State Consumer Disputes Redressal Commission
M/S. Hardayal Singh Patel vs Indira Priyadarshni Mahila Nagrik ... on 3 February, 2011
CHHATTISGARH STATE
CONSUMER DISPUTES REDRESSAL COMMISSION
PANDRI, RAIPUR
Complaint Case No.01/2009
Instituted on 22.01.2009
M/s. Hardayal Singh Patel,
(Registered Partnership Firm)
Office: 32, Ravinagar, Rajatalab, Raipur (C.G.),
Partner, Hardayal Singh Patel, S/o Late Shri Palsingh Patel,
R/o Vill. Jarve, Tah. Shakti,
Dist. JANJGIR (C.G.) ... Complainant.
Vs.
2. (a) Indira Priyadarshini Mahila Nagrik Sahkari Bank Ltd.,
Registered Cooperative Bank, Through: The Liquidator,
Deputy Registered Cooperative Societies Package,
Government of Chhattisgarh., G.E. Road,
RAIPUR (C.G.)
(b) Government of Chhattisgarh, Through: Collector,
RAIPUR (C.G.)
3. Deposit Insurance & Credit Guarantee Corporation,
Head Office, Reserve Bank of India, 2nd Floor,
Opp. Mumbai Railway Station, Bhaikhala,
MUMBAI (M.H.)
4. Reserve Bank of India, Urban Bank Department,
Central Office, 1st Floor, Garment House, Worli,
MUMBAI - 18 (M.H.)
Branch Office: Mahadeo Ghat Road, Nr. Lakhe Nagar,
RAIPUR (C.G.) ... Opposite Parties.
PRESENT: -
HON'BLE JUSTICE SHRI S.C. VYAS, PRESIDENT
HON'BLE SMT. VEENA MISRA, MEMBER
HON'BLE V. K. PATIL, MEMBER
COUNSEL FOR THE PARTIES: -
Shri B. B. Agrawal, for complainant.
Shri S. K. Agrawal, for OP No.2 (a).
Shri Hitendra Tiwari, for OP Nos. 3&4.
None for OP no.2 (b).
// 2 //
ORDER
Dated: 03/02/2011 PER: - HON'BLE JUSTICE SHRI S. C. VYAS, PRESIDENT This is a complaint of depositor of OP No.2A, Bank, which is at present under liquidation after cancellation of its Banking Licence by the Reserve Bank of India. The complaint has been filed for seeking directions to the OPs to pay the complainant, the deposited amount of Rs.37,94,000/- along with interest @ 9% p.a. till the date of payment.
2. The facts of the case are that the complainant is a registered firm and is engaged as a contractor and in doing jobs for the Government. For that purpose he deposited in Fixed Deposit Accounts Rs.37,94,000/- on different dates in the name of the Firm with OP No.2(A) Bank, as security deposits for the State Government. After completion of construction works allotted to the complainant, the complainant wanted to encash the fixed deposits with OP No.2 (A) Bank. There are as many as 29 FDRs in the name of the complainant Firm, which have been matured, but in the meantime the OP No.2 (A) Bank lost to its liquidity & stopped Banking Transactions so, its banking licence was cancelled by the Reserve Bank of India and an Official Liquidator has been appointed by the State Government, under the provisions of Cooperative Societies Act and that Official Liquidator is performing all the works of the Cooperative Bank, under the directions of the State Government, which is OP No.2 (B) in this // 3 // complaint. It is alleged in the complaint that the complainant appeared before the Official Liquidator on 08.11.08 and claimed refund of deposited amount, but then the Liquidator on the same day paid only Rs.1,00,000/- to him and for the remaining amount it was said that, the amount would be paid after directions of the State Government. It has also been averred in the complaint that the complainant Firm is having seven partners and all the seven partners have authorized Hardayal Singh Patel to file complaint against the Bank and for seeking payment of the deposited amount. It has also been averred that on the recommendations and with the permission of the State Government, the Reserve Bank of India had granted banking licence to OP No.2(A), but thereafter the State Government has failed to exercise its authority on the Cooperative Bank and Cooperative Department of the State Government also failed to conduct timely inspection and audit of record of the Bank and that is how a huge amount was misappropriated by the Office Bearers of the Bank and Liquidator was required to be appointed by the State Government.
