D.o.F:15/12/06 D.o.O:17/02/2010 IN THE CONSUMER DISPUTES REDRESSAL FORUM, KASARAGOD CC.140/06 Dated this, the 17th day of February 2010 PRESENT: SRI.K.T.SIDHIQ : PRESIDENT SMT.P.RAMADEVI : MEMBER SMT.P.P.SYAMALADEVI : MEMBER Surendran.M, S/o Late.P.P.Appu, Mundikoth House, Orie, : Complainant Po.Kaithakkad, Cheruvathur,Kasaragod. (Shrikanta Shetty.K, Adv.Kasaragod) Shriram Transport Finance Co.Ltd, 2nd floor, Land Mark Centre, : Opposite party Opp.New Busstand,Kasaragod. (Prasanth.R,Adv.calicut) ORDER SRI.K.T.SIDHIQ : PRESIDENT The brief facts of the case are that the complainant, the R.C.owner of the bus bearing Reg. No.KL-13F2156 availed a loan of Rs.4, 00,000/- from the opposite party as per loan agreement No.SIL/KSR/90232 dtd.20/1/05 with a condition to repay of Rs.635000/- in 48 monthly installments. Out of which the first 36 monthly installments were of Rs.13900/- each and the remaining 12 monthly installments were of Rs.11300/- each. In that , the complainant paid 183600/- as on the date of complaint. Later complainant came to know that the amount paid directly in cash was suppressed and the remittance was shown in a different mode i.e., by way of cheque. Moreover, the opposite party without the consent and knowledge of the complainant re-scheduled the chart of installments by escalating the dues. Hence he lost trust on opposite party and approached opposite to foreclose the loan as one time settlement before the scheduled time and requested to give recalculated amount @12% simple interest per annum as promised. But the opposite party insisted to pay entire amount as calculated till last due installments as per rescheduled chart. They also threatened the complainant that if the payment is not made as stipulated in the rescheduled chart they would repossess the bus. According to the complainant it is his right to pre close the loan and the opposite party is bound to co-operate for the same at concessional rate of interest at the time of granting loan. The opposite party without disclosing the amount for pre-closure of the loan, misappropriated the cash payments made towards the loan, rescheduled the chart of installments without the consent and knowledge of the complainant. Therefore the complainant alleging deficiency in service on the part of opposite party praying for an order directing the opposite party to settle the loan A/c SK/KSR/90232 dtd.20/01/2005 @12% per annum and to issue clearance certificate with respect to the bus bearing Reg.No.KL13-I2156. Opposite party filed version denying the case of the complainant. According to opposite party they were formerly known as Sriram Investment Ltd. The said company was amalgamated with opposite party w.e.f 25/11/2005. The erstwhile Shriram Investments Ltd entered into loan cum hypothecation agreement dtd. 20/1/2005 with the complianant for extending financial facility to the complainant for the purchase of the vehicle bearing Reg.No.KL-13/F2156. The complainant has defaulted payments of the amount as per the agreement and the complainant requested the opposite party herein for extending the financial facility, and thus at the request of the complainant the loan repayment was recharted and a fresh loan cum hypothecation agreement dtd.1/1/2006 was executed between the complainant and the opposite party. As per the said agreement a sum of Rs.445000/- has been advanced to the complainant for a total agreement value of Rs.720683 payable in 52 monthly installments pursuant to the agreement bearing No. STFC/KSR/75167 dtd.1/1/2006. The complainant had suppressed the execution of the agreement dtd1/1/2006. The complainant seeks settlement of a loan account dtd.20/1/2005, which has already been replaced by another agreement dtd.1/1/2006. The relief claimed by the complainant is infructuous. The complainant who has defaulted the repayment of the amount advanced in terms of the agreement has no locus standi to allege deficiency in service on the part of opposite party. The complainant never approached the opposite party with cash to preclose the loan before the due date. As per the clause 10 .2 of the agreement dtd.1/1/2006 option is available to the opposite party to agree to prepayment upon such terms and conditions and upon payment of such charges inclusive but not limited to foreclosure charges and after execution of such other further documents as the lender may deem necessary at its satisfaction. The parties are bound by the terms of the agreement. The complainant cannot allege deficiency in service on the part of opposite party merely on the basis of allegation that he was not allowed to foreclose the account or concessional rate. The complainant is not a consumer and he has no locus standi to file this complaint. The settlement of account is not come within the purview of consumer dispute. There is no deficiency in service on the part of opposite party and the complaint is therefore liable to be dismissed with cost. 3. The complainant filed affidavit in support of his case. He was cross-examined by the counsel for opposite party. Exts.A1 to A6 marked. On the side of opposite party Ext. B1 marked. Ext.A1 series are 14 numbers of receipts for the payment of installments. The receipt dtd. till 30/11/05 is seen issued by Shriram Investment Ltd towards the loan No.FL KSR 90232. But from the receipt dtd.30/1/2006 onwards the payments are seen adjusted in loan agreement No.SLR SR75167. 