DATE OF FILING : 24.2.2009.

BEFORE THE CONSUMER DISPUTES REDRESSAL FORUM, IDUKKI

Dated this the 29^th day of April, 2010

Present:

SRI.LAIJU RAMAKRISHNAN PRESIDENT

SMT.SHEELA JACOB MEMBER

SMT.BINDU SOMAN MEMBER

C.C No.35/2009

Between

Complainants : 1. Thomas K. Vallamattom,

(Managing Prtner, M/s Valllamattom

Construction Corporation),

Vallamattom House,

Pandappally P.O., Muvattupuzha,

Ernakulam District.

2. Neena Thomas, W/o Thomas George,

Vallamattom House,

Pandappally P.O.,, Muvattupuzha,

Ernakulam District.

3. Tomy Vallamattom, S/o V.K. Varkey,

Vallamattom House,

Pandappally P.O., Muvattupuzha,

Ernakulam District.

4. Jose Mathew, S/o Mathew,

Kodamullil House,

Perumballoor P.O., Arakuzha.

(All by Advs: K.M. Sanu &

M.K. Kunjachan)

And

Opposite Parties : 1. The Manager,

Kerala Financial Corporation,

Distrsict Office, Pulimoottil Buildings,

Muvattupuzha Road, Thodupuzha.

2. The Managing Director,

Kerala Financial Corporation,

Head Office, Vellayambalam,

Thiruvananthapuram.

3. The Deputy Tahsildar (RR),

Kerala Financial Corporation,

Kalloor, Ernakulam.

O R D E R

SRI.LAIJU RAMAKRISHNAN (PRESIDENT)

The complainants are jointly running a construction firm in the name and style 'M/s Vallamattom Construction Corporation', for earning their livelihood as self employment. The 1^stcomplainant was acting as the managing partner. They are engaged in the field of construction on contract basis. For the modernisation of the firm the 1^st complainant applied for a loan of Rs.35 lakhs from the opposite party and the 1^st opposite party sanctioned Rs.30 lakhs on 29.3.2001. The loan was secured by first charge over the assets and collateral security of 3 acres 81 cents of land comprised in Sy.No.604/7A1, 604/7A2, in Arakuzha Village, 1acre 51 cents of land in Sy.No.595/2-2 in Arakuzha Village and 55 cents in Sy.No.594/10/1,594/11-1,594/11-2,594/12-2 in Arakuzha Village by way of equitable mortgage. The loan was also guaranteed by the personal guarantee of the other complainants and two retired partners. A loan agreement was signed between the complainant and the opposite party for an interest rate of 15% and 2% penal interest. The opposite party charged Rs.11,875/- as processing fee for the loan. The opposite party had sanctioned the loan as refinance from the Industrial Development Bank of India (IDBI) and the papers for refinance were given by the 1^st complainant at the time of sanction of the loan. Due to the long delay in getting the loan amount from the government, the complainant failed to repay the loan promptly. They already paid an amount of Rs.20,29,837/-. Now the opposite party issued a demand notice for Rs.56,48,206/- and also informed that if the amount is not remitted immediately, the mortgaged property will be sold out in public auction. A news paper advertisement was also done by the opposite party about the auction. The opposite party had availed the loan as refinance from the Industrial Development Bank of India. As per the circular dated 6.4.1984 issued by IDBI as Circular No.F1.27/83-84, the rate of interest for the loans given for modernisation has fixed as 11.5%. The opposite party id duty bond to follow the direction of IDBI because they are giving the loan as refinance from IDBI. The complainant came to know about the circular, recently. At the time of loan agreement, the opposite party wilfully quoted an exorbitant rate of interest as 15% plus 2% penal interest by suppressing the actual rate of 11.5%. So the petition is filed for getting benefits under one day settlement scheme and also against compensation for unfair trade practice and deficiency in service of the opposite party.

2. The opposite parties filed a written version and admitted that the complainant availed a loan from the opposite party to the firm for a period of 2 years and the same was to be repaid within a period of 23 months commencing from 1.6.2001. The opposite party have not availed any refinance from IDBI or any other agencies to the loan of the complainants. The averment of the complainants that a loan was sanctioned to them as refinance from IDBI is a colorful attempt to lend credence to the argument made by them and the same is not supported by any evidence. The loan disbursed to the firm was the own fund of the corporation. The complainants are wilful defaulters of the loan. They have no intention to close the loan account. The government has already settled the dues of the contractors up to 2008. The complainant and two other persons from the family have availed 3 other loans also from the opposite party. They have filed CC No.23/09, CC No.24/09, CC No.25/09 before this Forum and have obtained orders restraining the opposite parties lawful action against the mortgaged assets. It is true that the rate of interest incorporated in the agreement was 15% plus 2% penal interest. But as a developmental financial institution and industrial facilitator, the opposite parties now charging 15% interest only without penal interest. The opposite parties are not duty bond to comply the Circular No.F1.27/83-84 dated 6.4.1984. The IDBI is not a decision making authority over the management of the Corporation. It is the Board of Directors of the Corporation who will fix the rate of interest to the loans disbursed to the borrowers. More over this Forum has no jurisdiction to entertain the complaint since the cause of action, if any, has hit by limitation under Sec.24A of the Act, having been filed beyond 2 years. The limitations had already been started from the date of fixation of rate of interest in the loan agreement that is, on 8.4.2001. Under the definition of the word “consumer”, contained in Sec.2(d) (ii), it does not include a firm who avails of the services (in this case financial assistance for execution of contract works) for any “commercial purpose” does not include the service availed, exclusively for the purpose of earning livelihood by means of self employment. The partners have no locustandi to file the complainant under their personal capacity since the loan was availed by their firm. Therefore under that score itself the complaint is not maintainable. So the complaint is vexatious, without any rational basis and may be dismissed.

