Sri. P. Satheesh Chandran Nair (President):
The complainant filed this petition u/s.12 of the C.P. Act 1986 for getting a relief from the opposite party.
2. The case of the complainant is as follows:- On 07/07/2014 the complainant availed a loan for an amount of Rs.26,06,950/- by pledging gold ornaments from the opposite party. It is contended that when the complainant approached the opposite party on 26/08/2015 for the renewal of the loan the opposite party informed the complainant to remit Rs. 36,13,124/- for the said renewal i.e., principal amount plus interest as on that date. According to the complainant the calculation of interest as Rs. 10,06,174/- is against the terms and conditions of the loan agreement between the parties. It is further contended that the complainant is ready and willing to remit the principal amount plus interest as per the loan agreement between the parties. It is contended that the act of the opposite party demanding the higher interest of Rs. 10,06,174/- is a deficiency in service on their side and they are liable to the complainant. Hence, this complaint to set aside the notice of renewal the opposite party and also to find Rs. 5,21,032/- as the legal interest, compensation, cost etc. etc.
3. This Forum entertained this complaint and issued notice to the opposite party for their appearance. The opposite party entered appearance and filed their version as follows. According to the opposite party this case is not maintainable either in law or on facts. The opposite party is admitted that there is a loan agreement between the parties and on 07/07/2014 the complainant availed a loan of Rs. 26,06,950/- from the opposite party. It is further contended that since this loan is a short term one, the opposite party is at liberty to impose 22% of interest for the principal amount and the opposite party is a non-banking finance company controlled by RBI. The opposite party had got right to decide the rate of interest on the basis of the difference circumstances of prevailed on time. The opposite party admitted the notice dated: 08/06/2015 which demanded the remittance of Rs. 36,13,124/- including the interest. The opposite party is strictly following the fair practice code issued by Reserve Bank of India. According to the opposite party he is not comes under Kerala Money Lenders Act so that there is no need for any kind of criminal intimidation from their side. It is further contended that the opposite party did not pay any interest for the last one year so that the account of the complainant has becomes a non-performing asset. Therefore, the opposite party has got right to auction the gold ornaments after the completion of the said one year. Therefore, the opposite party prayed to dismiss the complaint with cost to them.
- This Forum peruse the complaint, version and records before us and framed the following issues for consideration:
- Whether the complaint is maintainable before this Forum?
- Whether the opposite parties committed any deficiency in service against the complainant?
- Regarding the relief and costs?
5. In order to prove the case of the complainant, the complainant he who filed a proof affidavit in lieu of his chief examination and examined him as PW1. Through PW1 Ext.A1 to A8 and Ext. B1 were also marked. Ext. A1 series (7inNos.) are the claim forms, related to the pledging of gold No. F23274, F23276, F23277, F23278, F23280, F23281. Ext. A2 series (7 in Nos.) are the details of the pledged gold ornament with opposite party’s financial institution. Ext. A3 is the summary sheet issued by the opposite party dated: 26/08/2015. Ext. A4 is the interest rate of different gold loan of opposite party. Ext.A5 is a modification of direction issued by RBI on 03/08/2012. Ext. A6 is a direction issued by RBI dated: 31/05/2013. Ext. A7 is an another letter issued by RBI dated: 07/02/2014 with regard to the interest rate of Non-Banking Financial Company – Micro Finance Institutions. Ext. A7 is the reply notice dated:15/12/2016 from opposite party. Ext.A8 is the notification of the RBI related to lending norms of the Micro Finance Institution. Ext. B1 series & Ext. A2 series are one and same. On the other side of the opposite party has not adduced any evidence. After the closure of evidence we heard both side.
6. Point No.1: The opposite party strongly contested that this case is not maintainable either in law or on facts. According to this opposite party the complainant suppressed the real fact of this case and filed this complaint against them. When we examined the evidence adduced by both sides in this case it is come out in evidence to see that the complainant he who availed a loan of Rs. 26,06,950/- from the opposite party by pledging gold ornaments. The transaction of pledging of the gold ornaments and availing loan for an amount of Rs. 26,06,950/- are also admitted by the opposite party. If so we can find that the complainant is a consumer and the opposite party is a service provider of the complainant. Hence Point No.1 found in favour of the complainant.
