AI Structured Summary
Not yet generated for this judgment
Judgment
Dr. Inder Jit Singh, Presiding Member
Heard counsel for both sides.
Challenge is to the order dated 21.08.2018 of the State Commission vide which the appeal filed by the Petitioner-Bank herein was dismissed. The District Forum vide its order dated 03.05.2018 has issued the following directions to the Opposite Parties (Petitioner-Bank herein):
“(i) To pay interest on the FDR in question at the rate applicable to fixed deposits for one year w.e.f. 23.10.2003 onwards after adjusting the amount already paid.
(ii) To pay Rs. 25,000/- to complainant as compensation for deficiency in service and mental agony and harassment caused.
(iii) To pay to the complainant Rs.10,000/- as costs of litigation.”
It is contended by the learned counsel for the OP-Bank that District Forum has wrongly allowed the payment of the interest on the FDR in question at the rate applicable to fixed deposits for one year w.e.f. 23.10.2003 onwards after adjusting the amount already paid as per para 8(i) of its order. He has drawn our attention to instructions contained in their manual of time deposits which is in accordance with the guidelines issued by the RBI. In particular, he has drawn to our attention in clause 8.7 of this manual relating to renewal of overdue deposits. Under serial no.2 this para, if the overdue period exceeds 14 days the interest is to be paid as per the following guidelines:-
“Overdue deposit it may be accepted as a fresh deposit (in part or in full) for a further period as specified by the depositor at the rate of interest as ruling on the date on which the fresh deposit is made.
Interest for overdue period
On the portion of overdue deposits (in part or in full) renewed as fresh deposits, simple interest may be paid for the actual overdue period as under:-
a) ROI application for the actual overdue period as prevailing on the date of maturity
Or
b) ROI applicable for the actual overdue period as prevailing on the date on which the deposit is renewed as fresh deposits
Or
c) ROI application for the period for which overdue deposit is made as fresh deposits.
WHICH EVER IS LEAST”
It is also contended by the Petitioner-Bank that the District Forum has wrongly assumed that they have paid interest at the rate of saving bank. He contends that they have paid interest at higher rate for certain years.
The Respondent-Complainant on the other hand has drawn our attention to para 8.8 of the same manual of time deposits which relates to auto renewal of time deposits. Contends of this para are reproduced below:-
“8.8. Auto renewal of time deposits-
In our bank, Auto Roll Over of deposits is available in CBS. Updated features regarding Auto Roll Over are as under-
If customer has given specific mandate for Auto Renewal than deposit shall be renewed accordingly.
In case customer has not given any mandate for auto renewal of the deposits and he has not turned up till due date/ maturity date of the deposit for renewing the same, the deposit shall be auto renewed, provided there is no lien on the said deposit.
i) Auto renewal of time deposit to be allowed maximum for one year provided the deposit is originally contracted for one year or more.
ii) In case deposit is originally contracted for a period less than one year, it is to be auto-renewed for the same period.
iii) Auto renewal to be continued even after first auto-renewal as above.”
In this case, the initial fixed deposit was issued on 24.10.2002, for Rs.1 lakh, with interest rate @ 7%, with maturity value Rs.1,07,186/- and maturity date as 24.10.2003. This FD was procured by the complainant for furnishing as security to the Government Department viz. Principal Controller Defence Accounts, Western Command, Sector-9, Chandigarh. Till 2016 this FD remained with the Principal Controller Defence Accounts and was sent to the bank for renewal in the month of July, 2016 and the same was renewed for six months by calculating interest at 6% w.e.f. 23.10.2003 to June, 2016 (as recorded in the State Commission) and interest was credited in the saving account of the Complainant.
It is the case of the Complainant that the FD was supposed to be renewed automatically every year and the prevailing interest applicable on one year FD was to be calculated and disbursed to the complainant.
