CONSUMER DISPUTES REDRESSAL FORUM, KOTTAYAM
Present
Sri. Santhosh Kesavanath P. President
Smt. Bindhu M. Thomas, Member
Sri. K.N. Radhakrishnan, Member
CC No. 299/2009
Thursday, the 31st day of May, 2012.
Petitioner : Muhammed Ameen
Humayoon Manzil
Velloor P.O, Kottayam.
(By Adv. Zakhier Huzzain)
Vs.
Opposite party : The Managing Director,
Muthoot Finance Pvt. Ltd.,
KK Road, Kottayam.
(Muthoot M.George Enterprises)
(By Adv. N.P Muhammed Nizar)
O R D E R
Sri. Santhosh Kesavanath P., President.
Case of the petitioner filed on 5..10..2009 is as follows.
Opposite party is a Money lender come under the perview of the Money lenders Act. Petitioner pledged gold ornaments with opposite party for his business purpose running the business is sole livelihood of the petitioner, agreeing to pay interest 2% interest above bank rate. When the petitioner approached the opposite party to pay off the loan amount and to release the ornament opposite party demanded interest at the rate of 36% per annum. According to the petitioner opposite party is a licensee under money lender act and he cannot charge interest above 2 % of the maximum interest charged by a commercial bank. Since the petitioner apprehends that filing of any complaint, before releasing the articles, may cause damage to the article pledged. So, petitioner paid entire amount demanded by opposite party. According to the petitioner interest collected by the opposite party is in excess. So, act of opposite party amounts to deficiency in service. So, petitioner
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prays for a direction to the opposite party to return the illegal amounts collected from petitioner, with interest at the rate of 17 % per annum. He claims a compensation of Rs. 10,000/- and cost of proceedings.
Opposite party entered appearance and filed version contenting that petition is not maintainable. According to the opposite party, petitioner is not a consumer. Relation ship between the petitioner and the opposite party is that of debtor creditor relationship and there is no service given by the opposite party to the petitioner. Petitioner availed gold loan on 11..6..2008, 27..1..2009 and 17..6..2008 for Rs. 2,00,000/-, 82,000/-, 38,000/-, 27,600/- and 27,800/-. All the said transactions are independent transaction so, separate complaint for his alleged grievance has to be filed. So, petition is bad for non jointer of necessary parties. The averment that petitioner for his business purpose, and he availed the loan and for his sole livelihood at the rate of interest 2% above commercial bank rate etc., are denied by opposite party. The petitioner has availed the said loans agreeing to repay the amount with interest at the rate of 17% per annum and the risk interest at rate of 12% per annum. As per terms of the loan agreement if the loan account is closed within 3 months a reduction of 6 % interest on the risk interest is allowed and if the loan account is closed within six months a reduction of 3 % on the risk interest is allowed. It is also agreeing that if the loan account is not closed within one year opposite party is entitled to get compound interest for the said amount. According to opposite party they collected the amounts which are legally entitled to the opposite party. Since opposite party is a non banking finance company incorporated under companies act registered under
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section 45 (1) (A) of RBI Act 1956, Money lenders act is not applicable to the opposite party. According to the opposite party there is no deficiency in service so, they pray for dismissal of petition with their costs.
Points for determinations are:
i) Whether the petition is maintainable or not?
ii) Whether there is deficiency in service on the part of the opposite party?
iii) Relief and costs?
Evidence in this case consists of affidavit filed by both parties and Ext. A1 to A10documents on the side of the petitioner and Ext. B1 to B9 documents on the side of the opposite parties and
Point No.1
According to the opposite party petition is not maintainable on two grounds (a) The relationship between petitioner and opposite party is that of debtor creditor relationship and absolutely no service was given by opposite party to petitioner.(b) The complainant availed the gold loan for a business transaction and said transactions are independent transaction. So, petitioner is not a consumer and grievances of the petitioner if any is to be redressed in a competent Civil Court. First point is whether the petitioner is a consumer or the relationship between the petitioner and opposite party is that of debtor creditor relationship? (section 2 (d) of Consumer Protection Act states that consumer means any person who hires or avails any goods or service for a consideration which has been paid or promised or partly paid and partly promised or under any system of deferred payment and includes any beneficiary of such service.
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Section 2 (O) service is defined as service of any description which is made available to potential users and includes, but not limited to, the provisions of facilities in connection with banking, financing, insurance, transport, processing etc. etc. So in our view while construing section 2 (d) and 2 (O) of Consumer Protection Act service in connection with banking with a promise to pay interest, as consideration is a service availed by a consumer. So, in our view petitioner is a consumer.
Second argument paused by learned counsel for opposite party is that since the loan is availed for a business transaction it is definitely availing of the service for commercial purpose and the petitioner is not a consumer. In our view while considering availing the service for commercial purpose. The nexus between the availing of the service for which the commercial activity conducted by petitioner is to be looked into. In the present case opposite party has not adduced any evidence to prove that the pledging of the gold ornament with the opposite party has any nexus to the commercial activity conducted by the petitioner. So, in our view petitioner is a consumer and point No. 1 is find accordingly.
