D.O.F:29/04/2015
D.O.O:18/10/2019
IN THE CONSUMER DISPUTES REDRESSAL FORUM, KASARAGOD
CC.No.108/2015
Dated this, the 18th day of October 2019
PRESENT:
SRI.KRISHNAN.K : PRESIDENT
SRI.RADHAKRISHNAN NAIR.M: MEMBER
Sashi.T aged 36 years
S/o Krishnan Nair,
Krishna Kripa, Pannikallu
Chattanchal, Thekkil.P.O : Complainant
(Adv: C. Krishna Kumar)
The Manager,
Union Bank Of India,
Door No. C.P – 111/997,
Pulunthotti Complex, Poinachi, Thekkil Post : Opposite Party
Kasaragod -671541
(Adv: A. Radhakrishnan)
O R D E R
SRI.KRISHNAN.K : PRESIDENT
Complaint filed under section 12 of Consumer Protection Act for an order directing the Opposite Party to refund the excess amount collected and damages and costs.
Facts of the case in brief as follows:-
The complainant’s case in short is that he availed agricultural loan of Rs. 3,00,000/- from Opposite Party bank by pledging gold ornaments. Since price of gold ornaments came down, Opposite Party requested to pay difference amount of Rs. 44,000/- . Request was complied by complainant loan renewed for Rs.256000/- vide loan number 654/4100 dated 30/08/2013. Loan was closed on 27/08/2014 by payment of Rs.2,87,103/-, while complainant was out of India on employment. But Opposite Party collected interest @12.25% per annum instead of 4%. The Opposite Party informed that rate of interest is 7% and advised him to file a written complaint. Written complaint was filed during December 2014 but no positive reply. Enquiry was made on 03/02/2015 but still grievance was not yet redressed. The deficiency in service and unfair trade practice caused irreparable injury hardship and mental agony. Hence this complaint.
The Opposite Party appeared through counsel and filed their written version. The Opposite Party admitted availing of gold loan and payment of difference of amount due to reduction of gold price, and rate of interest at 4% is also admitted. Bank also admitted closing of loan payment of Rs. 287103/-. The case of Opposite Party bank is that agricultural loan was availed on 11/09/2012 for Rs. 3, 00,000/- for one year. Request was made for extension of loan but request for loan on reduced rate is rejected. It was informed that loan can be given with a higher rate of interest. The complainant requested for another loan of Rs.2, 56,000/- with 12.25% on pledging of gold ornaments. New loan is granted accepting gold as security. Bank did not collect any amount then really due. In case of an agricultural loan is closed, party is eligible for agricultural loan only after one month. Opposite Party denied any deficiency in service or unfair trade practice and prayed for the dismissal of the complaint.
Complainant filed proof affidavit in lieu of chief examination. Ext A1 to A4 documents marked from complainant side. Ext A1 is the power of attorney, Ext A2 is the basic tax receipt, Ext A2(a) is possession certificate. Receipt for payment of Rs.287103/- is marked as Ext A3, copy of complaint is marked as Ext A4. Pw1 was cross examined by Opposite Party. From the side of Opposite Party bank manager filed chief affidavit. He was cross examined by complainant. Opposite Party produced X1 to X3 documents. X1 is request for gold loan dated 11/09/2012. X2 is gold loan pledge form and X3 is the gold loan pledge form with endorsement of closing the loan dated 27/08/2014.
On the basis rival contention and pleading following arise for consideration.
- Whether complainant availed agricultural loan on 30/08/2013 and whether Opposite Party is entitled to collect interest at 12.25% interest on agricultural loan with pledging of gold ornaments as security?
- Whether there is any deficiency in service or untrade practice from the part of Opposite Party?
- Whether complainant is entitled for compensation and if so as to what reliefs?
Answer to part a to c
According to complainant Opposite Party bank denied the facility provided by the Government for the agriculturists to improve their agricultural products. In the version Opposite Party contended that the averment to the effect that on 03/02/2015, complainant made an enquiry is utter falsehood. There is only to create a cause of action for filing complaint. In chief affidavit Opposite Party say in Para -7 “Ext A2 and A2(a) BT receipt and possession certificate never produced before the bank. Ext A4 copy of complaint is false and fabricated document. While cross examination of Dw1 bank manager, he deposed that “it is true that complainant has lodged a complaint up on that on 03/02/2015 before the bank. The document is Ext A4. There is no document to show that bank has taken any action up on the complainant”.
