Sakthi Finance Ltd. vs J.ARUNA (Minor)

THIS appeal is directed against the order dated the 31st day of March, 1998 in O.P. No. 201/96 on the file of the District Consumer Disputes Redressal Forum, Coimbatore.

THE appellant is the opposite party while the respondent is the complainant. The opposite party is a financial institution. In pursuance of the advertisement made by the opposite party inviting deposits the complainant is stated to have deposited a sum of Rs. 15,000/- on 1.8.1987 under Fixed Deposit Receipt No. 002-C 00326, the date of maturity being 1.8.1988 and the maturity value being Rs. 17,235/-.

In the month of October, 1987, the Officials of the Income-tax Department of Government of India was stated to have conducted a raid in the premises of the complainant''s relative one Mr. A. James and seized several fixed deposit receipts for the deposits made by the opposite party including the above said deposit receipt of the complainant as of all those deposit amounts belonged to the said A. James. The Department immediately attached all those amounts that were lying with the opposite party.

THE amount covered by the abovesaid deposit belonged to the complainant absolutely and did not form part of the assets of A. James to whom the receipts were merely entrusted for safe custody but in view of the attachment effected by the Income Tax Department the opposite party refused to pay the amount to the complainant after maturity of the deposit. THE opposite party promised to renew the deposits and pay the amount to the complainant immediately after the attachments were raised. The Income Tax Department started assessment proceedings and a settlement had been arrived on 18.1.1994. The claim of the Department had been settled finally and the attachment had been raised. So the complainant is entitled to the maturity amounts due on the deposit receipts with subsequent interest @ 18% p.a. from the date of maturity till payment.

INSPITE of repeated demands the opposite party had not made any payment. The contention of the opposite party that interest is not payable on the matured amounts is not legally tenable. Failure of the opposite party to refund the maturity amount with subsequent interest thereon amounts to gross deficiency in service within the meaning of Section 2(1)(g) of the Consumer Protection Act, 1986. The complainant is entitled to a sum of Rs. 17,235/- as maturity value under the fixed deposit and a sum of Rs. 23,009/- as interest on the maturity amount @ 18% p.a. from 1.8.1988 till 31.12.1995 making in all a sum of Rs. 40,244/-. Hence the complainant sought a direction to the opposite party to pay him the said sum of Rs. 40,244/- with subsequent interest thereon @ 18% p.a. from the date of complaint till the date of payment and a sum of Rs. 5,000/- as compensation and also costs of the complaint. The opposite party filed objections reflected as below :

THE deposit in question matured for payment as early as in the year 1987-88 and hence the present complaint is time barred. Mr. James made certain deposits with the opposite party including the deposit concerned in this complaint on various dates in the year 1986-87 each of them being from one year and the said deposits were matured during 1987-88. THEn on 19.7.1987 and 20.8.1987, the Income-tax Authorities, Madras/Coimbatore raided the premises of James and seized various deposit receipts including one concerned in the complaint. On 16.11.1987, the Authorities issued prohibitory orders under Section 132, Clause (3) of the Income-tax Act, 1961, to the opposite party prohibiting him from making payment to the said James or any other person in respect of the said deposit until further orders.

SUSBEQUENT to 16.11.1987, the opposite party held the amounts covered by the deposits of James and the complainant for and on behalf of the Income-tax Department solely as their Trustee/Garnishee. After due enquiry, and several proceedings between James and the Department, it was ultimately decided by the Department that the amounts held over by James for and on behalf of the Income-tax Department should be appropriated by the Department. In consonance with the direction of the Department, the opposite party remitted the amounts to the Department on 21.8.1990 and on other dates as and when specific orders were received from the Department. The deposit concerned in this case was withheld as per the prohibitory orders issued by the Department.

Under the contract the opposite party is bound to pay interest only till the date of maturity and not for any further perid, unless the deposit were duly and properly renewed. As the Income-tax Department has issued prohibitory orders, the opposite party could not deal with the deposits. The opposite party never agreed to renew the deposits automatically. The complainant is not entitled to any interest subsequent to the date of maturity, even as per the conditions in the application form for acceptance and renewal of deposits. For renewing the deposits the complainant had to produce the original fixed deposit receipt duly discharged. In the case on hand the original discharge receipts was with the Income-tax Department and the complainant had not produced the original deposit receipts alongwith the order of the Income-tax Department raising the prohibitory orders without which it was not possible for the opposite party to make payments. To the best of knowledge of the opposite party the prohibitory orders issued by the Department are still in force. The Department had not directed the opposite party to transfer the deposit concerned in this case and the amount is still being held by the opposite party as trustee on behalf of the Income-tax Department.

THE complainant is not entitled to subsequent interest @ 18% from the date of maturity till the date of payment as the same is repugnant to the terms and conditions of acceptance and renewal of deposits and in violation of the directions issued by the Reserve Bank of India in respect of the non-banking financial companies. The complainant is not a consumer under Section 2(1)(d)(ii) of the Consumer Protection Act as there was no hiring of services of the opposite party by the complainant. The opposite party had acted as per the directions of the Income-tax Department. So no deficiency in service can be attributed to the opposite party.

