State Consumer Disputes Redressal Commission
Idbi Bank Limited vs S Renuka Bajaj on 25 October, 2013
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB, DAKSHIN MARG, SECTOR-37A, CHANDIGARH
FIRST APPEAL NO. 894 OF 2010
Date of Institution: 24.05.2010
Date of Decision: 25.10.2013
IDBI Bank Limited, through its Manager, IDBI Tower, W.T.C.
Complex, Cuffe Parade, Mumbai-400005.
.....Appellant/Opposite Party
VERSUS
S Renuka Bajaj D/o Sh.Surinder Kumar Bajaj, R/o H.No.24, Mall
Road, Opposite Town Hall, Ferozepur.
.....Respondent/Complainant
First Appeal against the order
dated 5.3.2010 passed by the
District Consumer Disputes
Redressal Forum, Ferozepur.
Quorum:
Hon'ble Mr. Justice Gurdev Singh, President
Sh. Baldev Singh Sekhon, Member
Smt. Surinder Pal Kaur, Member Present:
For the appellant : Sh.Jatin Kumar, Advocate
For the respondent : Sh.Vikram Bajaj, Advocate
BALDEV SINGH SEKHON, MEMBER
This appeal has been filed by the appellant/opposite party against the order dated 5.3.2010, passed by the District Consumer Disputes Redressal Forum, Ferozepur (in short "District Forum"), vide which the complaint filed by the respondent/complainant was allowed and opposite party was directed to pay to the complainant the maturity amount alongwith interest at the rate at which the said amount deposited by her would have got the maturity value of Rs.50,000/- as on September 1, 2011.
First Appeal No. 894 of 2010 Page 2 of 10
2. Briefly stated, the facts of the case are that the opposite party floated a scheme inviting applications for purchase of IDBI Deep Discount Bond-96 (in short "the Bond") from the public at large. The complainant also applied and paid Rs.5,300/- for the issuance of the said Bond which were payable after a period of 25 years with a maturity amount of Rs.2,00,000/-. The application was accepted and the Bond, having folio No.FDDB 1567304, Certificate No.01630966, was issued on 18.3.1996 in her name. As per the Bonds, maturity value of it on early redemption by either party was as under:
"On 1.8.2000 Rs.10,000/-
On 1.12.20006 Rs.25,000/-
On 1.9.2011 Rs.50,000/-
On 1.6.2016 Rs.1,50,000/-"
3. The complainant never exercised the option of early redemption of the Bond at any time. However, she was shocked to receive a letter dated 29.4.2009 from the opposite party mentioning therein that it had exercised the option of early redemption (call option) on 1.8.2000 and issued redemption notice dated 25.5.2000 individually to all the bond holders advising them to surrender the duly discharged bonds to the opposite party. It was pleaded that she never received any such earlier intimation at her residential address and the opposite party had kept her amount with it. As such, it was liable to pay interest on the amount of Rs.5,300/- as per terms/rate of interest, which was agreed by at the time of issuance of the Bond. Pleading deficiency in service and unfair trade practice on the part of opposite party, she filed the complaint before the District Forum seeking directions to opposite First Appeal No. 894 of 2010 Page 3 of 10 party to pay her the Bond value with interest at the rate mentioned in the Bond till its actual payment. Compensation of Rs.25,000/- alongwith litigation expenses were also prayed.
