National Consumer Disputes Redressal
Zila Sahkari Bank Ltd. vs Uttar Pradesh Police Avas Nigam Ltd. on 8 November, 2004
Equivalent citations: I(2005)CPJ89(NC)
ORDER
S.N. Kapoor, J. (Presiding Member)
1. In this case, the respondent, U.P. Police Avas Nigam Ltd., Lucknow in response to an advertisement deposited a sum of Rs. 2,01,38,800/- in the year 1988 with the appellant Bank. On maturity of the call deposits, the opposite party did not pay the maturity amount on the ground that as per instructions of NABARD, the rate of interest of only 4.5% and 3.5% p.a. was payable on the call deposits of 61 days and 16 days. With a view to get the blocked money released from the Bank, the complainant accepted the offer made by the opposite party for converting the balance call deposits into fixed deposits. However, in violation of all contractual norms, the Bank did not pay even the revised lower rate of interest. While on one deposit interest was paid @ 3.5% instead of 9.5% in respect of another deposit the interest was paid @ 3.5%. Since in spite of writing several letters, the opposite party did not pay any heed and ultimately filed a complaint.
2. The stand taken by the Bank was that in advertisement inadvertently the rate of interest on call deposits with 61 and 16 days notice were shown at 12% and 10.5% without incorporating cause "Applicable to non-borrowing Cooperative Institutions." As per RBI's directions on rate of interest dated 16.8.1974 and 3.4.1983, these rates should have been at 4.5% and 3.5%, respectively. NABARD raised an objection on the rate of interest allowed by the Bank (c) 12% and 10.5% on the call deposits. Accordingly, the opposite party informed the complainant vide letter 22.7.1989. The matter was reconciled with the complainant and on agreement all the outstanding call deposits were converted into FDRs and, as such, FDRs were mentioned (r) 9.5% which was admissible at that point of time. It is alleged that this was further subject to guidelines of NABARD. On maturity, two FDR Nos. 3375 and 3377 were paid by the Bank along with interest applicable. However, prior to making the final payment of FDR, it was thought proper to seek guidance of NABARD and the payment of concerned FDR No. 3376 was withheld. On the advice of NABARD, the opposite party/appellant have made the payment of interest @ 3.5% claiming that the Bank would abide by the guidance issued by the RBI, from time-to-time in respect of interest rate on deposits. The mistake in respect of issuance of call deposits at higher rates and also conversion thereof into FDRs from retrospective effect was done inadvertently. Any contract made in contravention of the statute Rules and directives could not be enforced.
3. After hearing the learned Counsel the State Commission directed the payment of interest @ 9.5% in view of the concluded contract in respect of call deposit of 16 days and @ 10.5% in respect of call deposit of 61 days and thereafter conversion into FDR (c) 9.5%.
4. Excepting granting interest (c) 9.5% in FDR No. 3376, all other reliefs sought by the opposite party were rejected by the State Commission.
5. We have heard the parties' Counsel and gone through the record.
6. The contention of the learned Counsel for the appellant was that even contract in violation of the instructions issued by RBI would be subject to overall prescribed rate of interest and interest over and above the said rate could not be granted. In this regard, the learned Counsel for the complainant referred two judgments, Corporation Bank v. D.S. Gowda and Anr., (1994) 5 SCC 213 and Mannai Al Khetan and Ors. v. Kedar Nath Khetan and Ors., (1977) 2 SCC 424. There could not be any dispute with the proposition that the contract prohibited by a statute or rules, etc. and contract for Commission for illegal act would not be enforceable and the circular issued by the RBI, Bank being based on rational policy would have statutory force.
7. But, we have to keep in mind the fact that firstly the judgment in Corporation Bank (supra) related to interest on Bank loan given by Bank and did not relate to loan on deposit. Secondly, in the judgment in Corporation Bank (supra) the impact of void contract was not considered. In this regard, one would like to draw the attention to Sections 70, 72 and 73 second part relating to "compensation for failure to discharge obligation resembling those created by contract" of the Contract Act. We reproduce these sections for ready reference :
70. Obligation of person enjoying benefit of non-gratuitous act.-Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the later is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered.
72. Liability of person to whom money is paid, or thing delivered, by mistake or under coercion.-A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it.
73. Compensation for failure to discharge obligation resembling those created by contract.-When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract.
Explanation-In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account.
(Emphasis supplied)
8. By no stretch of imagination it could be said that the depositing amount in fixed deposit was a gratuitous act on the part of the opposite party. It could not be said that the applicant Bank has not enjoyed the benefit of the deposit. Insofar as the complainant /respondent and the officials of opposite party/appellant are concerned, there was no mistake about the terms of the term of contract. Besides, in some cases such deposits had been regularised subsequently.
9. Supposing we accept the arguments of the learned Counsel that the Branch Manager has exceeded to his authority, even then, the Bank is supposed to adequately compensate the opposite party for an obligation resembling those created by contract, had been incurred by the Bank and this obligation had not been discharged. Consequently, the respondent was under an obligation in terms of second part of Section 73 of the Contract Act. It had not been discharged. Any person injured by the failure to discharge such an obligation is entitled to receive the same compensation from the party in default, as if such person had contracted. According to the explanation for the purpose of estimating the loss or damage from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account.
10. Consequently, even if we ignore all other things, the interest @ 9.5% awarded, may be termed as an obligation to pay resembling those created by contract as compensation instead of calling it as interest under alleged void or voidable contract for such deposits could be regularised. It may be mentioned that in view of the representation made by way of advertisement inviting call deposits for 61 days and 16 days and thereafter converting it @ 9.5% without having any authority in terms of instructions of the RBI and NABARD, etc. the officials of the Bank were certainly deficient in rendering service and led the complainant on a garden path. The Bank, therefore, cannot be absolved from its obligation to compensate and could not be expected to put the complainant in an awkward situation to suffer an undesirable loss. The Bank, therefore, is certainly liable under law of torts as well due to deficiency in service.
11. If in aforesaid circumstances, despite repeated deficiencies in rendering service and making misrepresentations to the investors by alluring them and keeping the amount deposited @ 9.5%, the Bank is not made to pay the compensation as mentioned hereinabove, it would defeat avowed object and purpose of Consumer Protection Act.
Consequently, we do not find any illegality or irregularity in the order passed by the State Commission which leads to substantial justice in between the parties. The petition is dismissed accordingly. There shall be no order as to cost.