Date of filing:2.1.2014
Date of Disposal:12.8.2014
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 12th DAY OF AUGUST, 2014.
C.C.No.15 OF 2014
Between :
Penugonda Krishna Murthy, S/o Late Lakshmi Narasaiah, Hindu, O/o D.No.41-1-128, III Floor Feedaru Road, Krishna Lanka, Vijayawada, Krishna District, Andhra Pradesh State.
….. Complainant.
And
Fed Bank Financial Services Ltd., Rep., by its Branch Manager, O/o 27-37-73, 1st Floor, Near Raghavaiah Park, Bandar Road, Vijayawada Mandal Educational Officers, G.Konduru Village and Manadal, Krishna District.
…....Opposite Party.
This complaint is coming before us for final hearing on 28.7.2014 in the presence of Sri B.Devadass and Sri B./ramesh babu, Advocates for complainant and Sri D.Rajasekhar, Advocate for opposite party 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.6,50,000/- from the opposite party on 14.7.2012 on pledging his gold ornaments weight about 338.70 grams worth about Rs.10,83,866.50ps. The complainant paid the instalments regularly. While so on 7.11.2013 the opposite party issued a notice to the complainant stating that the complainant failed to pay the instalments regularly. Therefore they are going to auction the gold ornaments on 22.11.2013. Accordingly the complainant approached the opposite party on 22.11.2013 but the opposite party changed the date of auction and also venue. On that the complainant informed the opposite party that he is ready to clear the entire loan amount but the opposite party did not respond properly. Therefore the complainant got issued a notice dated 9.12.2013 demanding the opposite party to furnish the account copy. The opposite party received the said notice and issued a reply dated 18.12.2013 stating that they conducted auction of gold ornaments on 25.11.2013 and realized the amount of Rs.7,42,234/- and they are adjusted the same amount to the gold loan account. They also informed that the complainant need not pay anything under the said loan account. Though the complainant expressed his willingness to discharge the entire loan amount the opposite party without prior intimation auctioned the pledged gold ornaments below the original value. The opposite party also did not adjust the instalment amounts of Rs.1,71,608/- paid by the complainant to his loan account as such the opposite party have clear negligence and deficiency in rendering service to the complainant. Hence the complainant is constrained to file this complaint against the opposite party praying the Forum to direct the opposite party to deposit pledged gold ornaments to pay Rs.2,00,000/- as compensation and to pay costs.
2. The version of the opposite party is in brief:
The opposite party denied all the allegations of the complaint and submitted that the complainant had availed a loan facility of Rs.6,50,000/- from the opposite party by pledging his gold ornaments vide loan Account No.GL03020000236. The said loan facility was granted to the complainant based on the loan application dated 14.7.2012 and assurance to service the loan facility regularly. The complainant was liable to pay interest of Rs.76,375/- for the said loan amount in two half yearly instalments which would commence from 14.1.2013 and ends on 13.7.2013 and the principal loan amount repayable by the complainant on the date of maturity. The complainant was not regular in payment of interest. The opposite party has done regular follow up with the complainant and also sent demand notice dated 13.5.2013 to the complainant to regularize the loan account. The opposite party wide demand notice request the complainant to make the payment of Rs.85,415/- towards outstanding on 13.5.2013. But the complainant failed to regularize the loan account. The complainant has violated the terms and conditions of the said loan facility including defaults in payment of interest and over due charges. The opposite party gave notice dated 22.5.2013 to recall the entire loan facility by invoking Clause 3 of the terms and conditions of the loan facility and called upon the complainant to redeem the said gold ornaments and pay the total dues for an amount of Rs.7,25,590/- within seven days excluding accumulated and penal interest/charges and if he failed to comply with the requisitions contained in the said notice the opposite party shall be constrained to initiate appropriate legal action against the complainant for recovery of the overdue amounts including enforcement of its security interest by way of sale/liquidation of pledged gold. The complainant had paid part payments towards overdue interest, penal interest and other charges. The payments made by the complainant are not sufficient and he failed to make payment of total outstanding as mentioned in the notices and his account was matured on 13.7.2013. Hence on failure of complainant the opposite party had sent final liquidation notice dated 11.7.2013 and offered an opportunity to the complainant to pay the outstanding amount and to release gold ornaments. The