BEFORE THE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD.
F.A.No.801/2009 against C.C.No.691/2008, District Forum-III, Hyderabad.
Between
Smt.T.Hymavathi
W/o.T.N.Rao,
Aged about 44 years, Occ:Housewife,
R/o.1-4-879/58, Jayasree Mansion,
Bakaram, Gandhinagar,
Hyderabad-500 080. Appellant/
Complainant.
And
1. The I.F.C.I. Ltd.,
Rep. by its Chairman & M.D.,
IFCI Towers, 61 Nehru Place,
New Delhi-110 019.
2. The I.F.C.I. Ltd.,
Rep. by its Branch Manager,
Taramandal Complex, 8th floor,
5-9-13, Saifabad,
Hyderabad. Respondents/
O.Ps.
Counsel for the Appellant : Mr.T.Neelakanta Rao
Counsel for the Respondents: M/s. Deepak Bhattacharjee
QUORUM: THE HON’BLE JUSTICE SRI D.APPA RAO, PRESIDENT.
AND
SMT.M.SHREESHA, HON’BLE MEMBER
MONDAY, THE TWENTY SIXTH DAY OF SEPTEMBER,
TWO THOUSAND ELEVEN
(Typed to the dictation of Smt.M.Shreesha, Hon’ble Member)
****
Aggrieved by the order in C.C.No.691/2008 on the file of District Forum-III, Hyderabad, the complainant preferred this appeal.
The brief facts as set out in the complaint are that the complainant purchased a 30 year Millionaire Bond floated by Industrial Finance Corporation of India Limited in July, 1996 and due for redemption in September, 2026 in the nature of Zero Coupon Bonds. The complainant attracted by the offer invested a sum of Rs.10,000/- towards one Millionaire bond and nominated her daughter Kum.T.Priyanka Naidu as beneficiary to collect the amount of Rs.10,00,000/- for her future studies etc. on full redemption in the year 2026. The complainant submitted that the opposite parties vide letter dated 16-11-2004 intimated the complainant that they have decided to exercise call option and redeem the Millionaire Bond on 06-12-2003 and requested all bond holders to surrender their original documents for the purpose of redemption. The complainant aggrieved by the said letter sent a notice by registered post dated 2-2-2005 stating that the early redemption of Millionaire Bond is illegal and as per the terms and conditions of the Bond, it is only Bond holders that have right of redemption and not Industrial Finance Corporation of India Limited. The complainant further submitted that as per the bond, it can be redeemed on the following dates viz. 6th September, 1999, 2002, 2006, 2011, 2015, 2019, 2023, 2024 and by 2026 and the complainant/nominee will be entitled to receive redemption face value of Rs.10,00,000/-. It is the case of the complainant that she had invested the amount of Rs.10,000/- keeping in view the future plan of her daughter and the same could not be fulfilled due to the act of opposite parties which she alleges deficiency in service. Hence the complaint for a direction to the opposite parties to permit the complainant to redeem the Millionaire Bond upon full redemption on 06-9-2026 and also prayed for grant of compensation of Rs.50,000/- towards mental agony and costs of Rs.10,000/-.
Opposite Parties 1 and 2 filed counter contending that the District Forum has no jurisdiction to entertain the complaint as the registered office of the opposite party is outside the territorial jurisdiction. They submitted that Industrial Finance Corporation of India Limited is a Financial Institution, aided by Government of India and in order to augment its financial resources, it mobilized deposits from the public in the name of ‘Family Bonds’ under various schemes. The public prospectus was issued on 03-7-1996 containing detailed terms governing the terms of issue etc. They admitted that the complainant subscribed for one bond under Millionaire-I by depositing a sum of Rs.10,000/- in her name and nominated T.Priyanka Naidu as her nominee. They submitted that due to recessionary tend in the economy and slow down in manufacturing sector during the years 1998-99 and 2002-2003, recoveries of opposite parties were severely affected which led to deterioration of its liquidity position as a result, losses of Rs.1143.97 crores accrued by the end of financial year, 2003. Therefore in accordance with the clause of Modification of rights, a meeting of all bond holders was called on 25-6-2003 wherein a resolution was passed for variation of terms and conditions contained in the prospectus. Thereby the opposite parties were vested with the authority of early redemption and exercise call option in whole or part as and when decided by Board of Directors of opposite parties after giving two months notice and deemed face value of the bond immediately before the date of redemption indicated in the prospectus along with accrued interest after the date of redemption so notified by the complainant will be paid to the bond holders.
