BEFORE THE DAKSHINA KANNADA DISTRICT CONSUMER DISPUTES REDRESSAL FORUM AT MANGALORE

Dated this the  15^th September 2009

COMPLAINT NO.33/2009

(Admitted on 16.2.2009)

PRESENT:              1. Smt. Asha Shetty, B.A. L.L.B., President                                                                                                                                                                                                                                                                                                                                   

                                                                                2. Smt. Sulochana V. Rao, Member

                                                                               3. Sri. K. Ramachandra, Member

BETWEEN:

E.Rama Bharanya,

So Krishna Bhat.B.

Aged 51 years,

Proprietor M.s. Aparna Foods,

Aryapu, Puttur.                                 …….. COMPLAINANT

(Advocate for Complainant: Sri.B.SriKrishna Bhat)

          VERSUS

1. The Chief Secretary,

    Dakshina Kannada Zilla Panchayath,

    Mangalore.       

2. Deputy Director,

    Khadi & Gramodyoga Elakhe,

    Dakshina Kannada Zilla Panchayath,

    Mangalore.                             ……. OPPOSITE PARTIES

(Opposite Parties: Inperson.)

ORDER DELIVERED BY PRESIDENT SMT. ASHA SHETTY:

1.       The facts of the complaint in brief are as follows:

This complaint is filed under Section 12 of the Consumer Protection Act alleging deficiency in service as against the Opposite Party claiming certain reliefs. 

          The Complainant has obtained Seed margin money loan of Rs.40,000/- from the 1^st Opposite Party (Formerly known as Zilla Parishath) through the 2^nd Opposite Party.  The loan was sanctioned as per the proceedings No.DKZP:MKV:SMM:37 dated 15.3.1993 of the Functional Manager, D.K. Zilla Parishath, Mangalore under margin/seed money scheme of Zilla Parishath programme for self employment.  That the Complainant has agreed to borrow the loan as per the terms and conditions set out in a agreement dated 18^th day of March 1993 entered into between the Complainant and the 1^st Opposite Party.

          As per the terms of the agreement the Complainant was liable to pay simple interest at the rate of 9.25% per annum on the principal amount or at the rate specified by the Zilla Panchayath from time to time.  Further the Complainant was liable to pay penal interest at the rate of 2.75% above the normal rate on the overdue installments for the period of default.  With that condition the Complainant has obtained a loan from the Opposite Party. Apart from the loan the Complainant also obtained loan from K.S.F.C. amounting Rs.5,00,000/-.

          It is submitted that when the Complainant about to clear the loan, the 2nd Opposite Party asked the Complainant to pay principal amount of Rs.40,000/- and interest of 1,15,971/-.  The Complainant was asked the Opposite Party on which basis such calculation was arrived into.  Then it was informed that the interest was calculated at the rate of 16% p.a. and a penal interest of 4% as against the agreement entered between the Complainant and the 2^nd Opposite Party.  It is contended that the Opposite Party has no right to charge interest at the rate of 16% or 4% penal interest.  The Opposite Party never intimated the Complainant at any point of time with regard to the 16% and 4% penal interest.  It is submitted that to release the  charge over the property and with no other option has paid the amount demanded by the Opposite Party on 10.11.2008 and contended that the Opposite Party has collected excess amount of Rs.41,070/- in addition to the actual liability and the service rendered by the Opposite Party is a deficient and the calculation arrived by the Opposite Parties arbitrary and hence the Complainant filed the above complaint under Section 12 of the Consumer Protection Act 1986 (herein after referred to as ‘the Act’) seeking direction from this Hon'ble Forum to the Opposite Parties to return the excess amount of Rs.41,070/- along with interest at the rate of 20% to the Complainant. 

2.       Version notice served to the Opposite Parties by RPAD.  The Opposite Party appeared in person filed version and the 2^nd Opposite Party appeared through their counsel filed separate version.

          The Opposite Parties submitted that, the Opposite Party department has sanctioned a sum of Rs.40,000/- to the Complainant who was running a small scale industry under the name Aparna Foods as seed money as per the proceedings of the functional manager dated:13.3.1993.  The loan amount was repayable in installments with the interest at 9.25% per annum and penal interest at 2.75% per annum.  It is submitted that the order of the above sanctioning of loan stated that interest rate could be revised from time to time and the borrower would be liable to pay the same.  The Complainant also executed an agreement dated 18.3.1993 by accepting the said terms and conditions.

