Narayan Viragar had two cumulative deposits with Sanjeevani Co-operative Bank. When the deposits matured on April 8, 2003, the maturity amounts of Rs 23,468 and Rs 40,090 were reinvested by renewing the deposits on July 18, 2003. These deposits were to mature in May 2009, for Rs 47,706 and Rs 81,495, respectively.
Meanwhile, Sanjeevani Bank was merged with Vaidyanath Urban Co-operative Bank. On maturity, Viragar demanded repayment of the deposits' maturity value. The bank refused to pay either the maturity value or any interest, repaying only the principal amount, through a credit to Viragar's account.
Viragar filed a complaint with the Parbhani District Forum, saying refusal to pay interest on the deposits was illegal and a deficiency in service. Vaidyanath Urban Bank contested the complaint, claiming renewal of deposits was not according to Reserve Bank of India (RBI) norms. While an RBI circular had stipulated a deposit could be renewed within 14 days of maturity, in Viragar's case, the deposits maturing on April 8, 2003, were renewed on July 18, 2003, after a period of 14 days; as such, interest wasn't payable. The bank also claimed there was no ledger entry in its records showing renewal of the deposit.
The forum allowed the complaint and directed the bank to make a payment according to the maturity value of the deposits. It also awarded Viragar Rs 1,000 as compensation and Rs 1,000 towards costs. The bank's appeal before the Maharashtra State Commission was also dismissed.
Subsequently, the bank filed a revision before the National Commission. It reiterated its stand and argued since Viragar had accepted the principal, he had given up his right and was stopped from claiming interest.
In its judgment on February 3, 2015, the National Commission rejected the bank's contention, saying the RBI circular cast an obligation on the bank to inform its customers about its policy in the case of overdue deposits but there was nothing to show the bank had communicated this to Viragar. On the contrary, Sanjeevani Bank had renewed the deposit. Even if the renewal was due to a mistake, Viragar could not be held responsible and deprived of the benefits entitled to him, the commission said. As the amount was with the bank, it was only logical to renew the deposit with retrospective effect. Once the deposit had been renewed, the maturity value had to be paid. According to the terms of merger and the scheme of amalgamation Vaidyanath Urban Co-operative Bank had taken over all the liabilities, duties and obligations of Sanjeevani Bank. Therefore, the commission concluded Vaidyanath Urban Bank was liable to pay the maturity value of the deposits. Though the principal had been accepted, Viragar would not be stopped from claiming the interest, as he hadn't accepted the amount as full and final satisfaction of payment.
Accordingly, the National Commission upheld the orders of the District Forum and the state commission and dismissed the bank's revision, with costs of Rs 10,000 payable towards legal aid.
A consumer must remember a dispute regarding the amount of payment will not be permitted if a discharge recording full and final satisfaction is given. Mere acceptance of the amount without recording satisfaction will not act as a hurdle to claiming the balance amount.
Meanwhile, Sanjeevani Bank was merged with Vaidyanath Urban Co-operative Bank. On maturity, Viragar demanded repayment of the deposits' maturity value. The bank refused to pay either the maturity value or any interest, repaying only the principal amount, through a credit to Viragar's account.
Viragar filed a complaint with the Parbhani District Forum, saying refusal to pay interest on the deposits was illegal and a deficiency in service. Vaidyanath Urban Bank contested the complaint, claiming renewal of deposits was not according to Reserve Bank of India (RBI) norms. While an RBI circular had stipulated a deposit could be renewed within 14 days of maturity, in Viragar's case, the deposits maturing on April 8, 2003, were renewed on July 18, 2003, after a period of 14 days; as such, interest wasn't payable. The bank also claimed there was no ledger entry in its records showing renewal of the deposit.
The forum allowed the complaint and directed the bank to make a payment according to the maturity value of the deposits. It also awarded Viragar Rs 1,000 as compensation and Rs 1,000 towards costs. The bank's appeal before the Maharashtra State Commission was also dismissed.
Subsequently, the bank filed a revision before the National Commission. It reiterated its stand and argued since Viragar had accepted the principal, he had given up his right and was stopped from claiming interest.
In its judgment on February 3, 2015, the National Commission rejected the bank's contention, saying the RBI circular cast an obligation on the bank to inform its customers about its policy in the case of overdue deposits but there was nothing to show the bank had communicated this to Viragar. On the contrary, Sanjeevani Bank had renewed the deposit. Even if the renewal was due to a mistake, Viragar could not be held responsible and deprived of the benefits entitled to him, the commission said. As the amount was with the bank, it was only logical to renew the deposit with retrospective effect. Once the deposit had been renewed, the maturity value had to be paid. According to the terms of merger and the scheme of amalgamation Vaidyanath Urban Co-operative Bank had taken over all the liabilities, duties and obligations of Sanjeevani Bank. Therefore, the commission concluded Vaidyanath Urban Bank was liable to pay the maturity value of the deposits. Though the principal had been accepted, Viragar would not be stopped from claiming the interest, as he hadn't accepted the amount as full and final satisfaction of payment.
Accordingly, the National Commission upheld the orders of the District Forum and the state commission and dismissed the bank's revision, with costs of Rs 10,000 payable towards legal aid.
A consumer must remember a dispute regarding the amount of payment will not be permitted if a discharge recording full and final satisfaction is given. Mere acceptance of the amount without recording satisfaction will not act as a hurdle to claiming the balance amount.
The author is a consumer activist