KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION  VAZHUTHACADU  THIRUVANANTHAPURAM

                                  APPEAL  NO: 70/2010

      JUDGMENT DATED: 29-12-2010

  PRESENT

JUSTICE SHRI.K.R. UDAYABHANU               : PRESIDENT

SHRI. S. CHANDRAMOHAN NAIR                  : MEMBER

The Manager,

Neema Benefit Fund Ltd.,

(Neema Group), S.R.Buildings,                          : APPELLANT

Sasthamkotta.P.O, kollam.

(By Adv.Sri.S.Reghukumar)

            Vs.

Jamal,

Darul Amen,

Paisserikkal.P.O,                                                                : RESPONDENT

Sasthamkotta, Kollam.

(By Adv.Sri.K.G.Baiju)

                                                 JUDGMENT

SHRI. S. CHANDRAMOHAN NAIR : MEMBER

The opposite party in CC.50/08 before CDRF, Kollam is the appellant herein.  By the impugned order dated:23/1/2010 he is under directions to close the loan amount of the complainant after recovering interest at the rate of 14.5% per annum from the loan date till 2/11/2009 with principal amount and give back the pledged gold ornaments to the complainant or in the alternative to pay the value of the pledged gold ornaments at the present day market value after deducting the loan amount along with interest at 14.5% per annum from the loan date to 2/11/2009 with compensation of Rs.1000/- and cost of Rs.1000/-.

 2.     The complainant claiming himself to be an agriculturist has availed a loan of Rs.85,000/- on 24/4/2006 and another loan of Rs.40,805/- on 10/5/2006 from the opposite party by pledging his gold ornaments by way of security.  The complainant’s case is that the condition to pay interest was at the rate of 14.5% compounded on quarterly rates and that when he approached the opposite party on 23/4/2007 for closing the loan and to redeem the gold ornaments, the opposite party claimed huge interest and as such the complaint was filed praying for directions to the opposite party to release the gold ornaments on accepting the principal amount with 14.5% interest along with further prayers for compensation and cost.

3.      The opposite party in his version contended that the complainant was not a consumer and that the complainant had availed the loans fully understanding the interest rates realized by the opposite party and on 30/3/2007 when the complainant approached the opposite party for pledging the gold ornaments, the opposite party had informed him about the maturity period of gold loans and had asked him to take release of the ornaments after paying the principal and interest on the due dates.  It is also the case of the opposite party that though notices including 2 registered notices were sent on 3/5/2007 and 8/6/2007 intimating the complainant regarding the auction, the complainant did not come to the branch for taking the gold ornaments.  It was in order to realize the amount that the gold ornaments were sold in auction on 22/8/2007.  Submitting that there was no deficiency of service or unfair trade practice, the opposite party prayed for the dismissal of the complaint.

4.      Evidence consisted of the oral testimony of the complainant as PW1 and Exts.P1 and P2 on his side.  The opposite party was examined as DW1 and D1 to D10 were marked.

5.      Heard both sides.

6.      The learned counsel for the appellant vehemently argued before us that the order of the Forum below directing to realize interest only at the rate of 14.5% per annum from the date of loan till 2/11/2009 is unacceptable, illegal and unsustainable.  It is his very case that the loan was given to the complainant on the strength of the pledged gold ornaments and it was also after intimating the rate of interest that the amounts were paid to the complainant.  It is his further case that it was the complainant who abstained himself from approaching the opposite party for taking the gold ornaments even after receipt of the 2 registered notices.  He has also relied on Ext.D3 notification dated:26/7/2001 of the Government of India (Ministry of Law, Justice and Company Affairs) wherein it is notified that the rate of interest charged on loan given by the Company like the opposite party shall not exceed 5% of the highest rate of interest offered on deposit by the ‘Nidhi’ and shall be based on reducing balance method.  It is the further case of the appellant that as per Ext.D5 series the complainant had the full knowledge that when the loanees failed to take back the pledged ornaments within one year, the opposite party is entitled to realize the amount by auction of the pledged ornaments and in the instant case the opposite party/appellant had informed the complainant that the ornaments would be sold in auction if he fails to take the ornaments after paying the principal amount and interest.  The learned counsel has submitted before us that the complaint is also not maintainable as the complainant has taken the loan for his business purpose though it is stated in the complaint that he is an agriculturist.  Ext.D6 would clearly show that the complainant was conducting a Jwellery shop in the name and style, New Fashion Jwellery.  He has also submitted that Ext.D9 is a conclusive proof that the ornaments were sold on 22/8/2007 by auction and the maximum amount obtained in the auction was insufficient to meet the liability of the complainant towards the principal and interest at the rate of 18% per annum.

