IN THE DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, KOLLAM

                                                     C.C.No. 117/2023

PRESENT

SMT. S.K.SREELA, B.A.L, LL.B, PRESIDENT

SRI.  STANLY HAROLD, B.A.LL.B, MEMBER

                                                          ORDER DATED:   30.04.2024

BETWEEN

1.         Jyothish Johnson 25 years &

            Asha George, 57 years,

            M/o Jyothish, Kalluvila Jyothish villa,

            Palamukku, Thrikkovilvattom,

            Kannanalloor P.O., Kollam 691 576.

            (Rep.by Power of Attorney Holder)                                           :   Complainants

2.       George Mathews, 61 years,

          S/o Sri.K.M.George, Asha Mandiram,

          Thrippilazhikom P.O.,

          Kuzhimathicaud, Kollam 691 509.

AND

1. Mr.Unnikrishnan Nair (60 years),

S/o Govinda Pillai, Mullasseril House,

Chattunnapuzha, Choorakkode (P.O.),

Pathanamthitta 691551.

2. Mr.Krishnan Nair, 63 years,

S/o Narayana Pillai, Ushas-34/1734

(Vadakkekaraveedu), Near Vazhoottukonam

Devi Temple Arch, Vattiyoorkavu(P.O.),

Thiruvananthapuram 695 013.

3. Mr.Prasad, 55 years,,

S/o Gopalakrishna Pillai,

Changailveedu, Binammikunnu,

Aringada, Near Njarackyadu Devi Vilasam School,

Thalavoor (P.O.), Kottarakkara,Kollam 691557.                   : Opposite parties

ORDER

Stanly Harold, B.A.LLB, Member

          This complaint is filed U/s 35 of the Consumer Protection Act 2019.       

The averments in the complaint in short are as follows:-

Complainants are represented by the Power of Attorney holder. The complainant Mr.Jyothish Johnson is doing his studies at Thirunelveli College and the 2^nd complainant is his mother residing at the aforesaid address. That, Kerala Housing Finance Limited (KHFL) had its inception in 1992, to finance building constructions for residential houses & flats by providing loan on land mortgaging along with other allied activities and services.  Later in 2006, they extended their registration from National Housing Bank (NHB) a subsidiary body owned by RBI the Head Office at Thiruvananthapuram.  The complainant was an investor and holder of KHFL secured debenture bond certificates of their Kottarakkara branch and the branch manager had acquaintance with the Power of Attorney holder  and was a friend of the Power of Attorney holder and visited complainant’s house several times for canvasing various deposits from other persons for the company.  Upon his instigation and assurance that the company is a registered firm under NHB and having regular periodic auditing by RBI, that provides 12% annual interest for 3 years bonds and that the investments will be safe and secured, the Power of Attorney Holder instigated his sister to deposit money in KFHL.  Accordingly on 26.03.2018, the 2^nd complainant Asha George deposited Rs.2,00,000/- in the joint names of her son Jyothish Johnson and Asha George for a period of 36 months and a certificate was issued by KHFL.  The maturity date is 26.03.2021and amount mentioned in the certificate is Rs.2,72,000/-.  That in October 2019, all the branches were closed down and stopped functioning and depositors gathered at branch offices and the Kottarakkara Branch Manager said that the company is under the control of a caretaker at Cochin, the Interim Resolution Professional (IRP) and instructed to send copies of bonds along with Aadhar & bank account passbook copies to him.  Accordingly, complainants emailed the details of their claims but nothing happened so far.

The investors suspect this dubious bank scandal as illegal planned fraud play on the part of the KHFL management after misusing the fund collected from public investors.  Later the complainant came to know that the malfunctioning began since 2014 onwards and that KHFL were in NHB’S blacklist and that in 2017 NHB cancelled their registration.  Various cases were filed in the High Court and other legal institutions by other investors.  KHFL collected huge volume of money by concealing all the information from general public and functioned pretending normal till the shutdown of the company in 2019.

The complainants availed the services of the opposite parties for consideration, but the opposite parties willfully, illegally & arbitrarily failed to provide the services & money to the complainants as agreed in their terms and conditions.  They are liable to pay the deposit amount with interest due as per the contract agreement.  The above said act and conduct of opposite parties are a clear case of contractual violation, deficiency in service and also unfair trade practice and they are illegally withholding the money of complainants for their illegal enrichment and hence this complaint has been filed for getting the reliefs.  

The 1^st and 2^nd opposite parties accepted the notice issued from the Commission but they never appeared before the Commission nor filed any version or contest the case. 

