Kerala High Court
Sijili Sabastian Puthenkudy vs The Federal Bank Limited on 15 November, 2018
Author: N.Nagaresh
Bench: N.Nagaresh
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
THURSDAY ,THE 15TH DAY OF NOVEMBER 2018 / 24TH KARTHIKA, 1940
WP(C).No.18888 of 2014
PETITIONER:
SIJILI SABASTIAN PUTHENKUDY,
AGED 40, W/O.SIJU KURIACKOSE KAPPIL,
KAPPIL HOUSE, PULINCUNNOO P.O,
ALAPPUZHA DISTRICT, PIN 688 504,
WORKING AS STAFF NURSE TAWAM HOSPITAL,
AL AIN, ABU DHABI UAE, P.O BOX NO.15258,
REPRESENTED BY HER POWER OF ATTORNEY,
SRI. DEVASSY PYLEE, S/O.PUTHENKUDI CHACKO PYLEE,
AGED 69, PUTHENKUDI HOUSE, AIMURY P.O,
KOOVAPPADY, PERUMBAVOOR, ERNAKULAM DISTRICT.
BY ADV. SRI.GEORGE KURUVILLA(ALAPPUZHA)
RESPONDENTS:
1 THE FEDERAL BANK LIMITED
P.B NO.24, KAVALAM BUILDINGS,
S.B COLLEGE ROAD, CHANGANACHERRY,
KOTTAYAM DISTRICT, 686 101,
REPRESENTED BY ITS ASSISTANT GENERAL MANAGER,
NRI RELATIONS.
2 THE BANKING OMBUDSMAN
OFFICE OF THE BANKING OMBUDSMAN,
RESERVE BANK OF INDIA,
THIRUVANANTHAPURAM. 695 0333.
3 THE RESERVE BANK OF INDIA
BY ADVS.
SRI.A.ANTONY
SMT.LEELAMMA ANTONY
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
15.11.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C).No.18888 of 2014
2
JUDGMENT
The petitioner filed the writ petition contending that she is a Non Resident Indian working as Staff Nurse in Abu Dhabi. She deposited `12 lakhs under NRE account for a period of one year in the 1 st respondent bank on 16.05.2012. The said NRE deposit was bearing 9.5% interest. After the expiry of the one year period for which the amount was deposited, the petitioner neither withdrew the deposit nor sought for extension of the deposit. As per the rules prevailing, the bank renewed the deposit amount for a further period of one year on 16.05.2013. While the deposit was so remaining, the petitioner sought to withdraw the Fixed Deposit on 17.10.2013. It appears that the bank closed the Fixed Deposit on 18.10.2013. The bank paid interest for the period from 16.05.2012 to 16.05.2013 but refused to pay interest for the period from 16.05.2013 to 18.10.2013.
2. Aggrieved by the refusal of the Bank to pay WP(C).No.18888 of 2014 3 interest for the remaining period, the petitioner took up the issue before the Banking Ombudsman and the petitioner's complaint was numbered as 22677. The Banking Ombudsman found that the petitioner was informed about the automatic renewal system and eligibility of interest at the time of opening the account with the bank. The Banking Ombudsman found that under the relevant features and benefits of NRE deposits, the petitioner is not entitled to interest for the 5 months' period. The Banking Ombudsman disposed of the complaint holding that the petitioner is at liberty to approach any other forum for the redressal of her grievance. Hence, the petitioner filed the writ petition seeking to declare that she is entitled to interest on her Fixed Deposit for the period from 16.05.2013 till its closure on 17.10.2013 at the rate applicable to the period for which the deposit remained with the bank without deducting the penal interest for closing.
3. The 1st respondent is contesting the writ petition by filing a detailed reply statement. In the counter affidavit filed WP(C).No.18888 of 2014 4 by the 1st respondent, the 1st respondent states that they have acted in accordance with RBI Master Circular dated 02.07.2012, wherein it is categorically stipulated that NRE term deposit has run for minimum period of one year to be eligible for interest. The Circular categorically stipulated that deposits will be renewed for the identical period at the interest rates then applicable as a continuing process until instruction to the contrary is received from the depositors. As such, the deposit was renewed for a period of one year and the deposit will be eligible for interest on completion of one year as per the Circular mentioned above. As the deposit in question was closed prematurely, the said deposit is not eligible for any interest for the period from 16.05.2013. The 1st respondent contended that Ext.P4 is strictly in accordance with law and the same cannot be assayed for the grounds stated in the writ petition.
4. I have heard Advocate George Kuruvila appearing for the petitioner and Advocate A.Antony representing the 1 st respondent bank. It is the case of the petitioner that as per WP(C).No.18888 of 2014 5 Ext.R1(a) Master Circular on Interest Rates relating to Domestic, NRO and NRE accounts, if a Fixed Deposit is matured and proceeds are unpaid, the amount left unclaimed with the bank will attract savings bank interest. The counsel for the petitioner further brought my attention to Clause 2.10 of Ext.R1(a) Master Circular, which stated that while prematurely closing a deposit, interest on the deposit for the period that it has remained with the bank will be paid at the rate applicable to the period for which the deposit remained with the bank and not at the contracted rate. Learned counsel for the petitioner argued that the non payment of interest for the period in question during which hard earned money of the petitioner remained with the bank, is illegal and has resulted in unjust enrichment of the 1st respondent bank.