4. Upon notice, the opposite party filed written reply pleading therein that the complainant had not complied with any of the terms and conditions of the offer document, had not followed any of the advices of Investor Services India Ltd., the Registrar and Transfer Agent (R&T Agent) for redemption of the Bond, in question, and had not submitted duly discharged Bond to R&T Agent. The complaint has been filed on whimsical and unfounded apprehensions. The Bonds, issued by the opposite party, do not fall within the definition of "goods" or "services" defined under Section 2 (1) (I) of the Consumer Protection Act, 1986. Rather it deals with the money only and in connection with the issuance of the bond, does not render banking or financial service. Therefore, the complainant does not fall within the definition of the "consumer". It was further pleaded that the IDBI Bank Limited (earlier Industrial Development Bank of India) had made public issue of the Bond with the object of raising resources needed by it for the public under terms and conditions of the "offer document" dated January 30, 1996 in which all features of the bonds and risk factors, appended thereto, were clearly mentioned. Before going for public issue, terms of the offer was filed with Security Exchange Board of India (S.E.B.I.) and after approval from S.E.B.I. the said bonds were issued to public. The Bond was having face value of Rs.5,300/- with the condition of prematurely withdrawal/redemption by the either party. This fact has been clearly First Appeal No. 894 of 2010 Page 4 of 10 stated in the offer document stating that "IDBI also reserves the right (call option) to redeem the Deep Discount Bond on the dates mentioned therein." Lending rates declined and it was not commercially viable for IDBI to continue to pay the higher rate of interest. Thus, IDBI decided to exercise its call option available on August 01, 2000 and to redeem the Bond at a maturity value of Rs.10,000/- per bond. Accordingly, IDBI served call option notices dated 25.5.2000 and 22.9.2000 under the certificate of posting to all the bond holders and requested them, including the complainant, to submit the duly discharged Bond certificate to the R&T Agent on or before 15.7.2000 to enable the opposite party to process and pay the redemption proceeds by 1.8.2000. These call option notices were sent at her given registered address i.e. 24 Mall Road, Opposite Town Hall, Ferozepur. Inspite of receipt of this notice, the complainant did not submit the duly discharged Bond and did not redeem the same. It had also given advertisements in the leading newspapers across the country on May 25, 2000 and September 22, 2000 about the said call option, which was published in "The Indian Express", "Jansatta" "The Times of India", "Punjab Kesari", etc. IDBI also published a reminder notice on 7.10.2002 to submit the duly discharged bond to obtain the redemption amount. Inspite of these notices, the complainant did not choose to surrender the duly discharged bond as stated in the notice. Thereafter, it issued reminder through letter dated 29.4.2009 requesting her to receive the redemption amount of Rs.10,000/- as per terms and conditions of the Bond. Even though the bond holders were not eligible to any interest after the date of call First Appeal No. 894 of 2010 Page 5 of 10 option i.e. 1.8.2000, however, IDBI has taken a decision, keeping in view RBI directions, to pay interest @ 3.5% per annum on quarterly compounded basis from the date of redemption on the redemption value of the unclaimed bonds. Hence it is ready and willing to pay her the redemption amount of Rs.10,000/- together with interest thereon @ 3.5% per annum on quarterly compounded basis from 1.8.2000 on the receipt of duly discharged bond from her.
5. Both the parties led their evidence by way of affidavits and documents.
6. The learned District Forum, after going through the pleadings of the parties and evidence on record, allowed the complaint and directed the opposite party in the aforesaid terms.
7. Aggrieved by this order, the opposite party has come up in appeal on the ground that as per the terms of the offer document, IDBI decided to exercise its right of call option on 1.8.2000. Accordingly, the call option notice was served on 25.5.2000 and 22.9.2000 under certificate of posting to all the bond holders, including the complainant. Advertisements in the leading newspapers across the country were given to that effect on 25.5.2000 and 22.9.2000. But the complainant failed to respond or submit the duly discharged bond. At the time of issuance of the IDBI Bond, all its terms and conditions were made clear to all the bond holders by way of publication. It is presumed and understood that bond holders subscribed to the bond after thoroughly reading and understanding the same. They are now estopped from pleading ignorance of the same terms and conditions. Moreover, whenever the dates are specified for the maturity of any First Appeal No. 894 of 2010 Page 6 of 10 investment, none of them can be stopped from doing so. Only intimation was required to be given in a general mode, which was done by the opposite party by sending the individual notices as well as through wide publication. If any of the parties remains oblivious or dormant of its rights, the other cannot be penalized for that. The dates of maturity were mentioned on the offer document as well as on the very face of the bond itself. The District Forum has failed to appreciate the averments made by the opposite party, the evidence led by it and the diligence of the appellant bank which made all kinds of efforts to intimate its customers by sending individual notices as well as by way of publication in various newspapers. Acceptance of the appeal and setting aside of the impugned order was prayed.
