By G. Yadunadhan, President:

 

            The above complaint is filed alleging negligence and deficiency in service and unfair trade practice on the part of the opposite party bank in unilaterally reducing the contractually agreed rate of interest on the fixed deposit of complainant without intimating the same to him.    The complainant is employed abroad at Kuwait and the complaint is filed by his duly constituted Power of Attorney holder Sri. K.M. Binu. Complainant had several term deposits with different branches of the Nedungadi Bank Ltd. since early 1980’s. The complainant had deposited the amounts on the specific promise and undertaking of Nedungadi Bank Ltd. that the same would carry a particular rate of interest till maturity. The agreed rate of interest and the period of deposit in the three different branches of M/s. Nedungadi Bank Ltd. are shown in the complaint. Later Nedungadi Bank would amalgamate with the opposite party bank. The complainant had permitted the deposits to be continued even after the amalgamation under the bonafide belief that his deposits would be secure and would carry the same rate of interest agreed to by the parties while making the deposits, moreso because it was widely published that the interest of all the depositors of the Nedungadi Bank Ltd. will be fully protected.   There after when the complainant had instructed the S.B.I., NRI branch, Calicut to collect a maturity deposit No.18292 dated 12-3-2000 for Rs.5,50,000/-, the maturity  amount of which was Rs.7,95,685/- as declared in the deposit receipt itself, it was found that the amount paid by the opposite party to S.B.I. NRI Branch, Calicut was short of Rs.6042/-. When this was noticed to the opposite party by the complainant as well as the receiving bank, they were made known that from the date of amalgamation ie. February 2003, the opposite party had unilaterally decided to reduce interest rate to 5.5% against the committed/ agreed interest rate of 12.5%. The complainant was never informed/intimated about any such unilateral/highhanded decision to reduce the rate of interest applicable to the deposits. The opposite party is not entitled to unilaterally reduce the agreed rate of interest basing on which the deposits were made. The Nedungadi Bank Ltd. now its successor opposite party are bound to pay the maturity amount of the deposit that had declared, promised and undertaken in the deposit receipts. Had the complainant known that the deposits made by him of his hard earn money will not be carrying the promised and declared rate of interest, he would have withdrawn the deposits and utilized the same for some other income generating projects or transferred the same to some other reputed or responsible bank who would honour their promise and commitments by paying the maturity amount. To a specific query regarding the details of account after the amalgamation the opposite party had as per communication dated 25-7-03 again reiterated and declared that deposits carrying the rate of interest as promised and undertaken by the Nedungadi Bank Ltd. were being maintained by the opposite party. The complainant caused a letter dt. 10-10-03 to be issued to the opposite party requesting redressal of his grievance, to which the opposite party had issued letter dated 29-10-03 setting out improper and unsustainable allegation and claims. Thus the opposite party is misleading the customers and the general public and the complainant is alleging that the act and conduct on the part of the opposite party amounts to deficiency in service and unfair trade practice. The above complaint is filed seeking the relief of an order directing the opposite party to discontinue the unfair trade practice ad restrictive trade practice of the unilateral and high handed reduction of the agreed rate of interest on the deposits and directing them to pay the maturity amount as declared in the deposit receipt and to pay a sum of Rs.6042/- improperly and unauthorisedly deducted regarding the deposit No.18292 along with interest thereon at 18% from the date of unauthorized deduction till realization and to pay a sum of Rs.1,00,000/- as compensation for the loss and inconvenience on account of deficiency in service on the part of opposite party.

 

