KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION VAZHUTHACADU THIRUVANANTHAPURAM APPEAL NO: 195/2008 JUDGMENT DATED:31..05..2010. PRESENT SMT. VALSALA SARANGADHARAN : MEMBER SRI. M.V. VISWANATHAN : JUDICIAL MEMBER 1. The Manager, Canara Bank, Kanhangad Branch, P.O. Kanhandgad. : APPELLANTS 2. The Deputy General Manager, Canara Bank, Circle Officer, 18/167, 2md floor, P.K.Kamalam, Kozhicode-673 004. (By Adv:Sri.P.Balakrishnan) Vs. Gopalakrishna Shenoy, Sreevenkatesh, : RESPONDENT Adiyamboor, Balla.P.O, Kanhangad. JUDGMENT SHRI.M.V. VISWANATHAN : JUDICIAL MEMBER The appellants were the opposite parties and respondent was the complainant in CC:26/2008 on the file of CDRF, Kasaragode. The complaint therein was filed alleging deficiency of service on the part of the opposite party/Canara Bank, Kanhangadu Branch in reducing the rate of interest from 13% to 12% and thereby claimed a sum of Rs.55,843/- as the loss suffered by the complainant. The opposite parties entered appearance and denied the alleged deficiency of service on their part. They contended that the rate of interest for fixed deposits over 3 years were reduced to 12% from 14/7/1997 as per RBI guidelines and that the Kamadhenu Fixed Deposit Receipt issued to the complainant was due to a mistake and the said mistake was corrected within one year of deposit after duly intimating the complainant. Thus, the opposite parties prayed for dismissal of the complaint. 2. Before the Forum below Ext.A1 fixed deposit receipt was marked on the side of the complainant and B1 to B3 documents on the side of the opposite parties. After hearing both sides, the Forum below passed the impugned order dated:30th July 2008 allowing the complaint and directing the opposite parties to pay Rs.55,843/- to the complainant with interest at the rate of 9% per annum from the date of the complaint till payment with cost of Rs.2000/-. Hence the present appeal. 3. We heard both sides. The learned counsel for the appellants/opposite parties argued for the position that the rate of interest was reduced from 13% to 12% by virtue of the guideline issued by Reserve Bank of India and the said matter was informed the complainant. He relied on B2 circular dated:11/7/1997 issued by the General Manager, Canara Bank Development Section, Bangalore and submitted that the A1 fixed deposit receipt was issued to the complainant by mistakenly showing the rate of interest as 13% instead of 12% and that the said mistake was corrected in the light of the RBI guideline. He relied on the decisions rendered by the Hon’ble National Commission reported in 2001 (3) CPR 166 (NC) and 2002 (3) CPR 29 (NC) and submitted that the reduction of the rate of interest based on RBI guide line can be justified. Thus, the appellants prayed for setting aside the impugned order passed by the Forum below in CC:26/08. On the other hand, the learned counsel for the respondent/complainant supported the impugned order passed by the Forum below. He further submitted that the B2 circular was not sufficient to alter the terms of agreement entered into between the complainant/depositor and the opposite party/bank. He also relied on the decision rendered by the Hon’ble Supreme Court in Syndicate Bank Vs. Veeranna and Others reported in AIR 2003 SC 2122. Thus, the respondent prayed for dismissal of the present appeal. 4. The points that arise for consideration are:- 1. Whether there was deficiency of service on the part of the appellants/opposite parties in reducing the rate of interest from 13% to 12%? 2. Whether the Forum below can be justified in allowing the claim of the respondent/complainant for Rs.55,843/- by way of the loss suffered by the complainant with interest and costs? 3. Is there any legally sustainable ground to interfere with the impugned order dated:30/7/2008 passed by the CDRF, Kasaragode in CC.26/2008? 5. Points 1 to 3:- There is no dispute that the respondent/complainant effected the term deposit (fixed deposit) of Rs.1,30,000/- with the 1st opposite party, Canara Bank, Kanhangadu Branch under the Kamadhenu fixed deposit. The aforesaid Kamadhenu fixed deposit is covered by A1 fixed deposit receipt. The aforesaid fixed deposit was for 10 years with effect from 24/7/1997. The date of maturity was 24/7/2007. A1 fixed deposit receipt was issued on 30/11/99 for a period of 10 years with effect from 24/7/1997. The maturity value of that deposit was calculated at Rs.4,67,246/-. Thus, as per A1 fixed deposit receipt, the 1st opposite party/Canara Bank was liable to pay a sum of Rs.4,67,246/- on the maturity date of 24/7/2007. Admittedly appellants/opposite parties paid only Rs.4,24,065/-. Thereby a sum of Rs.55,843/- was deducted. The aforesaid deduction was made on the ground that the rate of interest has been reduced to 12%. Admittedly in A1 fixed deposit receipt the rate of interest was shown as 13%. The admitted facts would show that the appellants/opposite parties failed to pay the agreed rate of interest and thereby they deducted a sum of Rs.55,843/-. 