ORDER

ANUPAM DASGUPTA

This appeal is from the order dated 20.01.2005 of the Delhi State Consumer Disputes Redressal Commission, Delhi (in short, ‘the State Commission’) in complaint case no. 309 of 1994. By this order, the State Commission partly allowed the complaint of the complainants (appellants before us, and hereafter referred to as ‘the complainants’) against the opposite parties/respondents, Bank of Baroda (hereafter referred to as ‘BoB’ or ‘the bank’). Before the State Commission, the complainants alleged deficiency in service on the part of BoB, viz., acting against their written instructions requiring renewal of their FCNR (foreign currency non-resident) deposit of Sterling Pounds (£) 20,000 as Sterling Pound deposit, after the first five-year tenure of the said deposit from 01.03.1983. Effectively (though worded differently), their prayer before the State Commission was to direct BoB to renew the said deposit only in Sterling Pounds and not Rupees, for a period of five years from 01.03.1988 and also thereafter, with interest at the then applicable rates, until actual payment - in Sterling Pounds. In addition, they sought compensation of £1000 (or, Rs. 50,000) for mental tension and suffering that BoB allegedly caused them in this matter as well as costs of the proceedings. However, the State Commission ordered as under:
“For the aforesaid lapse on the part of the OP officials we deem that the complainants need to be compensated for the difference of amount in Indian currency vis a vis the FD of FCNR for a period of 3 years w.e.f. 1-3-88 and the FD of Indian currency, i.e., NRE for the said period. This amount shall be calculated by the OP-Bank and the complainants may accept the amount either in foreign or Indian currency. We also award a sum of Rs. 2000/- to the complainants towards cost of litigation.”

2. The undisputed facts of the case are limited:
(i) The complainants are persons of Indian origin who have acquired British citizenship and settled down at London, the United Kingdom. In early 1983, after consultation with the local branch of BoB with which they had banked for long, they decided to invest £20,000 in the FCNR deposit scheme then applicable to such persons. Accordingly, the International Branch, Connaught Circus, New Delhi of BoB invested the amount for a period of five years with effect from 01.03.1983 with interest @ 13% per annum and issued the fixed deposit receipt (FDR) to the complainants.

(ii) By his letter dated 22.02.1988, complainant no. 2 asked BoB to renew the FDR, as the first alternative, “for a further period of five years at the same rate of interest and on the same terms as before.” The second alternative was to renew the deposit “for a further period of five years from 01.03.1988 on such terms as may have been varied by the bank in relation to the interest rates.” The complainant also asked the bank “to supply the details of other attractive saving/investment schemes applicable to Indians residing abroad.”

3 Thereafter, the dispute started:

(i) Before the State Commission, the complainants alleged that the bank encashed and converted the maturity value of the FCNR FDR (£37,542) into Rupees and reinvested the Rupee amount for further five years from 01.03.1988 with interest @ 13% per annum, in violation of their written instructions of 22.02.1988.

Complainant no. 2 (hereafter referred to as ‘SDJ’) came to know about this only in mid-December 1992 when an official of the bank called him up at his place in London to seek instructions regarding renewal of their Rupee deposit.

SDJ protested that they had issued written instructions in February 1988 to renew the deposit only in Sterling Pounds. According to the complainants, the bank official replied that the conversion might have been done on telephonic instructions of the complainants but was unable to furnish details. SDJ pleaded in vain to rectify the error.

He also wrote a letter to this effect to the bank but did not retain a copy. [Emphasis supplied]

(ii) SDJ then came to India to sort this matter out and met the bank officials concerned. During this stay, SDJ wrote a letter in his hand on 26.02.1993. The significant part of the letter reads:

“I have given the serious consideration that this matter warrants, but I regret to have to advise that I do not consider this my investment decision that has misfired.
“The above being so, unless the Bank is prepared to indemnify me against any loss following as a consequence of its actions, I’ll have no alternative but to seek a remedy irrespective of any consequences.”

