BEFORE THE A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION: AT HYDERABAD.
F.A.No. 620 OF 2009 AGAINST C.C.NO.17 OF 2007 DISTRICT CONSUMER FORUM CHITTOOR
Between
The State Bank of India
Rep. by its Branch Manager,
K.G.Sathram Branch,
Bangarupalem Mandal,
Chittoor District
Appellant/opposite party no.1
A N D
- Sri C.Madhusudhana Reddy
S/o Sri C.Raja Reddy, aged about 46 yrs
R/o Thumbakuppam Village and Post
Bangarupalem Mandal, Chittoor Dist.
Respondent/complainant - The Regional Manager,
Local Head Office, State Bank of India
Tirupati, Chittoor District
(Respondent No.2 is not necessary party)
Respondent/opposite party no.2
Counsel for the Appellant Sri M.Narender Reddy
Counsel for the Respondent No.1 Sri T.Janardhan Rao
QUORUM: SRI SYED ABDULLAH, HON’BLE MEMBER
&
SRI R.LAKSHMINARSIMHA RAO, HON’BLE MEMBER
WEDNESDAY THE TWELFTH DAY OF MAY
TWO THOUSAND TEN
Oral Order ( As per R.Lakshminarsimha Rao, Member)
***
The opposite party no.1 is the appellant. The appellant challenges the order directing it the amount of Rs.1,01,710/- with interest @9 % p.a. from the date of maturity besides the sum of Rs.!000/- awarded towards compensation.
The facts of the case as represented by the complainant are that the complainant deposited a sum of Rs.18,000/- on 24TH july,1992 with the opposite party no.1under the Farmers Welfare Scheme. The amount can be paid in 12 monthly installments @ Rs.1,500/- per month. The amount on maturity is Rs.1,01,710/- and the due date is 24th July,2006. The opposite party no.1 issued pass book bearing number FWS 72. After the date of maturity of the amount, the complainant requested the opposite party no.1 to pay the amount due. The opposite party no.1 has not paid the amount. The complainant got issued notice through his advocate on 7th November,2006 for which the opposite party no.1 issued reply dated 15-12-2006 stating that they are ready to pay the sum of Rs.68,318/-.
The opposite party no.2 remained exparte.
The opposite party no.1 resisted the claim inter alia contending that non payment of the amount does not amount to deficiency in service since the opposite party no.1 expressed its readiness to pay the amount of Rs.68,318/- along with interest at the prevailing rate from 25th July,2006.As per the Farmers’ Welfare Scheme the recurring deposit account was opened for 12 months. The maturity amount was Rs.19,305/-. The amount of Rs.19,305/- was reinvested after completion of the deposit period in STDR for 13 years on 24th July,1993. At the time of reinvestment of the deposit the prevailing rate of interest was 11% p.a. and the maturity date was 24th July,2003. On 24th July,2003, the STDR was renewed for another 36 months with the rate of interest @6% p.a. and the total maturity value was Rs. 68,318/-At the time of the opening account, the complainant had agreed to abide by the terms of the State Bank of India Recurring Deposit Rules. As per the Banking Regulation Act any circular issued by the Reserve Bank of India is a statute. The general publication and affixing in the bank premises would be a deemed notice to all the banking customers. The complainant cannot take advantage of an entry in the RD pass book since the rate of interest mentioned therein was mentioned at the prevailing rate at the relevant time. It was denied that the amount @Rs.1,500/- per month was to be deposited in 12 monthly installments. The entry in the RD pass book in regard to the interest is subject to the rules framed by the Reserve Bank of India from time to time. The District Forum has no jurisdiction to try the matter. The complainant is at liberty to receive the amount of Rs.68,318/- along with interest at the prevailing rate from 24th July,2006.
The District Forum allowed the complaint opining that as per Sections 70, 72 and 73 of the Contract and in view of the decision of the National Commission reported in 2005(3) ALT 31 the Bank has no authority to vary the agreed rate of interest.
The complainant has filed his affidavit and documents Exs.A1 and A5.
The Manager of the opposite party no.1 has filed affidavit and got marked Ex.B1 to B3.
The points for consideration are:
1) Whether the opposite parties are liable to pay the rate of interest mentioned in the RD pass book to the complainant ?
