KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

VAZHUTHACAUD, THIRUVANANTHAPURAM

APPEAL No. 512/2016

JUDGMENT DATED: 05.10.2023

(Against the Order in C.C. 240/2014 of CDRC, Thiruvananthapuram)

PRESENT:

SRI. AJITH KUMAR D.                                                    : JUDICIAL MEMBER

SRI. RADHAKRISHNAN K.R.                                        : MEMBER

APPELLANT:

S. Radhakrishnan, Sreedhara Vilasom, Keezhethottom, Parassala, Thiruvananthapuram-695 502.

(By Adv. Abdul Azeez)

                                                Vs.

RESPONDENTS:

1. Suresh, Branch Manager, Kosamattom Financial (P) Ltd., Mekevattavila Veedu, Karumanoor, Parassala P.O., Thiruvananthapuram-695 502.

2. George Thomas, Owner, Kosamattom Mathew K., Cheriyan Building, Market Junction, Kottayam-686 001.

(By Adv. K. Vasantha Kumar)

JUDGMENT

SRI. RADHAKRISHNAN. K.R: MEMBER

This is an appeal filed under section 15 of the Consumer Protection Act, 1986, against the order in C.C. No. 240/2014 before the District Consumer Disputes Redressal Commission, Thiruvananthapuram (District Commission for short). The appellant is the complainant before the District Commission.  The District Commission by its order dated 15.06.2016 dismissed the complaint.

2.  The complaint pertains to excess amount allegedly collected by the respondents towards interest in respect of loans taken by the complainant by pledging gold ornaments. According to him, he had taken twenty different gold loans on various dates during the period from 23.11.2011 to 17.10.2012 for Rs. 17,49,300/-.  He alleges that the opposite parties charged exorbitant interest when he took back seven items in April 2013 by paying Rs. 4,37,000/-.  The 1^st opposite party issued receipts at the time of pledge and in that receipt the dates of repayment of loans were given but interest rate was not mentioned.  The complainant received a notice dated 13.03.2013 from the 1^st opposite party requiring him to pay Rs. 17,49,300/- with interest within 15 days.  This pertained to 20 separate gold loans including the above seven items involved in this complaint.  When approached, he was given another three months to repay the loan with interest and for that purpose he was required to give a blank signed paper.  After getting the notice dated 13.03.2013, he took 7 out of 20 items in April 2013 by paying Rs. 4,37,000/-.  The loan amount was Rs. 2,52,900/- and he was told that the balance Rs. 1,84,100/- is the interest and penal interest for the released items.  The 1^st opposite party explained the interest rate to the complainant that for one month - 27% , for 1-3 months -30%, for 3-6 months - 33%, for 6-12 months - 35%.  Above 12 months the interest will be decided by the opposite parties.  Nothing is written in the receipt regarding penal interest.  The complainant alleged that the opposite parties are charging exorbitant rate of interest for the gold loan taken by him. The opposite parties charged exorbitant interest and penal interest and thereby charged Rs. 1,84,100/- as interest and penal interest for 12 months for a pledge amount of Rs. 2,52,900/-.  Hence the complainant filed the complaint alleging unfair trade practice and deficiency in service by the opposite parties. He prayed for directing the opposite parties to refund the excess amount realized from the complainant for 7 items of gold ornaments less the bank interest on that date of release in April 2013.

