Order-18.

Date-11/05/2016.

This is an application u/s.12 of the C.P. Act, 1986.

           Complainant by filing this complaint has submitted that on 18-12-2012, 30-01-2013 and 04-01-2013 he applied for a gold loan to the OP which is a non-banking finance company being Gold Loan Account Nos.GL 21755477, GL 2400643 and GL 2261847 where one Gold chain, five gold ring net weight 16 gram and one Gold chain 16.50 gram and one pair of bangle, two chain, two ear ring, two gold ring weighs about 45 grams and obtained gold loan of Rs.1,72,000/- for EMI of 36 months starting from June, 2015 and April, 2015.

          From December, 2012 and January, 2013 OP only took interest at a tune of 1.5 percent over the loan account but did not start EMI as per the schedule started the EMI from May, 2015 at a tune of Rs.1,204/-, Rs.1,266/- and Rs.3,543/-.

          Fact remains in the year 2012 and 2013 only interest has been taken against 36 months without taking any EMI and taking of such interest  at the rate of1.5 percent per month only is illegal as per the RBI Rules 13(9) where it is clearly stated that EMI is included principal and interest and no concern cannot take only interest without adjusting principal in the EMI.  So, entire act on the part of the OP is illegal and against the banking rules.

          From the month of May 2015 OP started EMI along with principal and interest and did not adjusted pre-EMI interest already paid from the month of December and January, 2012-2013.

          Fact remains complainant defaulted in the month of September and October, 2015 and wants to pay the principal amount due to sudden death of his father and one message was sent on 15-10-2015 to the complainant by the OP that the entire gold deposited to them without any further communication or notice which is illegal as per direction of the RBI In Rule 8 and Rule 13 (2) & (4) of the Security Enforcement Act without serving prior notice of 60 days and publication in the newspaper and the said OP in violation of the present law performing illegal, unfair trade practice.

          Complainant is no doubt a consumer under the OP and OP violated the terms and condition of the RBI and illegally without adopting proper procedure of law regarding sale of mortgage property and sold the same which is no doubt unfair trade practice and for which complainant suffered much and sale of Gold of 16 gram, 16.50 gram and 40 gram against loan of Rs.1,72,000/- is completely illegal and in fact, by that act OP suffered mental loss, financial loss for which complainant has prayed for redressal.

          On the other hand, OP by filing written statement has submitted that complaint is not maintainable in the eye of law and there is no cause of action to file the instant complaint and it is specifically mentioned that complainant is the pailor/pawnee of the Mortgaged gold Articles as described in the complaint and the present complaint is governed u/s.173 and 176 of the Contract Act, 1872 and with some false allegation the complaint is filed for which the complaint should be dismissed.

          It is specifically mentioned that complainant handed over the gold ornaments against loan which are in the exclusive possession of the OP and as the complainant has failed to make payments of the outstanding amounts despite reasonable opportunity being given and sale notices was served upon the complainant.

          It is specifically mentioned that complainant willfully intent to pledge his gold to the OP and secured loan from the OP only upon reading the terms and conditions of the pledge form and upon understanding the same had put his signature upon the same.  So, there is no deficiency or negligence on the part of the OP.

          It is specifically mentioned that from the date of sanction which expired on 17-12-2013, 03-01-2014 and 29-01-2014 respectively and in total 77.6 gram of gold through pledged against loan of Rs.1,73,000/-.

          Non-payment of the EMIs against loan account No.GL2175417, GL 2261847 and GL 2400643 are also annexed and when complainant secured the three loans it is clear from the fact that the complainant was liable to pay the sum and to get refund of the deposited gold but complainant did not follow it and he is a defaulter and failed to repay the loan amount against which the gold was pledged since long and for contravention of the terms and conditions of the loan account message was sent to the complainant on 15-10-2015 which was admitted by the complainant and three different and specific sale notices dated 07-10-2015 were sent to the complainant for three different loan accounts but complainant deliberately did not repay the loan amount for which ultimately as per agreement after paper publication sold away the same to a recognized government purchaser and in the above reasons it can safely be said that OP never acted illegally, never adopted unfair trade practice and on sale of gold legal procedure was also adopted, so, the complaint should be dismissed.