2) Whether there was deficiency in service on the part of the opposite parties?
3) To what relief?
POINT NOs.1& 2: The complainant’s case is that he had deposited in one instance the amount of Rs.18,000/- on 24th July,1992 under Farmers Welfare Scheme with the Opposite Party no.1 though the terms of the scheme provided for investment of the amount @Rs.1,500/- in 12 monthly installments. The opposite party no.1 denied any of the terms of the scheme provided for payment of the amount in 12 monthly installments. The account opening form contains a clause that the complainant agreed to open the account to deposit the amount @ Rs.1500/- per month. The first paragraph of the account opening form begins with” I/We wish to open a Recurring Deposit Account and am/are agreeable to deposit Rs.1,500/- per month”. In view of the account opening form providing for depositing the amount in installments, the opposite party no.1 cannot contend that the scheme does not contain any terms for depositing the amount in installments. The opposite party no.1 has not denied the lump sum payment of the amount of Rs,18,000/- on 24th July,1992. The contention of the learned counsel for the opposite party no.1 that the terms of the scheme have not provided for deposit of the amount in installments is not tenable.
The learned counsel for the opposite party no.1 has contended that the circular issued by the Reserve Bank of India has statutory force and is binding on the transactions of the opposite party no.1 bank. He has submitted that as per the circular issued by the Reserve Bank of India the opposite party no.1 offered to pay the sum of Rs. 68,318/- along with interest at the prevailing rate whereas the learned counsel for the complainant submitted that the terms of the pass book are binding on the opposite party no.1. He supported the impugned order contending that the opposite party no.1 is liable to pay the amount of Rs. 1,01,710/- in terms of the RD Pass book.
There is no dispute of the fact that the complainant has signed the declaration in the account opening form. Clause 2 of the Declaration reads as under:
“In particular, I/was have understood Rule No.6, in terms of which I/we authorize the Bank to open a Savings Bank Account in my/our names and credit the balance of my/our Recurring Deposit Account to such account, in the event of default as set out in the said Rule”.
The complainant had opened the recurring deposit account with the opposite party no.1. The complainant deposited Rs.9,000/- and a lumpsum amount of Rs.9,000/-. The lump sum deposit made by the complainant will not take away the character of either the savings bank account or the recurring bank account for the reason that irrespective of the nature of the payment the due date remains the same. Now the question to be determined is whether the Reserve Bank of India has issued any circular stipulating the rate of interest and does the circular has the binding effect on the transaction in question? Before adverting to the aspect, it is essential to look into the time of deposit of the amount and the rate of interest agreed to be paid by the opposite party no.1 on the due date”.
The complainant’s case is that he had deposited the sum of Rs.18,000/- on amount of Rs,18,000/- on 24-07-1992 whereby the opposite party no.1 has agreed to pay an amount of Rs. Rs.1,01,710/- on the due date i.e., 24-07-2006. The opposite party no.1 has stated that “It is submitted that as per Farmers’ Welfare Scheme the recurring deposit account is opened for 12 months and the maturity amount was Rs.19,305/-(after completion of the deposit period). Later, the amount was Rs.19,305/- was reinvested in STDR for 13 years on 24-07-1993 and the then prevailing rate of interest was 11%p.a. and the maturity date was 24-07-2003.On 24-07-2003 the STDR was renewed for another 36 months and then the rate of interest was 6% p.a. and the total maturity value is Rs.68,318/-“. It, is thus, the contention of the opposite party no.1 that the interest is to be calculated from 24th July,1992 till 24th July,1993, @11%p.a. from 24th July,1993 to 24th July,2003 and @ 6%p.a from 24th July,2003 till 24th July,2006. If the interest is calculated in the aforesaid manner, the amount due on maturity would be Rs.68,318/-. The opposite party no.1 expressed its readiness to pay the amount of Rs. 68,318/- along with interest at the prevailing rate from the date of maturity, 24th July,2006.
