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Bank penalised for inconsistent procedural lapses

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI

FIRST APPEAL NO. 588 OF 2014
(Against the Order dated 12/06/2014 in Complaint No. 59/2013 of the State Commission Punjab)

MANAGER, BANK OF INDIA & 2 ORS.
GOLDEN TEMPLE ROAD,
AMRITSAR
PUNJAB ...........Appellant(s)
Versus
NARINDER KUMAR JAIN
ADVOCATE, 8, R.B. DUNI CHAND ROAD, CIVIL LINES,
AMRITSAR
PUNJAB    ...........Respondent(s)

BEFORE:
    HON'BLE MR. DR. B.C. GUPTA,PRESIDING MEMBER
    HON'BLE MR. DR. S.M. KANTIKAR,MEMBER

Dated : 12 Jun 2017

ORDER

PER DR. B.C. GUPTA, MEMBER

          The challenge in this first appeal filed under section 19 read with section 21(b)(ii) of the Consumer Protection Act, 1986 is to the impugned order dated 12.06.2014, passed by the Punjab State Consumer Disputes Redressal Commission, Chandigarh (hereinafter referred to as ‘State Commission’) in consumer complaint No. 59/2013, filed by the respondent/complainant Narinder Kumar Jain against the appellants/opposite parties/OPs Bank of India, vide which, the said complaint was allowed in his favour.

2.       The facts of the case are that Narinder Kumar Jain, stated to be a practising Advocate at Amritsar, Punjab, filed the consumer complaint No. 59/2013 saying that he alongwith members of his family Smt. Chameli Devi Jain, Pradeep Jain and Praveen Jain made a Fixed Deposit worth ₹25 lakh with the appellant/OP Bank and obtained a Fixed Deposit Receipt (FDR) worth ₹25 lakh bearing No. 630143710000170. The said FDR carried interest @10% p.a. and was due to mature on 30.10.2012. It has been stated in the consumer complaint that the complainant instructed the concerned Branch of the Bank telephonically that on maturity of the FDR on 30.10.2012, the amount payable should be credited to their overdraft (OD) Account No. 6301271110004 with the OP Bank. However, despite the said instructions, the Bank renewed the FDR on 30.10.2012 on their own for a further period of 5 years with interest payable @9.45%. It is further stated that one of the depositors Smt. Chameli Devi Jain had expired on 08.04.2010 and the factum of her death was within the knowledge of the Bank, but despite that, they renewed the FDR on 30.10.2012 for five years in the joint name of all depositors including Smt. Chameli Devi Jain. The complainant filed the consumer complaint, alleging that the action of the Bank had caused mental agony, harassment and physical discomfort to them, besides causing pecuniary loss, as they had to pay interest at higher rate on the money borrowed from the Bank. The complainant demanded relief for the loss caused, along with interest @18% p.a. and also a sum of ₹5 lakh as compensation for mental harassment etc.

3.       The complaint was resisted by the OP Bank by filing a written statement before the State Commission, in which they stated that the FDR account holders never gave any written instructions to the Bank, not to renew the said FDR on maturity. The Bank was not bound to act on oral or telephonic instructions. They renewed the FDR acting in accordance with the policy guidelines from the Reserve Bank of India (RBI), in which it has been stated as follows:-

“(P).     The term deposit account holders at the time of placing their deposits can give instructions with regard to closure of deposit account or renewal of deposit for further period on the date of maturity.

In case of absence of any instructions deposits will be treated as Auto renewal deposit and shall be renewed for a similar period.”

4.         The OP Bank further stated in their reply that the complainant had not submitted any evidence in writing to the Bank that Smt. Chameli Devi Jain had died on 08.04.2010, neither they produced her death certificate, or the names of her legal heirs. The Bank stated that the complainant failed to provide the evidence as stated above, although he had been advised telephonically and also verbally during his visit to the Branch of the Bank at Golden Temple Road, Amritsar (OP-3). The Bank has placed on record a letter dated 01.03.2013 addressed by the complainant to the Manager, Bank of India, Amritsar, by which he demanded a photocopy of the FDR No. 630143710000170. The complainant did not convey any instructions to the Bank, objecting to the auto-renewal of the FDR in this letter as well. The State Commission vide impugned order dated 12.06.2014 allowed the complaint and directed as follows:-

“In view of the above discussion, the complaint is allowed and the opposite parties are directed to transfer the amount of the FDR, alongwith interest which had accrued thereon, to the over draft account bearing No. 6301271110004 any other account of the complainant and to pay ₹2,00,000/- as compensation for the loss and injury suffered by the complainant and ₹11,000/- as cost of litigation, within 45 days of the receipt of the copy of this order”

5.       Being aggrieved against the above order of the State Commission, the OP Bank is before this Commission by way of the present appeal.

6.       During hearing before us, the learned counsel for the appellants/OP Bank contended that the State Commission had taken an erroneous view in observing that the complainant had “successfully” proved on record that he had given instructions to the Bank personally as well as on telephone for the transfer of maturity amount of the FDR to the OD Account. There was no material on record to prove that instructions to this effect were given to the Bank, but even if such instructions had been given, the Bank was not bound to act in accordance with these instructions. A copy of the statement of account produced on record by the Bank showed that the Bank had been crediting the interest earned on the FDR in the account of the complainant. There was an entry dated 30.01.2013 vide which an interest amount of ₹49217.50ps. had been credited to the account of the complainant. However, the complainant neither objected nor requested for redemption of the FDR. The Bank had also sent reply dated 22.04.2013 to the legal notice dated 16.04.2013, issued by the complainant, in which they stated that the complainant had verbally instructed the Bank in March 2013 to credit the FDR amount into their OD Account. However, the Bank had advised the complainant that such a step shall result in the recovery of interest already paid to the complainant. The learned counsel further stated that the complainant had never submitted proof about the death of Smt. Chameli Devi Jain to the Bank.