            The opposite party entered appearance and filed detailed version disputing and denying the case and claim of the complainant. It was contended inter alia that of an application made by the Reserve Bank of India to the Central Government under Section 45 (1) of the Banking Regulation Act, 1949, the Central Government passed an order of Moratorium in respect of the Nedungadi Bank Ltd., Kerala. As per the provisions in section 45 (6) of the Act and during the period of Moratorium the Reserve Bank of India being satisfied that in the public interest and in the interest of the depositors so to do, in exercise of the powers conferred by section 45 (4) of the Act had prepared a scheme for the amalgamation of the Nedungadi Bank Ltd. with the Punjab National Bank. The Reserve Bank of India had in accordance with section 45(6) of the Act and after considering the suggestions and objections received with regard to the scheme had forwarded it to the Central Government for sanction. The Central Government in exercise of the powers conferred by section 45(7) of the Act sanctioned the scheme, which is called as Nedungadi Bank Ltd. (amalgamation with Punjab National Bank) Scheme, 2003. The chapter III of the Scheme deals with the payment to creditors and depositors. In clause 6 (b) of the scheme incorporated in the chapter it is clearly stated that in respect of all the depositors with the transferor bank, the transferee bank shall open with itself on the prescribed date a corresponding and similar account in the respective holder thereof crediting thereto full amount including interest to the extent payable under the scheme. Accordingly at the time of amalgamation new accounts of the complainant were opened with the opposite party, which is the transferee bank. These new accounts, which are opened with the transferee bank, will have the same rate of interest as the transferee bank normally allows to its own depositors. Clause 6 (4) of the scheme categorically states, “6(4) not withstanding anything to the contrary contained in any contract, express or implied interest from the prescribed date shall be paid in respect of the new accounts opened with the transferee bank and credited in accordance with the provisions of the scheme only at such rates as the transferee bank normally allows to its own depositors for such accounts.” Accordingly all the accounts of the complainant were opened with the transferee bank and as per Clause 6 (4) the prevalent rate of interest were given to the complainant for the deposits made. Everything was done in compliance with the scheme as sanctioned by the Central Government and there is no discrepancy or any foul play as far as the giving of interest to the depositors is concerned. Clause-9 of the scheme clearly states that no depositor or creditor of the transferor bank shall be entitled to make any demand against the transferor bank or the transferee bank in respect of any liability of the transferor bank to him except to the extent prescribed by the scheme. So it is futile to contend that now the successor of the Nedungadi Bank Ltd. is bound to pay the maturity amount of the deposit that had declared, promised and undertaken in the deposit receipts issued by the Nedungadi Bank Ltd. Apart from the fact that the opposite party has complied with all the relevant provisions of the scheme, Clause-10 of the scheme has clearly barred any one from resorting to any legal proceedings against the Central Government, Reserve Bank of India, transferee bank or transferor bank for acts done in good faith. The opposite party bank being the transferee bank has not done any malafides nor violated any of the provisions of the scheme formulated by the Reserve Bank of India and sanctioned by the Central Government. All the creditors, depositors and employees of the Nedungadi Bank are statutorily bound by what is set forth in the scheme. The allegations in the complaint were denied and the opposite parties sought for the dismissal of the complaint.

 

            The evidence in the matter consists of the oral testimony of the complainant Mr. Sankar Madhusoodhanan who was examined as PW1 and Ext.A1 to A4 were marked on complainant’s side. T. Jayachandran, the Punjab National Bank Manager was examined as RW1 and Ext.B1 was marked on O.P.’s side.

 

            In view of the rival contention raised by the parties the following issues arise for consideration (1) Whether the complaint is maintainable? (2) Whether there was any negligence, deficiency in service or unfair trade practice on the part of opposite party? (3) What order as to relief and costs?

 

 

 

 

Issue No.1:

 

            Even though the opposite party has raised the contention regarding the maintainability of the complaint, the same was not seriously proved at the time of the hearing. Services as defined under Section-2(1) (O) of the Consumer Protection Act, includes the provisions of facilities in connection with the banking, financing etc. Persons availing the service of a bank by depositing the amount as fixed deposit is a consumer and in case there is any failure to make the payment of fixed deposit on maturity the same would constitute deficiency in service. As well 1991 (1) CPJ 147, 1998 (456) Orissa, 1993 (3) CPR 370 Maharashtra has been relied on the part of the complainant to support their contentions regarding maintainability. Andhra Pradesh State Commission in Nagabhushana Rao Vs Union Bank of India, Ramkot branch 1 1991 CPJ 352 has held that it is a matter of common knowledge that the interest paid by bank on the deposit made by any person is much less than what the bank charges on the advances made by it to the borrowers. Therefore it can be said that the complainant had hired the service of the opposite party for a consideration. Thus the complainant answers the description of a consumer and therefore he is entitled to file the complaint if the services rendered by the bank suffer from any deficiency in any aspect. In view of the fact and circumstances of the matter we hold that the complainant is a consumer and above complaint is maintainable.

