BEFORE THE A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION:
HYDERABAD.
FA.NO.619/2008 to 628/2008 AGAINST C.C.NO.804 OF 2007 to 812/2007 & 848/2007, District Forum-II, Hyderabad.
Between:
1. R.S.Mitra, S/o.Shadrach,
Aged about 80 years,
Occ:Retd.Employee,
House No.1-7-509/6, Zamistanpur,
Hyderabad-48. Appellant/Complainant
in F.A.No.619/2008
2. C.Krishna Reddy, S/o.C.Narasimha Reddy,
Aged about 58 years,
Occ:Doctor,
House No.5-6-169, Aditya Multi
Speciality Hospital, Sikh Vada,
Hanumakonda-506001 Appellant/Complainant
in F.A.No.620/2008
3. C.Sarojini, W/o.C.Krishna Reddy,
Aged about 45 years,
Occ:Housewife, H.No.5-6-169,
Aditya Multi Speciality Hospital,
Hanamkonda-506 001. Appellant/Complainant/
in F.A.No.621/2008
4. J.Ramakanth, S/o.J.Venkata
Sastry, aged 76 years
Occ:Retd. Professor,
Plot No.1, Road No.6, Trimurthi Colony
Mahendra Hills, Secunderabad-26. Appellant/Complainant
in F.A.No.622/2008
5. J.Seetha W/o.J.Ramakanth,
aged 66 years
Occ:Housewife
Plot No.1, Road No.6, Trimurthi Colony
Mahendra Hills, Secunderabad-26. Appellant/Complainant
in F.A.No.623/2008
6. M.H.Prakash Rao, S/o.M.Narasimha
Rao, aged about 70 years,
Occ:Pensioner
Plot No.201, Amaravathi Apartments
Malkajgiri, Hyderabad-47 . Appellant/Complainant
in F.A.No.624/2008
7. Rajendra Prasad, S/o.Bansi Prasad,
Aged about 56 years,
Occ:BHEL employee,
House No.9-1-33/A/50,
Prashanthnagar, Langar House,
Hyderabad-08. Appellant/Complainant
in F.A.No.625/2008
8. R.P.Nirmal Kumar, S/o.late Aaseervadam,
aged about 62 years
Occ:Retd. Bank Employee,
Plot No.16/C, Vengalraonagar,
Hyderabad-38 . Appellant/Complainant
in F.A.No.626/2008
9. C.V.Vasantha Kumari, W/o.R.P.Nirmal
Kumar, aged about 59 years,
Occ:Housewife, Plot No.16/C,
Vengalraonagar, Hyderabad-38 Appellant/Complainant
in F.A.No.627/2008
10. A.Balachandran, S/o.C.C.Nair,
Aged about 66 years,
Occ:Pensioner, Melakalam House
P.O. Naduva thappara via
Perimgottukurussi, Palghat Dist.,
Kerala-678574. Appellant/Complainant
in F.A.No.628/2008
And
1. Mother Theresa Hyderabad Co-operative Bank Ltd.,
3-6-237/118, Amrutha Estates, Lingapur House,
Himayathnagar, Hyderbad-500 029.
2. Chief General Manager,
Deposit Insurance and Credit Guarantee Corporation (DICGC) Opp.parties
(Wholly owned subsidiary of RBI) 2 & 3 are one
RBI Building, 2nd floor, Opp:Mumbai Central Railway Station, and the same
P.B.No.1076, Byculla, Mumbai-400 008.
3. Chairperson of the DICGC,
Deputy Governor, RBI,
18th floor, RBI Central Office, Fort Mumbai-400 001. ..Respondents/
Opposite parties
Counsel for the Appellants : Mr. M.Mukteswara Rao
(common in all appeals)
Counsel for the Respondents:Mr.G.Maloji Rao-R1
Smt.Jhan Sree-R2
(common in all appeals)
QUORUM: SMT.M.SHREESHA, LADY MEMBER
AND
SRI G.BHOOPATHI REDDY, MALE MEMBER
WEDNESDAY, THE THIRTEITH DAY OF JULY,
TWO THOUSAND EIGHT.
