Tamil Nadu

South Chennai

CC/42/2014

S.Sabarinath - Complainant(s)

Versus

Dhanalaxmi Bank - Opp.Party(s)

G.Gopalakrishnan

05 Nov 2019

ORDER

                                                                             Date of filing      : 30.01.2014

                                                                               Date of Disposal : 05.11.2019

                                                                                  

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, CHENNAI (SOUTH)

@ 2^ND Floor, T.N.P.S.C. Road, V.O.C. Nagar, Park Town, Chennai – 3.

 

PRESENT: THIRU. M. MONY, B.Sc., L.L.B, M.L.                    : PRESIDENT

TR. R. BASKARKUMARAVEL, B.Sc., L.L.M., BPT., PGDCLP.  : MEMBER

 

C.C. No.42/2014

DATED THIS TUESDAY THE 05^TH DAY OF NOVEMBER 2019

                                 

S. Sabarinath,

S/o. Late. Sudarshan,

No.3, Pambanswamy Salai,

Muthulakshmi Nagar,

Chittlapakkam,

Tambaram,

Chennai – 600 064.                                                        .. Complainant.

                                                                                                     ..Versus..

1. The General Manager,

Dhanlaxmi Bank,

No.12, 1^st Main Road,

Baby Nagar,

Velachery,

Chennai – 600 042.

 

2. Mr. Natesh,

Branch Manager,

Dhanlaxmi Bank,

No.12, 1^st Main Road,

Baby Nagar, Velachery,

Chennai – 600 042.

 

3. The Chairman,

Dhanlaxmi Bank,

Registered and Head Office @

Dhanalakshmi Buildings B Naickanal,

Thrissur,

Kerala – 680 001.                                                   ..  Opposite parties.

 

Counsel for the complainant                   : M/s. G. Gopalakrishnan &

                                                                   another

Counsel for the opposite parties 1 to 3  : M/s. W.S. Jayaprakash & 

                                                                   others

ORDER

THIRU. M. MONY, PRESIDENT

       This complaint has been filed by the complainant against the opposite parties 1 to 3 under section 12 of the Consumer Protection Act, 1986 prays to return the pledged items of gold weighing 258.900 grams after receiving the outstanding loan amount thereon, or in the alternative to pay the current market value of the pledged items of gold less the outstanding loan amount  and to pay a sum of Rs.10,00,000/- towards compensation for deficiency in service, unfair trade practice, mental agony and hardship suffered by the complainant on the part of the opposite parties with cost of Rs.25,000/-.

1.    The averments of the complaint in brief are as follows:-

The complainant submits the he availed 3 loans from the 1^st opposite party bank after pledging gold of 258.900 grams and received a sum of Rs.5,35,000/- at the rate of Rs.2,175/- per gram in the month of October 2012.   During the month of November 2012, the 1^st opposite party called the complainant and offered enhancement of loan amount at the rate of Rs.75/- per gram.  Thereby, the complainant received a total amount of Rs.5,53,500/- with a tenure of 6 months i.e. payable in the month of May 2013.  The complainant also availed second and third loans against the account numbers 016219100003391 & 061219100004593 for additional increased amounts of Rs.17,061/- & Rs.24,309/- respectively totalling of Rs.41,370/-.  The complainant submits that on 15.04.2013, the complainant received a notice for all the above three loan accounts indicating that the account either by regularized or closed on or before 20.05.2013, failing which, the jewels will be auctioned.  Immediately, the complainant contacted the 2^nd opposite party and after discussions remitted a sum of Rs.90,000/- on 20.05.2013 which consists of Rs.47,457/- being the interest amount against the first loan amount of Rs.5,53,500/- as well as the second and the third loans of Rs.17,061/- & Rs.24,309/- respectively.  The opposite party also extended the period of loan for 6 months from May 2013 to November 2013 for settling the first loan amount.  The complainant submits that the 2^nd opposite party kept silent for two months i.e. till 23.07.2013 suddenly issued recall notice informing that the balance as on 30.06.2013 was Rs.5,62,239/- (Rs.5,53,500/- + Interest Rs.8,739/-) and requested the complainant to close or renew the loan by paying the entire outstanding or interest on or before 02.08.2013 failing which, the pledged gold items will be auctioned.  The complainant submits that immediately after receipt of notice while pledging, the opposite parties have stated that it is a routine notice and only for a bank formality. 

