IN THE CONSUMER DISPUTES REDRESSAL COMMISSION, KOTTAYAM
Dated this the 31st day of August, 2021
Present: Sri. Manulal V.S. President
Smt. Bindhu R, Member
Sri. K.M. Anto, Member
C C No. 89/2017 (filed on 28-03-2017)
Petitioner : Siby Mathew,
Pulparayil House,
Omalloor Kara,
Manjoor P.O. Kothanalloor Village,
Vaikom, Kottayam – 686 603.
(Adv. Raju Abraham)
Vs.
Opposite Party : The Manager,
State Bank of India,
Kuruppanthara branch (11920)
Manjoor P.O.
Kottayam – 686 603.
(Adv. Thomas Mannanal)
O R D E R
Sri. Manulal V.S. President
The case of the complainant is as follows.
Complainant had availed an agricultural loan to the tune of Rs.2,00,000/- from the opposite party on 19-09-2012 by pledging 95.6 grams of gold ornaments. But due to the agricultural failure and some other causes, the complainant could not repay the gold loan in time. On 23-11-2015, the father of the complainant received a notice from the opposite party asking to close the loan on or before 20-11-2015 or else, the gold ornaments would be auctioned without further notice. On receiving the notice, the complainant approached the opposite party and intimated his willingness to close the loan paying an amount and interest. But the opposite party directing the complainant to come on another day after one week. Though the complainant again went to the opposite party bank for closing the loan, the opposite party sent him back without closing the loan. Subsequently on 04-02-2016, the complainant received a demand notice from the opposite party asking him to pay an amount of Rs.61,564/-. When the complainant contacted the bank, the opposite party told that notice was issued by a mistake. Thereafter on 07-02-2017 the revenue officials from Kothanalloor village and Vaikom Taluk office came to the residence of the complainant and demanded to pay Rs.61,564/- with 12% interest within 10 days or else revenue proceedings will be initiated against the complainant for recovery of his amount. On enquiry, it is found that opposite party had already sold the gold ornaments in auction without notice to the complainant and without complying the rules and regulations of Reserve Bank of India. The act of the opposite party amounts to deficiency in service and unfair trade practice. According to the complainant, due to the illegal acts of the opposite party, he had suffered much mental agony and financial loss. Hence this complaint is filed praying for an order directing the opposite party to return the gold ornaments after accepting the amount of agricultural loan or in alternative, the market value of the gold ornaments along with compensation and cost.
Upon notice, opposite party appeared before the Commission and filed version contenting as follows.
The complainant had availed an agricultural gold loan of Rs.2,00,000/- on 19-09-2012 from the opposite party. By availing the loan, the complainant had executed documents specifying the terms and conditions of the loan. As per the Government directions, the rate of interest charged on agricultural loan for the 1st year is 7% for loans upto Rs.3,00,000/-. Accordingly the interest was charged at 7% for the 1st year. If the account is not renewed or repaid within one year, the accounts is not eligible for the interest subsidy offered by the Government and hence the interest rate will be usual floating rate. If the loan was repaid within one year, the account was eligible for another 3% interest subvention by the central government. But since the complainant has not repaid the amount within 12 months, the said 3% subvention was also lost. If the loan is not closed strictly on the due date, computer system will automatically change the interest rate.
When the loan was not repaid, opposite party sent notice to the complainant in his correct address on 06-06-2015, demanding regularization of the account, but there was no positive response from the complainant. According to the opposite party, again on 12-08-2015 bank had sent registered notice in his correct address intimating that if the loan was not repaid, the gold ornaments would be sold in public auction and that the complainant would be liable as per the Promissory Note for any shortfall that may accrue. The notice was acknowledged on 27-08-2015. Again on 09-11-2015, opposite party had sent registered notice in his correct address intimating that if the loan was not repaid, the ornaments would be sold in public auction on 23-11-15 and the complainant would be liable as per his Promissory Notes for any shortfall that may accrue. The notice was acknowledged on 13-11-2015. The bank had given a period of 3 years for repayment of loan, but since the complainant had not kept his promise, bank had proceeded for selling the gold in public auction and on 27-11-2015 after complying with all statutory formalities for auction, 95.6 grams of gold had been sold for Rs.2,19,700/- to Sri. Mathew C.J. Chakkiarathu, Memmury P.O. and after paying VAT of Rs.10,985/- an amount of Rs.2,08,715/- was credited to the loan account. Since the closure amount of loan account was short by Rs.55,140/-the said amount with future interest is due from the complainant to the bank for which revenue recovery steps initiated by bank.