(iii) On 18.08.1993, SDJ wrote from London a letter to the Connaught Circus branch of BoB, quoting the NRE (non-resident external, i.e., Rupee) term deposit (TD) receipt number (188270 of 03.03.1993) as well as that of the previous one (36672). He sought renewal of the deposit for six months, like the previous one, at currently applicable rate of interest. However, the letter stipulated that the renewal was “without prejudice” as the bank “had advised that it could not rectify the matter relating to unauthorised conversion” and sought “all costs and expenses … likely to result as a direct consequence of the bank’s actions relating to unauthorised conversion”. Though the complainants did not file a copy of their letter to the bank regarding the “previous” (i.e., the first) renewal of the NRE FDR, it can be inferred that the said letter pertained to “without prejudice” renewal of the FDR from March to September 1993.

(iv) The next letter of SDJ, a copy of which he filed with the complaint, is dated 19.11.1993 and addressed to the Assistant General Manager (AGM) of the Delhi City Region I of the bank. It is in reply to the latter’s letter of 04.11.1993. The letter reiterated the allegation of untenabality of the bank’s stand on conversion of the £ deposit and added, “My custom has continued, would continue and how many other clients the undersigned has introduced is open to scrutiny. So please be rest assured that the business will continue as ever before but I am not prepared to bear the loss which I have not consented to sustain or ever met anyone responsible for the situation that has arisen.”

(v) In addition to the photocopies of two more of his letters, dated 10.01.1994 and 08.02.1994, to the said AGM of the bank and to the same effect, SDJ filed with the complaint a copy of the bank’s hand-written letter of 06.01.1993. In the letter of 08.02.1994, he also sought further renewal of the NRE TD for one year from 03.03.1994.

(vi) As the complainants did not find the bank’s response dated 14.07.1994 to their letters satisfactory, they sent a legal notice dated 28.05.1994 to the bank on all the above-mentioned counts. This finally led to filing the complaint dated 14.10.1994 with the State Commission.

4. On the other hand, the bank’s case is as under:


(i) In its above-mentioned reply to the legal notice, the bank stated inter alia that on receipt of SDJ’s letter of 22.02.1988, the then Branch Manager of the Connaught Circus branch of the bank, Mr. S. C. Ahuja (hereafter, ‘SCA’) spoke with SDJ on telephone on 06.03.1988. Based on this conversation, the bank converted the maturity value of the FCNR deposit into an NRE term deposit (TD) for five years from 01.03.1988, with interest @ 13% per annum. By his letter of 12.03.1988 to SDJ, SCA also enclosed the TD certificate and a draft letter from the complainants by way of written confirmation of the transaction. Though SDJ did not send the written confirmation, the bank “presumed in good faith that he had acceded to the aforesaid action of the bank.” The reply added that what SDJ asserted in his letter of 21.12.1992 was false and an afterthought after he came to know about the fall in the value of the Rupee vis a vis Sterling Pound. The reply also noted that the bank, by its letter of 06.01.1993, had reiterated to SDJ that what the bank had done was at his instance and in his best interest.

(ii) In its written version, the bank contested all the allegations in the complaint and reiterated the point regarding conversion of the FCNR deposit amount into Rupees and its reinvestment as an NRE TD at the instance of SDJ during the telephone conversation of SCA with SDJ on 06.03.1988. It also filed copies of SCA’s letter of 12.03.1988 and SDJ’s letter of 21.12.1992. The complaint had specifically referred to the last-mentioned letter (vide paragraph 6 of the complaint) and added that the complainants had not retained a copy.

(iii) SCA’s letter of 12.03.1988 referred to SDJ’s letter of 22.02.1988 as well as SCA’s telephone call of 06.03.1988 to SDJ. It noted SDJ’s instruction during that telephone conversation that (a) the FCNR deposit “… … should not be renewed in foreign currency @ 91/2% for 3 years” and (b) “… it should be renewed only for 5 years @ 13% as NRE deposit in Indian rupees (as convertible Rupees a/c)”. The letter added, “Further, I have got your Deposit receipt renewed after converting the maturity value as on 3.3.88 for £37542 @ Rs. 23.789 for a period of 5 years @ 13% p.a. under RIRD plan. Please acknowledge the receipt and you are requested to sign the enclosed confirmation and return to us per return post”. SCA also stated that he was sending to SDJ “a booklet, containing some important information” by separate post.

