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Court asks finance firm to return gold ‘auctioned without intimating customer’

The court has asked the company to return the same gold chain or pay money equivalent to the then market rate of the gold chain.

Written by Sailee Dhayalkar | Mumbai | Published: January 14, 2018 4:41:12 am
Consumer court, Muthoot Fincorp LTD, gold chain auction, Mumbai news, indian express news The company allegedly sold her gold before the date when she promised to pay. (Representational photo)

A consumer court has asked finance company, Muthoot Fincorp LTD that gives gold loans, to return a gold chain that they allegedly auctioned without intimating the customer after she failed to pay her interest on time. The court has asked the company to return the same gold chain or pay money equivalent to the then market rate of the gold chain.

Arpita Sanghvi, a resident of Airoli, Navi Mumbai, in her complaint had stated that she had taken gold loan of Rs 60,000 from Muthoot Finance against a gold chain weighing 32.70 gm, on January 31, 2015.

She was supposed to pay 22 per cent interest per annum for the loan, which she claimed that she paid regularly till July 2015. She said she was unable to pay interest on the loan after July 2015.

Sanghvi alleged that Muthoot Finance had auctioned the pledged goods without any intimation or information, despite her promising to clear off the dues by March 31, 2016. The company allegedly sold her gold before the date when she promised to pay.

Sanghvi issued legal notice to Muthoot Finance but it did not reply. She then approached the consumer court. Muthoot Finance, in spite of due service of notice, failed to appear in court. Sanghvi had filed an affidavit of evidence and certain documents on record.

The court has noticed, through documents filed by Sanghvi, that she had defaulted in payment of interest after July 2015. Judge A Z Telgote and member Tryambak Thool of the Thane Additional District Consumer Reddressal Forum, noted that “as per terms and conditions specified in a document filed by Complainant at page 12, the opposite party is entitled to charge interest @ 27 % p.a. in case of default in payment of interest for three months and @ 30 % p.a. plus additional interest @ 12 % p.a. on the total amount of interest in case of default for six months in payment of interest”.

The court said: “The opposite party has no right to auction the pledged goods without intimation to the customer.

In spite of this, the pledged goods of the complainant have been auctioned by the opposite party without any prior intimation to her or without giving her opportunity to clear off the dues. The opposite party is certainly entitled  to charge enhanced rate of interest on the gold loan availed by the complainant due to default committed by her in payment of interest but in any case, is not authorised to auction the pledged goods without her intimation.”
The court also observed that the company has not only rendered deficient services, but has also adopted unfair
trade practice.

Declaring the finance company guilty of deficiency in service, the court asked the company to return the gold chain in question or on the alternative, pay the amount equivalent to the cost of the same as per the then market rate to Sanghvi after she clears off the dues payable as per the terms and conditions of the contract.

The court also asked the finance company to pay Rs 10,000 for mental agony and Rs 10,000 towards cost of litigation.

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