          It is submitted that the Directorate of Industry and Commerce of Government of Karnataka as per the order date 2.9.1991 had revised the rate of interest and penal interest to 16% per annum and 4% per annum respectively with effect from 1.8.1991.  This fact was made known to the Joint Director of Industries Center by the Additional Director of the Directorate as per the letter dated 22.11.2002.  This change of interest was conveyed to the Complainant as per the letter dated 2.3.2007.  The Outward Register maintained in the office shows that the letter was posted on 13.3.2007 under the Serial Number.210.  The said entry made in the ordinary course of his procedure correspondence.  The said entry is binding on the Complainant and it is submitted that the Complainant had paid the principal amount Rs.40,000/- and Rs.1,15,971/- as interest on 10.11.2008.  The said amount did not cover the entire amount he owed a further sum of Rs.41,071/- towards the interest and penal interest and contended that there is no deficiency on the part of the Opposite Parties and prayed for dismissal of the complaint. 

3.       In view of the above said facts, the points now that arise for our consideration in this case are as under:

1. Whether the Complainant proves that the Opposite Parties committed deficiency in service?
2. If so, whether the Complainant is entitled for the reliefs claimed?
3. What order?

4.         In support of the complaint Sri E.Rama Bharanya (CW1) filed affidavit reiterating what has been stated in the complaint and answered the interrogatories served on him. Ex.C1 to C3 were marked for the Complainant as listed in the annexure. One Mr.B.R.Yogish, Deputy Director of Khadi and Gramodyoga Department of Opposite Parties (RW-1) filed counter affidavit and answered the interrogatories served on him. Ex.R1 to R11 were marked for the Complainant as listed in the annexure. The Complainant filed written notes of arguments.

          We have considered the notes/oral arguments submitted by the learned counsels and also considered the materials that was placed before the Hon’ble Forum and answer the points are as follows:                

          Point No.(i): Affirmative

          Point No.(ii) & (iii): As per the final order.

REASONS

5.  Points No. (i) to (iii):

In the present case, the facts which are not in dispute is that, the Opposite Party department has sanctioned a sum of Rs.40,000/- to the Complainant who was running a small scale industry under the name Aparna Foods as seed money as per proceedings No.DKZP:MKV:SMM:37 dated 15.3.1993 of the Functional Manager, Dakshina Kannada Zilla Parishath, Mangalore under Margin/Seed money scheme again under Zilla Parishath Programme.  In respect of the above loan the Complainant entered into an agreement dated 18.3.1993 (as per Ex.C1) with the 1^st Opposite Party.  As per the terms of the agreement, the Complainant was liable to pay simple interest at the rate of 9.25% per annum on the principal amount or at the rate specified by the Zilla Panchayath from time to time.  Further the Complainant liable to pay penal interest at the rate of 2.75% above the normal rate on the overdue installments for the period of default.  It is admitted that with that condition Complainant obtained the loan from the Opposite Parties.

Now the point in dispute between the parties are that, as according to the Complainant, the Complainant is liable to pay interest at the rate of 9.25% per annum on the principal amount and in case of default he is liable to pay penal interest at the rate of 2.75% per annum above the normal rate on the over due installments for the period of default.  But in this case without informing to the Complainant and as against the agreement the Opposite Parties have charged interest at the rate of 16% per annum and the penal interest 4% per annum and collected excess amount of Rs.41,070/- from the Complainant.  Since he had to release the charge over the property with no other option paid the entire amount as demanded by the Opposite Parties on 10.11.2008 and protested the claim of the Opposite Parties by issuing a notice and contended that the service rendered by the Opposite Parties is a deficient. 

On the contrary, the Opposite Parties contended that the Complainant executed an agreement dated 18.3.1993 by accepting the said terms and conditions in respect of the above loan transaction, as per the terms and conditions of the agreement interest rate could be revised from time to time and the borrower/Complainant would be liable to pay the same.  It is further contended that directorate of Industry and Commerce of Government of Karnataka as per the order dated 2.9.1991 had revised the rate of interest to 16% per annum and 4% penal interest per annum respectively with effect from 1.8.1991 and the same was conveyed to the Complainant and contended that the Complainant is liable to pay the interest and there is no deficiency.

In order to substantiate the grievances of the Complainant, Complainant himself has been examined as CW-1 and produced Ex.C1 to C3 and RW-1 i.e. Opposite Party No.2 examined and produced Ex.R1 to R11 for the Opposite Parties.  On considering the oral evidence as well as documentary evidence placed on record, the point for consideration is that whether the Opposite Party justified by charging 16% interest per annum and 4% penal interest in this case.  