3. It has also been averred that the liquidator was required to send name of depositors to the Deposit Insurance and Credit Guarantee Corporation (hereinafter referred as "DICGC" for short) within three months, but he failed to perform this work within the stipulated time and DICGC also failed to provide necessary funds for payment to the // 4 // depositors in time, under the provisions of DICGC Act, 1961 and so it has also committed deficiency in service. Against Reserve Bank of India, it has been alleged that it has not appointed any auditor to inspect and audit the accounts of the Cooperative Bank and on account of this lethargy, the OP No.2 (A), Bank failed. On these allegations, the complaint has been filed against all the OPs and it is prayed that all the OPs be held jointly and severally responsible for payment of deposited amount along with interest @ 9% p.a.
4. OP No.2 (A), the Indira Priyadarshini Mahila Nagrik Sahkari Bank Ltd., in the reply averred that an amount of Rs.54 crores was taken out from the funds of the Cooperative Bank and thus the persons who were engaged with the affairs of the Bank committed fraud and misappropriation of funds of the Bank, resulting in loss of liquidity of the Bank and so the Bank has stopped its all banking activities w.e.f. 02.08.06 and on 26.09.07, the Reserve Bank of India has cancelled its banking licence and thereafter in exercise of powers under section 69 of the Cooperative Societies Act, 1960, Liquidator was appointed, by the Registrar, Cooperative Societies, for the Bank, and as per provisions of Section 69 A & B of the Cooperative Societies Act 1960, regarding liabilities of the Bank. As it was an insured Bank, so for payment to depositors duties of DICGC started and accordingly amount was provided by the DICGC. Thereafter, each and every // 5 // depositors has already been paid Rs.1,00,000/-, per depositor, as per provisions of the Law and thus no deficiency in service has been committed by the Official Liquidator.
5. The OP No.2 B State Government in its separate reply, refuted the allegations leveled against it by the complainant and averred that it committed no deficiency in service and actions were taken timely by the State Government. It has also been averred that the complainant was not a „consumer‟ of the State Government, as no amount was deposited with the State Government, so the OP No.2 B was not having any responsibility for paying any amount to the complainant.
6. Similarly the DICGC OP No.3 in its written version has stated that it is a body corporate constituted under an Act of Parliament, established and incorporated by Section 3 of the DICGC Act, 1961 for the purpose of insurance of deposits and guaranteeing of credit facilities and for other matters connected therewith and incidental thereto. It has also been averred that under the provisions of Section 16 (1) of the DICGC Act, the liability of the Corporation was only for payment of Rs.1,500/- to every depositor, which was enhanced from time to time and at present the limit is Rs.1,00,000/- w.e.f. 01.05.1993. It has also been averred that for the purpose of payment under Section 16 (1) of the DICGC Act all the deposit accounts of every depositor, in // 6 // the same right and in the same capacity, are clubbed together so as to ensure that on settlement of claim, none of the depositors is paid amount exceeding the present insurance limit of Rs.1,00,000/-. In view of the above, the amount of deposit held in the name of the proprietary concern where a depositor is the sole proprietor and the amount of Deposit held in his individual capacity, are required to be clubbed together. It has also been averred that as per Section 17 of the DICGC Act the liquidator is required to submit the claim list within three months from the date of assuming charge as liquidator of the liquidated Bank and the DICGC is required to release the admissible amount to the liquidator within a period of two months from the date of receipt of the claim list and as per Section 19 of the DICGC Act, any amount paid in respect of deposit shall discharge it from its liability in respect of that deposit. It has further been averred that in the present case, the Indira Priyadarshini Mahila Nagrik Sahkari Bank was the insured Bank and the complainant was having several deposits in the same name with the Bank. Seven such deposits have been described in the written version. It has been averred that since the proprietor of the Firm M/s. Hardyal Singh Patel was Hardyal Singh Patel and all the accounts in the name of Firm and deposits in the name of Shri Hardayal Singh Patel were considered to be held in the same capacity and in the same right and required to be clubbed and maximum amount Rs.1,00,000/- was to be paid. Further deposit account in the // 7 // joint name of Hardyal Singh Patel and Smt. Asha Patel were considered as held in different capacity and right than those of other deposit accounts, and was paid Rs.8,141/-. Accordingly the complainant has been paid a sum of Rs.1,08,141/-, which is the maximum permissible amount under the DICGC Act. Thus, the Corporation is not liable to pay any more amount to the complainant at this stage. It has also been averred that the complainant is neither the „consumer‟ of the Corporation nor the Corporation has rendered any service to the complainant under Section 2(1)(o) of the Consumer Protection Act, 1986. It has also been averred that list of depositors of the Bank was submitted to the Corporation on 30.07.08 and the Corporation has scrutinized the same and released the admissible amount of Rs.14,47,35,781.65p. to the Official Liquidator on 08.09.08 and the amount has been disbursed in accordance with the provisions of the DICGC Act and so there was no lapse of service on the part of the Corporation.
