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KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION, THIRUVANANTHAPURAM
K.R. Udayabhanu, President
Mary Mathai - Appellant
Versus
Kalloorkadu Farmers Co-Operative Bank Ltd. - Respondent
First Appeal No. 235 of 2006
Joseph George Alias Georgekutty - Appellant
Versus
Kalloorkadu Farmers Co-Operative Bank Limited - Respondent
Appeal No. 236 of 2006
Decided On : 08-06-2010
Advocate Appeared:
For the Appellants :Mr. T.C. Krishna, Advocate.
For the Respondent:Mr. Sojan Micheal, Advocate.
Unilateral closure of welfare schemes by the bank constituted deficiency in service, entitling the complainants to compensation.
Headnote:
Deposit Schemes - Welfare Schemes - Kerala Co-operative Societies Act - Circular No. 9/03 - Managing Committee's authority to modify schemes - Deficiency in service - Compensation
Fact of the Case:
The appellants deposited amounts under the Mangalia Deposit Scheme and Karshaka Pension Scheme, which were unilaterally closed by the bank, leading to a loss for the complainants. The bank contended that they were bound by the Kerala Co-operative Societies Act and the circulars issued by the Registrar of Co-operative Societies.
Finding of the Court:
The court found that the closure of the schemes by the bank amounted to deficiency in service and awarded compensation of Rs. 75,000 to each complainant.
Issues: The issues involved the authority of the bank to modify the schemes, compliance with the terms of the original schemes, and the complainants' entitlement to compensation.
Ratio Decidendi: The court held that the bank's unilateral closure of the schemes constituted deficiency in service, and the complainants were entitled to compensation.
Final Decision: The court set aside the forum's order and directed the opposite parties to pay Rs. 75,000 each to the complainants in the two cases as compensation for deficiency in service.
Key Points: - The bank's unilateral closure of the Mangalia Deposit Scheme and Karshaka Pension Scheme constituted deficiency in service, entitling complainants to compensation (!) (!) . - Complainants deposited amounts under welfare schemes with the expectation of specified returns, which were discontinued by the bank, resulting in loss (!) (!) (!) . - The bank contended it was bound by the Kerala Co-operative Societies Act and Registrar of Co-operative Societies' circulars, including Circular No. 9/03 (!) (!) . - The court held that future terms cannot retrospectively terminate the entire scheme and there was no clause allowing unilateral withdrawal by the bank (!) (!) . - Compensation of Rs. 75,000 was awarded to each complainant in the two cases due to the deficiency in service (!) (!) (!) . - The Managing Committee of the bank has authority to modify schemes, but this authority is constrained by compliance with the Act and original scheme terms (!) (!) . - The Forum had dismissed the complaints, but the court set aside that order and directed payment of compensation (!) (!) (!) .
What is the basis for determining that the bank's unilateral closure of welfare schemes constituted a deficiency in service?
What are the rights of depositors regarding compensation when a bank unilaterally closes welfare deposit schemes?
What authority does the bank have to modify deposit schemes under the Kerala Co-operative Societies Act and related circulars?
ORDER :
K.R. Udayabhanu, President
The appellant in A.235/06 is the complainant in OP.126/05 and the appellant in Appeal 236/05 is the complainant in OP129/05 in the file of CDRF, Ernakulam. The complaints along with a number of other complaints stands dismissed vide the common order.
2. The matter involved in the 2 appeals is with respect to the Mangalia Deposit Scheme and Karshaka Pension Scheme floated by the opposite parties/Farmers’ co-operative Bank. The opposite party bank started the above welfare schemes during the period 1992. As per the Mangalia Deposit Scheme if a member deposits Rs. 1,000 for 18 years on maturity he will be paid an amount of Rs. 16,000. The deposits can be made for the multiples of Rs. 1,000. As per the Karshaka Pension Scheme if a member deposit a sum of Rs. 10,100 at the end of 10 years and 30 days he will be paid a monthly pension of Rs. 750. The deposits under the above schemes also can be made in multiples of Rs. 10,100. There was also provision to make deposits in instalments; and for such members the pension was fixed at Rs. 600. In February 2005, the depositors were informed that the schemes are stopped from 15.3.2005 and thereafter only interest approved from time-to-time will be paid.
3. The complainant in OP.126/05/A. 235/06 had deposited Rs. 1,01,000 on 20.6.1994 and 2,02,000 on 21.3.1995 under the Karshaka Pension Scheme. As per the terms he will be eligible for Rs. 7500 from 21.7.2004 with respect to the 1st deposit and Rs. 15,000 per month from 22.4.2005 with respect to the 2nd deposit. She was being paid a pension of Rs. 7,500 from 2004 onwards. Subsequently as per the intimation dated 15.2.2005 it was reduced to Rs. 3,333 and with respect to the 2nd deposit she was paid only 6666 instead of Rs. 15,000
4. In OP. 129/05/A.236/06 the complainant had remitted Rs. 12,000 on 19.6.1992, Rs. 5000 on 14.6.1994 and Rs. 19,000 on 1.10.1997 in the Mangalia Scheme. He had also deposited a sum of Rs. 3,0400 under the Karshaka Pension Scheme. He will be entitled for a sum of Rs. 1,200 as monthly pension from 24.5.2002 onwards.
5. The opposite parties had contended that the opposite parties are bound by the Kerala Co-operative Societies Act and the relevant rules and directions of the Registrar of Co-operative Societies. It is contended that the complainants have executed an undertaking that they are bound by the provisions applicable to the deposit scheme and will abide by the conditions and stipulations made from time-to-time in future. Hence they are bound by the modifications effected to the deposit schemes. It is submitted that the deposit schemes involved were formulated during the year 1987, when the deposits were earning interest at the rate of 15 to 17% compounded quarterly. Subsequently due to market fluctuations there has been substantial reduction in the rate of interest which has come down to 8%. In the audit report for the year 2002-2003, 2003-2004 the Joint Registrar of Co-operative Societies had called upon the bank to close the deposit schemes which are causing heavy loss to the bank. As per the circular No. 9/03 dated 22.2.2003 of the Registrar of Co-operative Societies, the maximum rate of interest payable on deposits exceeding 3 years by primary Co-operative bank is 8% per annum. The maximum interest chargeable on loan is 13% if the loan amount is above Rs. 2 lakh and 11% for loan upto the amount of Rs. 50,000. The Managing Committee of the Bank is competent to modify the schemes.
6. The Forum dismissed the complaints holding that the opposite parties have acted only as per the circulars issued by the Registrar of Co-operative Societies and the complainants are bound by the same.
7. It was contended by the Counsel for the appellants that the opposite parties have suppressed the relevant documents in the matter. The appellants have produced attested photo copies of the proceedings of the Managing Committee of the bank dated 30.10.2004 wherein audit report suggesting to close the above