As we noticed in the admitted facts discussed in the preceding paras it is noticed that Complainant obtained Seed Margin Money loan of Rs.40,000/- from the 1^st Opposite Party formerly known as Zilla Parishath through the 2^nd Opposite Party for running small scale industries under the Margin/Seed Money Scheme.  It is also admitted by both the parties that in respect of the above loan the Complainant and the 1^st Opposite Party entered into an agreement dated 18.3.1993 and the loan was sanctioned.  However, we have perused the loan agreement entered between the parties i.e. Ex.C1, wherein the clause No.3 of the terms and conditions reproduced here below:

“3.   It is agreed by the borrower and Zilla Parishath, Dakshina Kannada, that such sum or sums of money as are drawn under this Bond carry simple interest at the rate of 9.25% per annum or at the rate to be specified by the Zilla Parishath, Dakshina Kannada from time to time.  The interest being charged from the date of drawal of the loan or any instalment thereof to the borrower by the Zilla Parishath.

4.   Penal interest at the rate of 2.75% above the normal rate shall be charged on the overdue instalments for the period of default or at the rate to be specified by the Zilla Parishath, Dakshina Kannada from time to time.”

From the above clause it is very clear that the Complainant liable to pay simple interest at the rate of 9.25% per annum or at the rate to be specified by the Zilla Parishath D.K. from time to time.  And the penal interest at the rate of 2.75% above the normal rate shall be charged on the over due installments for the period of default or at the rate to be specified by the Zilla Parishath D.K. from time to time.  The said loan shall be repaid over a period of four years after the last installments of the main loan sanctioned by the financial institutions is repaid or 8 years  from the date or release of seed capital which ever is earlier.  The said agreement also shows that the Complainant borrowed a total loan of Rs.5,00,000/- from the KSFC, Mangalore on the strength of the seed money sanctioned by the 2^nd Opposite Party.   In the given case, in order to close the loan the Complainant paid Rs.1,15,971/- as demanded by the Opposite Party on 10.11.2008 also proved.  But it could be seen that the Opposite Party while collecting the amount from the Complainant collected the loan amount by charging 16% per annum as against the agreement entered between the Complainant and the 1^st Opposite Party is proved. 

The Opposite Party vehemently contended that as per the Directorate of Industry and Commerce of Government of Karnataka order dated 2.9.1991 had revised the rate of interest and penal interest to 16% per annum and 4% per annum respectively with effect from 1.8.1991.  And also contended that as per the terms and conditions the Complainant is liable to pay interest as specified by the Opposite Party from time to time and the change of the interest was conveyed to the Complainant and they are not deficient.  Admittedly the loan amount was entered between the Complainant and the 1^st Opposite Party on 18.3.1993.  As could be seen from the Ex.R1 i.e. the order dated 2.9.1991 passed by the Directorate of Industry and Commerce of Government of Karnataka revised the interest at 16% per annum and 4% per annum respectively with effect from 1.8.1991.  If that is the case what prevented the 1^st Opposite Party to execute an agreement to the revised rate of interest i.e. 16% and the penal interest at 4% as ordered by the Directorate of Industry and Commerce of Government of Karnataka.  Because the above order was came into force earlier to the agreement entered between the Complainant and the 1^st Opposite Party.   Moreover the above said fact was not intimated to the Complainant atleast immediate after entering into an agreement with effective communications we can say either by registered post or by any other means.  The Opposite Party officials had enough time to revise the agreement by calling upon the Complainant.  It could be seen that there is no such attempt was made by the Opposite Party officials in this case.  The agreement was entered and the Complainant agreed to pay 9.25% per annum and 2.75% penal interest.  Under such circumstances, the Opposite Parties cannot demand the interest against the agreement without any due communications in respect of the above loan transaction.  However, the Opposite Parties took another contention stating that the revised rate of interest was conveyed to the Complainant as per the letter dated 2.3.2007 and produced a Xerox copy of the outward register maintained at their office.  The said communication was denied by the Complainant.  Under such circumstances, it is the bounden duty of the Opposite Parties to prove that the said communication was duly served to the Complainant.  We have perused the Xerox copy of the outward register wherein the serial No.210 shows the name of Rama Bharanya, Aparna Foods, Nethaji Rioad, Aryapu, Puttur, the stamp used shows Rs.5/-.  And the said register do not show whether the said communication was duly served to the Complainant or not.  Apart from the above we further noticed that admittedly the loan was sanctioned in the year 1993 and the agreement was entered between the Complainant and the 1^st Opposite Party also in the year 1993 and the revised interest as pleaded by the Opposite Party came to effect in the year 1991 itself.  But the above said agreement was entered after two years from the above said order, the concerned Opposite Party’s officials without looking into the order passed by the Directorate Industry and Commerce of Government of Karnataka charged and entered agreement for the rate of 9.25% and penal interest 2.75% is very clear.  Now at this stage the Opposite Party took a defence that they have conveyed the change of interest to the Complainant in the year 2007 once again shows their gross negligence that in the year 1993 the agreement was entered and so called communication was attempted to convey after more or less 14 years shows their sheer negligence of the official concerned of the Opposite Parties.  In the given case it is proved that the rate of interest entered between the parties in the agreement dated 18.3.1993 is at the rate of 9.25% and penal interest at 2.75 % and not 16% per annum and penal interest at 4% per annum.  It is also proved that because of the sheer negligence on the part of the Opposite Party officials revised rate of interest was not communicated/conveyed to the Complainant within reasonable time or later.  Therefore, we are of the considered opinion that the Opposite Parties is hereby estopped from claimed 16% and 4% penal interest from the Complainant.  The Complainant is liable to pay only the interest entered in the agreement dated 18.3.1993 and not otherwise. 

