IN THE CONSUMER DISPUTES REDRESSAL FORUM, KOLLAM
DATED THIS THE 31ST DAY OF MARCH 2015
Present: - Smt. G.Vasanthakumari, President
Adv. Ravisusha, Member
Adv.M.Praveen Kumar, Member
CC.No.26/2013
Ishan Thariq : Complainant
M.K.S.Manzil
Thattamala P.O
Kollam
[By Adv.S.Riyas & Johnson Jacob, Kollam]
V/S
1. The Manager : Opposite parties
Manappuram Finance Limited
Kollam Branch
Kollam
2. The Manager
Manappuram Finance Limited
Trissur
[By Adv. C. Rajeev & N.Muraleekrishnan, Kollam]
ORDER
ADV.SRI. M.PRAVEEN KUMAR, MEMBER
Complainant’s case is that he had availed three different loans for amounts Rs.2,40,000/-, Rs.18,500/- & Rs.18,500/-, respectively for gold ornaments weighing 107.6 grams, 8.9 gms and 8 gms on 05/11/2011 vide loan receipt numbers 0100770700746363, 0100770700746362 & 0100770700746364 from the 1st opposite party. The mutually agreed rate of interest between them was 12% at the time of availing the above referred loans. After he went to the opposite party to pay the interest 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.
He had affixed signatures in the loan agreements on the belief that it was what has been already agreed upon between the parties at 12%. Moreover the said loan agreements were mostly blank and unfilled up at the time of the signing. He had the least doubt that the opposite parties
(2)
will deviate from the mutually agreed rate of 12% thereafter. He was made to believe at the time of taking the loan that only 12% interest rate will be charged on the loan amount. However, the exorbitant demand subsequently made to the tune of 30% interest, stood in the complainant’s way in paying the interest of the loans in the regular fashion. Hence this complaint praying that the Hon’ble Forum may be pleased to pass orders in terms of the complaint and thus restore the pledged gold ornaments together with compensation of Rs.25,000/- for the mental agony caused to the complainant and cost also of Rs.5,000/- in favour of the complaint.
Opposite parties filed version contending that the complainant approached the 1st opposite party on 05-11-2011 and obtained three gold loans by pledge No. 010770700746362 for Rs. 18,500/-, by pledge No.010770700746363 for Rs. 18,500/- and by pledge No. 01077070700746364 for Rs.2,40,000/- 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 2,77,000/-. He 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. He has to pay the 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.
Regarding the charging of interest rate, the opposite party is a Non Banking Finance Company registered with the Reserve Bank of India under the provisions of Chapter III B of Reserve Bank of India Act 1934, and it is regulated by the rules, regulations and circulars of the Reserve Bank of India. Moreover the Reserve Bank of India has not given any specific direction to the opposite party regarding the rate of interest. The Reserve Bank of India, vide Notification No.DNBS.204 / CGM (ASR) -2009 dated January 2, 2009 directed all the Non Banking Finance Company’s to adopt an interest rate model taking into account relevant factors such as, cost of funds, margin and risk premium, etc and determine the rate of interest to be charged for loans and advances. Reserve Bank of India vide circular DNBS.CC.PD.NO.266 / 03.10.01 2011- 12 dated 26 March 2012 titled “Guidelines on Fair Practices Code for NBFCs” has suggested to introduce fair practice code for transparent, fair, ethical and legally tenable practices while conducting business and also for providing all necessary information to customers.
(3)
Directions of the Reserve Bank of India opposite parties had already disclosed the rate of interest in the loan application form and also mentioned the rate of interest in the pawn ticket issued to complainant. The opposite party after complying with all the required legal formalities issued the gold loans. This being the true facts, the complainant agreed and signed the relevant papers to pay the interest at the rate mentioned in the pawn ticket. 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 notice to the complainant by registered post with acknowledgement due on all the above said gold loans and the notice was duly served on the complainant on 06-06-2012, 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 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 loan accounts of the complainant and a sum of Rs.3,87,945/- is the Pledge Settlement Amount. But only an amount of Rs.3, 22,365\- was obtained through the auction of the gold ornaments. Thus he has to pay an amount Rs. 65,590/-towards the opposite party and he is liable to pay the above said amount along with its interest.