The account opening form does not contain any clause as to renewal the deposit from 24th July,1992 to 24th July,1993 and from July,1993 to 24th July,2003 and from July,2003 to 24th July,2006. The opposite party no.2 had issued a circular dated 22nd February,1983 informing all the branch managers of the State Bank of India that publicity for the “Police Welfare Scheme” in the form of pamphlets and addressing the employees in groups was not necessary. The title “Police Welfare Scheme is merely a selling point to make a personal appeal. The nomenclature could be changed to suit the organization which joins the scheme and there could be as many as the organizations”. The Farmers Welfare Scheme was introduced on the lines of the Police Welfare Scheme with all the terms and conditions of Police Welfare Scheme applicable to the The Farmers Welfare Scheme.
The clause no.1 of the Police Welfare Scheme deals with the objectives of the scheme that enables the employees concerned who opted for the scheme to save Rs.100/- per month during the first year of his service and provides for substantial sum of money at the time of his retirement. There could be loan facility also to the account holder. Clause of the scheme mandates the mode of investment of the amount. It stipulates the period of installments to 11 months with the amount to be paid @Rs.100/- per month in the first year the scheme is opted by the account holder. It is not clear how this clause is made applicable to the Farmers Welfare Scheme as the farmers are not the employees of either of the public sector or the private sector undertakings to pay the initial amount at the rate of Rs.100/- per month.
The opposite party no. has not filed the particulars of the Farmers Welfare Scheme. If not in toto ,most of the guide lines framed for the Police Welfare Scheme cannot be applied for the Farmers’ Welfare Scheme. Then there is variation in the narration of the complainant and the opposite party no.1 in regard to the deposited amount and the renewal of the deposit. The Fixed Deposit Receipt issued by the Opposite party no.1 with the date of deposit 24th July,1993 and the date of maturity 24th July,2003 would support the contention of the opposite party no.1 that it is a STR and the deposit was renewed from 24th July,1992 to 24th July,1993, later from 24th July,1993 to 24th July,2003 and subsequently, from 24th July,2003 to July,2006. Hence, the theory of automatic renewal has to be accepted. Once, the amount was allowed to be renewed automatically the other aspect of the controversy ruling the field, i.e., the rate of interest comes to the fore vying with the contractual interest and both of them supported by the pleadings and evidence adduced by the parties have been attempting to move one another to the vault and thereby seeking adjudication of the core issue.
The special term deposit receipt issued by the opposite party no.1 provides for payment of interest @ 11% p.a. on the deposited amount. The recurring deposit account was opened subject to the rule 6 of the State Bank of India. Relying upon the said rule, the learned counsel for the opposite party has contended that the interest payable on the recurring deposit made with the bank is subject to the guidelines issued by the Reserve Bank of India from time to time.
The learned counsel for the opposite party no.1 has relied upon the decision of the Hon’ble National Commission in Kamalesh Kumar vs Allahabad Bank” 2007(3) ALT 3 to contend that the complainant bank is bound by the guidelines issued by the Reserve Bank of India. The National Commission held that Bank is not liable to pay the rate of interest agreed rate of interest and the rate of interest as fixed by the Reserve Bank of India would only be applicable to calculate the amount at the time of its payment to the depositor. The National Commission held that its decision relied upon by the learned counsel for the complainant and the District Forum is not applicable to the where the Fixed Deposit Receipt contains a condition that the rate of interest payable on the deposit is subject to RBI instructions that may be issued from time to time. The Special Term Deposit has a note that it was subject to the conditions of which the first clause reads as under:
“The rate of interest payable on this deposit is subject to the directives that may issued by the Reserve Bank of India from time to time.
The facts of the case on hand and those of the cited case are similar in restricting the bank’s liability to pay the rate of interest on the deposited amount as fixed by the Reserve Bank of India from time to time and not in accordance with the contractual rate of interest agreed to be paid in terms of the Fixed Deposit Receipt. In that view of the matter, we are inclined to accept the contention of the appellant that the rate of interest has to be calculated in terms of the circular issued by the Reserve Bank of India. The opposite party is liable to pay the amount of Rs.68,318/- with interest @ 6% per annum from 24.7.2006 till payment. The complainant is entitled to receive the amount.
In the result the appeal is partly allowed by modifying the order 7.12.2007 passed by the District Forum. Consequently the complaint is partly allowed directing the opposite parties no.1 and 2 to pay the amount of Rs.68,318/- with interest @ 6% per annum from 24.7.2006 till payment together with costs of Rs.2000/-. Time for compliance four weeks.
MEMBER
MEMBER
Dt.12.05.2010
KMK*
