ORDER
Complaint under Sec.12 of the CPA 1986 as amended upto date
Per Sh. Rakesh Kapoor, President
On 8th March, 1990, the complainant had purchased a bond from the respondent bank vide Folio No. EDDB 0623861 Certificate No. 006536366 for a sum of Rs.5300/- having Distinctive No. 000656366. It is alleged by the complainant that at the time of the purchase of the bond, he was assured that the bond would fetch an amount of Rs. 1 lac at the higher maturity date i.e. 1.6.2006. However, when the complainant surrendered the bond to the OP, he received a cheque for Rs.13,853/- instead of Rs.50,000/- which was payable to him as per the schedule of payment. The complainant took up the matter with the Ops but to no effect. Hence, the complaint wherein he has prayed for a direction to the OP to pay the complainant the balance amount of Rs.36,147/- alongwith interest and cost.
The Ops have contested the complaint and have filed a written statement. The Ops have denied any deficiency in service and have justified their action whereby they had refunded a sum of Rs.13,853/- to the complainant. The defence of the OP is contained in Para 2 & 3 of Preliminary Submissions of the W.S. which are being reproduced as under:-
2. That erstwhile Industrial Development Bank of India was a statutory corporation established under the Industrial Development Bank of India Act, 1964 (18 of 1964) (since repealed). Pursuant to the Industrial Development Bank (Transfer of undertaking and Repeal) Act, 2003 (53 of 2003) (IDBI Repeal Act), the business T and undertaking of erstwhile Industrial Development Bank of India, has been transferred to, and vested in IDBI Bank Ltd., with effect from October 1, 2004, from which date all liabilities, duties and obligations of the erstwhile Industrial Development Bank of India stood transferred to the Respondent.
3. That at the very outset, and before dealing with the statement, submissions, contentions, pleadings and averment raised by/dealt with by the Complainant, the Respondent respectfully makes the following submissions about the facts of the case:
2 A. That IDBI had made a public issue of bonds in January 1996 under 4 types of the unsecured redeemable bonds viz. IDBI Discount Bond ‘96, IDBI Easy Exit Bond ‘96, IDBI Regular Income Bond ‘96 and IDBI Retirement Bond ‘96. The bonds issue was made in accordance with the guidelines to Development Financial Institutions for Disclosure and Investor Protection dated September 29, 1992 issued by SEBI. The Bond Regulations have been approved by the Parliament and are in the nature of sub-ordinate legislation. In terms of Regulation 3 of the Bond Regulations, IDBI was authorized to issue the bonds in the form of promissory note or in the form of entry in the books of the IDBI. As such, the bonds issued by IDBI for public subscription were in the form of promissory note.
B. That in terms of offer document (filed with SEBI) dated January 30, 1996, IDBI Discount Bond having price value of Rs. 5300/- were issued with a condition of Withdrawal/ redemption to the Bondholder and/or IDBI. The principal terms of IDBI Discount Bond are given on pages 8 to 10 of the Offer Document, Wherein it has been clearly stated “IDBI ALSO RESERVES THE RIGHT (CALL OPTION) TO REDEEM THE DISCOUNT BOND AT THE DATES INDICATED ABOVE”. One of such date was August 1, 2000 and IDBI was liable to pay a sum of Rs. 10,000/- per bond to the investor, if decides to exercise the call option. The document in support has been annexed herewith and marked as Annexure-I (Colly). Therefore, IDBI was liable to pay a sum of Rs. 10,000/- per bond to the investor on August 1, 2000, if IDBI decides to exercise the call option. It is not of place to mention here that As per Regulation 19 of the IDBI (Issue and Management Bonds) Regulation 1972 IDBI shall be discharged its obligation in case of payment made after a lapse of four years from the date of which the payment was due.