 

Issue No.2:

 

            The main grievance of the complainant is that the opposite party unilaterally varied the rate of interest to his prejudice that too without any intimation on the fixed deposit amounting Rs.30,00,000/-. He has got a further case that even in Ext.A2 communication issued by the opposite party there was no mention of any change in the rate of interest, but the agreed rate of interest was reiterated whereby the complainant was mislead to take a decision to continue the deposits with the opposite party bank, in not intimating the unilateral change of the rate of interest payable and for furnishing him with false and misleading information about the true state of affairs. On the contrary the opposite party would contend that Nedungadi Bank Ltd got itself amalgamated with the Punjab National Bank, the opposite party ,as per a scheme sanctioned by Reserve Bank of India which is known as Nedungadi Bank Ltd. (Amalgamation with Punjab National Bank) Scheme 2003. The Punjab National Bank, opposite party, after the amalgamation had been following the terms and conditions laid down in the scheme with respect to all the deposits of the Nedungadi Bank Ltd. Everything has been done as per the direction of the Reserve Bank of India. Sanctioned in the same scheme was sanctioned to the complainant. The complainant has no right to claim more than what is provided by the Reserve Bank of India in the scheme. Therefore the complaint is liable to be dismissed. Reliance is made on Clause 6(4) of the scheme to contend that the complainant is entitled to get interest only at such rates as the transferee bank normally allows to its own depositors for such accounts. According to the opposite party everything was done in compliance with the scheme as sanctioned by the Central Government and there is no discrepancy or any foul play as far as the giving the interest to the depositors is concerned. Clause-9 of the scheme highlighted to canvass the position that no depositor or creditor of the transferor bank shall be entitled to make any demand against the transferor bank or transferee bank in respect of any liability of the transferor bank to him except to the extent prescribed by the scheme. It is further contended that apart from the fact that the opposite party has complied with all the relevant provisions of the said scheme. Clause-10 of the scheme has clearly barred anyone from resorting to any legal proceedings against the Central Government, Reserve Bank of India, transferee bank or transferor bank for acts done in good faith. It is finally contended that no order can be passed in violation of the provisions of the said scheme. It is contended on the part of the complainant that the fixed deposit is completed contract between the bank and depositor banker in connection with the fixed deposit is one of debtor and the bank continues to be a debtor even though the period of fixed deposit has expired and the deposit is not withdraw.

 

