Date of filing:22.4.2014.
Date of disposal:27.1.2015.
BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM - II:
VIJAYAWADA, KRISHNA DISTRICT
Present: SMT N. TRIPURA SUNDARI, B. COM., B. L., PRESIDENT (FAC)
SRI S.SREERAM, B.COM., B.A., B.L., MEMBER
TUESDAY, THE 27th DAY OF JANUARY, 2015.
C.C.No.103 of 2014
Between:
Sri Pilla Satyanarayana, S/o Sri Penta Rao, 40 years, R/o House No.5-6-43/2, Lambadipet, Chitinagar, Vijayawada – 09, Krishna District, Andhra Pradesh Rep., by Consumers’ Guidance Society, Having its registered and administration Office at Flat No.1, 1st Floor,D.No.58-1-26, Veerapaneni Plaza, Patamata, Vijayawada – 520 010. .… Complainant.
AND
1. The Branch Manager, Kanakadurga Leasing & Finance Limited, Beside Bodemma Hotel, One Town, Vijayawada – 520 001.
2. The Authorized Signatory, Kanakadurga Leasing & Finance Limited, 47-7-31, Jammi Chettu Centre, Mogalrajpuram, Vijayawaa – 10.
.… Opposite Parties.
This complaint coming on before the Forum for final hearing on 12.1.2015, in the presence of Consumers’ Guidance Society, Representing the complainant and Sri K.Kumara Srinivas, Advocate for opposite parties and upon perusing the material available on record, this Forum delivers the following:
O R D E R
(Delivered by Hon’ble President (FAC) Smt N. Tripura Sundari)
This complaint is filed under Section 12 of the Consumer Protection Act, 1986.
The averments of the complaint are in brief:
1. The complainant availed gold loan of Rs.38,000/- from the 1st opposite party on 2.3.2013 against the security of gold ornaments weighing about 23.5 grams for which the 2nd opposite party issued a receipt on the ground that the receipts would be issued in the name of the registered address only. The 1st opposite party informed the complainant that the rate of interest would be at the rate of 12% per annum on the monthly rests provided that the amount is paid within a year and interest of 15% per annum would be charged if the amount paid after one year from the date of pledge. While so the complainant had approached the 1st opposite party in the month of November, 2013 to pay the entire amount along with accrued interest under gold loan account. The 1st opposite party informed the complainant that the securities are already sold in auction held in the month of June, 2013 and further the amount realized out of auction sale was adjusted for the outstanding amount in his gold loan account, therefore nothing was due to the complainant. The complainant questioned the opposite parties for the reason for not giving any notice before conducting auction which is mandatory under law. The opposite parties informed to the complainant that there was no need to them to give any answer for the questions of the complainant. The complainant requested the 1st opposite party to issue latest account copy of his loan account, but the 1st opposite party refused to issue the same. The said acts clearly show how the opposite parties are adamant in behaving with their customers. Under the said circumstances the complainant got issued a legal notice demanding the opposite parties to pay compensation for the loss and agony caused to him. The opposite parties received the said notice and kept quiet which amounts to deficiency in service. Hence the complainant is constrained to file this complaint against the opposite parties praying the Forum, to direct the opposite parties to pay compensation of Rs.50,000/- for unbearable agony and to pay costs.
2. The 2nd opposite party filed its version and the 1st opposite party adopted the same.
The version of the 2nd opposite party is in brief:
The opposite parties denied all the allegations of the complaint and submitted that the complainant availed gold loan of R.38,000/- on 2.3.2013 vide agreement No.VOT1461 by pledging his gold ornaments weighing 23.5 grams gross, net weight 16.652 grams. The complainant failed to make single payment either interest or part payment of the principal amount continuously for more than six months. As the complainant failed to make payment the opposite party got issued a notice intimating the intention to auction the gold articles pledged. Even then the complainant failed to pay the said amount. As per the procedure the opposite parties conducted the auction on 22.10.2013 and realize an amount of Rs.43,150/-. The settlement amount includes principal amount, interest thereon and other incidental charges is Rs.45,921/- after deducting the realization amount from the due amounts of the complainant under the said loan account, the complainant is still due of Rs.2,771/-. Therefore there is no deficiency in service on the part of the opposite parties towards the complainant and prayed to dismiss the complaint with costs.
3. On behalf of the complainant he gave his affidavit and got marked Ex.A.1 to Ex.A.6. On behalf of the opposite parties Sri S.Lakshmi Narayana, Managing Director gave his affidavit and got marked Ex.B.1 to Ex.B.5.
4. Heard and perused.
5. Now the points that arise for consideration in this complaint are:
1. Whether there is any deficiency in service on the part of the opposite parties towards the complainant in not giving the auction notice before auctioning the gold ornaments of the complainant?
