F.A.No. 659  OF 2007 AGAINST C.C.NO.7 OF 2007 DISTRICT CONSUMER FORUM-II TIRUPATHI

Between
State Bank of India
Rep. by its Branch Manager,
Pakala Branch, Pakala Town & Mandal
Chittoor District
                                                                                                Appellant/opposite party

        A N D

Vattaikunta Chinnaswamy Naidu
S/o Pothaiah Naidu, Hindu, aged about 65 yrs
Cultivation, Valapavari Palli, Mogarala Post,
Pakala Mandal, Chittoor District

Respondent/complainant

Counsel for the Appellant              Sri M.Narender Reddy

Counsel for the Respondent           Sri Nimmagadda Satyanarayana

 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 is the appellant.  The appellant challenges the order  directing it the amount of Rs.2,03,420/- with interest @9 % p.a. from the date of maturity besides the sum of Rs.!000/- awarded towards costs.       

The facts of the case as represented by the complainant are that the complainant deposited a sum of Rs.18,000/- each on 6.8.1992 with the opposite party under the E.W. Scheme.  The amount on maturity is Rs.2,03,420/-  and the due date is 6.8.2006. The opposite party issued pass books with A/c Nos. 79 amd 80. After the date of maturity of the amount, the complainant requested the opposite party to pay the amount due. The opposite party has not paid the amount. The complainant got issued notice through his advocate on 9.11.2006 for which there was no response from the opposite party.

The opposite party resisted the claim inter alia contending that non payment of the amount does not amount to deficiency in service.  As per the provisions of the E.W. Scheme the recurring deposit account was opened and the deposit was treated as term deposit for a period of 10 years and the subsequent three years period was treated as renewal period.  The duration of the deposit had been mentioned in the rules of the scheme.  As per the rules and circulars issued by the Reserve Bank of India only, the amount would be paid.  As per the rules of the scheme the maturity amount is Rs.1,46,636/-.   The complainant failed to produce the documents and signed in the discharge receipts.  Several other members of the scheme received the amount of Rs.68,318/- from the opposite party irrespective of the maturity amount mentioned in the ledger.  The staff of the opposite party had wrongly mentioned the amount on maturity in the passbook issued to the complainant.  As per clause 5.1 of the scheme, Special Term Deposit would initial be issued for a period of 10 years and it would be automatically renewed for a further period of 10 years each @ interest prevailing on the respective maturity dates.  Clause 9 of the scheme had provided a table showing the maturity value for different maturity periods worked out on the basis of then prevailing rates of interest on bank deposits subject to clause 6 of the scheme.  Clause 6 of the scheme restricts the rate of interest subject to the RBI directions.  On the date of deposit, i.e., on 11.9.1993 the rate of interest was 11% per annum.  The complainant is entitled to the interest @ 11% per annum for 10 years i.e., till 11.9.2003.  The deposit was automatically renewed on maturity for further period and the maximum rate of interest payable is 6% per annum.  The complainant is entitled to the amount of Rs.1,36,636/- under two deposits.   

The District Forum allowed the complaint opining that the defence of the opposite party that wrong entry was made in the passbook relating to the amount on maturity is no good ground and that the terms and conditions of the Police Welfare Scheme are not applicable to the deposits received under EW Scheme. 

        The complainant has filed his affidavit and documents Exs.A1 and A5.

        The Branch Manager of the opposite party has filed affidavit and got marked Ex.B1 to B7.

        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 has deposited an amount of Rs.18,000/- vide passbook with A/c No.79 and an amount of Rs.18,000/- vide passbook with A/c No.80 on 6.8.1992 The passbooks evidence the payment.  In fact there has been no dispute of the amount deposited by the complainant with the opposite party. 

The learned counsel for the opposite party 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 bank. He has submitted that as per the circular issued by the Reserve Bank of India the opposite party offered to pay the sum of Rs.1,36,636/- whereas the learned counsel for the complainant submitted that the terms of the pass books are binding on the opposite party. He supported the impugned order contending that the opposite party is liable to pay the amount of Rs. 2,03,420/- in terms of the RD Pass books.

The complainant had opened the recurring deposit accounts No.79 and 80  with the opposite party. 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 on the due date.

The complainant’s case is that he had deposited the sum of Rs.18,000/- each on 6.8.1992 whereby the opposite party has agreed to pay an amount of Rs. Rs.1,01,710/- each on due date is 6.8.2006. The opposite party has stated that “ as para 5.1 of the scheme which spell out that the Special Term Deposit would initially be issued for a period of 10 years and it would be automatically renewed on maturity for further period of 10 years, each at the rates of interest prevailing on the respective maturity dates.  If the last renewal is for a period lower than, the period for which the maximum rate of interest is applicable, the penultimate renewal will be done for a suitable shorter duration so that the last renewal may be done for a period which will fetch maximum rate of interest on bank deposits.  The clause 9.0 of the scheme also stated that the able showing the maturity values for different maturity periods is worked out on the basis of the then prevailing rate of interest on bank deposits i.e., @ 11% per annum and subject to the clause 6.0 of the scheme.  Clause 6.0 speaks about that the rate of interest would be subject o RBI directions”.   It, is thus, the contention of the opposite party that the interest is to be calculated at the rate of 11% from 6.8.1993 till 6.8.2003, @ 6%p.a. from 6.8.2003 to 6.8.2006. If the interest is calculated in the aforesaid manner, the amount due on maturity would be Rs.68,318/- each. The opposite party expressed its readiness to pay the amount of Rs. 68,318/- + Rs.68,318/- to the complainant.

It was contended that the EWS was the replica of the police welfare scheme.  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 EW Scheme was introduced on the lines of the Police Welfare Scheme with all the terms and conditions of Police Welfare Scheme applicable to the E.W. 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 4of 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 EW Scheme as the applicant and other account holders under the scheme 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 has not filed the particulars of the EW Scheme. If not in toto , most of the guide lines framed for the  Police Welfare Scheme cannot be applied to the EW Scheme. Then there is variation in the narration of the complainant and the opposite party in regard to the deposited amount and the renewal of the deposit. The account opening form issued by the opposite party with the date of deposit 11.9.1992  and the date of maturity EWS 31 years would support the contention of the opposite party that it is a STR and the deposit was renewed from 11.9.2003 to 11.9.2006.   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 move one another to the vault and thereby seeking adjudication of the core issue. 

The passbook issued by the opposite party  provides for payment of interest @ 11% p.a. on the deposited amount. The learned counsel for the opposite party 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 facts of the case 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 contains 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.1,36,636/- under accounts No.79 and 80.

In the result the appeal is partly allowed by modifying the order 21.4.2007 passed by the District Forum.  Consequently the complaint is partly allowed directing the opposite party to pay the amount Rs.1,36,636/-   along with interest 6% per annum from 6.8.2006 till payment  together with costs of Rs.2000/-.  Time for compliance four weeks.

                                                                        MEMBER

                                                                        MEMBER

                                                                     Dt.12.05.2010

KMK*