            When money deposited by a customer is not repayable on demand and is payable on the expiry of a specified period from the date of deposit, such a deposit is called a fixed/term deposit. The banker evidences such a deposit by issuing a receipt known as fixed deposit receipt and interest is paid at maturity or at regular intervals at specified rate on such deposits. A fixed deposit receipt is not transferable and not negotiable one. In banking law and practice by P.N. Warshney 21^st revised addition page-248 to 260 the legal position relating to fixed deposit is dealt with. It is stated “As the date of repayment of fixed deposit is determined in advance the banker need not keep more cash reserves against it and can utilize such amount more profitably. The banker therefore offers higher rate of interest on such deposits because the depositor parts with liquidity for a definite periods”. In two leading judgments given by the Hon’ble Supreme Court of India the whole law relating to the subject of fixed deposits seems to have been confined and explained. Santhi Prasad Vs Director of Enforcement, AIR 1962 SC Page 1964 it held that the relationship created in deposits in a bank is that of debtor and creditor and not trustee and beneficiary, except when there is special arrangement. The fact that the deposits were made by the customer himself or by some other person does not effect the position. The law is well settled that when money is deposited in bank, the relationship that is constituted between the banker and customer is one of a debtor and a creditor and not trustee and beneficiary. We have heard the contentions raised by the respective counsels and perused Ext.B1 scheme in detail. The evidence of RW1 also assumes importance while taking a final decision in the matter. Ext.B1 starts with the statement that the same is to be published in Part-II ection-3- Sub section-2 of the Gazette of India extra ordinary. RW1 in Page-2 of the cross examination would admit that Ext.B1 shows it is yet to be published and that they have documents to show whether it is published and if so when nothing is produced by the opposite party to show that Ext.B1 was ever published. Likewise even though the opposite party would contend that as per Clause-6(4) of the scheme the complainant is entitled to get interest only at such rate as transferee bank normally allows to its own depositors for such accounts. But nothing is produced to show that what exactly is the rate of interest being paid to its customers. RW1 in Page-3 of cross examination would confer that what exactly is the rate of interest offered by the opposite party to its customers is not mentioned in the version, proof affidavit, Ext.B1 and Ext.A4 reply. In Page-4 of the cross examination he would states that the opposite party has documents to show the rate of interest for the fixed deposit offered to customers and that in Ext.B1, RW1 has not fixed any particular interest. He would add that the same is contract between the depositor and the bank that the depositor will be given fixed rate of interest till maturity and that under normal circumstances neither party can unilaterally change the contract. It is in spite of Ext.B1 and proceedings there under that Ext.A2 statement was issued by the opposite party which is misleading in nature. RW1 in Page-2 of the cross examination would admit that Ext.A2 was issued by Punjab National Bank Manager, Nadakkavu branch wherein the deposits of the complainant are there and in Page-6 of the cross examination would state that Ext.A2 issued after the prescribed date. According to RW1 the Reserve Bank of India from time to time only gives guidelines regarding interest structure and that there is no specific bar in certain section in offering rats of interest different from the regular customers. He would add that “once we offer we are bound to honour the offer”. The opposite party does not have a case that Ext.A2 was mistakenly issued or that they are bound by it. No action also taken against the Manager who had issued it, if the same was issued improperly on negligently. Clause-13 of Ext.B1 scheme specifically provides for the manner in which the notice has to be served. RW1 in Page-5 of the cross examination would admit no notice was given regarding any of the proceedings of the amalgamation nor any notice to continue or discontinue was given. No notice has been contemplated under Clause-13 was given. It assumes importance especially because the specific case of the complainant is that he had been made aware of the fact that the rate of interest payable on his fixed deposit were being reduced he would have withdrawn his deposits and invested it elsewhere. The failure on the part of the opposite party to intimate the complainant about the change of the interest is also against the code of bankers commitment published by Reserve Bank of India in the Hindu daily dated 14-7-06 which is stated to be voluntary code, which sets minimum standards of banking practices for banks to follow when they are dealing with individual customers with a view to provide protection to the customers and explains how banks are expected to deal with the customer for the day to day operations. It is further provided that any changes in interest rate will be informed to the customer and under the heading changes to “terms and conditions’. It is specifically stated that the customer will be intimated about any changes in the prevailing terms and conditions of his accounts/deposits. In the instant matter not only did the opposite party failed and neglected to intimate/give notice to the complainant regarding the unilateral reduction in the rate of interest, but also had issued Ext.A2 meleading the complainant, all of which amounts to negligence, deficiency in service and unfair trade practice. Clause-10 of the scheme is applicable to acts done in good faith and hence the opposite party cannot claim any impunity or protection under the said clause. In any view of the matter the opposite party has failed and neglected to comply with the scheme in its true letter and spirit. State Bank of India Vs Dr. Samual S Chauthari 1998 CPJ Page-456, the  Hon’ble Ossissa State Commission has held that the interest rate cannot be varied without informing the customer. The Madhya Pradesh State Commission has held in Post Master, M.P Circle, Bhopal and another Vs M.K. Bajirani 2005 (3) CPR 182 that when Rule. National Savings scheme post offices provided for opening of only one account by a person, non providing of such necessary information in any form to account holder amounts to deficiency in service. The counsel for the opposite party relies heavily on chapter-3 of Ext.B1 scheme deals with payment to creditors and depositors. As per the provisions contained therein the transferee bank should open with itself on the prescribed date a corresponding and similar account in the name of the respective holder thereof crediting thereto full amount including interest to the extent payable under the scheme. In respect of any interest bearing deposit accounts, the transferee bank shall pay interest at the rate applicable in accordance with the directives of the Reserve Bank of India till the prescribed date. Ext. B1 provides that notwithstanding anything to the contrary contained in any contract, express or implied interest from the prescribed date shall be paid in respect of the new accounts opened with the transferee bank and credited in accordance with the provisions of the scheme only at such rates as the transferee bank normally allows to its own depositors for such accounts. There is nothing produced on the part of the opposite parties to show that there are any directives of Reserve Bank of India till prescribed date or that rate of interest shown in the fixed deposit receipts are against any such directives which is the prescribed date, or when new account was opened and whether the complainant was aware of any such opening of new account. There is a procedure to be followed for opening a new account and the scheme does not provide for derogation of any such procedure or to have an account opened and operated without the junction or consent of the deposit holder especially when substantial amounts are lying in fixed deposit on an assured contractually agreed rate of interest. Ext.A2 issued reiterates the rate of interest applicable which is the same as the originally contractually agreed rate of interest and thus the complaint is made to continue the deposit under the impression that the deposits would fetch the said rate of interest at maturity. The opposite party has not adduced any evidence to substantiate their contention that the rate of interest originally contractually agreed rate in the fixed receipts are higher or different from rates as the transferee bank normally allows to its own depositors for such accounts. In view of the legal position discussed above and the facts and circumstances of the matter binding force of the scheme cannot be taken as a ground to justify the act and conduct of the opposite party. Whether under the said scheme the opposite party could unilaterally vary and without the knowledge and consent of the complainant the specific agreed contractual rate of interest to this prejudice is doubtful especially when the status of the bank is that of a debtor. There is nothing on record to show that scheme has been published in the Gazette, that any public notice was given, what exactly is the rate of interest being offered by the opposite party bank to his customers on similar deposits and as how they are not bound by the representation made in Ext.A2. RW1 himself admits that the rate of interest regarding the fixed deposit are flexible and only guidelines are fixed by the Reserve Bank for India and there is nothing produced on the part of opposite party to show that the rate of interest offered originally to the complainant is in contravention of any such alleged guidelines. In any view of the matter the act and conduct on the part of the opposite party cannot construed as done in good faith entitling them to any of the protection provided under Ext.B1 scheme. On a consideration of the entire facts and circumstances of the matter we find that there was negligence, deficiency in service and unfair trade practices on the part of the opposite party bank. The issue answered accordingly.