So in evidence manger admits receipt of complaint on 03/02/2015 which is marked as Ext A4 in the case. In A4 it is specifically mentioned that bank will take necessary action if matter is genuine with regional office. It contains seal and signature of bank manager with endorsement therein. There is nothing to disbelieve Ext A4 when Dw1 categorically admits its genuineness in evidence. Bank did not take any steps on the complaint. If really interest rate agreed was 12.25% there is no need to make an endorsement in the complaint that matter will be taken with higher ups of the bank. But fact remains that no action is taken by Opposite Party in the regard.
Section 21 A of the Banking Regulation Act reads as under.
“21 A rates of interest charged by banking companies not to be subject to scrutiny by courts not withstanding any thing
contained in the usurious loans Act , 1918 (10 of 1918); or any other law relating to indebtedness in force in any state, a transaction between banking company and its debtor shall not be re-opened by any court on the grant that the rate of interest charged by the banking company is excessive”.
Honourable Supreme Court in 1994 (3) SCALE 46 “corporation Bank Vs D.S Gowda and another held that “ if rate observed in violation of RBI directions, then court disallow such excess interest and can give relief to party”.
Therefore the right of the bank to fix the rate of interest is not arbitrary but subject to RBI instructions. Role of RBI has been defined under sections 35 A of banking regulations Act 1949. The RBI is entitled to give directors to as to rate of interest to be charged and other terms and conditions on which advances or other financial accommodation may be made.
In the nutshell, bank at liberty to fix the rate of interest according to the instruction of RBI. However the bank is required to put the borrower on notice as and when the rate of interest is increased so that he may have choice to continue his account with the bank in the enhanced rate of interest. In the present case, the rate of interest is for agricultural loan is 7%.
Under the circumstance, having submitted BT receipt, possession certificate, security of gold ornaments also provided, there is no need to avail gold loan for higher rate of interest particularly when complainant was having gold loan accounts for 11/09/2012 and that loan is closed by reducing loan amount by paying difference due to price reduction of gold. There is thus no justification in saying that complainant agreed for gold loan for higher rate of interest when he is eligible for gold loan for 7% interest as per RBI circular. Hence Forum is of the considered view that charging of interest more than 7 % interest on gold loan for agricultural purposes is not justifiable and amounts to unfair trade practice. There by deficiency in service on the part Opposite Party thereby complainant has really suffered great hardship and mental agony for that he is entitled for compensation. Issues are found infavour of the complainant.
Thus complaint is allowed in part directing the Opposite Party to refund the excess amount of interest collected from the complainant from 30/08/2013 to till 27/08/2014 over and above 7% per annum on Rs. 2,56,000/- along with interest at 6% per annum from the date of complaint till date of payment to the complainant. Since there is deficiency in service and unfair trade practice, complainant is entitled for compensation for mental agony and also for financial loss. The Forum hereby award a reasonable amount of Rs.10, 000/- (Rupees ten thousand only) as compensation payable by Opposite Party to complainant. The Opposite Party is also directed to pay Rs.5000/- (Rupees Five thousand only) towards cost of litigation. Time for compliance is 30 days from the date of receipt of the order.
Sd/- Sd/-
MEMBER PRESIDENT
Exhibits
A1.Power of attorney
A2. Tax receipt
A2 (a). Possession certificate
A3. Payment receipt Rs. 2,87,103/-
A4.Copy of complaint
X1. Request for gold laon Dt:11/09/2012
X2. Gold loan pledge form
X3. Gold loan pledge form with endorsement of closing the loan Dt: 27/08/2014
Witness Examined
Pw1. Remya .A
Dw1. Shravan Kumar Ambati
Sd/- Sd/-
MEMBER PRESIDENT
Forwarded by Order
Senior Superintendent
Ps/
