IN THE CONSUMER DISPUTES REDRESSAL FORUM, PATHANAMTHITTA,
Dated this the 30th day of June, 2012.
Present : Sri. Jacob Stephen (President)
Sri. N. Premkumar (Member)
Smt. K.P. Padmasree (Member)
C.C.No. 21/2012 (Filed on 13.01.2012)
Between:
Thomas. P. Oommen,
Palluviruthil Veedu,
Niranam.P.O.,
Pin – 689 621,
Pathanamthitta, Thiruvalla. …. Complainant
(By Adv. Abraham Varghese Kadavil)
And:
1. Kosamattam Finance,
Registered Office,
Kosamattam MKC Buildings,
Market Junction,
M.L. Road, Kottayam – 1.
2. Kosamattam Finance,
Registered Office,
Marthoma Buildings,
M.C. Road, Thiruvalla,
Pathanamthitta – 1.
(By Adv. Bijoy Varghese Koshy
for OP’s 1 & 2) …. Opposite parties.
O R D E R
Smt. K.P. Padmasree (Member):
The complainant has filed this complaint against the opposite parties for getting a relief from the Forum.
2. Complainant’s case is as follows: Complainant is a farmer by profession. On 29.10.2010 he pledged 46 grams of gold ornaments with the opposite parties and received ` 73,000. Complainant’s allegation is that he pledged the same with the opposite parties believing their advertisements in leading news papers and T.V channels that gold ornaments can be pawned on low interest rate such as ` 1 for ` 100 for one month. While pledging the gold, Manager did not disclose that after one month penal interest will be charged. The term of gold loan is for one year, then the charging of penal interest per month is illegal.
3. Complainant pledged the ornaments believing the offer of low interest rate. But when the complainant approached the opposite parties for closing the loan, they demanded more than 30% interest and informed that after one month interest will be increased and it will be up to 30% and if complainant is not ready to pay the interest, the ornaments will be sold for closing the loan amount.
4. Complainant’s allegation is that if opposite parties properly informed the terms and conditions he could avail loan from any nationalized bank at the rate of 7% per month. Moreover, 2nd opposite party obtained some signed blank papers from the complainant. According to the complainant, opposite parties are trying to exploit consumers by suppressing the real facts. On 12.09.2011 and 18.10.2011 complainant approached the opposite parties for closing the loan account. But opposite parties didn’t turned up and they are trying to sell the ornaments. The acts of the opposite parties are clearly an unfair trade practice. Hence this complaint for the following relief.
(a) For allowing to repossess the ornaments after remitting lawful interest.
(b) For banning the false and misleading advertisement.
(c) Restraining the opposite parties from selling the ornaments till the disposal of the complainant.
(d) For allowing compensation of ` 10,000.
5. Opposite parties entered appearance and filed joint version with the following contentions. They admit that complainant had pledged 46 grams of gold ornaments for ` 73,000. But the opposite parties contention is that complainant had voluntarily entered into a contract of pledging which comes under the special scheme KFSCI having specific condition as to the period of maturity, rate of interest, penal interest etc. of the loan if transaction is not closed within the stipulated period of one month. The opposite parties have never advertised in any newspaper or television channels that gold ornaments can be pawned on low interest rate. The complainant was well provided with information and details of the loan and its interest and he is very well aware with respect to the same. Complainant had never approached the opposite parties for closing the loan. The non-payment of the agreed monthly interest will attract penal interest and the defaulter is always liable for the same.
6. The opposite parties are conducting the business under a valid licence issued by the Reserve Bank of India in the status of non-banking finance company. As such the provisions of the Kerala Money Lenders Act 1958 is not binding to the opposite parties. As per the judgment in W.P (C) No.11891 of 2005(N) dated 14.02.2007 the Hon’ble High Court of Kerala, all non-banking finance companies were permitted to levy the contracted interest from the pledgers. The complainant never approached the opposite parties to close the loan by paying fair interest. It is true that opposite parties issued notice to the complainant with respect to the default and that was done so as to aid the complainant to close the loan and repossess the gold ornaments. By filing this frivolous complaint the complainant is attempting to restrain opposite parties from taking legal steps for the recovery of the loan amount. Moreover, the Forum has no jurisdiction to entertain the matter and the same is to be decided by a Civil Court. Hence the opposite parties pray for the dismissal of the complaint with their cost.
7. On the basis of the pleadings of the parties, the only point to be considered is whether this complaint can be allowed or not?
8. The evidence of this complaint consists of the oral testimony of PW1 and Exts.A1 to A4 and B1. After closure of evidence, both sides were heard.
9. The Point:- The complainant’s case is that he had availed a gold loan of ` 73,000 from the opposite parties on 29.10.2010 by pledging the ornaments with the opposite parties believing their advertisements in the medias that gold ornaments can be pawned on low interest rate. On 12.09.2011 and 18.10.2011 complainant approached the opposite parties for closing the loan. But they demanded exorbitant rate of interest by saying that after one month interest rate will be increased and it will be up to 30%. If the complainant is not ready for paying the same gold ornaments will be sold. The act of the opposite parties is an unfair trade practice and the opposite parties are liable to the complainant and he prays for allowing the complaint.