 

Issue No.3:

 

            In view of the proved negligence, deficiency in service and unfair trade practice on the part of opposite party bank they cannot take shelter under Ext.1 scheme and escape from the liability and responsibility that arises on account of the acts and omissions on their part. The scheme is intended to protect the interest of the depositors as well. The Hon’ble National Commission has in Smt.Manorama Vs Chairman Punjab National Bank 2004 (1) CPJ Page-56(NC)  held that interest has to be paid up to the time that the bank is holding the money and enjoying its fruits irrespective of the fact whether the depositor got the deposit renewed or not.

 

 

            The counsel for the complainant has relied on 1992 (2) CPJ 454 (NC) Ashok Kumar Singh Vs M/s. Gujarath Cycles and another wherein it has held that reasons stated by the Lower Forum that the complainant has not adduced any detailed evidence furnishing particulars of the nature of inconvenience caused to him and hence not entitled to any relief is not correct or sound that Forum constituted under the Act has to take a realistic and pragmatic view in matters coming before them and where it is manifest that real inconvenience has been caused to the complainant, it is the duty of the Forum to determine and award reasonable compensation without insisting that the complainant should perform the impossible task of furnishing particulars in regard to the nature of inconvenience suffered by him. We are of the opinion that the opposite party shall be liable and responsible to pay interest on the fixed deposit of the complainant at the originally agreed rates mentioned in the fixed deposit receipts for the period shown therein. For the period of delay if any in paying the entire interest amount as directed herein above the opposite party shall be liable to pay interest @ 12% on that portion of the amount of interest kept as unpaid from the maturity date of the respective fixed deposits till payment. Regarding the deposit No.18292 the opposite party shall be liable to pay a sum of Rs.6042/- along with interest @ 12% from its maturity date till payment. The opposite party is liable to pay a sum of Rs.10000/- as compensation to the complainant for the loss, injury and damages sustained by him on account of the negligence, deficiency in service and unfair trade practice on the party of the opposite party and also to pay a sum of Rs.2000/- as cost to the complainant. The amount awarded as compensation and cost shall be paid within a period of one month of this order, failing which interest @ 12% per annum is liable to be paid by the opposite party to the complainant.

 

 

Pronounced in the open court this the 5th day of April 2010.

 

 

            SD/- PRESIDENT                SD/-MEMBER               SD/-MEMBER

 

 

 

 

 

 

 

 

 

 

APPENDIX

 

Documents exhibited for the complainant:

 

A1. Power of Attorny executed by the complainant in favour of

        Sri. K.M. Binu dt. 10-12-2003.

A2. Photocopy of letter dt. 25-7-2003 sent by O.P. to the complainant.

A3. Photocopy of letter dt. 10-10-2003 sent by the complainant

        to the opposite party.

A4. Photocopy of letter dt. 29-10-2003 sent by O.P to the complainant.

 

Documents exhibited for the opposite party.

B1. Photocopy of Notification dt. 31—01—2003.

 

Witness examined for the complainant:

 

PW1. Sankar Madhusudoodhanan (Complainant)

 

Witness examined for the opposite party.

RW1. T. Jayachandran, Punjab National Bank, Nadakkavu, Calicut-11.

 

                                                                        Sd/- President

 

                                                // True copy //

 

(Forwarded/By order)

 

 

SENIOR SUPERINTENDENT.