DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, PALAKKAD
Dated this the 14th day of February, 2023
Present : Sri.Vinay Menon V., President
: Smt.Vidya A., Member
: Sri.Krishnankutty N.K., Member
Date of Filing: 01.01.2021
CC/1/2021
Rajesh.M.P
S/o Ramakrishnan Nambiar
Markkassery Pandikasala House
Ongallur, Kalladipatta P.O
Pattambi Taluk
Palakkkad – 679 313 - Complainant
(Party in person)
V/s
1. M/s Radhakrishna Finance Pvt. Ltd.
Represented by its Branch Co-Ordinator
Ajith Kumar.C.A, West Nada
Guruvayur, Thrissur – 680 101
2. The Branch Manager
Radhakrishna Finance Pvt. Ltd.
Bank Building, Main Road
Pattambi – 679 303 - Opposite parties
(1st and 2nd Opposite party By Adv. K.Sujith Kumar)
O R D E R
By Smt. Vidya.A, Member
1. Gist of the complaint is that the complainant availed a loan from the 2nd opposite party for starting a small business for earning his livelihood. The opposite party granted loan and deposited an amount of Rs. 2,50,000/- to the complainant’s account maintained in Bank of Baroda, Pattambi Branch with Account No: 38790100001150. The loan period was 260 days starting from 17/05/2018. The complainant repaid an amount of Rs.1,12,700/- towards the loan. But on enquiry, he understood that the entire amount was accounted towards interest. The opposite parties are charging high rate of interest which is illegal and they have no authority to do that. As per opposite parties direction, he renewed the loan for an amount of Rs. 2,50,000/- after closing the earlier loan on 23/03/2019. The opposite parties did not give any money at the time of closing the loan. The complainant paid Rs.82,313/- towards the new loan. So the complainant paid a total amount of Rs. 1,95,013/- against the loan amount of Rs. 2,50,000/- The opposite parties demand further amount of Rs. 3,05,000/- for closing the loan. The complainant suffered great mental agony because of the conduct of the opposite parties. So he approached this Commission for directing the opposite parties to account Rs. 1,95,013/- paid by the complainant towards principal and to give a compensation of Rs. 1 lakh for the mental agony and inconveniences suffered by the complainant together with cost.
2. On receiving notice from this Commission, the opposite parties appeared and Vakalath was filed on behalf of them. But they did not file version and were set ex-parte. Later they filed RA 2/2021 for reviewing the order and it was allowed and version was taken on file.
3. The opposite parties in their version contended that the complainant is not a consumer of the opposite party and the relationship between the complainant and opposite party is a lender-creditor relationship based on an agreement. On 17/05/2018, complainant applied for a loan from the opposite party for an amount of Rs. 2,50,000/- The complainant and opposite party had entered into an agreement with respect to the terms & conditions of the repayment of the loan and other things related to that. As per the agreement, the complainant had to repay the amount in 260 days with Rs. 1,250/- per day and the total amount to be paid including principal and interest comes to the tune of Rs. 3,25,000/- As on 23/03/2019, the complainant had repaid Rs. 61,604/- towards principal, Rs. 20,448/- towards interest, legal charges (cheque bouncing charge of 2 times) amounting to Rs. 1,000/-, Arbitration proceedings filing charges Rs.5,500/- and OD interest charges Rs. 24,148/- The complainant requested the opposite party to renew the loan after calculating the balance amount in the existing loan and as per that the opposite party closed that loan on 23/03/2019. Considering the balance in the principal amount of Rs. 1,88,396/- balance interest Rs. 54,552/- and OD interest Rs. 7,052/- loan was renewed for an amount of Rs.2,50,000/- As per the loan agreement on 23/03/2019, the complainant has to pay Rs. 15,000/- per month for 24 months amounting to Rs. 3,60,000/- towards the renewed loan. The complainant had paid Rs.33,688/- towards principal, Rs. 37,045/- towards interest and OD interest, legal charge Rs. 11,580/- So he had paid a total of Rs. 82,313/- and as on 29/04/2021, the complainant has to pay a balance of Rs. 3,84,300/- towards opposite party company. When he had defaulted payments, the opposite parties had initiated Arbitration proceedings and as a counter blast to that, the complainant filed this complaint. As per the Arbitration clause 10(a) in the agreement, any dispute arising out of it shall be adjudicated by the sole Arbitrator appointed by the Chairman of the company and any award passed by him is binding on both parties. Further as per clause 10(b) of the agreement, the Jurisdiction for any dispute arising out of this will be in Thrissur and this Commission has no Jurisdiction to entertain the matter. The complaint is bad for non-joinder of necessary parties as it did not array the guarantors of the loan in the party array. So the complaint has to be dismissed.
