ANDHRA FINANCE vs PALACHERLA PAPARAO

THE appellant was the opposite party in O.P. No. 71/1995 on the file of East Godavari District Forum at Kakinada. It is a partnership firm. THE three respondents were the complainants in that O.P. THE first respondent was the husband of Palacheria Rajya Venkata Lakshmi (Venkata Lakshmi) and the second and third respondents (second and third complainants) are their son and daughter respectively.

ACCORDING to the respondents, Venkata Lakshmi deposited in all a sum of Rs. 65,000/- with the appellant firm on various dates in the year 1990. She died on 24.12.1992 leaving the respondents as her only legal heirs. There were some disputes between the partners of the appellant firm and the same were settled and the amount due to the respondents was settled at Rs. 1,66,714/- on 24.9.1994. As per the agreement arrived at between the respondents and the appellant, the appellant should pay the said amount by way of draft in the name of the respondents and the latter should furnish an Indemnity Bond to the appellant. ACCORDING to the respondents they got an Indemnity Bond prepared and executed the same and delivered it to the appellant firm on 28.9.1994 keeping photo copy of the same with them. The appellant took a draft on the same day for Rs. 1,66,714/- but did not hand over the same after receiving the Indemnity Bond and got issued a lawyer''s notice dated 18.1.1995 (marked as Ex. A-l). The respondents gave a reply to lawyer''s notice dated 22.1.1995 (marked as Ex. A-2). As the deposit amount was not paid the respondents approached the District Forum for a direction to the appellant to pay a sum of Rs. 1,66,714/- with interest thereon @24% per annum from 28.9.1994 and costs, damages and compensation for mental agony, submitting that the appellant wrongfully withheld the said amount contrary to the agreement reached between them even though the partners of the appellant knew very well that they were the only legal heirs of the deceased Venkata Lakshmi. The appellant received notice in the O.P. and filed counter. The deposits made by Venkata Lakshmi were admitted. It was also admitted that the appellant agreed to pay a sum of Rs. 1,66,714/- but to the legal heirs and not to the petitioners. The case of the appellant in the counter was that after the death of Venkata Lakshmi the respondents approached for payment and the appellant was willing to pay the amount to them subject to the production of Succession Certificate to avoid litigation. As there was no response from the respondents, the appellant got issued a notice to them on 18.1.1995 to which the respondents replied on 22.1.1995 with "false allegations". Thereafter the appellant got issued a rejoinder to the respondents specifically insisting the proof that they were the legal heirs. The appellant also denied that the Indemnity Bond was delivered to it; accordingto it only a photostat copy of the Indemnity Bond was delivered stating that they would deliver it "at the time of giving drafts". The appellant also contended in the counter that the respondents were not consumers and that the relationship between late Venkata Lakshmi and the appellant was that of debtor and creditor and that therefore the District Forum and no jurisdiction to entertain the complaint. The appellant did not get any documents marked on its side.

The District Forum by its order dated 16.7.1996 allowed the complaint and permitted the respondents to receive the amount of Rs. 1,66,714/- deposited by the appellant in the Forum and directed the appellant to pay interest thereon at the rate of 18% per annum from 28.9.1994 till 14.12.1995 and also Rs. 5,000/- towards general damages for mental agony suffered by the respondents and Rs. 5,000/- towards costs. This order is questioned in the present appeal by the appellant.

THE District Forum rejected the contention advanced before it on behalf of the appellant that the respondents were not consumers as the relationship between the appellant and the deceased Venkata Lakshmi was one of creditor and debtor and no service was involved. THE District Forum observed that the Counsel for the appellant before it relied on the decision of the Bombay State Commission in Neela Vasant Raje v. Amogh Industries, III (1992) CPJ 540, without noticing that the said decision was reversed by the National Commission in Neela Vasant Raje v. Amogh Industries and Another, III (1993) CPJ 261 (NC)=1993 (3) CPR 343=1986-1995 Consumer page 446 (NS). In that case the National Commission held that when a company or firm invited deposits promising attractive rates of interest it amounted to rendering service and that therefore the Forum had jurisdiction to entertain the complaint for non-payment of the deposit amount. After noticing that, the District Forum observed that it followed that when the parties agreed for particular amount to be paid as in the present case, non-payment of the same would be deficiency in service. Pursuant to the directions of the District Forum the appellant deposited in the Forum Rs. 1,66,714/- by way of a demand draft on 14.12.1995 and the respondents filed a fresh Indemnity Bond on 27.6.1996 in order to put an end to the litigation. THE District Forum noted that even then the appellant was not prepared to accept it. THE District Forum also observed that the appellant had taken a demand draft earlier for Rs. 1,66,714/- on Indian Overseas Bank on 28.9.1994 in the name of the three respondents and after the respondents delivered the Indemnity Bond it avoided delivering the demand draft to the respondents. THE District Forum also noticed that in Ex. A-l notice issued by the appellant it was specifically stated that Venkata Lakshmi was the wife of the first respondent and mother of respondents 2 and 3 thereby admitting their relationship. THE District Forum concluded as follows : "As has been rightly contended by the learned Counsel for the petitioners, the respondent with a view to put the petitioners to loss has stated in that notice to produce succession certificate whereas the agreement in between the parties was totally different one. When the D.D. was taken on 28.9.1994 in the name of the petitioners 1,2 & 3 for the said amount, the issue of notice on 18.1.1995 asking the petitioners to produce a succession certificate is really an after- thought in order to harass the petitioners".

