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Judgment
Anand Byrareddy, J.—These petitions though coming on for Preliminary hearing in ''B'' Group, are heard and disposed of by this common order.
The background of the case is as follows:
"Petitioners are similarly aggrieved in the following background:
One Hiresave Ramaiah is said to have actively involved in the freedom movement with the great Indian leader Nethaji Subhash Chandra Bose in his army and he was said to be the Commandant-in-Chief in the Indian National Army and he had supported Nethaji. It is stated that he had settled down at Japan after the end of the Second World War and he had commenced business and had earned much wealth. Having a strong admiration for India, he had deposited his money earned in the form of NRI deposits in India and most of the deposits were in the State Bank of India kept in various branches all over India. Hiresave Ramaiah being a bachelor is said to have died issueless without leaving any Class-I heirs. There were Class-II heirs, the petitioners herein who had instituted a suit in O.S. No. 5801/2000 and it was ultimately compromised as between the Class-II heirs as per the compromise decree dated 18.04.2001. However, it transpires that some of the Class-II heirs had been left out of the proceedings, who in turn filed proceedings before this Court in its appellate jurisdiction in R.F.A. 1495/2005 C/W. R.F.A. 1464/2006. Those appeals were disposed of again by a compromise decree between the Class-II heirs. There was yet another claim by a person claiming to be the widow of late Hiresave Ramaiah, before the Allahabad High Court and the matter was dismissed."
Pursuant to the judgment of this Court in R.F.A. 1495/2005, the petitioners had approached the first respondent seeking payment of the amounts covered under the NRI bonds, which were in deposit. The Bank in turn had released the amount with interest accrued up to the date of maturity of the bonds, but they had not paid any interest for the subsequent period. One of the Class-II heirs had made a representation requesting for payment of interest after the maturity period. The Bank had issued a letter stating that there was no such condition under which interest would be paid after the maturity date. It is this which is the subject matter of the present petitions.
In response to the petition, Respondents 1 and 2 had entered appearance through counsel and Respondent No. 1 has subsequently pleaded to state that the Reserve Bank of India, in the year 1988 permitted the State Bank of India in terms of an approval of the scheme of the Government of India to issue 7 years cumulative U.S. Dollar denominated non-repayable NRI bonds to Non-resident Indians. As per para 2(ii) of the sanction letter, it was stated that no interest accrued on the bonds after the date of maturity and as per paragraph 8 of the letter, amount collected so could not be utilized or kept with the respondent -Bank and it should be transferred to the account of the Reserve Bank of India maintained with the Federal Reserve, New York. The said letter dated 23.09.1988 was furnished by the bank in which it is stated that if the bonds are presented for encashment after the maturity date, the conversion rate which was prevalent on the date of maturity would be applied and no interest will accrue on the bonds after the date of maturity. It is the scheme for issuance of NRI bonds, 1988 which was floated by the Government of India acting as an agent of the RBI. It is clear from clause mentioned in the scheme that no interest would accrue after the date of maturity.
Late Hiresave Ramaiah had purchased 79 N.R.I. bonds of U.S. Dollars 10,000 each aggregating to USD 7,90,000 and the said bond matured on 15.03.1996. The bond holder had died on 14.11.1989 without leaving any Class-I heirs. Some of the Class-II heirs as already stated, has filed proceedings and it is after the culmination of the appeal in R.F.A. 1495/2005 and RFA 1464/2006 that an application was filed seeking release of the amounts, which are duly released with interest upto the date of maturity. It is in this vein that Respondent No. 1 has sought to deny its liability to pay any interest after the date of maturity period of the said bonds.
The Reserve Bank of India, the third respondent has on similar lines denied its liability to pay any interest, as the scheme does not provide for payment of interest beyond the maturity period.
The learned counsel for the petitioner by way of a rejoinder would seek to draw attention to a so-called circular of the Reserve Bank of India, which the counsel for the Reserve Bank of India vehemently disputes as being a circular. It is more in the nature of a note indicating the post-maturity interest with reference to relief bonds and insofar as the NRI bonds, 1988 are concerned, there is no such consideration of any postmaturity interest and on the face of the bonds which indicate that there would be no post-maturity interest and hence, on the basis of what is indicated in the bonds, the question of payment of interest by way of post-maturity, does not arise.
