Order-20.
Date-17/05/2016.
This is an application u/s.12 of the C.P. Act, 1986.
Complainant by filing this complaint has submitted that complainant due to financial crisis of his family initially obtained Gold Loan against Gold Loan Account No.PG/0240/g/131000192/193/194 DATED 27-05-2014 to the tune of Rs.2,60,800/- from the OP Magma Fincorp Ltd. by way of pledging Hall Marked Gold ornaments 137.2 gms and as per loan agreement complainant started repayment of the said amount with huge interest rate and in this manner already deposited total interest for a sum of Rs.59,551/- and despite extreme financial hardship and over coming all odds in the family and business the complainant determined to repayment of said loan amount with huge interest rate at the rate of18 percent and payment of interest was done by cash and the OP acknowledged and gave money receipt.
All on a sudden a purported notice dated 19-01-2015 issued by the Advocate of the OP1 intimating that Auction of Gold Loan No.PG/0240/G/131000192/193/194 has been completed and immediately after getting such notice complainant shocked and surprised and fact remains without serving any prior notice of auction OP illegally and without performing proper procedure of auction sell sold the same and complainant for which submitted demand notice but they did not take any action and it is absolutely illegal, arbitrary and motivated act for which no sanction was made and getting no information from the OP complainant sent representation to the Consumer Affairs Department to take necessary steps but OP did not turn up. Thereafter complainant sent an Advocate’s notice for such sort of illegal act of the OP and for selling the gold without adopting proper procedure in respect of auction sell and accordingly prayed for redressal.
On the other hand, OP by filing written statement submitted that the complainant pledged gold against sanctioned total amount of Rs.2,60,800/- and, in fact, in respect of three proposal numbers loan was granted to the extent of Rs.2,60,800/- and loan term was for 12 months and complainant pledged gold of 136.6 gms of Gold and loan was sanctioned against payment of 18 percent p.a. for a period of 12 months and the maturity date was 27-05-2015, interest was payable by 27 of each month.
As per Clause 8 and 9 of Gold Loan application Form by its notice dated 18-11-2014 terminated the loan agreement and called upon the complainant to repay the entire dues together with interest within 14 days from the date of notice and in the said notice it is specifically noted that in default of payment the OP in exercise of its right under the agreement will proceed to sale the pledged gold to recover its dues and said notices was duly served upon the complainant and further in exercise of its right to auction of the pledged gold fixed the auction on 08-01-2015 and with intention to give a further opportunity to the complainant vide its notice dated 16-12-2014 issued through their Advocate called upon the complainant to clear his entire outstanding as mentioned therein within 14 days of the notice and thereafter, notice of auction was duly published in two leading newspapers namely Dainik Statesman and Eco Times on 31-12-2014 for selling of the gold and accordingly gold was sold at a price of Rs.3,18,838/- and the surplus amount of Rs.20,233/- is lying in the loan account no. PG/0240/G/13/000192, PG/0240/G/13/000193 & PG/0240/G/13/000194 and OP intimated such adjustment of surplus amount vide their notice dated 21-01-2015.
After passing of almost two months from the date of sale the complainant vide his letter dated 09-03-2015 raised purported allegation of non-issuance of notice before sale and complainant was well aware of the outstanding notice and date of auction in respect of that he kept silent and OP replied against the allegation of the complainant vide their letter dated 25-03-2015.
Since, the contract entered into the parties with regard to the sale of pledged gold and OP having enforced its right, thereunder, there is no question of entertain this writ in exercise of jurisdiction conferred under Article 226 and fact remains complainant filed a writ and that was also rejected on 16-06-2015, in fact, there was no deficiency, negligence and arbitrary action on the part of the OP for which the present complaint should be dismissed.
Decision with Reasons
On careful consideration of the complaint and the written version and also considering the argument advanced by the Ld. Lawyars including the written version and also considering the materials on record including the admitted fact that complainant took a loan of Rs.2,60,800/- and from the document it is found that complainant submitted three gold loan application but not one and from the document promissory note it is found that complainant was granted loan amount of Rs.88,000/-, Rs.95,300/- and Rs.77,300/- on 07-05-2014 and he shall have to pay interest at the rate of18 percent p.a. but in the present case Ld. Lawyer for the complainant submitted that no notice was served upon them before auction of gold and they never received such notices and OP has failed to prove that notice was served upon him before alleged auction but Ld. Lawyer of the OP submitted that they sent notices upon the complainant on 05-11-2014 by registered post with A/D whereas Ld. Lawyer for the OP submitted that notices was duly served which is evident from the fact that copy of the notices was sent and they also submitted that another notice was sent on 18-11-2014 by registered post with A/D. But after considering the material documents it is found that OP has failed to prove by any cogent evidence that notices were served duly and it was received by the complainant and fact is that OP’s Ld. Lawyer also has failed to produce any document before this Forum. Mere sending of notice does not ipso facto proved that notices were duly served but it must be proved by Internet postal track report by internet that it was served but no such document is proved. So, apparently, entire materials on the record proves that OP has failed to prove by any cogent document that notices for auction was served upon the complainant prior to alleged auction to be held on 08-01-2015.
