Per Sri A. Hazarath Rao,  President:-

        The complainant filed this complaint u/s 12 of the Consumer Protection Act claiming Rs.46,800/- being the loss of value of gold ornaments for low price in bidding; Rs.10,000/- towards mental agony, pain & suffering; Rs.500/- towards legal notice and Rs.5000/- towards costs of the complaint.

2.   In brief the averments of the complaint are these:

The complainant obtained loan of Rs.13,200/- and Rs.26,531/- from the opposite party on 14-10-10 by pledging gold ornaments weighing 34 grams (24 ct.)  The complainant agreed to repay the same with interest @12% p.a.   The complainant received notices on 15-10-2011 and 04-11-11 about the proposed auction of gold ornaments on 05-12-11 at their office.   The complainant after receiving the above notices approached the opposite party and requested it permitting him to pay interest.  But the opposite party demanded to pay the entire amount along with interest and costs.   The complainant was unable to pay entire amount with interest in time i.e., before 05-12-11.   Fifteen days thereafter the complainant approached the opposite party to pay interest and principal amounting to Rs.45,000/-.   But the opposite party informed that the pledged gold was sold in the auction conducted on 05-12-11.  The complainant demanded the opposite party to give details of auction, as weight of the gold ornaments pledged by him were in higher than the amount received.   On 05-12-11 the market rate per gram (22 ct) was Rs.2700/-.   The value of gold ornaments pledged by the complainant comes to Rs.91,800/-.   The complainant demanded the opposite party to repay the balance amount.  But the opposite party gave evasive replies and did not furnish any information.   The opposite party willfully conducted auction at their office and did not follow any rules and regulations of RBI.   The opposite party did not give proper publication of auctioning gold ornaments.   The opposite party though received notice did not give any reply.   The complainant lost his gold ornaments which were sentimental to his family for low price due to improper auction.  The above conduct of the opposite party amounted to deficiency of service.  The complaint therefore be allowed.    

3.    The contention of the opposite party in brief is thus:

        The complainant pledged gold ornaments weighing 9.6 grams (net) on 04-10-10 and 19.6 grams (net) on 14-10-10 for obtaining loan of Rs.13,200/- and Rs.26,531/- respectively under F498.   The opposite party informed the terms and condition of gold loan to the complainant while giving loan.   The loan amount has to be repaid within the maximum period of twelve months and in the event of failure the opposite party has right to proceed with auction of gold ornaments to recover the loan amount inclusive of interest.   The complainant failed and neglected to repay any amount either towards interest or principal inspite of personal requests.   Thereafter the opposite party issued notices to the complainant on 30-10-11 and              04-11-11 requiring him to discharge the loan amount on or before           05-12-11 failing which auction will take place.   The opposite party published an advertisement in Andhra Jyothi telugu daily informing the date and place of auction.   Inspite of notices and paper publication the complainant did not care to discharge the loan amount.  The opposite party left with no other option except to auction the gold ornaments at their office at Vijayawada.   The complainant alone is responsible for auction of his gold ornaments.   Even after auction the opposite party informed the details of auction including the statement of accounts for which the complainant did not respond.   The opposite party is a non banking financing company registered under the Reserve Bank of India and is carrying on its business as per guidelines and regulations.   The opposite party followed the terms and conditions of loan and the said transaction is a pure commercial transaction.   The opposite party sent a reply to the complainant on 29-03-12.   The opposite party did not commit any deficiency of service.          The Forum has no jurisdiction to entertain the complaint.   The complaint is not entitled to any compensation much less the amount claimed.  Rest of the allegations contra mentioned in the complaint are all false and are invented to suit complainant’s case.   The complaint therefore be dismissed.    

4.  Exs.A-1 to A-10 and Exs.B-1 to B-9 were marked on behalf of complainant and opposite party respectively.

5.     Now the points that arose for consideration in this case are:

1. Whether this Forum has jurisdiction to entertain the complaint?
2. Whether the opposite party committed deficiency of service?
3. Whether the complainant is entitled to compensation and if so to what amount?
4. To what relief?

6.  Admitted facts in this case are these:

1. The complainant borrowed Rs.13,200/- on 04-10-10

        by pledging gold ornaments (Ex.A-1=B-1).

1.  The complainant borrowed Rs.26,531/- on 14-10-10

        by pledging gold ornaments (Ex.A-2=B-2).

1.  The opposite party issued notice to the complainant either                to close or renew the loan on or before 30-10-11

        (Ex.A-3 & A5).

1. The opposite party issued notice on 04-11-11 informing the        complainant about their proposed auction

        (Ex.A4 & A6 = B3 to B-7).

1. The complainant issued registered notice to the opposite party on 14-02-12 (Ex.A7 & A8). 
2. The complainant did not pay any amount either towards principle or interest.