7.       Per contra, the learned counsel for the respondent/complainant vehemently argued that the business dealings between the complainant and the Bank had been done on oral instructions only. In reply to the legal notice sent by the complainant, the Bank had admitted that the FDR of ₹25 lakh was issued on 30.10.2007 as per oral instructions only. The Bank should, therefore, have acted upon the oral instructions to credit the maturity amount of the FDR to the OD account, and it had, therefore, indulged in unfair trade practice towards them in not following the same. In the evidence affidavit filed by the complainant, it had been stated that the complainant personally visited the Bank on 19.10.2012 to collect the TDS (Tax Deduction at Source) letter and at that time, he had instructed the Bank to credit the FDR proceeds in the OD Account. The instructions were also given telephonically to do the same, but the Bank failed to act accordingly. The learned counsel has further drawn attention to copies of a number of documents, issued by the OP Bank, entitled as ‘monthly income certificates’ and ‘double benefit deposit certificates’, in respect of some other deposits made by the complainant with the Bank. In all these documents, the name of Smt. Chameli Devi Jain has been printed as the first depositor, but it was later struck off by hand on 27.04.2010 by some Bank official. The learned counsel has tried to show from these documents that the factum of death of Smt. Chameli Devi Jain was in the knowledge of the Bank as early as 27.04.2010, but despite that, they chose to renew the FDR in question on 30.04.2012. It was the duty of the Bank to have inquired about the legal heirs of Smt. Chameli Devi Jain before auto-renewal of the FDR. The learned counsel emphasised that the action of Bank in not depositing the maturity amount of the FDR into the OD account has resulted in pecuniary loss to them, besides mental harassment and agony.

8.       We have examined the entire material on record and given a thoughtful consideration to the arguments advanced before us.

9.       The main issue that requires consideration in the matter is whether the action of the Bank in making auto-renewal of the FDR of Rs. 25 lakhs on the date of its maturity, was in accordance with the established procedure etc., given the facts and circumstances of the case. The Bank has tried to justify its action in renewing the FDR, relying on the guidelines of the RBI as reproduced above, by saying that in the absence of any written instructions to the contrary, the Bank was justified in making the auto-renewal of the fixed deposit with them. However, the State Commission in the impugned order, have interpreted the guidelines/instructions of the RBI, observing that the instructions to be given to the Bank, could be ‘oral or written’. In this regard, the reply dated 22.04.2013 given by the Bank to the legal notice issued by the complainant, is quite significant. The Bank has admitted in the said reply that the FDR was issued to the complainant as per the ‘oral instructions’ received by them on 30.10.2007. There appears considerable weight, therefore, in the argument taken by the complainant that the transactions between the complainant and the Bank were mainly done on oral instructions. The complainant stated in the legal notice that he had made personal request to the Bank to credit the maturity proceeds to the OD account during his visit to the Bank and he had also given these instructions telephonically as well. In the consumer complaint also, the complainant mentioned a specific date i.e. 19.10.2012, on which he visited the Bank personally and gave instructions for crediting the maturity proceeds to the OD account. We have no reason, therefore, to differ with the finding of the State Commission that the Bank should have acted according to the oral instructions given by the complainant to the Bank in the matter.

10.     A crucial aspect in the whole episode is the auto-renewal of the said FDR in the name of all four depositors, including Smt. Chameli Devi Jain, who had died on 08.04.2010. Although the Bank has taken the stand that evidence regarding the death of Smt. Chameli Devi Jain, including her death certificate was never produced before the Bank by her legal heirs, but it is clear from the documents like the ‘monthly income certificate’ etc. as stated above that the Bank had itself struck off the name of Smt. Chameli Devi Jain from its certificates on 27.04.2010. It is evident, therefore, that the Bank was within the knowledge of the fact that Smt. Chameli Devi Jain had died much earlier to the auto-renewal of the FDR in question. It was the duty of the Bank, therefore, to seek instructions about the legal heirs of Smt. Chameli Devi Jain before auto-renewal of the FDR. A new FDR could not have been issued in the name of a dead person and more so, when the Bank had itself struck her name off from the previous documents.

11.     The contention raised by the complainant that the action of the Bank in auto-renewal of the FDR has resulted in pecuniary loss to them is evident from the material on record. The complainant/depositors were required to get an interest @ 9.45% on the renewed FDR w.e.f. 30.10.2012. However, they were required to pay an interest of 11.25% on the money borrowed from the Bank as cash credit limit. Had the Bank credited the maturity amount of the FDR on 30.10.2012 itself to the OD account, the liability of the Bank to pay interest would have been reduced to the extent of difference between the interest charged by the Bank on the cash credit limit and the interest payable by them on the fixed deposit.

12.       From the foregoing discussion, we do not find any infirmity, irregularity, or jurisdictional error in the impugned order passed by the State Commission, by which, they have directed the Bank to transfer the maturity value of the FDR as on 30.10.2012 to the OD account of the complainant and also asked them to pay compensation of ₹2 lakhs for loss and injury suffered by the complainant and ₹10,000/- as cost of litigation. There is no merit in this appeal therefore, and the same is ordered to be dismissed and the impugned order passed by the State Commission upheld. Further, the Bank is directed to carry out the necessary adjustment of accounts of the complainant, based on the direction given in the impugned order, within a period of eight weeks from today.

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