CC Filed on 22.09.2009<br /> Disposed on 31.03.2010<br /> <br /> BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, KOLAR.<br /> <br /> Dated: 31st day of March 2010<br /> <br /> PRESENT:<br /> Sri. G.V.HEGDE, President.<br /> <br /> Sri. T.NAGARAJA, Member.<br /> Smt. K.G.SHANTALA, Member.<br /> ---<br /> <br /> Consumer Complaint No. 97/2009<br /> <br /> Between:<br /> <br /> <br /> S. Raja,<br /> S/o. L. Srinivasan,<br /> Aged about 48 years,<br /> No. 437, 11th Cross,<br /> Swarna Nagar,<br /> Robertsonpet,<br /> K.G.F.<br /> <br /> <br /> (By Advocate Sri. H. Pavana Chandra Shetty) <br /> <br /> V/S<br /> <br /> 1. The BEML Employees Credit<br /> Co-operative Society Limited,<br /> Est. ARK/B/Reg/3187/dt. 1976-77,<br /> Maharaj Road, Robertsonpet,<br /> K.G.F – 563 122, Kolar District.<br /> Rep. by its Secretary.<br /> <br /> <br /> 2. The BEML Employees Credit<br /> Co-operative Society Limited,<br /> Est. ARK/B/Reg/3187/dt. 1976-77,<br /> Maharaj Road, Robertsonpet,<br /> K.G.F – 563 122, Kolar District.<br /> Rep. by its President. <br /> <br /> <br /> <br /> <br /> <br /> <br /> ….Complainant<br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> ….Opposite Parties<br /> <br /> <br /> ORDERS<br /> <br /> This is a complaint filed under section 12 of the Consumer Protection Act, 1986 praying for a direction against the opposite parties to refund the deposit/s with interest at 21% p.a. and to pay compensation of Rs.1,00,000/- towards mental agony with costs, etc., <br /> <br /> 2. The material facts of complainant’s case may be stated as follows:<br /> That the OP-the BEML Employees Credit Co-operative Society Limited, K.G.F represented by its Secretary and President, is a society registered under the Karnataka Co-operative Societies Act 1959 and the complainant is a member/associate member of the said society. <br /> <br /> The complainant deposited certain amounts on different dates and also received certain payments as stated in para.3 of the complaint. <br /> <br /> It is alleged that the OP has issued deposit receipts for the amount received containing the terms and conditions of deposits. The deposit receipts show that the OP had agreed to return the deposits immediately after maturity period and also agreed to return the said amounts prematurely whenever the complainant demanded the same by reducing rate of interest by 2%. It is alleged that the OP is conducting his business in a suspicious way and the OP has reduced rate of interest 6% p.a. from September 2008 and the OP is not opening the office regularly during office hours and it is trying to shift the office from place to place. It is alleged that for these reasons the complainant intended to get back his deposit even before the maturity and made demand for return of the deposits but the OP did not repay and on the other hand harassed the complainant. Therefore the complainant has filed the present complaint. <br /> <br /> 3. The OP appeared and filed version. The receipt of deposits and the terms agreed for payment of interest and principal are not disputed. It is contended that for unforeseen events the financial status of the OP had deteriorated and therefore a meeting of depositors and members were called for and the circumstances were explained to them and it was agreed and resolved in the said meeting to pay the interest at reduced rate of 6% p.a. on the deposits. The following are the grounds stated for the deterioration of financial status of OP.<br /> <br /> i) Heavy amount was taken as loan from DCC Bank, and reciprocally heavy amount was kept in deposit with the said Bank. As there was a ‘run-on-the’ said bank, the bank exercised general lien, without prior intimation, and closed the loan account pre-closing the deposits which was unexpected and unforeseen.<br /> ii) State Government took policy decision popularly known as HRMS-where under salary of State Government employees were not permitted to be deduced except for the Governmental loans. The salary deduction of instalments of the loan given by this society was abruptly stopped.<br /> <br /> iii) Many of the borrowers among State Government have either gone on transfer or dead or terminated from service. Their loans have been doubtful debts and this being a private loan, it does not find a place in ‘last pay certificate’.<br /> <br /> iv) Earlier the salary of staff of Education Department was disbursed by BEO and later the same was changed to clusters and now again the system is reverted to BEO. This change over has caused lot of problem in regular recovery of loans.<br /> <br /> v) The society gave loans to State Government employees of Kolar District earlier but now with the formation of Chickaballapur District, the entire administration has split and the borrowers from Chickaballapur District are dodging and are not paying the instalment regularly.<br /> <br /> vi) The management of BEML, K.G.F permitted Bharat Earth Movers Employees Association (BEMEA) the official Union, to given loans to employees and the deduction for such BEMEA loans is given preference than the loan of this society. <br /> <br /> <br /> The OP has further contended that it has been making all hectic efforts to come out of the crises and has been repaying the deposits to depositors in installments and this scheme was approved and accepted by the members. Further it is contended that many of the depositors have rushed to this Forum, though they knew the above facts and circumstances. Hence it is contended that there was no deficiency in service and OP stated that it is ready to repay the deposits to the depositors in easy installments. <br /> <br /> 4. The complainant filed affidavit in support of the allegations made in the complaint. The OP filed the version at belated stage, therefore further time was not granted to file its affidavit thinking that it would be repetition of the contentions taken in the version. In para.3 of the complaint it is shown that the total amount deposited on different dates comes to Rs.5,90,000/- and the total amount received comes to Rs.60,000/-. Therefore the balance of amount as per the complaint is Rs.5,30,000/-. However during arguments after verifying the accounts the OP submitted that the total balance payable is Rs.5,40,000/- and not nearly Rs.5,30,000/- as stated in the complaint. It is admitted that the complainant had received interest accrued due on every month as per the agreement and till August 2008 the interest was paid at the rate agreeable to complainant. It is submitted that the grievance of the complainant is regarding the reduction of interest to 6% p.a. from September 2008. It is admitted the complainant is receiving the interest on monthly basis even now. <br /> <br /> 5. The following points arise for our consideration:<br /> Point No. 1: Whether there is deficiency in service by OP?