Per K.V.Krishna Murthy:   

            A complaint filed on 15-11-2012 before the District Forum Dharawad in C.C. No. 372/2012 came to be transferred by the Karnataka State Consumer Disputes Redressal Forum, Bangalore vide Order No. ಕರಾಆ:ಆಡಳಿತ:76:2014, ದಿನಾಂಕ : 30.07.2014 to this Forum from District Forum Dharawad.  The records of the case received in this Forum on 14-08-2014 and re-numbered on the file of this Forum as aforementioned.

            2.  The order-sheet dated: 04-12-2012 reads as follows;

“Called out.  Sri. JRM Counsel filed power for R1.  Notice sent to R2 returned unserved with an endorsement “refused”.  The counsel submits there is no such designation and pose by name “The Manager, Maratha Co-Op. Bank Ltd.,” and he himself appeal to the R.1.  Written version of R1 by 14/12/2012.”   

            3.  The envelope containing refusal endorsement is available in the case file.

            4.  Section – 28A. (3) of the Consumer Protection Act – 1986 reads thus;

“(3) When an acknowledgment or any other receipt purporting to be signed by the opposite party or his agent or by the complainant is received by the District Forum, the State Commission or the National Commission, as the case may be, or postal article containing the notice is received back by such District Forum, State Commission or the National Commission, with an endorsement purporting to have been made by a postal employee or by any person authorized by the courier service to the effect that the opposite party or his agent or complainant had refused to take delivery of the postal article containing the notice or had refused to accept the notice by any other means specified in sub-section (2) when tendered or transmitted to him, the District Forum or the State Commission or the National Commission, as the case may be, shall declare that the notice has been duly served on the opposite party or to the complainant:

In view of the above provision of law, it should have been declared that the notice has been duly service on OP No.2.  After the transfer of the case file to this Forum, a notice has been sent to both opposite parties.  The endorsement of the postal envelope OP No.2, the same has been received in the office of the Bank.  Hence service held sufficient on OP No.2 also.

5.  After the transfer of the case to this Forum, we have marked the documents filed for the complainant as Ex.A1 to Ex.A5 and those filed on behalf of the OP No.1 have been marked as Ex.B1 to Ex.B19 for our convenience. 

6.  In the complaint originally filed on 07-11-2012, the complainant claims that she has deposited Rs.2,00,000/- in OP No.2 bank by opening a F.D. Account.  Subsequent to filing of the written version, amendment was moved, allowed and effected on 20-02-2013.  The amended complaint averments read as follows;

“2. she deposited Rs.1,65,236/- in Opponent No-2 Bank by opening F.D. Account and the said F.D. Account matured in the year 2007.  After maturity Complainant approached Opponent No-2 Bank to withdraw F D amount of Rs.1,65,236/- for her own family necessity.

3. she requested Opponent No-2 to return entire F D amount Rs.1,65,236/- but the Opponent No-2 Bank authorities told to complainant that, since their Bank is under server loss and it is badly in need of finance and requested Complainant to permit them to withheld Rs.33,300/- out of Rs.1,65,236/- F D as Erojin Fund and they will return the said amount to the Complainant within short period.

4.  The complainant believing the words of the Opponent No-2 Bank allowed them to withheld Rs.33,300/- out of Rs.1,65,236/- F D and the said amount of Rs.33,300/- is deposited in Erojin Account bearing No.-11 in the name of complainant in Opponent No-2 Bank.  The amount of Rs.33,300/- deposited on 15.2.2007.

5.  after sometime she approached Opponent No-2 Bank and requested them to return Rs.33,300/- deposited in Erojin Account bearing No-11 in Complainant name.  Opponent No-2 Bank did not keep their words and for one or other reason went on postponing to return Rs.33,300/- to Complainant for the reasons best known to them.

6.  she deposited all her hard earned earning with Opponent No-2 thinking that, in her old age it will be helpful to her, but opponent No-2 did not return entire FD amount of Rs.1,65,236/- to complainant and out of it withheld Rs.33,300/- for no fault of Complainant and till today not returned the said amount inspite of their assurance that, said amount will be returned to complainant.  This amount to deficiency of Opponent No-2 towards complainant.

