Andhra Bank vs K. Durga Devi

This revision petition has been filed by the petitioner against the order dated 19.01.2010 of the State Consumer Disputes Redressal Commission,

Andhra Pradesh, (in short ‘the State Commission’) passed in First Appeal No.360 of 2007.

Brief facts of the case are that on 05.07.2001, the respondent/complainant applied for Gold Loan for Rs.18,500/- vide application dated 05.07.2001.

The Gold jewellery was duly appraised on 05.07.2001 for Rs.26,600/- by the approved valuer. The appraisal form was duly signed by appraiser and

complainant. The address given by the borrower in her loan application form was 143A, 8 th Block, JPTS, Mallapur, Hyderabad. In February, 2004,

respondent/complainant paid Rs.5000/- towards overdue interest, but did not inform change of her address as alleged by the petitioner. No payments

were made between 05.07.2001 and February, 2004 towards repayment or interest. On 14.05.2004, petitioner bank issued notice to the complainant to

pay loan amount along with interest on the address given in the loan application form.

However, the same was returned unserved. On 20.07.2004 reminder was sent by the bank for the payment of the loan, however, the same was also

returned unserved for the reason “shiftedâ€. On 17.08.2004, the petitioner bank published the auction notice in the news paper Eenadu for auction

of the gold of the respondent/complainant. On 03.09.2004, the gold was auctioned, loan of the respondent was adjusted and the balance amount of

Rs.13,909/- was credited to her savings account of the respondent. On 26.05.2006, the respondent/complainant filed a complaint before the District

Consumer Forum, Hyderabad, (in short ‘the District Forum’) alleging that she had informed about the change of her address and many other

points were alleged. The District Forum after considering the material on record allowed the complaint vide its order dated 23.01.2007 and directed

opposite party/petitioner to pay Rs.15,000/- as compensation and Rs.2000/- as cost to the complainant. Opposite party/petitioner preferred an appeal

before the State Commission bearing No.360 of 2007, however, the State Commission vide its order dated 19.01.2010 dismissed the appeal.

Hence, the present revision petition.

Heard the learned counsel for the petitioner as the respondent was proceeded exparte vide order dated 06.04.2017 of this Commission.

Learned counsel for the petitioner stated that both the fora below have given a finding that there was no time limit for repayment of loan in the loan

application form. It was argued that the loan application clearly stated that the loan was to be repaid within one or two years. Thus, the findings of the

fora below are against the record and cannot be sustained. From the facts of the case also, it is seen that the respondent did not take any concrete

action for repayment of the loan though she had paid Rs.5,000/- as interest in February, 2004 . Contention of the petitioner is that two notices were

sent to the respondent on the address given in the loan application form and the respondent never informed any change in her address. Learned

counsel for the petitioner has argued that the respondent/complainant had agreed that if the loan is not repaid the opposite party/petitioner shall be free

to recover the amount after selling the pledged gold ornaments. The petitioner has not committed any deficiency by selling the gold. Moreover, the

excess amount received in auction has already been paid to the respondent/complainant. Thus, there is no deficiency of service on the part of the

opposite party/petitioner.

On the other hand, on perusing the material on record, it is seen that it has been contended by the respondent/complainant that no such notices were

received before repaying the interest of Rs.5,000/- in February, 2004 and the changed address was also informed.

I have given a thoughtful consideration to the arguments advanced by the learned counsel for the petitioner and examined the record. From the loan

application, it is seen that the loanee has undertaken to repay the loan within one/ two years or on demand by the opposite party at any time, or if she

fails to pay the interest, the opposite party shall be free to recover the loan from the selling of the gold ornaments. The State Commission has observed

that as the gold prices were also increasing and the gold was of more value than the loan amount, there was no hurry to sell the gold. It is seen that

the complainant has paid Rs.5000/- towards interest in February, 2004 and the gold was auctioned on 03.09.2004 for which notice was issued on

17.08.2004.

From the loan application, it is clear that the complainant had given an authority to the bank to auction the gold if the loan is not repaid within one or

two years or the interest is not paid. Loan was taken in July, 2001. The complainant did not pay any amount towards repayment of the loan or the

interest for more than two years and then suddenly she paid Rs.5,000/- as interest in February, 2004. Clearly, the complainant has acted in defiance of

own undertaking given in the application form. As the interest would have been mounting and the bank has to recover loan as well as interest thereon,

the petitioner had no other choice but to auction the gold ornaments.

Thus, I find no irregularity in auction of the gold ornaments by the petitioner bank for recovering the loan amount along with interest. However, it is not

convincing when the complainant paid Rs.5,000/- as interest in February, 2004 and no notice was issued before that date, what was the urgency to

issue notice to the complainant and put her ornaments for auction within a span of six months. Here I agree with the State Commission that the

petitioner/opposite party has shown undue hurry in effecting the auction of gold even though the complainant had paid the interest on the loan amount.

The State Commission has awarded a compensation of Rs.15,000/- and cost of Rs.2,000/-.

In my view when the petitioner has acted in good faith and has deposited the balance amount of Rs.13,909/- in the savings account of the complaint,

the compensation of Rs.15,000/-as awarded by the State Commission seems to be on a higher side. In my view, ends of justice would meet if

petitioner pays a compensation of Rs.7,500/- to the complainant along with the cost of Rs.2000/- as awarded by the State Commission. This order be

complied within a period of 30 days, failing which the petitioner would be paying interest @8% from the date of the order of the District Forum.