The opposite parties issued notices by way of advertisements dated 30-9-2003, 05-8-2005 and 31-3-2007 inviting all bond holders to surrender their duly discharges certificates for redemption. They submitted that they have discharged their responsibility of complying with the terms and conditions envisaged in the prospectus and submitted that there is no deficiency in service. On the other hand, the complainant did not choose to surrender the bond and receive the redeemed value and the claim of the complainant is devoid of merits and prayed for dismissal of the complaint.
Based on the evidence adduced i.e.Exs.A1 to A3 and B1 to B9 and the pleadings put forward, the District Forum dismissed the complaint.
Aggrieved by the said order, the complainant preferred this appeal.
Both sides filed written arguments.
It is the complainant’s case that she purchased Industrial Finance Corporation of India Limited bond under the category of Millionare bond at a price of Rs.10,000/-. Ex.A1 which is the copy of the family bond dated 6-9-1996 mentions the nominee as T.Priyanka Naidu and the face value as Rs.10,00,000/- as on September, 2026. It is the complainant’s case that IFCI has to redeem the bonds only on specified dates i.e. September, 6, 1999, 2002, 2006, 2011, 2015, 2019, 2023, 2024 and 2026 as per the bond certificates and that there is no provision in the bond certificate for early redemption by convening a Board meeting or by newspaper and therefore the decision taken by the opposite parties in December, 2003 to redeem the bonds is unjust.
The respondents/opposite parties rely on Ex.B1 prospectus dated 3-7-1996 where it is stated that individual letters of intimation to the bond holders about the early redemption of the bonds is not obligatory. A meeting of all bond holders was called on 25-6-2003 and a resolution was passed and letters of intimation dated 30-9-2003, 16-11-2004, 01-10-2005, 01-6-2006 and 15-2-2008 were issued to the bond holders to submit bond certificates for redemption as evidenced under Exs.B5 to B9. Ex.B4 is the copy of the notice published in the newspaper.
We observe from the record that the complainant acknowledged receipt of the letter dated 16-11-2004 but did not give the bond certificate for redemption.
The learned counsel for the respondents submitted in his written arguments that the early redemption option was exercised by the respondents as per the provision in Ex.B1 prospectus dated 03-7-1996 and the meeting of the bond holders was chaired by the PNB Capital Market Limited who are the trustees of the Bond holders and therefore the resolution passed is binding. We observe from the prospectus P22 para 12 of LC record of the Modification of rights which reads as follows:
Modification of the rights:
“The rights, privileges, terms and conditions attached to the
bonds may be varied, modified or abrogated with the consent
in writing of those holders of bonds who hold at least three
fourth of the outstanding amount of the bonds or with the
sanction accorded pursuant to a special resolution passed
at the meeting of Bondholders, provided that nothing in such
consent or resolution shall be operative against the company
(OP) where such consent or resolution modifies or varies the
terms and conditions of the bonds, if the same are not
acceptable to the company”.
Therefore, it cannot be stated that the passing of such a resolution is unjust. The contention of the complainant that the very resolution passed is unjustified is not sustainable as per the terms and conditions of the prospectus, IFCI has the option to redeem the bonds and due notice was also given to the complainant. The complainant is entitled to get the payment of the redemption amount of Rs.30,270/-. The prayer of the complainant to redeem the bonds as on 06-9-2011 cannot be directed since the prayer in the original complaint sought for full redemption as on 06-9-2026. We direct the complainant to surrender the bonds and take the redemption amount of Rs.30,270/- . Taking into consideration that the actual deemed date of redemption is September, 2026 and the amount expected by the complainant at that point of time was Rs.10,00,000/- whereas opposite parties had offered early redemption which necessitated the complainant to accept at a lower amount i.e. face value, we are of the considered view that there was an opportunity loss for the appellant/complainant and if she had had invested the said amount of money in other ventures, she would have got substantial returns. Moreover, the appellant/complainant is more or less has not chosen to accept the face value which is much lesser then what she would have got had the scheme operated till 2026. For this opportunity loss, we are of the considered view that she is entitled to compensation of Rs.10,000/- and costs of Rs.5,000/-.
In the result this appeal is allowed and the order of the District Forum is set aside and we dispose of the appeal with a direction to the complainant to surrender the bond and the respondents to pay the face value of Rs.30,270 together with compensation of Rs.10,000/- and costs of Rs.5,000/- to be complied with four weeks.
Sd/-PRESIDENT.
Sd/- MEMBER.
JM Dt.26-9-2011
