Case Law Details
Tallada Dilip Kumar Vs Shriram City Union Finance Limited (Competition Commission of India)
The OP is stated to be a Non-Banking Finance Company (NBFC) registered under the Companies Act, 1956 as well as with the Reserve Bank of India (RBI) and has been engaged in the business of lending money to the public and collecting deposits. The Informant is stated to be a consumer under Section 2(f) (ii) of the Act.
The Informant has alleged that the OP is charging higher interest rates using illegal methods of EMI calculation without borrowers’ knowledge under the guise of agreement entered into between the parties, for which RBI has no regulation of rate of interest charged except to investigate the fraud.
The Informant has further alleged that the OP has not supplied him with the loan account statements and copies of two aforementioned loans agreements availed to cross-check the EMI fixed by the OP. Moreover, the Informant has alleged that he is unaware of the exact rate of interest charged from him in respect of the two loans availed.
The Commission notes that the Informant has not specified any provision of the Act which has been allegedly violated by the OP. The Commission observes that an examination of allegations from the perspective of Section 4 of the Act requires the delineation of the relevant market and the establishment of dominance of the enterprise in the relevant market so defined.
The Informant has neither defined the relevant market to which the alleged abusive conduct relates, nor provided any information in support of the dominant position of the OP. The Commission observes that a case was filed against the same OP, being Case No. 08 of 2020, inter alia relating to violation of FPC. The Commission, while passing an order under Section 26(2) of the Act in the said matter, had observed as follows:
‘apart from NBFCs, multiple options in the form of private and public sector banks, regional rural banks, cooperative banks etc. are available to the consumers for availing various types of loans in which OPs are dealing, not only in Andhra Pradesh, but on a pan-India basis. The Commission is therefore of the opinion that, in the facts and circumstances of this case, an exact delineation of relevant market is not required as it would not materially impact the assessment of dominance. In the absence of dominance, there is no occasion for the Commission to look into the alleged abusive conduct’.
The Commission is of the prima facie view that the OP does not appear to hold any market power in respect of its activities, thereby allowing it to operate independent of many other entities offering similar services, of the provision of various types of loans to consumers. There is nothing to indicate any change in position as regards the market power of OP since the passing of the earlier order dated 30.06.2021, in Case No. 08 of 2020 cited above. Consequently, the Commission refrains from commenting in any manner on the allegations of abuse as contained in the Information.
Thus, prima facie, no competition concern is observed in the facts and circumstances of the present case, and therefore, the matter is closed forthwith under the provisions of Section 26(2) of the Act. Consequently, no case for grant for relief(s) as sought under Section 33 of the Act arises, and the same is also rejected.
FULL TEXT OF THE ORDER OF COMPETITION COMMISSION OF INDIA
1. The present information is filed by Mr. Tallada Dilip Kumar (hereinafter, the ‘Informant’) under Section 19(1)(a) of the Competition Act, 2002 (hereinafter, the ‘Act’) against Shriram City Union Finance Limited (hereinafter, the ‘Opposite Party’ / ‘OP’) alleging contravention of provisions of the Act.
2. The OP is stated to be a Non-Banking Finance Company (NBFC) registered under the Companies Act, 1956 as well as with the Reserve Bank of India (RBI) and has been engaged in the business of lending money to the public and collecting deposits. The Informant is stated to be a consumer under Section 2(f) (ii) of the Act.
3. As per the Information, the OP has sanctioned two loans to the Informant, with the first loan amount being Rs. 17,00,000/- (Rupees Seventeen Lakhs) and the second loan amount being Rs. 20,00,000/- (Rupees Twenty Lakhs) in the years 2011 and 2013, respectively. For the first loan, an equated monthly instalment (EMI) of Rs. 80,395/- was fixed for a period of 30 months. As per the Informant, the said loan was pre-closed before completion of the loan term. With respect to the second loan, an EMI of Rs. 60,820/- was fixed for a tenure of 60 months. The Informant has refunded the said loan amount due to dispute with the OP pertaining to the fixation of wrong EMI, after cross-checking the same with the EMI calculator provided on the OP’s website.
4. It is also stated that the Informant’s wife entered a sample loan amount of Rs. 10,00,000/- at interest rate of 15% for 60 months on the EMI calculator available on the OP’s website. To the Informant’s dismay, the EMI calculator on the OP’s website allegedly showed a wrong EMI of Rs. 66,670/- per month, which ought to have been Rs. 23,790/- per month as per the RBI EMI calculation. After the Informant’s wife raised the issue with the OP on 30.06.2020, it rectified the said discrepancy on the EMI calculator in its website to Rs. 29,170/- for the aforesaid amount and loan tenure.
5. The Informant has averred that the Informant’s wife requested the OP on 15.08.2020 and 27.09.2020 to conduct an inquiry into the aforementioned EMI miscalculations; however, the OP has not replied to the same till date. The Informant then complained to RBI on the said conduct of the OP.
6. As per the Informant, the OP replied to the RBI vide its letter dated 11.11.2020 stating ‘technical glitch’ as the reason for the miscalculations of the EMIs on its calculator and that the same has been rectified by it. The Informant and his wife were not satisfied by this answer of the OP to the RBI and further complained to the Consumer Education and Protection Cell, RBI, to examine some loans obtained by borrowers from the OP for confirming the veracity of the ‘technical glitch’ as stated by the OP.
