IN THE CONSUMER DISPUTES REDRESSAL FORUM, KOLLAM
DATED THIS THE 12TH DAY OF FEBRUARY 2015
Present: - Smt. G.Vasanthakumari, President
Adv. Ravisusha, Member
M.Praveen Kumar, Member
CC.No.27/2013
Ishan Tariq : Complainant
M.K.S. Manzil
Thattamala P.O
Kollam
[By Adv.S.Riyas, Kollam]
V/S
1. The Manager : Opposite parties
Manappuram Finance Limited
Thattamala P.O
Kollam
2.The Manager
Manappuram Finance Limited
Trissur
[By Adv. C.Rajeev , Kollam & N.Muraleekrishnan]
ORDER
SRI. M.PRAVEEN KUMAR, MEMBER
Complainant’s case is that he had availed three different loans for amount of Rs.2,68,500/-, 19,500/-, and 21,300/- respectively for gold ornaments weighing 118.6 grams, 8.3 & 9 grams, dated 04/11/2011, 28/11/2011 vide loan receipt numbers 0105940700008587,010594070000&0105940700009021 respectively from the 1st opposite party . The mutually agreed rate of interest between them was 12% at the time of availing the above referred loans. Subsequently after availing of the above loans, when the complainant went to the opposite party to pay the interests the 1st opposite party started demanding amounts as interest exorbitantly higher than what was initially the agreed rate of 12% viz 26.04% for the 1st month 29.04% for the 2nd month and 30% for the 3rd month. The complainant continued to contact the opposite party and requested to come round on agreeable terms in tune with the originally agreed rate of 12% interest and the opposite parties assured the complainant that they would do the necessary after consulting the 2nd opposite party. And complainant prayed that Hon’ble Forum may be
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pleased to pass an order to allow the complainant to return the pledged gold ornaments from opposite party after paying principal amount and with 12% interest and an amount of Rs.25000/- as compensation allowed to complainant and Rs.5000/- as cost to the proceedings. .
Opposite parties filed version contending that complainant approached the 1st opposite party on 04/11/2011 and obtained a gold loan by pledge No.0105940700008587 for Rs.2,68,500/-, on 28/11/2012 by pledge No.0105940700008981 for Rs.19,500/- and on 01/12/2012 by pledge No.0105940700009021 for Rs.21,300/- at the rate of interest of 26.04% for 30 days that is up to Reset Period, the interest rate after Reset Period -31 to 60 days 29.04% per annum, 61 and above days 30% per annum and obtained gold loans by pledging the gold ornaments and availed gold loans for a total sum of Rs.3,09,300/-. The complainant himself selected the scheme which is suitable to him and he admitted all terms and conditions of the agreement while he was availing the gold loans and signed the loan agreement and pawn ticket. The complainant has to pay principal amount with interest accrued to the opposite party as per the terms and conditions of the agreement of the scheme selected by the complainant. The complainant is fully aware of the rate of interest as such rates are disclosed to him as at the time of availing the loan and the complainant had not made any complaint on the interest rate at that time. As per the guidelines on The Fair Practice Code , the company is issuing a pawn ticket containing all important terms and conditions of the loan including the rate of interest applicable to the borrower . Our rate of interest is fixed as per the loan and interest rate policy approved by the board taking into account our cost of borrowings operating expenses and expected rate of return on capital. Non Banking Finance Company’s in the gold loan segment are working in a different business model and it cannot be compared with nationalized/scheduled Commercial banks where costs of funds are cheaper. As explained earlier, the company is a Non Banking Finance Company registered with Reserve Bank of India Under the Reserve Bank of India Act . Reserve Bank of India has not fixed any cap on interest rate that can be charged by Non Banking Finance Company’s . Complainant fails to pay the borrowed amount with interest as agreed upon within a period of one year from the date of loan or within such period as demanded by
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the company, the opposite party shall have the right to sell the ornaments at the risk of the borrower either by public auction or by private arrangement at any time after 2 weeks from the date of notice of sale to the borrower for recover it’s dues. After the expiry of period, the opposite party has intimated the complainant directly several times and given sufficient time to get release the pledged article on repayment of the loan amount with accrued interest thereon. It is further submitted that, when the complainant become defaulter in repayment of the loan amount together interest accrued thereon, the opposite party sent sale notices to the complainant by registered post with acknowledgment due on all the above said gold loans and the notice was duly served on the complainant on 31/06/2012, 03/07/12, 13/07/2012, 13/11/2012, 11/12/2012, inspite of that the complainant has failed to pay the loan amounts together with interest as agreed upon, thus the opposite party proceeded further for recovering the dues of the complainant after complying all legal formalities, and had auctioned the gold ornaments pledged by the complainant by pledge No.0105940700008587 for Rs.2,68,500/- on 12/02/2013 , and in the said sale proceeds the opposite party has adjusted the principal loan amounts together with accrued interest in respect of the above said loan account of the complainant and a sum of Rs.3,75,343/-, is the pledge settlement amount. But only an amount of Rs.3,02,575/- was obtained through the auction of the gold ornaments . Thus the complainant has to pay an amount Rs.72,768/- towards the opposite party and the complainant is liable to pay the above said amount along with its interest .The other gold ornaments pledged by the complainant were in the custody of the opposite parties and they have no intention to sell that till the final disposal of this complaint. Submitted that there is no deficiency in service on the part of the opposite party as alleged, on the other hand the complainant is a chronic defaulter, and has not made payments in respect of the borrowed amount together with interest as agreed upon. Maybe pleased to dismiss the complaint with cost. The opposite party reserves the right to file additional written statement/version in the due course of this case. The complainant is not entitled to get any relief as prayed for.
