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PETITIONER: SOVINTORG (INDIA )LTD.

       Vs.

RESPONDENT: STATE BANK OF INDIA, NEW DELHI

DATE OF JUDGMENT:       11/08/1999

BENCH: R.P.Sethi, S.Saghir Ahmed

JUDGMENT:

SETHI,J.

     Not  satisfied with the majority view of the  National Consumer  Disputes Redressal Commission (hereinafter  called "the  National  Commission") but allured by the  observation made  by  one of its members (Bala Krishna Eradi,  J.),  the appellant  has  moved this Court for modifying the  majority order  of  the  National Commission with  direction  to  the respondent   to   pay  the   compensation   for   wrongfully withholding  the  amount and the interest at the  commercial rates as then prevalent.  The facts of the case are that the appellant-company    had   a    bank    account   with   the respondent-bank  wherein in the month of June, 1983 a cheque for  Rs.   One  lakh  was deposited  by  the  appellant  for collection  and  the proceeds thereof to be credited to  its account.   The appellant alleged that though the proceeds of the cheque were collected on June 17, 1983 yet they were not deposited  in its account for over a period of seven  years. The  appellant  filed a complaint before the State  Consumer Disputes Redressal Commission (hereinafter called "the State Commission")  constituted under the Consumer Protection Act, 1986  (hereinafter  called ’The Act’) detailing therein  its entitlement  to the following amounts:  (a) Principal amount deposited with the Defendant on 15.5.83 Rs.1,00,000/-

     (b)  Normal  and  penal  interest   @  24%  per  annum quarterly   compounded  as  per   standard  usual   practice prevalent  in  all Nationalised Banks w.e.f.   18.6.83  till 31.10.89 Rs.3,26,000/-

     (c)  Compensation for business losses inflicted on the petitioner  on account of above criminal acts/omissions  and commissions by the deft.  Rs.2,00,000/-

     (d)  Nominal damages/general damages/ special damages/ substantial  damages including for loss of prestige,  status and mental agony, suffered by the petitioner company and its Managing   Director.    Rs.2,00,000/-  --------------------- Total Rs.  8,26,000/- --------------------

     The  State Commission partly allowed the complaint  by directing  the respondent to pay Rs.  One lakh with interest at the rate of 12% p .a.  with quarterly rests from the date

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when the amount was received till the date of payment within the  time prescribed by it.  As noticed earlier the majority of  the National Commission confirmed the order of the State Commission.   Hence this appeal.  Learned counsel  appearing for  the  appellant  has vehemently argued  that  the  State Commission  as  well  as the National  Commission  were  not justified  in rejecting the claim of the appellant in so far as  it  pertained  to payment of the  compensation  and  the interest  at  the rate of 24% per annum.  Reliance  is  also placed  on  the  provisions  of  Section  34  of  the  Civil Procedure Code.  It is contended that in view of the finding of  one  of  the  members of the  National  Commission,  the negligence of the respondent stood proved which entitled the appellant  to  the payment of the amount claimed before  the State Commission.  After hearing the learned counsel for the parties  and  perusing the record, we have noticed that  the State  Commission  as well as the National  Commission  have concurrently   found  that  the   amount  realised  by   the collection  of  cheque  in question could not  be  deposited apparently  on  the  basis of an understanding  between  the parties which authorised the bank to keep the same as margin money  for the guarantee furnished by the Bank on behalf  of the  complainant company to the Chief Controller of  Exports and  Imports.  It has been found that the bank was not wrong in  having  retained  the said amount in its  custody.   The appellant  was  further found to have not proved as to  from which  date  the  contract for guarantee  stood  terminated. However,  the said contract was found to be in force as late as  in  1987.  In the absence of any negligence, we  do  not find  any  substance in the submission made by  the  learned counsel  for the appellant to modify the orders of the State Commission and National Commission for directing the payment of  compensation on allegedly wrong retention of the  amount as  was  submitted  in  the  complaint.   Relying  upon  the province  of  Section  34 of the Civil Procedure  Code,  the learned  counsel for the appellant submitted that  appellant was entitled to the payment of interest at the rate at which moneys  are  lent  or  advanced  by  Nationalised  Banks  in relation  to commercial transactions.  Referring to I.A.   2 filed  in  this Court and Banking Law and Practice in  India issued  in  1991, she had contended that the  appellant  was entitled  to the payment of interest minimum at the rate  of 19.4  per  cent per annum.  The general submission  made  in this  behalf cannot be accepted in view of the provision  of Section14  of  the Act.  There was no contract  between  the parties  regarding payment of interest on delayed deposit or on  account  of delay on the part of the opposite  party  to render  the  services.   Interest cannot  be  claimed  under Section  34  of the Civil Procedure Code as  its  provisions have   not   been  specifically   made  applicable  to   the proceedings  under  the  Act.  We, however,  find  that  the general  provision  of  the  Section  34  being  based  upon justice,  equity  and  good conscious  would  authorise  the Redressal  Forums  and  Commissions to also  grant  interest appropriately under the circumstance of each case.  Interest may  also  be awarded in lieu of compensation or damages  in appropriate  cases.   The  interest can also be  awarded  on equitable  grounds  as  was held by this Court  in  Satinder Singh and Ors.  Vs.  Amrao Singh & Ors.  (1961 (3) SCR 676). Referring  to  the province of the Interest Act of 1839,  in relation  to  the  compulsory acquisition of land  where  no specific  provision  is  made  for grant  for  awarding  the interest,  the  Court  held:   "In this  connection  we  may incidentally  refer  to Interest Act, 1839 (XXXII of  1839). Section  2  of this Act confers power on the Court to  allow

