Kerala

Idukki

CC/177/2021

Salmath ansil - Complainant(s)

Versus

Muthoot vehicle & asset Finance Ltd - Opp.Party(s)

26 Apr 2023

ORDER

DATE OF FILING : 09/12/2021

IN THE CONSUMER DISPUTES REDRESSAL COMMISSION, IDUKKI

Dated this the 26^th day of April 2023

Present :

              SRI.C.SURESHKUMAR                                               PRESIDENT

              SMT.ASAMOL P.                                                          MEMBER

              SRI.AMPADY K.S.                                                        MEMBER

CC NO.177/2021

Between

Complainant                                    : Salmath Ansil,

                                                           Vazhikkal House,

                                                           Vengalloor P.O., Thodupuzha

                                                          By Adv.K.M.Sanu (He subsequently       

                                                                                 given up vakalath)

                                                           And

Opposite Party                      :   1 . The Manager,

                                                        Muthoot Vehicle & Asset Finance Ltd.,

                                                        Thodupuzha P.O., Thodupuzha.

                                                  2 . The Manager,

                                                        Muthoot Vehicle & Asset Finance Ltd.,                                             

                                                        Midhun Tower, K.P. Vallon Road,

                                                         Kadavanthra, Ernakulam – 682 020.

                                                        (By Adv. Jayasankar G.)

      

O R D E R

SRI.AMPADY K.S.,  MEMBER

 

This Complaint is filed under S.35 of Consumer Protection Act, 2019 raising the following allegations against opposite parties:-

 

1 . Complainant availed loan of Rs.76484/- on 19/06/2019 from 1^st opposite party  for purchasing Honda Dio DLX Scooter.  It was given on condition to remit Rs.2921/- with 36 equated instalments.  Due to Covid 19 her husband who was working in gulf lost job there and forced to return to native place in March 2020.  Hence her family was suffering to meet their livelihood.

2 . During the period she met opposite parties and informed the situation.  By that time, she had remitted 8 instalments.

                                                                                            (Cont....2)

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3 . During Covid pandemic, RBI had introduced Resolution Framework 1 in June 2020 for giving relief to defaulters of loans.  On 24/05/2021 also Resolution Framework 2 was introduced during the 2^nd spread of Covid 19 and the same continues.  As per RBI circular, loans like the one given to her were directed to be rescheduled and issue another loan (Funded interest term loan) for remittance of interest.  Besides, there was direction to give moratorium for 2 years and to calculate normal interest only.

 4 . Opposite parties are bound to comply with RBI directions.  But disobeying this, they issued legal notice to her on 10/11/2021directing to remit Rs.79214/- urgently failing which legal action will be taken.  As per this notice, it is stated that Rs.46598/- towards instalments and Rs.32616/- as other charges.  Exorbitant interests and charges were demanded for which she is not liable.  Action of opposite parties are deficiency in service and unfair trade practice.  She is entitled to get rescheduling of the loan for another term and to also for compensation for deficiency in service.

Hence she prayed for the following reliefs.

1 .  Direct opposite parties to reschedule her loan for another term with normal interest as per RBI circular.

2 . Grant compensation of Rs.50,000/- towards deficiency in service.

3 . Award litigation costs of Rs.5000/-.

Opposite parties 1 and 2 filed joint version on the following lines.

1 . The complainant is not a consumer as defined under section 2 (7) of the Consumer Protection Act.

2 .  The 1^st opposite party is the Thodupuzha branch of the 2^nd opposite party company.  Now the manager in charge of the Thodupuzha branch of the 1^st opposite party is filing version in the above case also for and on behalf of the 2^nd opposite party.

                                                                                            (Cont....3)

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3 . The disputes raised by the complainant and the reliefs sought for by her in the above complaint is not a consumer dispute and the so called rights urged by the complainant there in is not a consumer right and hence the above complaint cannot be treated as a complaint as defined under the Act.  In view of the arbitration clause in the agreement also, the above complaint is not maintainable.  The respondents are challenging the maintainability of the above complaint and the said issue is to be heard as the preliminary issue.