Submitted that there is no deficiency in service on the part of the opposite party as alleged, on the other hand he is a chronic defaulter, and has not made payments in respect of the borrowed amount together with interest as agreed upon. Therefore it is humbly prayed that this Hon’ble Forum may be pleased to dismiss the complaint with cost.
The points that would arise for consideration are:-
(1).Whether there is any deficiency in service or unfair trade practice on the part of the opposite parties?
(2).Reliefs and costs?
(4)
The evidence in this case consists of the oral testimony of PW1 and DW1 and documentary evidence Exts. P1 to P3 and D1 to D.14..
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 13 documents and on the basis of the proof affidavit, he was examined as DW1 and documents marked as Exts.D1 to D13, later DW1produced Mathrubhumi Malayalam newspaper dated 26/01/2013 and marked as Ext.D14.
In the case of gold loan on 05/11/2011complainant pledged 107.6 gms of gold ornaments for Rs.2,40,000/- and 8.9 gms of gold ornaments for Rs.18500/-, 8gms of gold ornaments for Rs.18500/-, produced pawn tickets and marked as Exts.P1, P2 and P3 admitted by opposite parties.
Opposite parties argued that complainant had obtained gold loans by pledging the gold ornaments and availed gold loans for a total sum of Rs.2,77,000/- 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 also argued that 3 registered notices were sent to the complainant and after complying all the formalities, opposite parties auctioned the said gold items.
Complainant argued that opposite parties not complied any legal procedures for conducting auction. Opposite parties produced copy of guidelines issued by RBI and marked as Ext.D7. But Ext.D7 clearly discloses that the auction should be announced to the public by issue of advertisement in at least 2 newspapers, one in vernacular language and another in national daily newspaper and the loan agreement shall also disclose details regarding auction procedure. It is clearly seen that the auction conducted by opposite parties against the directions of RBI. Opposite parties produced ‘Mathrubhumi’ news paper and marked as Ext.D14 and argued that the auction details were already published in the daily newspaper. But as far as this case is concerned, Ext.D14 not yet publish/discloses any details regarding the name, loan number, loan amount of the complainant.
(5)
And it is found that the interest rate (26.04%, 29.04%, 30%) 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% interest per annum. If the pledged ornaments auctioned /sold by the opposite parties, opposite parties shall be liable to return balance amount from deducting principle amount with 18% interest from 05/11/2011 per annum from the present market value of the 124.5 grams of gold ornaments.
Ext.D7 is the guide lines on fair practices code for NBFC’s, which gives strict direction for 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 items of 124.5 grams as per Exts.P1, P2 and P3 documents on payment of principal amount with 18% interest per annum or if pledged items of 124.5 grams of gold ornaments were auctioned/sold, opposite parties must return the balance amount to the complainant after deducting the principal amount with 18% interest (from 05/11/2011) per annum from the present market value of the 124.5 grams of gold ornaments. Opposite parties are further directed to pay Rs.10,000/- as compensation to the complainant and Rs.2,500/- 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 31st day of March 2015.
G.VASANTHAKUMARI:Sd/-
ADV.RAVISUSHA: Sd/-
ADV.M.PRAVEENKUMAR: Sd/-
Forwarded/by Order
Senior Superintendent
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I N D E X
PW.1:- Ishan Thariq
Ext.P.1:-Pledged receipt bearing number 0100770700746364 dated 05/11/2011
Ext.P.2:- Pledged receipt bearing number 0100770700746363 dated 05/11/2011
Ext.P.3:- Pledged receipt bearing number 0100770700746362 dated 05/11/2011
DW.1:-Jayaraj N.R
Ext.D.1:- Loan agreement dated 05/11/2011
Ext.D.2:- Pawn ticket dated 05/11/2011
Ext.D.3:- Loan agreement dated 05/11/2011
Ext.D.4:- Pawn ticket dated 05/11/2011
Ext.D.5:- Loan agreement dated 05/11/2011
Ext.D.6:- Pawn ticket dated 05/11/2011
Ext.D.7:- RBI guideline dated 26/03/2012
Ext.D.8:- Ack cards (3 Nos)
Ext.D.9:- Returned postal articles (3 nos)
Ext.D.10:- Photo copy of ack cards
Ext.D.11:- Report on the auction
Ext.D.12:- Notices
Ext.D.13:- Authorization letter from Manappuram Finance limited dated 05/01/2013
Ext.D.14:- Mathrubhumi Malayalam newspaper dated 26/01/2013