            7.  The official liquidator of the Bank has been served with the notice of the proceedings on 23-11-2012.  Sri. J.R.Mandre, counsel filed vakalat for OP No.1.  Written version was filed beyond 45 days time prescribed in sub-section (2) of Section-13 of the Consumer Protection Act – 1986.

            8.  The version of the case given by OP No.1 are as follows;

“The true facts of the case are that the complainant had deposited amount in the F.D. No.66531/264/22 which was matured amount was Rs.1,66,458/- including interest.  That the respondent-bank being put under directives by the R.B.I., under the power conferred under section 35A of the Banking Regulation Act, 1949 w.e.f.3.2.2004, due to financial crisis and its deposits are eroded to the tune of 20% assessed by the R.B.I./Banks statutory conditions.  That the deposits proposed to be set-off deposited amount with Loan account of Loanee.  Yallappa.K.Habib, who was defaulter loanee and indemnifier in the matter.

The complainant depositor and defaulter loanee both have requested the respondent bank on first week of November, 2006 to adjust the deposit amount to the loanee’s bank account i.e. setting off deposits with Loan Account i.e. Deposit amount Rs.1,66,458/- and Loan amount of Rs.5,09,537/- and also furnished indemnity Bond on 13.11.2006 which clearly indicates all the details towards the impaired amount of Rs.33,292/- impounded by the Bank on the date of set-off.  Said amount will be credited to erosion account to reduce the Non-performance Account.

The consent of the Depositor and loanee and their deposit amount reducing to 20% out of Rs.1,66,458/- balance Rs.1,33,166/- was allowed to transfer to the loan account of default loanee, which the Bank Committee consented before government Representation as per the Circular No.CIO.267.CC.2005 dated 21.2.2006 on 6.1.2007.  The said documents are being produced for kind perusal of the Hon’ble Forum at Annexure A to C.

The issuance of notice to Bank, non-reply does not create any right to the complainant.  There is no single pai payable to the complainant.  The said transaction settled on 06.01.2007.  Now filing the complainant is not only time barred, but misconstrued to deducted erosion amount as if deposit amount.  And there is no cause of action.

The Hon’ble Forum lacks jurisdiction as per Section 118 K.C.S. Act 1959.  That a present respondent-bank is being liquidated with effect from 2.2.2008.  That there is no privity between the Liquidator and the Complainant.

9.  The main contention advanced by the counsel for the official liquidator of the Bank before this Forum is that the complainant has no locus-standi to file the complaint because the Bank is not in existence.  The very fact that the official liquidator is contesting the case discloses that the process of winding-up has not been completed.  The Bank has not been dissolved.  Certificate of Registration of Bank has not been cancelled.  Hence the contention is rejected out-right.

            10.  One Sri. Yallappa.K.Habib, resident of Hubli was borrower of the Bank under loan A/c No. 142/20H/L issued on 30-03-2002 and he is defaulter in repayment of his loan account and treated as N.P.A. w.e.f. 30-06-2002.  The principal amount due was Rs.5,00,000/- and interest accrued on 9,537/-.  So Rs.5,09,537/- was total N.P.A. since 30-06-2002.

            11.   On 03-2-2004, Reserve Bank of India has issued certain directions u/sec. 35A of the Banking Regulation Act, 1949 (AACS) on account of finance mis-management of the affairs of Maratha
Co-Operative Bank Ltd., Hubli vide Ex.B13 and Ex.B14.

            12.  Guidelines of setting off deposits under N.P.A. of Urban Co-Operative Banks has been issued by Government of Karnataka as per Ex.B16 provided a scheme for setting off deposits against the NPA of Banks, which are under the directions of Reserve Bank of India.  Condition No. 4 & 9 reads as follows;

”4. If the deposit amount exceeds the amount of NPA, the
       balance of deposit after adjustment should not be released
       to the deposits.

5.   xxxxxxxx

6.   xxxxxxxxx

7.   xxxxxxxxx

8.  xxxxxxxxxx

9. If after the adjustment, there remains any balance
       outstanding on the NPA account, the security provided to
       the loan account should not be released.