2.     The complainant submits that on 29.07.2013, the opposite parties sent another notice informing the complainant for settling the outstanding loan amount of Rs.5,68,498/- which reflects the increased interest amount of Rs.6,259/- within a period of 6 days.   The complainant submits that the interest should be remitted on or before 10.08.2013, failing which the pledged gold items would be auctioned on 17.08.2013.  Hence, the complainant issued legal notice dated:20.08.2013 claiming extension of time for 12 months.   But the opposite parties sold the pledged gold items by way of auction and deposited a sum of Rs.21,780/- in the account of the complainant.   The auction sale of the pledged gold by the opposite parties is arbitrary, unilateral, unjust, unfair trade practice and detrimental to law amounting to unfair trade practice.   Since the opposite parties has not responded, the complainant filed RTI letter dated:19.10.2013 for which also, the opposite parties has not replied till date.   While so, the complainant sent a letter to the Ombudsman dated:06.09.2013 through his Advocate for which also, there is no proper positive reply.  The complainant submits that 258.900 grams were pledged with details of purity (Carat) and its value.  The average purity (carat) is 87% and paid the loan amount accordingly as per the value the opposite parties kept the loan in their own custody and while auctioning the gold jewels the opposite parties reduced the purity (carat) of gold itself as 83% arbitrarily.  The act of the opposite parties amounts to deficiency in service and unfair trade practice which caused great mental agony.  Hence, the complaint is filed.

3.      The brief averments in the written version filed by opposite parties 1 to 3  is as follows:

The opposite parties 1 to 3 specifically deny each and every allegations made in the complaint and put the complainant to strict proof of the same.    The opposite parties 1 to 3 state that this complaint is not maintainable in this Consumer Forum since, the complainant availed the loan for business purposes.  The opposite parties 1 to 3 state that admittedly, the complainant availed a loan amount of Rs.5,35,500/- on pledging the gold jewels in the month of September 2012 and taking advantage of the increase of gold rates.  The complainant availed enhancement of loan limit also to the tune of Rs.5,53,500/- on 08.10.2012.   The loan is for 6 month i.e. on or before 08.04.2013 the complainant shall settle the loan.  The allegation that 12 months i.e. increase of 6 months granted by the opposite parties is not correct.   The opposite parties state that since the loan is an unsecured one and there is a short fall of the gold value.  There was an overdue amount hence, the opposite party issued notice dated:15.04.2013 for settlement of loan amount; in response to that the complainant deposited a sum of Rs.90,000/- on 20.05.2013 and it was sufficient to close the two other gold loan account leaving a balance of Rs.47,457/- which was hardly sufficient to regularize the gold loan No.162/191/2708 for the loan amount of Rs.5,53,500/-.  The allegation that 6 months additional time was given from May 2013 i.e. upto December 2013 is erroneous and imaginary. Hence, the opposite parties issued notice dated:23.07.2013 and 29.07.2013 calling upon the complainant to settle the loan amount on or before 10.08.2013. otherwise, the gold will be sold out in auction on 17.08.2013.  Accordingly, the opposite parties sold the gold in auction since the complainant has not paid / settled the loan amount for Rs.6,00,000/- + VAT Rs.6,000/- and adjusted the pending loan of Rs.5,78,212/- as on 31.08.2013 and deposited the balance amount of Rs.21,788/- on the account of the complainant.   Therefore, there is no deficiency in service on the part of the opposite parties 1 to 3 and hence, the complaint is liable to be dismissed.

4.     To prove the averments in the complaint, the complainant has filed proof affidavit as his evidence and documents Ex.A1 to Ex.A18 are marked.  Proof affidavit of the opposite parties 1 to 3 is filed and documents Ex.B1 to Ex.B8 are marked on the side of the opposite parties 1 to 3.

5.      The points for consideration is:-

1. Whether the complainant is entitled to get return of gold weighing 258.900 grams after receiving the outstanding loan amount or alternatively, to pay the current market value of the pledged gold as prayed for?
2. Whether the complainant is entitled to a sum of Rs.10,00,000/- towards compensation for mental agony and hardship with cost of Rs.25,000/- as prayed for?