notice of auction was also published in vernacular and English newspaper. After receipt of the above notices the complainant has again arranged to make payment of Rs.75,000/- to avoid the auction. The complainant failed to release the pledged ornaments and to clear the dues of the opposite party after its maturity of gold loan. As there was no option the opposite party auctioned the pledged gold ornaments pledged by the complainant. As per the terms and conditions of the loan facility if the complainant failed to release the gold ornaments pledged with the opposite party within maturity of the loan, then the opposite party has right to dispose of the gold ornaments and the same had been clearly mentioned in Clause 2 of terms and conditions of the loan agreement which the complainant has signed. The first interest was due on 14.1.2013 for an amount of Rs.76,375/- but the complainant has made only Rs.68,550/-. The amount paid by the complainant lesser than the outstanding amount against the interest. Instead of making payment and releasing the pledged gold ornaments, the complainant got issued the legal notice dated 9.12.2013 asking for account copy of the loan account. The opposite party has sent post sale notice dated 18.12.2013 and reply dated 20.12.2013 to the complainant. Further the opposite party vide post sale notice dated 18.12.2013 provide the auction details to the complainant. The complainant only made total payment of Rs.1,43,550/- in on several dates which was much lesser than the outstanding amount. As the complainant failed to repay the gold loan and release the pledged gold ornaments the opposite party auctioned the pledged gold ornaments. Therefore there is no deficiency in service on the part of the opposite party 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 and on behalf of the opposite party Mr.Yalamandababu, Branch Manager filed his affidavit and got marked Ex.B.1 to Ex.B.8.
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 party towards the complainant in not releasing the pledged gold ornaments of him even though he is ready to release them?
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 documents on hand it is an admitted fact that the complainant availed gold loan of Rs.6,50,000/- on 14.7.2012 by pledging his gold ornaments with the opposite party under Ex.A.1 gold pledge card and Ex.B.1 application for loan against gold and demand promissory note. As per Ex.B.1 the total value of the gold is Rs.10,83,866.50ps and the rate of interest per annum is 23.50% till date of payment in full. As per the opposite party the complainant has to pay interest Rs.76,375/- for the said amount in two half yearly instalments which commences from 14.1.2013 and ends on 13.7.2013 and the principal loan amount repayable on the date of maturity. As the complainant did not pay any amount either interest or principal amount after obtaining loan on 14.7.2012, the opposite party gave a notice Ex.B.2 dated 13.5.2013 stating that there is outstanding of Rs.85,415/- as on 13.5.2013 towards overdue interest and penal interest in the A/c of the complainant. On receiving the said notice the complainant paid Rs.10,500/- on 20.5.2013 under valid receipt Ex.A.6, on receiving the same amounts the opposite party again issued a notice Ex.B.3 dated 22.5.2013 to the complainant stating that the complainant has failed to make regular payments. Under such circumstances, the opposite party invokes the provisions of Clause 3 of the terms and conditions of the said gold loan, the opposite party recalls the entire loan facility sanctioned to the complainant and call upon him to redeem the said account and to pay the total amount due of Rs.7,25,590/- together accumulated interest and penal interest/charges if any within seven days, or alternately to renew the said loan facility. If the complainant fails to comply the above, Fedbank shall be constrained to initiate appropriate legal action against him for recovery of overdue including enforcement of its security interest by way of sale of the pledged gold. On receiving the said notice the complainant made payments Rs.24,500/- on 12.6.2013, Rs.21,000/- on 12.6.2013, Rs.20,000/- on 13.6.2013, Rs.10,550/- on 14.6.2013 and Rs.75,000/- on 7.9.2013 total Rs.1,51,050/- under valid receipts Ex.A.6 from the opposite party. On receiving the said amounts the opposite party issued Ex.B.5=Ex.A.2 dated 7.11.2013 notice for enforcement of security and intimation of gold auction date stating that the complainant has failed to make necessary payments towards overdue the opposite party is constrained to enforce its security interest by selling the pledged gold through an auction dated 22.11.2013. Time:10 A.M. Address:Plot No.2-H Anand Heights, C.K. Reddy road, Besides Lotus Land Mark, Vijayawada – 520 003. The opposite party gave auction notice in two news papers (1) Andhra Bhoomi daily Telugu news paper Ex.B.7 dated 16.11.2013 and (2) city English paper in city news edition Ex.B.8 