6. The reason or ground stated for deducting a sum of Rs.55,843/- that in A1 receipt the rate of interest was mistakenly shown as 13% instead of 12%. It is the further case of the appellants/opposite parties that as per the RBI guide lines, the rate of interest for fixed deposits for more than 3 years was only 12% and that the aforesaid mistake was corrected within one year and the same was corrected with intimation to the complainant. But the complainant has denied the case of the opposite parties that such intimation was given to him by the opposite parties as contended. There is nothing on record to show that the aforesaid rate of interest was reduced within one year of the deposit and that the reduction of rate of interest was intimated to the complainant/depositor. Ext.B1 is only a letter dated:11/8/2007 and B3 is the reply notice dated:14/12/2007. B2 is the circular dated:11/7/1997. No other document is forthcoming from the side of the appellants/opposite parties to substantiate their contention that intimation was given to the respondent/complainant within one year of the deposit. It is to be noted that A1 deposit was on 30/11/99 with effected from 24/7/1997. If that be so, the intimation ought to have been given during the year 2000. But no document is forthcoming evidencing issuance of any such intimation to the respondent/complainant (depositor). The available evidence on record would show that no such intimation was given by the opposite parties to the complainant. The facts, circumstances and evidence on record would support the case of the respondent/complainant that the reduction of rate of interest was informed the complainant only when he approached the 1st opposite party to get the maturity amount after the date of maturity of 24/7/2007. Ext.B1 and B3 documents would also support the case of the complainant that he was informed about the reduction of rate of interest from 13% to 12% only after 24/7/2007. It can be seen that the appellants/opposite parties enjoyed the fixed deposit amount for a period of 10 years and only after the date of maturity of the fixed deposit, the depositor was informed about the reduction of rate of interest from 13% to 12%. The aforesaid deduction of Rs.55,843/- effected by the appellants/opposite parties can be treated as a unilateral action without the consent of the respondent/complainant. A1 fixed deposit receipt would make it clear that there was an agreement entered into between the complainant and the opposite party (Canara Bank) agreeing to pay interest at the rate of 13% on the fixed deposit. It can also be seen that as per the said agreement, the respondent/complainant was entitled to get the maturity value of Rs.4,67,246/-. But the opposite party/Canara Bank had only paid Rs.4,24,065/-. The aforesaid deduction of Rs.55,843/- would amount to deficiency of service. 7. The appellants/opposite parties have got a case that they reduced the rate of interest from 13% to12% by virtue of the RBI guide line circular. But the appellants/opposite parties have not produced any such guide lines or circular issued by Reserve Bank of India stipulating rate of interest for fixed deposits of 3 years and more at 12% per annum. Ext.B2 is the circular No:145/97 dated:11/7/1997 issued by the General Manager, Development Section, Canara Bank, Bangalore. It is to be noted that B2 is not the RBI circular or guide lines. There is also nothing in B2 circular to show that the said circular is issued based on the RBI circular or guide lines. In effect there is nothing in B2 circular indicating that the Reserve Bank of India has stipulated the rate of interest for fixed deposits for over 3 years at 12% per annum. B2 circular would make it clear that the RBI reduced the cap rate prescribed for accepting domestic deposits for 30 days to one year and NRE deposits for 6 months to one year from 9% to 8%. But there is nothing in B2 circular about the fixation of rate of interest for domestic fixed deposits over 3 years at 12% per annum. A perusal of B2 circular would make it clear that the rate of interest for domestic deposits over 3 years was fixed at 12% per annum by the opposite party/Canara Bank. But, there was no RBI circular or guide lines stipulating the rate of interest for domestic deposits over 3 years at 12% per annum. The case of the appellants/opposite parties that there was RBI circular or guide lines fixing the rate of interest at 12% cannot be upheld. 8. The instructions contained in B2 circular issued by Canara Bank would make it clear that for reducing the rate of interest written consent of the depositor is required. Instruction 8 of B2 circular is as follows:- “In respect of domestic, capital gains, NRE and NRNR term deposits accepted on or after 14/7/1997 but prior to receipt of this circular, branches shall change the rates of interests (maturity value wherever applicable) already quoted on such deposits in accordance with the rates furnished above with the written consent of under due intimation to the depositor/s concerned.” 