Kerala

Idukki

CC/206/2019

Saji - Complainant(s)

Versus

K L M Neethi LTD - Opp.Party(s)

29 Nov 2022

ORDER

DATE OF FILING : 22/11/2019

IN THE CONSUMER DISPUTES REDRESSAL COMMISSION, IDUKKI

Dated this the 29^th day of November 2022

Present :

              SRI.C.SURESHKUMAR                                               PRESIDENT

              SMT.ASAMOL P.                                                          MEMBER

              SRI.AMPADY K.S.                                                        MEMBER

CC NO.206/2019

Between

Complainant                             :  Saji, S/o Sadhik,

                                                     Maravettickal House, Vazhathopp P.O.,

                                                     Thadiyampadu, Cheruthony – 685 602.

                                                     (By Adv.Ebi Thomas)

                                                           And

Opposite Party :                      :   The Branch Manager,

                                                    KLM Nithi Limited,

                                                    Manippara P.O.

                                                    (By Adv.Shiji Joseph)

O R D E R

SRI.AMPADY K.S., MEMBER

 

Complainant raised the following allegations against opposite parties and sought for the reliefs hereinafter shown:-

 

1 . Complainant pledged 58.66 grams of gold on 04/10/2018 and 78.860gms of gold on 06/10/2018 with opposite party and received Rs.1,46,500/- and Rs.1,81,000/- respectively.  Gold was pledged believing the advertisement given by opposite party that rate of interest was 11%.

2 . He approached opposite party on attaining 398 days from date of first loan and attaining 394 days from the date of second loan to redeem the pledged articles.  As per advertisement regarding rate of interest, he expected  an interest of Rs.17,572/- and Rs.21,790/- for first and second loans respectively.  As opposite party demanded interest of Rs.57317/- and

                                                                                                       (Cont.......2)

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Rs.52753/- for the above two loans, he was reluctant to redeem the pledged articles.  He understood that opposite party had calculated more than 30% interest as against 11% interest offered.  Then he demanded opposite party to charge 11% interest and return the gold pledged, opposite party threatened that if the gold is not redeemed within one week there from, they will sell the articles through auction without further notice.

3 . Above action of opposite party in demanding illegal interest as against rate of interest advertised is deficiency in service and unfair trade practice.

So he prayed for the following reliefs.

1 . Direct opposite party to accept 11% interest from him and return the pledged articles under above 2 loans.

2 . Compensation of Rs.25,000/- may be ordered to be given for his mental and economic difficulties.

3 . Direct opposite party to give him litigation costs of Rs.5000/-.

He produced copy of following

1. . Loan vouchers dated 04/10/2018 and 06/10/2018.
2. . Unsigned document purported to be statement of account in a piece of paper.

Opposite party filed written version as under.

1.  . The complaint is not maintainable either  in law or on facts of the case.

2 . The averment in para 2 of the complaint are to be proved  by the complainant.  It is true that the opposite party has various gold loan schemes varying rate of interest from 11% to 27%.  The interest will be charged to

                                                                                                       (Cont.......3)

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gold loans subject to certain conditions.  If the interest is less, the loan amount per gram and tenure of the loan will be less compared to higher interest schemes.  In the 11% gold loan scheme, 70% of the gold rate is given as loan.  The loan period is only 60 days.  From 61^st days to 90 days, interest will be increased to 16%.  From 91 days 150 days the rate of interest will be further increased to 24%.  Above 150 days the rate of interest will be 27% to the loan if is not repaid.

3 . It is admitted that, on 04/10/2018 vide loan No. Loan GEM0818000384, the opposite party sanctioned a gold loan for Rs.1,46,500/- to the complainant.  The gold loan was sanctioned as an EMI loan scheme for 8 months.  As per the conditions of the loan, the complainant is supposed to make the payment of the entire loan amount and interest in 8 monthly installments.  However, the complainant did not pay single paisa to the loan.  On 08/10/2018 the complainant availed another loan of Rs.1,81,000/- vide loan GME 0818000305.  The interest rate was 20% per annum.

4  . At the time of pledging the gold, the complainant signed a loan sanction form.  The copy of the form is also given to the complainant.  In the loan sanction form, there are 18 conditions and the conditions are accepted and signed by the complainant.  In condition No.1, the complainant has specifically agreed that, the complainant shall pay the interest on every 30^th day of the succeeding month.  In condition No.4, it is specifically stipulated that, if the loan amount per gram gold is higher, the rate of interest will also be higher.

