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M/s Muthoot Finance Ltd., Muthoot Chambers, Ernakulam & Another v/s O. Krishnapillai

Company & Directors' Information:- S P FINANCE PRIVATE LIMITED [Active] CIN = U65990MH1979PTC021790

Company & Directors' Information:- MUTHOOT FINANCE LIMITED [Active] CIN = L65910KL1997PLC011300

    First Appeal No. 886 of 2015

    Decided On, 11 February 2020

    At, Kerala State Consumer Disputes Redressal Commission Thiruvananthapuram

    By, MEMBER

    For the Appellants: C.S. Rajmohan, Advocate. For the Respondent: ----

Judgment Text

R. Ranjit, Member

Opposite parties 1 and 2 have filed this appeal against the order dated:29.9.2015 in CC.196/14 on the file of CDRF, Kollam (for short the District Forum). The District Forum by its order directed the opposite parties to refund Rs.18,099/- the excess amount received from the complainant as interest, with 18% interest to the complainant from 8.7.2013 till realisation. They were again directed to pay compensation of Rs.10,000/- and Rs.2500/- as costs of the proceedings.

2. The case of the complainant is that the he approached the 2nd opposite party and availed three gold loans (i) Loan No.MXL-12894 dated10.06.2011 for Rs.70,800/- (ii) Loan No. MRL-73872 dated:31.08.2011 for Rs.70,000/- and (iii) Loan No.XLP-10673 dated 10.10.2011 for Rs.14,000/-. At the time of availing the said loans, the 2nd opposite party informed the complainant that the rate of interest applicable will be @ 21% per annum for a period of 9 months and above that period, the rate of interest will be @ 24% per annum. The complainant closed the three loan and released the gold. Loan XLP 10673 was closed on 28.12.2012 (period of loan was 14 months & 19 days) by remitting an amount of Rs.19,390/-. He paid an amount of Rs.5390/- as interest. The rate of interest is about 32% per annum. Then on 8.7.2013, the other two loans were closed. Loan No.ML-12894 was closed (Period of loan was 25 months) by remitting an amount of Rs.1,20,644/-. The interest amount wasRs.49,844/-. The rate of interest is about 34% per annum. Loan No.MRL.7472 was closed (period of loan 22 months and 8 days) by remitting an amount of Rs.1,08,313/-. Interest amount was Rs.38,313/-. The rate of interest was 29.5% per annum. The act of the opposite party was unfair trade practice and deceisting. The matter was informed to the opposite party in writing but in vein. Then the complainant approached the banking Ombudsman, which referred the matter to the Reserve Bank of India as the subject matter was out of its jurisdiction. RBI clearly opined that the opposite party had not clearly indicated the rates of interest in the pledge forms. Opposite party has illegally collected an excessive interest of Rs.31,726/- (Thirty one thousand seven hundred and twenty six only) from all the three loans, which is against the fair practice code envisaged in the RBI, guidelines. It is an unfair trade practice.

3. Opposite parties filed version contending that the Reserve Bank of India and banking Ombudsman rejected the claim of the complaint. Complainant remitted the entire amount and redeemed the gold pledged based on agreement executed in favour of the opposite party. The complainant has redeemed his pledged gold ornaments on agreed rate of interest. The calculation and rate of interest mentioned in the statement is absolutely wrong and without any bonafides. This opposite party, by honouring an ex-serviceman than any other citizen of India offered a further reduction of Rs.2785/-. It is further submitted that it was not an admission, but as an honour to a man who served this great nation. This opposite party never committed any unfair trade practice or any negligency or deficiency of service. Absolutely no illegal act is intentionally or unintentionally is committed or any deficiency of service committed by this institution.

4. The evidence consisted of oral testimony of the complainant as PW1 and Exts.P1 to P5 marked on his side. Opposite party’s, the Manager was examined as DW1 and their documents were marked as D1 to D6.