7. Reserve Bank of India in its separate written version has raised this preliminary objection that the complaint against the Reserve Bank of India is not maintainable, as it has not provided any service, as described under Section 2 (1)(d) of the Consumer Protection Act 1986 and no amount was paid by the complainant by way of fee, charges or premium to the Reserve Bank of India and so there was no privity of // 8 // contract between the complainant and the Reserve Bank of India and therefore the complainant was not its „consumer‟. It was simply discharging its statutory duties and so also the complaint is not maintainable against it, as per the law laid down by Hon‟ble National Commission. The licence issued in favour of the Cooperative Bank for conducting banking business in India was cancelled by the Reserve Bank of India vide order date 27.09.07 and thereafter settlement of claim of the present complainant was up to the Liquidator appointed for winding up proceedings of the Bank. The provisions of the Banking Regulation Act, 1949, as applicable to the Cooperative Societies, and Reserved Bank of India Act, 1934 have been referred and on the basis of such description, its duties have been highlighted. It has been specified that it was having statutory functions only as per provisions of Banking Regulations Act, 1949 and rules and regulations, directions, instructions of the Bank issued thereunder from time to time. It has been averred that on 31.03.06, when inspection was conducted, under Section 35 of the Banking Regulation Act, with reference to the financial position of the Cooperative Bank, then certain deficiencies and irregularities were found and it was observed that the Bank was not having sufficient liquidity to meet the demands of depositors and it may have contagion effect on other UCBs in the area, so the Cooperative Bank was prohibited from allowing premature withdrawal of term deposits w.e.f. close of business on 23.08.06.
// 9 // Inspection was required to be prematurely concluded on 01.09.06 due to agitation by the depositors of the Cooperative Bank. The management of the Cooperative Bank had assured the depositors that the Bank would commence the business of Banking from 01.09.06 by arranging funds. However, no funds could be arranged by them and so the Cooperative Bank could not be opened on 01.09.06. Then inquiry was conducted under Section 60 of the Chhattisgarh Cooperative Societies Act 1960 and show cause notice was issued by the Registrar, Cooperative Societies, to the Bank and then recommendation was made to liquidate the Cooperative Bank. Then, the Reserve Bank of India vide letter dated 22.08.07, issued show cause notice to the Cooperative Bank and public notice in daily newspaper was also published. Since the reply given by the Cooperative Bank was found unsatisfactory, the banking licence issued to the Cooperative Bank to conduct banking business in India was cancelled w.e.f. the close of business of 03.10.07 and Registrar, Cooperative Societies, was requested to appoint a Liquidator. Then Liquidator was appointed on 12.10.07. Thus, the Cooperative Bank was given ample opportunity to improve its financial position. However, despite of getting enough time and opportunity the Cooperative Bank did not made any efforts to improve its financial position. It has also been averred that since the banking licence was already cancelled by the bank and liquidator was appointed to look after the affairs of the // 10 // Cooperative bank, so it was for the Liquidator to decide the claim of the depositors including the complainant and the Reserve Bank has nothing to do with the complaint. Thus, in sum and substance the allegations leveled against the Reserve Bank of India are totally denied.
