Karnataka

StateCommission

A/1893/2022

INDUSTRIAL DEVELOPMENT BANKOF INDIA IDBI - Complainant(s)

Versus

SRI UMESH - Opp.Party(s)

T.P. Muthanna

15 Dec 2023

ORDER

                                                                  Date of Filing :19.09.2022

  Date of Disposal :15.12.2023

 

BEFORE THE KARNATAKA STATE CONSUMER DISPUTES REDRESSAL COMMISSION, BENGALURU (PRINCIPAL BENCH)

 

DATED :15.12.2023

 

PRESENT

 

HON’BLE Mr JUSTICE HULUVADI G RAMESH : PRESIDENT

 

Mr K B SANGANNANAVAR : JUDICIAL MEMBER

 

Mrs DIVYASHREE M : LADY MEMBER

 

 

APPEAL No.1893/2022

 

Industrial Development Bank

of India (IDBI)

Represented by the Nodal Officer

of Bank for Investor

Education and Protection Fund

IDBI Bank, IDBI Tower

Cuffe Parade, Colaba

Mumbai - 400 005, Maharastra.

Represented by

The Branch Manager

IDBI Bank, Dharwad Branch                                            Appellant

(By Mr T P Muthanna, Advocate)

 

-Versus-

Sri Umesh

S/o Sri Nagappa Chittal

Aged about 64 years

Residing at Plot No.47A/6E

Ramanath Krupa

Chidambar Nagar Road

Gandhi Nagar

Dharward - 584 004                                                       Respondent                                                   

   : ORDER :

 

Mr JUSTICE HULUVADI G RAMESH : PRESIDENT

 

1.       This Appeal is filed under Section 41 of Consumer Protection Act  2019 by the OP, aggrieved by the Order dated 08.04.2022 passed in Consumer Complaint No.144/2021 on the file of District Consumer Disputes Redressal Commission, Dharwad (hereinafter referred to as District Commission).

2.       The District Commission after enquiring into the matter, deemed it fit to allow the Complaint and directed the OP to refund the Maturity Value of the Complainant’s IDBI Bank Deep Discount Bond of Folio No.FDDB0841070, Certificate No.00877406 dated 18.03.1996 i.e., at Rs.2,00,000/- with interest thereon, at the rate of 9% p.a from the Date of the judgment till realisation.

          The OP is directed to pay Compensation of Rs.5,000/- towards mental agony and Rs.5,000/- towards cost of the litigation.  District Commission further directed the OP to comply with the order within 30 days from the date of receipt of copy of the Order.

3.       Aggrieved by this Order, OP is in Appeal inter-alia contending amongst other grounds, that District Commission ought to have held that since the Branch was dealing with this case, the notice was not served to the proper party, hence, the Complaint has to be Dismissed            in limine. District Commission failed to appreciate the facts and circumstances in the case that, the Appellant Bank had published the Call Option Notice in leading Newspapers and based on this Notification, many of the Bond Holders had redeemed their Bonds and the face value was deposited to their Bank Accounts, but, the Respondent herein failed to surrender the Bond Certificate and to redeem the Bond and now claiming a huge amount out of Public Funds is not justifiable. Appellant further contended that the District Commission failed to appreciate the facts that, there is no legal or contractual obligation to compensate the Bond Holder viz., the Respondent herein over and above the Redemption value and accordingly, though Appellant Bank is not liable to pay any interest on the Redeemed Value of the Bond to the Bond Holders, however, as a gesture of goodwill and for protecting the interest of the Bond Holders, Appellant Bank has extended the benefit of interest at the prevailing SB Interest rate as per the RBI guidelines for payment of interest on un-claimed deposits extended the benefit of interest at Savings Bank rate on deemed face value payable on call option.  But, the Respondent did not utilize any of these opportunities offered by the Appellant Bank and this shows the negligence on part of the Respondent to redeem the Bonds and now the Respondent is raising false allegations on the Appellant Bank, just to create a bad impression to the public on the reputed public Financial Institution.  The District Commission has exercised its authority, beyond their jurisdiction by not appreciating the guidelines issued by the Reserve Bank of India, whereby, if the Term Deposit matures and the proceeds are un-paid, the amount left un-claimed with the Bank shall attract rate of interest as applicable to savings account or the contracted rate of interest on the matured TD, whichever is lower and thus seeks to set aside the Impugned Order by allowing the Appeal.