dated 16.11.2013. The complainant says that he approached the opposite party on 22.11.2013 at auction time 10 A.M. to participate in the auction, but the opposite party postpone the auction and informed him that they would inform him the next auction date and venue. The complainant got issued Ex.A.3 legal notice dated 9.12.2013, through his advocate stating that the complainant is paying the instalments regularly but on several requests of him the opposite party failed to supply account copy of the said loan and requested to supply the said account copy immediately or else he shall be constrained to take legal process against the opposite party. On receiving the same under Ex.A.4 the opposite party served a reply Ex.A.5 dated 18.12.2013 in Telugu and English versions to the complainant informing that the complainant failed to pay the loan or interest or regularize it, the opposite party is constrained to enforce its security interest and sell the pledged gold ornaments through public auction dated 25.11.2013 and had realized Rs.7,42,234/- against the outstanding of Rs.7,42,234/- post adjustment of principal outstanding, overdue interest, penal and other charges and closed the account of the complainant and no amount is refundable.
7. The complainant in his arguments stated that the opposite party is not a bank and it is only Private financial institution. The opposite party did not follow the guidelines of the R.B.I. and issued paper publication for auction simply mentioning the gold loan number only. The opposite party failed to give the full details of the loan in paper publication i.e., name of the borrower, address; arrears of loan and the weight of the gold pledged. The complainant filed the model publication issued by Indian Bank to its borrowers dated 10.7.2014. He went to auction venue on 22.11.2013 as stated by opposite party but they changed the auction date and venue without any prior intimation to him. The complainant expressed his willingness to repay the entire due. But the opposite party is not willing to receive the same. It seems that the opposite party intentionally proceeded for auction without informing the change of auction place and date. The opposite party did not furnish the particulars of the auction i.e., number of biders attended and who is the successor and the sale certificate. As per opposite party the original value is Rs.10,83,866.50ps as per Ex.B.1 but the opposite party sold the ornaments less than the original value for Rs.7,42,234/-. The complainant paid Rs.1,61,550/- to the said loan. The opposite party did not deduct the same and not furnished the account copy to him. Once the auction was postponed the auctioneer has to give demand notice to the debtor and publication has to be given again to the public.
8. We, the Forum carefully perused Ex.B.1 in the demand promissory note it was mentioned the rate of interest is 23.50% per annum till date of payment. But the opposite party wants to get another penal interest at the rate of 3% per month and other charges on non-payment of interest. Interest on interest is not permissible and interest cannot be charged at exorbitant rates. The terms and conditions are prepared by the opposite party for its own benefit. The complainant need not bind for them which are not statutory. The opposite party already charging 23.50% per annum which is highest rate and further the opposite party cannot be permitted to charge penal interest and other charges. The complainant already paid Rs.1,61,550/- under various receipts Ex.A.6. The loan amount is Rs.6,50,000/- availed on 14.7.2012. The interest is as per opposite party calculated from 14.7.2012 to 14.7.2014 is Rs.3,05,500/- + one month interest Rs.12,729/- (upto 14.8.2014) = Rs.3,18,229/- – Rs.1,61,550/- (paid by the complainant) = Rs.1,56,679/- (interest payable). The total amount payable by the complainant is principal amount Rs.6,50,000/- + interest Rs 1,56,679/- = Rs.8,06,679/-. The opposite party valued the gold items at Rs.10,83,866/- and is saying that it was auctioned lesser value of Rs.7,42,234/-. The complainant says that he is ready to pay the principal amount and remaining interest to the opposite party. When the complainant is ready to release his gold ornaments, the opposite party auctioned the gold ornaments without intimating the complainant and to say that the opposite party is not liable to refund any amount and the complainant need not pay any amount is not only deficiency in service but also unfair trade practice on the part of the opposite party. Therefore the opposite party is liable to return the gold ornaments to the complainant on receiving the due amount of Rs.8,06,679/- from him. If the gold loan exceeds its value then the opposite party can auction the said gold with due process of law. The opposite party not produced any circular of the Government or of the RBI to say that the opposite party is permitted to charge this type of interests, penal interests and other charges.