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interest  in cases specified therein, but the proviso to the said  section makes it clear that interest shall be  payable in  all  cases in which it is now payable by law.  In  other words,  the operative provisions of s.  1 of the said Act do not  mean  that where interest was otherwise payable by  law Court’s  power  to award such interest is taken  away.   The power  to  award interest on equitable grounds or under  any other  provisions  of  the  law is expressly  saved  by  the proviso to s.  1.  This question was considered by the Privy Council  in  Bengal Nagpur Railway Co.  Ltd.   V.   Ruttanji Ramji  (1938 L.R.  65 I.A.66).  Referring to the proviso  to s.1  of  the  Act the Privy Council observed  "this  proviso applies  to cases in which the Court of equity exercises its jurisdiction  to allow interest." We have already seen  that the  right  to  receive interest in lieu  of  possession  of immovable property taken away either by private treaty or by compulsory  acquisition  is generally regarded  by  judicial decisions as an equitable right;  and so, the proviso to s.1 of  the  Interest  Act  saves   the  said  right.   We  must accordingly  hold  that  the  High Court  was  in  error  in rejecting the claimants’ case for the payment of interest on compensation  amount, and so we direct that the said  amount should  carry  interest at 4% per annum from the  date  when respondent  2 took possession of the claimants’ lands to the date   on  which  it  deposited  or  paid  the   amount   of compensation to them."

     To  the same effect is the judgment in Laxmichand  Vs. Indore  Improvement  Trust, Indore and & Ors.  (AIR 1975  SC 1303).   The  State  Commission  as  well  as  the  National Commission  were,  therefore,  justified   in  awarding  the interest  to  the appellant but in the circumstances of  the case  we feel that grant of interest at the rate of 12%  was inadequate  as admittedly the appellant was deprived of  the user  of  a sum of Rs.  One lakh for over a period of  seven years.   During  the aforesaid period, the appellant had  to suffer  the winding up proceedings under the Companies  Act, allegedly  on the ground of financial crunch.  We are of the opinion  that  awarding interest at the rate of 15 per  cent per  annum would have served the ends of justice.  Under the facts  and  circumstances of the case the appeal  is  partly allowed  by modifying the orders of the State Commission  as well  as  the  National Commission with direction  that  the appellant  shall be entitled to the payment of Rs.  One lakh with  interest  at the rate of 15% per annum with  quarterly rests  from the date when the amount was received by it till the  date  of  payment.   The difference of  the  amount  on account of enhancement of the rate of interest shall be paid to  the appellant within a period of six weeks from the date of this judgment.