5  . In the complainant’s case, the complainant opted the maximum amount per gram gold scheme.  The period of the loan opted by the complainant also was high.  The market value of the gold per gram was

 

                                                                                                       (Cont.......4)

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Rs.2900/- on the 04/10/2019 and the loan amount sanctioned per gram gold is 2500/-.  That is 80% of the market value of the gold rate was sanctioned as loan.  The tenure was for 8 months ie., till 04/06/2019.

6  . The complainant, on 08/10/2018 has pledged another 78 grams of gold and availed a loan of Rs.1,81,000/- from the opposite party.  The market rate of gold on that day was Rs.2910/- per gram and the amount sanctioned per gram gold was Rs.2320.  The rate of interest agreed was 20% per annum.  The complainant was supposed to pay the interest monthly.  However the complainant did not care to pay the interest as agreed by the complainant.  On 14/08/2019, after one year, the opposite party sent a notice in the loan No.0817000077 and asked the complainant to pay the interest and renew the loan.  After getting the notice the complainant approached this Hon’ble Commission alleging deficiency in service on the part of the opposite party.

7  .  All the averments in para 3 of the complaint is not true hence denied.  The averment that the complainant approached the opposite party to redeem the gold loan is not true.  In fact, the complainant after receiving the notice  filed the complaint without approaching the opposite party.  The complainant availed the first loan agreeing to repay the loan in 8 installments.  However after taking the loan, the opposite party did not approach the complainant.

8  . By filing the complaint, the complainant is trying to get the loan account closed by calculating the loan interest at 11%.  In the government sector banks give only 60 to 70% of the of market rate of the gold as loan.  The public sector banks also deduct 10% of the total weight.  The opposite party did not make any deduction in the gold weight and the loan amount was also 80%.  In the complainant’s case, the complainant availed 80% of the total valuation of the gold as loan and did not pay the principal and interest till this date.

                                                                                                       (Cont.......5)

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9 . The opposite party charged on the legally chargeable interest and the complainant filed this complaint against the opposite party to avoid the payment of the loan amount and interest.  There is no deficiency in service on the part of the opposite party.

Complainant has not filed proof affidavit or given oral evidence.  Opposite party filed proof affidavit and produced 4 documents which  were marked as Exts.R1 to R4 respectively. As complainant or counsel was not present to cross examine  RW1, he was discharged.

Ext.R1 – Copy of loan sanction letter dated 04/10/2018 of opposite party.

Ext.R2 – Copy of loan sanction letter dated 08/10/2018 of opposite party.

Ext.R3 – Letter dated 13/08/2019 issued by opposite party informing complainant either to redeem or renew the loan in the absence thereof they would take action to sell the pledged articles.

Ext.R4 Series (2 in Nos)- R4 is the status report as on 24/02/2020 of loan amount Rs.146500/- and R4(a) is status report as on 24/02/2020 of loan amount Rs.181000/-.

Heard counsel for opposite party.

We have examined the pleadings of both sides and documents marked on the side of opposite party.  On an analysis of the same, following points arise for consideration.

1. Whether there is any deficiency in service or unfair trade practice on the part of opposite party?
2. If so, for what reliefs the complainant is entitled to?
3. Litigation costs.

 

                                                                                                       (Cont.......6)

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Point No.1

Main contention of the complainant is that, opposite party has advertised rate of interest for gold loan @ 11% and based on that, above gold articles were pledged with opposite party.  Though he contented as above, said advertisement is not produced by him.  At the same time, opposite party has not produced the promissory note mentioned in Ext.R1 and Ext.R2.  As per Ext.R1 and Ext.4 rate of interest shown in respect of loan amount of Rs.1,46,500/- is 21%.   As per Ext.R2 and Ext.R4(a) rate of interest for loan in respect of Rs.1,81,000/- is 20%.  In the first loan dated 04/10/2018, number of installments shown is 8 months whereas in respect of second loan mentioned above no specific period is mentioned and it is shown that “interest based on days”.  In Ext.R4 late fee of Rs.35,660/- is shown for the period from 04/11/2018 to 04/06/2019 (ie, for 8 months). The opposite party has not shown the interest rate for late fee.  Very small font is used for printing terms and conditions on back side of the loan sanction letter which is not readable with naked eye.  It is pertinent to note that, period of loan is for 6 months  and rate of interest is 21% in respect of first loan of Rs.146500/- sanctioned as per Ext.R1.  The conditions mentioned are not legible also.  Original of the documents were not produced for  verification.  In the absence of specific terms and conditions regarding levy of extra charges for delayed payment etc, as prescribed under applicable laws, opposite party cannot charge huge amount showing late fee.  On calculating the amount so levied, approximate rate of interest is 27.44%.  This is clearly an unfair trade practice on the part of opposite party.   On a rough calculation, the amount shown as interest from 08/10/2018 to 24/02/2020 for second loan is based on the approximate rate of interest of 20% shown in Ext.R4(a).  Penal interest shown is zero.  Certain terms and conditions are printed on the reverse side of the above 2 loan documents in the same wording.  Opposite party has not

                                                                                                       (Cont.......7)

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adduced any evidence to establish that they have levied interest rate permitted by law or guidelines of RBI for delayed payment of monthly interest.

