Complaint filed on: 17-08-2011
Disposed on: 25-02-2012
BEFORE THE BANGALORE IV ADDITIONAL DISTRICT
CONSUMER DISPUTES REDRESSAL FORUM,
BANGALORE URBAN DISTRICT, NO.8, SAHAKARA BHAVAN, CUNNINGHAM ROAD, BANGALORE – 560 052
CC.No.1513/2011 and CC.No.1514/2011
DATED THIS THE 25th FEBRUARY 2012
PRESENT
SRI.J.N.HAVANUR, PRESIDENT
SRI.GANGANARASAIAH, MEMBER
SMT.ANITA SHIVAKUMAR.K., MEMBER
Complainants: -
1. CC No.1513/2011
V.Rajeswari
(Allias M.Rajeswari)
71/2, Surveyor Street,
Basavanagudi,
Bangalore-56004
2. CC.No.1514/2011
B.R.Vittal,
71/2, Surveyor Street,
Basavanagudi,
Bangalore-56004
V/s
Opposite party: -
ICICI Bank Ltd,
No.1, Commissariat Road,
Bangalore-560 001
(Representing the Industrial
Credit and Investment corporation of India Ltd), Registered office at
163, Backbay reclamation, Mumbai
ORDER
SRI.J.N.HAVANUR, PRESIDENT
The complainants in these cases are husband and wife, and the OP in these cases are one and the same, so, they are clubbed together and disposed off by common order.
2. These are the complaints filed by the complainants against the OP, praying to pass an order, directing the OP to declare the early redemption of the complainants’ bonds by OP dated 15-7-2001, and in crediting the amounts due to the complainants to IEPF as illegal and void, and to pay Rs.2,00,000=00 each to the complainants towards breach of trust and Rs.50,000=00 towards cost and damages.
3. The brief facts of the complaint can be stated as under.
The OP has issued bonds under the name of ASHIRWAD DEEP DISCOUNT BOND to raise funds from the public to meet its business ventures and requirement and for its growth and development under certain the circumstances and conditions, after fulfilling its objectives, the OP has chosen to drop out the bond holders by its action under the heading of early redemption without following the process of law and established practices. Hundreds of bond holders lost their legitimate hard earned money amounting to crores of rupees. The bond holders who purchased the bond in good faith that their small savings would help them in the winter period of their life are deprived of the fruits of their legitimate and hard earned money saved through the bonds floated by the OPs. The complainants have become a victim of the callous, negligent and illegal attitude and methods followed by the OPs. The OP is the CM2 of ICICI Bank Ltd, No.1, Commissariat Road, Bangalore-01, representing the erstwhile Industrial Credit and Investment Corporation of India Ltd, Mumbai. The ICICI limited issued bonds no.1442-837 and 1442-838, certificates no.428802 and 428803 to the complainants naming the same as unsecured bonds in the nature of promissory notes, further naming the bond as ASHIRWAD DEEP DISCOUNT BOND. The bonds are promissory note as claimed in the bonds issued by the OP for the value received and promises the complainants to pay Rs.2,00,000=00 only, when the complainant surrenders the said bond certificates on July 15, 2021. The OP further states in the bond certificates that early redemption is facilitated as follows;
a) On July 15, 2001 for Rs.11,000=00
b) On July 15, 2006 for Rs.24,000=00
c) On July 15, 2011 for Rs.50,000=00
d) On July 15, 2016 for Rs.1,00,000=00
4. The bonds are issued and subject to and with the benefit of the terms and conditions endorsed heron in the prospectus dated April 24, 1996 and the Trustee agreement between the Company and the Central Bank of India as trustee, which shall be binding on the Company to the bond holders, the trustees and all the persons claiming by through and under any of them. The OP did not provide to the complainants on the date of issue of the bond i.e. on July 15, 1996 given at Mumbai or earlier or even now, the said bonds were issued by the Managing Director, Executive Director and the Authorized Signatory of the OP. The stamp duty on the bond namely ASHIRWAD DEEP DISCOUNT BOND, the said instrument bond in the nature of promissory note has been remitted by the Government of India. In the main terms and conditions of the bonds it is stated that the status of the bonds will constitute direct, unsubordinated and unsecured obligation of the company and shall rank Pari Passu inter se shall also as regards amount invested and any benefits thereon payable by the company out of its own funds. In main terms and conditions the procedure of redemption/early redemption by the bond holder briefly stated the bond certificates duly discharged by the sole/joint holders to be surrendered for redemption on Maturity or on Early redemption should be sent by bondholders by registered post with acknowledgement due. It further states in the main terms and conditions of the bond the procedure for early redemption by the company, in case the company decides for an early redemption of the bonds it will announce its intention to do so at least six months prior to the relevant date by giving a notice in the manner stated by publishing in one English and one regional language daily newspapers in Mumbai, Madras, Delhi, Calcutta, Bangalore and Baroda, the individual notices will not be given, as seen from the conditions of the bond which is a promissory note by nature as stated by the company, the date on which the OP can claim the promised amount of Rs.2,00,000=00 is after maturity period which is on 15th July 2021 with options to redeem on,
a) On July 15, 2001 for Rs.11,000=00
b) On July 15, 2006 for Rs.24,000=00
c) On July 15, 2011 for Rs.50,000=00
d) On July 15, 2016 for Rs.1,00,000=00
