Consumer Complaint No: 627/2007

Between:

Dr. Mrs. M.Ratnamala, W/o Dr.Koteswara Rao, Hindu aged 42 years, Allopathic Medical Practioner, residing at Door No.31-33-45, Saibaba Street, Visakhapatnam -530 020.

… Complainant
A n d :

1. Reserve Bank of India, represented by its Governor, Central Office, Shaheed Bhagat Singh Road, Mumbai – 400 001.

2. Reserve Bank of India, represented by its Chief General Manager, Public Debt Office, Saifabad, Hyderabad – 500 004.

3. M/s. Integrated Enterprises (India) Ltd., represented by its Chairman & Managing Director, Head Office, 1st floor, Kences Towers, No.1, Ramakrishna Street, T.Nagar, Chennai – 600 017.

4. M/s. Integrated Enterprises (India) Ltd., represented by its Branch Head, III floor, Dwaraka Plaza, Dwarakanagar, Visakhapatnam – 530 016. … Opposite Parties

This case is coming on for final hearing on 2-12-2009 in the presence of Sri C.Sanjeeva Rao Advocate for the complainant and of Sri.D.Ramesh, Advocate for the 1st & 2nd opposite parties, Sri P.V.V Seshagiri Rao Advocate for the 3rd and 4th Opposite parties and having stood over till this date, the Forum delivered the following.
: O R D E R :

(As per the Honourable President on behalf of the Bench)

1. The factual matrix of this dispute between the only legal heir of depositors and the Reserve Bank is that the complainant is the daughter of Dr.Sarabhalingam and Dr.Jogulamba of Visakhapatnam. The Doctor couple purchased 10% relief bonds, during 1995 and 1996 for Rs.25,00,000/- (Rupees twenty five lakhs only), under three bonds of Rs.10,00,000/- (Rupees ten lakhs only), Rs.10,00,000/- (Rupees ten lakhs only) and Rs.5,00,000/- (Rupees five lakhs only). The bonds are Ex.B7 to Ex.B9 in the names of the couple. At the time of making deposits, Dr.Sarabhalingam submitted nomination in favour of his daughter, Dr.Ratnamala, the complainant. Ex.B4 to Ex.B6 along with Ex.B1 to Ex.B3 applications in form ‘A’ signed by both the wife and husband. These applications and nominal forms are given on 10-4-1996 to the Bank through Op4, the broker. There was never any communication by the opposite parties Nos.1 and 2 that the nomination in favour of the daughter is not accepted, though the bonds were issued. While the things stood thus, Dr.Sarabhalingam passed away on 22-5-2000. It is claimed that Dr.Jogulamba, by her letter dated 8-8-2000 copy Ex.B11 informed the death of her husband enclosing the death certificate and also renewed the nomination in favour of her daughter, the complainant. However, this letter was claimed to have been not received by the Op2. In another three months Dr.Jogulamba herself passed away on 4-3-2001. The stipulated period of redemption of bonds is 15-4-2001. The complainant sent Ex.A9 letter dated 22-3-2001 duly discharging the three bonds, originals of ExB7 to ExB9 to the Bank along with Ex.A9. When there was no response, she got issued a legal notice. Ex.A10 dated 4-4-2001 requesting the bank to renew the bonds in her favour as being nominee and only legal heir to the parents. As there was no response, the complainant approached Op2 - Reserve Bank, at Hyderabad, and pleads at that time only she was informed as to the necessity of succession certificate in order to claim the amount. The complainant was never in writing except in Ex.A4 dated 18-5-2001 of their demand for succession certificate. The protests of the complainant against the demand of succession certificate inspite of nomination in her favour proved futile and so she obtained succession certificate, the copy of which is Ex.B6 dated 26-9-2003. Thereafter only, the amount under the bonds Rs.25,000/- (Rupees twenty thousand only) was released together Rs.2,17,861/- (Rupees two lakhs seventeen thousand eight hundred and sixty one only) said to be accrued interest. This payment of maturity of amount was made in the year, 2003 and interest calculation was stopped with effect from March 2003. Earlier on 10-07-2001, under Ex.A5, the bank sent interest warrants in the name of Dr.Sarabhalingam, a dead person.

