SIJILI SABASTIAN PUTHENKUDY Vs. THE FEDERAL BANK LIMITED

JUDGEMENT

(1.) The petitioner filed the writ petition contending that she is a Non Resident Indian working as Staff Nurse in Abu Dhabi. She deposited Rs.12 lakhs under NRE account for a period of one year in the 1 st respondent bank on 16.05.2012. The said NRE deposit was bearing 9.5% interest. After the expiry of the one year period for which the amount was deposited, the petitioner neither withdrew the deposit nor sought for extension of the deposit. As per the rules prevailing, the bank renewed the deposit amount for a further period of one year on 16.05.2013. While the deposit was so remaining, the petitioner sought to withdraw the Fixed Deposit on 17.10.2013. It appears that the bank closed the Fixed Deposit on 18.10.2013. The bank paid interest for the period from 16.05.2012 to 16.05.2013 but refused to pay interest for the period from 16.05.2013 to 18.10.2013.

(2.) Aggrieved by the refusal of the Bank to pay interest for the remaining period, the petitioner took up the issue before the Banking Ombudsman and the petitioner's complaint was numbered as 22677. The Banking Ombudsman found that the petitioner was informed about the automatic renewal system and eligibility of interest at the time of opening the account with the bank. The Banking Ombudsman found that under the relevant features and benefits of NRE deposits, the petitioner is not entitled to interest for the 5 months' period. The Banking Ombudsman disposed of the complaint holding that the petitioner is at liberty to approach any other forum for the redressal of her grievance. Hence, the petitioner filed the writ petition seeking to declare that she is entitled to interest on her Fixed Deposit for the period from 16.05.2013 till its closure on 17.10.2013 at the rate applicable to the period for which the deposit remained with the bank without deducting the penal interest for closing.

(3.) The 1st respondent is contesting the writ petition by filing a detailed reply statement. In the counter affidavit filed by the 1st respondent, the 1st respondent states that they have acted in accordance with RBI Master Circular dated 02.07.2012, wherein it is categorically stipulated that NRE term deposit has run for minimum period of one year to be eligible for interest. The Circular categorically stipulated that deposits will be renewed for the identical period at the interest rates then applicable as a continuing process until instruction to the contrary is received from the depositors. As such, the deposit was renewed for a period of one year and the deposit will be eligible for interest on completion of one year as per the Circular mentioned above. As the deposit in question was closed prematurely, the said deposit is not eligible for any interest for the period from 16.05.2013. The 1st respondent contended that Ext.P4 is strictly in accordance with law and the same cannot be assayed for the grounds stated in the writ petition.