4.       According to the Complainant, he was an employee of Life Insurance Corporation and during his service at Savadatti LIC Office, he had purchased the Deep Discount Bond Certificate No. 00877406 dated 18.03.1996 at the Issue Price of Rs.5,300/- and as per the terms of bond its face value will be at Rs.2,00,000/- at the time of its maturity on 18.03.2021 and the matured payment would help for his Daughter’s marriage or for construction of his house, but, the OP compelled for redemption of the bond on 01.08.2000 itself. Further, alleges that he has not received any intimation to this effect nor seen any News Paper advertisement regarding the alleged call option Notice. Also, OP did not contested the case before the District Commission inspite of due service of Notice from the Commission for his appearance and he was placed ex-parte.

5.       Perusal of the records, reveals that it is an admitted fact, that on 18.03.1996 the Complainant had purchased the Deep Discount Bond dated 18.03.1996 at the offer price of Rs.5,300/- and its face value will be at Rs.2,00,000/- on the date of Maturity on 18.03.2021.  However, on 01.08.2000, OP unilaterally proposed for compulsory redemption of the Bond.

6.       Further perusal of the records reveals the observation of the District Commission in its Impugned Order at Para 9 that the Ex-C1 is the original Bond and it depicts purchase of the Deep Discount Bond dated 18.03.1996 at the offer price of Rs.5,300/- and its face value will be at Rs.2,00,000/- on the date of its Maturity on 18.03.2021. The document Ex-C5 is the reply given to the Legal Notice of the Complainant, by one Vasanthy Deepak, an Official of OP Bank, wherein, the OP has admitted the purchase of the said Bond by the Complainant. In Para 10 of the Reply to the Notice, OP contended that with regard to the Bond marked as Ex-C1 that OP invited a Call option to all the Investors to redeem the Bonds and the Redemption amount was fixed at Rs.10,000/-, as against the Investment of Rs.5,300/- and they communicated the same through letters and print media in the year 2000 and has contended that they are not liable to answer the Claim made by the Complainant.

7.       Thus, the fact of dispute is that the Deep Discount Bond dated 18.03.1996 has been unilaterally Redeemed by the OP, without the knowledge of the Complainant.  The allegation of the Complainant is that, OP has not communicated to him with regard to the Redemption of the Bond in the year 2000.  The crux of the matter is that, whether the OP Bank exercising its option of pre-Redemption of Bond is proper and as per the Terms of the Bond the Complainant is entitled for the face value of Rs.2 Lakhs.  In this regard, perusal of the Annexure-H, the IDBI Deep Discount Bond annexed to the Appeal Memorandum reveals that the said Bond was sold under Folio No.F008 084070, Certificate No.00877406, number of Bond sold is one, issue price is Rs.5,300/-, Distinctive number 000877406, face value Rs.2,00,000/-  issued in the name of Umesh Nagapa Chittal as 1st holder and the 2^nd holder & 3^rd  Holder remaining blank and thereafter it is also mentioned that -

“Or Order on demand at the Head Office of IDBI at Bombay, on March 18, 2021, the sum of Rs.2,00,000/- (Rupees Two Lakhs only) being the face value of the Bond herein contained, for value received.  The holder(s) of this Bond/IDBI shall have the option to redeem the Bond on any or the following dates at the deemed face value mentioned as -

        On 1^st August 2000 at Rs.10,000/-

        On 1^st December 2006 at Rs.25,000/-

        On 1^st September 2011 at Rs.50,000/-

        On 1^st June 2016 at Rs.1,00,000/-

On the holder(s) of this Bond receiving the amount as specified above on exercise of the option as aforesaid, the liability of IDBI hereunder shall stand fully extinguished”.

 8.      Thus it is clear that holder of the Bond has an option to Redeem the Bond on particular dates as mentioned in the Bond.   The mere publication of notice in the News Paper is not sufficient compliance. Moreover, no document is produced to substantiate his case that he has communicated to the Complainant for redemption of the bond value cannot be accepted.  Further, the contention of the Appellant that, it has extended the benefit of Interest at Savings Bank rate of interest on the deemed face value, payable on Call option as per the RBI guidelines for payment of interest on un-claimed deposits is not justifiable and it is settled position of business ethics that the contract entered into between the parties, cannot be unilaterally changed, for advantage of one and disadvantage for the other.  Also when the Bond Holder’s details are available with the OP/Appellant, we are not able to understand as to what prevented them not to send an individual communication to the bond holders, by not doing so, the action/ inaction on the part of OP/Appellant herein tantamounts to deficiency in service.  In the circumstances, the findings recorded by the District Commission does not call for any interference by this Commission.  Accordingly, the Appeal is Dismissed with no order to as to costs.

9.       The Statutory Deposit in this Appeal is directed to be transferred to the District Commission for further needful.

                

10.     Send a copy of this Order to the District Commission, as well as to the parties concerned, immediately.

 

 

 

Lady Member                Judicial Member               President

*s