(iv) It is also worthwhile reproducing the substantive parts of SDJ’s letter of 21.12.1992:

“Re: TD No. 366727 FNCR (sic) dated 3.3.88

SD & GD Joshi

“The above is due on 3rd of March 1993 next. Although the sum originally invested was £37542, you were requested to renew this amount for further five years in pounds sterling. However, without any warning of possible serious loss or otherwise, you insisted and telephoned the writer to convert it in rupees which you suggested would increase more in real terms than keeping the money in sterling which converting into rupees was never intended. However, I now calculate that if I had never invested with you and not invested at all and kept the moneys under my pillow I would be better off than is the position as it obtains today.


……………………………………………………………………………………………………………………… …….
“Had it been my intent to convert, I instead of you should have requested for conversion. As a banker, dealing with a layperson you had a duty of care to at least warn that the conversion could mean that I could be lending you moneys for five years interest-free in sterling term and yet lose some of my own original." [Emphasis supplied].


5 (i) Aggrieved by the above-mentioned order dated 20.01.2005 of the State Commission in respect of the relief granted to them, the complainants filed this appeal.

(ii) This Commission issued interim direction on 14.08.2007 to the bank to pay to the complainants the amount awarded by the State Commission, with additional interest @ 12% per annum for the delayed period. The bank accordingly paid Rs. 16, 06,901/- on 21.08.2007 towards the maturity value of the NRE TD and Rs. 4,98,139 lakh towards interest @ 12% per annum on the said amount for the period of delay. The Commission also directed the bank to file a copy of the calculations underlying the payment and the learned counsel for the complainants to verify the calculations and submit their calculations, if any. The parties did so.

(iii) Further, by order dated 27.03.2008, this Commission directed the bank to furnish, on affidavit of SCA (as the dealing officer concerned), information regarding the transaction on six specific points and file copies of the relevant documents. The complainants also availed of the opportunity of filing rejoinder affidavits to the said affidavit of SCA.

6. We have heard Mr Mittal and Ms Sankhla, learned counsel for the appellants (complainants) and Mr Saxena, learned counsel for the respondent bank. SDJ was also present during the hearings. Both parties submitted their written submissions and copies of judgments (of the Supreme Court and this Commission) that they wished to rely upon.

7. On behalf of the complainants, Mr Mittal argued at length, highlighting the following:
(a) (i) The bank is guilty of deficiency in service because it violated the complainants’ written instructions of February 1988. As pointed out by SDJ in his letter of 21.12.1992, if the complainants had at all wished to convert their £ deposit into Rupees, they would have, on their own, stated so in their letter of 22.02.1988.

(ii) There was no telephone conversation of 06.03.1988, as claimed by the bank in SCA’s letter of 12.03.1988 and its subsequent pleadings, etc. This was clear from the bank’s own letter of 06.01.1993, stating it had no record of any telephone conversation over the issue. Moreover, 06.03.1988 was a Sunday – no Bank Manager would take the trouble of calling up a customer in the UK on a Sunday to seek his instructions on investments.

