KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION

VAZHUTHACAUD, THIRUVANANTHAPURAM

APPEAL No.221/2021

JUDGEMENT DATED: 12.04.2024

(Against the Order in C.C.No.559/2016 of CDRF, Ernakulam)

PRESENT:

APPELLANT:

(by Adv. George Cherian Karippaparambil)

Vs.

 RESPONDENT:

JUDGEMENT

HON’BLE JUSTICE SRI. K. SURENDRA MOHAN : PRESIDENT

          This appeal is filed against an order dated 09.04.2021 of the Consumer Disputes Redressal Commission, Ernakulam (the District Commission for short) dismissing the complaint filed by the appellant/complainant.  The respondent herein is the opposite party in the complaint.  For the sake of convenience, the parties shall be referred to herein, in accordance with their status before the District Commission.

          2.       According to the complainant, he is the borrower and his wife
Smt. Molly Johnson is the guarantor for a loan that he had availed from the opposite party on the security of his residential property.  The complainant had mortgaged his residential property having an extent of 19 cents of land with an old residential house therein comprised in resurvey No.132/4/3 of Parakadavu Village.  The opposite party is a housing finance company.  The complainant had availed a loan of Rs.1,02,95,924/-(Rupees One Crore Two Lakhs Ninety Five Thousand Nine Hundred and Twenty Four only).  The loan was availed for the additional construction and maintenance of his residential house and
foreclosure of a housing loan that he had availed from the Federal Bank Ltd., Mala Branch.  At the time of availing the loan the rate of interest agreed upon was 12% per annum, variable basis.  The opposite party had promised reduction of the rate of interest by 2% after regular repayment of the equated monthly instalments (EMI) for six months.  The complainant paid the first eighteen EMIs without any default.  But, the opposite party failed to fulfill the promise regarding the reduction of rate of interest by 2% after six months.  Therefore, the complainant closed the loan on 18.07.2016.  The opposite party charged an amount of Rs.4,97,608/-(Rupees Four Lakhs Ninety Seven Thousand Six Hundred and Eight only) as pre-closure charges, without any authority.  According to the complainant, the levy and recovery of pre-closure charges amounts to unfair trade practice.  The opposite party had no authority to levy the said charges and the complainant had not agreed for imposing such pre-closure charges.  The conduct of the opposite party has caused severe mental agony, loss and hardships to the complainant.  Therefore, the complainant approached the District Commission seeking compensation for an amount of Rs.6,00,000/-(Rupees Six Lakhs only) from the opposite party along with Rs.1,00,000/-(Rupees One Lakh only) as costs of the proceedings. 

3.       The complaint was contested by the opposite party who filed version disputing the claim of the complainant.  In the version, the opposite party admitted the statements made in paragraphs 1 and 2 in the complaint.  According to the opposite party, no promise to reduce the interest by 2% after regular payment of EMIs for six months was made.  The complainant was also not regular in making payments of the monthly instalments.  The opposite party does not know why the complainant wanted closure of the loan.  There is no deficiency in service on the part of the opposite party.  The amount of Rs.4,97,608/-(Rupees Four Lakhs Ninety Seven Thousand Six Hundred and Eight only) was charged on the complainant as foreclosure charges as per the terms and conditions of the agreement and there is no deficiency in service or unfair trade practice on the part of the opposite party.  There is no cause of action available to the complainant to file a complaint against the opposite party.  Therefore, they sought for the dismissal of the complaint.

4.       Both parties went to trial on the above pleadings.  The complainant examined himself as PW1.  Exhibits A1 and A2 were marked on his side.  No oral evidence was adduced by the opposite party.  Though Mr. Sinu Kumar, the Branch Manager of the opposite party had filed proof affidavit, he did not make himself available for cross examination.  In spite of the above, Exhibits B1 to B6 documents were marked by the District Commission on 18.03.2021 on which date the case was posted for final hearing.  The documents were marked subject to objections.  

5.       The District Commission considered the complaint on the basis of the above evidence and dismissed the same.  According to the District Commission, the complainant was guilty of suppression of material facts.  For the above reason, it has been held that the complainant was not a “consumer” under the Consumer Protection Act.  Consequently, the complaint was dismissed.  It is aggrieved by the said dismissal that the complainant had filed this appeal.