The learned Counsel for the appellant contends that the respondents are not ''consumers'' as that expression is defined in Section 2(1)(d) of the Consumer Protection Act, 1986 (''the Act'' for short). But that aspect of the matter is covered by the decisions of the National Commission in the case of Neela Vasant Raje, (supra), and in Dhanalakshmi Consolidates Industries Ltd. v. C.S. Menon, III (1993) CPJ 299 (NC)=1986-1995 Consumer page 714 (NS). In the latter case decided earlier Justice B.S. Yadav of the National Commission speaking for the majority, held as follows : "The State Commission has held that the company is rendering financial services. It also receives deposits from customers and pays interest thereon. The consideration for the hiring of the ''service'' is the payment of the deposit for a fixed term so as to enable the company to invest or utilise the money for earning profits. It was, therefore, held that the complainant of each case was consumer within the meaning of Section 2(1)(d) of the Act. We are in full agreement with the observations made by the State Commission".

In the case of Neela Vasant Raje, (supra), also the majority view of the National Commission was as follows: "We are quite clear in our minds that when a company or a firm invites deposits on promise of attractive rates of interest and prompt repayment of principal and interest on the expiry of the stipulated period with full security for the investment in the shape of the assets of the company or firm, it is in essence of an offer by the company of providing to persons interested a safe avenue for investment of their funds with an assurance of prompt repayment and full security of investment. The consideration for the arrangement consists of the fact that the company or firm is enabled to use the funds deposited with it for the purposes of its business. Such a transaction in our opinion is clearly one of providing service for "consideration" and the depositor is clearly a ''consumer'' under the Act".

The question is therefore no longer res integra. In the present case the appellant received the amounts from late Venkata Lakshmi as deposits agreeing to pay interest thereon. That was admitted in Ex. A-l notice dated 18.1.1995 got issued by the appellant to the respondents. The appellant also admitted that the deposit amount had to be paid to the legal heirs of the deceased Venkata Lakshmi. In Ex. A-l notice, as rightly observed by the District Forum, the appellant admitted the relationship of the respondents with the deceased Venkata Lakshmi. In view of that relationship it cannot be disputed that they are the legal heirs of the deceased Venkata Lakshmi. It was never the case of the appellant that some others claimed to be legal heirs of Venkata Lakshmi to the exclusion of the respondents. In Neela Vasant Raje''s case, (supra), the National Commission held that the Act being social welfare legislation principles of benevolent interpretation should be adopted with a view to promote and achieve the object and purpose of the Act i.e., to protect the interest of consumers and suppress the evil sought to be remedied by the statute, namely, the unscrupulous exploitation of consumers. Applying these principles it follows that the respondents are consumers in relation to the appellant in respect of the deposits made by Venkata Lakshmi, they being her legal heirs.

AFTER going through the material on record we are satisfied that the District Forum was right in holding that the case set up by the appellant in the notice Ex. A-l dated 18.1.1995 was an after thought and that they departed from the original agreement arrived at with the respondents that they would be paying to them Rs. 1,66,714/- on their furnishing an Indemnity Bond. As rightly inferred by the District Forum, the fact that the appellant obtained a demand draft for Rs. 1,66,714/- on Indian Overseas bank on 28.9.1994 itself in the name of respondents 1 to 3 clinchingly establishes that on 28.9.1994 itself the appellant agreed to pay the said sum to the respondents on their furnishing an Indemnity Bank. AFTER receiving the Indemnity Bond the appellant mischievously refused to hand over the demand draft to the respondents with a view to make illegal gain by retaining the amount and contending - as stated in Ex. A-l - that no interest would be payable on the amount from 28.9.1994. According to the respondents on 24.9.1994 the amount payable to the respondents towards deposits of late Venkata Lakshmi was arrived at as Rs. 1,66,714/- and on that date itself it was agreed that the appellant would be paying the said sum to the respondents on their furnishing an Indemnity Bond and that on that basis a demand draft for Rs. 1,66,714/- was taken by the appellant on 28.9.1994 in the name of respondents 1 to 3. If really the appellant expressed that it was willing to pay the amount to the respondents only on their producing succession certificate, the appellant does not explain why it had taken a demand draft bearing No. 607483 dated 28.9.1994 on Indian Overseas Bank in the name of respondents 1 to 3. On the other hand, in the counter the stand of the appellant was as follows : "It is also true that it is agreed to pay Rs. 1,66,714/- to the Legal Heirs of late Venkata Rajya Lakshmi, by way of Demand Draft, but not to the petitioners..... the petitioners approached this respondent to pay the amount. Thereupon this respondent expressed its willingness to pay the amount to them subject to production of Succession Certificate.....".