In view of the above discussions we are of the considered opinion that the Opposite Party officials concerned committed sheer negligence by charging 16% interest per annum and 4% penal interest on the above loan without conveying the same to the Complainant.  Therefore, the Opposite Party No.1 and 2 are jointly and severally hereby directed to refund the excess amount of Rs.41,070/- to the Complainant along with 10% interest per annum from the date of payment till the date of realization and also Rs.1,000/- awarded as cost of the litigation expenses.  Payment shall be made within 30 days from the date of this order. We further observe that the Opposite Parties have liberty to recover the above said amount from the erred officials concerned. 

6.       In the result, we pass the following:

ORDER

The complaint is allowed. The Opposite Parties No.1 and 2 jointly and severally hereby directed to refund the excess amount of Rs.41,070/- to the Complainant along with 10% per annum from the date of payment till the date of realization.  Further pay Rs.1,000/- as cost of the litigation expenses.  Payment shall be made within 30 days from the date of this order. 

Copy of this order as per statutory requirements, be forward to the parties free of costs and file shall be consigned to record room.

(Dictated to the Stenographer typed by him, revised and pronounced in the open court on this the 15^th day of September 2009.)

                       PRESIDENT

                                (SMT. ASHA SHETTY)

            MEMBER                                 MEMBER

(SMT. SULOCHANA V. RAO)      (SRI. K.RAMACHNADRA)

APPENDIX

Witnesses examined on behalf of the Complainant:

CW1 – Sri Rama Bharanya – Complainant

Documents marked on behalf of the Complainant:

Ex C1 – 18.03.1993: Agreement entered between the Complainant and the Opposite Party.

Ex C2 – 10.11.2008: Notarized copy of the challen for the payment of Rs.1,15,971/- in favour of the Opposite Party.

Ex C3 – 13.11.2008: Letter issued by the 2^nd Opposite Party to the K.S.F.C.

Witnesses examined on behalf of the Opposite Parties:

RW-1: Sri.B.R.Yogish – Deputy Director of Khadi and Gramodyoga Department.

Documents marked on behalf of the Opposite Parties:

Ex R1: Interest calculation on the sanctioned loan amount.

Ex R2: 15.03.1993: Attested Copy of the loan sanctioned order.

Ex R3: 18.11.2002: Proceedings issued by Government of Karnataka.

Ex R4: 02.09.1991: Proceedings issued by Government of Karnataka.

Ex R5: 18.03.1993: Agreement entered between the Complainant and the Opposite Party.

Ex R6: 12.02.1993: Letter of the Complainant to the Dakshina Kannada Zilla Parishath, Mangalore.

Ex R7: 05.03.1993: Letter issued by K.S.F.C. to the Dakshina Kannada Zilla Parishath.

Ex R8: 22.02.1998: Letter written by the Dakshina Kannada Zilla Parishath to the K.S.F.C.

Ex.R9: 09.03.2007: Notice issued by Dakshina Kannada Zilla Panchayath to the Complainant.

Ex.R10:          : Copy of the dispatch register.

Ex.R11: 24.04.2009: Letter of the Opposite Parties to the Complainant.

Dated:15/09/2009                                           PRESIDENT