Sovintorg (India) Ltd. Vs. State Bank of
India, New Delhi [1999] INSC 258 (11 August 1999)
R.P.Sethi, S.Saghir Ahmed
SETHI,J.
Not satisfied with the majority view of the
National Consumer Disputes Redressal Commission (hereinafter called "the
National Commission") but allured by the observation made by one of its
members (Bala Krishna Eradi, J.), the appellant has moved this Court for
modifying the majority order of the National Commission with direction to the
respondent to pay the compensation for wrongfully withholding the amount and
the interest at the commercial rates as then prevalent. The facts of the case
are that the appellant-company had a bank account with the respondent-bank
wherein in the month of June, 1983 a cheque for Rs. One lakh was deposited by
the appellant for collection and the proceeds thereof to be credited to its
account. The appellant alleged that though the proceeds of the cheque were
collected on June 17, 1983 yet they were not deposited in its account for over
a period of seven years.
The appellant filed a complaint before the
State Consumer Disputes Redressal Commission (hereinafter called "the
State Commission") constituted under the Consumer Protection Act, 1986
(hereinafter called 'The Act') detailing therein its entitlement to the
following amounts: (a) Principal amount deposited with the Defendant on 15.5.83
Rs.1,00,000/- (b) Normal and penal interest @ 24% per annum quarterly
compounded as per standard usual practice prevalent in all Nationalised Banks
w.e.f. 18.6.83 till 31.10.89 Rs.3,26,000/- (c) Compensation for business losses
inflicted on the petitioner on account of above criminal acts/omissions and
commissions by the deft. Rs.2,00,000/- (d) Nominal damages/general damages/
special damages/ substantial damages including for loss of prestige, status and
mental agony, suffered by the petitioner company and its Managing Director.
Rs.2,00,000/- --------------------- Total Rs. 8,26,000/- --------------------
The State Commission partly allowed the complaint by directing the respondent
to pay Rs. One lakh with interest at the rate of 12% p .a. with quarterly rests
from the date when the amount was received till the date of payment within the
time prescribed by it. As noticed earlier the majority of the National
Commission confirmed the order of the State Commission. Hence this appeal.
Learned counsel appearing for the appellant has vehemently argued that the
State Commission as well as the National Commission were not justified in
rejecting the claim of the appellant in so far as it pertained to payment of
the compensation and the interest at the rate of 24% per annum. Reliance is
also placed on the provisions of Section 34 of the Civil Procedure Code. It is
contended that in view of the finding of one of the members of the National
Commission, the negligence of the respondent stood proved which entitled the
appellant to the payment of the amount claimed before the State Commission.
After hearing the learned counsel for the parties and perusing the record, we
have noticed that the State Commission as well as the National Commission have
concurrently found that the amount realised by the collection of cheque in
question could not be deposited apparently on the basis of an understanding
between the parties which authorised the bank to keep the same as margin money
for the guarantee furnished by the Bank on behalf of the complainant company to
the Chief Controller of Exports and Imports. It has been found that the bank
was not wrong in having retained the said amount in its custody. The appellant
was further found to have not proved as to from which date the contract for
guarantee stood terminated.
However, the said contract was found to be in
force as late as in 1987. In the absence of any negligence, we do not find any
substance in the submission made by the learned counsel for the appellant to
modify the orders of the State Commission and National Commission for directing
the payment of compensation on allegedly wrong retention of the amount as was
submitted in the complaint. Relying upon the province of Section 34 of the
Civil Procedure Code, the learned counsel for the appellant submitted that
appellant was entitled to the payment of interest at the rate at which moneys
are lent or advanced by Nationalised Banks in relation to commercial
transactions. Referring to I.A. 2 filed in this Court and Banking Law and
Practice in India issued in 1991, she had contended that the appellant was
entitled to the payment of interest minimum at the rate of 19.4 per cent per
annum. The general submission made in this behalf cannot be accepted in view of
the provision of Section14 of the Act. There was no contract between the
parties regarding payment of interest on delayed deposit or on account of delay
on the part of the opposite party to render the services. Interest cannot be
claimed under Section 34 of the Civil Procedure Code as its provisions have not
been specifically made applicable to the proceedings under the Act. We,
however, find that the general provision of the Section 34 being based upon
justice, equity and good conscious would authorise the Redressal Forums and
Commissions to also grant interest appropriately under the circumstance of each
case. Interest may also be awarded in lieu of compensation or damages in
appropriate cases. The interest can also be awarded on equitable grounds as was
held by this Court in Satinder Referring to the province of the Interest Act of
1839, in relation to the compulsory acquisition of land where no specific
provision is made for grant for awarding the interest, the Court held: "In
this connection we may incidentally refer to Interest Act, 1839 (XXXII of
1839).
Section 2 of this Act confers power on the
Court to allow interest in cases specified therein, but the proviso to the said
section makes it clear that interest shall be payable in all cases in which it
is now payable by law. In other words, the operative provisions of s. 1 of the
said Act do not mean that where interest was otherwise payable by law Court's
power to award such interest is taken away. The power to award interest on
equitable grounds or under any other provisions of the law is expressly saved
by the proviso to s. 1. This question was considered by the Privy Council in
Bengal Nagpur Railway Co. Ltd. V. Ruttanji Ramji (1938 L.R. 65 I.A.66).
Referring to the proviso to s.1 of the Act the Privy Council observed
"this proviso applies to cases in which the Court of equity exercises its
jurisdiction to allow interest." We have already seen that the right to
receive interest in lieu of possession of immovable property taken away either
by private treaty or by compulsory acquisition is generally regarded by
judicial decisions as an equitable right; and so, the proviso to s.1 of the
Interest Act saves the said right. We must accordingly hold that the High Court
was in error in rejecting the claimants' case for the payment of interest on
compensation amount, and so we direct that the said amount should carry
interest at 4% per annum from the date when respondent 2 took possession of the
claimants' lands to the date on which it deposited or paid the amount of
compensation to them." Indore Improvement Trust, Indore and & Ors.
(AIR 1975 SC 1303). The State Commission as well as the National Commission
were, therefore, justified in awarding the interest to the appellant but in the
circumstances of the case we feel that grant of interest at the rate of 12% was
inadequate as admittedly the appellant was deprived of the user of a sum of Rs.
One lakh for over a period of seven years. During the aforesaid period, the
appellant had to suffer the winding up proceedings under the Companies Act,
allegedly on the ground of financial crunch. We are of the opinion that
awarding interest at the rate of 15 per cent per annum would have served the
ends of justice. Under the facts and circumstances of the case the appeal is
partly allowed by modifying the orders of the State Commission as well as the
National Commission with direction that the appellant shall be entitled to the
payment of Rs. One lakh with interest at the rate of 15% per annum with
quarterly rests from the date when the amount was received by it till the date
of payment. The difference of the amount on account of enhancement of the rate
of interest shall be paid to the appellant within a period of six weeks from
the date of this judgment.
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