Oral Order : (Per Smt.M.Shreesha, Hon’ble Member)
***
These appeals are disposed of by a common order since the facts are similar in all these appeals.
F.A.NO.619/2008:
Aggrieved by the order in C.C.No.804/2007 on the file of District Forum-II, Hyderabad, the complainant preferred this appeal.
The brief facts as set out in the complaint are that the complainant deposited Rs.50,000/- on 18-7-2000 for a period of 15 months, the maturity date and value being 18-10-2001 and Rs.60,105/- respectively. The complainant after the maturity date demanded for payment of the maturity amount from opposite party No.1 bank and they issued pay orders in February, 2002 for a total amount of Rs.61,340/-. The complainant could draw Rs.22, 708/- out of Rs.61,340/- and for the balance amount of Rs.38,632/-, opposite party No.1 bank issued pay order Nos.9742 to 9750 dated 29-7-2002. It is further submitted that the R.B.I. cancelled the license opposite party No.1 bank and opposite party No.2 de-registered it with effect from 10-10-2002 and the Registrar of Co-operative Societies, A.P. liquidated opposite party No.1 bank and appointed an liquidator. The complainant submitted that Section 17(1) of DICGC Act, 1961 lays down that the liquidator within 3 months of his assuming charge has to furnish to opposite party No.2, a list in such form and manner as may be specified by the Corporation showing separately the depositors in respect of each deposit and the amounts set off. After several representations and nine months of liquidation, a list was submitted by the liquidator to opposite party No.2 on 21-7-2003 (called List-A) without including the claim of the complainant. The liquidator furnished List-B (Traced deposits) on 25-3-2004 to opposite party No.2 listing out the names of depositors whose addresses were known later. Therefore, those depositors whose names were not included in List-A dated 21-7-2003 made several representations and thereafter C & D, claim lists which contain the name of complainant were sent to opposite party no.2 on 17-4-2004.
It is submitted that part ‘C’ of Annexure III contains the names of depositors who hold dishonoured pay orders which were issue in lieu of term deposit receipts. The DICGC issued a clarification of ‘term deposit’ and according to item No.13 of I items which are to be included within the category of deposits as defined “The unpresented drafts and pay orders held in the depositors accounts are deposits”. Annexure IV part (D) contains the names of depositors with Term Deposit Receipts. The claim of the complainant has been included at S.No.31 of Annexure III (part (C) as detailed below:
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Sl.No. Name Aggregate Insured Amount
of claim amount deposit claimed
P.O.No.9742 to
9750 F.D S.D. T.D.
31. R.S.Mitra 38,632 - 38,632 38,632 Rs.38,632
Since 17-4-2004 the date on which the claim list part (C) and (D) were sent to liquidator of opposite party No.1 to opposite party No.2, the complainant has approached the liquidator of the bank several times and contacted him on phone and representations were also made to R.B.I. and D.I.C.G.C. The liquidator had addressed a letter dated 3-6-2006 enclosing a copy of the letter dated 8-10-2003 of his predecessor stating that they have made available the entire records to the officials of R.B.I. and that it is for opposite party No.2 to release the amounts. The complainant cannot be made liable either for the liquidator not providing the records to the officials of R.B.I. for their scrutiny or for non inclusion of claim in the list dated 21-7-2003 furnished by opposite party No.1 to opposite party No.2. The complainant further submits that since opposite party No.2 is a subsidy of R.B.I. and insurer of the deposits made by the complainant, it has a statutory liability to pay the depositors. Hence the complaint seeking a direction to opposite parties 1 and 2 to pay Rs.38,632/- together with interest from 29-7-2002 till the date of realization, compensation and costs of Rs.5,000/-.