4. Now the points arises for consideration are: 1. Whether the complaint is maintainable before the Forum? 2. Whether the complaint is one for settlement of accounts? 3. Whether there is any deficiency in service on the part of the opposite party and if so, the reliefs prayed for? 5. Point No.1: Maintainability The complainant has sworn in his affidavit that the income derived from the stage carriage is the only source of his livelihood and he is running the said bus under self-employment. The opposite party has not taken any effort to negate this contention. Hence it can be considered that the complainant is eking out his livelihood by plying the disputed vehicle and hence he is a consumer. 6. Point No.2; the prayer of the complainant is not the settlement of account but an order directing the opposite party for the settlement of loan given by them and also such other reliefs. His main grievance is that the opposite party is not allowing him to close the loan prematurely. This is no way lead to the conclusion that the case is one for settlement of account. Hence this point is also goes against the opposite party. 7. Point No.3:The complainant alleges that he had availed a loan of Rs.400,000/- on 20/1/05 from Sriram Investments Ltd. The said company amalgamated with opposite party. According to him the opposite party rescheduled the chart for a higher amount without his knowledge and consent. Now what prompted the opposite party to rechart the loan repayment and to obtain a fresh loan cum hypothecation agreement is quite unknown. If a customer committed default in repayment the repossession of the vehicle was the usual procedure adopts by the opposite party on the strength of a particular clause in the agreement. But strangely no such steps were ever seen taken by opposite party in this matter before filing the complaint and passing interim order restraining them repossessing the vehicle (before the repossession without recourse to law was declared as illegal by the judicial authorities). Further according to opposite party, complainant has been advanced a loan of Rs.445000/- for a total agreement value of Rs.720683 payable in 52 monthly installments. But according to complainant the loan advanced was Rs.4, 00,000/- and the tenure for payment was 48 months and the total amount payable including interest as per the agreement dtd.20/1/2005 was Rs.635000/- only. According to the complainant he has remitted Rs.248600/-towards the loan and the balance is Rs.385760/-. To which he has offered Rs.4, 10,000/-before filing the complaint in 2006 when the 19th installments fell due but opposite party refused to accept the said amount and insisted to pay the amount as per the rescheduled chart i.e. Rs.720683/-with necessary further charges. 8. The case of the complainant from the very beginning was that he was prepared to foreclose the loan but the opposite party was unwilling. Normally when a customer approaches the financier/ banker requesting to foreclose the loan by paying the whole amount with the interest legally due the financier/banker should be happy because they can lend the amount to somebody else and earn interest and therefore they will give some reduction in the interest. The customer also will be satisfied since he could save interest The recent scenario among the financers show that they are more interested only in collecting interest stipulated for the whole loan period and therefore discourages the foreclosure of the loan and even if allows, then collects pre-closure charges which is quite unreasonable. The unwillingness to allow a customer to foreclose his loan itself is a deficiency in service on the part of the financier. When the loan agreement was prevailing and there was no change in circumstances rescheduling the said agreement by raising the principal amount and its proportionate payable interest to an exaggerated amount is also amounts to deficiency in service. In the instant case the complainant availed only Rs.4, 00,000/- as loan and entered in an agreement on 20/1/05 with a condition to pay Rs.6, 35,000/- in 48 monthly installments. When this agreement was in prevalence and there was no change in circumstances like the transfer of vehicle to third party with the consent of the financier etc, how the principal amount increased to 4,45.000/- in Jan 2006 when the alleged rescheduling of the loan is said to have taken place? This is a cardinal question, which left unexplained by opposite party. If the loanee commits any default in payment of monthly