Failure to inform customers of changes in terms constitutes deficiency in service.

1. This appeal by the State Bank of Indore is directed against the order dated 16.1.2008 passed by the District Consumer Disputes Redressal Forum, Shivpuri (for short the Forum) in CC No.95/2007.

2. Brief facts necessary for disposal of this appeal are that the respondent No.1 had approached the appellant / Bank on 30.10.2002 for opening an account under the Housing Loan Account Scheme floated by the second respondent / National Housing Bank. As per the Housing Loan Scheme the appellant had deposited Rs.2,000/- which was to be continuously deposited in instalments for 5 years. The interest as per the Scheme was payable at the rate of 10% per annum. It was also the condition of the appellant that after the expiry of 5 years period the respondent No.1 / complainant would be entitled to avail housing loan. However, as the Scheme was discontinued a circular dated 31.5.2004 was issued by the respondent No.2 / National Housing Bank by which the rate of interest on such deposit was reduced to 5% in lieu of the interest of 10% with liberty to the account holder to close the account any time. It was also mentioned in the said circular that the account holders are to be informed by the Bank about reduction in the rate of interest so that they can opt for withdrawal of amount.

3. According to the complainant on 23.9.2006 when he deposited Rs.2,000/- after entering the said amount the entry of Rs.79,123/- was made in his pass - book, but in October, 2005 when he deposited further Rs.2,000/- the balance amount in the pass - book was surprisingly shown to be Rs.74,123/-. The case of the complainant was that on 29.9.2006 when he went to the Branch of the appellant / Bank for depositing instalment of September, the instalment was not accepted and he was handed - over a Banker's Cheque of Rs.1,02,943/-. The case of the complainant before the Forum was that he was entitled for the interest at the rate of 10% upto the period of 60 months (5 years) as per the policy which could not have been reduced even on the basis of the alleged circular. Thus alleging deficiency in service in not informing the so called circular of reduction of rate of interest the complainant filed complaint case and claimed interest of the full period of 5 years upto September, 2007 at the rate of 10%, Rs.50,000/- for mental agony and Rs.5,000/- towards cost.

4. The appellant filed reply and stated that the respondent / complainant's account was opened as per the terms and conditions of the Scheme of National Housing Bank / respondent No.2 and the complainant cannot claim interest more than what is payable to him under the said Scheme and the circular issued by the National Housing Bank from time to time. It is stated that since the National Housing Board has reduced the rate of interest and as such the complainant cannot get the interest as claimed. The appellant / Bank denied any deficiency of service on its part.

5. The relevant conditions of the Scheme incorporated in the pass book and the circular dated 31.5.2004, which are extracted in the impugned order at Paras 13, 14 and 17. As per the circular dated 31.5.2004 the Scheme was decided to be closed and the interest was made payable at the rate of 5% per annum w.e.f. 1st March, 2004 in place of 10%. The concerned Branches of the Bank were directed vide clause (p) to inform about the said changes as per Clause 3 (v), (c), (l) and (n) to the account holder. The Branches were also vide clause (p) directed to strictly and meticulously follow the conditions by informing all concerned.

6. The Forum has recorded a categorical finding that clause (p) has not been complied with by the appellant / Bank. It further held that in the absence of such notice of reduction in the rate of interest as was mandated in the circu