(iii) In the written version (as well as SCA’s affidavit) before the State Commission, the bank stated that the maturity amount of £37,542 of the first FCNR fixed deposit (£20,000) was converted by the bank into Rupees and reinvested as an NRE term deposit, in the name of the complainants, for five years with interest @ 13% per annum w.e.f. 03.03.1988. This was as a sequel to the telephone conversation that SCA had with SDJ on 06.03.1988 and in accordance with the SDJ’s instructions during this conversation. However, the claimed sequence of steps leading to the conversion was impermissible for an FCNR account (as that of the complainants) under the then applicable Regulations of the Reserve Bank of India (RBI) governing such foreign currency deposits of non-resident Indians.
This was so because of the provisions of the Foreign Exchange Regulation Act (FERA), 1973 and the instructions/guidelines issued by the RBI in the Exchange Control Manual (ECM), under the powers vested in it by the said Act and the Banking Regulation Act, 1949. Accordingly, each bank branch had to report the status of foreign exchange holding of each individual FCNR account to the RBI on a daily basis. The bank branch would also need specific permission of the RBI for conversion of the foreign exchange holding on behalf of any depositor (including the complainants in this case), because such “conversion” would actually be a “sale”. Therefore, the bank’s branch, authorised to deal in foreign exchange, would have to make an application in the prescribed form for this purpose. Only on receipt of the RBI’s specific permission, could the branch sell the foreign exchange to the RBI and receive the sale proceeds in Rupees. It would then have to deposit the converted proceeds in a new Rupee-denominated account, in the name of the depositors.
The bank branch could not open such an account without both the depositors/complainants first signing the prescribed new account opening form. It was not the bank’s case that the complainants signed any form to open a new Rupee account in their names to enable the bank to reinvest the amount of £37,542 as an NRE deposit in their favour. If the bank claimed that it converted the complainant’s first FCNR deposit into Rupees following the prescribed procedure, it should have been able to prove the above-mentioned sequence of transactions by producing the relevant documents, which it did not do.
How could the bank branch then claim to have reinvested the said amount in an NRE Rupee deposit for five years? If, on the other hand, the bank did not follow the said procedure, it would be guilty of violation of the statutory provisions and that by itself would be a serious deficiency in service on its part. In this context, Mr. Mittal cited the Forms ‘A’, B’, ‘C’, ‘D’, ‘STAT 5’, ‘STAT 6’, etc., prescribed as schedules to the ECM (vide paragraph 15, Volume II of the ECM, 1987 edition) to highlight the mandatory detailed reporting, pro forma accounting and permission requirements for foreign exchange deposits and transactions therein.

(iv) Only in its written submissions of October 1996 before the State Commission, the bank disclosed for the first time that it had actually reinvested the maturity value (£37,542) of the first FCNR deposit in an FCNR £ account for 3 years from 03.03.1988, with interest @ 9.5% per annum, in accordance with the complainants’ written instructions of 22.02.1988.
The bank also contended that in accordance with the instructions of the RBI applicable after 1986, it could renew an FCNR deposit only for a maximum period of 3 years, with interest of 9.5% per annum. Further, with the written submissions, the bank produced, again for the first time, a copy of the said FCNR fixed deposit receipt of even date showing the maturity value of £49,512.95 as on 03.03.1991.
However, according to the bank’s stand in the complaint as well as in the appeal proceedings, it had straightaway converted the amount of £37,542 into Rupees on 03.03.1988 and reinvested the resultant sum of Rs. 8,93,112.85 as an NRE Rupee deposit for five years with interest @ 13% per annum, leading to the maturity value of £44,952.88 on 03.03.1993. [Emphasis supplied].

(v) In compliance of the interim order of 14.08.2007 of this Commission to make payment as per the award of the State Commission and interest for the period of delay @ 12% per annum, the bank submitted misleading calculations of the amounts payable. First, the maturity value of the deposit should have been taken as £49,512.95 as on 03.03.1991, instead of £44,952.88 as on 03.03.1993. Secondly, the rate for conversion of £ into Rupees at £1=Rs.35.70 was as of 04.03.1991.
This was also wrong because the applicable rate should have been that ruling on the day of the award, i.e., 20.012005. This would be so as per the ruling of the Apex Court in the case of Forasol v Oil and Natural Gas Commission [AIR 1984 SC 241]. Thirdly, in its calculations the bank omitted interest for the periods 04.03.1991 to 19.01.2995 and 21.01.2005 to 31.01.2005.
(b) In view of the foregoing, Mr. Mittal reiterated the prayer that the complainants ought to be placed in the same position as they would have been had their express written instructions been followed by the bank. In other words, the FCNR fixed deposit in pounds sterling ought to be renewed only as pound sterling FCNR fixed deposit account all through and not converted into Rupee account.
He also sought payment of interest on the maturity value of £49,512.95 @ 9.5% per annum from 03.03.1991 until the date of actual payment of principal and interest in the designated currency, the interest being added to the principal every three years, along with compensation of £1000 and costs of the proceedings.