10. In order to prove the complainant’s case, complainant filed a proof affidavit in lieu of his chief examination along with 4 documents. On the basis of the proof affidavit, complainant was examined as PW1 and the documents produced by him were marked as Ext.A1 to A4. Ext.A1 is the gold loan receipt issued by the Kosamattom Finance dated 29.10.2010. Ext.A2 is the notice sent by the opposite parties to the complainant on 17.10.2011. Ext.A3 is the advertisement in Manorama Newspaper. Ext.A4 is another advertisement in Manorama Newspaper.
11. On the other hand, the contention of the opposite party is that they have never advertised in any newspapers or medias that gold ornaments can be pawned on low interest rate. The complainant after understanding the terms and conditions signed the mortgage deed. Complainant never approached the opposite parties for closing the loan. The complainant has filed this complaint solely to evade payment and to wex the opposite parties. There is no deficiency in service or unfair trade practice from the opposite parties.
12. In order to prove the contention of the opposite parties, no oral evidence is adduced by the opposite parties. They have filed only one document which is marked through PW1 as Ext.B1. Ext.B1 is the mortgage deed entered between the parties.
13. On the basis of the contention and arguments of the parties, we have perused the entire materials on record and found that they have no dispute with regard to the gold loan transaction. The only dispute is with regard to the rate of interest. According to the complainant, opposite parties demanded exorbitant rate as interest in spite of their advertisement that their interest is ` 1 for ` 100 for one month. Whereas the opposite parties contention is that the complainant was well provided with information and details of the loan and its interest and he after understanding the same signed Ext. B1 mortgage deed. Ext.B1 mortgage deed is produced by opposite parties and marked through PW1. But in Ext.B1 document the agreed rate of interest is not mentioned by the opposite parties. Moreover, the opposite parties in their version stated that the scheme provided to the complainant is ‘KFSCI’ having specific condition. But in Ext.B1 document the scheme is mentioned as ‘VGL’. It shows that opposite parties didn’t disclosed the interest rate or scheme to the complainant at the time of executing B1 document.
14. Next allegation of the complainant is that opposite parties attracted him through their advertisement in medias that ` 1 per month for ` 100 is the interest rate of gold loan. But opposite parties denied the allegation stating that they have never given any advertisements in any medias that ` 1 per month is the interest rate of gold loan. On a perusal of Ext.A3 and A4 document it is evident that there is such an advertisements in leading newspapers to attract public. We are of the view that false and misleading advertisements through the medias exploit the vulnerability of consumers.
15. The opposite parties admit that they are conducting the business under a valid licence issued by the Reserve Bank of India, in the status of a non-banking finance company. If so why the opposite parties have not produced any Circular of the Govt. or of the Reserve Bank of India enabling them to collect high rate of interest.
16. Considering all the facts and circumstances of the case, it would be obvious that there has been unfair trade practice on the part of the opposite parties. The demand of exorbitant interest rate such as 30% is not reasonable.
17. Further in Exts.A3 and Ext.A4 advertisements, opposite parties offered the rate of interest as ` 1 for ` 100 per month with a note in the side of the advertisement in small letters “subjected to conditions”. The argument is based on the said note. But opposite parties has not been brought the terms and conditions of the transaction in question. They also failed to brought anything before the Forum showing their interest rate. In the absence of any evidence showing interest rate for the gold loan like complainant’s gold loan they are not entitled to demand any interest more than the interest offered in the advertisement. So they are entitled to collect the interest rate published in the advertisement. Demand for more interest than the published interest rate can’t be justified and it is an unfair trade practice. Therefore, this complaint is allowable.
18. In the result, this complaint is allowed; thereby the opposite parties are directed to close the loan amount of the complainant at the rate of ` 1 for hundred rupees per month, i.e. 12% interest within 15 days from the date of receipt of this order. Complainant is directed to close the loan account by paying loan amount along with 12% interest from the date of opening of the account till the closing of the account within 15 days from the receipt of this order. Opposite parties are also directed to pay an amount of ` 5,000 (Rupees Five Thousand only) as compensation and ` 1,000 (Rupees One thousand only) as cost to the complainant. Opposite parties are also directed to refrain from publishing misleading advertisements.
Declared in the Open Forum on this the 30th day of June, 2012.
(Sd/-)
K.P. Padmasree,
(Member)
Sri. Jacob Stephen (President) : (Sd/-)
Sri. N. Premkumar (Member) : (Sd/-)
Appendix:
Witness examined on the side of the complainant:
PW1 : Thomas. P. Oommen
Exhibits marked on the side of the complainant:
A1 : Gold loan receipt dated 29.10.2010 issued by the 2nd
opposite party to the complainant.
A2 : Notice dated 17.10.2011 sent by 1st opposite party to the
complainant.
A3 : Advertisement in Malayala Manorama daily dated
14.04.2010.
A4 : Advertisement in Malayala Manorama daily dated
16.09.2010.
Witness examined on the side of the opposite parties: Nil.
Exhibits marked on the side of the opposite parties:
B1 : Mortgage deed signed between the parties dated
29.10.2010.
(By Order)
(Sd/-)
Senior Superintendent.
Copy to:- (1) Thomas. P. Oommen, Palluviruthil Veedu,
Niranam.P.O., Pin – 689 621,
Pathanamthitta, Thiruvalla.
(2) Kosamattam Finance, Registered Office,
Kosamattam MKC Buildings, Market Junction,
M.L. Road, Kottayam – 1.
(3) Kosamattam Finance, Registered Office,
Marthoma Buildings, M.C. Road, Thiruvalla,
Pathanamthitta – 1.
(4) The Stock File.5