The points that would arise for consideration are:-
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(1). Whether there is any deficiency in service on the part of the opposite parties?
(2)Whether there is any unfair trade practice on the part of opposite parties ?
(3).Reliefs and costs ?
The evidence in this case consists of the oral testimony of PW1 and DW1 and documentary evidence Exts. P1 to P3 and D1 to D12.
The Points:- In order to prove the case of the complainant, complainant filed a proof affidavit in lieu of his chief examination along with 3 documents . On the basis of the proof affidavit, he was examined as PW1 and documents , marked as Exts.P1 to P3 and legal manager represented by opposite parties filed proof affidavit in lieu of his chief examination along with 12 documents and on the basis of the proof affidavit , he was examined as DW1 and documents marked as Exts.D1 to D12.
Here the question arise for consideration is whether the complainant is eligible to get pledged gold ornaments from opposite parties after paying the principal amount along with interest .
In the case of 1st item of gold loan, complainant pledged 118.6 gms of gold ornaments for Rs.2,68,500/- on 04-11-2011 and produced Pawn Receipt and marked as Ext. P1 and admitted by opposite parties. Interest rate is noted in the Ext. D1 document a 26.04%. Counsel for the opposite parties argued that they had auctioned the 1st set of gold ornaments after complying all the formalities and complainant has to pay an amount of Rs. 72,768/- to the opposite parties along with its interest. Legal manager examined as DW1 deposed that “ Ext. D7 A\p-k-cn-¨pÅ \nb-a-§Ä ]men-¨Ã Auction \S-¯n-bXv ? FÃm \nb-a-§fpw ]men¨p” .But opposite parties not yet produced any piece of evidence regarding the procedures conducted for auction as per RBI rules and any procedures for auction are not specified in the loan agreements produced by opposite parties and marked as Exts. D1, D3 & D5. Opposite parties produced guidelines on fair practices code for NBFC’s by RBI, and marked as Ext. D7 which clearly disclose that no penalty charged on delayed payment and the loan agreement must disclose the details regarding auction procedure. Opposite parties admitted that they had adjusted the principal loan amount, together with accrued interest in respect of the above said loan account of the complainant and a sum of Rs.3,75,343 is the pledge settlement amount.
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Date of pledge: 04/11/2011
Date of auction/sale: 12/02/2013
Pledge settlement amount: 3,75,343/-
Loan amount : 2,68,500/-
15 months interest: 3, 75,343 - 2,68,500 = 1,06,843.
Thus interest calculated by opposite parties is X % = 1, 06,843 ×100×12 = 3 1.83%
2,68,500×15
It is found that 31.83% is an excessive interest charged by opposite parties which is against the principles and directions of RBI. At this juncture we are of the opinion that there is unfair trade practice on the part of opposite parties, and complainant is liable to get gold ornaments after paying principal amount with 18% per annum for 15 months. If the pledged gold ornaments auctioned /sold by the opposite parties, opposite parties shall be liable to return balance amount from deducting principal amount with 18% interest for 15 months from the present market value of the 118.6 grams of gold ornaments.
As far as the 2nd and 3rd item of gold loan of amount of Rs. 19,500/- and 21,300/-. Complainant agreed and informed that he was ready to take the pledged gold ornaments by remitting principal amount and with interest of 12%. Opposite party’s calculated the interest for said item of gold ornaments to be excessive and complainant is liable to take the pledged items of gold ornaments (2nd & 3rd ) after remitting principal amount with 18% interest per annum.
Ext. D7 is the guidelines on fair practice code for NBFC’s, which give strict direction for the NBFC’s for interest rate and procedure for auction.
On considering the entire evidence we are of the opinion that there is gross negligence and deficiency in service and unfair trade practice on the part of the opposite parties, and complainant proved his case and liable to get the pledged gold ornaments with compensation and cost to the proceedings.
In the result, the complaint is allowed in part. Opposite parties are directed to give pledged gold item of 118.6 gram as per Ext.P1 document after receiving principal amount with 18% interest per annum or if pledged item of 118.6 gram of gold ornaments, were
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auctioned /sold, opposite parties must return the balance amount after deducting the principal amount with 18% interest per annum for 15 months from the present market value of the 118.6 grams of gold ornaments as per Ext.P1 document and opposite parties are also directed to allow the complainant to remit the principal amount with 18% interest per annum and return the pledged item of gold ornaments as per Exts P2 and P3 documents. Opposite parties are further directed to pay Rs.10000/- as compensation to the complainant and Rs.2500/- as cost to the proceedings. The order has to be complied with within one month from the date of receipt of this order.
Dated this the 12th day of February 2015 G.VASANTHAKUMARI: Sd/-
ADV.RAVISUSHA:Sd/-
M.PRAVEENKUMAR:Sd/-
Forwarded/by Order
SENIOR SUPERINTENDENT
I N D E X
PW.1:- Ishan Thariq
DW1:- Jaya raj.N.R
Ext.P1:- Pawn receipt number 8587 dated 04/11/2011
Ext.P2:- Pawn receipt number 8981 dated 28/11/2011
Ext.P3:- Pawn receipt number 9021 dated 1/12/2011
Ext.D1:- Loan agreement
Ext.D2:- Pawn ticket number 8587 dated 04/11/2011
Ext.D3:-Loan agreement
Ext.D.4:- Pawn ticket number 8981 dated 28/11/2011
Ext.D.5:- Loan agreement
Ext.D.6:- Pawn ticket number 9021 dated 1/12/2011
Ext.D.7:- Guidelines of RBI
Ext.D.8 (series): Ack cards
Ext.D.9- Auction report
Ext.D.10 (series): Copy of notices
Ext.D.11:- Authorization
Ext.D.12:-Copy of news paper cutting