This does not explain why a demand draft was taken by the appellant on 28.9.1994 itself in the name of these respondents without their producing a Succession Certificate and establishing that they were the legal heirs of Venkata Lakshmi. It could be explained only on the basis that the appellant agreed to pay the said sum to the respondents accepting them as legal heirs, on their furnishing an Indemnity Bond, Succession Certificate could not have been obtained by the respondents overnight. In Ex. A- 2 reply notice dated 22.1.1995 got issued by the respondents through their lawyer, it was categorically stated as follows : "Subsequently my clients and your clients settled the amount due on the deposits of late Lakshmi on 24.9.1994 and it was found that an amount of Rs. 1,66,714/- is due. It was agreed that my clients should furnish an Indemnity Bond to your client and your client should take a draft for the amount of Rs. 1,66,714/- in favour of my clients. Accordingly my clients got Indemnity Bond prepared and signed. My clients delivered the Indemnity Bond to your client on 28.9.1994 mentioning the Demand Draft No. Your client also took a demand draft for Rs. l,66,714/- on Indian Overseas Bank on 28.9.1994 in the names of clients 1 to 3. AFTER my clients delivered the Indemnity Bond to your client, your client did not deliver the Draft bearing No. 607483 dated 28.9.1994. Your client kept the draft with him in order to deprive my clients of the enjoyment of the amount and interest thereon. Your clients are aware that my clients are me only legal heirs and there is no need for proof of the same. Your client purposefully did not pay the amount and did not deliver the draft even-though the draft was taken in the name of my clients. The photostat copy of the Indemnity Bond delivered to your client is with my client and my client is enclosing the same for your kind perusal. Thus the allegation in your notice that my clients have to prove that they are the legal heirs is false. Never Rangarao and my client No. 1 were asked to produce any certificate that my clients are the legal heirs. The said allegation is false. Your client having obtained the Indemnity Bond did not pay the amount to my clients. Your client is liable to pay interest @ 24% per annum till date of payment to my clients. The allegation that your client need not pay interest is not correct as your client is investing the amount in his business".

The appellant has not denied that it had obtained a draft on 28.9.1994 in the names of respondents 1 to 3. It is not the case of the appellants that any other person lodged a claim before it contending that he or she was the legal representative of the deceased Venkata Lakshmi or that any one contended that the respondents were not the legal heirs of the deceased. We are therefore satisfied that the District Forum was right in holding that the case set up by the appellant was an afterthought and that it wrongfully withheld the payment of the amount. Thus there was deficiency in service on the part of the appellant. Under the circumstances we are not inclined to interfere with the order of the District Forum permitting the respondents to receive the amount of Rs. 1,66,714/- deposited in the District Forum and directing the appellant to pay interest thereon at the rate of 18% per annum till 14.12.1995, the date on which the amount was deposited in the District Forum. After the appellant approached this Commission by way of the present appeal, it sought stay of the operation of the order of the District Forum in FA.IA. No. 836/1996. Even though the respondents filed fresh Indemnity Bond on 27.6.1996 in favour of the appellant as per the direction of the District Forum and that bond is available in the records of the District Forum, the appellant did not question the sufficiency of the indemnity cover in that bond in the stay petition. In the affidavit in support of the stay petition he did not even make a reference to the Indemnity Bond. Ex parte interim stay was granted by this Commission in FA. IA. No. 836/ 1996 on 31.7.1996. The respondents filed counter affidavit dated 8.10.1996 after they were served with notice in the appeal and in FA. IA. 1257/ 1996 sought vacation of the stay. As the appellant opposed the vacation of stay, this Commission directed the appeal itself to be posted to 22.11.1996 and under these circumstances expressed that they were not inclined to vacate the interim stay. Because of the interim stay of the operation of the order of the District Forum in the O.P. granted on 31.7.1996 at the instance of the appellant, the respondents could not withdraw the amount from the District Forum and did not have the benefit of that amount for more than 1 years. To compensate that, we direct the appellant to pay to the respondents a further sum by way of interest at the rate of 18% per annum on Rs. 1,66,714/- from 31.7.1997 to this date i.e. 15.6.1998. On the facts of the present case we are also not inclined to interfere with the compensation of Rs. 5,000/- awarded to the respondents who were subjected to unnecessary harassment and mental agony. We are therefore inclined to dismiss the appeal. In the result, subject to the above directions, the appeal is dismissed with costs of Rs. 500/-; The interest and costs shall be paid as per the directions of the District Forum and this Commission within 30 days from the date of this order i.e., by 13.7.1998. The District Forum shall permit the respondents to withdraw immediately the sum of Rs. 1.66/714/- lying in deposit with it. Appeal dismissed with costs.