Judicial Analysis Court Copy Headnote Facts Arguments Court observation

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
AVM J. Rajendra, AVSM VSM (Retd.), Presiding Member
Shree Mata Co-Operative Credit Society Ltd. and Ors. – Appellants
versus
Bhimappa Hanamantappa Raddi – Respondent
First Appeal No.476 of 2023
(Against the Order dated 01/03/2023 in Complaint No. 156/2018 of the State Commission Karnataka)
Decided on 16.8.2024

Advocates:
Counsel for the Parties:
For the Appellants:Mr. Ranjeet M. Pawar, Advocate
For the Respondent:Mr. Sudhanshu Prakash, Advocate

IMPORTANT POINT
Dispute involving rendition of accounts & excess interest on loan between parties fell under business domain of cooperative society, requiring to be adjudicated by arbitration.

Headnote:
Consumer Protection Act, 2019 – Section 19 – Multi State Co-Operative Societies Act, 2002 – Section 84(b)(1) – Jurisdiction of Consumer forum/ Arbitration – Disputes involving cooperative societies under Multi State Cooperative Societies Act – Complainant did not produce any evidence to establish unauthorised withdrawal of Rs.4,67,600/- from his account by OPs along with Rs.3 lakh cash – As per section 84 of Act, there is dispute between member & multi-state society – OPs being credit society, acts of lending & borrowing falls within its domain of regular business – Dispute involving rendition of accounts & excess interest on loan between parties fell under business domain of cooperative society, this requiring to be adjudicated by arbitration – Consumer forum does not have jurisdiction to entertain present complaint as same should be dealt by way of arbitration as stipulated in Multi-State Co-operative Societies Act, 2002 – Order of SC is set aside & Consumer complaint is dismissed. (Paras 12, 13, 14, 15, 16 to 20)
Result: FA Allowed.

ORDER

The Appellants filed the instant Appeal under section 51 of the Consumer Protection Act, 2019 (the Act”), against the Order dated 01.03.2023 passed by the learned State Consumer Disputes Redressal Commission, Karnataka. (“State Commission”) in Consumer Complaint No. 156 of 2018, wherein the State Commission partly allowed the Complaint of the Complainant (Respondent herein) against the Opposite Parties (Appellants herein).

2. For convenience, the parties in the present matter are being referred to as per position held in the Consumer Complaint. The appellants are described as Opposite Parties (OPs) and the respondent is described as the Complainant.

3. Brief facts of the case, as per the complainant, are that he approached Shree Mata Co-operative Credit Society Ltd, managed by OPs, for financial assistance to develop his agricultural land. The OPs, operating under the Karnataka Co-operative Societies Act and the Multistate Co-operative Act, approved a loan of Rs.3,00,00,000, secured by the complainant’s title deeds, and agreed to an interest rate of 14% p.a. The loan was disbursed under A/c No. 645 and was to be repaid through 60 EMIs. Subsequently, he discovered that unauthorized withdrawals amounting to Rs.4,68,600/- were made from his account for various funds that he did not authorize. Additionally, Rs.3,00,000/- was withdrawn, but no cash was provided to him. The OPs allocated shares worth Rs. 9,000/- but did not provide him share certificates or dividend. He paid regular instalments to the OPs at interest @ 14% per annum and 16% per annum in case of default, as stipulated in the mortgage deed. Despite requesting a detailed calculation sheet, the OPs failed to provide one. When sought to close the loan account, OPs demanded Rs.69,85,678/- towards interest, claiming that interest was due until January 2016. It is the case of the complainant that interest was charged @ 21% per annum, contrary to the agreed rates. He paid excess interest amounting to Rs.38,18,819 and that the OPs collected Rs.4,67,600 and Rs.3,00,000 in cash without any basis. Consequently, he alleged a deficiency of service and sought a refund of the excess amounts paid by him, along with compensation.

4. In their reply before State Commission, the OPs denied the averments and contended that the complainant approached OP society for financial assistance and a loan of Rs.3,00,00,000 was sanctioned on 14.10.2014 by executing mortgage/loan deed and three sureties. The agreed rate of interest was 18% per annum and, in case default 20% per annum was payable in 60 EMIs. After the loan was sanctioned, he did not heed to repay the loan as agreed. On 31.03.2015 he made a part payment towards the principal amount of Rs.4,110 and interest of Rs.2,98,890. Further, on 19.01.2016 he made part payment of Rs.14,232 towards principal and interest of Rs. 69,85,678, as against Rs.2,99,95,890/-. Thereafter, on 15.12.2017 he paid total outstanding amount of Rs.2,94,79,658 and interest of Rs.1,17,13,141. The said amount was paid based on the requests made by him as a one-time settlement and OPs have also provided a rebate of Rs.5,00,000 to him towards interest. It was the case of the OPs that after paying the loan amount along with interest, he filed this false complaint for wrongful gains and alleged deficiency in service. No excess amounts were collected. What was paid was as per agreement between the parties. There is no consumer and service provider relationship between them.

5. The learned State Commission vide order dated 01.03.2023 partly allowed the complaint against OPs with the following observations:

“In the absence of any materials placed before this Commission, we draw an inference that the Opposite Parties have collected excess rate of interest against the RBI norms, we noticed here that, the loan was sanctioned for the purpose of development of agricultural land. We do not consider the rate of interest collected by the Opposite Parties is in accordance wit