CONSUMER DISPUTES REDRESSAL COMMISSION – X

GOVERNMENT OF N.C.T. OF DELHI

Udyog Sadan, C – 22 & 23, Institutional Area

(Behind Qutub Hotel)

New Delhi – 110016

Case No.513/2013

MR. PHOOL CHAND

S/o. Lt Sh. RAMESH CHAND

R/O 2265, GAUTAM PURI, PHASE-1,

NEAR MOTHER DAIRY BOOTH NO 1012,

NEW DELHI-110044.…..COMPLAINANT

Vs.

KARINA FINCAP LIMITED

SH. HARBANSH P. CHAWLA.

B-2, JUNGPURA EXTN,

NEW DELHI-110014..…..RESPONDENT/ OP 

Date of Institution-27.09.2013

           Date of Order- 30.06.2022

  O R D E R

RASHMI BANSAL– Member

Complainant filed the present complaint for return of his gold ornaments pledged with OP for securing finances but were sold by OP without his permission, along with compensation towards mental agony, stress and litigation charges.

Complainant states that he has secured a loan from OP of  Rs. 1,15,006/- by pledging his gold (total gross weight 65.7 grams, net weight 60.9.gms), Ex. A1 against receipts, Ex. A2, in terms of loan agreement dated 11/02/2012,

Annexure B of reply, provides for return of pledged gold on clearance of entire principal amount along with interest @ 1.85 per cent per month. Till March 2013, complainant has paid 30 installments, amounting to Rs. 37,667/- of Rs. 2128/- each against the receipts, Ex. A3(Colly), however, thereafter OP closed his office and complainant could not deposit further installments. Complainant stated that in first week of June 2013, he received two letters from OP dated 27/05/2013, Ex. A4, and 12/06/2013 Ex. A5, through speed post, demanding clearance of his dues but did not mention his address. Another letter of OP dated 05/07/2013, Ex. A6, containing OP’s new address stating that complainant’s gold loan was transferred to OP’s Jungpura office with immediate effect, and interest/ EMI to be paid at new address was received by complainant on 13/07/2013. Thereafter, two more demand letters dated 12/07/2013, Ex. A7, (received by complainant on 18/07/2013), and 27/07/2013, Ex. A8, were sent by OP wherein complainant noticed that principal amount was reduced from Rs. 1,15,006/- to Rs. 37,752/-. Upon enquiry, on 19/07/2013, complainant was informed by OP officials that his pledged gold was auctioned on 12/07/2013. The complainant objected to the auction of his gold arbitrarily and illegally without his permission and notice stating that he had paid all the interest on time and OP by shifting his office in April 2013, without any intimation to complainant, has prevented him from paying interest for the months of May and June 2013 and thus deprived him from taking back his pledged gold. As soon as he got information of OP’s new address in July 2013, he immediately reached to OP’s office but by that time OP has already sold his gold on 12/07/2013 which is illegal and also continuously and illegally demanding further payments from complainant. complainant alleges that the whole act of OP amounts to deficiency in services and unfair trade practice which caused him loss of his precious gold ornaments which  he got as gift,

mental stress, harassment and agony and prays for return of his gold along with compensation and litigation charges, after adjustment of principal money and interest as per law.

The OP filed his written statement, evidence by way of affidavit and written arguments, through his authorized signatory vide resolution dated 06/06/2014, Ex. A, contending that complainant has not come to this Court with clean hands and have concealed material facts. OP states that complainant failed not only in timely payment of monthly interest, but also never paid principal loan amount. The last payment of interest for March, 2013 was given by complainant on 16/04/2013, as per payment of interest ledger, Ex. B, which have been accepted by OP, but thereafter, the complainant has not paid interest. Since complainant has failed to pay even the principal amount which should have been paid within 1 year from the date of disbursement of loan i.e. by 11/02/2013, therefore, he has auctioned the pledged gold ornaments on 12/07/2013, after publication of advertisement in newspaper, Ex. C. OP further states that he has informed the complainant vide its letter dated 27/05/2013, 12/06/2013 and 27/06/2013, Ex. D calling him to make payment within 7 days, failing which pledged gold ornaments shall be auctioned in order to recover overdues, but complainant failed to comply with the same. OP further stated that vide its letter dated 05/07/2013 he has informed the complainant about his new address.  It is further stated by the OP that if complainant had intended to pay the loan amount then he could have visited OP office at Gurgaon which address was mentioned on the collection deposited slip filed by complainant himself. The OP prays for dismissal of the complaint on the ground that intention of the complaint is mala-fide with the sole purpose of extracting money from OP.

We have carefully gone through the pleadings of both the parties and heard the arguments.

Loan agreement dated 11/02/2012 is not disputed, and provides for return of gold on payment of entire principal money, interest and penal charges etc. on or before 11/02/2013 i.e. after completion of 1 year from the date of availing the loan, however, this is clear from the documents on record that OP did not determine the loan agreement on due date i.e. 11/02/2013 and extended the contract by accepting the interest for the month February 2013 and March 2013, and thereafter unilaterally sold the pledged gold on 12/07/2013 without notice to complainant. Besides this, OP also kept sending loan recall notices dated 21/07/2013, 27/07/2013, 13/08/2013, 27/08/2013, 13/09/2013, 27/09/2013 to complainant asking him to make payment within 7 days stating, ‘the gold ornaments pledged by you shall be auctioned in order to recover overdues’, giving impression that pledged gold is still intact with OP and thus concealed the fact that the pledged gold was already sold by him on 11/07/2013, which  amounts to misrepresentation on the part of OP. The advertisement for auctioning the gold published by OP in the newspaper does not reveal the date and name of the newspaper, nor is readable with naked eye due to its very small font size, which fails to attract the attention of the common people. Such publication is no notice to public at large in the eyes of law. Moreover, OP was having address and phone numbers of the complainant, there is no reason why such notice was not sent to the complainant in the same way as various loan recall notices were sent by OP to the complainant.

