Tamil Nadu

StateCommission

A/112/2017

K.Viswanathan - Complainant(s)

Versus

The Chennai Central Co Operative Bank Ltd. & anr. - Opp.Party(s)

Party in Person

21 Jun 2023

ORDER

IN THE TAMILNADU STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CHENNAI.

 

Present:   Hon’ble THIRU. JUSTICE R. SUBBIAH  :     PRESIDENT

                 THIRU R   VENKATESAPERUMAL           :      MEMBER

 

F.A. No. 112 of 2017

[Against the order passed in C.C. No.102 of 2012 dated 18.06.2015 on the file of the D.C.D.R.F., Chennai (North)].

 

Wednesday, the 21^st day of June 2023

K. Viswanathan

New No.3/Old No.1A

Krishnapuram Street

Choolaimedu P.O.

Chennai – 600 094.                                     ..  Appellant/Complainant 

             

 

- Vs –

 

1. The Chennai Central

         Co-operative Bank Ltd.,

    Head Office

    215, Prakasam Salai

    Broadway, Chennai-600 001.

 

2. The Manager

    The Chennai Central

         Co-operative Bank Ltd.,

    Choolaimedu P.O.,

    Chennai – 600 094.                                ..  Respondents/  Opposite parties

 

                         

 For Appellant /Complainant           :  Party-in-person

 

Counsel for the Respondents/

                Opposite parties                : M/s. Gandhi Balasubramaniam

 

This appeal came before us for final hearing on 24.02.2023, and on hearing the arguments of the appellant in person and the counsel for the opposite parties and on perusing the material records, this Commission made the following :-

O R D E R

R.SUBBIAH J., PRESIDENT

 

             This appeal has been filed under Section 15 of the Consumer Protection Act, 1986 as against the order dated 18.06.2015 passed by the District Consumer Disputes Redressal Forum, Chennai (North) in C.C. No.102 of 2012, dismissing the complaint filed by the Appellant herein.

 

     2.  It is the case of the complainant before the District Forum that in the year 2011 the opposite parties/Bank solicited deposits under a scheme of 444-days duration, with 10.5% interest per annum for seniors and 10% interest for others.  This scheme is similar to other Term Deposit Schemes of the Bank, such as Cash Certificate Scheme. As per RBI guidelines, in respect of other Term Deposit Schemes, the interest will automatically be calculated every 3 months on compound interest and be paid on maturity, under cumulative scheme.  The complainant had deposited a sum of Rs.20 lakhs under the "444 days Spl FD SR ON MATURITY" scheme and opting for cumulative option, under which the interest is payable on maturity.    The Management of the Opposite parties/Bank concealed the vital fact that those customers who make deposits under the 444-days scheme under cumulative option will not be eligible for compound interest.  The complainant and his family members have several term deposits with different maturity periods and all deposits under cumulative scheme earn compound interest.  All the term deposits carry simple interest on monthly option scheme and compound interest on cumulative option scheme. Hence the complainant wrongly assuming that the said scheme was under normal Term Deposit, opted for cumulative scheme.  The rule of compound interest applied to the cash certificate schemes should equally apply to fixed deposits under reference.  While the complainant read the FD receipt, he noticed a substantial difference in the maturity amount mentioned in the FD receipt and his calculation.  The amount of interest on Rs.20 lakhs, as per the calculation of the complainant is Rs.2,68,830/- whereas the amount mentioned in the FD receipt was Rs.2,55,452/-.  Thus, the difference is about Rs.13,378/-. The date of maturity of the said deposit is 22.06.2012.   When the complainant vide his letter dated 20.04.2011, requested the 2nd opposite party to make necessary corrections, the 2nd opposite party informed the complainant orally that the calculations are based on simple interest only and not on compounded basis and hence there is difference in the amount.  Thus the complainant realised the mistake of the Bank, which had equated and clubbed the monthly option and cumulative option of the deposit as if they come under the same deposit scheme.  The very purpose of offering a higher interest rate to senior citizens was defeated because of clubbing of the two options, although distinguishable as separate schemes of the fixed deposit.  Thus, senior citizens like the complainant have not gained anything out of opting for cumulative option, except severe hardship and financial loss in explaining the officials of their mistake in equating monthly interest option and compounded interest option.  The General Manager of the opposite party Bank Mr. R. Nagarajan vide his letter dated 13.06.2011 denied the interest calculated on compound basis.  In paragraph 2 of the said letter, it is stated that in their bank, interest calculation on fixed deposit scheme is being calculated on simple interest basis and the interest calculation on cash certificate scheme is being calculated on cumulative basis.  But this statement was never explained to the customers, at the time of deposit of money.  The Bank has also not considered the fact that every deposit is a term deposit where there is a specified period of maturity, namely, recurring deposit, cash certificate, fixed deposit, whatever may be the name attached to it.  The earlier mistake of the bank in not distinguishing two different options was suddenly changed recently, probably because of complaint made by the complainant with the opposite parties/Bank, again soliciting term deposits with the benefit of cumulative option with compound interest.  The complainant took this matter to Reserve Bank of India, Chennai vide his email dated 20.04.2011 and the RBI forwarded his complaint to the National Bank for Agriculture and Rural Development (NABARD), which is the nodal agency for cooperative banks.  The action taken by the RBI, to forward the email of the complainant to NABARD makes it clear that the co-operative banks are outside the Banking Ombudsman and the customers of co-operative banks have no forum to agitate complaints against them.  Hence, the complainant could not get any relief from the above agencies.  Therefore, the complaint has come forward with the complaint seeking the following directions to the opposite parties:-

