IN THE CONSUMER DISPUTES REDRESSAL FORUM, KOTTAYAM
Dated this the 30th day of March 2023
Present: Sri.Manulal.V.S, President
Smt.Bindhu.R, Member
Sri. K.M.Anto, Member
CC No. 64/2022 (Filed on 19.03.2022)
Complainant : Bini Raju
Kattaykkathumattathil House
Punnathura East P.O
Kottayam - 686583
Vs
Opposite party : Branch Manager
ISAF Small Finance Bank
Ettumannoor
(By Adv.Shebin K Cyriac)
O R D E R
Smt.Bindhu.R, Member
The complaint is filed under section 35 of the Consumer Protection Act 2019.
The complainant pledged 38 grams of gold with the opposite party on 18.03.2021 for Rs.1,30,700/-. On 26.08.2021 she paid Rs.4,582/- towards the interest. Complainant received a letter from the opposite party on 06.10.2021. When she contracted the opposite party in person they informed her that the said letter was sent for payment of the amount as the value of the gold was less. As it was pandemic period she was not in a position to pay the required amount. Later in March when she again went to the opposite party’s office to pay the interest it was known that the gold was already sold on auction. This is an unfair trade practice of the opposite party which caused mental agony, suffering and financial loss to the complainant. Hence this case is filed.
Upon notice the opposite party appeared and filed version.
The opposite party admitted that the complainant had availed a gold loan for Rs.1,30,700/- on 18.03.2021 vide loan account no.63210000456766. The term of the loan was four months and the complainant had opted for monthly payment of interest. All the conditions were clearly explained to the complainant at the time of inspection of the loan. On 26.08.2021 the complainant paid Rs.4,582/-. The loan account of the complainant got matured on 18.07.2021 but due to non repayment of the loan the opposite party issued a pre-auction notice on 06.10.2021 demanding the repayment within 7 days. Though the complainant received the said notice on 13.10.2021 she neither made any payment nor attempted to renew the loan, again the opposite parties had issued a public auction notice dated 16.10.2021, clearly intimating that the bank would sell the pledged gold ornaments in auction on 26.10.2021 in the event of the non repayment of the loan amount. The opposite party further contented that the said notice was received by the complainant on 21.10.2021 but there was no response from her.
On 16.10.2021 the loan account of the complainant was marked as non performing asset and once the account become NPA the bank has right the proceed with the auction of the pledged articles. In order to realise the amount the bank had also published loan account details in the regional news paper Veekshanam on 22.10.2021 prior to the auction. Subsequently the auction was conducted by the bank on 26.10.2021 and auction proceed amounting to Rs.1,55,839/- after deducting the applicable taxes were credited to the loan account of the complainant. After closing the loan account the excess amount of 13,211.01/- was credited to the savings bank account of the complainant on 13.04.2022. The receipt produced by the complainant dated 18.03.2021 is not connected with the said gold account but it is deposit receipt of Rs.10,000/- in her savings account. The complainant is a defaulter of the loan and the opposite party has followed the accepted procedure to realize the loan amount through conducting auction. So there is no deficiency in service or unfair trade practice on the part of the opposite party and hence the complaint is liable to be dismissed.
On the basis of the above pleadings and evidence we frame the following points:
- Whether the complainant has succeeded in establishing any unfair trade practice on the part of the opposite party?
- If so what are the reliefs the complainant is entitled for?
Point no.1 and 2
1. The complainant’s case is that she had pledged her gold ornaments with the opposite party and without intimation they had sold the said ornaments in auction whereas the opposite party contended that they had sold the ornaments as the loan account of the complainant got NPA as the complainant did not repay the amount even after the elapse of several months and credited the balance amount to her own savings account.
2. The opposite party contended that the complainant had defaulted in the repayment of the loan amount and thus the said account became NPA. As the opposite party being a scheduled Bank, is entitled to sell the gold ornaments of an NPA account, they conducted an auction and sold the ornaments of the complainant. As per Exhibit B1, the loan account statement, the opposite party’s contention is that due to the default in payment, the loan account of the complainant was made NPA and they issued pre auction notice to the complainant which was marked as Exhibit B3. As there was no response or payment, the opposite party sent a public auction notice Exhibit B5. Exhibits B6 and B4 are the postal track record of the B3 and B5 notices respectively. Exhibit B5 public auction notice was received by the complainant on 21.10.21 as per Exhibit B4.So there is prior intimation of the auction to the complainant. But there is only 5 days notice which is considered as not sufficient for the complainant to turn up for the payment. Exhibit B7 is the auction notice published in the Veekshanam daily by the opposite party on 22.10.2021.
