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CASE NO.: Appeal (civil)  2982 of 2006

PETITIONER: Standard Chartered Bank Ltd.

RESPONDENT: Dr. B.N. Raman

DATE OF JUDGMENT: 14/07/2006

BENCH: ARIJIT PASAYAT & S.H. KAPADIA

JUDGMENT: J U D G M E N T [Arising out of S.L.P.(C) No.19723 of 2004]

Kapadia, J.

       Leave granted.

       This civil appeal, by grant of special leave, is filed by  Standard Chartered Bank Ltd. against order dated  14.7.2004 passed by National Consumer Disputes  Redressal Commission (for short ’National Commission’)  dismissing the bank’s appeal and confirming the decree  passed by the State Consumer Disputes Redressal  Commission, New Delhi (for short ’State Commission’)  under Consumer Protection Act, 1986 (for short ’the Act’).            Respondent herein was a non-resident Indian  employed as a professor of Medical Physiology in the  University of Libya from 1975 to 1980.  Thereafter, he  stayed in Libya till 1992.  On 17.8.79 when the  respondent was in Libya he had placed with the bank  US$5000 in FCNR (Foreign Currency Non-Resident)  Account for 63 months at 9% p.a. vide LF No.MR-24, DR  No.316/79/39.  The deposit was made by the draft  drawn on New York Bank.  The deposit was to mature on  17.11.84.  The appellant confirmed the deposit.  The  deposit receipt is annexed to the paper book.  In 1984,  Reserve Bank of India (RBI) allowed the banks to keep  FCNR for six years.  Interest on such deposits was  increased from 9% to 13% p.a.  According to the  respondent, in June 1984, intimation was given to the  appellant to reinvest the entire amount in FCNR account  on maturity for a further period of six years at 13% p.a.   In 1986, the respondent visited India.  He attended the  branch office of the bank.  The respondent claims that he  was assured by the bank that everything was in order  and that US$ 7939.56 were lying in the FCNR account  which amount stood reinvested at 13% p.a. for six years  maturing on 17.11.90.  Respondent alleged that in  September 1990 he had requested the bank to reinvest  the entire amount in his FCNR account for a further  period of three years.  This was to be done on maturity of  his deposit on 17.11.90.  In January 1992, as stated  above, the respondent returned to India.  He enquired  about the status of his deposits.  He did not get the  response.  He made a complaint in writing on 5.1.92 and  on 14.1.92.  On 7.9.92, he received a letter from the bank

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stating that no outstanding amount was there in his  name in the FCNR account.  By letter dated 15.10.92, the  appellant stated that from their records it is seen that the  said deposit was prematurely withdrawn on 22.11.79.   Thereafter, correspondence ensued.  Respondent herein  denied the fact of premature withdrawal of the deposit.   He complained to RBI.  On 19.4.93 the bank stated that  the deposit was encashed prematurely not on 22.11.79  but on 23.11.79.  A copy of the sale/purchase register  was also enclosed by the bank to show that the deposits  stood withdrawn on 23.11.79.  Ultimately, on 28.9.94 the  respondent herein preferred a complaint under section  2(1)(g) and section 2(1)(o) of the Act before the State  Commission.   

       In the said complaint respondent alleged that he  could not have withdrawn the amount on 23.11.79 as he  was not in India.  He relied upon his passport to show  that he was not in India.  He further alleged that a copy  of the original FCNR was put in the safe deposit vault.  In  this connection, he relied upon the said receipt which  states that the deposit receipt memo is retained by the  bank in Safe Custody.  Respondent stated, on the basis  of the above facts, that the amount has been withdrawn  by somebody in connivance with the bank’s officers.  In  the circumstances, respondent herein claimed that he  was entitled to the decree in following terms :  

"S.No.  Year            Interest                        Total amount  payable on  maturity

1.     From 17.8.79 to  @ 9% to be             US $7939.56 16.11.1984 (63  added half yearly   months)                on $ 5000

2.      From 17.11.84   @ 13% to be added       US $ 16904/093         to 16.11.1990   half yearly on   (6 years)               $ 7939.56

3.      From 17.11.90   @ 10.5% to be           US $ 22978/645 to 16.11.1993   added half yearly on  (3 years)               $ 16904/093      

A total of Rs.7,12,337.99 at present date is due from the  opposite party till 17.11.93.  Thereafter, interest @ 18% per  annum on the aforesaid amount which comes to approx.  Rs.1,28,220.83 (Rupees one lakh twenty eight thousand two  hundred twenty and paise eighty-three only)."

       By written statement, the appellant conceded that the  respondent had deposited on 17.8.79 a sum of US$ 5000 in  FCNR account for 63 months maturing on 17.11.84 at 9% p.a.   However, the appellant contended that prior to the date of  maturity the deposit was prematurely withdrawn on 23.11.79.   In this connection, reliance was placed on sale/purchase  register.  Therefore, according to the bank, there was no  question of reinvesting of the aforestated amount from time to  time, as alleged by the respondent.  The appellant also denied  that the deposit receipt was kept in Safe Custody.  In this  connection, the appellant submitted that an inquiry into  premature withdrawal and the demand for recovery of money  after 12 years was beyond time.  The bank, however, agreed  that in 1984 RBI allowed it to keep FCNR for six years at the

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rate of 13% p.a.  However, the appellant contended that since  the amount was prematurely withdrawn, there was no  question of reinvesting it for six years at the rate of 13% p.a.   The bank denied all factual allegations made by the  respondent with regard to reinvestment.  By the objections,  apart from the question of limitation, the appellant stated that  the respondent was not a consumer as defined under section  2(1)(d) of the said 1986 Act.  The appellant also contended that  under RBI rules, the bank was not bound to retain the records  after eight years and, therefore, the matter cannot be decided  on presumptions; that the burden was on the respondent to  prove the alleged facts regarding reinvestment.  By the written  statement, the appellant denied its liability to pay a sum of  Rs.7,12,337.99 including interest till 17.11.93 and further  interest at 18% p.a. on the said amount amounting to  Rs.1,28,220.83.

