Kerala

Idukki

CC/10/257

Mathew John - Complainant(s)

Versus

The Manager - Opp.Party(s)

Adv.Lissy.M.M

28 Mar 2011

ORDER

 
Complaint Case No. CC/10/257
 
1. Mathew John
Mangalathil(H),Valiyathovala.P.O Kattappana
Idukki
Kerala
...........Complainant(s)
Versus
1. The Manager
Muthoot Fincorp limited,Kavitha Building,Kattappana.P.O
Idukki
Kerala
............Opp.Party(s)
 
BEFORE: 
 
PRESENT:
 
ORDER

 

DATE OF FILING : 3.12.2010


 

BEFORE THE CONSUMER DISPUTES REDRESSAL FORUM, IDUKKI

Dated this the 28th day of March, 2011

Present:

SRI.LAIJU RAMAKRISHNAN PRESIDENT

SMT.SHEELA JACOB MEMBER

SMT.BINDU SOMAN MEMBER

C.C No.257/2010

Between

Complainant : Mathew John,

Mangalathil House,

Valiyathovala P.O.

Kattappana, Idukki District.

(By Adv: Lissy M.M.)

And

Opposite Party : The Manager,

Muthoot Fin Corp Ltd.,

Kavitha Building,

Kattappana P.O.,

Idukki District.

(By Adv: V.C. Sebastian)


 

O R D E R


 

SRI. LAIJU RAMAKRISHNAN (PRESIDENT)


 

The complainant availed a loan of Rs.85,000/- from the opposite party by pledging his gold ornaments of 60.500 gm. The complainant was attracted by the advertisement given by the opposite party in the leading newspapers stating that the interest for the loan is 12% per annum. And so the complainant approached the opposite party for availing the gold loan. At the time of availing the loan, the manager of the opposite party assured the complainant that the interest for the loan is 12% per annum. The interest for the loan was not mentioned in the pass book issued to the complainant and not mentioned in the notices served to the complainant by the opposite party. On 1.12.2010, a registered notice was received from the opposite party stating that the auction of the ornaments are fixed on 3.12.2010, the amount and the rate of interest were not written in the notice. So the complainant approached the opposite party's office, but they demanded Rs.1,14,000/- as the amount for redeeming the gold ornaments. But the complainant was entitled to pay only Rs.96,000/- at that time as per the assurance given by the opposite party. So this petition is filed against the unfair trade practice of the opposite party and also for giving direction to the opposite party to calculate the interest as 12% per annum as per the advertisement given by the opposite party.


 

2. The opposite party filed written version stating that it is a Public Limited Company incorporated under the Companies Act 1956, functioning as a Non-Banking Financial Company, registered with the Reserve Bank of India. The opposite party is functioning under the strict principles and guidelines of the Reserve Bank of India. They are having about 1100 branches all over India and having a very large number of customers. They provide speedy and prompt services and charges only reasonable rate of interest for gold loans. The opposite party never issued any advertisement on the rate of interest during the time when the complainant availed the loan. They


 

(cont....2)

- 2 -


 

never advertised the interest rate as 12% and the opposite party never told that interest rate to be charged is 12% per annum. The rate of interest charged by the opposite party is @ Rs.2/- per month and this was informed to the complainant at the time of availing the gold loan and the complainant has agreed the rate, availed the gold loan on 26.11.2009. The normal period allowed for redemption of the gold pledged is one year from the date of pledge and as per the loan agreement between the company and the complainant, the interest of the gold loan was to be remitted on due dates was informed to the complainant at the time of disbursal of the loan. But the complainant had not remitted the interest at the due dates and failed to redeem the pledge at the expiry of the loan period. The opposite party sent the 1st reminder notice on 20.2.2010, 2nd reminder notice under C/P on 28.4.2010, registered notice on 27.5.2010 and the final auction registered notice on 26.11.2010. But the complainant has not taken any steps to redeem the jewels, even after the repeated instructions by repeated notices. The complainant has not paid the interest within the stipulated period so the interest was accumulated. The opposite party is bound to take necessary steps for auction of the pledged ornaments to realise the loan amount after repeated notice to the complainant, in order to avoid a heavy loss. According to Sec.173 of Indian Contract Act, the opposite party is empowered to sell the pledged jewels on default of the borrower in payment of loan with interest. If the customer fails to redeem the pledged jewels within the prescribed period or failed to remit the monthly interest on the stipulated dates as per the pledge token, penal interest is payable by him. This has been clearly stated in the conditions of the gold loan and the complainant has accepted all the conditions stipulated for sanctioning the gold loan. The opposite party is charging only normal rate of interest and penal interest. All the terms and conditions are clearly convinced to the complainant before giving the loan. So there is no deficiency from the part of the opposite party.