1. The opposite party conducted auction of gold ornaments belonging to the complainant on 05-12-11.

7.  POINT No.1:-   The complainant is a customer of the opposite party.   The opposite party provided service to the complainant by way of lending loan on pledge of gold ornaments.  Thus there is a consumer relationship between the complainant and the opposite party.   The complainant is questioning the deficiency in holding the auction of gold ornaments by the opposite party.  Therefore we hold that this Forum has jurisdiction to entertain the complaint and answer this point in favour of the complainant.

8.  POINT No.2:-  The opposite party issued Exs.A-1(=B1) and                     A-2(=B-2) while disbursing loan to the complainant.  Exs.B-1 and B-2 were with the opposite party.   The opposite party issued Exs.A-3 to           A-7 to the complainant.    The opposite party though contended that it issued reply to Ex.A-7 notice did not file office copy of reply before the Forum for the reasons best known to it.   Rate of interest was not mentioned in Exs.A-1(=B1) and A-2(=B-2) besides in Exs.A-3 to A-7.   In Exs.A-3 to A-7 the opposite party did not mention the amount due by the complainant by those dates.   Thus the opposite party kept the complainant in dark regarding the amount payable by the complainant.  

9.     The opposite party in its version and affidavit contended that  it sanctioned loan as per terms of the agreement.  The opposite party in its version and affidavit did not mention the rate of interest charged by it and the amount due as on the date of auction.   The opposite party did not file terms and conditions of loan agreement except Ex.B-1 and B-2.  The opposite party categorically mentioned in Ex.A-3 regarding the existence of loan agreement.   If Exs.A-1 and A-2 and B-1 and B-2 constitute an agreement there should be a mention of rate of interest.   In the absence of any rate of interest we are of the view that there should be a separate agreement.  Under those circumstances, the agreement plays an important role.  An adverse inference can be drawn against the opposite party for not filing the agreement.  

10.   The due dates of interest payment for the loan taken on                     04-10-10 are 04-11-10; 04-12-10; 04-01-11; 04-02-11; 04-03-11 and 04-04-11 as seen from Ex.A-1.   The due dates of interest payment for the loan taken on 14-10-10 are 14-11-10; 14-12-10;                 14-01-11; 14-02-11; 14-03-11 and 14-04-11 as seen from Ex.A-2.  The complaint averments revealed that the complainant did not pay any amount to the opposite party.  

 11.    The complainant in para III (a) of his complaint mentioned that in all he pledged 34 grams (Net) of gold ornaments (24 ct).  But the averments in para III (c) of the complaint are to the affect that the complainant pledged 34 grams of gold of 22 cts.    On the other hand, the opposite party contended that the complainant deposited 9.6 grams on 04-10-10 and 19.6 grams on 14-10-10 totaling to 29.2 grams.  Weight of gold ornaments did not find place in Exs.A-1 and            A-2 except the description of ornaments.   Exs.B-1 and B-2 were signed by the complainant on the date of obtaining loan i.e., 04-10-10 and 14-10-10 on front and back side.    Exs.B-1 and B-2 revealed that that the complainant pledged 9.6 grams on 04-10-10 and 19.6 grams on 14-10-10 only.  

12.   In Exs.A-1 and A-2 it was mentioned that penalty on interest can be avoided by paying the interest on the dates mentioned in the gold loan receipt.   The rate of penal interest was not mentioned in Exs.A-1 and A-2.   On the reverse of Exs.B-1 and B-2 the terms and conditions for giving loan on gold articles were mentioned.   Those conditions were not incorporated in Exs.A-1 and A-2.  Clause 2 of Exs.B-1                and B-2 reads as follows:

        “The borrower has to retrieve the articles pledged to the bank within a period of six months by paying the borrower amount with interest, whether the bank demands or not.   Otherwise the Bank has the right to sell the pledged articles through Public auction, without any notice to the borrower, and recover the borrower amount and interest, in case the amount received by auction is less than what is due to the bank, the borrower has to remit the difference by cash to the bank.   If the amount received by auction exceeds, the bank will return the difference amount to the borrower.   The Bank will, however not be responsible for any loss to the borrower by selling the pledged articles by public auction”. 

        Not mentioning the above term in Exs.A-1 and A-2 is not a fair play on the part of the opposite party.   In this case absence of the above clause in Exs.A-1 and A-2 is not of much importance as the opposite party informed the date of auction to the complainant under Exs.A-3 to A-7.   

13.   The opposite party in its version mentioned the date of publication blank; but mentioned the date of publication as 25-11-11 in affidavit.   The opposite party did not file copy of the said publication into Forum though mentioned as filed in affidavit for the reasons best known to it.   The opposite party did not file rules and regulations imposed by RBI on it for its activities though available with it.   Ex.B-8 did not disclose the rate of interest and penal interest charged by it.   Ex.B-8 only disclosed the amount due as on the date of auction.  The opposite party also did not file minutes of auction before this Forum so as to disclose the participants which is in its special knowledge. 