7. Point No.2 & 3:- For the sake of convenience, we would like to consider Point No.2 and 3 together. The complainant as PW1 deposed that on 07/07/2014 he availed a loan for an amount of Rs. 26,06,950/- by pledging gold ornaments. It is also deposed that through media the opposite party offered ‘one rupee interest’ for their loan. It is further deposed that for the first month an interest of 12% and for the subsequent month 18% interest are imposed as per the norms of the said loan. In order to substantiate this contention the complainant produced the registered notice dated:08/06/2015, related to gold pledge No. F23274, F23276, F23277, F23278, F23280, F23281 for a total amount of Rs.2,139,850/- (51,900+50,1000+772000+245000+478500+65450+26000) as per Ext. A1 series (7inNos.). Ext. A2 series (7 in Nos.) shows that the PW1 pledged gold ornament at opposite party’s financial institution as per Ext. A2 series. When we consider the evidence of this case there is no dispute between the parties with regard to the gold ornament or it weight shown in Ext.A2 series. Ext.A3 dated: 26/08/2015 shows that there is an amount of Rs. 36,13,124/- is due against PW1, when calculating the interest as per norms of the opposite party. Ext. A4 shows that the interest rate of different gold loan of opposite party, if we go through Ext. A4 an additional interest of 12% per annum on defaulted interest can be seen if it exceeded 12 months under MIP scheme. As per this Ext.A4 it is seen that opposite party is enjoying a right to impose 12% additional interest to defaulted interest. Ext.A5 is a direction issued by RBI on 03/08/2012. When we go through Ext. A5 in para 6 ‘Pricing of Credit’ is discussed, It is stated that “It has also been decided that the cap on margins as defined by Malegam Committee may not exceed 10 Percent for large MFIs (loans portfolios exceeding Rs. 100 crore) and 12% for the others. This measure will ensure that in a low cost environment, the ultimate borrower will benefit, while in a rising interest rate environment the lending NBFC-MFIs will have sufficient leeway to operate on viable lines”. On the basis of this circular we can arrive a conclusion to the effect that the loans below 100 crore has to be imposed only 12% interest as per the Malegam Committee recommendation on interest matters. Ext. A6 is also a direction issued by RBI of 31/05/2013. The main contents of Ext. A6 is as follows. “However with effect from 01/04/2014 margin caps as defined by Malegam Committee may not exceed 10 percent for large MFIs (loans portfolios exceeding Rs. 100 crore) and 12 percent for the others”. Ext. A7 is an another letter issued by RBI dated: 07/02/2014 with regard to the interest rate of Non-Banking Financial Company – Micro Finance Institutions. Here also we can see the interest of the Reserve Bank to protect the interest of the borrowers. Ext.A8 is also a lending norms of Micro Finance Institutions. When we go through Ext.A8 it shows that in a notification the RBI said that the Micro Finance Institution above Rs. 100 crore loan with higher cost of borrowing can charge about 27% as the average base rate currently is about 10%. At last the circular says “In December, 2011 the RBI had capped the interest rate that can be charged by MFIs at 26%, based on the recommendations of an expert–panel under Y.H. Malegam. Later, the interest rate cap was removed but a margin cap of 10% was set for larger MFIs and 12% for those with loan less than Rs. 100 crore.
8. When we examine the evidence adduced by the PW1 in this case it is pertinent to see that though the PW1 says that he remitted interest for the said loan he failed to adduce any convincing evidence to prove that contention. In-cross he answered “(Q) ഈ ഇടപാടിൽ എത്ര തുക താങ്കൾ പലിശയായി OP സ്ഥാപനത്തിൽ കൊടുത്തിട്ടുണ്ട് (A) കണക്ക് നോക്കിയാലേ പറയാൻ സാധിക്കുകയുള്ളൂ. (Q) ഈ കാലയളവിൽ താങ്കൾ ഒരു രൂപ പോലും interest നൽകിയിട്ടില്ല എന്ന് പറയുന്നു. (A) കണക്ക് നോക്കിയാലേ പറയാൻ സാധിക്കൂ. (Q) നിങ്ങൾ കൊടുത്ത പരാതിയിൽ പലിശയെ സംബന്ധിച്ച് പറഞ്ഞിട്ടുണ്ടോ (A) ഇല്ല”. On the basis of the testimony it can be inferred that though the complainant pleaded that he has paid certain interest to opposite party, no material evidence can be seen to substantiate his contention. Therefore we can find that the complainant did not pay any interest for the principal amount Rs. 26,06,950/-. In cross-examination PW1 is admitted that Ext. A2 series & Ext. B1 series are one and same. Ext. B2 is a direction to Non-banking Financial Company – 2016 Chapter -VI which describe the regulation of excessive interest charged by NBFC. It shows that the rate of interest and reason for charging different rate of interest to different categories of borrowers shall be disclosed to the borrower or customer in the application form and communicated forthwith in the sanction letter. We do admit that the opposite party and the complainant issued Ext.A2 series (7 in Nos.) stating the variation to interest for different period. It is interesting to see that either in Ext.A2 series or in Ext.B1 series we cannot see a single signature of the complainant as his acceptance of the interest rate. Even at the time of the trial of this case the opposite party failed to adduce any evidence to show that the complainant accepted the terms and conditions of the loan agreement as alleged by the opposite party. DW1 the Senior Branch Manager of the opposite party deposed that the complainant PW1 was aware of the terms and conditions