6.       Though the opposite party had been served with notice in the appeal and had entered appearance through counsel despite grant of repeated chances, there was no representation for them continuously.   Therefore, we have heard the counsel for the appellant.  We have also carefully examined the lower court records called for and produced before us by the District Commission. Paragraph 2 of the complaint is reproduced hereunder for convenience of reference:

“2. Complainant availed loan amount of Rs.1,02,95,924/-
(Rupees One Crore Two Lakhs Ninety Five Thousand Nine Hundred and Twenty Four only) from the opposite party for the additional construction and maintenance of his residential house and for closure of housing loan with Federal Bank Ltd., Mala Branch”.

Paragraph 2 of the version filed by the opposite party reads as follows:

“2.     The averment in para 1 and 2 is admitted by the respondent herein”. 

7.       Therefore, the opposite party has admitted in their pleadings that the loan was availed by the complainant was for the additional construction and maintenance of his residential house and for closure of an earlier housing loan that he had availed from the Federal Bank Ltd., Mala Branch.  The District Commission has taken exception to the fact that the complaint was filed by the complainant in his personal capacity and not in the capacity as proprietor of a proprietary concern.   Since he had availed the loan as the proprietor of his concern and filed the complaint without disclosing the said fact, the District Commission has dismissed the complaint.  It is trite that a proprietorship concern does not acquire a separate personality like that of an incorporated company.  Therefore, there is no difference or distinction between the proprietor and the proprietary concern.  Further, Exhibit A7 the loan sanction letter shows that the loan was sanctioned to “SMS Traders (Proprietor, Paranikulangara Ouseph Johnson)”.  The loan was therefore sanctioned to the complainant on the security of his property.  The above being the position of law, we are not satisfied that the complainant is guilty of suppression of any material fact as held by the District Commission.  The statement that he had availed a loan, though in the name of his business concern, does not make any difference because the business concern does not have a separate personality.  For the above reason, the District Commission erred in finding that the complainant was guilty of suppression of a material fact. 

8.       Apart from the above, as evident from the pleadings in this case particularly the portions extracted hereinabove, the opposite party in this case had admitted the case pleaded in the complaint.  There cannot be any dispute that an admitted fact need not be proved.  The opposite party did not have a case that the complaint was not maintainable for the reason that the loan had been availed in the name of SMS Traders.  The District Commission has therefore dismissed the complaint on the basis of a case not pleaded by any of the parties.  We also notice that, since no oral evidence was adduced in this case Exhibits B1 to B6 documents marked on the side of the opposite party have not been proved.  Hence, no reliance could be placed on the said documents.   We are satisfied that the action of the opposite party in levying and recovering pre-closure charges from the complainant amounts to unfair trade practice for which, the complainant is entitled to be compensated.  In view of the fact that there is no evidence on the side of the opposite party also, the complainant is entitled to succeed.  We therefore find that the order of the District Commission against which this appeal is filed is wrong and liable to be set aside. 

This appeal is therefore allowed and the order dated 09.04.2021 of the Consumer Disputes Redressal Commission, Ernakulam in C.C.No.559/2016 is set aside.  The complaint C.C.No.559/2016 is allowed as follows:

1. The opposite party is directed to return the amount of Rs.4,97,608/-(Rupees Four Lakhs Ninety Seven Thousand Six Hundred and Eight only) recovered from the appellant/complainant as pre-closure charges with interest thereon @8% per annum from 18.07.2016 till the date of realisation.
2. The opposite party shall pay a further amount of Rs.2,00,000/-(Rupees Two Lakhs only) as compensation for the mental agony, loss and hardships caused to the complainant with interest thereon @8% per annum from 03.10.2016 the date of filing the complaint.
3. The opposite party shall make a further payment of Rs.50,000/-(Rupees Fifty Thousand only) as costs of this litigation. 

All the amounts referred to the above shall be paid within a period of one month from the date of receipt of a copy of this judgement failing which all the amounts shall carry interest @9% per annum.

SL