4 . The 2^nd opposite party is a public limited company having its registered office at Midhun Tower, K.P.Vallon Road, Kadavanthra.  The said company is registered under Indian Companies Act 1956 and registered with Reserve Bank of India as a nonbanking  finance company.  The petitioner company is engaged in the business of providing loans mainly on Hypothecation and guarantee basis.

5 . It is true that the complainant had availed a financial loan of Rs.76,484-00 from the opposite party for the purchase of Honda Dio DLX vehicle.  The total value to be repaid by the complainant in the said transaction was agreed to be Rs.1,15,138.00 which  are to be paid in 36 equal monthly instalments of Rs.2,921.00 each which commences from 10/07/2019.  The complainant signed the loan agreement as the borrower and her mother inlaw stood as the guarantor of the said transaction.  The complainant and the guarantor had duly executed the said loan agreement after fully convinced of the entire terms and conditions of the same and they had voluntarily executed the same.  The officers of the opposite parties had properly explained all the terms of the said agreement to the complainant and the guarantor.

6 . The allegations that the husband of the complainant had lost his job due to the covid-19 is not correct and hence denied.  The allegations in paragraph 2 of the complaint are also false and incorrect and hence denied.

 

                                                                                            (Cont....4)

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The complainant was not at all prompt in making the due payment of the EMI instalments.  She was highly irregular in making the payments and flouted and violated the very terms of the loan agreement from the very inception itself.

7 . The allegations in paragraph 3 of the complaint are not fully correct and misconceived.  The said prudential frame work was provided by the RBI to assist the borrowers who are in default under the normal scenario.  It was not at all intended to the customers like the complainant who are at default from the very inception of the loan agreement itself.  Further it is also provided that the said prudential frame work was to mitigate the stress to the customers who are otherwise having good track record.  Further it is also submitted that the RBI had provided a prudential frame work to enable the financial establishments like the opposite parties to implement a resolution plan for the eligible customers and it is for the opposite party to frame the same as its prerogative.

8 . By virtue of the RBI Resolution frame work 01, the complainant had availed the facility of moratorium for a period of 5  months from April 2020.  It is submitted that the said moratorium period will end by August 2020.  Even after availing the moratorium facility, except 2 EMI instalments, and that too for the month of January 2020 and February 2020, the complainant had not paid any amount towards the loan amount due.  Thus the complainant had  flouted the strict directions given by the RBI.  It is submitted that at the time of availing the moratorium facility by the complainant 3 instalments were due to the loan account from her.  After availing the moratorium facility, till 31/03/2021, the complainant ought to have remitted 8 EMI amounts after deducting the 5 months moratorium period.  Unfortunately as the against the said 8 EMI instalment amounts, the complainant not paid any amount towards the loan due.  As on 11/11/2021, the account of the complainant has been classified as a non performing asset and the same has been continuing as such even

                                                                                            (Cont....5)

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now which would absolutely disqualify her from availing the benefit of RBI Resolution frame work o2.  The complainant is not entitled to any benefit as alleged in paragraph 4 of the complaint.  It is also submitted that as far as the interest and its rate is concerned, the opposite parties are entitled to claim the interest as per the contract and the loan agreement.  Apart from that as on December 2021, total 17 EMI instalments are due from the complainant to the opposite parties and hence the complainant is a willful defaulter.

9 . These opposite parties had not violated any of the directions issued by the RBI.  Unfortunately the complainant is not entitled to claim any benefit and she is disqualified from claiming the benefit of RBI Resolution frame work 02 for the reasons stated above.  The opposite parties are legally entitled to recover the amount mentioned in the notice dated 10/11/2021 issued by the opposite parties to the complainant.  It is also interesting to note that the complainant is fully aware of the fact she is not entitled to any benefit under RBI Resolution frame work 02 due to the willful fault on her part in not making the installment payments and hence she had not approached the opposite parties for the same.  Now the above complaint is only an afterthought to get over the consequences of the willful default on the part of the complainant in not making the due payment.  The entire amount shown in the issued to the complainant is legally due to the opposite parties.  Further the complainant has no right or authority to restrain the opposite parties from exercising its rights under the contract entered in to with the complainant which she is legally bound to perform.

