By Smt. Beena. M, Member:
This is a complaint filed under section 12 of the Consumer Protection Act 1986.
2. Brief facts of the case are given below:- The case of the complainant is that on 30-06-2016 the complainant had availed a gold loan from the opposite party for an amount of rupees 5,20,000/- (Rupees Five lakh and twenty thousand only). It was a renewal of an old loan which was taken in the name of the complainant himself along with one Kanakarajan and E.P.Shamsudheen, who were the colleagues of the complainant. At that time the opposite party realized rupees 57,000/-(Rupees Fifty seven thousand) towards the overdue interest but no receipt was issued for that. Thereafter on 17-08-2017 the opposite party demanded to pay rupees 1,30,000/- (Rupees One lakh thirty thousand) and the rate of interest shown in the receipt was 17% to 24% per annum. But in the gold loan receipt issued to him dated 30-06-2016 there the rate of interest stated is 21% for 3 months. The rate of interest shown in the gold loan receipt as well as in the demand notice is highly exorbitant and the same is against the provisions of Kerala Money Lenders Act and the provisions of the Indian Interest Act and directions of Reserve bank of India. The complainant received another notice of auction of the pledged gold ornaments and informed the auction date. As per that notice the opposite party demanded Rs.1,45,271/- (Rupees One lakh forty five thousand two hundred seventy one only) along with penal interest of Rs.2,374/- (Rupees Two thousand three hundred seventy four only).
3. The complainant further stated that the opposite party has applied malpractice and unfair trade practice and deficiency of service on the part of opposite party in charging higher rate of interest. Due to that the complainant has suffer huge mental agony, hardship and financial loss. Hence the complainant prayed to charge legal rate of interest as per Kerala money lenders act and Indian interest act and Rs. 57,000/- (Rupees Fifty seven thousand only) paid by the complainant on 30-06-16 to credit in the loan account and stop the auction proceedings and to pay Rs.40,000/- (Rupees Forty thousand only) as compensation and cost of the complaint.
4. Notices were issued to the opposite party and Opposite party appeared and filed version denying the averments of the complaint and contending that the complaint is not maintainable in view of arbitration. The opposite party challenged the jurisdiction of this forum. It is submitted that in the agreement itself had arbitration clause and any dispute arising out of loan agreement had been mutually and exclusively conferred upon the courts in Ernakulam. The opposite party admitted the loan transaction between the complainant and opposite party and denied the other averments regarding the malpractice, deficiency in service and unfair trade practice alleged in the complaint. The opposite party clearly narrated the said old loan transactions with the complainant and his colleagues. And the opposite party is also explained the non issuance of receipt for Rs. 57,000/ -(Rupees Fifty seven thousand only), cash payment made by the complaint.
5. The opposite party further contented that the complainant is liable to pay an amount of Rs. 6,68,235/- (Rupees Six lakh sixty eight thousand two hundred and thirty five only ) for which the demand notices were issued. The interest rate shown is 21% and in case of default there is an additional penal interest of 2 % stipulated and the clauses are clearly shown in the pledge form. The opposite party prayed for disposal of the compliant with costs.
6. On perusal of complaint and documents the Forum raised the following points for consideration:-
1. Whether the complaint is maintainable?
2. Whether any deficiency in service, unfair trade practices on the part of
opposite party?
3. Whether the complainant is liable to pay interest @ 17% to 24% and
2% penal interest?
4. Relief and cost.
7. On the side of the complainant he himself examined as PW-1 and one witness examined as PW-2. Exhibit A-1 to A-3 were marked. on the side of opposite party examined as OPW-1 and marked Exhibits B-1 series(5nos) and B-2series(2nos).
8. Point No. 1 :- The opposite party contested that the complaint is not maintainable and the forum has no jurisdiction to entertain the above number complaint. It is well settled that arbitration clauses cannot oust the jurisdiction of Consumer Courts. Even if there exists an arbitration clause in an agreement and a complaint is made by the consumer, in relation to certain deficiency of service, then the existence of an arbitration clause will not be a bar to the
Redressal agency, constituted under the consumer protection Act. Section 3 of Consumer protection Act states that “ The provisions of the this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force”. More over the opposite party admitted the pawnor pawnee relationship and the transactions. Hence there is
no merit found in the challenges as raised by the opposite party and the point found against the opposite party.