By order dated 28.4.97, the State Commission came to  the conclusion that the respondent had deposited US$ 5000  on 17.8.79 carrying 9% interest and maturing on 17.11.84;  that the receipt was retained in safe custody; that there was  no record to show that the said amount was prematurely  withdrawn; that there was no evidence regarding destruction  of the records on completion of eight years and since the initial  deposit of US$ 5000 on 17.8.79 stood established the decree,  as prayed for, was granted by the State Commission. The  Commission further found that there was no evidence on  record to show that the respondent had given written  instructions to the bank for premature withdrawal; that there  was no endorsement on the receipt showing payment in lieu of  discharge and, therefore, the bank was not entitled to place  reliance only on entry in the sale/purchase register dated  23.11.79.  The State Commission further found that on  23.11.79 respondent was not in India.  In this connection,  reliance was placed on the endorsement in his passport.   Accordingly, the State Commission came to the conclusion  that the deposit was reviewed from time to time and, therefore,  the complaint was within limitation.  Accordingly, the decree  in the aforestated terms was passed by the State Commission.

Aggrieved by the aforestated decision of the State  Commission, appellant herein went in appeal to the National  Commission under the said 1986 Act.  By the impugned order  dated 14.7.2004, the findings of fact recorded by the State  Commission were confirmed.  The appeal was accordingly  dismissed.  Hence, this civil appeal comes before this court at  the instance of the bank.  

The Consumer Protection Act, 1986 provides for  formation of National Commission; State Commission and  District Forum.  These are remedial agencies.  Their functions  are quasi judicial.  The purpose of these agencies is to decide  consumer disputes.  Activities relating to non-sovereign  powers of statutory bodies are within the purview of the Act.   The functions of such statutory bodies come under the term  ’service’ under section 2(1)(o) of the Act.  Banking is a  commercial function.  ’Banking’ means acceptance, for the  purposes of lending or investment of deposit of money from  the public, repayable on demand or otherwise [See: section  5(b) of Banking Regulation Act, 1949].  The intention of the  1986 Act is to protect consumers of such services rendered by  the banks.  Banks provide or render service/facility to its  customers or even non-customers.  They render  facilities/services such as remittances, accepting deposits,  providing for lockers, facility for discounting of cheques,

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collection of cheques, issue of bank drafts etc.  In Vimal  Chandra Grover v. Bank of India [AIR 2000 SC 2181] this  court has held that banking is business transaction between  bank and customers.  Such customers are consumers within  the meaning of section 2(1)(d)(ii) of the Act.   

Only two points appear to have been argued by the bank  before the National Commission, viz., question of premature  withdrawal and limitation.  However, the claim of the  respondent for money decree with interest at the rate of 18%  p.a. till realization appears to be on the higher side and  inflative.  The rate of exchange, which is indicative of price and  which constantly varies from time to time, has not been  examined.  This is apart from awarding of the rate of interest  at 18% p.a. which itself is on the higher side.  In the case of  Forasol v. Oil and Natural Gas Commission [AIR 1984 SC  241] this court observed that in an action to recover an  amount payable in a foreign currency, five dates compete for  selection by the court as the proper date for fixing the rate of  exchange at which the foreign currency amount has to be  converted into the currency of the country in which the action  has been commenced and decided.  These dates are - the date  on which the amount became due and payable; the date of the  commencement of the action; the date of the decree; the date  when the court orders execution to issue; and the date when  the decretal amount is paid or realized.  The court has to  select a date which puts the plaintiff in the same position in  which he would have been, had the defendant discharged his  obligation when he ought to have done, bearing in mind that  the rate of exchange is a fluctuating factor.  To select the date  when the amount became due, the court has to act in a just,  fair and equitable manner because in a case where the rate of  exchange has gone up, the opponent escapes by paying a  lesser sum than what he was bound to and thus he gains by  default while in the converse case where the rate of exchange  has gone against the opponent, the opponent would be  subjected to a greater burden than what it should be.  Apart  from the judgment of the Supreme Court in Forasol (supra),  we may observe that in such cases, the Agencies under the  Consumer Protection Act, 1986 should also keep in mind the  economic situation of the country.  Encashment of dollar  denominated deposits have certain economic implications.  In  the present case, none of these factors have been considered  by the State Commission.  In cases of this type, the burden is  on the complainant to show the rate of exchange prevalent on  the aforestated dates in order to assist the court to arrive at  the indicative prices.  This has not been done in the present  case.  Neither the State Commission nor the National  Commission has examined this question regarding selection of  the appropriate date, the appropriate rate of exchange on that  particular date as also the rate of interest which the appellant  was required to pay.  

For this limited purpose alone, we partly allow the appeal  and remit the matter to the State Commission to pass the  decree in favour of the respondent herein in accordance with  law indicated above.  On all other factual findings, we are in  agreement with the impugned decision.  This appeal is partly  allowed with no order as to costs.