The opposite party had given proper notice to the complainant before selling gold in public auction and observe all statutory and legal procedures for selling the gold and there is no deficiency in service or unfair trade practice has occurred from the part of the bank. Complainant has no right to claim any compensation from the opposite party.
Evidence of this case consist of proof affidavit and Ext.A1 to A5 documents were marked from the side of the complainant. Dw1 is examined from the part of opposite party and Ext.B1 to B9 were marked from their side.
On evaluation of complaint, version and evidence on record, we would like to consider following points.
- Whether there is any deficiency in service or unfair trade practice from the side of opposite party?
- Reliefs and costs?
For the sake of convenience, we would like to consider Point No.1 and 2 together.
Point No.1 and 2
There is no dispute on the fact that agricultural gold loan for an amount of Rs.2,00,000/- was availed by the complainant from the opposite party by pledging 95.6 gms of gold ornaments dtd.19-09-2012. The gold loan application and the arrangement letter dtd.19-09-12 are marked as Ext.B1 and B2 respectively. Ext.B1 proves that the said agricultural loan was to be repaid by 18-09-2013. The specific case of the complainant is that on 13-11-2015 he had received Ext.A2 notice from the bank calling upon him to close the gold loan within 15 days from the date of receipt of notice. It is further submitted by the complainant that though soon after receipt of Ext.A1 notice, he contacted the opposite party and expressed his willingness to close the loan account, however the opposite party returned him back asking to come another day. According to the complainant, he came to knew the auction of the gold ornaments by the opposite party on 07-12-2017, the day on which the revenue officials came to his residence and demanded to pay Rs.61,564/- with 12% interest within 10 days. On the other hand opposite party contented that they had sent Ext.A2 notice on 09-11-2015 to the complainant and he had received the same on 13-11-2015 by Ext.B8 AD card. Dw1, who is the Manager of the opposite party further deposed before the Commission that on 27-11-15 sold out the pledged gold ornaments in public auction after complying all the statutory and legal procedures. Ext.B9 proves that one Mathew C.T. had purchased 95.6 grams of gold ornaments that includes 2 chains, 2 padasaram, 3 bangle and one bracelet on a public auction conducted on 27-11-2015 from the opposite party bank, and the sale consideration was Rs.2,19,700/-. The main point to be considered is that whether the opposite party has given proper notice to the complainant before conducting the sale of gold ornaments which were pledged by the complainant to avail the agricultural gold loan. On going through Ext.A2 which is according to the opposite party is a final notice before the public auction, we can see that it was recorded in a printed matter as “Further to our letter No….. dated 12-08-2015 requesting you to regularize your above loan, we observe that you have not regularized the account/repaid the loan. You are, therefore, requested to please close the loan account within a period of 15 days from the receipt of this letter, failing which the ornaments held as security for the advance will be sold by public auction and you will be liable on your Promissory Note, for any shortfall that may accrue”. On a perusal of Ext.A2 we can further see that it was handwritten in the said document that the auction is on 23-11-15 and it is further written in Ext.A2 that “if the loan account is closed before 20th, the gold will be auctioned”. As discussed above, Ext.B9 proves that the gold ornaments was sold by the opposite party in public auction on 27-11-2015.
The Hon’ble National Commission in the judgement of The Manager, Karnataka Bank Ltd. vs Puttamade Gowda 2002 (3) CPR 36 held that before pledged goods to sale, pledgee or pawnee has to be given reasonable notice to the debtor and fail of doing so is a clear breach of mandatory provisions of Section 178 of Indian Contract Act.
Further Hon’ble National Commission in Federal Bank Ltd. Vs. Gajnan S Alva 1 (1196) CPJ 252 NC held that the bank as guilty of negligence and deficiency in service by gold auction to sale before cut off date and closing the loans to the pledgee.