C. That when the Public Issue was launched in the year 1996, the Deep Discount Bond were offered as one of the instruments with longer maturity period. However, keeping in mind, the interest of the investors against fluctuating lending rates, future fluctuation/fierce market conditions, risks involved in the financing projects, lDBl incorporated Put/Call Option facility at the time of issue of Bonds itself. It has been specifically mentioned in the Application Form/on the bond certificate that the Investors shall have the option to redeem the bond at the deemed face value on the dates indicated therein. Similarly lDBl also had the right to exercise call option and redeem the bond at the deemed face value on August 1, 2000, December 1, 2006, September 1, 2011 and June 1, 2016. As per the Offer Document, IDBI has the right to exercise Call Option on 1.8.2000 and the same had been printed on the face of the Bond to avoid any confusion/misinterpretation by the bondholders.
D. That subsequent to the issue of the said bonds, the lending rates started declining and commercially it was not just viable for the IDBI to continue to pay higher interest on such bonds. So in terms of Offer Document, IDBI decided to exercise the call option available on August 1, 2000 and redeem the bonds by paying Rs. 10, 000/- as per the commitment. It finds pertinent to mention here that apart from individual notices through UPC (Under Postal Certificate) to the Bondholders, as per the practice the Call Option Notice was published in the leading Newspapers like Financial Express, Jansatta on 11/05/2000 and in Dainik Bhaskar, Dainik Jagran and in Delhi edition of Times Of India & Hindu on 10/05/2000. The document in support has been annexed herewith and marked as Annexure-Il (Colly). It is further submitted that through the Call Option Notice dated 09/05/2000 published in all major News Papers it has been informed to the bondholders of the lDBl Deep Discount Bonds that “Notice is hereby given by the IDBI to holders of IDBI Deep Discount Bonds and IDBI Retirement Bonds of the Flexibonds Issue, 1996 that IDBI has decided to exercise the Call Option pursuant to the offer document dated January 30, 1996. Accordingly IDBI Deep Discount Bonds and IDBI Retirement Bonds of the Flexibonds Issue, 1996 will be redeemed by IDBI on August 1, 2000 i.e. call option date. Notice of call option will be issued to all 4 the bond holders whose name appears in the Register of bond holders with the Registrar as on May 25, 2000. In case of joint holders, such notice will be given to the first named holder.”
E. That accordingly, IDBI sent the call option notice dated 25/05/2000 with all requisite forms and requested all the bondholders including the complainant on 27/05/2000 through UPC at its registered address as provided to the respondent at the time of the purchase of the bond to surrender duly discharge bond certificates to M/S Investors Services of India Ltd., Navi Mumbai, the Registrar & Transfer agent of IDBI, by July 15, 2000 to enable bondholders/Complainant to receive redemption proceeds by 01/08/2000.
F. That it finds pertinent to mention here that from our call option notice published in the Newspapers on May 10, 2000 and the individual notice dated 25/05/2000 that IDSI had clearly mentioned therein that “No interest will be payable on the bonds beyond August 01, 2000” i.e. call option adaptation date. Notice of call option will be issued to all 4 the bond holders whose name appears in the Register of bond holders with the Registrar as on May 25, 2000. In case of joint holders, such notice will be given to the first named holder.”
E. That accordingly, IDBI sent the call option notice dated 25/05/2000 with all requisite forms and requested all the bondholders including the complainant on 27/05/2000 through UPC at its registered address as provided to the respondent at the time of the purchase of the bond to surrender duly discharge bond certificates to M/S Investors Services of India Ltd., Navi Mumbai, the Registrar & Transfer agent of IDBI, by July 15, 2000 to enable bondholders/Complainant to receive redemption proceeds by 01/08/2000.
