BEFORE THE DAKSHINA KANNADA DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, MANGALORE

Dated this the 30^th of May 2011

PRESENT

        SMT. ASHA SHETTY           :   PRESIDENT

                        SMT.LAVANYA M. RAI       :   MEMBER

COMPLAINT NO.235/2010

(Admitted on 30.08.2010)

Mr.Siraj,

So. Late Aliyabba,

Aged about 27 years,

RA. Rehamath Manzil,

Ullal, Mangalore  20.                         …….. COMPLAINANT

(Advocate for the Complainant: Mrs.Suma R. Nayak).

          VERSUS

Ms. Muthoot Finance Ltd.,

Thokkottu Branch,

Thokkottu, Mangalore,

Represented by its Manager.               ……. OPPOSITE PARTY

(Advocate for the Opposite Party: Sri.K.Balaraj Rai).

                                      ***************

ORDER DELIVERED BY PRESIDENT SMT. ASHA SHETTY:

1.       This complaint is filed under Section 12 of the Consumer Protection Act alleging deficiency in service against the Opposite Party claiming certain reliefs. 

The brief facts of the case are as under:

It is stated that, the Complainant availed a Super Personal Loan (SPL) on 16.07.2009 for Rs.1,00,000/- against loan account bearing No.0004075 from the Opposite Party by giving a gold ornaments weighing 93 grams as collateral security.

It is stated that, at the time of disbursement of the loan, the Opposite Party represented to the Complainant that the basic rate of interest charged by the Opposite Party is 17% p.a. on the loan so availed, the same was stated in the declaration form issued by the Opposite Party.   Due to financial constraints, the Complainant was unable to repay the loan.  It is stated that, in the last week of July 2010, the Complainant approached the Opposite Party, at that time the Complainant came to know that the Opposite Party has charged up and above 17% rate of interest as additional risk interest.  When the Complainant asked the Opposite Party they gave vague reply, therefore, the Complainant refused to pay any excess interest other than 17% interest on Rs.1,00,000/-.  Thereafter the Complainant received a notice dated 09.08.2010 from the Opposite Party calling upon to clear the loan with interest.  The Complainant approached the Opposite Party on 23.08.2010 and informed by the Opposite Party that the total outstanding was Rs.1,37,989/-.  The Complainant was willing to pay Rs.1,37,989/- as against Rs.1,18,416/- i.e., the entire loan amount with 17% rate of interest per annum from 16.07.2009 to 16.08.2010.  On 28.08.2010 the Complainant paid the entire amount of Rs.1,38,460/- under protest to the Opposite Party as demanded by them and released the gold ornaments given as collateral security to the said loan. 

It is stated that, the Opposite Party has collected Rs.20,044/- in excess from the Complainant and the service rendered by the Opposite Party amounts to deficiency and unfair trade practice.  Hence the above complaint filed under Section 12 of the Consumer Protection Act 1986 (herein after referred to as ‘the Act’) seeking direction from this Forum to the Opposite Party to remove the deficiency of service and handover copy of statement of loan account to the Complainant, to refund Rs.20,044/- being the excess amount collected by the Opposite Party from the Complainant with 17% interest p.a. from 28.08.2010 till the date of payment and also claimed Rs.70,000/- as compensation and cost of the proceedings.

2.       Version notice served to the Opposite Party by RPAD. Opposite Party appeared through their counsel filed version admitted the loan availed by the Complainant for Rs.1,00,000/- on 16.07.2009 by pledging the gold ornament as security.  It is stated that, at the time of availing loan the Complainant was informed by the Opposite Party that the basic interest payable is 17% p.a.  The stipulation was that if the Complainant closes the account within three months then he will get a rebate of 6% in the risk interest and if it is paid after three months but before six months there will be a reduction of 3% risk interest.  It is denied that, during the month of July 2010 the Complainant visited the Opposite Party to find out the outstanding loan and repay the same.  It is denied that Rs.1,18,416 /- is a correct outstanding loan amount.  The Opposite Party is charging the interest as per the contract entered between them and there is no deficiency. 

