FA.No.26/2008 AGAINST C.D.NO.93/2007  DISTRICT FORUM-II, HYDERABAD

Between:

Reserve Bank of India,

Rep. by its Regional Director,

Urban Banks Department, Saifabad,

Secretariat Road, Hyderabad.                                                                           Appellant/

                                                                                                                            Opposite party No.2

                   A N D

1. K.Bhimasankara Rao,

    S/o.late Narasimha Murthy, Hindu,

    Aged 73 years, Occ:Advocate, R/o.D.No.22-113,

    Amandastraman, Ramanaidupeta

    Machilipatnam-521 001, Krishna District.                                                   Respondent/

                                                                                                                            Complainant

2. Vasavi Co-operative Urban Bank Ltd.,

    Rep. by its Managing Director

    Scheduled Bank, having their Head Office

    At 16-2-295/9/11, Malakpet,

    Hyderabad.                                                                                                     Respondent/

                                                                                                                            Opp.party No.1

Counsel for the Appellant:M/s.B.Nalin Kumar

Counsel for the Respondents:Mr.K.S.R.Hemanth Kumar

QUORUM:      SRI SYED ABDULLAH, MEMBER

&

SRI K.SATYANAND, MEMBER

FRIDAY, THE THIRTIETH DAY OF OCTOBER,

TWO THOUSAND NINE

Oral Order( Per Sri K.Satyanand, Hon’ble Member)

                                                                                                          ***

          This appeal is filed by opposite party No.2 Reserve Bank of India against which the District Forum imposed liability jointly and severally along with the fist opposite party co-operative bank questioning the order of the District Forum in so far as it related to the appellant herein.

          The complainant and his late wife made as many as 11 deposits with opposite party No.1 by way of fixed deposit receipts marked to be encashed on maturity.  Some time around the time of maturity, the opposite party No.1 co-operative bank landed itself in financial straits. The appellant, Reserve Bank of India by virtue of its statutory powers issued directions numbering three in a row putting a ceiling on the amount to be paid by the opposite party No.1 to each of the depositors with it regardless of the number of deposits made by each such depositor.  During the course of the currency of this investment the wife of the complainant died.  However, the complainant stepped into the shoes of his wife as the alternative depositor in the investments made by his wife while remaining the principal depositor in the investments made by him as deposited No.1.  It seems acting under the statutory instructions of the Reserve Bank of India, appellant, the opposite party No.1, co-operative bank, treated all these 11 deposits made by the complainant and his wife as being made by only one person overlooking the fact that in respect of the investments made by his late wife, he was a substituted or constructive depositor while in respect of the deposits made by designating himself as the principal depositor, he was a depositor absolute in his own right.  Effacing this distinction the opposite party No.1 purportedly acting under the instructions of the Reserve Bank released only the maximum amount of Rs.31,000/- by way of interim measure.  Aggrieved by this denial of yet another amount of Rs.31,000/- keeping intact the distinction between a principal depositor and a substituted depositor in view, the complainant filed the present complaint from out of which this appeal arises demanding yet another scoop of Rs.31,000/- relatable to his own deposits as depositor No.1 and other consequential reliefs.

          Opposite party no.1 also filed a counter taking shelter under the instructions of opposite party No.2 and maintaining that it was bound by the said instructions and therefore cannot be attributed with any deficiency in service.

          Opposite party No.2, Reserve Bank of India entered appearance and tried to vindicate its instructions drawing support from its statutory status. 

          In support of his case the complainant filed his own affidavit and relied upon Exs.A1 to A97 obviously pressed into service to prove that the distinction between himself and his wife who had invested monies in the pattern of A + B and B + A cannot be obliterated as their investments are ascribable to their separate financial sources.  The opposite parties also filed affidavits.  The opposite parties also relied upon documents marked as Exs.B1 to B3.

          The District Forum brushed aside the objections raised by the opposite party and upheld the claim of the complainant and accordingly directed the opposite parties to pay the additional claim of Rs.31,000/- and granted other consequential reliefs. 

Opposite party No.1 did not prefer any appeal.  However, the Reserve Bank of India, as opposite party no.2 filed this appeal challenging the liability imposed against it chiefly contending that by no stretch of imagination can the complainant be characterized as consumer vis-à-vis the RBI.  Its contentions amounted to saying that the District Forum lost sight of the fact that the entire role played by the Reserve Bank in this matter was nothing but the exercise of sovereign powers and in that view of the matter, no liability ought to have been fastened to it. 

The learned counsel for the respondent/complainant filed written arguments.  Heard.

The point for consideration is whether the District Forum is justified in mulcting a statutory body like Reserve Bank of India with liability even when it was morally justified when the record shows that its role was far from that of a service provider and precisely that of a statutory authority.  There can be no gain saying the fact that there was absolutely no consumer v. service provider relationship between the complainant on one hand and the appellant.  No doubt the District Forum did not approve the appellant’s instructions or disagreed with the version of the appellant in the matter of clubbing the deposits made by the complainant and his wife separately  to treat all the deposits as being made by only one depositor.  It is also evident that the opposite party No.1 denied a second amount independently ascribable to the deposits made by the complainant as the principal depositor acting only under the instructions of opposite party No.2.  it is all the more clear from the provisions of Section 21 and 35(a) and 56 of Banking Regulation Act that opposite party No.1 can disobey the instructions of the Reserve Bank only under pain of penalty. Still the deficiency of service on the part of opposite party no.1 otherwise discernable is  as it brought the affairs of its business to such a pass as to endanger the deposits of the depositors and make them run around to retrieve their investments.  But in the case of RBI, it is rather incomprehensible as to how the District Forum could extend that element of deficiency of service also to the Reserve Bank when the Reserve bank exercised its powers or acted not as a service provider but as a statutory authority entrusted with the duty of controlling and supervising the conduct of business by opposite party no.1 among thousands of banks of its like.  The District Forum ought not to have lost sight of the distinction between the sovereign and non sovereign functions.  The Consumer Fora get jurisdiction only if the questions emanate from deficiency in service in a case like this.  Assuming for a moment that the perception of the Reserve Bank of the law was wrong yet it cannot be roped in for deficiency in service. Strictly speaking the consumer fora do not have power to evaluate the validity or otherwise of any statutory instrument which is precisely the one that the appellant issued and the opposite party no.1 acted under.  Thus that part of the order of the District Forum directed against the appellant is utterly untenable and liable to be set aside.  In other words the appellant deserves to be absolved of the liability cast upon it by the order under appeal. Thus we are of the opinion that the order under appeal needs to be modified accordingly.

In the result the appeal is allowed setting aside the order against opposite party No.2 appellant and the order of the District forum stands as it is in all other respects.  There shall be no order as to costs in the circumstances of the case

                                                         Sd/

                                                                                                                                                MEMBER.

                                                                                                                                                  Sd/-

                                                                                                                                                MEMBER.

Jm                                                                                                                                                                                  30-10-2009