Opposite party No.1 filed his counter stating that opposite party No.1 co-operative society was carrying on banking business and it was ordered to be wound up and a liquidator was appointed u/s.65 of A.P.Co-operative Societies Act, 1964 and the liquidator was vested with powers in all matters of the society. They admitted the term deposit amounts of the complainant and submitted that opposite party No.1 had issued pay orders for Rs.38,632/- against the maturity value of T.D.R. and the same was not honoured for which the complainant is entitled for payment. The claim of the complainant against T.D.R. along with other claims was sent to opposite party No.2 for releasing of the said amounts. Opposite party No.2 submits that the amount payable to the complainant in accordance with the rules can be arranged to him on receipt of funds from opposite party No.2. They have been following the procedure under A.P.C.S. rules for arranging the funds and the complainant cannot expect them to circumvent the rules and procedures for seeking payment of the amount. The complainant is not entitled to claim interest or compensation or costs which is not sustainable under the A.P.C.S. Act. In the present case, opposite party No.1 bank has been under liquidation with effect from 19-10-2002 as per the provisions of A.P.C.S. Act and the payment is subject to provisions of D.I.C.G.C Act only. They also contended in their counter that the matter is seized by the liquidator, who is a statutory authority under A.P.C.S. Act and exclude the jurisdiction of other authorities. Therefore, there is no deficiency of service on their behalf and prayed for dismissal of the complaint.
Opposite parties 2 and 3 filed their counter and submitted that the license of opposite party No.1 bank was cancelled by R.B.I. vide order dated 14-10-2002 and accordingly the registration of the bank stood cancelled with effect from 19-10-2002. The bank was placed under liquidation on 24-10-2002 and the liquidator submitted the claim list of 2404 depositors of the bank vide his letter dated21-7-2003 and claimed a sum of Rs.50651501.63. The claim list was scrutinized as per the provisions of D.I.C.G.C Act and a sum of Rs.5,04,61,501.63/- was found as eligible amount to be released to the liquidator. The claims in respect of traceable deposits was released and in respect of untraceable depositors was with held for want of full particulars of the depositors. On 25-3-2004 the liquidator sent a letter submitting particulars of 147 depositors included in Part B of claim list for Rs.10450490. After scrutiny, opposite party No.2 released an amount of Rs.73,01029/-. The liquidator again submitted Part C & D of the claim list dated 17-4-2004 but he has not sent the correct particulars as the said amounts were not included in the previous years audited reports. The Chartered Accountant also mentioned that these are not included in the previous years audited balance sheet of the bank. The matter was referred to RBI UBD vide letter dated 10-11-2004 and they informed vide their letter dated28-3-2005 that the liquidator could not provide the necessary records to confirm whether the transactions were accounted for in the books of accounts of the bank as deposits. The complainant had closed his deposit before the bank went into liquidation and obtained pay orders and therefore the complainant is not a depositor of the bank but a holder of an instrument issued by the bank. The amount representing unpaid pay order is not a deposit as defined under Section 2(g) of D.I.C.G.C. Act, 1961 and the Corporation is not liable to extend deposit insurance cover and hence there is no deficiency of service on their behalf.
The District Forum based on the evidence adduced i.e. Exs.A1 to A16 and B1 to B5 and the pleadings put forward, dismissed the complaint on the ground that the complainant failed to show that there is any deficiency of service.
Aggrieved by the said order, the complainant preferred this appeal.
We heard the learned counsel for appellant/complainant and the counsel representing opposite party No.1 bank and also the Legal Officer representing opposite parties 2 and 3. It is the case of the complainant that he deposited an amount of Rs.50,000/- on 18-7-2000 for a period of 15 months and the maturity value being Rs.60,105/- and the maturity date being 18-10-2001. The complainant could draw Rs.22,708/- out of Rs.61,340/- issued by the bank and for the remaining balance of Rs.38,632/- the bank issued pay order Nos. 9742 to 9750 dated 29-7-2002. These facts were not disputed by the opposite parties. The learned counsel for opposite party No.1 argued that the Consumer Forums do not have jurisdiction to entertain this complaint and he relied on a judgement of the Supreme Court of Madras reported in (1992) 1 Comp LJ 34 (Mad) in SUDARSHAN CHITS (INDIA) LTD., MADRAS v. OFFICIAL LIQUIDATOR, HIGH Court of kerala and drew our attention to Section 3 of Consumer Protection Act, 1986.