3.  The opposite parties entered appearance and filed their joint version. According to them the complainant is a dealer of second hand cars, used to avail gold loan from the opposite parties for raising fund for his business.  He is not in the habit of release of the gold pledged by him in time.  The complainant required maximum amount of loan that he could get on pledging the gold and he was not concerned with the higher rate of interest.  The complainant altogether pledged 20 items of gold on different occasions.  The pledges were under different schemes and the respective rate of interest on each scheme was notified in the office.  The complainant was also aware of the schemes and the rate of interest.  He voluntarily opted the scheme KF SC-K27 when he pledged the gold ornaments.  The rate of interest under this scheme was (0-1 M) 27% + (1-3 M) 3% + (3-6M) 3% + (6-12 M) 2%.  This was also noted in the receipts also.  It is the contract rate of interest which the complainant had agreed to pay.  The complainant is bound to pay the rate of interest as per the scheme opted and if the interest was paid every month as agreed, only the initial rate of interest of 27% ought to have been payable.   The 2^nd opposite party is a limited company having license issued by the Reserve Bank of India (RBI) to function as a Non Banking Finance Company (NBFC).   The Kerala Money Lenders Act is not applicable and hence no separate license is required.  They follow the directives issued by the RBI from time to time.  The interest rates charged by the NBFCs may vary under different schemes and the customer can choose the NBFC on the basis of their terms.  The gold loan became over due on the expiry of one year from the date of pledge.   Pledges for which interest for one year had not been paid becomes NPA and will be classified so.  The 1^st opposite party issued registered notice on 13.03.2013 to the complainant.  On receiving the notice he had taken back 7 items of gold on the agreed rate and the remaining 13 loans were not closed.  According to the opposite parties there was no deficiency in service or unfair trade practice on their part and hence sought for dismissal of the complaint.

4.  The complainant filed proof affidavit and Exts. P1 to P8 were marked on his side.  Opposite parties entered appearance and filed version and marked Ext. D1 on their side.  There was no oral evidence on either side.  On the basis of the evidence adduced the District Commission passed the impugned order.  Aggrieved by the said order the complainant has filed this appeal.

5.  Heard both sides.  The learned counsel for the appellant/complainant submitted that the respondents have charged exorbitant rate of interest from him.  Out of the 20 items pledged only 7 items were released in April 2013 and 13 items are still lying with them.  They never explained the scheme and interest. Their advertisements (Ext P8) state that they charge only 12 % p.a. They cannot charge an interest higher than the statutory rate.  They have violated various provisions of the Kerala Money Lenders Act and the guidelines on fair practices code of the Reserve Bank of India for NBFCs.  The respondents are liable for unfair trade practice and deficiency in service.  The District Commission erred in dismissing his complaint and he prayed for direction to the respondents to refund the excess amount of Rs. 1,61,350/- with  interest, compensation and costs.

6.  The learned counsel for the respondents submitted that the respondents are a Non Banking Finance Company (NBFC) registered under the Reserve Bank of India and the rules applicable to them are that of the NBFCs. The Kerala Money Lenders Act is not applicable to them.  The interest on the pledged gold varies depending upon the scheme opted by the pawner.  The appellant opted for 27% scheme and the respondents have charged interest as per the scheme agreed by him.  The details of charging interest on default are given on the reverse side of the receipts issued to the appellant and he has intentionally not produced the back side of the receipts.   Notice was sent for all the 20 items pledged by him and he has already taken back 7 items.  He has filed the complaint on an experimental basis to avoid payment of interest which would now be more than the value of the gold pledged.  The learned counsel submitted that the respondents have not committed any unfair trade practice. They have not violated any guidelines regarding charging of interest and hence there is no deficiency in service on their part and hence he prayed for dismissal of the appeal with costs. 

7.  We have considered the submissions on both sides and perused the records.  The complaint pertains to excessive interest rate charged by the respondents on the pledged gold.  Another appeal, A 568/2016 against the order in C.C. No. 189/2014 of the District Commission, Thiruvananthapuram is also filed by the same appellant for a direction to get back 13 items pledged on payment of loan amount with interest as per law.

8. The appellant/complainant produced eight exhibits also before the District Commission to substantiate his claim.  Notice dated 13.03.2013 (Ext. P1), which pertains to all the 20 pledges, issued by the respondents was sent 16 months after the first pledge.  It was stated that if the amount is not paid within 15 days, the pledged gold will be auctioned.  After getting the notice, he has taken seven items.  No evidence is produced to prove payment of any interest during the pendency of the pledge.  A letter (Ext. P4) was sent by the appellant after a few months on 25.08.2013.   No efforts are taken by the appellant either to take back the gold or to renew the pledge.  The consumer complaint was given more than a year after getting the notice.  Details of the loan and interest, written in a piece of paper (Ext. P3) in respect of pledge Nos. 7478 and 7479, said to be given in August 2013 cannot be taken as evidence to prove exorbitant rate of interest.