Decision with Reasons

On careful consideration of the entire materials on record and the documents no doubt we find that complainant took gold loan of total sum of Rs.1,73,000/- against gold loan account No. GL2175417, GL 2261847 and GL 2400643 and said loans were sanctioned on 18-12-2012, 04-01-2013 and 30-01-2013, period of loan was for 12 months and against that 77.6 grams of gold was deposited by the complainant and OP admitted that.  Now, question is whether complainant as per RBI Guideline is entitled to take gold (which is equivalent to cash) can be received from any customer against granting of loan.  In this regard, it is to be mentioned that Reserve Bank of India issued certificate of registration of non-banking company to present India Infoline Finance Ltd. with certain condition which is evident from the said certificate.  Truth is that company was granted certificate of registration on 12-05-2005.  But it is specifically mentioned that the OP is not allowed to accept the public deposit.  At the same time there is such clause that if company will accept public deposit only after obtaining specific approval of the RBI and it is specifically mentioned in the clause that company shall not have to receive deposits without written permission of the RBI.  In this case another clause is there that if any non-banking establishment want to take gold as mortgage against any loan in that case the said company must have to take license of the Gold Controller because if any loan is found unpaid in that case the gold shall be sold by him but any bank or any non-banking financial institution of accepts gold itself is cash but not nehotiable instrument but OP received gold at first then released the loan that means it is completely against the registration certificate granted by the RBI and at the same time it is specifically mentioned that the OP company is not permitted to receive any public deposit, gold is equivalent to cash and that cannot be taken or accepted as deposit without prior permission of RBI.  So, it is clear OP bank as a non-banking company has violated the terms and condition of certificate as granted by the RBI at the same time if any concern to any bank or non-banking company wants to sell gold in that case the bank or non-banking company must have to secure such license from the Gold Controller and this is not in the possession of the OP when the Forum has directed to produce such certificate they failed to submit any certificate that they have their license for keeping or selling of gold.  At the same time it is admitted that it is security or pledged property that is gold then as per provision of law auction purchase must be made but no such publication is produced by the OP to prove that in respect of the present loan account in details and publication was made for auction sale.  But they are trying to say that it was published in some papers but we have gathered that formality or procedure for selling mortgaged property is violated by the OP and no legal auction was made

          Another factor is that copy of publication as mentioned it is found that the said publication does not confirm that auction sale in respect of this account was made.  Parties name was not there, loan account number is not there.  At the same time details of pledged gold are not there, value of gold are not there and at the same time acceptance of bidding are also not there.

          So, in the above circumstances, we are convinced to hold that OP acted illegally by adopting unfair trade practice.  Sale of gold is no doubt illegal in the eye of law.  OP has no right to sell out in such a fashion having their no gold control license and also they never received any such license from the RBI for taking gold as public deposit and the certificate of registration as issued by the RBI does not permit the complainant to keep gold as a public deposit against loan.  So, the entire act on the part of the OP is illegal, uncalled for and violating the terms and condition of the RBI and also there is no license from the Gold Controller as per Gold Control Act.  So, no doubt for such illegal act of OPs complainant has suffered much.  At the same time this company acted illegally and deceived the complainant for which this complaint succeeds as negligence and deficiency of service and unfair trade practice on the part of the OP well proved.

          In the result, the complaint succeeds.

Hence,

Ordered

That the case be and the same is allowed on contest against the OP with a cost of Rs.10,000/- against the OP.

          OP is hereby directed to refund the entire pre-EMI interest as paid  at the rate of 1.5 percent against the loan account and also compensation of Rs.20,000/- to the complainant for adopting unfair trade practice and selling of gold is illegal and without any adoption of legal procedure because unfair auction procedure was adopted against the rule of law having no authority to do that.

          OP is hereby directed to comply the order within one month from the date of this order failing which penal damages shall be paid by the OP  at the rate of Rs.2,000/- per month till full satisfaction of the decree and if it is collected it shall be deposited to this Forum.

          OP shall have to sell the gold pledged against the complainant’s account adopting all procedure of auction sale as per law and invariably with prior order of the Civil Court or RBI and Gold Controller.

OP is directed to comply the order failing which penal action u/s.25 read with Section 27 of the C.P. Act shall be started against them for which further penalty and fine shall be imposed.