5. On 14-5-2011 the complainants have submitted letters in persons under acknowledgement to redeem their bonds to meet their personal commitments presumably exercising their options to redeem their bonds on 15-7-2011 for Rs.50,000=00 if the period of six months is waived or on 15-7-2016 for Rs.1,00,000=00 as per the rule of giving a prior notice of six months. The OPs e-mailed a letter to the complainants ref.00 10269425 dated 30-5-2011 that the erstwhile ICICI Ltd who issued the bond, exercised his right for redemption of the bonds due on 15-7-2001 with a notice said to have been issued on 12/1/2001 by publishing notices in the newspapers and also by subsequent intimations/reminders on 15-5-2001, 12-10-2011, 26-2-2002, 21-11-2003, 11-5-2006 and 15-5-2008 by post requesting all the bond holders to surrender the certificates for redemption. The action of OP in transferring the amount due to the complainants to IEPF, Investors Education Protection Fund is unwarranted, irregular and illegal. The redemption provision is only a facility for the exchange of money on either side, such a facility is a premature closure of the transaction under definite understanding and expression of the provision and without this understanding, knowledge and belief it cannot be deemed as maturity date, such a facility can be exercised for the mutual benefits of the transacting parties, but not to the determent of either of them. In this case, there is negligence and carelessness of the OP in not following the principles of natural justice and principles of public usage and practice in communicating one’s intended action. So the complainants pray this forum to declare the early redemption of the complainants’ bond by OP on 15-7-2001 without giving any notice, and in crediting the amounts due to the complainants to IEPF as illegal and void, and also to direct the OP to pay a sum of Rs.2,00,000=00 towards breath of trust and Rs.50,000=00 towards cost and damages. Hence, these complaints.
6. After service of notice, the OPs have appeared through their counsel and filed their version separately. The averments of the version of OPs can be stated in the common as under.
The complaints are not maintainable either in law or on facts; these complaints are liable to be dismissed in limine. The OP is a banking company being represented by its Legal Manager. The redemption of bonds was exercised by ICICI Ltd in the year 2001 and the same was exercised by ICICI Ltd in terms of the agreed terms of the bond by publishing the same in news papers. The complainants after lapse of several years approached the ICICI bank claiming redemption of bonds and filed this frivolous complaint claming the redemption amount, hence the complaints are time barred and liable to be dismissed. The ICICI bank as per the agreed terms of the bond exercised early call option on 15-7-2001 at its deemed face value of Rs.11,000=00, and intimated the bond holders through paper publication, and as per the statutory requirement the redeemed amount was parked in the unclaimed redemption account and sent reminders to the complainants to collect the amount by surrendering the bonds. Despite of the same, the complainants failed to surrender the bonds and collected the redemption amount within seven years from the date of redemption. It is relevant to state as per the provisions of the Companies Act the ICICI bank transferred the unclaimed redemption amount to the IEPF. The act of the OPs in transferring the amount to IEPF while discharge their duty as per the statutory requirement does not amount to deficiency of service, the consumer forum being welfare legislation cannot override the Companies Act, hence the complaints are liable to be dismissed. The OP formerly ICICI Ltd since 2002 i.e. post merger transformed into ICICI Bank Ltd. However, the OP in its former capacity as a public Limited Company came up with four types of bonds/investments which were unsecured, redeemable promissory notes in the nature under the title of ICICI Bonds-1996. Out of such four kind bonds, the complainants had purchased one bond termed as “Ashirwad Deep Discount bond” from the OP. The face value of each bonds were Rs.2,00,000=00 which was issued at discount price of Rs.5,200=00 and capable enough to be redeemed at its face value of Rs.2,00,000=00 at the end of 25th year from the deemed date of allotment. The prospectus provided an option to either party as well as the company to avail option of early redemption of the bond after 5 years. The OP decided to exercise early call option as on dated 15-7-2001 at it deemed face value of Rs.11,000=00 on the basis of surrender of bond certificates by the bond holders. Pursuant to this the OP published notice of early redemption in the news daily on 12-1-2001 calling upon the bond holders to surrender their bond certificates to the OP. Though it was not obligatory to send individual notices in the interest of bondholders, the OP issued redemption circular dated 5-5-2001 alongwith form 15H to all bond holders including the complainants to the address as specified by the bond holders in the application form, accordingly the OP sent the copy of the circular alongwith form 15H at the specified address respectively. The OP again issued reminders dated 12-10-2001, 26-2-2001, 21-11-2003 by mode of ordinary post to such bond holders including the complainants. The complainants failed to surrender their bond certificates despite issuance of notice and reminders. The OP issued final reminder dated 15-5-2008 by RPAD on 2-6-2008 as a last opportunity to the bond holders including the complainants. The