BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM

VAZHUTHACAUD : THIRUVANANTHAPURAM

PRESENT:

SHRI. G. SIVAPRASAD : PRESIDENT

SMT. BEENA KUMARI .A : MEMBER

SMT. S.K. SREELA : MEMBER

C.C.No. 62/2006 Filed on 01/03/2006

Dated: 17..01..2011

Complainant:

C.S. Jaffar, 'Good Will', Njarayilkonam, Madavoor – P.O., Thiruvananthapuram.

(By Adv. N.P. Prabhakaran)

Opposite parties:

1. Kerala Sate Co-operative Bank Ltd., Co-Bank Towers, Palayam, Thiruvananthapuram – 1.

2. Branch Manager, Kerala State Co-operative Bank Ltd., Head Office Branch, Co-Bank Towers, Palayam, Thiruvananthapuram – 1.

   (By Adv. S. Hridya)

This O.P having been heard on 15..12..2010, the Forum on 17..01..2011 delivered the following:

ORDER

SHRI.G. SIVAPRASAD, PRESIDENT:

The facts leading to the filing of the complaint are that, complainant made deposits with the 2^nd opposite party, prior to 2003 and continued to deposit even after that period, that complainant renewed six fixed deposits with the 2^nd opposite party under Diamond Jubilee Cash Certificates vide Nos. 15,16,17,18,19 & 20, that the said deposits were made in Indian Rupees, that 2^nd opposite party had issued the certificates indicating the maturity value and date of those deposits, that Diamond Jubilee Cash Certificates were floated, as a special scheme of deposits in connection with the Diamond Jubilee of the Bank, offering special rates of interest to mobilise more deposits, that when the three cash certificates bearing Nos. 18, 19 & 20 became matured, complainant approached the 2^nd opposite party for refund of the said deposits with interest, opposite party allowed a lesser amount than agreed in the cash certifictes raising some untenable contentions, that opposite party refunded only Rs. 9,47,866/- in the place of Rs.10,02,806/- causing an interest loss of Rs. 54,940/-, that complainant accepted the said amount, out of acute necessity under objections, the action of the 2^nd opposite party was a gross violation of the terms agreed at the time of deposits, that complainant having lost confidence in the bank was forced to foreclose the remaining three cash certificates bearing Nos. 15,16 & 17 amounting to Rs.12,51,165/- after having retained the deposits in the bank ranging for a period of one year and four months to one year and eight months, that the amounts under these deposits were also accepted under objection, that for deposits of period above 12 months and upto 24 months the interest allowed is at the rate of 7.25% per annum, the reduction in the rate of interest would definitely amount to deficiency in service, that short payment of interest loss on account of matured cash certificate Nos. NRA – 18, 19 & 20 was of Rs. 54,940/-, while the interest disallowed on foreclosure of cash certificate vide Nos. NRE 15, 16 & 17 would come to Rs.1,24,454/-, thus the total short payment of interest of all cash certificates would come to Rs. 1,79,394/-. Hence this complaint to direct opposite parties to effect payment of interest amounting to Rs. 1,79,394/- with 9.5% per annum along with a compensation of Rs. 25,000/- and cost of Rs.5,000/-.

2. Opposite parties filed version contending inter alia that complaint is not maintainable, that Diamond Jubilee Cash Certificates were floated in connection with the Diamond Jubilee of the bank, that opposite party never offered any special rate of interest as alleged, that complainant renewed six fixed deposits vide NRE – 15, 16, 17, 18, 19 & 20 with the opposite parties, that opposite parties issued certificates noting the maturity value calculated at the rate of interest which was applicable to NRE deposits prior to 01/12/2003 ie 7.5% instead of 1.80% and 3.10% which is the actual rate of interest applicable to the said deposits, that opposite party had revised the interest rates on deposits based on the advice given by the Reserve Bank of India under NR (O) / NR (E) Rupee Account Scheme as per the Circular No.PDD/7/2003 – 04 dated 10/12/2003 with effect from 01/12/2003, that as per the said Circular the rate of interest applicable to deposits for the period of one year and above but less than two years was 1.80% and for the deposits for the period of 3 years was 3.10%, that the rate of interests applicable to fixed deposits NRE – 18, 19 & 20 was 1.80% and rate of interest applicable to deposits NRE – 15, 16 & 17 was 3.10%, that 2^nd opposite party mistakenly calculated the maturity value at the rate of 7.5% which is applicable to NRE deposits prior to 01/12/2003, that it is only when the depositor tendered the deposit receipts to the branch for refund of deposits, the 2^nd opposite party observed the mistake that the maturity value calculated and noted in the deposit receipts are much higher than the actual rate applicable, that on realising the mistake the 2^nd opposite party convinced the complainant about the mistake happened in the calculation of interest and released only the actual interest calculated at the rates applicable to such deposits at the time of the investment, that complainant presented deposit receipts of NRE – 15, 16 & 17 which were due to mature on 7/3/2007, 9/4/2007 and 11/07/2007 for premature closure, that opposite party had closed the said accounts on 6/8/2005 and refunded the principal with interest applicable for premature closure of term deposits, that as per the clause 10 of the directive of Reserve Bank of India RPCD No.RF.DIR.BC.53/D..1-87/88 "If payment under a term deposit is made before the completion of the period of deposit agreed upon at the time of making of the deposit, the rate of interest payable in respect of such term deposit shall be the one applicable to the period for which the deposit remained with the bank less one percent penalty for premature withdrawal", that fixed deposits NRE – 15, 16 & 17 were deposited for a period of 39 months, that the actual interest rate applicable to the said period is 3.10%, that since the said deposits were closed prematurely the rate of interest at which the interest calculated is 1.80%, that there was no deficiency of service on the part of the opposite party, and that there was no short payment of interest as alleged and the allegation is absolutely wrong. Hence opposite parties prayed for dismissal of the complaint.