2. If so is the complainant entitled for any relief?
3. To what relief the complainant is entitled?
POINTS 1 AND 2:-
6. On perusing the material on hand the complainant availed gold loan of Rs.38,000/- from the 1st opposite party on 2.3.2013 by pledging his gold ornaments weighing 23.5 grams. The 2nd opposite party issued receipt Ex.A.1 and Ex.A.2 for the same. As per Ex.A.2 the rate of interest is 24% per annum. The complainant had approached the 2nd opposite party in the month of November, 2013 to release the gold by paying entire amount along with accrued interest. But the 2nd opposite party informed that the gold was already sold in auction held in the month of June, 2013 and the amount realised out of auction sale was adjusted for the outstanding amount in his gold loan account and no amount is due to the complainant. Then the complainant requested the 2nd opposite party to issue statement of account but there is no response from him. Under the said circumstances he got issued a legal notice Ex.A.3 dated 29.12.2013 to the opposite parties demanding to issue a latest statement of gold loan account of him and to pay Rs.50,000/- by way of compensation for unexceptional loss owing to the illegal auction sale. Otherwise he will take legal actions against the opposite parties. The 2nd opposite party received the said notice and kept quiet. The complainant filed RBI guidelines Ex.A.4 and filed Ex.A.5 gold rates in Chennai in June, 2013 and Ex.A.6 gold rate in Vijayawada in April, 2014. The opposite parties say that the pledged gold ornaments weighing 23.5 grams and net weight 16.652 grams. The same is evidenced under Ex.B.1. As per Ex.B.2 the opposite parties calculated the interest at the rate of 24% per annum for 30 days and it was added to the principal. On every month it was used to add the principal + interest to the next following month instalment. As per opposite parties calculation the interest calculated at Rs.7,731/- from 2.3.2013 to 22.10.2013 and Ex.B.2 also shows that overdue customers transferred to auction Rs.4,960/- and interest Rs.2,771/- total debit Rs.38,000/- and interest Rs.7,731/- total credit Rs.38,000/- overdue customers transferred Rs.4,960/- and postal charges Rs.190/- and the account is closed on 22.10.2013. The opposite parties says that as the complainant failed to make single payment either interest or part of the principal amount continuously for more than six months they got issued a notice to him intimating the intention to auction the gold articles pledged by him. But there is no documentary proof to show that the opposite parties intimated the complainant about the auction of gold ornaments of him. As per opposite parties they conducted the auction on 22.10.2013 and realized an amount of Rs.43,150/- and principal + interest and incidental charges being Rs.45,921/- and after deducting realization amount from the due amounts the complainant is still due of Rs.2,771/-. But Ex.B.2 did not show how much amount was realized by auctioning gold of the complainant. Ex.B.5 filed by the opposite parties to show that they give paper advertisement. But it is not an authenticated document to say that it is paper advertisement. As per RBI guidelines clause ‘C’ lending against collateral of gold jewellery (i) (e) The jewellery accepted as collateral should be appropriately insured. (f) The Board approved policy with regard to auction of jewellery in case of non-repayment shall be transparent and adequate prior notice to the borrower should be given before the auction date. It should also lay down the auction procedure that would be followed. There should be no conflict of interest and the auction process must ensure that there is arm’s length relationship in all transactions during the auction including with group companies and related entries. (g) The auction should be announced to the public by issue of advertisements in at least 2 newspapers, one in vernacular language and another in national daily newspaper. (h) As a policy the NBFCs themselves shall not participate in the auctions held. (i) Gold pledged will be auctioned only through auctioneers approved by the Board. (j) The policy shall also cover systems and procedures to be put in place for dealing with fraud including separation of duties of mobilization, execution and approval. Clause C (ii) The loan agreement shall also disclose details regarding auction procedure. The opposite parties did not adopt any of the procedures lay down by the RBI and they adopted unfair trade practice and auctioned the gold within 7 months of the pledged. The opposite parties did not issue any notice personally to the complainant or public by publication in newspaper. Hence there is deficiency in service on the part of the opposite parties and the opposite parties are liable to pay compensation to the complainant for their illegal acts and the complainant is entitled to get relief from the opposite parties. Accordingly these points are answered.
POINT No.3:-
7. In the result, the complaint is allowed in part and the opposite parties are directed to pay an amount of Rs.15,000/- as compensation to the complainant for auctioning the gold without intimation of the complainant and public; and to pay Rs.2,000/- as costs to the complainant. Time for compliance one month. Rest of the claims of the complainant are dismissed.
Dictated to the Stenographer K.Sivaram Prasad, transcribed by him, corrected by me and pronounced by us in the open Forum, this the 27TH day of January, 2015.
PRESIDENT(FAC) MEMBER
Appendix of evidence
Witnesses examined
For the complainant: For the opposite parties:
P.W.1 P.Satyanarayana D.W.1 S.Lakshmi Narayana,
Complainant, Managing Director
(by affidavit) of the opposite parties
(by affidavit)
Documents marked
On behalf of the complainant:
Ex.A.1 . . Acknowledgement issued by the opposite parties.
Ex.A.2 02.03.2013 Document showing the particulars of gold pledged by the
complainant.
Ex.A.3 29.12.2013 Office copy of legal notice.
Ex.A.4 01.07.2013 Unsigned letter from the Reserve Bank of India to All Non-
Banking Financial Companies and Residuary Non-Banking Companies.
Ex.A.5 . . Document showing Gold rates in Chennai.
Ex.A.6 . . Document showing gold rates in Vijayawada.
On behalf of the opposite parties:
Ex.B.1 02.03.2013 Office copy of Loan Agreement issued by the opposite
parties.
Ex.B.2 16.10.2014 Statement of account relating to the gold loan of complainant.
Ex.B.3 21.08.2013 Photocopy of Final Auction Notice.
Ex.B.4 22.10.2013 List of Auction dates.
Ex.B.5 . . Photocopy of Paper publication notice.
PRESIDENT(FAC)
