BEFORE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD

FA 780  of 2013   against CC 16 of 2011  on the file of the District Consumer Forum, Ranga Reddy District

Between:

Smt. K. Visweswari, D/o Nageswar Rao, 50 years

House wife, R/o H. No.16-11-20/6/3/1,

Saleemnagar -2, Malakpet colony,

Hyderabad – 36                                                        ..          Appellant/complainant

And

1. Industrial Development Bank of India,

Head office : IDBI Towers, Cuffle Parade

Mumbai – 400 005, rep by its Managing Director

1. The Managing Director, Investor services of India Ltd,

IDBI Building, 2^nd floor, ‘ A’ wing, Sector – II,

CBD-Bellapur, Navi Mumbai – 400014

1. The Manager, Andhra Bank, Rajiv Chowk Branch

Dilsukh nagar, Hyderabad             … Respondents/opposite parties

Counsel for the Appellant                                      :           Mr. G. Subash

Counsel for the Respondent                                 :           Mr. B. Harinath Rao for R-1

                                                                                                M/s.Mr. Nurulla Baig for R-2.

                                                                                                R-3 is only a formal party.

QUORUM:  

HON’BLE SRI JUSTICE GOPALA KRISHNA TAMADA, PRESIDENT

AND

SRI  R. LAKSHMINARASIMHA RAO, HON’BLE MEMBER

Wednesday, the Eleventh   Day of June, TWO THOUSAND FOURTEEN

Oral Order :   ( As per Sri R. Lakshminarasimha Rao , Hon’ble Member )

1.             Being dis-satisfied with the order passed by the District Forum partly allowing the complaint,  the  complainant has filed the appeal challenging the order of the District Consumer Forum, Ranga Reddy District which directed the respondents 1 and 2 to pay a sum of  Rs.10,000/- along with interest @ 3.5% p.a. from 01.08.2008  and dismissed the complaint against the  respondent no. 3.
2.             The brief facts of the case are that  the appellant deposited an amount of Rs.5,300/- to the  respondents 1 and 2 by way of cheque bearing No. 120995 drawn on third respondent bank, Kothapet branch, Hyderabad and  the respondents issued ‘ Deep Discount Bond -96 ‘Certificate  Folio bearing  No. FDDB 1546639 and  certificate bearing  No. 01609368  on 18.03.2021  for the maturity amount of Rs. 2 lakh  with  Right to choose option to  Redeem the bond (1) on 01.08.2000 at Rs.10,000/-, (2) on 01.12.2006 at Rs.25,000/-, (3) on 01.09.2011 at Rs.50,000/- and (4) on 01.06.2016 at Rs.1,00,000/- with one month prior notice. The respondents  had sent letter dated 29.04.2009 to the appellant  for redemption of bonds on 0108.2000 without any prior option notice as per the norms. They did not produce any evidence that they have withdrawn from the said scheme.  The acts of the respondents 1 and 2 amount to deficiency in service. Hence,  the complaint to direct the respondents to award Rs.50,000/-as per the option dated 01.09.2011 with interest @ 18% pa and costs.

1.             The District Forum returned the complaint and on that the complainant preferred appeal before this Commission  in FA 30/2012 and  after  hearing both the parties, this Commission remanded the matter  to the District Forum for fresh disposal.

1.             The first respondent filed written version  contending  that they have  Right to redeem the bonds exercising early call option on the dates mentioned in the bond.  The respondent no. 1  redeemed the Bond-96 at the face value of Rs.10,000/- by giving intimation to all the registered Bond holders including the appellant six months in advance  i.e., on 10.05.2000 through advertisement in leading news papers and also by sending  “ Industrial Call Option Notice “ under certificate of posting on 22.09.2000 along with reminder notice on 29.04.2009  to redeem the bond for value of Rs.10,000/-. The appellant is responsible  for not surrendering the original bond certificate in response to the notice issued by them. As per the RBI guidelines, IDBI is inclined to pay interest @ 3.5% pa on quarterly compounded basis from the date of redemption on the redemption amount of Rs.10,00o/-. As such  one month’s prior notice is not required to be issued. There is no deficiency in service on their part and the District Forum has no territorial jurisdiction to entertain the complaint.  Thus,  prayed to dismiss the complaint.

1.             The appellant filed her affidavit and Ex. A1 to A6 and the Assistant General Manager of the respondent No.1 Bank  filed his  affidavit and Ex.B-1 to B-19. 

1.             After the matter was remanded by this Commission,  the District Forum on the basis of material available on record, allowed the complaint directing the respondents 1 and 2 to pay Rs.10,000/- along with interest @ 3.5% pa from 01.08.2000 to the appellant  while dismissing the complaint against respondent no.3.

1.             Aggrieved by the order of the District Forum, the appellant preferred this appeal contending that the District Forum ought to have observed that the appellant received notice from the respondents no. 2 and 3 on 29.04.2009 only and that the District Forum failed to see that the notice was not published in Telugu news papers in the State of Andhra Pradesh and Ex.B7 & 14 are published in the year 2006 and 2007, call option date is 01.08.2008 whereas Under Certificate of Posting date was 22.09.2000 and that there is no evidence brought on record that the notices were served on the appellant and there is deficiency in service on the part of the respondents and  thus prayed to allow the appeal setting aside the impugned order.