3. The points that arise for consideration are:

1. Whether the complainant is entitled to get a sum of Rs. 1,79,394/- as interest as per Diamond Jubilee Cash Certificates?

2. Whether there is deficiency in service on the part of the opposite parties?

3. Whether complainant is entitled to compensation and cost?

    

In support of the complaint, complainant has filed affidavit and has marked Exts. P1 to P7. In rebuttal, 2^nd opposite party has filed affidavit and has marked Exts. D1 to D3.

4. Points (i) to (iii): Admittedly, complainant took 6 Diamond Jubilee Cash Certificates vide certificate Nos. 15,16,17,18,19 & 20. Ext. P1is the letter dated 16/3/2006 from the opposite party to the complainant stating that opposite party has forwarded the details of DJCC NRE A/Cs held by the complainant with opposite party. Ext. P2 is the copy of the Diamond Jubilee Cash Certificate NRE-18. As per Ext. P2 the amount deposited: is Rs. 4,68,372/-, date of deposit, 15/4/2005. It is seen written that the said deposits renewed on 17/8/2004, and the bank agrees to pay Rs. 5,04,500/-, 12 months after date on presentation of the certificate. Ext. P3 is the copy of the NRE-15 Diamond Jubilee Cash Certificate. As per Ext. P3, the amount deposited is Rs. 4,69,187/-, period of deposit is 39 months, matured amount is Rs.6,02,102/-. Ext. P4 is the copy of the Diamond Jubilee Cash Certificate for Rs. 2,34,593/-. As per Ext. P4 the date of deposit is 03/04/2004, matured amounts is Rs. 3,01,036/-, period of deposit is 39 months. Ext. P5 is the copy of the cash certificate dated 12/04/2004 for Rs. 5,47,385/-. As per Ext. P5 period of deposit is 39 months, matured value is Rs. 7,02,457/- . Ext. P6 is the copy of the Advocate notice to the complainant. Ext. P7 is the postal receipts and acknowledgment cards. Opposite parties' evidence consists of oral testimony and Exts. D1 to D3. Ext. D1 is the copy of the Circular No.PDD/7/2003 – 04 issued by the Managing Director of the Kerala State Co-operative Bank. It is seen stated in Ext. D1 that based on the advice given by the RBI it has been decided with immediate effect, that the maturity period of fresh NRE deposits will normally be one to three years. Further it is stated that the interest rates on deposits under NR(O) / NR(E) Rupee Account Scheme were last revised vide Circular No.RFD/18/2002 – 03. As per Ext. D1 the rate of interest for Term Deposits for one year and above but less than 2 years is 1.80%, interest for 2 years and above but less than 3 years is 2.50% and for 3 years interest is 3.10%. It is further stated in Ext. D1 that the new rates will be applicable to fresh deposits / renewed deposits on or after 1/12/2003. Ext. D2 is the copy of the Circular No. RFD/18/2002 – 03 wherein it is stated that the interest rate for Term Deposits from 6 months to less than one year is 6.75, from one year to less than 3 years is 7.5, 3 years and above is 7.75. It is stated further therein that the new rates will be applicable to fresh deposits / renewed deposits on or after 10/3/2003. Ext. D3 is the copy of the Circular issued by RBI on 2 November, 1987 regarding interest rates on deposits. Complainant has been cross examined by opposite parties. In his cross examination complainant has deposed that he had firstly withdrawn deposit Nos. 18, 19 & 20. He has further deposed that opposite party has informed him regarding the RBI advice when he approached opposite parties for withdrawing the matured amounts. Opposite party has been cross examined by the complainant. He has admitted in his cross examination that under the aforesaid scheme a quarterly interest would cumulate. DW1 has deposed that complainant has availed the aforesaid deposit certificate Nos. 15,16,17,18,19 & 20. In his cross examination DW1 has further deposed that at the time of maturity they would offer interest as per the Guidelines of the RBI, and complainant has accepted the same. It is further deposed by DW1 that at the time of issuance of the certificate the rate of interest has been wrongly noted. DW1 has admitted in his cross examination that Ext.D3 is in connection with the premature closure. To the question that when did opposite party come to the notice of the error in the interest, DW1 has replied that it came to the notice of the opposite party, when the customer came to close the deposit. It is further admitted by opposite party in his cross examination that opposite party did not give the amount offered to the customer. Opposite party further admitted that in case of premature closure 1% interest will be deducted. Admittedly, complainant obtained 6 cash certificates from the opposite parties. Out of which NRE Nos. 18, 19 & 20 were encashed on maturity while NRE Nos. 15,16 & 17 were forced to foreclose before maturity. On perusal of Ext. P2 NRE – 18 cash certificate it is seen that the complainant deposited an amount of Rs.4,68,372/- by way of renewal of DJCC – 12 with effect from 17/8/2004, which would mature on 17/8/2005 and the matured amount will be Rs. 5,04,500/-. Admittedly, opposite party refunded an amount of Rs. 4,76,860/- on maturity thereby there is short payment of Rs. 27,640/-. As per NRE – 19 cash certificate it is submitted that complainant deposited an amount of Rs. 2,49,153/- with effect from 3/8/2004, which would mature on 5/8/2005, and on maturity, opposite party refunded a sum of Rs. 2,35,503/- thereby there is short payment of Rs.13,650/-. As per NRE – 20, it is submitted that complainant deposited Rs.2,31,311/- with effect from 3/8/2004, which would mature on 3/8/2005 and on maturity opposite party refunded a sum of Rs. 2,35,503/-, thereby there is short payment of Rs. 13,650/-. It is pertinent to point out that there is no dispute on deposited amount and issuance of cash certificates NRE – 18, 19 & 20.Opposite party is bound to pay the promised amount as stated in the certificates, opposite party cannot bounce back from the promise. Customer deposits their amounts in the bank in the anticipation that he would get back the deposited amount with interest promised thereon maturity. Non payment of maturity amount as promised would definitely amount to deficiency in service. Altogether under NRE Nos. 18, 19 & 20 there is short payment of Rs.54,940/- complainant is entitled to get the said amount from the bank opposite parties. Opposite parties are bound to pay the promised amount vide cash certificates Nos. 18,19 & 20. As regards, NRE 15, 16 & 17 it is argued by the complainant that he was forced to foreclose the said cash certificates due to loss of confidence in the bank. According to opposite parties, there is a foreclosure charge of 1%. Deposited amount and maturity amount has been recorded in the documents itself. Opposite party has produced document by Ext. D3 showing foreclosure charge of 1%. Nowhere in the cash certificate it is seen mentioned about the foreclosure charge. Assuming that there is a foreclosure charge of 1% from the amount mentioned in the said cash certificates, even on adjusting the foreclosure charge, still complainant is entitled to get interest amount as on the date of foreclosure as per the rate of interest at which the maturity amounts under NRE – 15, 16 & 17 were assessed. After issuance of cash certificates promissing to pay the matured amount, opposite parties have unilaterally backed out from the contract which amounts to deficiency in service. Complainant is entitled to get the assured amount under NRE – 15,16 & 17 after deducting the foreclosure charge of 1% as stipulated. Subsequent variation in the interest rates after the issuance of cash certificate will never affect the complainant's right to claim the assured amount from the opposite parties. Non payment of assured amount after adjusting the foreclosure charge (1%) tantamounts to deficiency in service.

