Karnataka

StateCommission

A/127/2016

M/s Manappuram Finance Ltd - Complainant(s)

Versus

Kiran M - Opp.Party(s)

Ravi Shankar T P

23 Jun 2021

ORDER

BEFORE THE KARNATAKA STATE CONSUMER DISPUTES REDRESSAL COMMISSION, BANGALORE

 

DATED THIS THE 23^RD DAY OF JUNE 2021

 

 

PRESENT

 

 

MR. KRISHNAMURTHY B. SANGANNAVAR      : JUDICIAL MEMBER

MRS. DIVYASHREE M.                                     : MEMBER

 

Appeal No. 127/2016

 

M/s Manappuram Finance Ltd. APMC Branch, Arasikere Hassan District Represented by its Area Head and Authorized representative Shekar Gowda Patil (By Sri. Ravi Shankar T.P. V/s	..…Appellant
Kiran M. S/o. K. Muthuraj Resident of Sathya Sundara Nilaya Near KSRTC Bus Stand Rathna Chiramandira Road Arasikere, Hassan Dist. (By Sri. Mamatha M.)	……Respondent

O R D E R

 

Mr. KRISHNAMURTHY B. SANGANNAVAR, JUDICIAL MEMBER

 

This is an appeal filed under Section 15 of the Consumer Protection Act 1986 by the OP, aggrieved by the order dated 27.11.2015 in C.C.No.40/2014 passed by the District Consumer Disputes Redressal Forum, Hassan (for short District Commission).