Point No. 2
The moot question to be decided in this case is what is the rate of interest entitled to the opposite party for the availed gold loan. According to opposite party they had collected interest rate which the opposite party is legally entitled. On the other hand petitioner has a definite case that opposite party charged 36% interest rate from the petitioner. According to the opposite party, opposite party is a non banking finance company incorporated under
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the companies act and registered under the provisions of RBI. So, Money lenders act is not applicable. Further more as per agreement between the party opposite party is entitled for risk interest, as stated in the agreement between the parties. Petitioner produced pawn receipt dtd: 11..6..2008 and another pawn receipt dtd: 13..9..2008 those receipts were marked as Ext. A1 and A2. In the reverse side of Ext. A1 and A2 it is stated that interest rate for one yea5r is 17%. It is further stated that risk interest for loan amount is .........%.
Opposite party produced pawn receipt and same is marked as Ext. B4 and B6. Counsel for the petitioner argued that the endorsement of risk interest in the reverse side of Ext. B4 and Ext. B6 is a subsequently written one. Here rate of interest agreed between the parties is in dispute. Even though opposite party has a definite case that they are conducting gold loan as per RBI norms nothing has been produced to prove the same. Hon’ble High Court of Kerala as per its decision in Sundaram Finance Ltd. Vs. State of Kerala and others (reported in 2009 for KHC page 871) it is stated that non banking finance companies are Money lenders coming under the money lenders act 1956. Further more Hon’ble Division Bench of High Court stated that provisions of chapter III B of RBI Act are intend to protect the depositors where as provisions of Money lenders act are essentially protect borrowers. Provisions of both act are not in conflicts and simultaneously apply to non baking finance companies. In the said case Hon’ble High Court stated that interest rate chargeable should not exceed 2% above maximum rate of interest charged by commercial banks.
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In our view Section (2) (g) defines ‘deficiency’ as any fault imperfection, shortcoming and inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service.
In the present case as per Ext. A1 and A2 opposite party is only entitled for 17 % interest. Even though opposite party has a definite case that they are entitled for risk interest. Admittedly there is no evidence to prove that risk interest is to be levied to petitioners. Further more opposite party has no case that petitioner has taken loan for more amount under a particular scheme which attract risk interest. From the available evidence and from the deposition of DW1 it can be seen that the percentage of risk interest in the reverse side of Ext. B4 to B7 is a subsequently written one for the purpose of this case. In our view act of opposite party in accepting rate of interest above the rate entered in pursuance of a contract in relation to the banking service amounts to deficiency in service. So, point No. 2 is found accordingly.
Point No. 3
In view of the finding in point No. 1 and 2. Petition is allowed. In the result, opposite party is ordered to refund excess amount collected from the petitioner by levying an interest at the rate 17 %. Without saying what had happened caused much inconvenience and sufferings to the petitioner. So, we order opposite party to pay an amount of Rs. 2,000/- as litigation cost. Opposite party is also ordered to pay an amount of Rs. 1,000/- as cost of the proceedings. Opposite party is further ordered under section 14 (f) of
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Consumer Protection Act 1986 to discontinue the unfair trade practice and not to repeat the same. Order shall be complied with within one month of the receipt of the copy of this order.
Dictated by me transcribed by the Confidential Assistant corrected by me and
pronounced in the Open Forum on this the 31st day of May, 2012.
Sri. Santhosh Kesavanath P. President Sd/-
Smt. Bindhu M. Thomas, Member Sd/-
Sri. K.N Radhakrishnan, Member Sd/-
APPENDIX
Documents of the Petitioner
Ext. A1: Copy of Receipt of loan No. 7067.
Ext. A2: Receipt of loan No. 10022
Ext. A3: Copy of receipt of loan No. 10775
Ext. A4: copy of receipt of loan No. 10776
Ext. A5: Copy of receipt of loan No. 8262
Ext. A6: Cash receipt Dtd: 31..8..2009 for Rs. 2,00,000/-
Ext. A7: Cash receipt Dtd: 31..8..2009 for Rs. 82,000/-
Ext. A8: Cash receipt Dtd: 1..9..2009
Ext. A9: Cash receipt dtd: 1..9..2009 for Rs, 27,600/-
Ext. A10: Cash receipt Dtd: 8..9..2009 for Rs. 27800/-
Documents of the Opposite party
Ext. B1: Memorandum of Association
Ext. B2: Article of Association
Ext. B3: Copy of certificate of registration
Ext. B4: Receipt of loan 7067
Ext. B5: Receipt of loan 8262
Ext. B6: Receipt of loan 1022
Ext. B7: Receipt of loan 10776
Ext. B8: Receipt of loan 10775
Ext. B9: Statement Dtd: Nil.
Witness
PW1 : Mohammed Ameen
DW1 : V.I Ittycheriya
DW2 : M.P Mathew.
By Order,
Senior Superintendent
