GUJARAT STATE CO-OP AGRICULTURAL AND RURAL DEVELOPMENT BANK LTD Vs. BRANCH MANAGER STATE BANK OF MYSORE

JUDGEMENT

(1.) By way of this complaint, the Gujarat State Co-operative Agricultural and Rural Development Bank Limited seeks to have following reliefs granted against the opponent State Bank of Mysore. "[a] Direct the opponents to pay to the complainant Rs.5,91,781/- being the amount of interest for the quarter ending September, 1996 which has been wrongly deducted by the opponents as explained hereinabove together with interest @ 18% p. a. thereon from the date of deduction till the date of payment. [b] Direct the opponents to pay to the complainant Rs.69,117/- being the amount of interest @ 14.5% p. a. wrongly recovered by the opponent from the complainant on the interest of Rs.5,91,781/- as explained above together with interest @ 18% p. a. from the date of recovery till the date of payment. [c] Direct the opponent to pay to the complainant Rs.2,68,374/- being the amount of loss of interest which the complainant has suffered and which amount complainant was entitled to get on the amount of the quarterly interest and which the opponents were liable to pay as per the terms and conditions of the F. D. R. placed with them. [d] Direct the opponents to pay to the complainant Rs. . . . . towards the financial inconvenience, tension and harassment caused to the complainant. [e] Direct the opponents to pay to the complainant Rs.10,000/- being the cost of this complaint.

(2.) We need not exert ourselves in reproducing the facts which are not in dispute by setting out the rival pleadings separately. Suffice it to say that following brief facts are not in dispute between the two parties. The complainant Bank invested Rs.5,00,00,000/- [rupees five crores] with the opponent Bank carrying interest @ 12% p. a. for a period of one year commencing from 26.8.1996 and the interest was payable in one slot. The dispute centres around the manner in which the interest was payable to the complainant Bank by the opponent Bank. According to the complainant, by letter dated 26.8.1996, the Manager of the opponent Bank clarified that the opponent Bank was ready to take Rs.5,00,00,000/- at 12% interest to be paid quarterly in one slot with a note appended below the communication indicating that interest would be paid in September, 1996; December, 1996, March, 1997; and June, 1997. This would mean that first instalment of interest was payable in September, 1996 for the months of August and September, 1996, during which period the deposit actually remained with the opponent Bank. There is no difficulty with regard to the next three quarterly instalments which can be worked out at Rs.15 lakhs each. The final instalment would be Rs.15 lakhs less the amount payable in September, 1996. There is a lot of correspondence between the parties but we need not refer to such correspondence as it was the contention of the opponent Bank pointed out to the complainant Bank while the deposit was subsisting that quarterly interest could not be paid as per the guidelines of Reserve Bank of India. Accordingly, by letter dated 1.1.1997 [annexure-D], the opponent Bank called upon the complainant Bank to return the quarterly interest of Rs.5,91,781/- paid in September, 1996 to the complainant Bank in view of the Reserve Bank of India [rbi] guidelines operating contrary to payment of quarterly interest in respect of such deposits. According to the complainant Bank this requisition from opponent Bank was contrary to the aforesaid communication addressed by the opponent Bank to the complainant Bank at the time when the deposit was given by the complainant Bank. The xerox copy of the F. D. R. indicates that issue price was Rs.5,00,00,000/- and face value was Rs.5,60,00,000/-. Deposit Receipt does not indicate payment of quarterly interest but speaks about period of deposit to be one year and rate of interest to be 12%. Therefore, the complainant Bank's case essentially revolves round the communication addressed by the Manager of the opponent Bank at the time when the deposit was taken from the complainant Bank. We have referred to that communication. During the course of the period, the complainant Bank had an occasion to call back the money with interest @ 12% p. a. as according to the complainant Bank, there was a breach of the aforesaid communication on the part of the opponent Bank in not honouring the payment of interest every quarter. At the conclusion of the period of deposit, the opponent Bank returned Rs.5,53,39,102/-. Thus, the opponent Bank repaid Rs.69,117/- less than what the opponent Bank ought to have repaid. According to the opponent Bank it was entitled to deduct such amount by way of interest @ 14.5% on the erroneously paid amount of Rs.5,91,781/- in September, 1996. According to the complainant Bank, this deduction could not have been made and was also not warranted by any further RBI directive/guideline speaking about recovery of interest on mistakenly paid amount of interest. By communication/notice dated 1.9.1997, therefore, the complainant in terms and specifically demanded from the opponent Rs.69,117/- illegally deducted by the opponent Bank while returning the aforesaid deposit with interest. The opponent Bank seeks to defend the claim of Rs.69,117/- on the basis of the RBI guidelines as also communication dated 26.8.1997 inter alia stating that as per the advice received by the opponent Bank from its controlling authority, the opponent Bank recovered 14.5% for 249 days on Rs.5,91,781/-, i. e. Rs.69,117/-, while making repayment of aforesaid FDR with interest.

(3.) The questions in the aforesaid background which we are required to determine are whether the complainant Bank is entitled to interest on the non-payment of quarterly instalments of interest for the quarters ending December, 1996, March, 1997 and June, 1997 and whether the opponent Bank is entitled to deduct Rs.69,117/- from the repayment amount of the aforesaid FDR on its maturity.