 7.     On the other hand, the learned counsel for the respondent supported the findings and conclusions of the Forum below and argued for the dismissal of the appeal.  It is the strong case of the respondent/complainant that the complainant was not informed of the rate of interest as 18% per annum, where as at the time of availing the loan the opposite party had specifically stated that it was only 14.5% per annum and whenever the complainant tried to take back the ornaments the opposite party demanded 30% interest on the principal amount and it was due to the said reason that he could not take back the gold ornaments.  The learned counsel has also submitted that the opposite party had committed unfair trade practice in not divulging the interest rate in any of the records maintained by him.

8.      On hearing the learned counsel for the appellant, respondent and also on perusing the records, we find that the complainant has availed the loan after pledging the gold ornaments which is evident as per Ext.P1 series.  It is noted that an amount of rs.85,000/- was taken on 24/4/2006 and another sum of Rs.40,805/- was taken on 10/5/2006.  The complainant/respondent would argue that when he went to clear the loan on 23/4/2007 the opposite party demanded 30% interest.  But we find no supporting evidence to show that the opposite party demanded 30% interest.  It is also to be found that as per Ext.D2to D4 the opposite party is entitled to collect interest at a rate higher than that of the interest offered for the deposits. On a perusal of Ext.D5 series we find that it is specifically noted that *3^ EThWk 8W*BW^ =DUFBW^ =LiUCUBadWk =CATE;U *TDTE;UBad*^ 8UCU[* 8\Ct8W^} !h[< 8UCU[* "3WdTf=R^ \C+TAXD^ !LUBU/b \FG^ %CWg3U \DD^ [/Ba8a AW8DW^ =DUFBW^ Apa /UDEW*JW^ $]3TdWk8WAT7.  It is also found that the maximum period allowed was only one year.  It is further found that as per Ext.D8 the complainant was informed of the fact that the ornaments would be sold in auction if he fails to take back the ornaments after paying the principal and interest.  The Forum below had noted that as the copy of the notice was not produced, the acknowledgement regarding the sending of the notices cannot be accepted.  But we find that the complainant himself has deposed before the Forum that he had received 2 registered notices on 3/5/2007 and 8/6/2007.  He also stated; “\DD^ [/BbWET<WJJ \<TeVHa #[7ka A<HaHUDTBU.”  In the said circumstances it cannot be heldthat the complainant was not aware of the auction and we do not  find any action taken by the complainant to redeem the gold ornaments.  Ext.D9 would show that the ornaments were sold in auction on 22/8/2007 after giving time to the complainant to take the gold ornaments.  In the back drop of the events said circumstances we are of the opinion that the Forum below cannot be justified in directing the opposite party to give back the gold ornaments on accepting the principal amounts with interest at 14.5% per annum from the date of gold loan till 2/11/2009 only or in the alternative to pay the value of the gold ornaments after adjusting the amounts due to him.

9.      The Forum below had ordered for a compensation of Rs.1000/- and cost of Rs.1000/- apart from the directions above cited.  On a perusal of the records produced from both sides we do not find any defect in the action of the opposite party in selling the ornaments after giving notice.  All the same we find that at no point of time the opposite party had intimated the complainant that the rate of interest is 18%.  Even in Ext.P1 series no rate of interest is shown.  In Ext.D5 series also though it is stated that the ornaments would be sold in auction any interest rate is not shown.  The opposite party has also not specified about the rate of interest even in the appeal memorandum though it is argued that the rate of interest charged and collected was only 18%.  It is only in the argument stage that the opposite party/appellant has stated that he is entitled to collect 18% interest which is supported by Ext.D2 to D4.  Though the complainant would argue that the agreed rate was 14.5% for that also there is no supporting evidence.  However it was unfair on the part of the opposite party that he did not divulge the interest rate at the time of taking the gold loan itself.  It is the bounden duty cast upon the opposite party to declare the rate of interest at the time of giving the loan amounts which will enable the loanee to have the idea about the interest rate and clear the loans as soon as he can.  In the instant case the opposite party has not declared the interest rate to the complainant which amounts to deficiency of service.  The Forum below had awarded the amount of Rs.1000/- as compensation.   We enhance the same to Rs.5000/- to meet the ends of justice and we direct the opposite party to declare the interest rate in the loan cards issued to the loanees at the time of pledging gold ornaments.  The complainant/respondent is also entitled to the cost ordered by the Forum below.

In the result the appeal is allowed in part with the modifications indicated above.  Thereby the opposite party is justified in auctioning the gold ornaments of the complainant as it is seen that proper notices were given to the complainant.  But for the unfair trade practice committed by the opposite party the complainant is entitled to Rs.5000/- as compensation and Rs.1000/- as cost and the opposite party is directed to pay the said amounts within one month from the date of receipt of this order failing which the same shall carry interest at 9% per annum from the date of complaint till the date of realization.  In the nature and circumstances of the present appeal the parties are directed to suffer their respective costs.

S. CHANDRAMOHAN NAIR : MEMBER

JUSTICE K.R. UDAYABHANU: PRESIDENT

&&

VL.