3. The opposite party though alleges that they had conducted the auction for Rs.1,55,839/-, the opposite party has not produced any evidence to support this contention like the details of those who had participated in the auction, the quoted rates and the sale price etc.
The opposite party has not proved that which officials were present during the public auction while these assets were being sold and whether a reasonable number of bidders participated in this process of public auction.
RBI has issued guidelines as
V. Auction Process and Procedures
Reference is invited to DNBS.CC.PD.No.266/03.10.01/2011-12 dated March 26, 2012 by which NBFCs were directed inter alia to have Board approved policies on auction of gold jewellery that are transparent to the borrower and adequate prior notice has been issued to her/him.
The following additional stipulations are made with respect to auctioning of pledged gold jewellery:
a. The auction should be conducted in the same town or taluka in which the branch that has extended the loan is located.
b. While auctioning the gold the NBFC should declare a reserve price for the pledged ornaments. The reserve price for the pledged ornaments should not be less than 85% of the previous 30 day average closing price of 22 carat gold as declared by The Bombay Bullion Association Ltd. (BBA) and value of the jewellery of lower purity in terms of carats should be proportionately reduced.
c. It will be mandatory on the part of the NBFCs to provide full details of the value fetched in the auction and the outstanding dues adjusted and any amount over and above the loan outstanding should be payable to the borrower.
d. NBFCs must disclose in their annual reports the details of the auctions conducted during the financial year including the number of loan accounts, outstanding amounts, value fetched and whether any of its sister concerns participated in the auction.
4. Thus from the above discussion as there is no evidence before us regarding the conduct of the auction, we find that the opposite party has committed unfair trade practice in conducting the auction without following the procedures. Hence the point no 1 is found in favour of the complainant and we are inclined to allow the complaint.
5. Deciding the point no 2, we find that the complainant after taking loan by pledging the gold ornaments defaulted the payment. The complainant is legally bound to repay the amount along with the agreed interest to the opposite party. But the opposite party has failed to establish that the auction was conducted properly. They have not proved what was the highest bid amount whether the opposite party has sold the ornaments in the highest amount etc.
All the details about the conduct of the auction is in darkness. So we allow the complaint.
As it is found that there is deficiency of service and unfair trade practice on the part of the opposite party, the opposite party is bound to compensate the complainant. Hence allowing the complaint in part, we pass the following order.
The opposite party is directed to pay Rs.50,000/- (Rupees fifty thousand only) to the complainant.
No cost is ordered.
Pronounced in the open Commission on this the 30th day of March, 2023.
Smt.Bindhu.R, Member sd/-
Sri.Manulal.V.S, President sd/-
Sri. K.M. Anto, Member sd/-
Appendix
Exhibits marked from the side of complainant.
A1- Copy of statement of account from the period of 18.03.2021 to 11.03.2022 issued by ISAF Small Finance Bank.
A2- Copy of cash voucher dated 18.03.2021 issued by ISAF Small Finance Bank.
A3- Copy of pre-auction notice dated 06.10.2021 issued by ISAF Small Finance Bank.
Exhibits marked from the side of opposite party
B1- Copy of statement of account issued by ISAF Small Finance Bank.
B2- Copy of account details of the complainant issued by ISAF Small Finance Bank.
B3- Copy of pre-auction notice dated 06.10.2021 issued by ISAF Small Finance Bank.
B4- Copy of track consignment signed by Branch Manager of ISAF Small Finance Bank Ltd.
B5- Copy of Public Auction Notice dated 16.10.2021 issued by ISAF Small Finance Bank.
B6- Copy of track consignment signed by Branch Manager of ISAF Small Finance Bank Ltd.
B7- Copy of advertisement in Veekshanam news paper dated 22.10.2021
B8- Copy of statement of account from the period of 05.03.2017 to 18.05.2022 issued by ISAF Small Finance Bank.
By order
sd/-
Assistant Registrar