 

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 oral testimony of PW1 and Exts. P1 to P5 marked on the side of the complainant and Exts. R1 to R3 marked on the part of the opposite party.


 

5. The POINT :- The complainant produced evidence as PW1. PW1 was attracted by the advertisement given by the opposite party including in the leading newspapers stating Muthoot Smart Gold Loan of the opposite party with 12% interest per annum. Ext.P5 is the copy of the Malayalam daily named Malayala Manorama produced by the complainant in which it is advertised that Muthoot Smart Gold Loan and it is also written that the annual interest rate is 12% only. Ext.P1 is the gold loan pass book issued by the opposite party at the time of availing the loan for an amount of Rs.85,000/-. The opposite party's manager assured that the rate of interest is 12% per annum at the time of availing the loan. Ext.P2 is the notice issued by the opposite party to the complainant demanding the interest of the loan and another notice issued by the opposite party on 26.11.2010 stating that the auction was fixed on 3.12.2010 is marked as Ext.P3. On cross examination of the learned counsel for the opposite party, PW1 deposed that the complainant availed loan from the Muthoot Fincorp which is situated in Kavitha building at Kattappana. At the time when the complainant approached for paying interest of the loan, the opposite party demanded for a hike interest, that is 24% and so the complainant was not able to pay the interest of the loan. Ext.R1 is the copy of the letter issued by the complainant on 3.12.2010 to the opposite party requesting to postponed the auction procedure for a week because the notice for auction received by the complainant only on 2.12.2010. Ext.R2 is the declaration signed by the complainant at the time of availing the gold loan stating that he shall redeem the pledge or renew the above said gold loan


 

(cont....3)

- 3 -


 

account within 3 months by paying up-to-date interest. It is also written that, in the event of the failure to pay the interest, the complainant agreed for the recovery of the gold loan by the sale of the gold ornaments and he will not make any claim in the future. The card signed by the complainant at the time of availing the gold loan stating that he is ready to pay the interest in every month, is marked as Ext.R3.

         

As per the complainant, the complainant approached the opposite party attracted by the advertisement given by the opposite party that the interest rate is only 12% for gold loan and the manager of the opposite party also assured the same at the time of availing the gold loan. But after that the opposite party sent a letter to the complainant stating the auction sale on 3.12.2010. When the complainant approached the opposite party, they demanded Rs.1,14,000/- as loan amount with interest. But the complainant is entitled to pay Rs.96,000/- only. So he was not able to pay the amount. As per the opposite party, they never advertised that the interest rate of the gold loan as 12% and the complainant never paid any interest for the gold loan. The rate of interest is 24% and it was convinced to the complainant at the time of availing the loan and the opposite party is entitled to get the loan with interest by auction sale of the jewels.