Therefore, the learned counsel for the petitioner in furtherance of his arguments in line with the petition averments, has drawn attention to a master circular of the Reserve Bank of India dated 1.7.2011 and particularly, draws attention to Para 5.8.5, 5.8.7 and 5.8.9 as under:
"5.8.5 Payment of interest on fixed deposit Method of calculation of interest:
Indian Banks'' Association (IBA) Code for Banking Practice has been issued by IBA for uniform adoption by the Member Banks. The Code is intended to promote good banking practices by setting out minimum standards, which Member Banks should follow in their dealings with customers. IBA, for the purpose of calculation of interest on domestic term deposit, has prescribed that on deposits repayable in less than three months or where the terminal quarter is incomplete, interest should be paid proportionately for the actual number of days reckoning the year at 365 days. Some banks are adopting the method of reckoning the year at 366 days in a Leap year and 365 days in other years. While banks are free to adopt their methodology, they should provide information to their depositors about the manner of calculation of interest appropriately while accepting the deposits and display the same at their branches.
5.8.7. Renewal of Overdue deposits
All aspects concerning renewal of overdue deposits may be decided by individual banks subject to their Board laying down a transparent policy in this regard and the customers being notified of the terms and conditions of renewal including interest rates, at the time of acceptance of deposit. The policy should be non-discretionary and non-discriminatory.
5.8.9 Payment of interest on accounts frozen by banks:
Banks are at times required to freeze the accounts of customers based on the orders of the enforcement authorities. The issue of payment of interest on such frozen accounts was examined in consultation with Indian Banks'' Association and banks advised to follow the procedure detailed below in the case of Term Deposit Accounts frozen by the enforcement authorities:
(i) A request letter may be obtained from the customer on maturity. While obtaining the request letter from the depositor for renewal, banks should also advise him to indicate the term for which the deposit is to be renewed. In case the depositor does not exercise his option of choosing the term for renewal, banks may renew the same for a term equal to the original term.
(ii) No new receipt is required to be issued. However, suitable note may be made regarding renewal in the deposit ledger.
(iii) Renewal of deposit may be advised by registered letter/speed post/courier service to the concerned Government department under advice to the depositor. In the advice to the depositor, the rate of interest at which the deposit is renewed should also be mentioned.
(iv) If overdue period does not exceed 14 days on the date of receipt of the request letter, renewal may be done from the date of maturity. If it exceeds 14 days, banks may pay interest for the overdue period as per the policy adopted by them, and keep it in a separate interest free sub-account which should be released when the original fixed deposit is released.
Further, with regard to the savings bank accounts frozen by the enforcement authorities, banks may continue to credit the interest to the account on a regular basis."
And would submit that by the token of reasoning that the first and second respondents had the benefit of the value of the bonds post-maturity, it was duty bound to at least part with the proceeds in a Savings Bank of the petitioner as was requested by them. The Bank however did not choose to do so and since the respondents had the benefit of the amount, it would be in the interest of justice for this Court to direct that nominal interest at least be paid on the amount that they were to release in favour of the petitioner.
This is vehemently disputed by the learned counsel for the respondents.
The fact of the matter is that the writ petitions itself are misconceived. It was appropriate for the petitioners to have filed a suit in raising disputed contentions and seeking to urge that this Court grant them relief by way of directing the respondents to pay interest on the amounts covered under the bonds. On facts, it is noticed as rightly contended by the learned counsel appearing for the SBI that the terms and conditions of the bonds did not contemplate payment of interest post-maturity and the question of paying any such interest did not arise. Therefore, since the petitioners would insist that this Court addresses the disputed controversy, this Court can only prima facie hold that the terms and conditions of the bond did not prescribe for payment of interest. The contention that the Bank had the benefit of the money and therefore, it would follow that the benefit of interest should be passed on to the petitioners, also cannot be accepted in the light of the further contention of the Bank that on maturity, it was required that the proceeds would be kept with the Federal Reserve in the USA and that there would be no such benefit of the proceeds. This being a disputed question of fact, it was appropriate for it to have been adjudicated in a suit.
In any event, since the petitioners had insisted that this Court arrive at its conclusion, in the opinion of this Court, there is no merit in the writ petitions and the same are dismissed.