opposite parties but they got an amount of Rs.7300 from the complainant to deceit the complainant and the complainant has not authorized the opposite parties to take insurance.

VIOLATION OF RBI GUIDELINES:

16. As rightly pointed out by the complainants the opposite parties have violated the RBI guidelines.

As per the RBI Guidelines on Fair Practices Code for NBFCs(Non banking Financial Companies)

“Loan application forms should include necessary information which affects the interest of the borrower, so that a meaningful comparison with the terms and conditions offered by other NBFCs can be made and informed decision can be taken by the borrower”

We are of the view in the present case also the opposite parties have not followed the abovesaid guidelines issued by RBI. Hence we are of the view that the opposite parties have committed deficiency in service and unfair trade practice and the complainants are entitled to get necessary relief from this Forum.

17. In the result, we direct the opposite parties to refund a sum of Rs.44,660 paid by the 1st complainant to the opposite parties towards processing fee with interest at the rate of 12% p.a. from 1.1.2008 till date of realization and direct the opposite parties to pay an amount of Rs.25,000 as compensation for mental agony and to pay a sum of Rs.1000 as cost within two months from the date of this order failing which the complainants are at liberty to execute this order u/s.25 and 27 of the Consumer Protection Act, 1986. The DD for Rs.7185 and 37 unused cheques submitted by the opposite parties on 22.6.09 shall be returned to the complainants.