2. The grievance of the complaint is that when there was valid nomination made by her father in her favour and also as a sole legal heir, by her mother, she is entitled to receive back the amount and insistence upon obtaining succession certificate in order to entitle her for such payment is nothing but incorrect and it amounted to deficiency in service. Because of that insistence, the complaint was forced to spend Rs.1,72,885/- (Rupees one lakh seventy two thousand and eight hundred and eighty five only) for obtaining succession certificate. Apart from that, it is her grievance that she is entitled for interest at 10% up to 7-10-2003, the date of payment and deducting interest already paid, she is entitled for Rs.4,65,889/- (Four lakhs sixty five thousand eight hundred and eighty nine only). Thus she claimed Rs.6,38,774/- (Rupees six lakhs thirty eight thousand seven hundred seventy four only) in total.

3. The pleas of the opposite parties 1 & 2 in resisting the complaint are: firstly, it has been discharging the statutory duty acting on behalf of the Government of India in accepting the deposit and there is no banking service that is provided by it to the complainant and hence the dispute between them would not be a consumer dispute, under the Act. Secondly under the rules relating to these 10% bonds, the facility of nomination is available only to a sole holder of the deposit, but not joint with another individual, and in this case, it is a joint deposit by the couple and so the nomination, though given is not permissible and invalid. As per section 7 of Public Debt Act 1944, the claimant has to obtain either probate of will, letter of administration, succession certificate granted by competent court, or Mitakshara certificate, to facilitate payment and the same was advised to the complainant by latter dated 18-05-2001. It took up a specific stand that alleged letter dated 8-8-2000 purported to be of Dr.Jogulamba, the original of Ex.B11, was not received by them at all so, even if it is accepted the nomination should be in prescribed proforma in order to be accepted. It also asserted that payment of interest after maturity of bonds would be as per existing rules of the Government. Thus it justified in insistence upon succession certificate and also payment of interest up to a particular date only at the contract rate.

4. The complainant, apart from filing her affidavit, marked Ex.A1 to Ex.A12, whereas the opposite parties marked Ex.B1 to Ex.B16 besides filing the affidavits of officials. Both the counsels were heard.

5. It is the contention for counsel of the complainant that when undisputedly nomination in form ‘B’ in Ex.B4 to Ex.B6 by Dr. Sharabhalingam were furnished, along with the Ex.B1 to Ex.B3 applications for issue of bonds, the opposite parties 1 and 2 did not choose to intimate that nomination is not valid or nomination is not permissible as contended now. He contended the three bonds were in their individual capacity, on joint basis category, as laid down in Relief bond notification in 1995. More over even if it is taken as a joint bond, after the death of her husband, Dr.Jogulamba, the surviving holder in her letter, Ex.B11 categorically nominated her daughter. He vehemently urged though it is not in prescribed form, still the opposite party is bound to act upon it and erred in not accepting it, as valid nomination. Thus he urged that in spite of the fact that the complainant is sole legal heir as well as the nominee, the opposite party, erred in demanding production of succession certificate misinterpreting the rules which amounted to deficiency in service. He urged that his client is entitled for interest at contract rate of 10% till the payment was made. Thus the learned counsel vehmintly urged the complainant is entitled for reimbursement of the expenditure incurred for obtaining succession certificate, as well as interest at contract rate till date of payment as claimed.

6. On the other hand it is the contention of the counsel for opposite parties 1 and 2 that it is not an individual but a joint holding and as per section (7) of Public Debt Act and so also the rules made from time to time, only when there is a sole holder, nomination facility is made available but not when it was a joint holding as in the present case. He contended that under section (7) Public Debt Act, the bank is justified in demanding production of succession certificate. He vehemently contended that Ex.B11 letter of Dr.Jogumbala was not received by the opposite party at all and this fact was informed by the complainant personally on 26-4-2001 only. He urged that such being the case, there was never any request by Dr.Jogumbala nominating her daughter. With regard to interest from the date of maturity till date of payment, the counsel contended that it was done as per the existing rules of the subject and that cannot be termed as deficiency in service. Apart from this, the learned counsel contended that the bank has been discharging statutory duties under the Public Debt Act on behalf of the Union Government and there was no service as such provided by to the complainant and hence the dispute cannot be treated as consumer dispute at all.

7. Both the counsels cited certain authorities in respect of their respective contentions, which would be considered at the appropriate stage.

8. In view of the respective contentions the points that would arise for determination in this complaint are:

i)Whether the present dispute does not come under the purview of the C.P Act and opposite parties 1 and 2 are only discharging their statutory duties?

ii) Whether there is any deficiency in service on the part of the opposite parties 1 and 2 and the complainant is entitled for the reliefs asked for?

