BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM AT BANGALORE (URBAN)

O R D E R

SRI.P.V.SINGRI, PRESIDENT

In both these complaints the complainant as well as OP are one and the same and the issue involved in both these cases are same.  Therefore, both these complaints have been taken up together for disposal under this common order. 

The complainant has filed these two complaints under Section 12 of Consumer Protection Act, 1986 against Opposite Party (herein after referred as OP) with a prayer to direct the OP to close his entire loan account as per law and return entire pledged gold articles and to pay him Rs.1,00,000/- under each complaint towards legal expenses and damages, together with interest at 12% per annum.

2.  The brief averments made in the complaint are as under:

The complainant has availed personal loan from the OP on various dates by pledging gold ornaments and details of the same are as under:-

1. Availed a loan of Rs.1,84,000/- in loan account No.1227 on 25.08.2010 by pledging gold ornaments weighing 117.5gms as collateral security.
2. Availed loan of Rs.84,000/- in loan account No.1558 on 28.09.2010 by pledging gold ornaments weighing 52.10gms as collateral security.
3. Availed loan of Rs.1,30,000/- in loan account No.4046 on 11.11.2011 by pledging gold ornaments weighing 65.80gms as collateral security.
4. Availed loan of Rs.63,000/- in loan account No.4047 of 11.11.2011 by pledging gold ornaments weighing 33.30gms as collateral security.
5. Availed loan of Rs.1,31,000/- in loan account No.4048 on 11.11.20141 by pledging gold ornaments weighing 65.30gms as collateral security. 
6. Availed loan of Rs.88,000/- in account No.4073 on 13.01.2012 by pledging gold ornaments weighing 43.40gms as collateral security.

4.      At the time of sanctioning the above mentioned loans to the complainant, the OP have issued undertaking and sanction letter in favour of the complainant.  At the time of sanctioning the said loans the OP promised the complainant that they would charge interest at 16% per annum only on the principal amount and further agreed to send details of interest charged every month either by post or courier.  However, OP has not complied with their promise and are not sending the details of statement of account every month.

5.  The complainant visited the office of the OP several times, but the OP failed to furnish the statement of loans account.  However the complainant was informed that the outstanding of loan account No.1227 as Rs.2,92,460/- and in account No.1558 the outstanding amount of Rs.1,13,354/- as on 09.04.2012.  The complainant was further informed that the outstanding loan in account No.4046 as Rs.1,96,880/- and Rs.95,457/-  in account No.4047, Rs.1,98,402/- in account No.4048 and Rs.1,29,103/- in account No.4073 as on 10.06.2013. The complainant was shocked to know the said outstanding amount and on calculation it was found that the OP has charged interest at 33% per annum.  The complainant is not interested with the said loan accounts and requested the OP to close his loan accounts as per the rate of interest as promised by them.  However, the OP has not closed the account as requested by the complainant.  The OP is not entitled to claim interest more than 14% per annum as per Government Notification dated 28.08.2003.  The OP has charged abnormal rate of interest.  This is against the provision of Karnataka Prohibition of Charging Act 2004.  As per the said Act the maximum interest chargeable is 14% per annum on secured loans. 

6.  Since, the OP failed to close the loan accounts of the complainant, he got issued legal notice to the OP and despite receipt of legal notice, the OP failed to comply with the legal notice and close the loan accounts of complainant charging interest as orally agreed at the time of the loan transactions.  Certain goondas on behalf of the OP visited the office and the house of the complainant and demanded extra amount from the complainant and threatened that the entire gold ornaments pledged with the OP will be sold in auction.  Therefore, the complainant was compelled to file these two complaints. 

7.  For the aforesaid reasons the complainant prays for an order directing the OP to close the entire loan accounts of the complainant as per law and return the entire pledged gold articles and pay a compensation of Rs.1,00,000/- with interest at 12% per annum in complaint No.1254/2012 and compensation of Rs.2,00,000/- together with interest at 12% per annum in complaint No.1414/2013.

