IMPORTANT POINT
Rate of Interest - the rate of interest mentioned would be the rate applicable for the duration of the ‘scheme’ and not any other rate.

ORDER

Subhash Chandra, Member—This revision petition filed under section 21 of the Consumer Protection Act, 1986 (in short, the ‘Act’) assails the order of the State Consumer Dispute Redressal Commission, Punjab, Chandigarh (in short, ‘State Commission’) in Appeal No. 202 of 2012 dated 09.05.2014 arising out of order dated 26.12.2008 in complaint no. 8/829 of 2008 of the District Consumer Disputes Redressal Commission, Patiala (in short, ‘District Forum’).

2. The facts of the case as per documents on record are that the petitioner/bank started a scheme known as “KVP Margin Funding” under which the applicant was required to deposit an amount of margin money with the bank. The bank in turn would advance nine times the amount of the margin money as loan to the applicant and procure Kisan Vikas Patras (KVPs) on behalf of the applicant and retain the same till maturity after 8 years and 7 months. During this period the value of the KVPs was expected to double and thereby offer interest higher than the interest that would be charged by the bank on the loan amount. Through a Customer Approval Sheet (CAS) provided by the bank it was specifically stated that the rate of interest would be 7% without any processing fee. The respondent accordingly opened an account with a cheque of Rs 10 lakhs on 29.09.2005. An agreement was signed between the petitioner bank and the respondent and a loan of Rs.90 lakhs was credited to the account of the respondent. This amount was encashed on 18.10.2005 and the KVPs purchased from the Post Office. However, the amount of commission received from the Post Office was not credited to the said account. The Overdraft (O/D) limit of Rs 200 lakhs as agreed to in the Customer Approval Sheet dated 20.10.2005 was also not provided. The rate of interest charged was @ 9.75% w.e.f. 03.04.2006 which was refunded on 31.08.2006 when protested. However, interest @ 8% continued to be charged on monthly compounding basis against the 7% on monthly compounding basis that was agreed upon. The interest was enhanced to 12% on 22.08.2007 w.e.f. 10.09.2007 which was refunded on 08.12.2007. However, interest @ 8% continued to be charged. The petitioner expressed inability to provide O/D facilities. The petitioner conveyed that the KVPs would be encashed and that the interest amount was contingent upon the holding period of the KVP based upon bonus, which placed the respondents under mental stress. On the grounds of unfair trade practice and deficiency in service, the respondent approached the District Forum which ordered as below on 26.12.2008 after opportunity to both parties:—

30. As an upshot of our aforesaid discussion, it would appear that not only that the complaint is found barred by limitation, the Forum lacks the jurisdiction to entertain and try the complaint and even there are no merits in the complaint and the same is hereby dismissed.

3. As per records, the respondent herein preferred an appeal against the order of the District Forum which was allowed by the State Commission. The order of the State Commission reads as below:—

22. In view of the position discussed above, the order passed by the learning district forum is liable to be set aside. Consequently, we accept the appeal. The complaint filed by the complainant is accepted with the direction to:—

(i) OP No 1/respondent no 1 to charge interest @ not more than 7% and accordingly recast loan account of the complainant in which the interest has not been charged more than 7% on the loan taken by the complainant for the purchase of KVPs and to calculate the interest accordingly and to refund the excess amount so charged to the LAS O/D A/c No. 01162070000105 of the complainant.

(ii) credit in the account of the complainant the amount of commission i.e. Rs 1 Lac received from the Post Office on the investment of the complainant as per his share of contribution.

(iii) pay Rs 50,000/- on account of compensation for mental and physical harassment

(iv) pay Rs 11,000/- fo