KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION

VAZHUTHACAUD THIRUVANANTHAPURAM

APPEAL NO.111/01

JUDGMENT DATED 5.4.2011

PRESENT

JUSTICE SHRI.K.R.UDAYABHANU                --  PRESIDENT

SHRI.S.CHANDRAMOHAN NAIR                    --  MEMBER

The Manager

Muthoot Finance Ltd;                                          --  APPELLANT

Chalukunnu,

Kottayam.P.O.   

   (By Adv.C.S.Rajmohan)

                   Vs.

Prasad.J.

C.S.Sadanam,

T.B.Road, Kodimath P.O,                                  --  RESPONDENT

Kottayam.

                                                JUDGMENT

JUSTICE SHRI.K.R.UDAYABHANU,PRESIDENT

          The appellants are the opposite parties in CC.140/10 in the file of CDRF, Kottayam.  The appellants are under orders to levy interest on gold loan amounts only at the rate of 2% above the maximum rate of interest charged by the commercial banks. 

2. It is the case of the complainant that   he pledged 31 gms. of gold ornaments at the opposite parties for a sum of Rs.35,000/-.  As per the conditions printed on the loan receipt, the petitioner  is liable to pay 17% interest.  It is also mentioned that if the loan is not paid within 3 months,  petitioner is liable to pay risk interest.   On 29.5.10 the petitioner approached the opposite party for taking the sovereign by remitting the loan amount.  According to him, opposite parties demanded more interest rate than the agreed amount.  Petitioner has sought for return of the ornaments with interest for the loan amount at 17% or the rate prescribed the RBI  and compensation of Rs.25,000/-  

  3.  It is contended by the opposite parties that the complainant  had agreed to pay interest at 17% and  risk interest at the rate of 15%  per annum.   The opposite party had several scheme for the gold loans approved by the Reserve Bank of India.  Conditions are legibly printed on the loan receipt.   If the loan is not closed  within 3 months,   risk interests is allowed.  If the loan is not closed within one year, the opposite party is entitled for compound interest for the said amount.  On 29.5.10, a total different due would be Rs.43,212/-.  Interest for the above loan as on 29.5.10 is Rs. 8,212/-.

          4. The evidence adduced proof affidavit filed both sides  Exts. A1 and B1.

          5. The respondent appeared in person.

           6. It is contended by the counsel for the appellant that the Forum has failed to note that the respondent has agreed to pay interest at 17%.  But the Forum has directed to collect interest only at 2% above the rate collected by the commercial banks.  It is contended that the opposite parties have acted as per the guidelines of the RBI  as per the fair practices code vide circular No. RBI/2009-10/15 DNBS (PD) CC No.153/03.10.042/2009-10 dated 1/9/09.  We find that in Ext.A1 receipt issued to the complainant on the reverse side the interest rate for one year is mentioned as 17% only.  The space for risk interest is left blank.  The risk interest is not mentioned properly.  It was the duty of the opposite parties to properly inform the complainant as to the terms and conditions of the loan.  We find that the matter has been disposed of on the basis of Ext.A1 receipt.    

          7. In the circumstances, the order of the Forum is set aside.  The complainant is permitted to redeem the pledge on payment of the loan with interest at 17% up to 27.9.10. The direction to pay compensation and cost is set aside.  The complainant will    redeem the pledge   as specified above within 15 days of receipt of copy of this order. 

          8.  In the result the appeal is allowed in part as above.

          The office will forward a copy of this order to the Forum.

JUSTICE  K.R.UDAYABHANU --  PRESIDENT

 S.CHANDRAMOHAN NAIR --  MEMBER