1. To declare that clubbing monthly income option and cumulative option as an unfair trade practice and direct the opposite parties to pay a sum of Rs.13,400/- as the difference between the simple interest and compound interest;  and
2. To pay a sum of Rs.1,600/- as cost.  Thus, in total direct the opposite parties/Bank to pay a sum of Rs.15,000/- to the complainant.

  

             3.  The opposite parties have filed a common version resisting the case of the complainant.  The Reserve Bank of India vide Circular No.UBD No.Ds.PCB Cir 12/13.01 00/97-98 dated 22.10.1997, had de-regularised the rate of interest stating that the individual banks can decide the ultimate rate of interest to be given to the depositors.  Hence, the Banks are free to fix the rate of interest for deposits depending upon the period of deposit.  In the present case, the Registrar of Cooperative Societies had issued a Circular No.10/2011/ RC 25516/2011/CBPI dated 11.03.2011 informing that the Co-operative Banks under their control, to have deposit schemes with a maturity period of 444 days or 555 days or 666 days and has informed to fix rate of interest for these deposits @ 10.5% p.a.   The 1st opposite party vide Circular No.2010-11/B dated 15.03.2011 had issued instruction to its branches to get deposits for 444 days @ 10.00% per annum for individuals and 10.50% per annum for senior citizens, at simple rate of interest.  Rate of interest 10.00 (or) 10.50% per annum means at simple rate of interest.  Interest for 444 days is calculated as below:

Example - Deposit amount      Rs.1000/-

                Period of Deposit        444 days

                Rate of interest          10.50% per annum for senior citizen  

                Interest Payable         PNR/100

                1000 x 444 x 10.50

                                                      =  Rs.127.72

                        100 x 365

 

Rate of interest per annum means per year is 10.50% i.e., for 365 days.  For calculating interest it is banking terminology that rate of interest is specified in percentage for per annum and calculation of interest is done for the contract period as above.  The complainant had deposited Rs.20 lakhs for a period of 444 days @ 10.5% interest per annum.  Simple Interest is calculated on the above said basis.  It is shown as below:-

 

        20,00,000 x 444 x 10.50

                                                       =  Rs.2,55,452/-

                365 x  100

 