9. The complainant filed citations of (1) Branch Manager State Bank of Travancore Vs.Shaila Jain 2014(1) CPR 571 (NC) (2) Muthoot Finance Ltd., Vs. J.P.Jose 2013 (2) CPLR 38 (KER). The opposite parties have not produced any circular of the Government or of the RBI enabling the opposite parties to charge this much of interest. We accept with the contentions of the complainant.
10. The opposite party filed a citation given ruling in Shiva Shankar Lal Gupta Vs. Kotak Mahindra Bank ltd., & ors 2013(1) CPR 298(NC) that Consumer Commission cannot entertain loan matters. The above case is not related to the present case. In the above matter the complainant is doing business and for that commercial purpose obtained loan against the collateral security of immovable property and the case is pending under SARFAESI Act, 2002. The complainant is not a consumer as he obtained loan for his commercial purpose. Hence the complaint is not entertainable. The Consumer Commission or any other Tribunal cannot entertain any loan matters when they are pending before Debts Recovery Tribunal.
Point No.3:-
11. In the result, the complaint is allowed in part and the opposite party is directed to return the gold ornaments of the complainant on receiving the due amount Rs.6,50,000/- (Principal amount) + Rs.3,18,229/- (interest payable upto 14.8.2014) = Rs.9,68,229 – Rs.1,61,550/- (amount paid by the complainant) = Rs.8,06,679/- from the complainant and the complainant is also directed to pay the amount of Rs.8,06,679/- (principal amount + interest) to the opposite party, if the opposite party is not willing to receive the same, to deposit the same in this Forum within two months to get release the gold ornaments of him. Time for compliance two months. The complainant has to pay further interest till payment. The opposite party is further directed to pay Rs.10,000/- as compensation for mental agony and Rs.2,000/- as costs to the complainant. Rest of the claims of the complainant are rejected.
Typewritten by Stenographer K.Sivaram Prasad, corrected by me and pronounced by us in the open Forum, this the 12th day of August, 2014.
PRESIDENT(FAC) MEMBER
APPENDIX OF EVIDENCE
WITNESSES EXAMINED
For the complainant: For the opposite parties:-
P.W.1 P.Krishna Murthy D.W.1 Yalamandababu,
Complainant Branch Manager of the
(by affidavit) opposite party(by affidavit)
DOCUMENTS MARKED
On behalf of the Complainant:-
Ex.A.1 . . Gold pledge card.
Ex.A.2 07.11.2013 Letter from the opposite party to the complainant.
Ex.A.3 09.12.2013 Office copy of legal notice.
Ex.A.4 . . Postal acknowledgement along with postal receipt.
Ex.A.5 18.12.2013 Letter from the opposite party to the complainant.
Ex.A.6 20.05.2013 Six Receipts issued by the opposite party.
For the opposite parties:-
Ex.B.1 14.07.2012 Photocopy of Application for Loan against Gold.
Ex.B.2 13.05.2013 Photocopy of Letter from the opposite party to the
complainant.
Ex.B.3 22.05.2013 Photocopy of letter from the opposite party to the
complainant.
Ex.B.4 . . Photocopy of postal tracking report.
Ex.B.5 07.11.2013 Photocopy of letter from the opposite party to the
complainant.
Ex.B.6 . . Photocopy of paper publication.
Ex.B.7 . . Photocopy of paper publication.
Ex.B.8 . . Photocopy of paper publication.
PRESIDENT(FAC)