3. The point for consideration is whether there was any deficiency in service on the part of the opposite parties, and if so, for what relief the complainant is entitled to?

4. The evidence consists of the oral testimony of PW1 and Exts. P1 to P3 marked on the side of the complainant and no oral evidence on the side of opposite party.
 

5. The POINT :- The complainants 1 to 4 are the partners of a firm in the name and style, M/s Vallamattom Constructions Corporation, which is running as a self employment for the livelihood of the persons who are unemployed and educated. They are engaged in the field of construction on contract basis. The petition is filed for getting the benefits as per the circular issued by the Industrial Development Bank of India, Small Industries Development Department, for the loans availed for the modernisation of the firms. The 1^st complainant is examined as PW1. PW1 deposed that the opposite party sanctioned Rs.30 lakhs on 29.3.2001, with the security of the property of the complainants. And also by personal guarantee of the partners. At the time of availing the loan, a loan agreement was signed between PW1 and the opposite party for an interest rate of 15% and 2% penal interest. The opposite party charged 11,875/- as processing fee of the loan application. The opposite party had sanctioned the loan as refinance from IDBI and the papers for the refinance was given by the PW1 at the time of sanction of the loan. Some amount was received by the opposite party as upfront leavy payable to IDBI. The loan sanction letter is marked as Ext.P1. As per the circular issued by the IDBI, the Circular No.F1.27/83-84 dated 6.4.1984, the rate of interest for loans given for modernisation has fixed as 11.5%. The opposite party is duty bound to follow the directions of IDBI because they are giving the loan as refinance from the IDBI. PW1 came to know about the circular recently only. At the time of loan agreement the opposite party wilfully quoted an exorbitant rate of interest of 15% plus 2% penal interest by suppressing the actual rate of 11.5%. The opposite party had no right to charge more than the rate prescribed by IDBI. Now the opposite party is demanding Rs.56,48,206/-. So the PW1 is entitled to get revise the rate of interest as 11.5% and also entitled to get cancel the excess demand made by the opposite party. The circular is marked as Ext.P2 and the paper publication done by the opposite party is marked as Ext.P3. As per the cross examination of the learned counsel of the opposite party, PW1 admitted that he has signed the loan agreement. But the loan agreement was a false one. It was revealed only recently that the loan agreement was fabricated by the opposite party. The interest rate in the loan agreement is not correct.

Ext.P2 circular produced by the opposite party dated 6^th April, 1984, states that it is referred a Circular No.12705/MSD/0(41)/80-81 dated 28^th February,1981 advising the interest rates under various schemes of IDBI. It is the circular of IDBI for Small Industries Development Department, Division of Financial Institutions. As per the circular, the Union Budget for the year 1984-85 has provided for reduction in the rates of interest applicable to modernisation assistance given by term lending institutions. It is decided to reduce the ceiling rates of interest chargeable by primary lending institutions in respect of modernisation and rehabilitation assistance under the Refinance Scheme. And the revised rate is given as, in small scale units, in backward areas 12.5% to 9% and in non-backward areas 13.5% to 10%. But the circular is provided for interest rates structure under IDBI refinance scheme. The complainant never produced evidence to show that the KSFE has disbursed the loan of the complainant as refinance from the Industrial Development Bank (IDBI). The opposite party contented that the opposite parties have not availed any refinance from the IDBI or any other agencies to the loan of the complainant. The amount disbursed to the loan of the complainant was own fund of the corporation. More over, the loan was sanctioned on 21.3.2001 and agreement for interest was also created on the same day. The complainant never challenged the same even after 8 years.

So we think that the complainant is not entitled to get the benefits under the circular issued by the IDBI because it is not a refinance scheme. So there is no deficiency in the part of the opposite party and hence the petition is dismissed.
 

Pronounced in the Open Forum on this the 29^th day of April, 2010.

Sd/-

SRI. LAIJU RAMAKRISHNAN (PRESIDENT)
 

Sd/-

SMT. SHEELA JACOB (MEMBER)
 

Sd/-

SMT. BINDU SOMAN (MEMBER)

APPENDIX

Depositions :

On the side of the Complainant :

PW1 - Thomas K. Vallamattom.

On the side of the Opposite party :

Nil.

Exhibits :

On the side of the Complainant :

Ext.P1 - Copy of the loan sanction letter dated 29.3.2001.

Ext.P2 - Copy of the circular No.FI.27/83-84 dated 6.4.1984, issued by the Industrial Development Bank of India, Bombay.

Ext.P3 - Malayala Manorama daily dated 28.1.2009, in which the auction notice waspublished by the opposite party.