8. On the other hand, Mr Saxena focussed on the facts revealed by the correspondence and the provisions of the Exchange Control Manual guidelines/instructions and argued succinctly as under:

(a) (i) SDJ, complainant no.2, was of his own admission (vide his personal clarification of 09.01.2009 before this Commission) a banker himself and he invested with his eyes wide open, with a view to maximising his gains.

(ii) SCA, the then Manager of the branch concerned of BoB, had been posted to London and was personally familiar with SDJ. This was clear from the subsequent affidavit of SCA, filed before his Commission on 03.09.2008 in compliance of this Commission’s interim order of 27.03.2008. SDJ did not rebut this point in his rejoinder affidavit of 09.01.2009.

(iii) In compliance of the complainants’ letter of 22.02.1988, the bank first reinvested the maturity value of the FCNR deposit of 1983, i.e., £37,542, as an FCNR deposit for 3 years from 03.03.1988, with interest @ 9.5% per annum. It is common for Managers of bank branches to work on Sundays in the month of March because it is the closing month of the financial year. Because SCA knew SDJ personally while he was posted at London, he called up SDJ on 06.03.1988, a Sunday, on long distance telephone to advise him of the changed FCNR regulations of the RBI regarding the permissible maximum period of investment (reduced from 5 to 3) as well as the rate of interest (reduced from 13% to 9.5% per annum). As a result of the discussion during this telephone conversation, SDJ instructed SCA to reinvest the said £37,542, after conversion into Rupees, in an NRE term deposit for 5 years carrying interest @ 13% per annum. By his letter of 12.03.1988, SCA then wrote to SDJ to seek his written confirmation of the telephonic transaction of 06.03.1988 and enclosed the NRE TD certificate bearing no. 36672 dated 11.03.1988 (as of 03.03.1988). The certified copy of the mail dispatch register of the bank branch filed before this Commission on 03.09.2008 proved the dispatch of this letter, on 14.03.1988.

(iv) SDJ’s letter of 21.12.1992 clearly corroborated the fact of his receiving this NRE TD receipt in normal course after 14.03.1988 as well as the telephone conversation. In this letter, he quoted the specific certificate number (viz., 36672, without mentioning the date) and stated,

“The above is due on 3rd of March 1993 next. Although the sum originally invested was £37542, you were requested to renew this amount for further five years in pounds sterling. However, without any warning of possible serious loss or otherwise, you insisted and telephoned the writer to convert it in rupees which you suggested would increase more in real terms than keeping the money in sterling which converting into rupees was never intended.

However, I now calculate that if I had never invested with you and not invested at all and kept the moneys under my pillow I would be better off than is the position as it obtains today.” Yet, in the complaint, SDJ alleged not receiving SCA’s letter of 12.03.1988, with which both the TD receipt and the letter of confirmation of the telephonic instruction to convert the £ deposit into Rupees were enclosed. In this letter, SDJ clearly admitted the telephone conversation (vide

“However, without any warning of possible serious loss or otherwise, you insisted and telephoned the writer to convert it in rupees which you suggested would increase more in real terms than keeping the money in sterling which converting into rupees was never intended).


Further, if he received the TD receipt (as his above-mentioned admission would show), there could be no conclusion other than that he also received the letter of 12.03.1988 along with the other enclosure, well in time. Thus, if he had any reservation about the conversion of his £ deposit into Rupees for the NRE reinvestment, after having so instructed because of the higher rate of interest, he had enough time to revert to the bank and there was no earthly reason for him to wait until 21.12.1992.

(v) There was only one reason of SDJ’s highly belated letter of December 1992, disowning his own instructions of March 1988. Up until July 1991, the exchange rates of the Rupee vis a vis the currencies like Sterling Pound, US Dollar, etc., were administratively controlled by the Government of India through the RBI. After India’s foreign exchange crisis of March 1991, the Government had to decontrol this regime, starting with a steep devaluation of the Rupee in July 1991. As a result, the value of the Rupee investments in terms of the hard currencies dipped sharply after July 1991 and the position stabilised somewhat, in accordance with the market forces, only towards the end of 1992.