It is further stated that, the Opposite Party is dealing in public money and advancing loan by raising funds through debentures, loan availed from nationalized and public sector banks and other sources.  If the recovery proceedings are delayed the Opposite Party will not be able to repay the amounts borrowed by them and stated that the Opposite Party is a non-banking financial institution governed by the Reserve Bank of India Act 1934, loan and advance made by them shall not be called in question in any Court of Law and stated that the Complainant is not a consumer and prayed for dismissal of the complaint.

3.       In view of the above said facts, the points now that arise for our consideration in this case are as under:

1. Whether the Complainant is a consumer?

2. Whether the Complainant proves that the Opposite Party has committed deficiency in service?

3. If so, whether the Complainant is entitled for the reliefs claimed?

4. What order?

4.         In support of the complaint, Mr.Siraj (CW1) filed affidavit reiterating what has been stated in the complaint and answered the interrogatories served on him.   Ex C1 to C5 were marked for the Complainant as listed in the annexure in detail.   One Sri.Praveen Kumar (RW1), Branch Manager of the Opposite Party filed counter affidavit and answered the interrogatories served on him.  Ex R1 was marked for the Opposite Party as listed in the annexure in detail.   The Complainant as well as Opposite Party produced notes of arguments.

          We have considered the notes/oral arguments submitted by the learned counsels and also considered the materials that was placed before this Forum and answer the points are as follows:

                       Point No.(i): Affirmative.

                       Point No.(ii) to (iv): As per the final order.  

Reasons

5.  POINT NO. (i):

          The 1^st point raised by the Opposite Party is that, the Complainant is not a consumer.  It is a settled position of law that, the transaction between the financier and the customer herein the Complainant is a creditor and debtor and all the transaction between the banker and the customer falls within the ambit of ‘Service’ under the Consumer Protection Act, 1986.  Hence, the Complainant is a consumer and the Complaint filed by the Complainant is maintainable before this Forum and Point No.(i) held in favour of the Complainant.

Point No. (ii) to (iv):

          In the instant case, the facts which are admitted is that, the Complainant availed a Super Personal Loan on 16.07.2009 for Rs.1,00,000/- from the Opposite Party by pledging the gold ornaments as collateral security.  It is also admitted that the basic interest payable on the above said loan was 17% p.a. (as per Ex C1).

          Now the point in dispute is that, the Complainant came up with a complaint stating that the Opposite Party charged excess interest than the agreed one.  According to the Complainant the basic rate of interest charged by the Opposite Party was 17% p.a. but while releasing the gold the Opposite Party has collected Rs.20,044/- in excess from the Complainant, hence came up with this complaint

          The Opposite Party on the other hand stated that the rate of interest charged by them is / was in accordance with law as per the contract entered between them and stated that there is no deficiency.

          The Complainant filed oral evidence by way of affidavit and produced Ex C1 to C5.  Opposite Party also filed oral evidence by way of affidavit and produced Ex R1. 

          On scrutiny of the oral as well as documentary and admitted facts, we find that, admittedly the Complainant availed Rs.1,00,000/- as Super Personal Loan by pledging his gold ornaments on 16.07.2009 as collateral security.  The Complainant contended that, the Opposite Party charged 17% interest per annum on the above said loan and issued a declaration dated 16.07.2009 (as per Ex C1).  While releasing the gold contrary to the above interest the Opposite Party collected excess amount of Rs.20,044/- from the Complainant.  In order to prove the same, the Complainant produced the declaration issued by the Opposite Party.  The above said declaration contains terms and conditions printed on the back portion of the declaration.  It is seen that, the basic rate of interest on the above said loan shown as 17% p.a. by the Opposite Party.  Further the rate of risk interest is left blank.  When that is so, the Opposite Party cannot charge the interest contrary to the contract agreed between the parties i.e., the Complainant and the Opposite Party.  It is also seen that, the Opposite Party came up with a copy of the declaration form issued to the Complainant i.e., Ex R1, wherein, 15% interest has been entered later.  But the original declaration form issued to the Complainant at the time of availing loan the rate of risk interest left blank and there is no mentioning.  On bare reading of the declaration form, the rate of interest of 15% as seen in the above document will be levied only in case the value of gold ornaments given as collateral security comes down, the borrower has to repay immediately the amount demanded by the Company.  But in the instant case, no such situation arised on the contrary the value of the gold is increased day by day.  Hence the Opposite Party had never been at risk. 