10 .   The entire amount demanded by the opposite parties is legal and contractual.  There is no deficiency in service on the part of these opposite parties.  There is willful violation of the loan agreement by the complainant.  The complainant is not entitled to get the agreement

 

                                                                                            (Cont....6)

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rescheduled.  There is absolutely no cause of action for the complainant to file the above complaint.  The cause of action alleged is false, fabricated and imaginary.  The complainant is not entitled to get any reliefs claimed in the above complaint.

So they prayed for dismissal of complaint with costs.

Complainant produced copy of documents which were marked as Exts.P1 and P2 and 1^st and 2^nd opposite parties filed one document and was marked as Ext.R1 as follows:-

Ext.P1 – legal notice dated 10/11/2021 issued on behalf of 1^st and 2^nd opposite parties.

Ext.P2 – Bank’s Policy on Resolution Frame Work 2.0 for Covid 19 related stress of individuals and small business (Revised on 17/06/2021).

Document marked on the side of opposite parties.

Ext.R1 – statement of account dated 13/07/2022 for the period from 19/06/2019 to 13/07/2022.

No oral evidence is adduced by both sides.  Counsel for complainant relinquished his vakkalath after the case was posted for hearing on 4 occasions.  Hence notice was issued to complainant and she appeared in person on 16/02/2023 and sought time for engaging another counsel.  Hence case stood adjourned to 10/03/2023.  She was not present on that day.  No representation or application was filed on her behalf.   Hence heard the counsel for opposite parties.

As the complainant was not present on the date of hearing, this complaint is disposed of on merits as follows.

We have examined the pleadings of both sides and documents produced.  On verification of the same, following points arise for consideration.

                                                                                            (Cont...7)

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1 . Whether the complainant is a ‘consumer’ and whether the complaint is sustainable before this Commission?

2 . Whether there is any deficiency in service or unfair trade practice on the part of opposite parties?

3 . If so, for what reliefs, complainant is entitled to?

4 . Order to be passed?

Point No.1

Contention of opposite parties is that complainant is not a ‘consumer’ as defined in S.2(7) of Consumer Protection Act, 2019 (hereinafter referred to as the Act).  But they have not pointed out the reason thereof. As per S.2(42) of Consumer Protection Act 2019, service means service of any description which is made available to potential user and includes, but not limited to the provision of facilities in connection with banking, financing, insurance etc etc.   A person who avails of any service from a bank is a ‘consumer’.  This position is categorically held by the Hon’ble Supreme Court in Arun Bhatiya Vs HDFC Bank & Ors reported in IV (2022) CPJ 1 (SC).  Similar is the situation in respect of financial institutions.  The contention of opposite parties is without understanding the legal provision and settled legal position.

When a consumer right is infringed by a service provider, he/she can file complaint before the Commission constituted under Consumer Protection Act.  Similarly, existence of clause for arbitration in the agreement does not prevent a customer if his right is violated.  This position is also upheld in various celebrated judgments.  So the contention of opposite parties in this regard is found to be baseless and hence overruled.  Pint No.1 is answered against opposite parties.

 

                                                                                            (Cont....8)

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Point No.2 and 3 are considered together

The contention of opposite parties is that complainant was not prompt in making the due payment of EMI installments.  She was highly irregular in making the payment and violated the terms of loan agreement from the very inception itself.  Another allegation raised by them is with regard to RBI resolution frame work 1and 2.  It is their contention that said frame work was not at all intended to customers like the complainant who are in default from the very inception of the loan agreement.  It is contended by them that complainant had availed the facility of Moratorium for a period of 5 months from April 2020.  Even after availing the Moratorium facility, except 2 EMI installments and that to for the month of January and February 2020, complainant had not paid any amount towards the loan amount due.  At the time of availing moratorium facility 3 installments were due from the complainant.  After availing the moratorium facility, till 31/03/2021 complainant ought to have remitted 8 EMI amounts after deducting the 5 months moratorium period.  But no amount was paid by her.  As on 11/11/2021, the account of the complainant has been classified as non performing asset and the same has been continuing as such even now which would disqualify her from availing the benefit of RBI Resolution  frame work 2.  Complainant had not approached the opposite parties for availing the benefits due to the fact that she is aware of the fact that she is not entitled to the benefit under RBI Resolution frame work 2.  On going through Ext.P1, following amounts are shown as due.