9. i) The first and foremost objection of the Reserve Bank of India, the opposite parties 1 and 2, is that this Forum has no jurisdiction as there was no banking service that provided by it, in accepting deposits and in fact they have been discharging the statutory duties, on behalf of the Government of India. There is no doubt that these public deposits were invited by the Government of India only and the bonds also issued in the name of the Government of India. But it cannot be ignored that the deposits were collected and bonds were issued to be repaid with accrued rate of interest, on maturity to the depositor. It is nothing but a banking service i.e offered to the customer, though by the Government of India through Reserve Bank. As a matter of fact, the notification dated 10-1-1993 issued by the Central Government for these 10% relief bonds would show that it is not only the Reserve Bank of India i.e opposite parties 1 and 2, which is authorized to accept the subscription to these bonds, but also State Government and other Nationalized Banks at different places all over the country. These rules would provide that these bonds are transferable and can be used as a security to obtain loans from banks. Thus the scheme would clearly show that it is nothing but banking business by the Reserve Bank and other Nationalized Banks in the country. Under no stretch of imagination, it can be treated as a sovereign function of the Government.

10. Though the learned counsel for opposite party relied upon a decision in Veerendra Prasad Vs.Reserve Bank of India 1991 (5)CPR page 661 in support of his contention that it is a statutory function that it was undertaken by Reserve Bank, in our view, on perusal of the same, it is quite clear that this decision will not be of much help to its contentions. It arose on action of Reserve Bank of India converting foreign currency into Indian currency of a bank customer, under the provisions of Foreign Exchange Regulation Act, on the ground that the customer has returned to India and so not entitled for re-conversion facility. It is quite clear that in that case, the Reserve Bank of India was enforcing the provisions of Foreign Exchange Regulation Act as a sole authority for that purpose, by giving instructions to the banks, including that of the complainant there in. It was not dealing with the customer directly. In those circumstances, it was held that it is discharging of statutory duties by Reserve Bank of India, but not a banking business.

11. Thus in our view the opposite parties 1 and 2 in accepting the deposits from public, though on behalf of the Government and subject to rules framed from time to time, issuing bonds, which are transferable even and liable for repayment of the same together with interest is engaged in banking service, similar other nationalized banks and this Act of the Reserve Bank of India cannot be treated as mere statutory duty. From the nature of transaction, it is clear case of banking service provided to the complainant’s parents by Op1 and Op2. Accordingly this point is answered and hence the complainant well within the purview of the provisions of this consumer Protection Act.

12. II) Now coming to the main dispute as to whether the insistence upon production of succession certificate for payment of proceeds of the bonds to the complainant amounted to deficiency in service is concerned, there is no dispute that late Sarabhalingam, the father of the complainant gave nomination in favour of the complainant, in form ‘B’ along with his applications subscribing for the bonds. It is an undisputed fact that the opposite parties 1 and 2 never intimated that the nomination is not permissible or invalid and hence not accepted, at any time. The main thrust of the opposite party is as it is joint holding of the bond by the parents, rules on the subject will not permit such a nomination. The bonds were issued are 10% relief bonds 1995, by virtue of a notification dated 29-9-1995. This notification was preceded by earlier notification on 10-3-1993, also 10% relief bonds. This notification of 1993, provided rules or guide lines for issue of such bonds. It would be convenient to extract those rules under the two notifications.

Para 2 is eligibility for investment: The Bonds may be held by

i) an individual

(a) in his or her name, on behalf of a minor or

(b) jointly with another individual

(ii) a Hindu undivided family.

Para 12 Nomination:

(i) A sole holder or a sole surviving holder of Bond, being an individual,may nominate in Form B annexed to this notification or as near thereto as may be, one or more persons who shall be entitled to the Bond and the payment thereon in the event of his death.

The Rules under second notification of the September 1995 substituted the original rule as:

2. Eligibility for investment: The bonds may be held by

(i) an individual

(a) in his or her individual capacity

(b) in individual capacity on joint basis

(c) in individual capacity on anyone or survivor basis (only in case of bonds issued in the form of Promissory Note)

(d) on behalf of a minor as father/mother/legal guardian

(ii) a Hindu Undivided Family.

There is no change in para 12, relating to nomination in this subsequent notification.

