SRI.LAIJU RAMAKRISHNAN(PRESIDENT) The complaint is filed against the Manager, Muthoot Finance Private Limited against the hike interest rate in gold loan and also for subsequent relief. The complainant is a businessman at Kattappana, Idukki. The complainant happened to watch an advertisement of the opposite party through notices and banners offering an interest rate of Rs.1/- and Rs.740/- per gram as gold loans. Attracted by the advertisement the complainant approached the opposite party and he promised the complainant and made him to believe that he would give any amount of money at the interest rate of Rs.1/- and Rs.740/- per gram as gold loan. The complainant pawned 363.900 grams of gold at the opposite party finance on 29.06.2006 and availed two loans, one is for Rs.1,83,000/- and the other is for Rs.59,210/-. Two seperate agreements were executed by the complainant in favour of the said company. The opposite party issued only Rs.665/- per gram. Thereafter on 25.07.2006 the complainant approached the opposite party to close his gold loan. Then the opposite party asked Rs.3,630/- as interest. Being doubtful about the amount, the complainant calculated the interest rate and found that the opposite party has changed interest rate from Rs.1/- to Rs.1.5/-. So the complainant refused to pay the interest or to close the loan and asked the opposite party to act as per the agreed terms of the loan. The opposite party acted against the advertisement given by them and the complainant is constrained to send a legal notice to the opposite party, but no reply was given from their part. On 31.01.2007 the complainant received two letters from the opposite party stating that he is going to sale the pawned gold of the complainant in auction as 12 months time is elapsed. The complainant is ready to make payment of the entire loan amount and interest to the opposite party, if the opposite party calculates the interest at the promised rate. So the complaint is filed for alleging unfair trade practice and for compensation under various heads against the opposite party. 2. The opposite party, Manager of Muthoot Finance Private Limited, Kattappana filed a written version. The relationship between the complainant and the said company is a debtor and creditor. Hence the complainant is not a consumer coming under the provisions of the Consumer Protection Act and the petition has to be dismissed. The above said company is engaged in finance business and releasing advertisements to different medias regarding their business activities. The said company has introduced a personal loan scheme named as flexi scheme. As per the said scheme, the company has offered loan for a period of one month. The rate of interest under the said scheme is 12% per annum and the parties interested to avail loan should pay the interest and 0.5% service charge in advance. The complainant was a regular customer of the said company and he is aware about its various schemes. The complainant has not approached the opposite party and the opposite party has not given any offer to him as alleged by the complainant. The opposite party never offered to pay Rs.740/- per gram for gold loans to the complainant. The company is giving only Rs.675/- per gram to the solid ornaments and Rs.650/- per gram for chains and necklaces. The complainant has availed two personal loans on 29.06.2006 and given 274.20 grams of gold ornaments for loan No.18 and 89.70 grams of gold ornaments for loan No.19 to the above said company. He has availed Rs.59,210/- as per loan No.18 and Rs.1,83,000/- as per loan No.19. For which separate agreements were executed by the complainant in favour of the said company. As per the agreement, if the said loan amount is not paid within one month by remitting the principal amount or to renew the loan by paying the interest and processing fee in advance, the complainant is bound to pay interest as applicable to different periods under EPL facility provided by the company. But the complainant has not done the same. As per the agreement the complainant has to remit an amount of Rs.2,420/- being the interest for one month and Rs.1,210/- towards 0.5% service charge on 29.06.2006 to the said company in advance. When the opposite party directed the complainant to pay the same he has in urgent need of money for purchasing the property. So the complainant further requested the opposite party to pay the said amount of Rs.3,640/- in connection with the said loan transaction. The complainant being a close friend of the opposite party, the opposite party has paid the amount to the said company. The complainant never approached the opposite party on 25.07.2006 to close his gold loan and the opposite party never asked to pay Rs.3,630/- as interest towards the account. The opposite party requested to the complainant to return the amount of Rs.3,630/- paid by the opposite party on behalf of the complainant to Muthoot Finance Private Limited. So the opposite party had written a letter to the complainant. Since the complainant has not renewed the loan, the complainant is liable to pay interest at the rate of 18% monthly rate from 29.07.2006 to the said company. The complainant has agreed to settle the matter within 10 days so that the opposite party never replied to the legal notice. But as per the business practice the company has issued notice to the complainant on 31.01.2007. Even after the receipt of the said notice the complainant has not remitted the amount and he filed this complaint alleging false and baseless allegations and the complaint may be dismissed. 