F. That it finds pertinent to mention here that from our call option notice published in the Newspapers on May 10, 2000 and the individual notice dated 25/05/2000 that IDBI had clearly mentioned therein that “No interest will be payable on the bonds beyond August 01, 2000” i.e. call option date so as to avoid any confusion/misinterpretation by bondholders and make the redemption proceeds available to them by August 1, 2000. It is not out of place mention here that the Respondent has also taken utmost care to forward Reminder Intimation Notice to the complainant about the call option vide letter dated September 22, 2000 sent through UPC at the same address mentioned above. It is further to submit that the Respondent had also published the Reminder Notice in the Leading National Newspapers on October 7, 2002 requesting all the bond holders to surrender the duly discharge original bonds and obtain the redemption amount. The copy of the reminder notice and the Newspapers are annexed herewith and has been marked as Annexure-V & Annexure-VI respectively.
G. That the Advertisements were effected and Notices of the exercise of call option were sent to all registered bondholders, in terms of regulations to bring to the notice of the Public about the exercise of call option and in discharge of the obligation of IDBI to effect such publication/communication.
H. That it is further submitted that it was clerly stated in the Offer Documents “The bondholders must get his name registered with IDBI if he decides to exercise Early Redemption option or if IDBI decides to exercise the call option. The Bonds will be redeemed only on the surrender of the duly discharged Bonds certificates by the registered Bondholders.
I That despite the intimation and reminders, individually as well as through publication fo th call option notices in the year 2000 and 2002 the complainant did not surrendered the bond on time. That on the surrender of the bond the respondent had duly paid the bond value with interest at the 3.5% compounded quarterly on dated 10.10.2011. It finds pertinent to mention here that IDBI has taken a decision keeping in view of the RBI direction, to pay interest at the rate of 3.5 % p.a. on quarterly compounded basis from the date of redemption on the redemption value of unclaimed bonds. This policy decision was reiterated by our Hon’ble Finance Minister in Parliament on 14.7.2009.
J That it finds pertinent to mention here that similar type of the case (Case NO. 573/2007) under the title Shri Prahlad S/o Sushil Nagpal and Sushil Amarmath Nagpal v/s IDBI has been filed before the Hon’ble District Consumer Forum at Nagpur in Maharastra state based on the same facts. The Hon’ble District Consumer Forum through its judgment dated 8.4.2008 pronounced “The industrial Deveopment Bank of India (IDBI) has every right to redeem the IDBI Deep Discount Bond of Flexibonds, 1996 on the date mentioned on the Bond Certificate. As per this, the Opposite Party (IDBI) have redeemed the bond certificate on 1st August, 2000. The Oppsite Party has every right to do so. Therefore the Opposite Party is not deficient in providing service to complainant. The complaint is hereby dismissed”. The certified true copy of judgment pronounced on 8.4.2008 by the Hon’ble District Consumer Disputes Redressal Forum, Nagpur in Maharastra State is annexed herewith and has been marked as Annexure-VII.
The OP has contested the complaint on merits and has reiterated that they had made payment as per applicable terms and conditions. They have claimed that there is not merit in the complaint and the same is liable to be dismissed.
We have heard arguments advanced at the bar and have perused the record.
The complainant has filed his own affidavit in support of his complaint. On behalf of the OP an affidavit has been filed by Sh. Bijay Kumar, Assistant Manager, Bonds Department. Sh. Prasad in his affidavit has corroborated the contents of the written statement as reproduced by us above. It is not disputed that under the terms and conditions under which the Bonds were issued, the OP bank had the option to redeem the bonds at the end of 10 years i.e. 1.8.2000. The OP bank had duly exercised the said option and had sent letters to the Bond holders informing them about the exercise of the said option. Apart from this public notices were also issued in the form of publication in leading newspapers, information was also given to the bond holders under UPC. The OP bank had thereafter paid interest @ 3.5 % p.a. to the investors who had not submitted the bonds for redemption as per call option issued by the bank. This was done in accordance with the decision of the Govt. of India. We are, therefore, of the considered opinion that there was no deficiency on the part of the OP bank in refunding a sum of Rs.13,853/- to the complainant instead of the amount of Rs.50,000/- as sought by the complainant. We see no merits in this complaint. The same is hereby dismissed.
Copy of the order be made available to the parties as per rule. File be consigned to record room.
Announced in open sitting of the Forum on.....................