Here in the case in hand on Ext.A2 though the opposite party demanded to close the loan account within period of 15 days from the date of receipt of this notice. Ext.B8 proves that Ext.A2 notices was received by the complainant on 13-11-15. Thus we are of the opinion that the 15 days expire on 27-11-2015. But to the quite dismay that it was written on Ext.A2 that auction date was 23-11-2015 and the loan account should have been closed before 20th. We are of the opinion that the issuance of Ext.A2 itself is in vague and misleading manner. It is admitted by the opposite party that the public auction was held on 27-11-2015, the date on which the 15th day from the date of receipt of notice from the complainant. Further on going through the Ext.A2 we can infer that the opposite party was predetermined about the conducting of the public auction of the pledged gold ornaments without considering the possibility of the closure of the loan by the complainant on the last date which was offered by the opposite party through the printed portion of the Ext.A2 notice to the complainant. Moreover the opposite party has not produced any evidence to prove that they had given adequate publicity for the public auction which was proposed to be conducted on 27-11-2015. Ext.A3 is a piece of paper which is produced by the complainant claiming to be a notice published on the notice board of the opposite party regarding the public auction. Dw1 did not deny Ext.A3. But on perusal of Ext.A3 we cannot see any date of publication of Ext.A3 or signature of the authorized officer concerned. Moreover Dw1 did not depose before the Commission about the date of publication of Ext.A3 or any other publication regarding the public auction which was held on 27-11-2015.
Though the opposite party contented that they have committed the public auction of the pledged gold ornaments. Ext.A2 notice proves that was in a misleading manner and a common prudent man cannot understand the date of auction and the last date for the closure of the loan which is offered to him to secure his valuable ornaments. As discussed above, the opposite party is failed to prove that adequate publicity was given for the public auction committed on 27-11-2017. On a thoughtful evaluation of evidence on record and above discussion, we are of the opinion that the opposite party was negligent and deficient in service by conducting the sale of the gold in auction - before the cut of date ie. the 15 days from the date of receipt of Ext.A2 and caused loss to the complainant.
The complainant has no case that he had paid any amount towards the agricultural loan account. Though the opposite party contented that an amount of Rs.59,140/- was due in agricultural loan account of the complainant, the opposite party has not produced any evidence to substantiate their claim on this aspect. Moreover the opposite party has not produced the market value of the gold on 27-11-2015, the date on which the public auction was conducted by the opposite party to release the loan amount. We have already found that the opposite party has committed deficiency in service by selling the gold ornaments without giving proper notice to the complainant and thereby caused the loss and damages to the complainant. While considering the reliefs which are to be granted to the complainant, it is pertinent to consider that the complainant did not pay any single pie to the loan account. Even though the complainant is entitled to redress his grievance is bound to pay the loan amount with agreed interest which is applicable under the loan agreement. Considering all these aspects we allow the complaint in part and pass the following order.
- We hereby direct the opposite party to pay an amount of Rs.2,58,120/- to the complainant after receiving the loan amount with interest which are applicable till 27-11-2015
- We hereby direct the opposite party to pay Rs.10,000/- as compensation.
- We hereby direct the opposite party to pay Rs.3,000/- as cost of litigation.
Order shall be complied with within a period of 30 days from the date of receipt of Order.
Dictated to the Confidential Assistant, transcribed and typed by her, corrected by me and pronounced in the Open Commission on this the 31st day of August, 2021.
Sri. Manulal V.S. President Sd/-
Smt. Bindhu R, Member Sd/-
Sri. K.M. Anto, Member Sd/-
Witness from the side of opposite party
Dw1 – Remya Rajeev
Exhibits marked on the side of the complainant
A1 : Copy of memorandum of gold ornament dtd.19-09-12 issued by opposite
party
A2 : Copy of notice dtd.09-11-15 issued by opposite party
A3 :
A4: Copy of postal receipt dtd.12-11-15
A5 : Copy of control return P/Agl statement gold loan sanctioned for the month of September 2012 of opposite party
Exhibits marked on the side of opposite party
B1 – Copy of gold loan application dtd.19-09-12 by petitioner to opposite party
B2 – Copy of arrangement letter dtd.19-09-12 by opposite party to petitioner
B3 – Copy of promissory note dtd.19-09-12.
B4 – Copy of demand promissory note delivery letter dtd.19-09-12
B5 – Letter to the defaulting borrower dtd.06-06-15
B6 – Copy of final notice to the borrower dtd.12-08-15
B7 – Copy of postal AD card
B8 – Copy of postal acknowledgement
B9 – Receipt
By Order
Senior Superintendent