There is nothing on record which will show what were the maturity instructions with respect to the said FDR. As recorded in the order of the State Commission, despite opportunities given the Bank did not place on record the relevant documents. In the absence of any documents/ evidence on record to show whether the said FD was under auto renewal mode or not, we are of the considered view that this has to be governed by the instructions in para 8.8 for the manual of the time deposits of the Petitioner-Bank, which have been reproduced above. Hence, in our considered view starting with 24.10.2003, till the FD was renewed sometime in July, 2016 as per the request received from the Principal Controller Defence Accounts, this FD ought to have been automatically renewed for one year at the interest rate applicable for that particular year. Further, either the interest amount of each year should have been credited to the saving bank account of the Complainant or further renewals made for a maturity amount as on the last date of maturity rather than only for the principal amount. The bank has placed on record the interest calculation sheet w.e.f. 23.10.2003 as per which they have calculated the interest payable for different years starting from 23.10.2003 till 2016 on principal maturity amount of the original FD i.e. Rs.1,07,186/-. Learned counsel for the Bank stated that interest rates shown reflect the prevailing interest rate for the different years. However, he fairly concedes that the interest calculations were made only on the maturity amount of the original FD i.e. Rs.1,07,186/- and not by adding the interest amount of the previous year to the maturity amount. He also admits that the interest amount of a particular year have not been credited to the saving account of the Complainant on year to year basis.
We have carefully gone through the order of the State Commission, District Forum, other relevant record and rival contentions of the parties. Keeping in view the instructions of the bank under para 8.8 cited, we are of the considered viewed that –
a) The said FD is liable to be auto-renewed for all subsequent years starting with 24.10.2003.
b) The said renewal has to be at the rate of interest which is applicable for that particular year i.e. interest rate prevalent at the date of each renewal.
c) As the interest of the previous year(s) has not been paid to the Complainant/ credited to his saving bank account, the renewal of FD for subsequent years has to be for the previous year’s maturity amount and not maturity amount of the original FD as on 24.10.2003.
(to clarify the above stated direction, the renewal of the FD from 24.10.2003 to 24.10.2004 has to be for Rs.1,07,186/- at the interest rate prevailing as on 24.10.2003, the renewal of FD from 24.10.2004 to 24.10.2005 has to be at the rate of interest prevailing as on 24.10.2004 and for the maturity amount of the FD as on 24.10.2004. This principle shall be applied for each of the subsequent years).
Accordingly, we hold that the bank is liable to pay the interest in accordance with above the stated principle. To that extent we hold that District Forum went wrong in ordering that the interest of all subsequent years till 2016 should be at the rate applicable for one year w.e.f. 23.10.2003. Hence the order of the District Forum, which has been upheld by the State Commission, is modified to that extent. Petitioner- Bank is hereby directed to re-calculate the interests payable on the said FD from 24.10.2003 till it was renewed somewhere in July, 2016 as per the request received from the Principle Controller Defence Accounts, Western Command, as per the above stated principle and pay the additional amount, if any, after adjusting the amount already paid to the complainant, within 45 days of this order, failing which the amount payable at the end of the 45 days shall carry interest at the rate of 12% per annum.
As the amount payable under this order, read with the order of the District Forum/ State Commission was payable to the Complainant-Respondent in July, 2016 when the FD was renewed on the request, it is also ordered that the amount payable as per the above said principle will carry interest at the rate of 6% per annum w.e.f. the date of renewal of the FD in July, 2016 till date of actual payment.
Keeping in view the entire facts and circumstances of the case and that there are concurrent findings of both the Fora below with respect of deficiency in service on the part of the Petitioner-Bank herein, we uphold the order of the District Forum in para 8(ii) & 8(iii) with respect for compensation of the deficiency in service and litigation cost.
It is clarified that bank will be entitled to deduct TDS on the interest amount as per the guidelines of the Income Tax Department subject to the condition that the requisite TDS/ Form 16(a) be issued to the Complainant along with payment of the additional amount, if any.
The Revision Petition is disposed off accordingly.