6.      On point:-

Both parties filed their respective written arguments.   Heard their Counsels also.  Perused the records namely; the complaint, written version, proof affidavits and documents.  The complainant pleaded and contended the he availed 3 loans from the 1^st opposite party bank after pledging gold of 258.900 grams and received a sum of Rs.5,35,000/- at the rate of Rs.2,175/- per gram in the month of October 2012.   During the month of November 2012, the 1^st opposite party called the complainant and offered enhancement of loan amount at the rate of Rs.75/- per gram.  Thereby, the complainant received a total amount of Rs.5,53,500/- with a tenure of 6 months i.e. payable in the month of May 2013.  The complainant also availed second and third loans against the account numbers 016219100003391 & 061219100004593 for additional increased amounts of Rs.17,061/- & Rs.24,309/- respectively totalling of Rs.41,370/- as admitted by the opposite parties.   Further the contention of the complainant is that on 15.04.2013 the complainant received a notice for all the above three loan accounts indicating that the account either by regularized or closed on or before 20.05.2013, failing which, the jewels will be auctioned as per Ex.A1(S).  Immediately, the complainant contacted the 2^nd opposite party and after discussions remitted a sum of Rs.90,000/- on 20.05.2013 which consists of Rs.47,457/- being the interest amount against the first loan amount of Rs.5,53,500/- as well as the second and the third loans of Rs.17,061/- & Rs.24,309/- respectively as per Ex.A2 to Ex.A5.  But the complainant has not stated anything about the interest amount for the second and the third loan.  The opposite party also extended the period of loan for 6 months from May 2013 to November 2013 for settling the first loan amount. 

7.     Further the contention of the complainant is that the 2^nd opposite party kept silent for two months i.e. till 23.07.2013 suddenly issued recall notice informing that the balance as on 30.06.2013 was Rs.5,62,239/- as per Ex.A6 (Rs.5,53,500/- + Interest Rs.8,739/-) and requested the complainant to close or renew the loan by paying the entire outstanding or interest on or before 02.08.2013 failing which, the pledged gold items will be auctioned.  Further the contention of the complainant is that immediately after receipt of notice while pledging, the opposite parties have stated that it is a routine notice and only for a bank formality.  But there is no record.  Further the contention of the complainant is that on 29.07.2013, the opposite parties sent another notice informing the complainant for settling the outstanding loan amount of Rs.5,68,498/- as per Ex.A7 which reflects the increased interest amount of Rs.6,259/- within a period of 6 days proves the deficiency in service.   Further the contention of the complainant is that as per Ex.A7 the interest should be remitted on or before 10.08.2013, failing which the pledged gold items would be auctioned on 17.08.2013.  Hence, the complainant was constrained to issue legal notice dated:20.08.2013 as per Ex.A8 claiming extension of time for 12 months.   But the opposite parties sold the pledged gold items by way of auction and deposited a sum of Rs.21,780/- in the account of the complainant.   The auction sale of the pledged gold by the opposite parties is arbitrary, unilateral, unjust, unfair trade practice and detrimental to law amounting to unfair trade practice. 

8.     Hence, the complainant called for the following details:-

1. When the jewels were auctioned?
2. How much sovereigns of jewels were auctioned?
3. How much bidders participated in the auction?
4. Who is the bidder to whom the jewels were given in the auction?
5. Who is the highest bidder and how much amount was given to the auctioned property?
6. What is the amount given credit in my loan account and what was the balance amount?
7. When the auction notice was issued and the name of the newspaper when it was published?
8. When the final notice was issued to the loanee prior to auction?

Since the opposite parties has not responded the complainant filed RTI letter dated:19.10.2013 as per Ex.A13 for which also, the opposite parties has not replied till date.   While so, the complainant sent a letter to the Ombudsman as per Ex.A10 dated:06.09.2013 through his Advocate for which also, there is no proper positive reply except Ex.A14 legallizing the auction sale without looking into malpractices. Hence, the complainant was constrained to file this case claiming the outstanding amount after selling the pledged gold jewels on the date of market value with compensation. 

