5/12/08

This is a complaint filed under Section 12 of the Consumer Protection Act for an order directing the opposite party to grant benefit of one time settlement as per the circular no.15/2004 of Registrar, Co.operative Society and to pay the difference in amount collected Rs 29,731/- from the complainants along with interest and cost to pay Rs 5000/- each as compensation.

The averments in the complaint in brief are : The complainants, members of opposite party bank obtained loan from the opposite party. The complainants 3 to 5 are children of complainants 1 &2. The complainants could not repay the loan. Complainants approached the opposite party in 2005 to pay the loan in one lump sum expecting to get the benefit of one time settlement scheme as per the circular of Registrar bearing No.15/2004. Separate request letter filed to provide the benefits of concession in one time settlement to the complainants. But opposite party forced to pay entire amount with interest , cost and other expenses without any concession under the threat of dare consequences of legal action. Complainant no.1 paid total amount of Rs 46,152/- . Complainant nos.2, 3, 4 & 5 have paid Rs 16,388/-, Rs 10004/-, Rs 10004/-Rs 9675/- respectively. Complainants totally paid Rs 92,223/-. Loan amount was Rs 29,000/-. In other words Rs 63,223/- paid as interest alone. The complainants are entitled for the benefit under the Circular NO.15/04 of the Registrar. But opposite party denied this benefit a legitimate right. Aggrieved by this complainants approached ARC Society requesting to direct opposite party to comply the circular 15/2004. ARCS has directed opposite party to grant all benefits. But opposite party did not comply the direction. Though approached again and again there was no use. Hence this complaint for compensation of Rs 5000/- each.

The contention of opposite party in brief are as follows: Complaint is not maintainable. Complaint is bad for non jointer of necessary parties. The complainants have no legal right to file this complaint jointly. It is true that the complainants had availed loan from this opposite party bank at the book rate interest of 18% per annum and the date of loan was 24.1.95 and to be repaid within a period of one year by complainant no.1,3,4 and 5 and within two years by complainant no.2. The amount shown in the complaint is false and baseless. Complainant did not pay the loan agreed inspite of the repeated demands. No offer of one time settlement was given by the opposite party . It is true that the opposite party bank has received communication from the Asst. Registrar with regard to the grant of one time settlement benefit to the complainants as per circular 14/04. This order was made without hearing the opposite party bank and much after the clearance of the loan by the complainants. The complainants did not make any written applications . The complainants are not entitled for any benefit under the circular after the clearance of the loan. Complainants suffered no mental agony or pain. The circular was issued against the provisions of the Co.operative Societies Act, Rules and By laws and if the scheme were implemented that would have resulted in huge financial loss to the bank. Anyway Manging Committee decided to grant the borrowers the benefit of settling their outstanding loan less than 1% of the document rate and to avoid entire penal interest. Even though the complainants were given the loan at the book rate of 18% and the arbitrator had decreed to collect the arrears with 21% interest the complainants were permitted to clear their dues at 17% interest rate ie; 1% less than the book rate. The Circular was issued without Authority and beyond the power of Registrar under Section 66 and 66A of Co. operative Societies Act 1969.There is no deficiency on the part of opposite party. Hence to dismiss the complaint.

On the above pleadings the following issues were taken for consideration.

1. Whether there is any deficiency on the part of opposite party?

2. Whether the complainants are entitled for the remedy as prayed for?

3. Relief and cost.

   The evidence consist of Ext.A1(a) to A1(d), A2(a), A2(a) to A2(e), A3(a) to A3(e), A4, A5(a) to A5(e), A6(a) to A6(e) on the side of the complainant and Exts. B1 to B6 on the side of opposite party.

   ISSUES 1 to 3:

   Admittedly complainants were availed loans from the opposite party bank. Opposite party contended that it was availed at the book rate interest of 18% per annum which was not denied by the complainant. Ext. A1 series are copy of letters sent by complainant requesting the Secretary to allow one time settlement benefits since they are closing the loan paying the amount lump sum . Ext. A2 series are receipts of payments of loan amounts by the complainants. Ext. A3 series are copies of order of Asst. Registrar . Ext. A4 is the copy of requisition letter submitted before the opposite party as per the order of the Asst. Registrar . Ext.A5 series are copies of lawyer notice. Ext. A1 series shows that complainants requested to opposite party for allowing the one time settlement benefit. Ext.A2 series shows that complainants paid amount lump sum and made clear the loan. Ext.A3 series proves that Asst. Registrar has directed the Secretary, Mattannur Co.op: Rural Bank to give one time settlement benefit. Ext.A4 makes it clear that the requisition letter was submitted by complainants jointly for the purpose of getting one time settlement benefits before the Secretary, Mattanur Co. operative Rural Bank.

   Opposite party rejected the requests of the complainants without taking into consideration the direction of the Asst. Registrar. The opposite party's case is that the complainants are not entitled to get the benefit of the order of the Asst. Registrar since the order issued without authority and beyond the power of Registrar under Section 66 and 66A of Co. operative Societies Act 1969. The vital point to be decided in this case is whether the circular issued by the Registrar is valid or not? If it is valid the complainants are entitled to get the benefit of one time settlement. IN the case Kallettumkara Service Co. operative Bank Vs. Registrar of Co. operative Societies reported in 2005(3) KLT 483 it is viewed that Section 66 would not authorise Registrar to issue any direction or guideline to Co.. operative Societies to regulate their financial transactions entered into by the society. It is also observed that “ The circular insisting the bank to settle their outstanding loans at the document rate or at the then existing rate excluding penal interest and compound interest would cause considerable loss to the bank “ . It is clearly opined that the circular has no statutory backing. There is no need to further probe into the other details to decide the case. Herein it has also been taken into consideration the attempt on the part of opposite party through Ext. B1. Ext.B1 is the copy of the circular No.1/12/2003 of the Managing committee of the bank. Ext. B1 shows that the Managing Committee decided to grant the borrowers the benefit of settling their outstanding loan less than 1% of the document rate. It can be seen that opposite party has contended that the arbitrator had decreed to collect the arrears with 21% interest in the case of complainant . This is not denied by the complainant. But complainant herein are permitted to clear their dues at 17% interest rate. That means complainant's were given opportunity to 1% less than the agreed interest.

   Considering the above facts we hold that there is no deficiency on the part of opposite party. Hence the issues 1 to 3 are found against complainants. The complainants are not entitled for compensation.

   In the result, the complaint stands dismissed. No order as to costs.

   Sd/- Sd/- Sd/-

MEMBER MEMBER PRESIDENT

APPENDIX

Exhibits for the complainant

A1. Copies of the letter sent by the complainants to OP

A2. Receipts issued by OP

A3.Letter dt.17.3.05 sent by OP to complainants

A4.Copy of the letter sent by the complainants to OP dt.29.3.05

A5.Copy of the lawyer notice dt.13.3.05 sent to OP

A6. Postal receipts.

Exhibits for the opposite parties

B1. Circular NO.1/12/03 issued by OP

B2 to B6 Copies of the loan ledger register maintained by OP

Witness examined for either side: Nil /forwarded by order/

Senior Superintendent

Consumer Disputes Redressal Forum, Kannur.