9.  Ext. P2 is the photostat copy of the receipt issued in respect of pledge No. 7478 dated 23.11.2011 for a loan amount of Rs. 2,05,100/-.  No other evidence regarding pledge of seven items involved in this complaint is produced.  The complainant has not given the various details regarding the pledges such as dates of pledge of seven items, amount taken as loan, interest payments etc.  On a perusal of Ext. P2 receipt we notice that pledge No., date, Scheme name, amount taken, name and address of the pawner, description of articles, date before which interest is to be paid without penalty and signature of both Branch Manager and the pawner are given in the receipt.  It is stated under clause 5 on the face of the receipt that conditions on the reverse side of the receipt are agreed by the pawner who has signed the receipt.  The scheme under which the loan was given is clearly stated in the receipt.  In pledge No. 7478, the scheme is stated as KF SC-K 27: [0-1 M] 27% + [1-3 M] 3% + [3-6 M] 3% + [6-12 M] 2% in which case interest is payable after one month.  It is pertinent to note that the complainant has not furnished vital information as to whether he has paid the interest on the due dates, how much he has paid etc.  In this case interest is payable after one month, without penalty.  Reverse side of the receipts are conspicuously not produced by the complainant.   In the absence of the back side of the receipt we are unable to ascertain the conditions of the pledge of the gold and examine the violations, if any, by the respondents.  According to the appellant interest is calculated on annual basis and he was not told about the rate of interest.  He relied on the advertisements in newspapers (Ext. P8) as well, showing interest as 12% p.a.  However, the scheme stated in the advertisement is KFL-A whereas the appellant pledged the gold as per different scheme and so it is not relevant in this case.  We are unable to accept the contention of the appellant that he was not aware of the interest rate and that the interest is payable every month.

10.  Certificate of Registration No. B 16.00117 (Ext. P6) dated 19.12.2013 issued by Reserve Bank of India in favour of the respondents, approving them as a NBFC was produced by the appellant to prove that they have taken the licence after disbursal of the loans.  However, the respondents have produced Certificate of Registration issued by RBI vide No. B-16-00117 dated 28.01.2005 (Ext. D1) evidencing the validity of registration on the date of giving the loans.

11.  Appellant argued that the respondents have violated the provisions of Kerala Money Lenders Act. In Nedumpilly Finance Co. Ltd Vs State of Kerala &Ors (Civil Appeal No 5233 of 2012), Apex Court held that state money lending laws are not applicable to NBFCs.  Hence this contention is not tenable. Chapter III B of the RBI Act 1934 is a complete code for regulation of NBFCs. Master circular issued by Reserve Bank of India (Ext. P7) regarding Fair Practice Code for the NBFCs was produced by the appellant.  However he could not prove violation of the said guidelines by the respondents.

12.  The appellant has not revealed full details of the loan taken by him which are essentially required to examine the lapses, if any, on the part of the respondents. The appellant is silent about payment of interest or about the conditions given on the reverse side of the receipts in case of default.  Scheme details given overleaf of the receipts were not produced.  He could not prove the actual amount remitted during the period of loan and the excess payment. Available records reveal that neither the loan amount was repaid in time nor interest was paid on the due dates.  Appellant/complainant failed to produce the documents necessarily required to substantiate his allegations.

13.  On the basis of the foregoing discussion, we find that the appellant could not prove any specific violation of the guidelines or the provisions of the relevant Act by the respondents/opposite parties. Hence we do not find any infirmity in the order of the District Commission in dismissing the complaint. We concur with the finding of the District Commission that there is no unfair trade practice or deficiency in service on the part of the respondents/opposite parties.

          In the result, the appeal is dismissed and the order dated 15.06.2016 of the District Commission, Thiruvananthapuram is confirmed.  There shall be no order as to costs.

AJITH KUMAR  D. : JUDICIAL MEMBER

                                                                        RADHAKRISHNAN K.R.  : MEMBER

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