8.  In response to the notice issued, the OP appeared through their advocate in both the complaints and filed their almost similar version in both the complaints, contending in brief as under:-

That both the complaints filed by the complainant are not maintainable and he is not entitled to any relief much less the compensation claimed in the complaints.  The OP at no point of time had orally promised to charge interest at 14 or 16% per annum as claimed by the complainant.  The OP has also not undertaken to send the statement of account every month.  The complainant has never visited office of the OP demanding the statement of account etc.  The OP never sent Goondas to forcibly recover the loan amount from the complainant.  The OP has charged interest as agreed by the complainant at the time of the above mentioned loan transactions.  The complainant has signed undertaking letter at the time of sanctioning the loans undertaking to repay the loans amount together with interest as mentioned in the undertaking letter.  Therefore, the complainant is liable to repay the loans amount together with agreed rate of interest.  If, at all the complainant fails to repay together with agreed interest the OP has to auction the gold ornaments in public auction and appropriate the sale proceedings towards the arrears of loan.  That the complainant is not a ‘consumer’ as defined under the Consumer Protection Act 1986.  Therefore, he cannot invoke the jurisdiction of this Forum.  The complainant having agreed and having undertaken to pay interest as mentioned in the undertaking letter now cannot allege that the OP has charged exorbitant interest.  The OP has sent several remainders to the complainant to repay the loan amount together with agreed interest. However, the complainant has failed to repay the loan amount till today.  The complainant is not entitled to any reliefs prayed for.

 9. For the aforesaid reasons, the OP prays for dismissal of both complaints by awarding exemplary cost.

10. On the rival contention of both the parties, the points that arise for our determination in this complaint are as under:

1. Whether, the complainant proves the deficiency of service on the part of the OP as alleged in the complaint?

2. If So, what order/relief the complainant is entitled to?

11.   The complainant in both the complaints to substantiate the allegations made in the complaint has filed his affidavit evidence in lieu of oral evidence.  The OP also filed the affidavit evidence of their Manager in lieu of oral evidence.  Both the parties have filed their written arguments.

12. Perused the allegations made in both the complaints, the averments made in the version filed by the OP,   written arguments submitted by both the parties, various documents filed by both the parties.  The learned advocate for OP advanced his oral arguments, however the learned advocate for the complainant failed to advance any oral arguments.

13. Our answer to the above points:

14. POINT NO.1: The loan transactions in both these complaints are admitted.  The only dispute is regarding rate of interest charged by the OP.  The complainant in his complaints as well as in his sworn testimony alleges that at the time of sanctioning the loans OP orally promised that they would charge interest at the rate of 14 or 16% per annum.  However, now they have charged interest at 33% per annum.  Except his self-serving statement the complainant has not produced any credible evidence to substantiate his allegation that the OP had promised to charge interest either at 14% or 16% per annum instead of the rate of interest mentioned in the loan documents/undertaking.  Therefore, we are unable to believe that the OP at the time of sanctioning the loan orally promised to charge interest either at rate of interest at 14% or 16% per annum instead of the rate of interest mentioned in the undertaking given by the complainant in each of the loan transactions.  The burden of proving the said allegation is on the complainant, but the complainant has failed to discharge his burden and to establish that he was promised by the OP that they would charge the rate of interest at 14% or 16% per annum only.

15.  It is submitted on behalf of the complainant that the OP cannot charge interest more than 14% per annum in secured loans as per notification dated 28.08.2003 issued by State Government.  The complainant has produced the copy of the notification dated 28.08.2003 issued by Government of Karnataka, in  exercise of powers conferred by sub-section(1) of the 28 of the Karnataka Money Lenders Act, 1961 (Karnataka Act No.12).  According to the said notification the persons engaged in business of money lending are permitted to charge interest at the rate of interest at 14% per annum in case of secured loans and 16% per annum in case of unsecured loans.  Thus according to the said notification the money lenders cannot charge interest more than 14% per annum in case of secured loans.  In the instant case on hand the loan transactions are secured loans.  Now the question is as to whether this notification is applicable to the business, which the OP is engaged. The OP produced the copy of the proceedings of Government of Karnataka dated 15.06.2010.  Perusal of the said proceedings go to show that the OP has been granted exemptions under the Money Lenders Act 1961 until further orders.  In view of the exemptions given by the State Government the OP is not bound by notification dated 28.08.2003 issued Government of Karnataka.  Therefore, we are of the opinion that the OP is entitled to charge interest as agreed by the complainant and undertaking given by him at the time of each of the loan transactions. 