          We observed that, the Ex C1 is the declaration form wherein, the basic rate of interest agreed between the parties was shown as 17% in this case.  Thus, the acceptance of terms and conditions clearly goes to show that the Complainant has been subjected to 17% interest per annum.  As far as the risk interest is concerned, there has not been any acceptance / covenant of the above interest.  From the above document it is made very clear that the Opposite Party indulged in unfair trade practice by charging excess rate of interest according to their whims and fancies. 

          It is a settled position of law that, the Opposite Party cannot charge the excessive rate of interest against to the contract or against to the covenant made with the Complainant which amounts to exploitation of borrowers herein the Complainant.  In the instant case, it is proved beyond doubt that, the Opposite Party collected excess amount of Rs.20,044/- from the Complainant as against to the contract of interest entered between them which amounts to deficiency in service as well as unfair trade practice as stated supra.

As far as compensation is concerned, while assessing the compensation, the facts and circumstances of the each case place an important role to determine the compensation.  But in the given case, we observed that the Complainant who is a customer of the Opposite Party because of his needy in finance and having no bargaining capacity forced to pay unjustifiable, unreasonable and coercive interest as demanded by the Opposite Party for which he cannot have any voice because he consented for 17% interest. But charging additional interest i.e., 15% which is against to the contract entered between them which show that the Opposite Party indulged in unfair trade practice. It is definite case of the Complainant that, the Opposite Party collected excess amount of Rs.20,044/- from the Complainant  i.e., contrary to the rate of interest agreed between the Complainant and the Opposite Party.  In order to substantiate the same, the Complainant produced Ex C4 i.e., the payment made to the Opposite Party under protest.  Except the above document nothing has been available on record to disprove the same.  By considering the above document we hereby direct the Opposite Party to refund Rs.20,044/- i.e., the excess amount collected from the Complainant and also furnish the statement of loan account to the Complainant.  Further Rs.10,000/- awarded as compensation for the deficiency / unfair trade practice committed by the Opposite Party and Rs.1,000/- as cost of the litigation expenses.  Payment shall be made within 30 days from the date of this order.

6.       In the result, we pass the following:

ORDER

The complaint is allowed.  The Opposite Party i.e. Muthoot Finance Ltd., represented by its Manager is hereby directed to furnish the statement of loan account to the Complainant and refund Rs.20,044/- (Rupees twenty thousand and forty four only) i.e., the excess amount collected from the Complainant.  And further directed to pay Rs.10,000/- (Rupees ten thousand only) as compensation and Rs.1,000/- (Rupees one thousand only) as cost of the litigation expenses.  Compliance/payment shall be made within 30 days from the date of this order.

  On failure to pay the aforementioned amount within the stipulated time as mentioned above the Opposite Party is hereby directed to pay interest at the rate of 12% p.a. on the total amount from the date of failure till the date of payment.

The copy of this order as per the statutory requirements be forwarded to the parties free of charge or sent to the parties under postal certificate and thereafter the file shall be consigned to the record room.

(Page No.1 to 10 dictated to the Stenographer typed by her, revised and pronounced in the open court on this the 30^th day of May 2011.)

    PRESIDENT                                                       MEMBER                                                          

ANNEXURE

Witnesses examined on behalf of the Complainant:

CW1 – Mr.Siraj –  Complainant.

Documents produced on behalf of the Complainant:

Ex C1 – 16.07.2009: Declaration by the borrower.

Ex C2 – 09.08.2010: Auction notice.

Ex C3 – 28.08.2010: Letter addressed by the Complainant to the Opposite Party.

Ex C4 – 28.08.2010: Cash receipt issued by the Opposite Party for a sum of Rs.1,38,460/-.

Ex C5 –                 : Postal acknowledgement.

Witnesses examined on behalf of the Opposite Party:

RW1 – Sri.Praveen Kumar, Branch Manager of the Opposite Party.

Documents produced on behalf of the Opposite Party:   

Ex R1 – 16.07.2009: Copy of the declaration and on demand

                               promissory note signed by the Complainant.

Dated:30.05.2011                            PRESIDENT