9.     The learned Counsel for the complainant cited the guidelines on fair practices Code for NBFCs issued by the Reserve Bank of India about the excess interest.  In this case, for 6 days interest the opposite parties claimed Rs.6,259/- arbitrarily.  Equally, the opposite parties has not given the details of auction procedure of gold jewels as per lending against collateral of gold jewellery which reads as follows:

While lending to individuals against gold jewellery, NBFCs shall adopt the following in addition to the general guidelines as above.

i. They shall put in place Board approved policy for lending against gold that should inter alia, cover the following:

1. Adequate steps to ensure that the KYC guidelines stipulated by RBI are complied with and to ensure that adequate due diligence is carried out on the customer before extending any loan,
2. Proper assaying procedure for the jewellery received,
3. Internal systems to satisfy ownership of the gold jewellery,
4. The policy shall also cover putting in place adequate systems for storing the jewellery in safe custody, reviewing the systems on an on-going basis, training the concerned staff and periodic inspection by internal auditors to ensure that the procedures are strictly adhered to.  As a policy, loans against the collateral of gold should not be extended by branches that do not have appropriate facility for storage of the jewellery,
5. The jewellery accepted as collateral should be appropriately insured.
6. 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 entities,
7. 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.
8. As a policy the NBFCs themselves shall not participate in the auctions held,
9. Gold pledged will be auctioned only through auctioneers approved by the Board.
10. 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.

ii. The loan agreement shall also disclose details regarding auction procedure.

10.    Further the contention of the complainant is that as per Ex.B1, 258.900 grams were pledged with details of purity (Carat) and its value.  The average purity (carat) is 87% and paid the loan amount accordingly as per the value the opposite parties kept the loan in their own custody and while auctioning the gold jewels the opposite parties reduced the purity (carat) of gold itself as 83% arbitrarily inorder to diminish the quantum and value of jewels.  The opposite parties has not explained how the purity of gold is reduced from 87% to 83% while in the custody has not been explained proves the unfair trade practice of the opposite parties.

11.    The learned Counsel for the opposite parties would contend that this complaint is not maintainable in this Consumer Forum since, the complainant availed the loan for business purposes.  But this complaint is filed only on the sole ground of deficiency in service and unfair trade practice of the opposite parties.   Further the contention of the opposite parties is that admittedly, the complainant availed a loan amount of Rs.5,35,500/- on pledging the gold jewels in the month of September 2012 and taking advantage of the increase of gold rates.  The complainant availed enhancement of loan limit also to the tune of Rs.5,53,500/- on 08.10.2012 as per Ex.B1.   The loan is for 6 month i.e. on or before 08.04.2013 the complainant shall settle the loan.  The allegation that 12 months i.e. increase of 6 months granted by the opposite parties are not correct.  Further the contention of the opposite parties is that since the loan is an unsecured one and there is a short fall of the gold value.  There was an overdue amount hence, the opposite party issued notice dated:15.04.2013 as per Ex.B3 for settlement of loan amount; in response to that the complainant deposited a sum of Rs.90,000/- on 20.05.2013 and it was sufficient to close the two other gold loan account leaving a balance of Rs.47,457/- which was hardly sufficient to regularize the gold loan No.162/191/2708 for the loan amount of Rs.5,53,500/-.  The allegation that 6 months additional time was given from May 2013 i.e. upto December 2013 is erroneous and imaginary. Hence, the opposite parties issued notice dated:23.07.2013 as per Ex.B6 and 29.07.2013 as per Ex.B7 calling upon the complainant to settle the loan amount on or before 10.08.2013 otherwise, the gold will be sold out in auction on 17.08.2013.  Accordingly, the opposite parties sold the gold in auction since the complainant has not paid / settled the loan amount for Rs.6,00,000/- + VAT Rs.6,000/- and adjusted the pending loan of Rs.5,78,212/- as on 31.08.2013 as per Ex.B8 and deposited the balance amount of Rs.21,788/- on the account of the complainant.  But the opposite parties has not explained the gold rate for auction sale was taken into consideration.  Equally, the opposite parties has not explained the huge amount of balance also not explained.  The reason for which is not also adduced in this Forum also.  On a careful perusal of documents Ex.B1 (S), it is very clear that the average purity of gold is on the date of loan is 87% for all the three loans.  Admittedly, the complainant closed two loans amounts.  But the opposite parties has not given the details.  It is also very clear from Ex.B1 (S) that for the purpose of auction sale of the gold the opposite parties fixed the purity (Carat) 0.83% when it is in the custody of the opposite parties.  How the opposite party can reduce the 0.87% purity of gold into 0.83% in unknown proves the unfair trade practice.  Thereby, the opposite parties wantonly and deliberately diminish the value of the gold in order to sell the gold in low price is also proved in this case.   Considering the facts and circumstances of the case, this Forum is of the considered view that the opposite parties 1 to 3 are jointly and severally liable to pay the difference amount for the value of purity (Carat) i.e.4% (87% - 83% = 4%) of the total gold auctioned on 31.08.2013 at the rate of Rs.2,842/- per gram along with interest at the rate of 9% p.a. from the date of filing of this complaint (i.e.) 30.01.2014 to till the date of this order (i.e.) 05.11.2019 to the complainant and to pay a sum of Rs.50,000/- towards compensation for mental agony with cost of Rs.10,000/- to the complainant.