8. We have heard arguments of all parties and perused the record of the case.
9. First question for consideration is whether the OP Nos.3 & 4, i.e. DICGC and Reserve Bank of India have also provided any service to the complainant and whether the complaint against them is maintainable ?
10. Learned counsel for the complainant submitted that the insurance premium to the DICGC was paid by the Indira Priyadarshini Bank from the amount of the depositors and so far as the purpose of insuring the deposits of the depositors, as per provisions of DICGC Act 1961 is concerned and so the complaint case against DICGC as well as the Reserve Bank of India, which granted licence to OP No.1 for banking activities, is also maintainable, whereas counsel for OP Nos.3 & 4 vehemently opposed these arguments and submitted that the Reserve Bank of India was merely exercising its statutory powers by granting licence to the Cooperative Bank and by inspecting its // 11 // accounts from time to time. It was having nothing to do with the banking services provided by OP No.1 to the complainant and same is the position of OP No.3 DICGC and therefore the complaint against both of them is not maintainable.
11. We find that similar question was raised before Hon‟ble National Commission in the case of Reserve Bank of India Vs. Eshwarappa & anr., Revision Petition No.2528 of 2006, which was decided on 24.07.08 and it has been held by Hon‟ble National Commission in the aforesaid case that "if there is inaction, lethargy/delay in taking appropriate action within a reasonable time the depositors / consumers cannot be left in the lurch." It was in respect of action of the Reserve Bank of India as well as DICGC. However, it has also been observed that the Consumer Forum has reasonable jurisdiction to entertain the complaint against the Official Liquidator appointed to settle the affairs of the Bank. Thus, on the basis of aforesaid Law laid down by Hon‟ble National Commission, it cannot be said that the depositors cannot initiate action against Reserve Bank of India or the DICGC.
12. Now the question for consideration is whether any of the OP can be directed to pay Rs.37,94,000/- along with interest @ 9% p.a. to the complainant ?
// 12 //
13. Complainant is saying that it is a registered partnership firm and when initially the complaint was filed, then name of other partners were not mentioned, but later on, in the amended complaint, in paragraph No.5 (5)(A) name of other partners of the Firm have also been mentioned. The complainant himself has filed photocopy of the deposit receipts along with a list, which has been verified also by the OP Cooperative Bank and the original FDRs have been produced before the OP Cooperative Bank.
14. On perusal, receipts of deposits show that all the deposits have been made in the name of M/s. Hardayal Singh Patel and in favour of Engineers of different projects, some are in favour of Engineer in Chief, WRD, CG, some are in favour of Executive Engineer, Kelo Project, Survey Devision, some are in favour of Executive Engineer, TDPP WR Division Jagdalpur, some are in favour of Executive Engineer CE/MJ Tube Well & Gate Division, Raipur, some are in favour of Executive Engineer WRD Kanker etc. Thus, from the description of different FDRs it appears that the amount were deposited in the name of M/s. Hardayal Singh Patel and in the name of concerning Engineers of different projects with whom the FDR was to be deposited as security. The concerning Engineer was not the person who made the deposits, but admittedly it was the Firm M/s. Hardayal Singh Patel, which has made deposits. Thus, the name of the depositor in all the 29 FDRs was // 13 // the same i.e. M/s. Hardayal Singh Patel. The description of Current Account of the M/s. Hardayal Singh Patel, which was also having some balance, is also there in the list. The complainant is a Firm registered in the name of M/s. Hardayal Singh Patel, of which the Hardayal Singh Patel is a partner and there are some other partners also, as described in the complaint, but so far as the deposits are concerned, they have been made in the name of the Firm and so the depositor is one and the same person, in case of all the deposits and also in case of Current Account with the Bank.