These unexpected developments appear to have seriously upset the initial investment calculations of SDJ to go in for the NRE (Rupee) term deposit investment in March 1988, which was at a much higher rate of interest (13% per annum) than that permissible (9.5% per annum) under the (revised) FCNR alternative. This was clear from the maturity value of the 3-year FCNR deposit (£49,512.95 as on 03.03.1991) as against that of the NRE Rupee deposit (£44,952.88 on 03.03.1993) when the latter was converted into Sterling Pounds at the then applicable exchange rate.

(vi) The allegations of violation of the provisions of the FERA or ECM were untenable because what had been emphasised on behalf of the complainants was not applicable to each transaction in respect of each individual NRE account held with a bank branch but for all such deposits/accounts with the branch, taken together. In other words, a branch of a bank authorised to deal in foreign exchange was not required to report, daily to the RBI, each individual transaction in respect of each NRE account. It was also not required to obtain permission to convert foreign exchange deposit into Rupees or vice versa at each stage, as alleged, except at the stages of opening an altogether new foreign currency NRE account and final payout to the depositor. Had the purpose of the FERA provisions and the ECM guidelines been as alleged in respect of each intermediate transaction, including permitted renewals, pro forma accounting of interest, etc., it would be virtually impossible for a bank to conduct any foreign exchange business.

This would be so because valuable time would invariably be lost at each such administrative stage of reporting and awaiting RBI’s permission, leading to possible serious losses to the clients or the banks, because of market fluctuations in the exchange rates. Moreover, under the RIRD plan it was not necessary for the bank to open a new Rupee account for an existing depositor for reinvestment of his/her earlier FCNR £ deposit in an NRE account. In the context of reporting, Mr. Saxena drew attention to paragraph 14 B.2 of the ECM, providing as follows:

“Authorised dealers should submit a monthly statement for the bank as a whole in Form STAT 5 showing the inflow, outflow and outstanding deposits under the Foreign Currency (Non-Resident) Accounts (Banks) Scheme during the month, so as to reach the Reserve Bank before the 10th day of the month following the month to which it relates. … … …”.


He further submitted that under the NRE Scheme (RIRD Plan), which the complainants opted for at the time of renewal of their matured FCNR deposit, the exchange risk at the time of final payout in the designated foreign currency was on the depositor and not the Reserve Bank, unlike in the case of the FCNR deposit. Therefore, the reporting and permission requirements were different for the NRE deposits.

(b) Summarising his arguments, Mr Saxena stated that the correspondence between SDJ and the bank (particularly SDJ’s letter of December 1992) clearly established that SDJ did have a telephone conversation with SCA when the latter called him up on 06.03.1988, during which he opted to reinvest the maturity value of the first FCNR deposit, viz., £37,542 as an NRE Rupee deposit for five years, carrying interest @ 13% per annum. He did so with a view to maximising his gains because the alternative of FCNR (Banks) Scheme deposit was for a shorter duration of 3 years and at a much lower interest @ 9.5% per annum. His implicit assumption was that the controlled exchange rate of the Rupee vis a vis £ would continue, allowing an over-valued and more or less steady Rupee as in the past decades.

In spite of receiving SCA’s letter of 12.03.1988, he chose not to confirm the telephone instructions for reasons best known to him. His calculations were, however, completely upset by the unexpected developments during March-July 1991 and their aftermath, in terms of the parity of the Rupee vis a vis the Sterling Pound and other hard currencies. Yet, being an experienced banker, he saw an opportunity to retrieve his losses in the complete lack of follow-up by the bank after March 1988 on seeking confirmation of the telephone instructions regarding the NRE deposit. Therefore, in December 1992, he completely changed his stand, disowned having ever instructed the bank to go in for the NRE deposit and built up a fraudulent complaint of deficiency in service against the bank on that ground. As was clear from SDJ’s letter of December 1992, he received SCA’s letter of 12.03.1988 sometime soon thereafter in March 1988. Hence, the consumer complaint filed before the State Commission in 1994 was hopelessly barred by limitation under the provisions of section 24A of the Consumer Protection Act, 1986.