4. From the pleadings of both parties, the following points arise for consideration:
- Is the complainant a ‘Consumer’ of opposite party as contemplated under the Consumer Protection Act 2019?
- Will the presence of Arbitration clause oust the Jurisdiction of this Commission?
- Whether the complaint is bad for non-joinder of necessary parties?
- Whether this Commission has territorial Jurisdiction to try this complaint?
- Whether the computation of accounts which is the subject matter of this complaint is in compliance with the terms & conditions of the loan agreement dated 17/05/2018?
- Is there any deficiency in service/unfair trade practice on the part of the opposite party?
- Reliefs and costs if any.
5. Complainant filed proof affidavit and Exhibits A1 & A2 marked. Opposite party also filed proof affidavit and Exhibits B1 to B3 marked in evidence. Heard.
6. Point No: 1
Opposite parties in their version has raised a contention that there is no consumer relationship between complainant and opposite party. As admitted, opposite party is a non-banking financial company and the complainant had availed a loan from the opposite party. As ‘Finance’ is included under ‘Service’ in the definition clause Sec.2 (42) of the Consumer Protection Act, opposite party is a service provider and complainant is a ‘Consumer’ of opposite party under Consumer Protection Act. Point No: 1 is decided accordingly.
7. Point No: 2
Another contention raised by the opposite party is the arbitration proceedings before the arbitrator and the arbitration clause ousting the jurisdiction of the Commission. Eventhough arbitration proceedings before the arbitrator is ongoing, that does not preclude the Commission from adjudicating whether there is any deficiency in service/unfair trade practice on the part of opposite party. The remedy available under the Consumer Protection Act is in addition to any other remedy available. So the Commission has authority to see the deficiency in service/unfair trade practice on the part of opposite parties.
8. Point No: 3
As per opposite party’s version, the 2 guarantors in the loan agreement are necessary parties and they are to be impleaded in the party array. Complainant availed loan from the opposite party and he is alleging deficiency in service on the part of opposite parties in charging exorbitant interest from him. So the guarantors of the loan are not necessary parties. Point No: 3 is decided accordingly.
9. Point No: 4
Opposite party’s contention is that as per 10(b) of the agreement, the jurisdiction for entertaining any dispute with regard to the agreement lies in the courts in Thrissur District. So this Commission has no jurisdiction to entertain the matter.
Complainant resides in Palakkad and he took loan from the Pattambi branch, Palakkad of opposite party. Hence as per Sec.34 of the Consumer Protection Act, this Commission has jurisdiction to entertain the matter. Further, clauses in agreement will not oust statutory rights or authority.
10.Point No: 5
As per complaint, the complainant availed a loan of Rs. 2,50,000/- from the 2nd opposite party branch. The period of the loan was 260 days from 17/05/2018. He repaid Rs. 1,12,700/- towards the loan. But he came to know that the entire amount he paid was accounted towards interest. As per his request, opposite parties closed the first loan on 23/03/2019 and renewed it for an amount of Rs.2,50,000/- He repaid Rs. 82,313/- towards the renewed loan. So he had re-paid an amount of Rs. 1,95,013/- against Rs. 2,50,000/- the opposite parties are demanding another Rs. 3,05,000/- for closing the loan. His grievance is that the opposite parties had charged exorbitant interest for the loan.