15. The DICGC Act, 1961 defines the word "Deposit" in Section 2(g) as under : -
"deposit" means the aggregate of the unpaid balances due to a depositor (other than a foreign Government, the Central Government, a State Government, a corresponding new bank, Regional Rural Bank or a banking company or a co-operative bank) in respect of all his accounts, by whatever name called, with a corresponding new bank or with a Regional Rural Bank or with a banking company or a co-operative bank and includes credit balances in any cash credit account------"
From this definition it is clear that „deposit‟ means the aggregate of all unpaid balances due to a depositor in respect of his all account, by whatever name called, and not a single account.
Section 16 (1) of the Act says that : -
"Where an order for the winding up or liquidation of an insured bank is made, the Corporation shall, subject to the other provisions of this Act, be liable to pay to every // 14 // depositor of that bank in accordance with the provisions of section 17 an amount equal to the amount due to him in respect of his deposit in that bank at the time when such order is made :
Provided that the liability of the Corporation in respect of an insured bank referred to in clause (a) or clause (b) of sub-section (1) of section (13) or clause (a) or clause (b) of section 13C shall be limited to the deposits as on the date of the cancellation of the registration:
Provided further that the total amount payable by the Corporation to any one depositor in respect of his deposit in that bank in the same capacity and in the same right shall not exceed one thousand and five hundred rupees."
From the above provision, it is clear that when the Act was enacted, at that time the liability of the Corporation was to the extent of Rs.1,500/- only towards single depositor in respect of all his accounts, in the same capacity. As per reply filed by the DICGC itself, the liability has now been increased to Rs.1,00,000/- w.e.f. 01.05.1993, so at present the amount payable by the Corporation in respect of one depositor in the same capacity and in the same right, is, not exceeding to Rs.1,00,000/-.
16. The aforesaid payment under the provisions of law is to one depositor, in respect of his all deposits with the Bank in the same capacity and in the same right, which includes partnership Firms, the proprietary Firms and the depositors of other categories also. In the facts of the present case, the deposits have been made in the name of partnership Firm, but all deposits were made in the name of the same partnership Firm without any change and under the same right and in // 15 // the same capacity, therefore the liability of the Corporation for payment in respect of all the insured deposits in case of liquidation of the insured Bank is to the extent of Rs.1,00,000/- only and as admitted by the complainant, that amount has already been paid and apart from this payment, further payment of some other deposits which were made by the complainant in his personal capacity along with one female member of his family, has also been made.
17. Therefore, when we consider the provisions of Section 16 (1) of the DICGC Act then there remains no doubt that maximum liability of the Corporation is only to the extent of Rs.1,00,000/- and not more than that in case of a depositor in the same capacity and in the same right and in the facts of the present case, that liability has already been discharged by paying that amount by the Official Liquidator of the OP Cooperative Bank, out of the funds provided by DICGC without delay to the complainant on the date of claim itself. Thus, the statutory duty has been promptly performed by the DICGC and so the allegation of deficiency in service against it is not sustainable.
18. Hon‟ble National Commission very recently in the case of Deposit Insurance & Credit Guarantee Corporation Vs. Chandrakant V. Zingade & ors., I (2011) CPJ 19 (NC), having similar facts, has held that the insurance corporation is liable to pay only Rs.1,00,000/- to the // 16 // depositor, who deposited more than Rs.1,00,000/- irrespective of amount they have deposited as the liability of the Corporation under Section 17 and 18 of the Act was to pay only Rs.1,00,000/- to each depositor.
19. From the record we find that as the Reserve Bank of India has provided ample opportunity to the Indira Priyadarshin Cooperative Bank to improve its financial position, after audit in the year 2006 and as assurance was given by some Office Bearers of the Bank that they will arrange funds from other sources, but ultimately no such fund could be arranged and so the Reserve Bank of India was having no option but to cancel the banking licence to safeguard the interest of depositors in the banking service. In view of this, we find that allegations against the Reserve Bank of India are lacking substance and are not acceptable.