1  .  EMI overdue Rs.46598/-

2 . Penal charge + Cheque return charge + Other charges =Rs.32616/-

From this it is not ascertainable how the amounts were calculated under different heads.  It is the duty of financial institution to issue correct

                                                                                            (Cont....9)

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details of each charges with from and to date.  Ext.R1 produced by opposite parties shows the dues and payments of complainant from 19/06/2019 to 13/07/2022.  But no loan agreement is produced by them to ascertain the correctness of the terms and conditions of the said agreement.  From Ext.R1, it is seen that complainant had committed regular default in paying the EMI.  Besides, cheques were bounced several times for which charges were levied for the same by opposite parties.  From this document, it is evident that total outstanding as on 13/07/2022 is Rs.1,38,014/- under various heads mentioned therein.  The main allegation of the complainant is that opposite parties has not given her the benefits and facilities provided by Reserve Bank under Resolution Frame Work 2.0.  Complainant has no case that she had applied for either under Resolution Frame Work 1 or Resolution Frame Work 2 before the opposite parties.  Opposite parties contented that she had availed Moratorium facility for 5 months from April 2020 by virtue of RBI Resolution Frame Work 1.  In Ext.P2 the applicability, eligibility etc are mentioned for availing the benefits.  In ‘Applicability’ portion in Ext.P2, following categories of borrowers are brought under the policy.

Applicability

a)   Advances to individuals and small businesses who have not availed any resolution in terms of Resolution Frame Work 1.0.

b)    For individuals and the small businesses, where resolution plan has been implemented in terms of the Resolution Frame Work 1.0 with less than 24 months of Moratorium, increasing the period of moratorium/extension of residual tenor upto maximum of 24 months.

•  

Following eligibility criteria is provided for  individuals who have availed personal loans including auto loans (other than loans for commercial purpose) and other loans mentioned in Ext.P2.  Advances to

                                                                                            (Cont....10)

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individuals and small businesses who have not availed any resolution in terms of the Resolution Frame Work1 with regard to term loan  and demand loan, allow moratorium period during the expected future, period of stress, subject to a maximum of 2 years.  The  future  period  of  stress  shall  be  assessed  based   on  the borrowers declaration of projected income.  The extension of residual tenure may also be granted, with or without payment during Moratorium with an overall cap of extension (including the moratorium period, if any) of 2 years.   The installment shall be re-fixed after capitalizing the interest during the moratorium, if not paid the moratorium shall come into force immediately upon implementation of the resolution plan.  In case overdue of installment and/or interest already exist at the time of implementation of the  resolution plan, that shall be removed from system.  However, in these cases, the period of instalments pending should also to be notionally taken as the moratorium period and to be added with the future moratorium subject to overall moratorium of 2 years.

Overdraft facility

The payment of interest shall be deferred for the expected future period of stress along with unserviced interest so far, if any, subject to a maximum of 2 years.  The future period of stress shall be assessed based on the borrower’s declaration of projection of income.  The interest accruing during the deferred period & overdue interest as on the date of implementation shall be converted into a funded Interest Term Loan (FITL) & the interest chargeable to the facility will be 1% more than the rate of interest that of the OD facility and shall be repayable within a period of 3 years.

In case of un serviced/overdue of interest already exist at the time of implementation of the resolution plan, the period of interest un serviced should also to be notionally taken as the moratorium period and to be

 

                                                                                            (Cont....11)

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added with the future moratorium subject to overall moratorium of 2 years.

Advances to individuals and small businesses who have availed resolution in terms of the Resolution Frame Work 1.0.

Allowing moratorium period & extension of tenure

In cases of loans of borrowers where resolution plans had been implemented in terms of the Resolution frame Work 1.0, and where the resolution plans had permitted no moratoria or moratoria of less than two years and / or extension of residual tenor by a period of less than two years, modify such plans only to the extent of increasing the period of moratorium and / or extension of residual tenor up to a maximum of 24 months.  The overall caps on moratorium and / or extension  of residual tenor granted under Resolution Frame Work 1.0 and this frame work combined, shall be two years.