Even after March 1993, the complainants did not withdraw the maturity value of the NRE deposit in Sterling Pounds or Rupees but went on renewing the amount as deposit for short periods from time to time. According to the guidelines of the RBI, such deposits were to be treated as “overdue deposits” on which interest @ 3 to 5% per annum only was payable. Even then, by its interim order of 14.08.2007, this Commission directed payment of interest for these periods on the amount awarded by the State Commission @ 12% per annum and the bank fully complied with these directions. This was more than adequate compensation to the complainants, if at all due.

They were, in fact, estopped from seeking such “remote damages” as prayed for in the complaint/appeal in view of their own instructions for reinvestment of the maturity amount of the FCNR deposit (£37,542) as an NRE TD and the ruling of the Apex Court on the doctrine of estoppel in the case of B. L. Sreedhar v K. M. Munireddy [AIR 2003 Supreme Court 578].

9(i) In our view, there is considerable substance in the submissions of Mr Saxena in respect of some of the important facts. It is quite clear from the wording of SDJ’s letter of 21.12.1992 (vide paragraph 4 (iv) above) that he did acknowledge the telephone conversation and the receipt of the NRE TD certificate. The bank produced a copy of its mail dispatch register of 14.03.1992, demonstrating the dispatch of SCA’s letter of 12.03.1988 to SDJ – the entry in the register mentioned the subject, which is a reproduction of the subject of that letter. The NRE TD receipt was one of the enclosures sent with this letter; the other enclosure was the draft letter confirming the transaction carried out according to the telephone conversation of 06.03.1988.

(ii) Hence, there can be no conclusion other than that SDJ received, in normal course, SCA’s letter of 12.03.1988 that was dispatched on 14.03.1988. If the complainants claimed that they received the NRE TD receipt independently and much later, the onus to prove so would lie with them. This they have not done.

(iii) Moreover, even if they received the said NRE TD receipt later, they have not cared to clarify the date of receipt and consequently, the reasons for writing a protest letter to the bank as late as on 21.12.1992 remain utterly unexplained.

(iv) Further, the NRE TD certificate produced on record by the bank clearly shows the amount invested as Rs. 8,98,112.85 (being the Rupee equivalent of the maturity value of £37,542 at the rate of exchange applicable on the effective date of conversion, viz., 03.03.1988) and the maturity value of Rs. 16,93,163.30. Notably, the certificate does not show the maturity value in Sterling Pounds.

(v) Thus, first of all, the cause of action, if any, for a possible consumer complaint arose sometime in March 1988 and that fact was well within the knowledge of the complainants. Strictly speaking, therefore, the complaint filed in 1994 would be indeed time-barred. However, the State Commission has held otherwise and the bank has not appealed against that order. Hence, at this late stage, we are not inclined to go into the merits of this issue.

(vi) Secondly, the maturity value of the NRE TD certificate is in Rupees and not in Pounds Sterling. Hence, the hypothetical comparison of the maturity amount of the second FCNR deposit, viz., £49,512.95 with that of the NRE TD receipt, converted into Pounds Sterling at £44,952.88, is devoid of any meaning in adjudicating this dispute.

(vii) This factual position would also lend credence to Mr Saxena’s next submission that the complainant SDJ (a banker himself) saw an opportunity of retrieving the adverse effects of his decision to reinvest the maturity value of the first FCNR deposit as an NRE TD (Rupee) deposit in the lack of follow-up by the bank after March 1988 (to obtain written confirmation of SDJ’s decision conveyed to SCA during their telephone conversation of 06.03.1988). This lack-lustre follow-up is quite understandable because the bank in this case is a public sector bank, and at the relevant time, the public sector banks had not computerised their operations and were also not much known for professional and efficient follow-up. The letter of the bank stating that there was no record of any telephone conversation during the relevant period is also not surprising – it is common knowledge that at the time when the said telephone conversation took place, there was no automated/computerised facility in such public sector banks to record telephone conversations with customers. In fact, the concept of ‘telebanking’ did not exist at all at that time.