13. It can be seen from above certain modifications were done to the existing rules of 1993. As per 1993 notification, an individual can hold the bond in his or her name on behalf of the minor or jointly with another individual where as under 1995 notification. It is in his or her individual capacity, or individual capacity on joint basis besides on behalf of the minor. Since the applications Ex.A1 to Ex.A3 would show that they were signed by both the parents of the complainant and it is the father of the complainant, who exercised the right of nomination. It is evident, as contended by the counsel for complainant, that late Sarabhalingam obtained the bond in his individual capacity, on joint basis with his wife. It is to be noted that the separate category that an individual capacity or anyone or survival basis was provided under these 1995 rules are significantly absent in 1993 rules. It is to be further noted here itself that there is no change in para 12 of the 1993 notification providing for nomination. Para 12(1) of 1993 notification provided a sole holder or sole surviving holder to the bond, being an individual may nominate in form B Annexure to this notification. Undisputedly Annexure B was given by Dr.Sarabhalingam as per Ex.B4 to Ex.B6. Considering the changes that were made in the eligibility criterion, in our view, the bonds were obtained by Dr.Sarabhalingam in his individual capacity, on joint basis as permitted under 1995 notification and such being the case, nomination made by him under Ex.B4 to Ex.B6, in favour of the complainant should be treated as perfectly valid.

14. Even otherwise, the sole surviving holder, Dr.Jogulamba by her letter in Ex.B11 dated 8-8-2000 has clearly nominated her daughter, the complainant as a nominee for the bonds. No doubt, the receipt of the Ex.B11 letter is being denied by the opposite party and pleaded that Ex.B11 a copy was given by the complainant when she went personally to meet the Op2 at Hyderabad, after the death of her mother. This Ex.B11, Dr.Jogulamba intimated the death of her husband, on 22-5-2000 and requested to delete the name of her husband in the certificates and also requested and nominated her only child Dr.Rathnamala. The death certificate was shown to have been enclosed to this letter. Such an enclosure of death certificate to this letter is very much probablized, in view of the fact that Ex.A10 copy of death certificate would show that it was issued on 26-5-2000, on the date of registration itself, while the death was on 22-5-2000. Unless it is for presentation to the concerned authorities with regard to these bonds, there is no necessity for the complainant and her mother to obtain death certificate so immediately after death. The original of Ex.A11 evidently was annexed to Ex.B11 letter dated 8-8-2000. It is evident that the Op2 obviously misplaced it.

15. Thus in our view, Ex.B11 letter by Dr.Jogulamba, the surviving holder, the complainant was made a nominee to the bonds. Simply because it is not in prescribed form B, the Op2 cannot refuse to register the nomination. Thus in any view of the matter, in our view, there is valid nomination of the complainant to the bonds obtained by her parents and the refusal to recognize her as a nominee and pay the bond amounts to her or transfer the bonds in her name, as requested by her, in our view, would clearly amount to deficiency in service.

16. In view of the findings that the nomination is permissible and there is valid nomination in favour of the complainant, the insistence upon filing succession certificate from a competent court as Sin qua non for payment, in our view is erroneous and on that ground the complainant is entitled for refund of the expenses incurred by her, in obtaining the succession certificate.

17. Apart from this, evidently interest at reduced rate varying 8% to 8.5% , as can be seen in the pleadings were only given subsequent maturity. Had the nomination in favour of the complainant, which is found to be valid, been accepted by the opposite party, the payment could have been made in the year 2001 itself, but it was not done soon. In Parasnath Singh Vs. Post Master District Bokoro, 3 (2006) CPJ 48 NC, relied upon by the counsel for the complainant. It was held when the account was closed and interest was deducted as excess paid by the Post Master, it was held that the Post Office is liable to pay interest under the second part of section 73 of contract Act. In the light of this decision the claim made by the complainant with regard to the balance interest due, has to be accepted, shown to be Rs.4,65,889/- Thus the complainant is entitled for Rs.6,38,774/- (Six lakh thirty eight thousand seven hundred and seventy four only) being the difference in interest together together with costs incurred in obtaining succession certificate.

18. In the result, the complaint is allowed directing the opposite parties 1 and 2 to pay Rs.6,38,774/- (Rupees six lakhs thirty eight thousand seven hundred and seventy four only) together with interest at 9% on 1,72,885/- (Rupees one lakh seventy two thousand and eight hundred and eighty five only) from 1-11-2006 till date of payment and costs of Rs.5,000/- (Rupees five thousand only). Advocate fee is fixed at Rs.3,000/- (Rupees three thousand only). The complainant against 3 and 4 is dismissed with no costs.

Dictated to the Shorthand writer, transcribed by him, corrected and pronounced by us in the open Forum on this the 4th Day of December,, 2009.