 

Ext.P5 advertisement in Malayala Manorama daily shows that Muthoot Fincorp is issuing gold loan with interest rate of 12% per annum and their telephone number in north Kerala, central Kerala, Thiruvananthapuram, Kollam, toll-free number, web site number are also written in that advertisement. They are disbursing the gold loan with 90% of the market value of the gold. There is a facility for repaying in monthly instalments, with the heading “ “. It is also written in the advertisement that, 'Smart Plus Gold Loan of Muthoot Pappachan Fincorp'. In Ext.P1 pass book issued to the complainant at the time of availing the gold loan, there is no mentions of the interest rate of the loan, but it is written that Fincorp Limited, Kavitha building, Kattappana and phone number is also written and an emblem is also fixed there stating Muthoot

Pappachan Group. Ext.P2 notice issued by the opposite party to the complainant, demanded to pay the interest at the earliest, dated 28.4.2010, there is no mentions of the interest rate of the gold loan. In the notice also it is written that Muthoot Pappachan. Ext.P3, which is the notice issued by the opposite party dated 26.11.2010 stating the auction on 3.12.2010, there is no mentions of the interest rate of the loan. Ext.R3, which is the card signed by the complainant at the time of availing the gold loan and in Ext.R2 which is the declaration signed by the complainant at the time of availing the loan, there is no mentions of the interest of the gold loan. In Ext.R2 also it is written that Muthoot Pappachan Group since 1939. So we think that the interest rate of the gold loan is not at all written in documents produced by the complainant or in documents produced by the opposite party. The interest rate of the gold loan which is published in the advertisement in Malayala Manorama daily as 12% per annum. As per the complainant, the opposite party assured the interest rate as 12% per annum at the time of availing the gold loan. As per the opposite party, there was no such advertisement given by the opposite party, but the advertisement was given on 25th November, 2010, in which it is written that Muthoot Fincorp Pappachan group and in Ext.R2 declaration, in Ext.P2 and P3 notices issued by the opposite party, it is written that Muthoot Pappachan group. So we think that the allegation of the opposite party that they never advertised in any of the newspapers that the interest rate is 12% is not at all believable. There is no evidence to show that the interest rate of the gold loan was 24% as per the opposite party. So we think that there is nothing to disbelieve the version of PW1. The opposite party ought to have calculated the interest rate as 12% as per the advertisement given by them. Eventhough the complainant disputed about the interest rate of the gold loan, they never sent any notice to the complainant stating that the interest rate of the gold loan was 24%. It is a gross unfair trade practice from the part of the


 

(cont.....4)

- 4 -


 

opposite party that they are calculating hike interest against the advertisement given by them. The ordinary prudent man avails the gold loan attracted by the advertisement given by the opposite party, but the opposite party deliberately charged hike interest from the complainant.


 

Hence the petition allowed. The opposite party is directed to calculate the interest rate of the gold loan of the complainant as 12% per annum, upto the date of filing this complaint and redeem the gold ornaments to the complainant or pay the balance amount to the complainant, by calculating the market value of the pledged ornaments as on the date of pledge after deducting 12% interest. And also directed to 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 28th day of March, 2011


 


 

Sd/-

SRI. LAIJU RAMAKRISHNAN (PRESIDENT)

Sd/-

SMT. SHEELA JACOB (MEMBER)

Sd/-

SMT. BINDHU SOMAN (MEMBER)


 


 

APPENDIX


 


 

Depositions :

On the side of the Complainant :

PW1 - Mathew John

On the side of the Opposite Party :

Nil

Exhibits :

On the side of the Complainant :

Ext.P1 - The gold loan pass book issued by the opposite party.

Ext.P2 - The notice issued by the opposite party to the complainant dated 28.4.2010.

Ext.P3 - The notice issued by the opposite party to the complainant dated 26.11.2010.

Ext.P4 - Advertisement in the Malayalam daily Malayala Manorama dated 25.11.2010.

Ext.P5 - Newspaper - Malayalam daily Malayala Manorama dated 25.11.2010.

On the side of the Opposite Party :

Ext.R1 - Copy of the letter issued by the complainant dated 3.12.2010.

Ext.R2 - The declaration signed by the complainant dated 26.11.2009.

Ext.R3 - A card of the opposite party, signed by the complainant dated 26.11.2009.


 


 

 

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