As per first condition shown in Ext.R1 printed on its back side, the borrower is liable to remit interest on every 30 days.  As per clause 2 of said documents, it is stated that the defaulted interest will be added to the principle amount and further interest will be levied thereon.  But no specific rate of interest is shown in Ext.R1 in front page.  As there is a contradiction between the conditions in the documents, we find that these conditions cannot be enforced against complainant.  So we are of the considered view that opposite party is not entitled to levy penal interest in the guise of late fee from the complainant in respect of loan shown in Ext.R1.

As per the second loan, different rate of penal interest is shown on the basis of term of loan.  It range from 2% to 7% based on period of loan.  Second loan as per Ext.R2 is for a period of 6 months.  For this, 4% penal interest is shown which seems to be exorbitant in the absence of production of authority of law to levy such as huge rate of interest.  In these circumstances we find that penal interest is not leviable.

In the light of facts and evidence we are of the view that there is deficiency in service and unfair trade practice on the part of opposite party in the case of loans sanctioned as per Ext.R1 and Ext.R2.  Hence they are liable for the same.  So point No.1 is answered in the affirmative.

Point No.2

The first prayer of the complainant is to direct opposite party to accept 11% interest as per advertisement and return the gold articles him.  As the complainant failed to produce the said advertisement, we cannot give such relief as prayed for.  On an overall appraisal of the facts and evidence on record  and  in  the  light  of  our  findings  on  point  No.1, we  hold  that

                                                                                                       (Cont.......8)

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complainant is entitled to the following reliefs.

1 . Complainant is not liable to pay the amount of Rs.35,660/- shown as late fee in Ext.R4 in respect of loan No.GEM0818000384 for loan amount of Rs.146500/- as per Ext.R1. Regarding loan No.GL0818000305 for Rs.181000/- as per Ext.R2, we have already found that penal interest is exorbitant and it is not to be levied.  Regarding second prayer, as there is no claim that payment was made by complainant as demanded by opposite party, we find that there is no loss or injury occurred to the complainant by the action of opposite party.  Hence we are declined to allow compensation to the complainant.  Point No.2 is answered as above.

Point No.3

Considering the entire facts of the case. Parties shall bear their respective costs.  Hence point No.3 is answered accordingly.

In the result complaint is allowed in part as follows.

Opposite party is directed to delete the amount of Rs.35660/- shown as  late fee in Ext.R4 in respect of loan No.GEM0818000384 for Rs.146500/-  allowed as per Ext.R1 and not to levy penal interest in respect of second loan allowed as per Ext.R2.

Parties to take back extra copies produced.

 

 Pronounced by this Commission on this the 29^th day of November, 2022.

 

                                                                           Sd/-

                                                                   SRI.AMPADY K.S., MEMBER

                                                                                              Sd/-

                                                                    SRI.C.SURESHKUMAR, PRESIDENT

                                                                                           Sd/-

                                                                            SMT.ASAMOL P., MEMBER

                                                                                                       (Cont.......9)

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APPENDIX

Depositions :

On the side of the Complainant :

Nil

On the side of the Opposite Party :

RW1- Benny George

Exhibits :

On the side of the Complainant :

Nil

On the side of the Opposite Party :

Ext.R1 – Copy of loan sanction letter dated 04/10/2018 of opposite party.

Ext.R2 – Copy of loan sanction letter dated 08/10/2018 of opposite party.

Ext.R3 – Letter dated 13/08/2019 issued by opposite party informing

           complainant either to redeem or renew the loan in the absence  

           thereof they would take action to sell the pledged articles.

Ext.R4 Series (2 in Nos)- R4 is the status report as on 24/02/2020 of loan  

                 amount Rs.146500/- and R4(a) is status report as on 24/02/2020 of   

                 loan amount Rs.181000/-.

 

                                                

                                                                                               Forwarded by Order

 

 

                                                                                         ASSISTANT REGISTRAR