In the result, this complaint is allowed in part.  The  opposite parties 1 to 3 are jointly and severally liable to pay the difference amount for the value of purity (Carat) (i.e.) 4% (87% - 83% = 4%) of the total gold auctioned on 31.08.2013 at the rate of Rs.2,842/- (Rupees Two thousand eight hundred and forty two only) per gram along with interest at the rate of 9% p.a. from the date of filing of this complaint (i.e.) 30.01.2014 to till the date of this order (i.e.) 05.11.2019 to the complainant and to pay a sum of Rs.50,000/-  (Rupees Fifty thousand only) for deficiency in service and mental agony with cost of Rs.10,000/- (Rupees Ten thousand only) to the complainant.

The aboveamounts shall be payablewithin six weeks from the date of receipt of the copy of this order, failing which, the said amounts shall carry interest at the rate of 9% p.a. to till the date of payment.

Dictated  by the President to the Steno-typist, taken down, transcribed and computerized by her, corrected by the President and pronounced by us in the open Forum on this the 05^th day of November 2019. 

 

MEMBER                                                                                PRESIDENT

 

COMPLAINANT SIDE DOCUMENTS:-

Ex.A1	15.04.2013	Copy of letter from the opposite party to the complainant (3 nos.)
Ex.A2	20.05.2013	Copy of challan for Rs.90,000/- remitted in the S.B. A/c. No.16212404
Ex.A3	27.05.2013	Copy of challan for Rs.47,457/- deducted by the opposite party for gold loan A/c. No.2708
Ex.A4	27.05.2013	Copy of challan for Rs.17,061/- deducted by the opposite party for gold loan A/c. No.4593
Ex.A5	27.05.2013	Copy of challan for Rs.24,309/- deducted for the gold loan a/c.3391
Ex.A6	23.07.2013	Copy of letter from the opposite party to complainant
Ex.A7	29.07.2013	Copy of letter from the opposite party to complainant
Ex.A8	20.08.2013	Copy of legal notice by the complainant to the opposite parties
Ex.A9	22.08.2013	Copy of acknowledgment by the opposite party for the Item No.7
Ex.A10	06.09.2013	Copy of letter by the complainant through his Advocate to the Ombudsman Reserve Bank of India, Chennai
Ex.A11	18.09.2013	Copy of reply letter from the ombudsman to item No.10
Ex.A12	20.09.2013	Copy of reply notice by the opposite party to the Item No.8
Ex.A13	19.10.2013	Copy of RTI letter of request by the complainant through his Advocate to the opposite party
Ex.A14	26.10.2013	Copy of letter by the complainant to the Banking Ombudsman, RBI, Chennai
Ex.A15	Oct. 2012	Copy of Disbursement receipt details of gold ornaments pledged by the complainant

 

OPPOSITE PARTIES 1 TO 3 SIDE DOCUMENTS:-  

Ex.B1	08.10.2012	Copy of Gold Loan Application
Ex.B2	08.10.2012	Copy of Demand Promissory Note
Ex.B3	15.04.2013	Copy of notice copy
Ex.B4	15.04.2013	Copy of notice copy
Ex.B5	15.04.2013	Copy of notice copy
Ex.B6	23.07.2013	Copy of notice copy
Ex.B7	29.07.2013	Copy of notice copy
Ex.B8	31.08.2013	Copy of Auction details

 

 

 

MEMBER                                                                                                                                                                          PRESIDENT