9. The aforesaid instruction would give a clear indication that if rate of interest is quoted in a fixed deposit receipt by the branch of the Canara Bank, the reduction of the interest rate in accordance with the said circular can be made only with the written consent of the depositor concerned. But in the present case on hand, the respondent/complainant/depositor was not informed about the proposed reduction of interest rate. The opposite parties have not obtained the written consent of the complainant/depositor for reducing the rate of interest from 13% to 12%. It is to be noted that the complainant/depositor ought to have been given an option to withdraw the fixed deposit amount, on reduction of the rate of interest from 13% to 12%. The failure on the part of the opposite parties in informing the proposed reduction of interest rate resulted in denial of the opportunity to exercise such an option. In effect, the opposite party/Canara Bank is benefited by reducing the rate of interest from 13% to 12% without the consent of the respondent/complainant (depositor). So, the action on the part of the opposite parties in reducing the rate of interest was against the provisions contained in B2 circular. 10. It is true that as per B2 circular issued by opposite party/Canara Bank, the rate of interest on domestic term deposits over 3 years had been fixed at 12% per annum. But A1 fixed deposit receipt dated:30/11/1999 was issued to the complainant/depositor agreeing to pay rate of interest at 13% per annum with effect from 24/7/1997. It can be seen that the A1 fixed deposit receipt was issued showing the rate of interest at 13% against the direction contained in B2 circular issued by Canara Bank. It is also true that B2 circular was in force from 14/7/1997. But, the 1st opposite party/Branch Manager, Canara Bank, Kanhangadu Branch issued A1 fixed deposit receipt agreeing to pay interest at the rate of 13% per annum on the fixed deposit covered by A1 FD receipt. It can be seen that the 1st opposite party issued A1 fixed deposit receipt against B2 circular issued by the General Manager, Canara bank. But, as far as the respondent/complainant/consumer is concerned, he was not aware of B2 circular issued by the higher authority of the 1st opposite party. A1 FD receipt would show that there was an agreement entered into between the 1st opposite party and the complainant with respect to the transaction covered by A1 FD receipt and thereby the 1st opposite party accepted the fixed deposit amount of Rs.1,30,000/- from the complainant/consumer agreeing to pay interest on the said amount at the rate of 13% per annum. The complainant/consumer is not bound by B2 circular issued by the General Manager of the bank to the branches of Canara Bank. The complainant/consumer is not concerned with B2 circular. 11. There is nothing on record to show that the complainant/consumer was aware of B2 circular issued from the head office of the bank to the branches of bank. It has been held by the Hon’ble Supreme Court in Syndicate Bank Vs. R.Veeranna and Others reported in AIR 2003 (SC) 2122 that instructions to the branches of bank issued by head office for their guidance and to safe guard the interest of bank cannot affect the terms of the agreement entered into between the customer/depositor and the bank. In the present case, the 1st opposite party/branch manager of the Canara Bank, Kanhangadu branch entered into an agreement with the complainant/depositor agreeing to pay interest at the rate of 13% per annum on the fixed deposit amount of Rs.1,30,000/- and evidencing the same A1 fixed deposit receipt was issued. So, the rate of interest specified in A1 fixed deposit receipt will prevail over the rate of interest shown in B2 circular. In other wards, the complainant/depositor is not bound by B2 circular. It is also to be noted that B2 circular cannot be treated as the circular issued by Reserve Bank of India. It is the settled position that depositor could not be paid interest at the rate higher than the maximum prescribed by RBI and that bank could not be found at fault for reducing rate of interest to follow the rate of interest prescribed by RBI. It is to be noted that the rate of interest prescribed by the Reserve Bank of India will bind the banking and financial institutions and they are bound by the circulars issued by the RBI prescribing the rate of interest. But in the present case on hand, there was no such circular issued by Reserve Bank of India fixing the rate of interest at 12% or reducing the rate of interest to 12%. The respondent/complainant being the depositor is entitled to get rate of interest as shown in A1 fixed deposit receipt. The appellants/opposite parties could not be justified in reducing the rate of interest from 13% to 12% and by deducting a sum of Rs.55,843/- from the agreed maturity value of Rs.4,67,246/-. The aforesaid deduction of Rs.55,843/- would amount to deficiency of service. The Forum below is justified in directing the opposite parties to pay the aforesaid sum of Rs.55,843/- to the complainant with interest at the rate of 9% per annum from the date of complaint in CC:26/08 and cost of Rs.2000/-. Thus, the impugned order passed by the Forum below is confirmed. The present appeal deserves nothing, but dismissal. These points are answered accordingly. In the result the appeal is dismissed. The impugned order dated:30/07/2008 passed by CDRF, Kasaragode in CC:26/08 is confirmed. As far as the present appeal is concerned, the parties are directed to suffer their respective costs. M.V. VISWANATHAN : JUDICIAL MEMBER VL. VALSALA SARANGADHARAN : MEMBER | 
