National Consumer Disputes Redressal
Mistri Jayantilal Vithaldas vs The Idar Nagrik Sahakari Bank Ltd. on 17 April, 2013
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 3871 OF 2011 (From the order dated 06.09.2011 in First Appeal No. 269/2010 of the Gujarat State Consumer Disputes Redressal Commission, Ahmedabad) Mistri Jayantilal Vithaldas, Near State Bank of India, At Post Taluka: Idar, District Sabarkantha, PIN 383 430 Gujarat ... Petitioner Versus The Idar Nagrik Sahakari Bank Ltd., Jawanpura, Taluka : Idar, District: Sabarkantha, Gujarat . Respondent(s) BEFORE HONBLE MR. JUSTICE K.S. CHAUDHARI, PRESIDING MEMBER HONBLE DR. B.C. GUPTA, MEMBER Appeared on 02.04.2013 at the time of arguments, For the Petitioner(s) Mr. Mistri Jayantilal Vithaldas Petitioner in person For the Respondent (s) Mr. Rauf K. Mansuri, Advocate PRONOUNCED ON : 17th APRIL, 2013 O R D E R
PER DR. B.C. GUPTA, MEMBER This revision petition has been filed under Section 21(b) of the Consumer Protection Act, 1986 against the order dated 06.09.2011 passed by the Gujarat State Consumer Disputes Redressal Commission, Ahmedabad (hereinafter referred to as State Commission) in First Appeal No. 269 of 2010, vide which the said appeal against order dated 10.02.2010 passed by the District Consumer Disputes Redressal Forum, Sabarkantha was ordered to be dismissed.
2. Briefly stated, the facts giving rise to the present petition are that the complainant Mistry Jayantilal Vithaldas and his family members deposited certain amounts of money under fixed deposit with the respondent/opposite party, the Idar Nagrik Sahakari Bank Ltd., which is registered as a Cooperative Bank. The money was deposited under the Sahkar Laxmi Deposit Scheme introduced by the Bank and a number of certificates were issued by the Bank in the name of the complainant and his family members, undertaking the amount payable on maturity after a certain period of years. The deposits were made on different dates during the years 1998. It was indicated in the scheme that the rate of interest shall be 12 % and fixed sums shall be payable at the end of a particular period, as far example, in this case, a sum of Rs. 34,240/- was payable at the end of 10 years. It was also mentioned that if the investor desired to withdraw the amount within a period of three years, only the principal amount would be returned without any interest. The period of ten years was to expire in the year 2008 but the Bank decided to lower the rate of interest on such deposits in the month of February, 2004, following certain circular issued by the Reserve Bank of India (RBI) in the year 2002.
The case of the complainant is that the bank was not authorized to make any change in the rate of interest midway with retrospective effect and such change should not have affected the rights of the investor. The complainant, on being informed by the bank through public notice in February, 2004, regarding lowering of the rate of interest, sent a letter dated 06.03.2004 saying that the opposite party had no lawful right to make change of any kind.
However, the bank sent a letter to him on 16.04.2004, saying that the prevailing rate of interest was applicable only to long term deposits. The complainant lodged a report with the local Police Station, but it was held in the said proceedings that it was a civil matter. At the time of maturity of the said investment in the year 2008, the bank refused to pay him the amount already committed and informed the complainant by letter dated 12.05.2008 that he was entitled to receive his money along with interest as per the new policy only. The complainant lodged a complaint with the District Forum pleading that he should be paid back the amounts already committed by the bank along with a further penal interest of 3%. The District Forum rejected the complaint, saying that the bank had reduced the rate of interest on fixed deposits under the instructions of RBI and the bank was bound to follow the directives of the RBI. They had also issued public notice in this regard and even committed to pay 2% more interest than the new rates, if the fixed deposits were renewed in time.
The District Forum also observed that it was mentioned on the deposit certificates that change in interest could be made on the directives of the RBI.
3. An appeal was filed before the State Commission against this order. The State Commission observed that the complainant should have filed the complaint in question within two years from the date i.e. 16.04.2004, when the bank had sent a letter to the complainant. The complaint was therefore, barred by limitation under Section 24A of the Consumer Protection Act, 1986. The State Commission passed the said order without going into the merits of the case. It is against this order, that the present petition has come up.
4. During the course of hearing before us, the petitioner personally presented his case and vehemently argued that the bank had no right to reduce the rate of interest in-between, when the period of ten years for which the fixed deposits were made was not over. He further stated that when he invested the money with the bank in the year 1998, there was a binding contract between him and the bank and the terms of the contract could not be altered later on. The complainant invited our attention to the circular in question issued by the RBI on 10.10.2002, saying that the RBI had simply asked to all Urban Cooperative Bank in the country to review their interest rates structure on term deposits and take appropriate action to make them comparable with rates offered by the Commercial Banks. Such kind of circular had not given any direction to lower the rate of interest and in case, the rate of interest was reduced on review, it could best be with prospective effect. The complainant also invited our attention to a letter written by the Deputy General Manager, Reserve Bank of India to the respondent / opposite party on 07.10.2004 vide their letter No. UBD(AH)Com. No.12.06.364/2004-05, in which it has been clarified that the deposit transaction between the bank and its depositors is a contract and is subject to the terms and conditions of that contract and the bank is liable for stringent action if they do not adhere to the terms of acceptance of the deposit.