16. The complainant referring to certain Writs filed by one D.M.Suresh Babu and others before the Hon’ble High Court of Karnataka argued that the interest charged by the OP is in violation of the Karnataka Prohibition of Charging Exorbitant Interest Act 2004 which fixes a maximum interest of 14% per annum on secured loan.  The complainant did not produce the copy of the said Act or the copy of the judgement passed by the Hon’ble High Court in any of the Writ Petition filed by above said Sri.D.M.Suresh Babu or others.  This Forum cannot take cognizance of the news published by the newspaper.  The complainant failed to produce any order passed by the competent authority or the Hon’ble High Court of Karnataka prohibiting the OP from levying interest as agreed or undertaken by the complainant at the time of entering into subject loan transactions.

17. The complainant himself has produced the copies of “Undertaking cum Sanction letter” pertaining to each of the loan transactions pertaining to these two complaints.  The OP has also produced the copies of such undertaking/sanction letter executed by the complainant along with applications for personal loan submitted by the complainant.  The rate of interest as mentioned in the “Undertaking cum Sanctioning letter is 23% per annum for the first month, 24% per annum for the second month, 25% per annum for the third month, 28% per annum for six months and 31% per annum up to 12 months.  In each of the “Undertaking cum Sanction letter” the complainant has put his signature undertaking to repay the loan availed by him along with agreed interest on or before the due date.  The complainant has signed on the said “Undertaking cum Sanctioning letter” only after understanding and agreeing to the rate of interest mentioned therein. The complainant having agreed to pay interest as mentioned in the above said “Undertaking cum Sanction letter” referred to above, is liable to repay the loan amount together with agreed rate of interest only.  Now, he cannot take up a contention that the rate of interest therein in either excessive or exorbitant. 

18. This Forum has no jurisdiction to interfere into rate of interest mentioned in the Undertaking cum Sanction letter.  If at all the complainant feels that the rate of interest imposed by the OP is exorbitant he can challenge the same before the appropriate court or Hon’ble High court.  Moreover, the complainant despite sufficient time given by the OP even failed to repay loan amount together with admitted interest. 

19. For the discussion made above we are of the clear opinion that the complainant has failed to prove deficiency in service on the part of the OP.  Infact the complainant has approached the wrong Forum since this Forum has no jurisdiction to entertain or grant the relief sought by the complainant.  Therefore, both the complaints are liable to be dismissed.

20.  POINT NO.2: The order could not be passed within the stipulated time due to heavy pendency.  In the result we proceed to pass the following:-

ORDER

1. The complaint No.1254/12 and Complaint No.1414/2013 filed by complainant under section 12 of the Consumer Protection Act, 1986 are dismissed. 

2. The parties to bear their own cost.

3. Furnish free copy of this order to both the parties.

4. The original order shall be kept in the file of the complaint No.1254/2012 and a copy of it shall be placed in Complaint No.1414/2013.

          (Dictated to the Stenographer and typed in the computer and transcribed by her, verified and corrected, and then pronounced in the Open Court by us on this the 6^th day of October 2015)

MEMBER                               MEMBER                              PRESIDENT

NRS* 

CC No.1254/2012

Witness examined on behalf of the complainant dated 28.11.2012

1. Sri.Karunakara.K.R.

Witnesses examined on behalf of the OP dated 13.03.2014

1. Sri.S.B.Doddamani, Branch Manager

MEMBER                               MEMBER                              PRESIDENT

CC No.1414/2013

Witness examined on behalf of the complainant dated 28.11.2012

1. Sri.Karunakara.K.R.

Witnesses examined on behalf of the OP dated 12.11.2013

1. Sri.S.B.Doddamani, Branch Manager

MEMBER                               MEMBER                              PRESIDENT