3^rd opposite party filed version along with an order of the National Company Law Tribunal. It has been admitted by the 3^rd opposite party that he was working in Kerala Housing Corporation which had license of National Housing Bank having 28 branches all over Kerala. The 1^st opposite party and the 2^nd opposite party are the Chairman and the Managing Directors respectively.  The 3^rd opposite party was the branch Manager of the Kottarakkara Branch during 2019 and that till 2018 the transactions by the bank were in a perfect manner.  Thereafter due to the flood problem as the borrowers did not remit the loan interest or principal amount, the head office could not refund the money to the depositors.  Hence they lodged police complaint against the opposite parties before the Kottarakkara Rural SP which has been forwarded to the Crime Branch.  After due verifications, 1^st and 2^nd opposite parties were apprehended and detained in judicial custody and after a period of 3 months they were released on bail.  Thereafter they had filed an insolvency petition.  Subsequently, a counsel has been appointed as IRP (Interim Resolution Professional) for resolving the problems. That deposit bonds and the required documents of all the depositors including that of the complainant were collected by IRP notification and he has procured an order from National Company Law Tribunal, Kochi and the complaint is not maintainable before this Commission. The 3^rd opposite party prays that he be exonerated from any liabilities.

The issues to be considered are as follows:

1. Whether there is any deficiency in service and unfair trade practice on the part of opposite parties?
2. Whether the 3^rd opposite party is to be exonerated from any liabilities?
3. Reliefs and Costs?

Points 1 to 3

The complainants have filed this case, through their Power of Attorney holder, against the opposite parties regarding the amount deposited with the opposite parties as per Ext P1. Opposite parties 1 and 2 remained ex parte, never appeared before the Commission for contesting the case. The third opposite party, who admitted to being the Manager of the Kottarakkara Branch office KHFL, acknowledged the facts of the case. He stated that transactions in 2018 were performed correctly, but due to flood problems, loan repayments were defaulted, preventing the refund of depositors' amounts. The depositors approached the Rural Police, Kottarakkara, who forwarded the case to the crime branch. Opposite parties 1 and 2 were apprehended and detained in judicial custody, and they subsequently filed an insolvency petition before the Hon’ble High Court. An Interim Resolution Professional advocate was appointed and he had advised the third opposite party that this case does not fall under the purview of the Consumer Commission.

The third opposite party stated that the complainants' bond deposit copies were also collected along with other depositors, and an order was obtained from the NCLT for further procedures. However, it is pertinent to note that the said order dated 18.09.2019 did not include the complainants as parties, nor was the order communicated to them. The complainant produced the original bond certificate before this Commission which has been marked as ExtP1. Until the complaint was filed, there were no affirmative actions taken by the opposite parties. Hence the complainant has opted to approach this Commission for redressal of their grievances. The Consumer Protection Act is a self-contained Act and, as per section 100 of the Act, its provisions are in addition to and not in derogation of other laws for the time being in force, and hence the contention of the third opposite party regarding the non-maintainability of the complaint before this Commission is unsustainable.

It is clear that the complainants have not been refunded the amount. Opposite parties 1 and 2 have not denied the pleadings in the complaint by failing to appear before the Commission.  As PW1 has not been cross examined, the affidavit of PW1 remains unchallenged.

Based on the uncontroverted testimony of the complainant and the supporting documents Exts.P1 and P2 it can be concluded that complainants presented sufficient evidence to substantiate their case and justify the relief they are seeking.  The pleadings in the complaint and the affidavit indicate that complainant made repeated requests to the opposite parties for the withdrawal of their deposits.  But the opposite parties refused to comply by withholding both interest and the principal amount. The complainant has pleaded that the third opposite party instigated them to deposit the amount. Therefore, the third opposite party also has the responsibility to ensure that the complainants are refunded the amount. This indicates a deficiency in service on the part of the third opposite party also.

This is a clear case of deliberate withholding of funds by the opposite parties amounting to illegal enrichment and demonstrates clear instances of deficiency in service, contractual violation and unfair trade practice. Therefore, based on the evidence presented it can be concluded that complainant has established their case and entitled for the relief they are seeking.

In the result the complaint is allowed. 

The opposite parties 1 and 2 are jointly and severally directed to pay to the complainants an amount of Rs.2,72,000/- together with interest @ 12% per annum from 26.03.2021 till realisation. Additionally, the opposite parties 1 to 3 are directed to pay an amount of Rs.10,000/-towards compensation and Rs.5,000/- as the costs of the proceedings.The opposite parties shall comply with the above directions within 45 days from the date of receipt of the order failing which the complainants can initiate execution proceedings.

Dictated to the Confidential Assistant  Smt. Minimol S. transcribed and typed by her corrected by me and pronounced in the  Open Commission this the 30^th day of  April 2024.

Sd/-

STANLY HAROLD

MEMBER

Sd/-

S.K.SREELA

PRESIDENT

Forwarded/by Order                            

                            Senior superintendent

INDEX

Witnesses Examined for the Complainant:-Nil

Documents marked for the  complainant

Ext.P1              : Original bond certificate dated 26.03.2018

Ext.P2             : Advertisement notice

Witnesses Examined for the opposite parties:-Nil

Documents marked for opposite parties:-Nil                                                                      

Sd/-

                                                                                          PRESIDENT