THE complainant has not come to Court with clean hands. THE complainant has not produced the original deposit receipts duly discharged or the order from the Income-tax Department raising the attachment and is aiming to get unjust enrichment at the expenses of the opposite party. THE opposite party is not liable to compensate the complainant or for any of the reliefs claimed. Hence the complaint has to be dismissed with compensatory costs. The Forum below after taking into consideration the materials placed on record and of course after hearing the projections of hues of views by the respective parties through their respective Counsel ultimately passed an order in paragraph 11 as below : "In the result, this Forum doth order and direct that the opposite party should, within two months from the date receipt of a copy of this order, pay to the complainant a sum of Rs. 17,235/- (Rupees seventeen thousand two hundred and thirty five only) with interest thereon at the rate of 18% p.a. from 1.8.1988 till date of payment and a sum of Rs. 500/- (Rupees five hundred only) as costs in this complaint failing which suitable penal action will be taken against the opposite party as per provisions of law."

Aggrieved by the orders above the opposite party resorted to the present action.

THE respondent/complainant though served with the process however chose to remain absent and she did not engage a Counsel of her choice.

WHEN the matter came up for hearing on 20.10.1999 the respondent/complainant was absent. Though the opposite party is represented by a Counsel of his choice learned Counsel Mr. T. Ramalingam, yet, he was not present in Court and no representation was made on his behalf. On that date the matter was adjourned to today i.e., specifically stating that if the learned Counsel is absent on the adjourned date namely the appeal will be disposed of on merits on perusal of the records. Today also learned Counsel for the appellant is absent. Therefore it goes without saying that we are to dispose of the appeal on merits of course after perusing the materials placed on record. Even at the outset, we want to point out that there are no merits in this appeal that warrants interference with the order of the Forum below. On perusal of the order we are able to perceive that the settlement had been effected on 18.1.1994 with the Department in respect of the dues to be paid by one James. Further, we are also able to perceive that the deposit of the complainant had not been transferred to the Department to off-set the tax liability of James.

No doubt true it is, that there has been a prohibitory order by the Income-tax Department prohibiting the opposite party to make any amount in respect of any deposits seized by them inclusive of the deposit made by the complainant. The moment the settlement had been finally made on 18.1.1994 and lifting the order of prohibition by the Income-tax Department as seen from the order of the Forum below, there is no reason for the opposite party to withhold the amount covered under the deposit and the withholding of the deposit we feel definitely deficiency in service on the part of the opposite party.

THE Consumer Protection Act, 1986, (the former enactment) is a general law and the Income-tax Act, 1961 (the latter enactment) is a special law. Section 3 of the former enactment prescribes "the provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force". By virtue of this provision, the provisions of the Income-tax Act as a special enactment and that enactment must be allowed to operate in addition to the provisions of the former enactment. THE moment the claims of the Income-tax Department had been finally settled from out of the deposit amounts of James as we have indicated earlier on 18.1.1994 and the prohibitory orders had been lifted, the complainant is entitled to the refund of the deposit amount to him and the non-refund of the deposit amount as already indicated is definitely deficiency in service on the part of the opposite parties. It is not as if even during the period of attachment the opposite party virtually transferred the cash amount to the Income-tax Department and he had not the benefit of the user of the money. The sordid act is that the opposite party had the possession of the amount covered by the deposit and utilised the same. In such state of affairs, he has to pay interest and the Forum below awarded interest @ 18% p.a. which cannot be stated to be excessive in commercial transactions. But no doubt the Forum below awarded interest on and from 1.8.1988. Such ordering of interest from 1.8.1988 cannot be ordered since the settlement as we have already indicated had reached only on 18.1.1994. In such circumstances, the order of the Forum below awarding interest @ 18% on and from 1.8.1988 deserves to be set aside and instead the opposite party is directed to pay interest on a sum of Rs. 17,235/- @ 18% p.a. on and from 18.1.1994 the date on which settlement had been reached between the Income-tax Department and the opposite party. The vociferous contention of the opposite party that the claim is barred by limitation cannot at all be acceded to on the facts and in the circumstances of the case. Once the prohibitory order under the Income-tax Act, 1961, comes into force and until it is lifted nothing can be done by the opposite party. The period of limitation will commence only from 18.1.1994 the date on which the settlement had been reached between the Income-tax Department and the opposite party and not earlier to that. Since the complaint had been filed in the year 1996 within the period contemplated by the Act, it cannot be stated that the claim is barred by limitation.

THE appeal stands allowed to the extent as indicated above. In fine, the appeal is partly allowed modifying the order of the Forum below in directing the opposite party to pay to the complainant a sum of Rs. 17,235/- within interest @ 18% p.a. on and from 18.1.1994. The appeal shall stands dismissed in other respects. We however make no order as to costs on the facts and in the circumstances of the case. Appeal partly allowed.