At the same time it is found that OP is a non-banking financial institution and as per RBI Guideline any financial institution is not entitled to receive any public deposit without specific sanction and order passed by the RBI and at the same time no non-banking institution is permitted to keep gold as pledged or to sell such pledged gold in auction without the permission of the Gold Controller because as per Gold Control Act dealing or selling or keeping gold by any concern must have to possess a license from the Gold Controller. At the same time there must be a license of RBI for keeping public deposit (gold) because gold is equivalent to money whereas rupee is negotiable instrument but anyhow OP has failed to produce any document to show that they have their license from Gold Controler for dealing with, keeping with or selling with gold. Further regarding procedure adopted for auction is not at per and procedure as per provision of law and also as per observation of the Supreme Court and procedure has not been followed because in respect of each and every auction particular detail in publication must be there with loan A/C no. account of loanee member and payment and there of outstanding and at the same time the details of the pledged goods and its expected value and demand for sale. But nothing is there. Another factor is that to the non-banking institution RBI has not given any permission to accept or sell public deposit (gold). So, taking of gold against a loan by a non-banking financial institution must be guided by the RBI rules and to that effect there must be a license but no such license is produced by the OP to prove that RBI has granted such certificate or authority to accept or hold public deposit (gold) and also permitted to sell such gold against non-payment of loan amount.
Another factor is that as per Gold Control Act if any Company or any Institution or establishment wants to deal with gold regarding keeping mortgaging, selling in that case as per Gold Control Act there must be a license of such non-banking financial institution but that has not also here and there. Another factor is that in copy of publication about auction no mentioned of detail of loan etc in respect of auction was made and parties names are not there, loan account number and the some other details and outstanding amount and granting loan amount etc. value of gold are not there. At the same time acceptance of bidding are also not there ad further formality and procedure for sell of mortgage property is violated by the OP and no legal action was taken before alleged auction.
Considering the above facts and circumstances, we are convinced to hold that OP acted illegally by adopting unfair trade practice sold away the goods and sale of gold is no doubt illegal because auction procedure is completely against the procedure of law as laid down by the Supreme Court so, we are convinced that OP has no right to sell it in such a fashion having their no gold control license and also they never received any such license from the RBI for taking gold as public deposit. So, the entire act on the part of the OP is illegal, uncalled for and violating the Regulations and condition of the RBI rules and also the Gold Control Act. So, no doubt for such illegal act of OPs complainant has suffered much. At the same time this company acted illegally and deceived the complainant for which this complaint succeeds for negligence and deficiency of service more over unfair trade practice on the part of the OP is well proved.
No doubt Ld. Lawyer of the OP tried to convince by producing one judgement reported in 1(2003) CPJ 46 and submitted that bank has his power to take pledge of the ornaments by way of security for advancement of loan and bank can sell the same by receiving the outstanding loan amount and such sort of act on the part of the bank is not deficiency. But that judgment is not applicable in view of the fact that OP is not a bank but a non-banking financial institution. Moreover, in the said judgment this legal factor has not been discussed. At the same time the said judgment is applicable in respect of nationalized bank or the bank who has granted such license or certificate from the RBI but in the present case OP is not a bank but a non-banking financial institution so, OP must have to show license of Gold Controller and also RBI for taking deposit of Gold so, that ruling is not applicable in this case.
In the light of the above observations we are convinced that complainant is able to prove the OP’s deficiency, negligence and at the same time unfair practice in selling the gold in auction violating all the settled principle as laid down by the Supreme Court.
In the result, the case succeeds.
Hence,
Ordered
That the case be and the same is allowed on contest against the OP with a cost of Rs.10,000/-.
OP is hereby directed to refund the entire gold to the complainant and against that complainant shall have to pay entire amount which was outstanding.
For adopting unfair trade practice and without any license of gold controller as per Gold Control Act and also for not holding such license to keep or hold public deposit (gold) OP has adopted unfair trade practice for which OP shall have to pay penal damages of Rs.25,000/- which shall be deposited to this Forum and it is imposed for protecting the interest of the general consumers from the hands of such OP non-banking institution.
OP is hereby directed to comply this order within two months from the date of this order failing which penal interest shall be paid by the OP to the extent of Rs.2,000/- per month till full satisfaction of this decree and if it is collected it shall be deposited to this Forum and henceforth OP shall have to take gold as pledged after taking proper license from the Gold Controller and also from the RBI and all auction procedure for sale of any mortgaged article or pledged shall be made after filing such cases before the Civil Court or as per license of the RBI and Gold Controller.
OP is directed to comply the order within stipulated time failing which further penal action u/s.25 read with Section 27 of the C.P. Act shall be started against them for which further penalty and fine shall be imposed.