II. For setting off deposits which are more than Rs. one lakh

f.  In the above case the percentage of erosion in deposits as
      assessed by the bank should not be less than 12% i.e. for
      deposit of Rs.100/- only Rs.88 will be eligible for set-off.

g. xxxxx

h.  xxxxx

i.  The amount of erosion should be credited in to a separate
      General ledger Account under the name and style ERODED
      VALUE OF DEPOSITS.

j.  xxxxxxx

k. xxxxxxx

l.  xxxxxxx

m.  If after the adjustment, there remains any balance outstanding on the
       NPA account, the security provided to the loan account should not be
      released.  The security shall be retained by the bank till the NPA is
      repaid.

n. xxxxxx

o. xxxxxx

p. Bank should not be required to make any payment to the
     depositor in pursuance of the adjustment.

13.  The complainant herein has deposited Rs.1,65,236/- in a Fixed Deposit of the Bank 16-09-2006 for period of 2 months.  Maturity date is shown as 15-11-2006 as per Ex.B2.

14.  Joint application was filed as Ex.B1 by the complainant (depositor) and Y.K.Habbi (Borrower) authorizing the bank to set-off the deposits towards the above mentioned borrowed accounts of the borrower.

15.  Acting on the said application, an indemnity bond was executed on 13-11-2006 vide Ex.B3, which discloses that the Bank has credited to set-off the deposited amount of the depositor amounting to Rs.1,66,458/- inclusive of interest on Rs.1,222/- with the loan account of the borrower. 

16.  On account of this adjustment, the depositor has consented to setting-off of his deposits with the loan account of the indemnifier to the extent of Rs.1,33,166/-, the impaired amount of Rs.33,292/- impounded by the Bank on the date of set-off will be credited to a separate suspense account under the name and style of Erosion Account maintained with the Bank.

17.  The pass-book, Ex.A.1 furnished by the complainant pertains to the said erosion account, which discloses that Rs.33,300/- has been credited to the said account on 15-2-2007 by F.D.A. No. 262/24.  Non-payment of this amount by the opposite parties, according to the complainant is the deficiency in service.  The dispute therefore confines to this amount of Rs.33,300/-, which remain unpaid since 15-2-2007 to the knowledge of the complainant.

18.  Section 24 (A) of the Consumer Protection Act – 1986 reads thus;

(1)  The District Forum, the State Commission or the National Commission shall not admit a complaint unless it is filed within two years from the date on which the cause of action has arisen.

(2) Notwithstanding anything contained in sub-section (1), a complaint may be entertained after the period of specified in sub-section (1), if the complainant satisfies the District Forum, the State Commission or the National Commission, as the case may, that he had sufficient cause for not filing the complaint within such period:

            19.  The complaint filed on 15-11-2012 is hopelessly barred as the complaint has not been filed before a District Forum within the limitation period because the deficiency in service by not making the payment has commended since 15-2-2007.

            20.  Section – 22 of the Banking Regulation Act – 1949 empowers the Reserve Bank of India to cancel a license granted to a banking company.  In exercise of this power so vested, the Reserve Bank of India issued letter dated: 23-1-2008, as per Ex.B5.  The last paragraph of the said letter reads as under;

“12. Having regard to all these facts, the Reserve Bank of India is satisfied that allowing the bank to carry on banking business any further would be detrimental to the interests of the present and future depositors.  Hence, the licence granted to the bank to conduct banking business deserves to be cancelled.  Accordingly, the licence dated Janury 08, 1988 granted to The Maratha Co-Operative Bank Ltd., Hubli, Karnataka to conduct banking business in India under Section 22 of the Act is hereby cancelled.  This order makes it obligatory on the part of the bank to stop conducting ‘banking business’ within the meaning of Section 5(b) of the Act, including acceptance and repayment of deposits, with immediate effect.”

            In view of this direction, repayment was not permissible to the complainant.  Hence allegation of deficiency in service not proved.

