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PETITIONER:

SOVINTORG (INDIA )LTD.

Vs.

RESPONDENT:

STATE BANK OF INDIA, NEW DELHI

DATE OF JUDGMENT: 11/08/1999

BENCH:

R.P.Sethi, S.Saghir Ahmed

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. 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/- --------------------

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

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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. 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. After hearing the learned counsel for the

parties and perusing the record, we have noticed that 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. Relying upon the

province of Section 34 of the Civil Procedure Code, the

learned counsel for the appellant submitted that 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 transactions. Referring to I.A. 2

filed in this Court and Banking Law and Practice in India

issued in 1991, she had contended that the appellant was

entitled to the payment of interest minimum at the rate of

19.4 per cent per annum. The general submission made in

this behalf cannot be accepted in view of the provision of

Section14 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 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 as was held by this Court in Satinder

Singh and Ors. Vs. Amrao Singh & Ors. (1961 (3) SCR 676).

Referring to the province of the Interest Act of 1839, in

relation to the compulsory acquisition of land where no

specific provision is made for grant for awarding the

interest, the Court held: "In this connection we may

incidentally refer to Interest Act, 1839 (XXXII of 1839).

Section 2 of this Act confers power on the Court to allow

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interest in cases specified therein, but the proviso to the

said section makes it clear that interest shall be payable

in all cases in which it is now payable by law. In other

words, the operative provisions of s. 1 of the said Act do

not mean that where interest was otherwise payable by law

Court's power to award such interest is taken away. The

power to award interest on equitable grounds or under any

other provisions of the law is expressly saved by the

proviso to s. 1. This question was considered by the Privy

Council in Bengal Nagpur Railway Co. Ltd. V. Ruttanji

Ramji (1938 L.R. 65 I.A.66). Referring to the proviso to

s.1 of the Act the Privy Council observed "this proviso

applies to cases in which the Court of equity exercises its

jurisdiction to allow interest." We have already seen that

the right to receive interest in lieu of possession of

immovable property taken away either by private treaty or by

compulsory acquisition is generally regarded by judicial

decisions as an equitable right; and so, the proviso to s.1

of the Interest Act saves the said right. We must

accordingly hold that the High Court was in error in

rejecting the claimants' case for the payment of interest on

compensation amount, and so we direct that the said amount

should carry interest at 4% per annum from the date when

respondent 2 took possession of the claimants' lands to the

date on which it deposited or paid the amount of

compensation to them."

To the same effect is the judgment in Laxmichand Vs.

Indore Improvement Trust, Indore and & Ors. (AIR 1975 SC

1303). 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

per annum would have served the ends of justice. Under the

facts and circumstances of the case the appeal is partly

allowed by modifying the orders of the State Commission as

well as the National Commission with direction that the

appellant shall be entitled to the payment of Rs. One lakh

with interest at the rate of 15% per annum with quarterly

rests from the date when the amount was received by it till

the date of payment. The difference of the amount on

account of enhancement of the rate of interest shall be paid

to the appellant within a period of six weeks from the date

of this judgment.