complainants inspite of many opportunities afforded having failed to redeem the proceed amount within expiry of due date have filed these complaints on baseless allegations which is not sustainable in law. The complainants sent a letter dated 14-5-2011 to the OP informing change of address and asking for the application form to redeem their bonds. By the time the complainants’ letters were received, the statutory period to hold unclaimed amount had expired and the OP had remitted the unclaimed amount to IEPF funds. Hence the OP issued reply letter dated 30-5-2011 informing the complainants about early redemption of bonds and the transfer of redemption amount to IEPF. The complainants have alleged that bond cannot be redeemed before final maturity date. However, the terms and conditions provides for the early redemption as stated supra. Besides the complainants have impliedly consented to abide by the terms and conditions mentioned therein. Hence, the complainants cannot dispute the act of early redemption opted by the OP. Remittance of redemption amount to IEPF is statutory in nature which cannot be opposed by the complainants. Hence it is prayed for dismiss the complaint against the OP in the interest of justice and equity.
7. So from the averment of complaints of the complainant and objections of the OP, the following points arise for our consideration.
1. Whether the complainants prove that, early redemption of their bond by OP on 15-7-2011, and action of OP in crediting the amount due to them to IEPF is illegal, and there is deficiency in service of OP?
2. If point no.1 is answered in favour of the complainants, how much amount the complainants are entitled towards the value of bond interest and cost?
3. What order?
8. Our findings on the above points are;
Point no.1: In the Affirmative
Point no.2: The complainants are entitled to claim
Rs.50,000=00 towards the value of the
Bond and interest at the rate of 9.5% p.a.
from 16-7-2011 till the date of realization
Point no.2: For the following order
REASONS
9. Answer on the point no.1: So as to prove the case, the complainants in complaints no.1513/2011 and 1514/2011 have filed their affidavit by way of evidence, and produced the original bonds and ten documents alongwith list dated 15-2-2011. On the other hand, one Harish Srivastav who being the collection manager of OP has filed his affidavit and produced seven documents with list dated 20-10-2011. We have heard the arguments of both sides, and we have gone through the oral and documentary evidence of both parties scrupulously. V.Rajeswari, who being the complainant in no.1513/2011 has stated in the affidavit filled by way of evidence that the relationship between her and OP is that of creditor and debtor, and as a debtor the OP is liable to pay her principal amount of Rs.5,200=00 which is capable enough to be redeemed at a face value of Rs.2,00,000=00 on maturity at the end of the 25th year, and after paying the said amount the debtor is discharged from its liability. The act of the OP in transferring the amount to IEPF amounts to negligence and deficiency of service, so this forum can protect her and her complaint has got nothing to do with the Company’s Act 1956. She purchased Ashirwad Deep Discount bonds in the nature of promissory notes from the OP with the face value of Rs.2,00,000=00 only, which was issued by OP for an amount of Rs.5,200=00 and capable enough to be redeemed at the face value of Rs.2,00,000=00 at the end of the 25th year. The said bond was purchased at Mysore, and it is nature of a promissory note, if the OP wants to exercise an option of early redemption, they should follow the terms and conditions mentioned in the bond which they failed to do so. There is no publication given in any of the regional language newspaper, so there is no notice provided to the bondholder(s) action done by the OP, so notice is illegal and it is not binding on her. So also situation of transfer of the fund to IEPF arose due to negligence of officer of OP, she prayed to grant relief as prayed in her complaint. So also the complainant in complaint no.1514/2011 has filed his affidavit by way of evidence and he gave evidence in conformity with evidence of the complainant in complaint no.1513/2011. Both the complainants in the said cases are husband and wife. By reading the averments of both the complaints and evidence of the complainants of these cases, it is made explicitly clearly that the complainants have given evidence in accordance with the averments of the complaints. At this stage, it is relevant to have a glance at the original bonds produced by the complainants. The bonds dated 15-7-1996 were issued by the Industrial Credit and Investment Corporation of India Limited in the names of the complainants, having the face value of Rs.2,00,000=00 each and the name of the bonds are Ashirwad Deep Discount Bond and it is in the nature of a promissory note and not a debenture, and in the bonds main terms and conditions are printed, and in the conditions at clause no.2 of the bonds the provision of early redemption is stated and in that clause, it is stated that the holder(s) of the bond(s) the company shall have the option of early redemption of the bond only at the dates and at the deemed face value mentioned below;
a) On July 15, 2001 for Rs.11,000=00
b) On July 15, 2006 for Rs.24,000=00
c) On July 15, 2011 for Rs.50,000=00
d) On July 15, 2016 for Rs.1,00,000=00