installments the recourses available to the opposite party as per the loan/ hypothecation agreement is the repossession of the vehicle by lawful means or the collection of overdue interest after the stipulated time fixed to pay the amount. It is the case of opposite party that the complainant has committed default in paying the monthly installments as per the first agreement dtd.20/1/2005 then how can he be regular if the loan agreement is revised to a higher amount that too without actually passing any further consideration? There is absolutely no logic in such a contention. Therefore Ext.B1 cannot be considered as an agreement executed in consensus ad idem and therefore it had no legal sanctity 9. It is seen that the opposite party had collected overdue interest as per 2 receipts claimed in Ext.A1 series. That is receipts dtd.15/6/2006 and 7/10/2006. That is also not legally permissible. As per the agreement, the opposite party had advanced a sum of Rs.4, 00,000/- with a stipulation to pay Rs.6, 35,000/- in 48 monthly installments ending in Jan 2009. According to opposite party complainant has to pay Rs.720683/- in 52 monthly installments as per the rescheduled chart and the last monthly installment fell due only on 1/5/2010. So the interest is calculated in flat rate for the whole period. Therefore again charging interest that too in an exorbitant rate of 36% per annum (3% p.m) as over due interest is a stipulation by way of a penalty. That is not legally permissible in view of Sec.74 of the Contract Act. 10. Moreover, the mode of calculation of interest is also repugnant to laws. Instead of calculating interest on prorata basis it is seen that opposite party is calculating interest on floating rate and further charging interest on interest by way of overdue charges. Actually the loan become overdue only after the last instalment date and he is liable to pay overdue charges only from that onwards. The Hon’ble NCDRC in the case of Ashok Layland Finance Ltd & Ors vs. ramjilal Gupta reported in I (2008) CPJ 40(NC) has held that if the opposite party charges interest on instalments received earlier than the prescribed time, then the customer is entitled for the proportionately reduced interest for the earlier instalments. But in this case the opposite party was not willing to foreclose the loan and there by the complainant missed the chance to save the interest by the early closure. 11. It is also clear from Ext.B1 loan cum hypothecation agreement that the opposite party collecting pre closure charges@ 5% of principal loan outstanding as per reducing balance method in the date of prepayment/foreclosure. This foreclosure charge is collecting without rendering any service. Instead of giving some rebate in the interest collecting foreclosure charges is an unjust enrichment on the part of opposite party and it is an unscrupulous exploitation of the consumer.. 12. So in this case the complainant should have been allowed to foreclose the loan after giving him the rebate in interest for the foreclosure of the loan when he approached to close the loan as on 2006 itself. But that was not allowed by opposite party. Hence the complainant is no way liable to pay the penal interest and over due charges as per the agreement to the opposite party. 13. As per the Ext.A1 series receipts the complainant has remitted Rs.226600/-towards the monthly instalments. The complainant is therefore liable to pay the balance amount i.e. Rs.635000/--226600=408400/- to the opposite party. The tenure of agreement according to the complainant is over in January 2009. Therefore he is liable to pay the over due interest also for the said amount from January 2009 to till date of payment. But overdue interest @36% is unconscionable. We feel that 15% per annum will be reasonable rate of interest towards the over due charges that is fell due only after 20/1/2009. Therefore, the complaint is allowed and the opposite party is directed to settle the loan of the complainant by collecting Rs.408400/- with over due charges @15% per annum from 20/1/2009 to till date of payment. On receipt of the said payment opposite party shall issue HP Termination letter and No objection Certificate in respect of the vehicle bearing Reg. No.KL-13/F 2156 to the complainant. Failing which on production of receipt evidencing the payment of aforesaid amount and application by the complainant directions will be issued to the concerned registering authority to cancel the HP endorsement favoring of the opposite party. Time for compliance is 2 months from the date of receipt of copy of order. There is no order as to costs. MEMBER MEMBER PRESIDENT Exts: A1&A1 series- receipts instalment payments A2-Copy of R.C A3-repayment chart A4-series-instalment receipts A5- Copy of FIR A6- charge sheet issued by Station House Officer Kasaragod PW1-Surendran.M- complainant MEMBER MEMBER PRESIDENT eva
......................K.T.Sidhiq
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