M/s Sakthi Finance Ltd.                                      ---    Appellant
                        Vs.
A. James                                                               ---    Respondent

Before: Hon’ble Mr. Justice C.L. Chaudhry, Presiding Member, Hon’ble Mr. Justice J.K.Mehra, Member, Mr. B.K. Taimni, Member.

C.L.Chaudhry, J. Member.

          This Appeal is directed against the order of the State Consumer Disputes Redressal Commission, Tamil Nadu at Madras. The appeal has arisen from the following facts: 

         The Respondent in this appeal, A.James, was Complainant before the State Commission. He filed a complaint with the allegations that the Complainant made as many as 22 deposits with the Opposite Party, Financer, i.e. Sakthi Finance Ltd., appellant in this case, in his name and in the names of his friends and relatives. On 19.10.87 and 20.10.87 there was a raid in his house by the Income Tax Officials who seized and attached those fixed deposits as unexplained assets. Subsequently, the Income Tax Authority passed an order of assessment on the Complainant on 19.3.1990 for a sum of Rs. 61,83,140/-. According to the Complainant, he filed a settlement application before the Settlement Commission which by its order dated 5.1.94 fixed the total taxable income at Rs. 11,97,150/- for the assessment year 1987-88 and Rs. 5,07,740/- for the assessment year 1988-89. Meanwhile, the Financiers transferred the maturity amount in respect of the aforesaid 22 deposits to the Income Tax Department on 21st August, 1990, but he did not pay the interest on the matured amounts from the date of maturity till the amounts were transfeerred to the department on 21st September 1990. According to the Complainant, this amounted to deficiency in service. In these premises, the Complainant claimed interest on the maturity amount from the date of maturity till payment to the Income Tax Department, which according to him, was Rs. 3,33,110/- and also compensation in the sum of Rs. 2 lakhs.

         The claim was resisted by the opposite Party. The plea taken was that there was no deficiency in service on the part of the Opposite Party nor any unfair trade practice. It was denied that the deposits were made in the name of the Complainant, his friends or relatives. The Opposite Party received a prohibitary order from the Income Tax Department and subsequently directed the Opposite Party to make payments to the Department and accordingly the Opposite Party made payment to the Income Tax Department. As per Cl. 3(1) of the deposit application interest ceases to accrue from the date of deposit of maturity unless renewed. Any deposit would carry interest upto the date of maturity. The claim for subsequent interest is untenable. The Complainant is a third party so far as the other depositors are concerned.

          The parties placed material on record before the State Commission in support of their respective pleas. The State Commission raised two points for consideration: (i) whether the complaint is maintainable in respect of other parties; and (ii) whether there has been any deficiency in service on the part of the Opposite Party and to what relief, if any, is the Complainant entitled to.

          The State Commission after due consideration of the material placed on record and hearing the learned Counsel for the parties, decided both the issues in favour of the Complainant. On point No. 1, the State Commission held that the complaint filed by the Complainat for the recovery of interest on deposit made by him and by others was maintainable. On point No. 2, the State Commission relied upon the provisions of Section 70 of the Contract Act which reads as under;

        "Whether any person lawfully does anything for any other person or delivers anything to him, not intending to do so gratituously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former, in respect of, or restore the thing so done or delivered."

        The State Commission also relied upon the Judgment of the Supreme Court reported in AIR 1962 SC 779, and returned the finding that the amounts deposited by the depositors to the Opposite Party, was not gratituously and the Opposite Party enjoyed the benefit of the maturity amount from the date of maturity till payment to the department. The retention of the matured amounts by the Opposite Party from the date of maturity till payment to the income tax department is itself a benefit which it must disgorge to the depositors. The doctrine of unjust enrichment is a well established on equitable principle. The Opposite Party who was the financier must certainly have utilised the money and earned a huge profit by way of interest. It cannot, therefore, retain that benefit and make an unlawful gain. As a result of findings on both the points, the Opposite Party was directed to pay interest to the Complainant at the rate of 18% on the maturity value of each of the 22 depositors from the date of maturity till 21.8.90 when the amounts were remitted to the Incom Tax Department. The Complainant was not granted any further compensation.

           Aggrieved by the order of the State Commission, the Opposite Party has filed the appeal before this Commission. We have heard the learned Counsel for the parties. It was contended on behalf of the Appellant that according to the application for acceptance of deposits it was expressly made clear that the Respondent would not be entitled to any amount as interest subsequent to the date of maturity of the deposits. The State Commission erroneously applied the provisions of Section 70 of the Indian Contract Act. The State Commission wrongly relied upon the doctrine of unjust enrichment. On behalf of the Respondent it was contended that the order passed by the State Commission was strictly in accordance with law and required no interference.

         We have given our thought consideration to the matter. In our opinion, the State Commission rightly relied upon Section 70 of the Contract Act and the judgment of the Supreme Court reported in AIR 1962 SC 779. The amount after maturity was retained by the financier for its own benefit. Assuming, in terms and conditions of the fixed deposits cumulative deposit, it is provided that interest would cease to accrue from the date of maturity of the deposit unless renewed, would not deprive the depositor to claim interest under the doctrine of unjust enrichment. In a recent judgment delivered by the Supreme Court in the case of Ghaziabad Develepment Authority Vs. Union of India, reported as II(2000) CPJ 1, it was held as under:

        "We are therefore, of the opinion that interest on equitable grounds be awarded in appropriate cases. In Sovintorg (India) Ltd.’s case the rate of 15 per cent per annum was considered adequate to serve the ends of justice. The Court was apparently influenced by the fact that the claimant had to suffer winding up proceedings under the Companies Act and the defendant must be made to share part of the blame. However, in the cases befoe us, the parties have not tendered any evidence enabling formation of opinion on the rate of interest which can be considered ideal to be adopted. The rate of interst awarded in equity should neither be too high nor too low. In our opinion awarding interest at the rate of 12 per cent per annum would be just and proper and meet the ends of justice in the cases under consideration. The provision contained in the brochure issued by the Development Authority that it shall not be liable to pay any interest in the event of an occasion arising for return of the amount should be held to be applicable only to such cases in which the claimant is itself responsible for creating circumstances providing occasion for the refund. In the cases under appeal the fault has been found with the Authority. The Authority does not, therefore, have any justification for resisting refund of the claimant’s amount with interest."

          Following the judgment of the Supreme Court, we hold that the Complainant is entitled to interest. We feel, in the facts and circumstances of this case, the State Commission should have allowed interest at the rate of 12% and not 18%. As a result thereof, the order of the State Commission is modified to the extent that the Respondent shall be entitled to interest at the rate of 12% instead of 18% as awarded by the State Commission. The appeal is partly allowed and the order of the State Commission is modified to the extent indicated above. The appeal is disposed of leaving the parties to bear their own costs.