     The interest calculated in the above basis is not in violation of any law.  The complainant having accepted to the calculation of interest on the above said basis, is not entitled to challenge the calculation.  The contract has been entered into between the parties on the basis of mutual agreement.  Having agreed to the terms of contract, the complainant is not entitled to seek relief beyond the terms of contract.  The deposit is not contrary to the guidelines issued by Reserve Bank of India as alleged in paragraph 4 of the complaint.  Hence, the allegations in paragraph 5 of the complaint that there would be a difference of Rs.13,378/- is not correct.   The allegations stated in paragraph 6 that there was a mistake in calculation and the complainant is entitled for more interest, is misconceived.  Thus, sought for dismissal of the complaint.

 

             4.  In order to prove the case, both the parties have filed their proof affidavits and on the side of the complainant, 9 documents have been marked as Exhibits A1 to A9 and 3 documents were filed on the side of the opposite parties and marked as Exhibits B1 to B3.

 

             5. The District Forum, after analyzing the entire evidence on record had observed that when the complainant had made a deposit with the 2nd opposite party, agreeing for the rate of interest offered by the Bank, the contract has been completed between the complainant and the opposite parties in respect of such deposit.  Therefore, the complainant has no basis again to ask the opposite party to revise the rate of interest and calculate on compound basis and to pay the interest difference to him.  Thus, the District Forum had come to a conclusion that the opposite parties have not committed any deficiency of service and dismissed the complaint.    Aggrieved over the same, the present appeal has been filed by the complainant.

 

             6.  The Appellant represented in person, was absent.  Keeping in mind the submissions made by the counsel for the respondents/ opposite parties, we perused the entire material available on records. 

 

             7.  The main allegation of the complainant is that based on the solicitation made by the opposite parties he deposited a sum of Rs.20 lakhs under the Scheme of '444 days Special FD SR on Maturity', under the belief that on maturity he would receive his deposit along with compounded rate of interest under cumulative scheme, which has been the practice followed by the opposite parties to other Term Deposits.  However, the opposite parties calculated the rate of interest only on simple interest.  Therefore, there is deficiency of service on the side of the opposite parties. 

 

             8.  The counsel for the respondents/opposite parties have cited the guidelines issued by Reserve Bank of India in Circular No.UBD No.Ds.PCB Cir 12/13.01 00/97-98 dated 22.10.1997 and the Master Circular dated 01.07.2013, regularising the rate of interest and stating that the banks are free to adopt their methodology and decide the ultimate rate of interest to be given to the depositors.  From the circular of RBI, it is clear that the Banks are at liberty to fix the rate of interest.  But, the only condition is that they should provide information to their depositors about the manner of calculation of interest appropriately, while accepting the deposits and display the same at their branches.  Hence, there is no deficiency of service on the part of the opposite parties and the District Forum had dismissed the complaint.  Hence, sought to dismiss the appeal.   

 

             9.  In the instant case, when the Banks are at liberty to fix the rate of interest on fixed deposits, the complainant cannot claim interest on compound basis only.  Moreover, at the time of deposit the complainant had agreed to the rate of interest, without any protest.  When that being so, at later point of time he cannot turn around and agitate that the interest paid by the opposite parties/Bank on simple interest cannot be accepted.  In fact, the District Forum by considering these aspects had rightly dismissed the complaint.

 

              10.  Therefore, we do not find any compelling situation warranting this Commission to interfere with the order of the District Forum.  Hence, the appeal is dismissed, confirming the order dated 18.06.2015 passed in C.C. No.102 of 2012 by the District Consumer Disputes Redressal Forum, Chennai (North).  Accordingly, the appeal is dismissed.  No order as to costs. 

 

 

 

R  VENKATESAPERUMAL                                                                                                      R.SUBBIAH

         MEMBER                                                                                                                            PRESIDENT

 

 

 

Index :  Yes/ No

 

AVR/SCDRC/Chennai/Orders/June/2023