NEELA VASANTRAJE vs AMOGH INDUSTRIES

IN this Revision Petition, the complainant in Original Complaint No. PDF-64 of 1990 on the file of the District Consumer Redressal Forum, Pune has challenged the legality, regularity and correctness of the orders passed by the State Commission and the District Forum dismissing her complaint petition. The District Forum as well as the State Commission declined to adjudicate upon the merits of the complaint petition holding that when a company or a firm invites deposits from the public for the purpose of using the money for its business on promise of giving attractive rates of interest with security of investment and prompt repayment of the principal after the stipulated term, the depositor does not become a "consumer" under the Act and the company or firm is not providing a ''service'' as contemplated under the Act and hence the Consumer Forums constituted under the Act have no jurisdiction to entertain and adjudicate upon such a dispute between the depositors and the company or firm.

THE complainant is a middle class woman who had deposited her hard earned savings with the respondent-firm in response to an invitation for deposits issued by the firm promising good rate of interest and prompt repayment of principal and interest with full security for the investment. Even after her two deposits matured for payment, the opposite party did not repay to her the principal and interest and hence the complaint was filed by the revision petitioner before the State Commission, Maharashtra seeking the reliefs by way of compensation inclusive of Principal, interest and damages. THE State Commission has taken the view that the opposite party had not undertaken to render any sort of service for consideration to the complainant and the transaction between the parties was only one of depositing money in Fixed Deposits for earning the interest. For coming to the said conclusion, the State-Commission lias relied on the dictionary meaning of the expression "financing" occurring in the definition of the word ''service'' in Section 2(o) of the Act and held that financing would only mean to provide the capital to a person or an enterprise. In the option of the State Commission "merely returning the amount of deposit or payment of interest thereupon the transaction cannot be considered as a contract for hiring of a service". It is on the aforementioned ground, that the State Commission has affirmed the order passed by the District Forum holding that it had no jurisdiction to adjudicate upon the complaint filed by the revision petitioner. We are unable to agree with the reasoning and conclusion concurrently recorded by the State Commission and the District Forum. In interpreting a social welfare legislation one should not make a narrow approach but should be guided by the principles of ''benevolent interpretation'' which will help to promote and achieve the object and purpose of the Act namely, to protect the interests of consumers and suppress the evil sought to be remedied by the statute namely the unscrupulous exploitation of consumers. The main part of the definition of the expression ''service'' is couched in the widest possible language and it expressly covers "service of any description" other than any service rendered ''free of charge'' or ''under a contract of personal service''. The mere fact that a particular form of arrangement for provision of a facility does not fall within any of the specified categories enumerated in the inclusive part of the definition is absolutely of no consequence as long as the arrangement entered into between the parties is one of rendering ''service'' as that expression is generally understood in common parlance. 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. In construing the scope of a social welfare enactment we have to take not of the current state of our society and the ground realities of life confronting the common people. To be offered a safe avenue for investing one''s funds with assurance of reasonable return in the shape of interest and sound security for repayment is certainly to be regarded as a "service" under the contemporary conditions prevailing in our society. It is a well known fact which we cannot loose sight of that it is common practice with many hundreds of thousands of middle class families and retired pensioners to invest their funds in such schemes of deposits launched by companies and firms and it would not be right to take a hypertechnical view regarding such an arrangement and deny relief under the Act to these depositors in the event of the company or firm failing to discharge their obligations in the matter of repayment of the principal and interest on the basis of the arrangement of service entered into between the parties. The default on the part of the company or firm to carry out its obligations to repay the principal and/or interest constitutes, in our opinion ''deficiency'' in service so as to warrant the filing of a complaint before a Consumer Forum seeking relief under the Act.

While, under the Act as it stood prior to its amendment by the Ordinance of 1993, the only relief of such arrangement of service was the award of compensation, the situation has substantially changed by reason of the amendment introduced by the Ordinance in Section 14 of the Act and a direction can now be issued by the Consumer Redressal Forum calling upon the opposite party to rectify the defect or deficiency in the service. In other words, an order directing payment of the outstanding amounts due to the depositor can now be passed under the provisions of Section 14 of the Consumer Protection Act.

IN the light of the foregoing discussion we allow this Revision Petition, set aside the orders of the State Commission and the District Forum and remand the case to the District Forum, Pune with a direction to dispose of the complaint petition No. PDF-64 of 1990 on the merits in the light of the conclusion recorded by us in this order on the question of jurisdiction. Revision Petitioner will be entitled to recover from the respondents herein Rupees one thousand by way of costs.

Y. Krishan, Member-The essential features of a scheme of deposits are that a certain amount is deposited by a depositor with a depository for a specified period of time; in return the depositor gets interest either periodically or cumulatively at the end of the maturity period of the deposit. The amount deposited i.e. the principal is also refundable on maturity. So the two essential features of a deposit scheme are (a) deposit; and (b) interest paid thereon. Nature of Deposits: -As would be already evident from what I have stated above, deposits are in the nature of loans. According to the ''Oxford Companion of Law'' "Deposit" inter alia means "sums held to a person''s credit by a Bank or building society". It constitutes a claim on the bank or the depository. This definition of ''deposit'' has necessarily to be enlarged to include deposits mobilised by financing companies for investment and also by corporations to meet their own needs. At the macro level deposits are by individuals. At the macro level, the deposits are also made by institutions with the banks, the banks in turn have also to make deposits with the Central Bank viz. The Reserve Bank of India. In all these cases the deposits earn interest. In case it is held that a reasonable return in the shape of interest and repayment of the principal, the amount deposited, are deemed to be ''service'' under the Consumer Protection Act, 1986, it would necessaryily raise a wider question whether all deposits and advances i.e. loan transactions between individuals, institutions including between banks and corporate bodies are also deemed to involve service to the depositors and creditors.

THE question in interest on deposits has been dealt with by me in detail in my order in a batch of cases Dhanalakshmi Consolidates Industries Ltd. v. C. S. Menon & Etc. Dt 21.5.1993 III (1993) CPJ 299 (NC) First Appeal No. 157, 175 to 181 of 1992. In brief, interest is the price or consideration paid to a creditor by a debtor or a loanee, by a depository to a depositor, for utilisation of former''s funds. As already mentioned above, interest may be paid either at periodical intervals viz. 1, 3, 6 & 12 months or cumulatively. Interest rates also very due to host of factors apart from demand for and supply of funds. Other factors are the period of the deposits, security and risk involved, the purposes of which the deposits or loans are made, economic policy of Government for providing cheap credit or denying credit for speculative purposes etc. This would also indicate that interest is in the nature not of service but of consideration for raising funds. It is noteworthy that in Islamic Law receiving interest is prohibited. This could not be, if it were in the nature of service. I, therefore, uphold the order of the State Commission and dismiss the Revision Petition. Revision Petition dismissed.