“3. Act not in derogation of any other law. The provisions of ths Act
shall be in addition to and not in derogation of any other law for the time
being inforce”.
The word “derogation” means partial abrogation. The word ‘abrogate’
is used when a law is abolished in its entirety. In view of this specific
provision under Section 3 of the Consumer Protection Act that the
Act shall not be I derogation of the provisions of any other law,
it is clear that the provisions contained in section 446 of the Companies
Act is not in any way abrogated even partially.
The provisions of the Companies Act relating to winding up are intended
to give relief to the company which is insolvent, from the harassment
of its creditors on the one hand and to provide a machinery by which all
creditors are equally satisfied, on the other hand. It is established
principle that insolvency law are devised for the protection of distressed
debtors and protection of the insolvent. The policy and object underlying
it is to secure the distribution of a debtor’s estate among his creditors
and to prevent the more active creditors from getting an undue advantage
over those who may be less active. If some of the creditors move the
authorities under the Consumer Protection Act and receive their dues, the
other creditors who do not move that authority may not get any amount due
to them. It cannot be taken that the legislature intended that such a
result should happen by implementing the Consumer Protection Act intended
to benefit the consumers in general and not to benefit one or a small group
of consumer against the interests of the large section of the consumers.
He further contended that liquidator can make payments only as per Companies Act and that winding up proceedings of Co-operative Act and Companies Act is similar. He further drew our attention to Sub Section 4 of Section 66 of the Co-operative Societies Act, 1964 in which the powers of liquidator has been described that the liquidator shall continue to exercise his powers until the affairs of the society are completely wound up and then he shall make a representation to the Registrar and deposit the records of the society in such a place as the Registrar may direct. Section121(2) of A.P. Societies Act is similar to Section 446 of the Companies Act in continuation of suit or other legal proceedings or instituting fresh proceedings and Section 121(1) of A.P. Societies Act bars the jurisdiction of any court or Forum in respect of orders, decisions or awards passed under Co-operative Act.
As against this, we rely on the decision of the Apex Court in SECRETARY, THIRUMURUGAN COOPERATIVE AGRICULTURAL CREDIT SOCIETY v. M.LALITHA reported in I(2004) CPJ 1 (S.C) that
‘dispute between the members and management of the Co-operative Society and Sections 90 and 156 of Tamilnadu Cooperative Societies Act, 1983 wherein rights and liability created between members and the management of the co-operative society under the said 1983 Act cannot exclude the jurisdiction of the Consumer Fora under the Consumer Protection Act, 1986’.
As stated in the aforementioned judgement, Consumer Forums have jurisdiction to deal with these complaints. Earlier similar complaints were filed before District Forum-II, Hyderabad in which the complaints were allowed and this Commission had confirmed them and slightly modified the orders of the District Forum directing opposite party No.2 i.e. D.I.C.G.C. to pay the amounts to the complainants and these orders were further confirmed by the National Commission in R.P.Nos.2401/2007 arising from the order dated 29-3-2007 in F.A.No.369/2007 of this Commission. The National Commission has dismissed the revision petition with an observation that in Annexure “B”, the complainants’ names were included and the amounts have to be paid to the complainants by DICGC.
Now we address ourselves to the aspect of deficiency in service. The legal officer representing opposite parties 2 and 3 submitted that the liquidator is liable to pay the deposits and interest upto the date of liquidation. She submitted that D.I.C.G.C. enters into the picture only after the date of liquidation and that there are certain guide lines and rules for the claim lists to be submitted by the liquidator and the list should be given with the auditor’s confirmation of statement. The auditor says that the T.D.Rs. did not figure in the list at all and therefore the corporation is not liable to pay any amounts. Moreover, the deposits of the complainant were said to be closed and pay orders were issued by the bank before the date of liquidation for which the Corporation cannot be made liable.