20. The Registrar, Cooperative Societies, Chhattisgarh, vide order dated 12.10.07, has appointed Shri S.K. Behar, (IAS) as Liquidator of the Indira Priyadarshini Bank, when it was found that the Bank was not following the norms set by the Reserve Bank of India under the Banking Regulations Act and has failed to fulfill its liabilities towards the depositors and has become unable to pay that amount. When the Official Liquidator was appointed, he started taking action for securing // 17 // amount from DICGC. The Liquidator submitted list of depositors to the DICGC on 30.07.08 and then the amount was provided immediately by the Corporation, under the provisions of section 17 of DICGC Act. The Liquidator was required to submit claimants list within three months from the date of assuming charges as Liquidator of the liquidated Bank. It appears that such list was submitted by the liquidator a little bit late, but as per contention raised by the complainant in the complaint, he himself approached the Liquidator on 08.11.08 and prior to that, not only the list was submitted to the DICGC but the amount was also received to the Liquidator and it was being disbursed also. So the present complainant cannot say that on account of some deficiency in service on the part of the Liquidator, he suffered some harassment.
21. From the documents which have been filed by the Official Liquidator, it appears that the Liquidator has filed many claims against the persons from whom dues of the Bank were to be recovered. As per the minutes of the meeting recorded by the Official Liquidator on 27.12.10, the Bank was having minus balance of Rs.350.15 lakhs, and it was to recover 28.36 crores from different persons out of which only Rs.1.58 crores could be recovered and which are safe in the hands of the Liquidator for making payments to the persons who are permitted to be paid by the Bank. It has further been noted in the minutes that for // 18 // recovery of other dues of the Bank, proceedings have been initiated. Matters have been sent to the Collector and the proceedings are going on for recovery of Rs.15.01 crores. 15 other cases were there for recovery of 12.33 lakhs, but no amount could be recovered in those cases till date. It has also been mentioned that the request was made from the Registrar, Cooperative Societies, to the State Government also in this regard. It has also been mentioned that after recovery of the amount from different defaulters, claim of the depositors, having deposits of more than Rs.1,00,000/- would be paid and Liquidator has also filed list of persons from whom in all amount of Rs.15,01,20,773/- is to be recovered and against whom proceedings are pending for recovery.
22. Considering these documents, we are satisfied that at present the Official Liquidator is taking interest and trying to recover the amount of dues of the Bank from the defaulters and then the amount of the depositors having deposits of more than Rs.1,00,000/- would be paid as mentioned by him in the minutes. From the minutes it appears that Rs.1.58 crores has already been recovered by the Official Liquidator and the amount is safe in his hands. Considering this amount, which is available with the Official Liquidator and which is the property of the Bank under liquidation and must be the amount of the depositors, it appears reasonable in the interest of justice to direct // 19 // the Official Liquidator to pay proportionate amount to the complainant against his deposits out of this amount. So far as small depositors are concerned most of their claims have already been settled and deposits below then Rs.1,00,000/-, have already been recognized and amount has been paid. The persons who were having deposits of more than Rs.1,00,000/- are to be attended now. The amount deposited by the complainant along with interest up to 02.08.06, when Banking activities were stopped, is to be paid in future.
23. In view of the aforesaid, the complaint of the complainant, so far as it relates to the Reserve Bank of India and DICGC and the State Government, is having no substance and is dismissed. So far as the Bank and its Official Liquidator is concerned, we find some substance in the complaint and direct the Official Liquidator to pay to the complainant the amount proportionate to its deposits in comparison to the deposits of the other depositors, out of the amount of Rs.1.58 crores, lying in the hands of the Official Liquidator. For the purpose of calculating the amount to be paid to the complainant, the Official Liquidator is directed to add the number of claims of different depositors and then the amount which is lying in the hands of the Official Liquidator be divided by the number of claimants and the proportionate amount be paid to the complainant within two months from today. Similarly the Official Liquidator is directed to pay the // 20 // amount to the complainant in proportionate to its claim, in future also, as and when recovered from its defaulters. Apart from it, the Official Liquidator is further directed to pay Rs.10,000/- by way of cost of this litigation. With these directions the complaint is thus disposed of.
(Justice S.C. Vyas) (Smt. Veena Misra) (V.K. Patil)
President Member Member
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