9. Point No. 2 :- As mentioned above the opposite party admitted the pawnor pawnee relationship and the transactions and the only question is to be decided here that any deficiency in service, unfair trade practices on the part of opposite party. On a perusal of documents and version of the opposite party it is seen that the alleged gold loan lastly availed to the complaint is not a new loan and it is a loan made in the name of the complainant after closing the earlier loans taken by him and his colleagues. It is done by not remitting the principal loan amounts but through adjustments. In the cross examination the opposite party admitted that the complainant had remitted 57,000/-(fifty seven thousand) by cash on 30-06-2016 and it is a margin amount of earlier loan and new loan. On verifying the entire documents and evidence the forum founds that there is difference in interest rate and 57,000/-(fifty seven thousand) paid by the complainant is not accounted towards within the principal loan amount of the complainant. So the auction proceeding initiated by the opposite party is not proper and legal. The opposite party not ready to consider the grievance of the complainant and if any discrepancy before taking proceeding to sold the gold in auction they can very well verify the records and if any merit of the grievance they can correct it. Then only
they can move to auction proceedings. Therefore the forum found that it is a clear deficiency of service from the side of the Opposite party. The point answered infavour of the complainant.
10. Point No. 3 :- Admittedly the Opposite party is a non-banking private limited finance company registered under the provisions of the companies Act engaged in the business of advancing money by pledging gold etc., Now the question is considered is as to whether the provisions of the Kerala Money Lenders Act and provisions of the Kerala Prohibition of charging Exorbitant Interest Act,2012. It is well settled that the provision of the Kerala Money Lenders Act are applicable to companies registered under the companies act or societies registered under co-operative Societies Act or even partnership registered under the Partnership Act or the like. And the provisions of Kerala Money Lenders Act are applicable to the non banking financial companies, because they are engaged in money lending business. Admittedly, the opposite party is a money-lender. Under Section 7(1) of the Kerala Money Lenders Act, no money lender shall charge the interest on any loan at a rate exceeding 2% above the maximum rate of interest charged by commercial banks on loans granted by them. Sub-section (3) of Section 7 specifically makes it clear that the money lender shall not demand or take from the debtor any interest in excess of that payable under section (1).
11. The second provision of Section 7(1) of the Kerala Money Lenders Act empower the state Government by notification specify the rate of interest under sub-section (1) from time to time. By virtue of the said power, the Government of Kerala issued notification, which was published in K.G(P)No. 541 dated 11.03.2005, which is extracted hereunder:-
“S.R.O No. 255/2005:- In exercise of the powers conferred by Section 7 of the Kerala Money Lenders Act, 1958 (Act 35 of 1958) the Government of Kerala, having considered it is necessary in public interest so to do, hereby fix the rate of interest under sub-section (1) of section 7 of the said Act at twelve per cent annum.”
12. More over that The Kerala Prohibition of Charging Exorbitant Interest Act, 2012 also came into force with effect from 07.01.2013. Section 2(1) of the K Kerala Prohibition of Charging Exorbitant Interest Act,2012 provides that “ exorbitant interest” means an interest at the rate more that the rate specified in sub-section (1) of Section 7 of the Kerala Money Lenders Act, 1958. Section 3 of the Kerala Prohibition of Charging Exorbitant Interest Act provides that no person shall charge exorbitant interest on any loan advanced by him.
13. Therefore, even if there is an agreement whereby the parties agree to pay exorbitant interest, the agreement is not legally enforceable. In the view of the above reason, even if there existed Exbt.A1, that would not help the opposite party to charge exorbitant interest. Hence the point also answered against the opposite party.
14. Point No. 4 :- Since the Points No.1 to 3 are found against the Opposite party. The complaint is allowed partly as stated hereunder.
In the result, the complaint is partly allowed and the opposite party is directed to charge @ i.e 17% + 2% additional interest the rate of interest as per the provisions of the Kerala Money Lenders Act, 1958 and prevailing rate of interest in the year 2016-2017. The opposite
party is also directed to account Rs.57,000/-(Rupees Fifty Seven thousand only) towards the principal loan amount of the complainant and deduct the same from the principal amount. The Opposite party is also directed to release the gold ornaments pledged by the complainant within 30 days from the date of receipt of this order after receiving the principal amount with interest at the rate of 17 % 2% additional interest annum (excluding from date of this petition till the date of this order and also directed to pay Rs. 5,000/- (Rupees Five thousand only) towards compensation and Rs.2,000/- (Rupees Two thousand only) towards cost of the proceedings.
Dictated to the Confidential Assistant, transcribed by him and corrected by me and Pronounced in the Open Forum on this the 27th day of November 2019.
Date of Filing:22.08.2017.
PRESIDENT: Sd/-
MEMBER : Sd/-
APPENDIX.
Witness for the complainant.:-
PW1. Suresh. T. Business.
PW2. Kanaka Rajan. Business.
Witness for the Opposite Party:-
OPW1. Sijo John. Asst. Manager, Muthoot Finance Ltd., Kalpetta.
Exhibits for the complainant:
A1. Receipt. dt:30.06.2016.
A2. Receipt. dt:24.03.2015.
A3. Auction Notice. dt:28.07.2017
Exhibits for the opposite party:-
B1 series (5 Nos) Copy of Cash receipt.
B2(a) Certified True copy of Resolution Passed by the Board of Directors of Muthoot
Finance Ltd.,
B2(b) Authorisation Letter. dt:25.08.2017