<br /> Point No. 2: What should be the rate of interest on the deposits?<br /> Point No.3: To what order?<br /> <br /> 6. After considering the rival contentions and the records our findings on the above points are as follows:<br /> Point No.1: The OP stated so many grounds for contending for which reasons it is facing financial crisis. Even if the said grounds are true, the non-payment of deposits soon after its maturity still amounts to deficiency in service. The unforeseen events leading to financial crisis may be a ground for reducing the rate of interest for the period subsequent to maturity of deposits, but it cannot be a ground to hold that there was no deficiency in service. Hence point No.1 is held in affirmative.<br /> <br /> Point No.2: During the arguments it is admitted that interest has been paid on monthly basis to all depositors at the agreed rate for certain period and it has been reduced from time to time and finally in August 2008 it was decided to reduce the interest to 6% p.a. and at that rate interest has been paid till date. In the present case, the agreed rate of interest was at 12%, 10% & 10.25% p.a. for different deposits depending on the date on which the deposits were made and the period of deposit was 12/24 months from the date of respective deposits. In August 2008 in respect of first four deposits the agreed period of deposits had already expired and in respect of last three deposits the agreed period had yet expired. For premature payments of these deposits the OP-society is entitled to deduct 2% p.a. of interest from the agreed rate. The payment of interest subsequent to the period of deposit is not governed by any terms of agreement, therefore we can fix the reasonable rate of interest. It is told that the Banks are giving interest nearly at 7% p.a. on deposits for one or two years. However for the deposits which were not matured the OP is liable to pay the agreed rate of interest subject to deduction of 2% p.a. interest for premature payments. <br /> <br /> Considering the financial crisis of the OP and other facts and circumstances of the case and the fact that the OP-society is entitled to deduct 2% p.a. interest from the agreed rate for the premature payments, we think the OP may be ordered to pay interest at 7% p.a. on the balance of deposits of Rs.5,40,000/- till the date of payment. As interest is being awarded a separate compensation for mental agony need not be granted in the present case. No such strong case is made out for awarding compensation for mental agony apart from awarding interest. <br /> <br /> The Learned Counsel for complainant relied upon the following decisions to contend that interest at 18% p.a. may be awarded in this case. <br /> a) S.C. & N.C. C.L.A (1996-2005) page 753 between M/s. Spring Meadows Hospital and another V/s. Harjol Ahluwalia through K.S. Ahluwalia and another of S.C.<br /> b) S.C. & N.C. C.L.A (1996-2005) page 578 between Vishnu Kumar Bhargav V/s. The Chairman LDA and another of N.C.<br /> c) S.C. & N.C. C.L.A (1996-2005) page 443 between Pushpa Builders Flat Buyers Association V/s. Pushpa Builders Limited of N.C.<br /> d) S.C. & N.C. C.L.A (1996-2005) page 5 between Haryana Urban Development Authority V/s. Meenakshi Goyal. <br /> e) S.C. & N.C. C.L.A (1996-2005) page 398 between Sri. Venkateshwara Tractors & Farm Equipment Limited. V/s. N. Somanath Gowda and another of N.C. <br /> f) Original Petition No.98/94 between M/s. Shri. Lakshmi Cotton Traders Limited V/s. Central Warehousing Corporation and others of S.C. decided on 21.06.1996.<br /> <br /> We perused the above decisions. The first four decisions relate to real estate business, where plot or flat is not allotted even after the receipt of full or substantial amount. The escalation in real estate price and cost of construction and the conduct of defaulting party were taken into consideration and the interest was allowed at 18% p.a. while ordering the return of deposit. The fifth case related to unlawful withholding of entire price of tractor because of some dispute between manufacturer and dealer and non-supply of tractor to the customer who had paid the entire price. In such case, the price of tractor was ordered to be refunded with interest at 18% p.a. The last case related to a Fire Insurance Claim in which it was held that the refusal to settle the claim was wholly untenable and therefore interest at the rate of 18% p.a. was awarded on the claim amount. <br /> <br /> We think these decisions are based on the facts and circumstances of those cases and they cannot be taken as precedents to award interest at 18% p.a. We think the award of interest at the rate stated by us appears to be just and reasonable. Hence point No.2 is held accordingly.<br /> <br /> Point No. 3: Hence we pass the following:<br /> <br /> O R D E R<br /> <br /> The complaint is allowed with costs of Rs.1,000/-. The OP-Society shall repay Rs.5,40,000/- (rupees five lakh forty thousand only) deposits to complainant with interest at 7% p.a. from September 2008 till the date of payment, less the interest already paid. The amount due under the award shall be paid within 6 weeks from the date of order. <br /> <br /> Dictated to the Stenographer, corrected and pronounced in open Forum this the 31st day of March 2010.<br /> <br /> <br /> MEMBER MEMBER PRESIDENT<br /> <br /> <br /> <br />