Important point
In proceedings under Consumer Protection Act 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. However the general provision of the Section 34 of CPC 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.

Headnote:(i) Consumer Protection Act, 1986 - Section 2(g) read with Section 17(a)-Code of Civil Procedure, 1908-Section 34-Deficiency in service - Compensation for -Cheque deposited by complainant with bank for collection-Amount realised but not credited into account of complainant for 7 years-Finding of State Commission that on basis of understanding between parties to keep amount in question as margin money for bank guarantee and bank was not wrong in retaining amount in its custody-Claim for penal interest, compensation for business loans rejected but interest at rate of 12% P.A. with quarterly rest granted-Does not warrant interference-Interest u/s 34 CPC cannot be claimed as Section 34 CPC has not been made specifically applicable to proceedings under Consumer Protection Act-However under Section 34 CPC Redressal Forum and Commission can also grant interest appropriately under circumstances of each case-Order modified awarding interest at the rate of 15% P.A. with quarterly rest.
       Held : 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. (Para 5)
       The contention that the 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 transaction cannot be accepted in view of the provision of Section 14 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 of CPC 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. (Para 6)
       Held consequently, 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 annum would have served the ends of justice. (Para 6)
       (ii) Consumer Protection Act, 1986-Sections 14 and 17 read with Section 34 of Code of Civil Procedure-Commissions power to award interest-Section 34 of CPC not specifically made applicable to proceedings under Consumer Protection Act-Redressal Forum and Commission can grant interest appropriately under circumstance of each case-Interest can also be awarded in lieu of-Compensation or damages.

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.

2. 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/-

3. 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 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.

4. 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.

5. After hearing the learned counsel for the parties and

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1999 Supreme(SC) 830

Cases Referred (2)