of the loan transaction by pledging the gold and he signed the relevant record to that effect. It is pertinent to see that when we are deciding the case no document to that effect was before us to consider their contention. On the other hand it is admitted that the opposite party’s Financial Institution is not functioning under the provisions of Money Lender’s Act as such Non-Banking Financial Code is applicable to the opposite party. He answered in-cross “Money Lenders Act ബാധകമല്ല. NBFC ബാധകമാണ്. NBFC പലിശ തീരുമാനിക്കുന്നത് RBI യുടെ guide lines ആണോ. (A) അതേ ഈ കേസിൽ അങ്ങിനെയാണ് പലിശ തീരുമാനിച്ചിരിക്കുന്നത്. (Q) RBI യുടെ guide lines അനുസരിച്ച് cost of fund നേക്കാൾ 5% പലിശയിനത്തിൻമേൽ പലിശ ഈടാക്കാൻ അർഹത ഇല്ലല്ലോ. (A) അറിയില്ല. (Q) Cost of fund തീരുമാനിക്കുന്നത് നിങ്ങൾ സ്വീകരിക്കുന്ന നിക്ഷേപത്തിന് പരമാവധി പലിശ എത്രയാണ് (A) അറിയില്ല”. On the basis of the testimony of DW1 we can also come to a conclusion that the opposite party has no idea with regard to the RBI guidelines and the norms of deciding the cost of fund and interest. On the basis of the evidence before us the main question to be considered is that the interest imposed to the principal amount Rs. 26,06,950/- is in terms of a valid agreement and the interest charged by the opposite party is within the norms or directions issued by the RBI with regard to the Non-Banking Financial Company. When we peruse Ext.A5 & A6 it is so clear to see that the interest rate of the loan port folios exceeding Rs. 100 crore is 10% and for of other loans it should be 12%. On the basis of this evidence it can be inferred that the interest charged by the opposite party with regard to this loan transactions is so excessive and clear violation of the direction issued by the RBI. Therefore we find that the notice issued by opposite party on 08/06/2015 as Ext. A1 series has to be set aside and found that the issuance of the said notice is illegal and against the circular issued by RBI as per Ext. A5 & A6. Therefore we find that the opposite party committed deficiency in service by violating the RBI directions as discussed above. Therefore opposite party is liable to the complainant.
9. It is also find that the gold ornaments were pledged by the complainant to opposite party which are in their custody. The main request of the complainant in this case is to set aside the Ext. A3 notice for remitting Rs. 36,13,124/- including the interest for the renewal of his gold loan. As discussed earlier we find that the notice issued as Ext.A3 is against the guideline of the RBI so that it has to be set aside. The complainant is at liberty to pay an interest of 12% per annum to opposite party for the principal amount Rs. 26,06,950/-. It is also found that the complainant has not remitted any amount as interest to the opposite party. On the basis of the above finding we decided to allow the complainant partly and Point No.2 and 3 are also found accordingly.
10. In the result, we pass following the orders:
- The Opposite party is directed to receive an interest of Rs. 10,11,354/- (Rupees Ten Lakh Eleven Thousand Three Hundred and Fifty Four only) (interest of 12% calculated from 26/08/2015 to date of order 28/09/2017) from the complainant to renew the gold loan, (if the complainant shall remit the above amount within 2 months of the date of receipt of this order with 12% interest). If the complainant fails to renew the loan as ordered the opposite party is at liberty to proceed with Ext.A3 notice.
- The Ext. A3 notice dated: 26/08/2015 demanding remittance of Rs. 36,13,124/- (Rupees Thirty Six Lakh Thirteen Thousand One Hundred and Twenty Four only) is here by set aside if the complainant complied the order No.1 as directed above.
- The opposite party is also directed to pay a compensation of Rs. 25,000/- (Rupees Twenty Five Thousand only) and a cost of Rs. 3,000/- (Three Thousand only) to the complainant with 10% interest from the date of receipt of this order onwards subject to the compliance of relief No.1(the complainant is at liberty to deduct this amount from the interest shown in relief No.1)
- The order in I.A.167/15 dated: 06/11/2015 is stands cancelled as per this order.
Dictated to the Confidential Assistant, transcribed and typed by her, corrected by me and pronounced in the Open Forum on this the 28th day of September, 2017.
(Sd/-)
P. Satheesh Chandran Nair,
(President)
Smt. Sheela Jacob (Member) : (Sd/-)
Appendix:
Witness examined on the side of the complainant:
PW1 : Mohanachandran.G.P
Exhibits marked on the side of the complainant:
A1Series: Claim forms, related to gold pledge No. F23274, F23276, F23277,
F23278, F23280, F23281.(7 in Nos.)
A2 Series: The receipt of PW1 pledged gold ornament at opposite party financial
institutions.
A3 : Summary sheet issued by the opposite party dated: 26/08/2015
A4 : Interest rate of different gold loan of opposite party.
A5 : Modification of direction issued by RBI on 02/12/2011.
A6 : Direction issued by RBI dated: 31/05/2013.
A7 : Reply notice dated:15/12/2016 from opposite party
A8 : Notification of the RBI said that the Micro Finance Institution.
B1 series : Ext. A2 series and B1 series are one and same.
Witness examined on the side of the opposite parties:
DW1 : Suseela Thomas
Exhibits marked on the side of the opposite parties: Nil
(By order)
Copy to:- (1) Mohanachandran.G.P,
Govindamandiram, Parakkodu.P.O,
Pathanamthitta.
(2) The Branch Manager,
Muthoot Fincorp Ltd.,
Parakkodu.P.O, Adoor, Pathanamthitta.
- The Stock File.