In the result, complaint is allowed. Opposite parties shall pay the complainant a sum of Rs. 54,940/- towards the short payment of maturity amount under NRE – 18, 19 & 20 with interest thereon at the rate of 9% from the date of complaint (that is 01/03/2006) till realisation. Opposite parties shall also pay the complainant the assured interest under NRE – 15, 16 & 17 as on the date of foreclosure, after adjusting the foreclosure charge of 1% and the amount of interest already allowed in part on the date of foreclosure. Opposite parties shall also pay Rs. 5,000/- towards compensation. Parties are left to bear and suffer their respective costs.

A copy of this order as per the statutory requirements be forwarded to the parties free of charge and thereafter the file be consigned to the record room.

Dictated to the Confidential Assistant, transcribed by her, corrected by me and pronounced in the open Forum, this the 17^th day of January, 2011.

G. SIVAPRASAD,

PRESIDENT.

BEENA KUMARI .A,

MEMBER.

S.K. SREELA,

MEMBER. ad.

C.C.No.62/2006

APPENDIX

I. Complainant's witness:

PW1 : C.S. Jaffar

II. Complainant's documents:

P1 : Copy of the letter dated 16/3/2006 from the opposite party to the complainant.

P2 : " Diamond Jubilee Cash Certificate NRE-18.

P3 : " NRE-15 Diamond Jubilee Cash Certificate dated 03/04/2004

P4 : " Diamond Jubilee Cash Certificate for Rs.2,34,593/- date of deposit 03/04/2004

P5 : " Diamond Jubilee Cash Certificate for Rs.5,47,385/- dated 12/4/2004

P6 : " Advocate notice to the complainant dated 29/8/2005

P7 : Acknowledgement cards.

III. Opposite parties' witness:

DW1 : K.S. Vijaya Kumar

IV. Opposite parties' documents:

D1 : Copy of the Circular No. PDD/7/2003 – 04 issued by the Managing Director of the Kerala State Co- operative Bank.

D2 : " Circular No. RFD/18/2002 – 03

D3 : " Circular issued by RBI on 2/11/1987.

PRESIDENT