5. The learned counsel for the 1st respondent, on the other hand, contended that the terms of the NRE deposits were made known to the petitioner at the time of the deposit itself. Learned counsel for the 1st respondent further contended that this writ petition is not maintainable and the WP(C).No.18888 of 2014 6 remedy of the petitioner lies elsewhere. The learned counsel further pointed out that the bank has taken a compassionate view in the matter and taking into account the difficulties of the petitioner, they have not levied penal charges for the premature withdrawal in the matter; that the writ petition is not liable to be entertained and it is only to be dismissed. Learned counsel for the respondent specifically pointed out that in Clause 2.10 to Ext.R1(a) Master Circular, it has been categorically stated that no interest is payable, where premature withdrawal of deposits takes place before the completion of the minimum period prescribed.
6. I have considered the pleadings in the matter and the arguments raised on either side. The fact remains that the petitioner has deposited `12 lakhs under NRE Fixed Deposit Scheme on 16.05.2012 and the amount remained with the bank till 17.10.2013. The petitioner has prematurely withdrawn the NRE Fixed Deposit. The petitioner has been paid interest only for one year period from the date of deposit. It is true that Ext.R1(a) Master Circular provides that WP(C).No.18888 of 2014 7 no interest is payable, where premature withdrawal of deposit takes place before completion of the minimum period prescribed. Though this is a condition prescribed in Ext.R1(a) Master Circular issued by the RBI, the fact remains that the Fixed Deposit amount deposited by the petitioner remained with the bank for the period from 16.05.2013 to 18.10.2013. The petitioner holds a savings bank account with the bank. Had the petitioner withdrawn the amount on 16.05.2013 and deposited it in his savings bank account, he would have been eligible for at least interest applicable to the savings bank account. However, the amount remained with the bank, though in NRE account, during the period from 16.05.2013 to 17.10.2013. Non payment of any interest on the hard earned money of the petitioner during the period would be harsh and undoubtedly it would result in unjust enrichment for the 1st respondent bank.
7. The petitioner had the remedy to file civil suit for recovery of interest which remained unpaid to her. However, the petitioner, expecting justice from the Office of the Banking WP(C).No.18888 of 2014 8 Ombudsman, approached the said authority filing Ext.P3 complaint dated 10.12.2013. A reading of Ext.P3 complaint would show that the petitioner was not aware of the loss of interest she will be put to, in case of premature withdrawal of Fixed Deposit amount before the completion of the extended period of deposit. The pleadings show that the Bank closed the Fixed Deposit immediately when they received a request to that effect and transferred the Fixed Deposit dues to petitioner's savings bank account. It is seen that the petitioner was not put to notice of the loss of interest she may have to suffer, in case of premature withdrawal of Fixed Deposit amount. Banker being an Agent and Trustee of the Account Holder, one would expect that the Account Holder would be put to caution, in such circumstances, of the possible loss of interest. The Banking Ombudsman ought to have made due enquiry in this regard before coming to any conclusion. Instead, the Banking Ombudsman in his Ext.P4 letter only observed that according to the Bank, they had informed the petitioner about "the automatic renewal system WP(C).No.18888 of 2014 9 and eligibility of interest etc." at the time of opening of account with the Bank. The Ombudsman simply closed the complaint, forwarding a copy of Bank's reply, to the petitioner. It is seen that the Banking Ombudsman has neither heard the petitioner in person nor has made any enquiry. Ext.P4 smacks of non-application of mind and it is unsustainable. It will be harsh on the petitioner if she is, at this distance of time, relegated to avail civil law remedy.
8. Therefore, I am of the opinion that this writ petition can be disposed of by directing the 1 st respondent bank to pay interest to the petitioner for the matured amount for the period from 16.05.2013 to 17.10.2013 treating the money as deposited in savings bank account and paying her the interest rate applicable to the savings bank account for the relevant period.
Accordingly, this writ petition is disposed of directing the 1st respondent bank to pay to the petitioner interest for the amount of the petitioner remained with the bank for the period from 16.05.2013 to 17.10.2013 at the WP(C).No.18888 of 2014 10 interest rate applicable to the savings bank accounts during the said period. This amount shall be disbursed and paid to the petitioner within two months from the date of receipt of a copy of this judgment.
Sd/-
N.NAGARESH JUDGE aks/16.11.2018 WP(C).No.18888 of 2014 11 APPENDIX PETITIONER'S EXHIBITS:
EXHIBIT P1 COPY OF THE LAWYER NOTICE DATED
6.11.13 ISSUED BY THE PETITIONER.
EXHIBIT P2 COPY OF THE REPLY DATED 3.1.14 OF THE
IST RESPONDENT BANK.
EXHIBIT P3 COPY OF THE COMPLAINT BEFORE THE
BANKING OMBUDSMAN.
EXHIBIT P4 COPY OF THE ORDER OF THE BANKING
OMBUDSMAN.