In the instant case, it is the plea of the complainant that the pay orders were admittedly issued on 29-7-2002 and the bank went into liquidation on 24-10-2002. The first list sent by the liquidator on 21-7-2003 did not include the name of the complainant. The second list was sent on 25-3-2004 listing out the names of the depositors whose addresses were known later. Thereafter after repeated requests, the liquidator sent part “C” and “D” claim lists to opposite party No.2 on 17-4-2004 and this has also been admitted by the liquidator i.e. opposite party No.1 in his counter filed before the District Forum.
We observe from the record that opposite parties 2 and 3 have admitted in their counter that an amount of Rs.50461501.63 was released to 2404 depositors on 21-7-2003 out of which 12971385.93 was released towards untraceable depositors under part B of the claim list. The claims in respect of these untraceable depositors was withheld for want of full particulars of the depositors. The liquidator vide his letter dated 25-3-2004 submitted particulars of 147 depositors included in part B of claim list for Rs.10450490. The liquidator admittedly submitted Part C & D of the claim list dated 17-4-2004. It is the main contention of opposite parties 2 and 3 that these claim lists are not accompanied by the auditors statement and that the accounts were not included in the previous year balance sheet and that the complainant has closed his deposit and therefore the complaint is not a depositor of the bank but a holder of the instrument issued by the bank. We find this contention unsustainable on the ground that admittedly the complainant was issued orders by opposite party No.1 bank and merely because of a technical difference between a ‘pay order’ and a ‘bank deposit’, the complainant cannot be made to suffer when opposite party No.1 bank has admitted to the issuance of pay orders. The contention of opposite parties 2 and 3 that the complainant is not a depositor but only a holder of an instrument does not hold good. We find force in the contention of the complainant that Section 2(g) of D.I.C.G.C. defines the term deposit as follows:
Section 2(g) of the Deposit Insurance and Credit Guarantee Corporation
Act defines the term ‘deposit’ as the aggregate of the unpaid balances
due to a depositor in respect of all his accounts by whatever name called,
with an insured bank and excludes certain categories of deposits from
the purview of the Act. It follows that in order to be ‘deposits’ the unpaid
balances should be due to a depositor and should be in respect of accounts,
or his name or maintained by him. We have received several references
seeking clarification whether a particular item would constitute ‘deposit’
or not and our views on the points raised have been communicated to the
to the respective banks. However, the classification of some of the more
common and important items is indicated below for your guidance. This,
of course, is not an exhaustive list and clarifications may be sought in
case of doubt.
Under the heading, items which are to be included within the category of ‘deposits’ as defined in the Act, under item 13 is listed as follows:
Unpresented drafts and pay orders held in the depositor’s accounts.
Therefore, the technical objection that ‘pay orders’ admittedly issued by opposite party No.1 cannot be termed as ‘deposits’ is unsustainable. Opposite party No.1 also submitted in his written arguments that the liquidator had already submitted the necessary information as required by the Corporation and the matter is under consideration. Therefore, it is apparent from the face of the record that pay orders were issued in lieu of T.D.Rs. on closure of accounts and we are of the considered opinion that there is deficiency in service on behalf of opposite parties 2 and 3 in not releasing the amounts even after the liquidator had sent the names.
In the result this appeal is allowed and the order of the District Forum is set aside directing opposite parties 2 and 3 to pay the pay order/deposit amount of Rs.38,632/- together with compensation of Rs.3,000/- and costs of Rs.2,000/-. The case against opposite party No.1 is dismissed without costs, since the role of liquidator is only that of a facilitator and he has already sent the claim list to opposite party No.2 Time for compliance 4 weeks.
F.A.Nos.620/2008 TO 628//2008:
For the same reasons as stated in F.A.No.619/2008, these appeals are allowed and the order of the District Forum is set aside directing opposite parties 2 and 3 to pay the pay order/deposit amount to the complainants together with compensation of Rs.3,000/- and costs of Rs.2,000/-. The case against opposite party No.1 is dismissed without costs, since the role of liquidator is only that of a facilitator and he has already sent the claim list to opposite party No.2 . Time for compliance 4 weeks.
LADY MEMBER. MALE MEMBER.
JM Dated 30-7-2008