2. The brief facts of the case are that the complainant had availed gold loan pledging gold ornaments weighing 81.60 gms. vide loan account bearing No. 0102010700714846 for a sum of Rs.1,48,500/- on 21.08.2011 under Scheme A for 90 days reset period and tenure of the loan for one year on an agreed rate of interest at 27% p.a.  It was agreed that in the event of complainant defaults in making payment within stipulated period agreed to pay 30% interest p.a. after reset period over and above 91 days.  Complainant on 21.03.2013 has repaid the loan amount together with accrued interest a sum of Rs.1,99,885/- to the OP.  However, raised a consumer complaint on the file of District Forum, Hassan to direct OP to repay a sum of Rs.42,000/- which is the interest calculated in excess by charging 27% interest towards gold pledged loan and sought for expenses incurred towards filing of the complaint.  This was resisted by appellant / OP.  However, after holding an enquiry by receiving affidavit evidence of complainant and documents Ex.P1 to P4 and Ex.R1 to R11 passed impugned order directing OP / appellant herein to pay back the excess interest collected from complainant towards gold loan borrowed on 21.08.2011 along with interest at the rate of 6% from the date of complaint and to pay Rs.3,000/- towards the cost of complaint within six weeks or else to pay 9% interest from the date of order for the said sum which is now in appeal on the grounds that Forum below has failed to consider the contract between the parties regarding rate of interest though the material placed on record discloses that complainant agree to pay interest at the rate of 27% p.a. under Scheme A for 90 days reset period and tenure of loan for one year and agreed to pay 30% interest p.a. after reset period over and above 91 days, impugned order is contrary to facts and law, since, the OP / appellant is non-banking financial institution can charge interest at the rate of 30% p.a.  The Karnataka Money Lenders’ Act is not applicable to the OP / appellant herein, the impugned order is liable to be set aside.
3. The Commission heard Learned Counsel for appellant. We examined the impugned order and records submitted along with appeal.  Now commission to examine whether impugned order dated 27.112015 in C.C.No.40/2014 can be maintained in appeal or required to be interfered for the grounds of appeal?.
4. It is the case of the complainant that he availed loan of Rs.1,48,500/- on 21.08.2011 and he repaid a sum of Rs.1,99,885/- on 21.03.2013.  Admittedly, the loan availed is a gold loan under Scheme A for 90 days rest period and tenure of the loan was for one year on agreed rate of interest 27% p.a.  However, complainant had repaid the said sum along with interest only on 21.03.2013.  In such circumstances, according to the complainant, OP has collected excess amount of Rs.42,000/- by charging interest at the rate of 27% p.a. instead of charging interest at the rate of 14%, as per the Karnataka Prohibition on Charging Exorbitant Interest Act 2004.  In other words, he has sought for refund of excess amount of Rs.42,000/-.  According to the complainant, the OP has to charge interest at the rate of 14% and not more than that and he is entitled for refund of interest in excess of 14%, since charged interest at the rate of 27% p.a. In this regard he raised consumer complaint for refund of excess interest and the District Forum considered his case as it is, thereby passed impugned order.
5. Learned Counsel for OP / appellant would submit that, OP is a non-banking financial company and functioning as per the guidelines of RBI, is exempted from the purview of Karnataka Money Lenders’ Act and to find support such contentions relied on decision of Hon’ble National Consumer Disputes Redressal Commission in the matter of AWAZ & others Vs. RBI and others reported in III (2008) CPJ 98 (NC) wherein, it was held non-banking financial institutions can charge interest at the rate up to 30% p.a.  Further, to take note of the fact that OP filed writ petition No.18597/12 and sought declaration that Karnataka Money Lenders Act is not applicable to the OP and would submit that Hon’ble High Court granted an interim order against Deputy Registrar of Money Lenders appointed under the Karnataka Money Lenders Act and other authorities restraining them from taking any action against the appellant from initiating any coercive action.  Thus, keeping in mind these two vital aspects coupled with documents submitted by OP to show that complainant has agreed to pay interest at the rate of 27% p.a. for 90 days reset period and interest at the rate of 30% p.a. after completion of 90 days is a contractual rate of interest which was paid by complainant on redeeming pledged articles which could not be said deficiency in service on the part of the OP, since, in Ex.R3, complainant while availing loan had agreed to pay interest for 90 days at the rate of 27% which cannot be revised or changed by the Commission below, since, As per Ex.R11 RBI notified on 02.01.2009 “The Board of each NBFC shall adopt an interest rate model taking into account relevant factors such as, cost of funds, margin and risk premium, etc. and determine the rate of interest to be charged for loans and advances.  The rate of interest and the approach for gradations of risk and rationale for charging different rate of interest to different categories of borrowers shall be disclosed to the borrower or customer in the application form and communicated explicitly in the sanction letter.  Further, the rates of interest and the approach for gradation of risks shall also be made available on the website of the companies or published in the relevant newspapers.  The information published in the website or otherwise published should be updated whenever there is a change in the rates of interest.  The rate of interest should be annualized rates so that the borrower is aware of the exact rates that would be charged to the account.  Since, in Ex.R2 loan application and sanction letter, rate of interest notified at 27% for first one month.  Therefore, the Commission below could not have power to change the contractual rate of interest agreed between the parties to the loan in question.  In other words, the findings to direct OP to refund interest in excess of 14% is not only contrary to Ex.R1 and R11, but, also the ratio laid down by the Hon’ble National Commission in the decision cited supra.
6. The OP / appellant has also filed a writ petition No.18597/2012 wherein directed the Department of Co-operative Society (Money Lending) and other respondents including Government of Karnataka, Department of Police and Reserve Bank of India should not take any coercive action pending disposal of the writ petition.  Thus, by conjointly appreciating these documents, in particular Exhibits referred to above, since documents placed on record by the complainant before forum to consider his complaint are only reply to the legal notice.  Office copy of the legal notice, circular issued by Co-operative Societies office, Bangalore and statement of loan account are not sufficient to hold that appellant / OP is deficient in service in collecting interest in excess of 14% p.a.
7. In the above such conclusion, we proceed to allow the appeal. Accordingly, set-aside the impugned order passed by District Forum, Hassan in C.C.No.40/2014 dated 27.11.2015 is liable to be set aside.  Consequently, the consumer complaint raised by the complainant under Section 12 of Consumer Protection Act, 1986 is dismissed as devoid of merits with no order as to costs.  
8. The amount in deposit is directed to be transferred to District Commission to refund to OP / appellant.

 

 

 

JUDICIAL MEMBER

 

 

MEMBER

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