            21.   Section – 50 of the Banking Regulation Act – 1949 bars certain claims for compensation, which reads as under;

“50. Certain claims for compensation barred. – No per shall have any right, whether in contract or otherwise, to any compensation for any loss incurred by reason of the operation of any of the provisions [contained in Sections 10, 12-A, 16, 35-A, 35-B, [36, 43-A and 45] or by reason of the compliance by a banking company with any order or direction given to it under this Act.”

            22.  In view of clear statutory mandate, the present claim of the complainant for compensation is not maintainable by virtue of Section 3 of the Consumer Protection Act – 1986.

23.  Section 118 (2) of Karnataka Co-Operative Societies Act – 1959 states –

“While a co-operative society is being wound up, no suit or other legal proceedings relating to the business of such society shall be proceeded with, or instituted against, the Liquidator as such or against the society or any member thereof, except by leave of the Registrar and subject to such terms as he may impose.”

The complainant has not obtained leave of the Registrar in instituting the present legal proceedings and therefore not maintainable.

24.  It is pertinent to note that Section – 127 of the Karnataka Co-Operative Societies Act – 1959 states thus;

“127. Indemnity: No suit, prosecution or other legal proceedings shall lie against the Registrar or any person subordinate to him or acting on his authority [or the [Director of Co-Operative Audit] or any other person subordinate to him acting on his authority] [or against the new committee of the co-operative society or the Administrator or the Special Officer appointed under section 30 or Section 30A] in respect of anything in good faith done or purporting to have been done under this Act.”

25.  In the instant case, the official liquidator was appointed under the orders of the Registrar of Co-Operative Societies, dated: 02-4-2008 as per Ex.B7.  Therefore, the Liquidator acting on the authority of the Registrar could not be found fault with in not making the payment of money to the complainant for any reason.  Moreover, the Bank could not conduct the banking business and therefore returning of the deposit amount was impermissible as per directions from the Reserve Bank of India.  Hence, no deficiency in service cannot be attributed the Liquidator.  

26.  In the case of – Registrar of Co-Operative Societies & Anr., V/s Tamil Nadu Consumer Protection Council, Tricy & Ors., - II (2007) CPJ 175 (NC), the National Commission observed as under ;

“The only question which requires consideration in these Revision Petitions is whether the Registrar of the Co-Operative Societies and the Special Officer, appointed under Section 88 of the Co-Operative Societies Act, after suppression of Management Board of the Society, Tiruchirapalli Consumer Co-Operative Wholesale Ltd., Trichy, would be jointly and severally liable for non-refund of deposits by the Society?

2.  In our view, the Registrar of the Co-operative Societies and the Special Officer are discharging their duties under statutory provisions unconnected with any contract of accepting deposit from the complainants by the Cooperative Society.  They cannot be held personally liable for non-refund of deposits by the Cooperative Society on the ground that the society was suffering from financial crunch or for various other reasons including mal-administration of the society.  The Registrar of the Cooperative Societies under the Tamil Nadu Cooperative Societies Act is not providing any service or facility as contemplated under the Consumer Protection Act, but exercising statutory, administrative, supervisory control and is discharging quasi-judicial functions as provided in the said Act.”

27.  The exposition of law stated above are squarely applicable to the facts of this case and therefore we hold that the Liquidator of the Bank is not providing any service or facility as contemplated u/sec. 2(1)(o) of the Consumer Protection Act – 1986 and therefore could not be held liable for deficiency in service.

28.  From the above analysis of the facts of the case, it is undoubtedly clear that the complainant has made a frivolous/vexatious claim against the Official Liquidator and Bank in liquidation knowing that the bank is liquidation winding-up process with full knowledge of the guidelines in Ex.B16 and therefore we impose cost of Rs.5,000/- to the complainant to be paid to the Official Liquidator of the Bank within three months u/sec. 26 of the C.P.Act – 1986.

29.  For the reasons give above, the complaint stands dismissed with a direction to the complainant to pay Rs.5,000/- (Rupees three thousand only) to the OP No.1, Official Liquidator, within three months.

// ANNEXURE //

List of Documents Exhibited for the Complainant / Respondent.

Documents filed by the Complainant:

Witnesses examined for the Complainant / Respondent.