7. The Informant has alleged that the OP is charging higher interest rates using illegal methods of EMI calculation without borrowers’ knowledge under the guise of agreement entered into between the parties, for which RBI has no regulation of rate of interest charged except to investigate the fraud.
8. The Informant has further alleged that the OP has not supplied him with the loan account statements and copies of two aforementioned loans agreements availed to cross-check the EMI fixed by the OP. Moreover, the Informant has alleged that he is unaware of the exact rate of interest charged from him in respect of the two loans availed.
9. The Informant has also averred that, for seeking clarity on the above, the Informant’s wife sought account statements from the OP but was denied the same on grounds of being a third party. Following this, the Informant personally requested the OP for the provision of a copy of his own account statement, which was denied by the OP on the grounds of lack of KYC. When Informant provided KYC to the OP, it was refuted on grounds of invalid KYC due to expiry of the Informant’s driving licence and also due to signature mismatch and incorrect name spelling. The Informant thereafter approached RBI, and RBI, vide its reply dated 19.10.2021, reiterated the OP’s reasons for rejection, and the complaint was closed by RBI.
10. The Informant, thereafter, vide letter dated 11.11.2021, clarified to the OP that his name was erroneously spelt by mistake in the earlier letter dated 09.06.2021 sent to the OP. The Informant also submitted other documents with the correct name as a proof to the OP. However, as per the Informant, the OP, to avoid issuing the Informant’s account statement, gave irrelevant reasons, leaving no option with the Informant but to file an Information before the Commission.
11. The Informant also intimated the OP vide notice dated 09.03.2022 claiming the refund of excess EMI amount of Rs. 11,11,064/- allegedly collected for the aforesaid two loans. The Informant further submitted that he sent a reminder dated 04.04.2022 to the OP for supply of account statement; however, till date, no reply has been received.
12. The Informant has also referred to a letter dated 23.03.2022 received from the Assistant Registrar of Companies (RoC), Chennai, vide F. No. ROC-Chn/CIPC/012840/2021, stating that the RoC office has taken up issue with the OP, and on receipt of the OP’s reply, it would take further course of action, if any violations under company law are committed by the OP and/or its directors.
13. The Informant has stated that he is being deprived of the exercise his legal rights due to non-supply of account statements by the OP, who has failed to adhere to the Fair Practice Code (FPC) specified by RBI, directions of Hon’ble Madras High Court to the RBI and Ministry of Corporate Affairs. Moreover, the OP is carrying out its business activities against the spirit of competition law, and an investigation is required to stop wrongful loss to customers and wrongful gain to the OP under the garb of EMI miscalculations.
14. The Informant prayed to the Commission, inter alia, to issue an order asking the OP to supply the Informant’s account statements and loan agreements to enable him to inspect and verify interest rates and cross-check the rate of interest/EMI fixed by the OP. The Informant has also sought interim relief under Section 33 of the Act, reiterating the reason as mentioned above.
15. The Commission considered the Information in its ordinary meeting held on 09.06.2022 and decided to pass an appropriate order in due course.
16. Having considered the averments and allegations made in the present matter, the Commission notes that the Informant, vide his application dated 17.12.2020, sought account statements of his two closed loans availed from the OP in the years 2011 and 2013, respectively, to cross-check the rate of interest/EMI charged by the OP. The account statements were allegedly not supplied to him by the OP in spite of several reminders and requests by the Informant. Accordingly, the Informant has alleged that the OP, inter alia, is carrying out its business against the spirit of the Act and violating the FPC set out by the RBI.
17. The Commission notes that the Informant has not specified any provision of the Act which has been allegedly violated by the OP. The Commission observes that an examination of allegations from the perspective of Section 4 of the Act requires the delineation of the relevant market and the establishment of dominance of the enterprise in the relevant market so defined.
18. The Informant has neither defined the relevant market to which the alleged abusive conduct relates, nor provided any information in support of the dominant position of the OP. The Commission observes that a case was filed against the same OP, being Case No. 08 of 2020, inter alia relating to violation of FPC. The Commission, while passing an order under Section 26(2) of the Act in the said matter, had observed as follows:
‘apart from NBFCs, multiple options in the form of private and public sector banks, regional rural banks, cooperative banks etc. are available to the consumers for availing various types of loans in which OPs are dealing, not only in Andhra Pradesh, but on a pan-India basis. The Commission is therefore of the opinion that, in the facts and circumstances of this case, an exact delineation of relevant market is not required as it would not materially impact the assessment of dominance. In the absence of dominance, there is no occasion for the Commission to look into the alleged abusive conduct’.
19. The Commission is of the prima facie view that the OP does not appear to hold any market power in respect of its activities, thereby allowing it to operate independent of many other entities offering similar services, of the provision of various types of loans to consumers. There is nothing to indicate any change in position as regards the market power of OP since the passing of the earlier order dated 30.06.2021, in Case No. 08 of 2020 cited above. Consequently, the Commission refrains from commenting in any manner on the allegations of abuse as contained in the Information.
20. Thus, prima facie, no competition concern is observed in the facts and circumstances of the present case, and therefore, the matter is closed forthwith under the provisions of Section 26(2) of the Act. Consequently, no case for grant for relief(s) as sought under Section 33 of the Act arises, and the same is also rejected.
21. Notwithstanding the order passed above, the Commission emphasises that the findings reflect the view of the Commission purely from the standpoint of the provisions of the Competition Act, 2002 and has not expressed any opinion on the existence or otherwise of violations alleged in the Information.
22. The Secretary is directed to communicate the order to the Informant accordingly.