10. Under the clause no.5 of the bond, it is stated that, all notices to the bondholder(s) required to be given by the company or the trustees shall be deemed to have been given if published in one in English and one in regional language daily newspaper in Mumbai, Madras, Delhi, Calcutta, Bangalore and Baroda and the bondholders desirous of exercising the option for early redemption on any of the above dates should submit their requests in writing to the company registrars or to such persons at such addresses as may be notified by the company. The said conditions of the bonds go to reveal that the company and bondholders can exercising the option for early redemption as stated in cause no.2 of the bond, and if the company wants to exercise the option for early redemption, the publication of notice one in English and one in regional language daily news papers in Mumbai, Madras, Delhi, Calcutta, Bangalore and Baroda must be made. The OP has produced a copy of publication in the news paper by name Indian Express as annexure-B. But it is pertinent to note that, the copy of publication in the daily news paper by Indian Express produced by OP does not bear the date of publication and it is not supported by bill towards payment of amount for the publication of notice. The OP ought to have publication notice of redemption in the regional language also, as per the conditions of the bonds. But in the present case one hand, the OP has not produced any notice copy for having published the same in the regional language before seeking redemption and no explanation was given by the OP for not producing the copy of notice published in the regional language. In the absence of producing the notice copy for having published the same in the regional language before redemption of the bonds, the proper conclusion would be that the OP has failed to comply the condition of the bond and it had failed to issue the notice in the regional language. So early redemption of the complainants bonds by OP dated 15-7-2011 is treated as illegal and void in view of the terms and conditions of the bond and notice copy for having published, the notice in the daily news paper by name Indian Express produced by the OP carries no evidential value. Besides the OP has stated both in the version and in the evidence that there was necessity to transfer the fund to IEPF. According, they have transferred the fund of the bond to IEPF. In fact, the OP has not chosen to intimate to complainants before crediting the amount to the IEPF, no sincere efforts were made by OP to intimate the complainants by serving notice atleast. The procedure adopted by OP in depositing the amount to IEPF is totally uncalled for and unwarranted. The negligent or callous act of the OP in not following procedure for early redemption of the bond and depositing the amount to IEPF, has resulted much loss and hardship to both the complainants on hands. The bonds produced by the complainants go to shows that they are in the nature of promissory note, and not a debenture. So we hold that the money transferred to IEPF by ICICI was totally illegal and there is deficiency in the service of OP. The testimonies of both the complainants that the notice issued by the OP is not according to the condition of the bonds and crediting of the amount to the IEPF by OP is illegal are corroborated by terms and conditions of the bonds and the documents of OP. The OP has failed to prove with the documentary evidence that they have followed the procedure as per terms and conditions of the bond and issued notice properly and credited the amount to the IEPF by serving the notice to the complainants. As per the documents of the complainants, it is vivid and clear that both the complainants have exercised their option of redemption on 14-5-2011 by writing a letter to the OP for redemption of their bond and settle the amount. But no positive response was given by the OP. So from the material evidence of the complainants and conditions of the bonds, we are of the considered opinion that, the complainants have proved this point satisfactorily by placing clear and convincing documentary evidence, and accordingly we answer point no.1 in the affirmative.
Point no.2: So making calculation of the bonds by taking into consideration the clause no.2 of the bond i.e. regular dates on which redemption is permitted on July 15th 2011, the value of the bond was Rs.50,000=00. So, we calculated the bond value of the complainants as Rs.50,000=00 each, as the complainants has exercised their option redemption on 14-5-2011. The OP has to indemnify the loss caused to the complainants by paying Rs.50,000=00 each towards the value of the bond. The complainants are entitled to claim interest at 9.5% per annum from 15th July 2011 till realization. The complainants are awarded cost of Rs.2,000=00 each, accordingly, we answer these points. In the result, for the forgoing reasons, we proceed to pass the following;
ORDER
The complaints of the complainants in complaints No.1513/2011 and No.1514/2011 are partly allowed. The complainants are entitled to claim bond amount of Rs.50,000=00 each. The OP is directed to pay the bond amount of Rs.50,000=00 each to the complainants with 9.5% per annum from 16-7-2011 till the date of realization.
The complainants are awarded cost of Rs.2,000=00 each.
Supply free copy of this order to both parties.
It is ordered to place the original order in complaint No.1513/2011 and copy thereof in complaint no.1514/2011.
Dictated to the Stenographer, got it transcribed and corrected, pronounced in the Open forum on this the 25th day of February 2012.
MEMBER MEMBER PRESIDENT