14.   The complainant contended that he did not receive any intimation after auction.   It is the contention of the opposite party that it intimated the complainant regarding auction.   The opposite party did not file any document to show that it sent the proceedings of auction to the complainant.  

15.  The conduct of opposite party in not mentioning the rate of interest in Exs.A-1 to A-7, B-1 and B-2; the rate of penal interest, not incorporating the auction clause in Exs.A-1 and A-2 (that was mentioned in Exs.B-1 and B-2), not filing publication said to have been made on 25-11-11, not filing proceedings of auction; not sending auction proceedings to the complainant in our considered opinion constituted unfair trade practice which amounted to deficiency of service.   We therefore hold that the opposite party committed deficiency of service and answer this point against the opposite party.         

16.  POINT No.3:-   The complainant claimed Rs.46,800/- being the difference of gold price as on 05-12-11.   It is the contention of the complainant that the gold rate of 22 carats was Rs.2700/- as on                05-12-11 and relied on Ex.A-9 which is a Xerox copy generated from www.mcx.com.   Gold ornaments pledged by the complainant were used one and as such they did not fetch the market value as rightly contended by the opposite party.  

17.   The complainant contended that he agreed to pay interest at 12% p.a.    The opposite party though denied the rate of interest did not mention the interest and penal interest it charged either in complaint or affidavit though it is within its special knowledge.   Under those circumstances, this Forum has to presume the rate of interest as mentioned by the complainant @12% p.a., is correct.  

18.   The complainant did not adhere to the conditions mentioned in Exs.A-1 and A-2 and he is responsible for auction of gold ornaments as rightly contended by the opposite party.  The opposite party in all received Rs.62,050/- (Rs.20,400/- + Rs.41,650/- in respect of the  loans covered by F464 and F498) as seen from Ex.B-8.    In respect of the loan amount of Rs.13,200/- the opposite party claimed Rs.18,516/- (Ex.A-1 = B-1) and Rs.36,706/- in respect of the loan amount of Rs.26,531/- (Ex.A-2 = B-2) as on the date of auction as revealed from Ex.B-8.  Ex.B-8 further revealed that the opposite party in all charged Rs.5,316/- and Rs.10,571/- for the period of about one year two months by way of interest on the loans covered by Exs.A-1 and A-2.    The net weight as mentioned in Ex.B-1 and B-2 totaling to 29.2 grams has to be taken into consideration and the rate per gram of 22 ct. comes to Rs.2,125/-.   No doubt the said amount is less than the market rate as mentioned in news bulletin/papers.   Being used ornaments the same will not fetch market price as rightly contended by the opposite party.   Therefore we hold that the amount realized by the opposite party by gold auction cannot be said as unreasonable.  

19.   Ex.B-8 also did not disclose the rate of interest and penal interest charged by the opposite party for claiming interest of Rs.5,316/- and Rs.10,571/- for the loans covered by Exs.A-1 and A-2.   Absence of rate of interest and penal interest in Exs.A-1 (=B-1), A-2 (=B-2), A-3 to A-7 and B-8 leads us to draw an inference that the amount of Rs.45,000/- due by the complainant has to be taken as correct. As per Ex.B-8 the opposite party is in possession of Rs.6,828/- after auction belonging to the complainant which it failed to return under proper acknowledgment.  Under those circumstances, directing the opposite party to refund Rs.17,050/- (Rs.62,050/- - Rs.45,000/-) will meet ends of justice.             

20.   This Forum has already discussed the conduct of the opposite party in granting loans, rate of interest and conducting auction of pledged goods regarding the complainant.  The said conduct could cause harassment to borrowers.   Under those circumstances awarding Rs.3000/- as damages will meet ends of justice.   We therefore answer this point in favour of complainant  accordingly.

10.  POINT No.4:-      In view of above findings, the complaint is party allowed as indicated below:

1. The opposite party is directed to refund Rs.17,050/- (Rupees        seventeen thousand fifty only) to the complainant together with interest @12% pa., from 06-12-11 till payment.

1. The opposite party is directed to pay Rs.3,000/- (Rupees three thousand only) as damages to the complainant.

1. The opposite party is directed to pay Rs.1,000/- (Rupees one thousand only) towards costs of the complaint.

1. The amounts ordered above shall be paid or deposited within a period of six weeks from the date of receipt of the copy of the order failing which the amount mentioned in clause 2 will carry interest @9% p.a., till payment.

            Typed to my dictation by Junior Steno, corrected by me and pronounced in the open Forum dated this the 11^th day of October, 2012.

MEMBER                                  MEMBER                                PRESIDENT

APPENDIX OF EVIDENCE

DOCUMENTS MARKED

For Complainant:

For opposite party: 

        PRESIDENT