Further, OP’s letters dated 27/05/2013 and 12/06/2013 did not contain OP’s changed address. Letter dated 27/06/2013 though had one address at the bottom of letter, but had no indication whether this address belongs to OP. This is only the letter 05/07/2013 of OP, by which complainant was informed about the change in address of OP, admittedly speed posted on 06/07/2013, which, as per

 complainant statement, received by him on 13/07/2013. It is thus established that OP had not given proper opportunity to complainant to participate in the auction bid and to get back his gold, which is violation of principal of natural justice. OP further failed to produce on record any documentary proof to show the actual rate on which the gold was sold, what procedure he has followed to get the best price and in what proportion he has adjusted the loan amount. The whole action of OP tantamount to unfair trade practice on the part of OP.

Hon’ble NCDRC, in HDFC Bank v. Sharmila Dasgupta on 28/06/2018, categorically held in a similar case that: ‘It is significant to mention that in the entire record there is absolutely no documentary evidence filed by the Bank to establish the actual rate, on which the gold was sold; what was the market rate as on the date of the auction; and, further, the procedure that was followed during the auction process. A perusal of the record does not anywhere show that a notice was issued to the Complainant prior to the auction to have given an opportunity to her to exercise the option whether to participate in the auction or not. This is against the principles of natural justice and audi-alteram partem. Hence, we are of the view that the conduct of the Bank in auctioning the gold without prior notice to the Complainant amounts to unfair trade practice. In this view of the matter, the Revision Petition does not require any interference. ’

So far as the contention of OP for late payment of interest installments are concerned, the same cannot be accepted since OP himself has condoned the delayed payment as admittedly, complainant payment till March 2013, paid on 16/04/2013, and duly accepted by OP without any protest.  Moreover, in view of the admitted fact that OP has shifted his office on 22/04/2013 and intimated complainant vide his letter dated 05/07/2013 about his changed address, complainant cannot be said at fault for non-payment of interest installments for May and June 2013.

Further, the perusal of the loan agreement dated 11/02/2012 also reveals stark incongruities between remedies available to both the parties as it contains highly unconscionable one-sided terms to the advantage to OP and disadvantage to complainant by suppressing his fair and equitable rights, such as, OP has got liberty to fix the charges for delay in repayment or violation of the terms and condition of loan agreement,  absolute and sole discretion to sell the gold by way of private sale or otherwise of his choice and  silent about any such intimation to be given to the borrower,  irrevocable permission from the borrower and not required to take any prior permission and many more.

This is settled principle of law that a term of a contract will not be final and binding if it is shown that one party to the contract had no option but to sign on the dotted line, on a contract framed by other party. The contractual terms of the loan agreement dated 11/02/2013 are ex facie one-sided, unfair and unreasonable.  The incorporation of such one - sided clauses in an agreement constitute an unfair trade practice as per Section 2(1) (r) of the Consumer Protection Act, 1986. Therefore, unfair terms of contract are not binding on the complainant.

Hon'ble Supreme Court of India also expressed his opinion in Ireo Grace Realtech Pvt Ltd vs Abhishek Khanna and Ors, Civil appeal no. 5785 OF 2019, has inter alia held that developers cannot compel apartment buyers to be bound by one sided contractual term. Finding such one-sided agreements oppressive, the court has held that the same would constitute an unfair trade practice under the Consumer Law in India.

In view of the above discussion, we arrive at the conclusion that OP is guilty for deficiency of service and unfair trade practice and is liable to return the pledged gold to complainant and complainant, in turn, pay the principal amount along

with the interest due towards OP accrued till filing of complainant i.e. 27/09/2013. Since the pledged gold is already sold and same cannot be returned by OP, therefore to meet the ends of justice, OP is directed  to pay an amount equivalent to 60.9 grams of gold, at the rate of gold, on the date of the passing of the order, i.e. 30/06/2022, after adjusting principal amount of Rs. 1,15,006/- and balance interest due from 05/04/2013 till 27/09/2013, i.e. date of filing of the complaint,  along with Rs. 5000/- compensation for causing harassment and mental agony to complainant and Rs. 2500/- towards litigation cost. OP is further directed to not to levy any further interest on the principal amount after 27/09/2013. The above said order be complied by OP within three months from the date of passing of order, failing which entire amount shall carry an interest @6% p.a.

The file be consigned to the record room after providing copy of the order to the parties free of cost. The consumer complaint could not be decided within the statutory period due to heavy pendency of Court cases. The order be uploaded on the website www.confonet.nic.in

The order contains 7 pages and bears my signature on each page.

(Dr. RAJENDER DHAR)              (RASHMI BANSAL)        (MONIKA SRIVASTAVA)

       MEMBER                                          MEMBER                           PRESIDENT