1.             The point for consideration is whether the order of the District  Forum is vitiated by any misappreciation of facts or law ?

1.             It is beyond any dispute that the appellant deposited an amount of Rs.5,300/- with the respondent for purchase of IDBI “ Deep Discount Bond “  on 10.03.1996.  As per the terms of the Bond, the respondents had the option to redeem it (1) on 01.08.2000 at Rs.10,000/-, (2) on 01.12.2006 at Rs.25,000/-, (3) on 01.09.2011 at Rs.50,000/- and (4) on 01.06.2016 at Rs.1,00,000/-.  It is not disputed that after taking prior approval from the Security Exchange Board of India, the respondents released the public issue with right to redeem the bonds by exercising early call option for the face value mentioned in the bonds.

1.             The learned counsel for the appellant has contended that the respondents had not issued any notice to the appellant and the notice published in  Ex. B-1 to B-4, B-8 to B-13 is not published in Telugu newspapers or in the State of Andhra Pradesh and that Ex. B7 and B14 are published in 2006 and 2007.  He has contended that the notice was sent under certificate of posting subsequently to the call option date i.e., 01.08.2000 and the appellant has not received the notice.  He has submitted that the District Forum has not followed the order of the Hon’ble National Commission.

1.             The respondents exercised call option on 01.08.2000 to redeem the discount bond at maturity value of Rs.10,000/- as per the terms of the Deep Discount Bond – 96.  The respondents had sent Call Option  notice on 25.05.2000 and 22.09.2000 under Certificate of Posting requesting the appellant to submit Discharged Bond Certificate to their agent on or before 15.07.2000.  The notice was published in the news papers on 10.05.2000.  Ex.B-1 to B-4, B6 to B14 are the copies of paper publication showing publication of notice in the news papers such as, “ The Telegraph”, Calcutta, “ the Financial Express”, Mumbai, “ Andhra Bhoomi”, Vijayawada, Andhra Pradesh, “ Andhra Prabha”, Visakhapatnam, Andhra Pradesh, “ Financial Express”, Hyderabad, Andhra Pradesh and “ The New Indian Express”. As such, the appellant cannot contend that he has no knowledge of notice or service of the notice on her.

1.             The decision of the Hon’ble National Commission in “  IDBI Bank Limited Vs. T. K. Nagaratna “, reported in NCD-2008-8-9-CPJ 2008 4 -136 has no application to the facts of the instant case as in that case the respondents had only published  the notice about their intention to exercise their call back option. In the instant case, the notice was sent under Certificate of Posting besides the publication in the newspapers having circulation in the State of Andhra Pradesh. The appellant has not challenged the correctness of her address on which the notice under Certificate of Posting was sent to her and she has not denied the dispatch of notice on the given address.

1.             In “IDBI Bank Limited, Mumbai  Vs.  Amuganti Bhooma Goud, Nizambad “ and another  in  FA no.  896 of  2010 decided on 18.05.2011, this Commission dealt with a case where similar questions of facts and law are involved. This Commission observed :

“in terms of the offer and the application form and the bond certificates, the appellant bank has right to exercise call options to redeem the bonds.  The right of the appellant bank to redeem the bonds has not been challenged by the first respondent.  As per the terms of the offer document and the bond certificate, the redemption amount is only payable on the bond on call option date i.e., 1.8.2000.  The notice sent to the first respondent to the address given by him is presumed to have been received him unless he challenged the correctness of the address mentioned therein.  It is pertinent to note that the respondent no. 1 has claimed to have received the letter dated 29.04.2009 which was sent to the given address.  The parties are bound by the terms and conditions incorporated in the bond certificates.  The appellant bank has stated that it has taken a decision as per the directions of the RBI to pay interest @ 3.5% per annum on quarterly compounded basis from the date of redemption, on the redemption value.  In the circumstances, the first respondent cannot be held entitled to the amount on maturity.  The District Forum has passed an erroneous order in ignorance of the terms and conditions mentioned in the bond.  The order passed by the District Forum is liable to be modified to the extent o scaling down the amount, i.e., redemption amount to Rs.10,000/- and the interest @ 10% pa to 3.5% pa. “

1.             The facts of the aforementioned case and that of the instant case being similar, the District Forum has not committed any irregularity in coming to the conclusion that the appellant is entitled to the amount of Rs.10,000/- with interest @ 3.5% pa as per the decision thereof taken by the respondents and approved by the  RBI.  However, the District Forum was  declined to award the costs and it  appears to be not reasonable, particularly, when  the District Forum  has applied the decision in FA 896 of 2010 to the facts of the case.  Not awarding the costs simply because the third respondent was made party to the complaint does not meet the requirement of reasonableness and principles of natural justice. There seems no justification in declining to award costs.   As such, we are inclined to award costs of Rs.5,000/- throughout the proceedings.

1.             In the result, the appeal is allowed confirming the order of the District Forum in regard to the award of Rs.10,000/- with interest @ 3.5% pa.  The respondent no. 1 and 2 are liable to pay costs of Rs.5,000/- throughout the proceedings to the appellant. Time for compliance four weeks.

                                                                                                            PRESIDENT

                                                                                                            MEMBER

                                                                                                            Dt: 11.06.2014.