5. The District Forum found that opposite party a financial institution had collected excess interest than what is mutually agreed between the complainant and the finance company. Charging the excess interest amounts to unfair trade practice and deficiency of service on the part of the opposite parties is the finding of the Forum. Thus they were directed to refund Rs.18,099/- the excess amount received from the complainant along with 18% interest and Rs.10,000/- as compensation and Rs.2500/- as costs of the proceedings. Aggrieved by this order opposite party has come up in appeal.

6. Heard both the counsel and perused the records. Learned counsel for the appellant canvassed that as per the agreement the complainant/respondent remitted the interest and redeemed the gold ornaments without any complaint. As the complainant was an ex-serviceman, the bank offered reduction of Rs.2785/-. There is no unfair trade practice or deficiency of service committed by opposite parties. As per the fair practice code issued by the RBI the rate of interest was informed to the complainant at the time of pledge. Opposite party has acted only as per the terms of the RBI. Opposite parties had levied only the interest rate as per the agreement between the parties and it is not against the law in force. Hence the direction of the District Forum to refund the interest collected with 18% interest along with unreasonable compensation is unjust and unreasonable and illegal and prays for setting aside the order. The respondents counsel on the other hand canvassed that the interest agreed between the parties for the three gold loans are 21%, 26% and 28% for the period up to 9 months, 12 months and above 12 months respectively. But the opposite parties had collected 32% interest for the first gold loan which was closed on 28.12.2012 and for the other two gold loans they have collected the interest at the rate of 34% and 29% which is against the guidelines of the RBI. Moreover the opposite party had admitted in the Ext.A5 letter that they have collected more interest than what is agreed between the parties. They have collected an amount of Rs.31,726/- illegally from all the three loans. Learned counsel prays for dismissal of the appeal.

7. We have examined the rival contentions canvassed by both the counsel and also perused the records.

8. The fact that the complainant had availed three loans and that he had closed the loan after paying the interest as asked by the opposite party, is admitted. The only question in dispute is with regard to whether opposite parties had collected higher rate of interest than what is stated in the gold loan agreement. The branch manager of the first opposite party who was examined as DW1 has admitted that the appellant had levied up to 31 % interest for the three gold loans which were pledged with them. The admitted rate of interest as per Ext.D1 to D5 pledged forms are 18% for 3 months 19% for 6 months, 22% for 12 months and above 12 months it is 24%. The rate of interest in the pledged forms varies and it goes up to a maximum of 28%. For the gold loan No.MXL-12894 the principle amount is Rs.70,800/- whereas admittedly the appellants received Rs.1,20,644/- as closure amount out of which Rs.49,844/- ie interest amount. For the gold loan No.MRL-7372, the principle amount is Rs.70,000/- whereas the appellant received Rs.1,08,313/- for closing the loan, out of which Rs.38,313/- is the interest amount. For the gold loan XLP-10673 for Rs.14,000/- the appellant received an amount of Rs.19,390/- for closing the loan out of which the appellant levied an amount of Rs.5390/- towards interest. The appellant admitted while deposing that they have charged more interest than the agreed terms. They have also admitted that they have charged excess amount as interest in Ext.P5 letter issued by them. Even though the complainant has asked for refund appellant did not care to refund the excess amount collected from the complainant on the above said gold loans.

9. The District Forum in these circumstances has rightly dir

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ected the appellant to refund Rs.18,099/- the excess amount, received from the complainant as interest on the three gold loans along with 18% interest to the complainant from 8.7.2013 till payment. No doubt in the above acts or omissions on the part of the appellants in not honouring the complainant’ s request for refund of the excess amount collected by them, caused much mental agony and financial loss to him. Thus the District Forum awarded a compensation of Rs.10,000/- on this ground. We feel it is only just and reasonable compensation to be awarded in this circumstance. 10. In the light of the above we are of the opinion that there is no ground to interfere with the well reasoned order of the District Forum. There is no merit in the appeal. In the result appeal is dismissed. Parties to suffer their respective costs.