INDIAN OVERSEAS BANK vs KLEBERT PIERRE

THE opposite party appeals.

THE case of the complainant was as follows: He made a fixed deposit with 9.5% of interest with the opposite party on 16.7.1990 of an amount of 3,6701.33 US Dollars which was renewed with interest, on 20.1.1992 with interest @ 10.5%, on 19.1.1993 with interest @ 5%, on 17.1.1994 with interest @ 4.5%. It was ultimately renewed on 18.1.1995 for an amount of 51,397.18 US Dollars with interest @ 6.5% adding the interest accrued as calculated by the Bank. When the last deposit was in force the opposite party issued a letter informing the complainant that while renewing the deposit during the year 1992 a mistake crept in favour of the depositor while calculating the interest. THE complainant objected for the reduction of the amount deposited by him and closed the account with the opposite party. He then approached the District Forum with the following prayers: (1) By directing the opposite party to pay the actual loss which is a sum of USD 7,392.89 as damages to the loss sustained by the complainant on account of the deficiency in service by the opposite party; (2) Direct the opposite party to pay a sum of Rs. 25,000/- as exemplary damages for mental agony, unilateral and arbitrary deductions arising out of the loss of the difference in the interest amounting to USD 7,392.89 to the complainant.

The version of the opposite party was as follows: There is no deficiency in service on the part of the opposite party which has only carried out the instructions issued by the Reserve Bank of India as per which the interest @ 6.75% p.a. only should have been paid whereas on account of error interest at the rate of 10.5% p.a. was given. That mistake was pointed out by the internal auditors of the opposite party in 1995. When there is wrong payment the bankers can recover the same as per law. The act of the Bank in debiting to the account of the complainant the excess amount paid to him is permissible under law.

The District Forum after considering the rival claims of the parties directed the opposite party to pay USD 2,003.91 with interest @ 6.5% from 19.1.1996 till the date of payment and dismissed the remaining claims. There is no appeal by the complainant. This appeal is preferred by the opposite party.

THE learned Counsel for the appellant would argue that as per Section 23 of the Indian Contract Act the rate of interest wrongly entered in the receipt of the fixed deposit made in 1992 cannot be enforced. He would also argue that any money paid to a person by mistake is refundable as per Section 72 of the Indian Contract Act. THE District Forum has rejected these arguments and has given elaborate reasons. We do not have to examine them, because we do not find that these contentions have any relevance for the disposal of the case pending before us. THE proceeding before the machinery created under the Consumer Protection Act is not on the basis of the Indian Contract Act. If the parties wanted to agitate their rights as per the Indian Contract Act, it is open to them to approach the appropriate forum. What we have to find out is whether the deficiency pleaded is established or not? It is true that in the definition of "deficiency" the word "contract" is also mentioned, but one has to read the whole definition to get the full import of the task of the Forum. That definition runs as follows: " "Deficiency" means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service."

To ascertain whether there is deficiency or not the performance has to be compared to the standard performance as provided by law or promised by a formal contract or in any other manner. So the contract is only one of the mode of determination of standard performance. The contract, if any, has to be looked into only to ascertain the standard of performance, but the law of contract has no other place for the purpose of determining whether there is deficiency or not. In this case, there is no formal contract. It is stated by the opposite party that the rate of interest was not properly indicated at the time of the renewal of the deposit in 1992. The deposit was renewed in 1993,1994 and 1995 adding each time the interest earned. So the result of the mistake was repeated thrice. The fact of deficiency in service arising out of negligence is clearly established.

THE learned Counsel for the opposite party would state that as per Section 171 of the Indian Contract Act the Bank was entitled to retain as security for a general balance of account any goods bailed to them. THEy would say that they made use of that provision and they retained the amount which according to them was over credited in favour of the complainant from the last deposit. THE District Forum has given reason why the Bank ought not have acted as it did. Let us add that when the Bank discovered the error after renewing the deposit thrice on the basis of their wrong calculation, the normal course would have been to bring it first to the notice of the customer, to reach a gentleman''s agreement or to pass order of recovery of the amount from the deposits in their hand after giving the opportunity for the customer of being heard with the right to appeal to higher Bank authorities for waiver or to file a suit for having the respective contentions of the parties adjudicated. Instead of following that normal course, the Bank acted high-handedly in calling upon the complainant to forward the last deposit receipt for correction and retransmission. This is total lack of manner in banking service which aggravates the initial deficiency. The learned Counsel for the opposite party would then contend that an amount of compensation of two thousand and odd USD ordered by the District Forum was excessive for the deficiency in service in the form of wrong calculation of interest and that the complainant has not given any evidence of the loss sustained by him. It is true that the complainant has not disclosed the details of his loss. He claimed USD 7,000 and odd for loss and Rs. 25.000/- for damages for mental agony, unilateral and arbitrary deduction. The District Forum allowed only USD 2003 and odd as compensation and rejected the balance of claims. If the complainant has tendered evidence of the loss and damage, he would have perhaps obtained more. We can compute the damages which an ordinary man would have suffered in the same circumstances. Further mental annoyance cannot be valued accurately. We consider that a compensation of 2,003.91 USD for a deposit which was initially of USD 36,000 and odd, and which was ultimately of USD 51,000 and odd is not excessive. We do not therefore think it proper to interfere with the order of the District Forum. In the result, the appeal is dismissed. In the circumstances of the case, each party shall bear his own cost. Appeal dismissed.