3. The point for consideration is whether there was any deficiency in service on the part of the opposite party, and if so, for what relief the complainant is entitled to ? 4. The evidence consists of the chief affidavit filed by the complainant and the oral testimony of PW1 and Exts.P1 to P5 marked. The opposite party was examined as DW1 and Exts.R1 to R5 marked on the side of the opposite party. 5. The POINT :- The opposite party advertised in banners and notices that they are offering gold loan in the interest rate of Rs.1/- and Rs.740/- for one gram of gold. Ext.P2 is the photograph of the same. The opposite party promised the same, when the complainant attracted by the advertisement and approached the Ist opposite party. On 29.06.2006 the complainant pawned 363.9 grams of gold at opposite party's finance company. Ext.P1 is the receipt of the same. On 25.07.2006 when the complainant approached the opposite party for closing the loan, the opposite party asked for Rs.3,630/- as interest. The opposite party calculated interest rate as 1.5%. So the complainant refused to close the same and asked the opposite party to calculate the same as per the agreed terms of loan. The complainant was examined as PW1. The opposite party convinced the complainant that the loan is in the interest rate of Rs.1/- means 12%. After one month on 5.08.2006 the opposite party send a letter through his staff stating that the Manager himself paid the interest Rs.3,630/-, so it should be returned, which is Ext.P3. The legal notice issued by the complainant is Ext.P4(b). But no reply was given by the opposite party. The opposite party was examined as DW1. He deposed that the gold loan was in a special scheme called flexi scheme, in which the interest rate is 12%. But there is a service charge of .5% of the principal amount, is also included in the scheme. The complainant availed two gold loans, one loan is for Rs.1,83,000/- and the other is for Rs.59,210/-. Ext.R4 is the undertaking given by the complainant at the time of availing the loan. In the undertaking the interest rate and processing fee is also written. Ext.R4 is duly signed by the complainant. The loan is for Rs.59,210/- and for Rs.1,83,000/-. The interest and processing fee are required to be remitted in advance. The interest should be renewed within one month. The complainant did not remit the same. So he has to remit an amount of Rs.2,420/- being the interest for one month and Rs.1,210/- towards 0.5% service charge. That is Rs.3,630/-. The complainant assured that the matter will be settled, so no reply was issued to legal notice. Gold loan is issuing as per the day today market value of the gold. If the loan amount is not paid within one month the interest rate will be increased as 18%. The advertisement is giving by the marketing section. The flexi scheme is started long before. Ext.R5 is the circular issued from the Head Office in which the ceiling rate for issuing the gold loan is written. The market rate of gold on 28.06.2006 is also written. Opposite party is not aware of the date of Ext.P2. The opposite party has told to the complainant about the service charge of .5%. The opposite party has remitted interest for the complainant on 29.06.2006. The date of Ext.P3 is not written by the opposite party. The service charge is needed to pay for one time. The processing fee is taken as Rs.5/- upto Rs.10,000/- and Rs.10/- for above. Anyway in Ext.P2 advertisement, the interest rate is written as Rs.1/- only. Nothing about the service charge is written. It is also written that Rs.740/- is offered for one gram of gold. There is no date is written in Ext.P2 advertisement. We think it is an unfair trade practice. If a scheme is introduced by a trader upto which date the scheme will prevail must also should written on that advertisement. Otherwise the trader must clarify that the scheme is not entertained by them when the consumer approaches. Without doing the same the consumer will not able to know about the service charge. As per the opposite party in Ext.R4 which is the undertaking, the whole thing is written. But when a consumer approaches a private bank for getting gold loan, he will be in a hurry burry situation, he may sign any paper in that mood. That is quite natural because he is in need of money. So we think it is a gross deficiency in the part of the bank to calculate interest more than 12% and also calculating the service charge, which is against the advertisement given. The amount given to one gram of gold may vary as per the market value of the gold. No compensation is ordering against the opposite party. As a result, the petition allowed. The opposite party is directed to charge only 12% interest from the complainant as per the advertisement in his gold loan No.18 and 19 for Rs.1,83,000/- and Rs.59,210/- respectively. The opposite party is also directed to exclude the processing charge 0.5% of the principal amount from the gold loan from the gold loan repayment amount. The opposite party should pay Rs.2,000/- to the complainant as cost of this petition within one month of receipt of a copy of this order, failing which the outstanding amount shall carry 12% interest per annum from the date of default. Pronounced in the Open Forum on this the 29th day of August, 2008