Invocation of Resolution Plan

The resolution process under this window shall be treated as invoked when the bank and the borrower agree to proceed with the efforts towards finalizing a resolution plan to be implemented in respect of such borrower.  In respect of applications received by the Bank from borrowers for invoking resolution process, the assessment of eligibility for resolution as per the instructions contained in this policy will be completed within  a reasonable period.  On being satisfied with the eligibility conditions the date on which bank decide to process the application can be taken as date of invocation. 

The decision to invoke the resolution process under this window shall be taken by each lending institution having exposure to a borrower independent of invocation decisions taken by other lending  institutions, if any, having exposure to the same borrower.

                                                                                            (Cont....12)

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 The last date for invocation of resolution permitted under this  window is September 30, 2021.  The decision on the application (sanction/rejection) shall be communicated in writing to the applicant by the bank within 30 days of receipt of such applications.

On going through Ext.P2, it is seen that even if Resolution Frame Work1 was  already opted and invoked a borrower/consumer can avail the Resolution Frame Work 2.0 subject to the conditions mentioned above.  Complainant has no specific case that she had filed application for availing the benefit of Resolution Frame Work 2.0.  Date of filing application is not mentioned.  Opposite parties contended that as she was aware of the fact that she cannot  avail the benefit, she had not approached them for the same.  This is not rebutted by her.  It is the duty of complainant to prove deficiency in service/unfair trade practice of opposite parties.  She failed to establish her case on this aspect.  So, we find that deficiency in service or unfair trade practice cannot be attributed  on the part of opposite parties in respect of this matter.  But opposite parties have not produced their resolution plan as per RBI notification.  They have not produced evidence regarding the classification of her account as non performing asset also.   As the last date allowed by RBI for invocation of resolution plan was 30/09/2021 and this complaint was filed only on 09/12/2021, it is not proper to give any direction to opposite parties to invoke the plan especially in the absence of evidence of filing application by her. 

But from Ext.R1, rate of penal interest is not shown.  Other charges shown are having no specific  details under each head.  It is the case of complainant that opposite parties have demanded interest and charges  illegally and against RBI directives.  Opposite parties have not mentioned rate of interest and legality of levy of other charges in written version except a vague statement that amounts shown in Ext.P1 notice is legally due.  But in Ext.R1, total due shown is Rs.1,38,014/-.  Huge difference is

                                                                                            (Cont....13)

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seen between Ext.P1 notice and Ext.R1 which is not explained by opposite parties.

Considering the entire aspects of the case, we are of the considered view that complainant is not entitled to avail the benefits under RBI Resolution Frame Work 2 for the reasons mentioned above.  But considering the nature of the case, we find it just and proper to issue a direction to opposite parties to levy only interest and other charges permitted by law.  Point Nos.2 and 3 are answered accordingly.

Point No.4

In the light of our findings on point Nos. 2 and 3 we direct opposite parties to levy only interest and other charges permitted by law.

In  the result, complaint is allowed in part  directing opposite parties  to levy only interest and other charges permitted by law.  Parties shall bear their respective costs. Interim order dated 09/12/2021is vacated and application is dismissed in the light of order passed here by us.

Parties shall take back extra copies without delay.

Pronounced by this Commission on this the   26^th  day of April 2023.

 

                                                                                                Sd/-

                                                                            SRI.AMPADY K.S., MEMBER

                                                                                            Sd/-                                                               

                                                               SRI.C.SURESHKUMAR, PRESIDENT

                                                                                            Sd/-

                                                                        SMT.ASAMOL P., MEMBER

 

 

 

 

 

 

                                                                                            (Cont....14)

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APPENDIX

Depositions :

On the side of the Complainant :

Nil

On the side of the Opposite Party :

Nil

Exhibits :

On the side of the Complainant :

Ext.P1 – legal notice dated 10/11/2021 issued on behalf of 1^st and 2^nd

               opposite parties.

Ext.P2 – Bank’s Policy on Resolution Frame Work 2.0 for Covid 19

                related stress of individuals and small business

               (Revised on 17/06/2021).

On the side of the Opposite Party :

Ext.R1 – statement of account dated 13/07/2022 for the period

               from 19/06/2019 to 13/07/2022.

 

                                                                                             Forwarded by Order  

 

 

                                                                                        ASSISTANT REGISTRAR