5. The learned counsel for the respondent, invited our attention to the circular dated 10.10.2002 as mentioned above and stated that the following directive from the RBI, the respondent bank passed a Resolution on 19.11.2003 in a Special General Meeting of the Board of Directors, in which it was decided to reduce the rate of interest. For the deposits in question, the rate of interest was reduced to 9% and a public notice to this effect was also given in the newspapers and the depositors were asked to convert the deposits under the Sahakar Laxmi Deposit Scheme during the period from 20.02.2004 to 20.03.2004 and they were offered 2% more interest than the new rate of interest. The Bank had not therefore, indulged in any deficiency of service and hence the complaint deserved to be filed. The counsel for the respondent also invited our attention to a citation quoted in Jalgaon Janta Sahakari Bank Ltd. Versus Hrishikesh Prabhakar Kulkarni & Ors. reported in IV (2012) CPJ 163 (NC), saying that the National Commission has held that the bank was within its right to alter rate of interest pursuant to reduction of rate of interest by the RBI.
6. We have carefully considered the facts of the case and the arguments advanced before us. It is admitted that the complainant and his family members had deposited certain sums of money at different times from the year 1998 with the respondent bank for a period of ten years and the rate of interest for the said deposit at that time was 12 %. It was clearly committed by the bank that a fixed sum say Rs.
34,240/- shall be paid to them on maturity after a period of ten years. The respondent bank have built up their defence on the strength of the circular issued by the RBI in October 10, 2002. For ready reference the said circular is reproduced as under:
RESERVE BANK OF INDIA URBAN BANKS DEPARTMENT, LA GAJJAR CHAMBERS, ASHRAM ROAD, POST BAG NO. 1, AHMEDABAD 380 009 Ref.
UBD(AH)DC No. 519/13.04.01/2002-03 October 10, 2002 All Primary (Urban) Co-operative Banks Dear Sir, Interest rates on deposits offered by Urban Co-operative Bank (UCBs)
1. In terms of instructions contained in our Central Office circular No. UBD/BSD.1.28/12.05.01/2001-02 dated 31st January, 2002, Urban Co-operative Banks are required to review their interest rate structure on term deposits of different maturities and take appropriate action to make them comparable with the rates offered by commercial banks.
2. It has, therefore, been decided that UCBs should forward to us a statement on half yearly basis indicating therein the rates of interest offered by them on deposits of different maturity periods and whether the same are comparable with the rates offered by commercial banks. First such statement for the half year ending December 31, 2002 may be forwarded to us by 15th January, 2003.
3. Please acknowledge receipt of this circular.
Yours faithfully, Sd/-
(A.V. Sabhapathy) Deputy General Manager
7. A plain reading of the above circular makes it very clear that it is a general circular issued to all Urban Cooperative Banks in the country asking them to review their interest rates structure on term deposits and make them comparable with the rates offered by the commercial banks.
The respondent bank did their exercise in pursuance to this circular and decided to reduce the rates of interest.
However, the circular of the RBI does not make it mandatory anywhere that any decision taken by the bank after review shall have a retrospective effect. The bank was within its rights to reduce the rate of interest but it cannot be made applicable to deposits already made with the bank. The terms of the contract already made between the investor and the bank cannot be changed retrospectively to the detriment of the investor. Moreover, when a public notice was given by the petitioner, enunciating their new policy, the complainant did write to the bank on 06.03.2004 that they were committing an illegal act. We therefore, have no reason to agree with the conclusion arrived at by the District Forum that there was no deficiency in service on the part of the bank as it was bound to follow the directives of the RBI. The direction of the RBI was of a general nature aimed at bringing reforms in the policies being followed by the bank and this circular in no way impinges upon the right of the consumer/investor. We also, find no reason to agree with the plea taken by the State Commission that the complaint should have been filed within two years of the letter dated 16.04.2004 sent by the Bank. The complainant has proceeded after the period of maturity of fixed deposits when the period of contract was over and the bank refused to give the money as mentioned in the terms of the contract. The complaint, therefore, cannot be called time barred under Section 24A of the Consumer Protection Act. Regarding the case cited by the respondent (Supra), the National Commission did not order the refund of excess amount as already paid by the bank.
Moreover, in the instant case, there is no specific direction by the RBI to reduce the rate of interest.
8. Based on the above discussion, the present petition succeeds, the order passed by the State Commission and the District Forum are set aside and the respondent is directed to pay the amounts in question to the complainant as per the terms and conditions of the contract entered in the year 1998. It is also clarified that the respondent shall pay a further rate of interest beyond the period of maturity at the new rates adopted by the bank till the period of realization. No order is being passed as to costs.
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(K.S. CHAUDHARI J.) PRESIDING MEMBER ..
(DR. B.C. GUPTA) MEMBER SB/4