11.Opposite parties denied the entire allegations and they produced the Account Statement summary which is marked as Ext.B1. This shows the balance amount to be paid by the complainant as on 29/04/2021 as Rs.3,84,300/-
Ext. B3 is the loan agreement executed between the parties. As per Ext. B3, the interest is shown as 24% and in case of default the interest is 36%. The agreement is signed by the complainant/Borrower and the Guarantors. The marking of this document is objected by the complainant on the ground that the contents in that agreement are filled by the opposite parties after he affixed his signature.
Since the matter is already under the consideration of the Arbitrator, we refrain from dealing with it.
12.Point No: 6 and 7
The opposite parties in their version had stated that “Any dispute arising from the agreement shall be adjudicated by the sole Arbitrator appointed by the Chairman of the Company.
Unilateral appointment of Arbitrator is violation of provision of Arbitration Act. So the Arbitration proceedings in violation of Arbitration Act is illegal and it is an unfair trade practice on the part of the opposite parties.
In Dharma Prathishthanam Vs Madhok Construction (P) Ltd. [2005(9) SCC 686] The Hon’ble Supreme Court observed that “An Arbitrator or an Arbitral Tribunal under the scheme of the 1940 Act is not statutory. It is a Forum chosen by the consent of the parties as an alternate to resolution of disputes by the ordinary forum of law courts. The essence of arbitration without assistance or intervention of the court is settlement of the dispute by a Tribunal of the own choosing of the parties. Further, this was not a case where the arbitration clause authorised one of the parties to appoint an arbitrator without the consent of other. Two things are, therefore, of essence in case like the present one; firstly the choice of the Tribunal or the arbitrator and secondly, the reference of the dispute to the arbitrator. Both should be based on consent given either at the time of choosing the Arbitrator and making a reference or else at the time of entering into the contract between the parties in anticipation of an occasion for settlement of disputes arising in future.
The Law of Arbitration does not make the arbitration an adjudication by a statutory body; but it only aids in implementation of the arbitration contract between the parties which remains a private adjudication by a forum consensually chosen by the parties and made on consensual reference.”
Here the opposite parties had appointed the arbitrator of their own choice without the consent of the complainant who is the other party to the agreement. So by applying the above dictum of the Hon’ble Supreme Court, we are of the opinion that, it is an unfair trade practice on the part of the opposite parties and the opposite parties are liable to compensate the complainant for that.
Resultantly the complaint is allowed in part.
We direct the opposite parties jointly and severally to pay Rs. 25,000/- as compensation for the unfair trade practice on their part and Rs.15,000/- as cost of the litigation.
The opposite parties shall comply with the directions in this order within 45 days of receipt of this order, failing which opposite party shall pay to the complainant Rs. 250/- per month or part thereof until the date of payment in full and final settlement of this order.
Pronounced in the open court on this the 14th day of February, 2023.
Sd/-
Vinay Menon V
President
Sd/-
Vidya.A
Member
Sd/-
Krishnankutty N.K.
Member
APPENDIX
Documents marked from the side of the complainant
Ext. A1 – Personal ledger between 17/05/2018 – 17/11/2020.
Ext.A2 – Loan repayment ledger dated 28/05/2020.
Documents marked from the side of opposite parties
Ext. B1 – Account statement summary as on 29/04/2021.
Ext. B2 – ARB No.27(R)/2020 Arbitration filed by the petitioner.
Ext. B3 – Agreement dated 23/03/2019.
Witness examined from the complainant’s side: NIL
Witness examined from the opposite parties side: NIL
Cost- Rs. 15,000/-
NB: Parties are directed to take back all extra set of documents submitted in the proceedings in accordance with Regulation 20(5) of the Consumer Protection (Consumer Commission Procedure) Regulations, 2020 failing which they will be weeded out.