(viii) Given the background of the telephone conversation of 06.03.1988, SCA’s letter of 12.03.1988 and the provisions of the ECM noticed above (and explained in the last affidavit of SCA), we are also inclined to agree with Mr Saxena that the conversion of the maturity value of the complainants’ previous FCNR deposit first as an FCNR deposit in Pounds Sterling and a few days later converting the said maturity value into Rupees and reinvestment of the proceeds as an NRE deposit did not violate the FERA provisions or the detailed guidelines in the ECM. This would be particularly so when the exchange risk associated with conversion of the final/maturity Rupee payout of such an NRE deposit in Sterling Pounds (or any other designated hard currency) was on the depositor(s).

(ix) However, it is here that there is some deficiency in service in the way the bank handled the reinvestment of the maturity value of the complainants’ first FCNR deposit in March 1988. It is not clear from SCA’s letter if he advised SDJ that opting for the NRE deposit in lieu of the then applicable (and apparently less favourable) FCNR deposit would entail that the depositors bear the exchange risk at the time of final payout. This also finds an indirect mention in SDJ’s letter of 21.12.1992, viz., SCA did not advise him of the possibility of adverse fallout if the Rupee/Sterling Pound exchange rate deteriorated. Secondly, it is also clear that when SCA spoke with SDJ on 06.03.1988, the bank had already reinvested the maturity value of £37,542 as a 3-year FCNR deposit with interest @ 9.5% per annum and maturity value of £49,512.95, perhaps in (partial) compliance with SDJ’s letter of February 1988. SCA should have mentioned this fact in his letter, particularly because this reinvestment did not fully comply with the complainants’ written instructions of February 1988 regarding the period of investment. However, we notice that the allegations in the complaint are not regarding these deficiencies in service.

(x) The bank did not appeal against the order of the State Commission or the interim order of August 2007 of this Commission. As far as the bank is concerned, these two orders have thus attained finality. On the other hand, for the reasons discussed above, it is simply not permissible to consider anything further to accommodate the prayer in the complaint/appeal to place the complainants/appellants in the same position as they would have been had their “express written instructions” been followed by the bank. First, by their letter of February 1988, the complainants/appellants had sought renewal of the maturity value of their first FCNR deposit in Sterling Pounds for a period of 5 years.
This period was not possible because of the intervening changes in the RBI instructions on the maximum tenure of FCNR deposits. Secondly, while their first FCNR deposit carried an interest @ 13% per annum, the permissible rate for the FCNR renewal in 1988 was only 9.5% per annum – however, this lower rate was not against the “express instructions” allowing the bank to vary the rate of interest as applicable. Though not happily worded, the impugned order effectively granted the relief prayed for in respect of reinvestment of the maturity value of the first FCNR deposit in Sterling Pounds. By the interim order of 14.08.2007, this Commission ensured payment of the awarded amount to the complainants and went on to grant interest @ 12% per annum on the awarded amount for the period of delay.


This rate of interest is much higher than what the complainants would be entitled to if the reinvestment had continued as an FCNR deposit even after March 1991; leave alone the rate of interest permissible on overdue deposits of this kind. In short, the complainants have already received the substantive reliefs they prayed for and quite a bit more. These they have also accepted, albeit under some sort of protest and after making strenuous efforts at re-calculating the interest. In view of the detailed discussion above, we do not consider it equitable to revisit the interest calculations or the rate of Sterling Pound/Rupee conversion of the awarded amount, as now urged on behalf of the complainants. This is particularly so because of the limited degree of deficiency in service on the part of the bank coupled with the fact that the said negligence was not specifically alleged in the complaint (vide sub-paragraph (ix) above) and the substantive reliefs already received by the complainants. For the same reasons, it is not necessary to examine the applicability of the Apex Court rulings cited by the parties in support of their respective cases.

10. In conclusion, therefore, we have no hesitation in dismissing the appeal and confirming the impugned award (in, to reiterate, an inadequately discussed order and unhappily worded award) read with our interim order of 14.08.2007. We also notice that the respondent bank has already complied with both these orders.

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[R. C. Jain, J]

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[Anupam Dasgupta]