8. We have thoroughly gone through the pleadings of the parties and carefully perused the evidence on record.
9. The complainant has contended that IDBI Deep Discount Bond, purchased by her having issue price of Rs.5,300/- and face value of Rs.2,00,000/-, which was to mature as on 18th March 2021, was prematurely redeemed on 1st August, 2000 by the opposite party without any intimation to her and retained the amount payable to her for 9 years. The said discount bond has been proved on record as Ex.C-3. A perusal of this document shows that both the bond holder as well as issuing bank were entitled to redeem the bond on any of the dates mentioned thereon by exercising the call option at the deemed face value. The opposite party decided to exercise its call option available on August, 1st, 2000 and redeem the Bond at a maturity value of Rs.10,000/- per bond as per offer document. Accordingly, it First Appeal No. 894 of 2010 Page 7 of 10 served call option notice dated May 25, 2000 and September 22, 2000 (Ex.R-3) under certificate of posting to all the bond holders and requested them, including the complainant, receipt of which has been denied by the complainant. The opposite party had also given advertisements in the leading newspapers across the country on May 25, 2000 and September 22, 2000 (Ex.R-7) about the call option. Certificate of posting issued by the Post & Telegraph Department has also been proved as Ex.R-4, in which the name of the complainant also figures. The learned counsel for the complainant argued that the address of the complainant as mentioned in this list of certificate of posting was incomplete and, therefore, the letter sent under this certificate of posting could not have reached her. This contention of the complainant is not acceptable because the complete address of the addressee is given on the letter itself and only its reference is given in the list of persons to whom the letters were despatched. Incomplete address on this certificate of posting, in no way, proves that the complete address was not mentioned on the letter itself. But fact remains that it was sent through an ordinary post, instead of registered post receipt of which is not confirmed.
10. No doubt the opposite party was entitled to exercise its "call option" on its own but the "principal terms of the bond" placed on record by the opposite party as Annexure-III attached with Ex.R-2 provides as under:-
"Early Redemption Option Investors also have the option to redeem the Deep Discount Bond before the maturity period on the following dates and get the First Appeal No. 894 of 2010 Page 8 of 10 amount indicated there against (which is Deemed Face Value of the Bond at the time of redemption).
XXX XXX XXX XXX Procedure for Early Redemption Investors desirous of exercising the option to redeem the Deep Discount Bond on any of the above dates, should submit their requests to IDBI/Registrars in writing, along with the Bond certificate(s), duly discharged, at least one month before the relevant date. The Bondholder will be entitled to receive the applicable deemed face value only if the request is received within the specified time.
Call Option IDBI also reserved the right (Call Option) to redeem the Deep Discount Bond on the dates mentioned above. In that event, the Deemed Face Value of the Bond as per the table given above will be paid to the Bondholders."
11. Thus, as per the "call option", it was incumbent upon the opposite party to pay to the bond holders the deemed face value of the bond as per the table. But in the present case this deemed face value of Rs.10,000/- was not at all disbursed to the complainant and the same was retained by them. No pre-condition of submitted Bond Certificate is laid down for the release of this payment. Only in case of exercise of early redemption option by the bond holders, they were required to submit duly discharged bond one month before the relevant date. The opposite party could have disbursed the deemed face value of the bond in right way.
12. No doubt, the complainant was issued call option notice on 25.5.2000 through certificate of posting, but when she did not respond to the said notice or to the public notices no further reminder was issued for 9 years. Ultimately she came to know about the exercise of First Appeal No. 894 of 2010 Page 9 of 10 call option by the opposite party through letter dated 29.4.2009. As per the provision made in the call option clause, bond would be fully discharged only on the bond holder receiving the amount as specified on the exercise of early redemption option/call option at any time. Admittedly the said payment was not made to her and, therefore, the bond cannot be said to be fully discharged. Had the opposite party been serious about discharge of its obligation, it would have followed up the notice sent through UPC by a registered post to make sure that the bond holder is duly informed. Apparently the opposite party retained this amount of Rs.10,000/- with it for a long period of 9 years and has failed to discharge the duty cast upon it. The opposite party has submitted that it was ready to give 3.5% per annum interest, compounded quarterly, on the maturity amount of Rs.10,000/-. But since the complainant did not receive the deemed face value of the Bond immediately upon exercise of call option by the opposite party, she is entitled to get the deemed face value of Rs.10,000/- with interest.
13. In view of the above discussion and findings, the appeal of the appellant/opposite party is partly accepted and the opposite party is directed to pay Rs.10,000/- @ 9% per annum from 1.8.2000 till realisation.
14. The appellant/opposite party deposited an amount of Rs.25,000/- with this Commission at the time of filing of the appeal. This amount, alongwith interest, which has accrued thereon, if any, be remitted by the Registry to the respondent/complainant, by way of a First Appeal No. 894 of 2010 Page 10 of 10 crossed cheque/demand draft, after expiry of 45 days under intimation to the learned District Forum.
15. The arguments in the case were heard on 24.10.2013 and the order was reserved. Now, the order be communicated to the parties.
16. The appeal could not be decided within the statutory period because of the heavy pendency of the court cases.
(JUSTICE GURDEV SINGH) PRESIDENT (BALDEV SINGH SEKHON) MEMBER (SURINDER PAL KAUR) MEMBER October 25, 2013 VINAY