SOVINTORG (INDIA) LTD.versusSTATE BANK OF INDIA, NEW DELHI

                      SOVINTORG (INDIA) LTD.                                     A
                                v.
                ST A TE BANK OF INDIA, NEW DELHI

                           AUGUST 11, l999

             [S. SAGHIR AHMAD AND R.P. SETHI, JJ.]                               B

     Consumer Protection Act, 1986:

       Section 14-Interest-Award of-Customer deposited Rs. I lakh in
bank but same not credited to its account for 7 years-State Commission C
found bank not wrong in retaining amount-Hence, claim for compensation
and damages, rejected-However, State Commission awarded 12% interest
 which was confirmed by National Commission-Held, in the absence of
contract between parties for payment of interest on delayed deposit or service,
 interest cannot be claimed under S.34 CPC since this provision has not been D
 specifically made applicable to the proceedings under the Act-However, the
 general provisions of S.34 CPC, being based upon justice, equity and good
 conscience, would authorise the consumer courts to also grant interest
 according to the circumstances of each case-Interest can also be awarded
 in lieu of compensation or damages in appropriate cases-Hence, National
 and State Commissions rightly awarded interest-However, 12% interest E
 being inadequate, raised to 15'Yo--Code of Civil Procedure, 1908-S.34.

     Section 14-/nterest-Award of-May also be awarded on equitable
grounds.

       The appellant-company had an account with the respondent-Bank and         p
deposited a cheque for Rs. 1 lakh, which was not credited to its account for
seven years, though the proceeds of the cheque were collected. The appellant
filed a complaint before the State Consumer Disputes Recfressal Commission
under the Consumer Protection Act, 1986 claiming compensation for
business losses, damages and 24% interest per annum.
                                                                                 G
      The State Commission as well as the National Commission held that
there existed an undertaking between the parties which authorised the Bank
to keep the amount as margin money for the guarantee furnished by the
bank on behalf of the appellant to the Chief Controller of Exports and Imports
and, therefore, the bank was not wrong in having retained the amount. The
                                     337                                         II
    338                      SUPREME COURT REPORTS [1999] SUPP. 1 S.C.R.

A appellant could not establish when the contract for guarantee stood terminated.
    However, it was found to be in force as late as in 1987.

            The State Commission rejected the claim for compensation and
    damages but awarded 12% interest from the date of receipt of the amount
    till the date of its payment The National Commission confirmed the aforesaid
B   order. Hence this appeal.

           On behalf of the appellant it was contended that the appellant was
    entitled to interest at the rate specified under Section 34 of the Code of Civil
    Procedure, 1908.

          Partly allowing the appeal, this Court

          HELD: 1. There was no contract between the parties regarding paymen~
    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 Code of Civil Procedure, 1908 as its provisions have not
I) been specifically made applicable to the proceed~ngs under the Consumer
    Protection Act, 1986. However, the general provision of Section 34 CPC,
    being based upon justice, equity and good conscience, 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
£  ·or compensation or damages in appropriate cases. Interest can also be awarded
    on equitable grounds. IJ41-A-B-CI

        ' SatinderSingh v. Amrao Singh, 1196113 SCR 676 and laxmichandv.
    Indore Improvement Trust, Indore, AIR (1975) SC 1303, relied on.

          Bengal Nagpur Railway Co. ltd. v. Ruttanji Ramji, (1938) LR 65 IA
F
    66, cited.

           2. The State Commission as well as the National Commission were
    justified in awarding interest to the appellant.· But 12% interest was
    'inadequate and, therefore, the appellant shall be entitled to 15% interest per
G   annum from the date of receipt of the amount till the date of its payment.
                                                                     1342-A-B; DI

          CIVIL APPELLATE JURISDICTION: Civil Appeal No. 823of1992.

         From the Judgment and Order dated 11.9.91 of the National Consumer
H   Disputes Redressal Commission, New Delhi in F. A. No. 4 of 1991.
            SOVINTORG (INDIA) LTD. v. S.B.I.[SETHJ, J.]                     339
      Ms. Meenakshi Arora for the Appellant.                                        A
      S.K. Bisaria for the Respondent.
      The Judgment of the Count was delivered by
      SETHI, J. Not satisfied with the majority view of the National Consumer
Disputes Redressal Commission (hereinafter called "the National Commission")        B
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-   C
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           D
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
                                                                                    E
      (b)   Normal and penal interest @ 24% per annum
            quarterly compounded as per standard usual
            practice prevalent in all Nationalised Banks w.e.f.
            l 8.6.83 till 31.10.89                                  Rs. 3,26,000
                                                                                    F
      (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                       G
            prestige, status and mental agony, suffered by the
            petitioner company and its Managing Director.
                                                                    Rs. 2,00,000
             Total                                                  Rs. 8,26,000
                                                                                    H
                     (

    340                     SUPREME COURT REPORTS [1999] SUPP. I S.C.R.

A         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 tl!e 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
B   this appeal.

            Learned counsel appearing for the appellant has vehemently _argued
    that the State Commission as well as the National Commission were not
    ju.stified 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.
C   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.

D          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
E    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
    amoont 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
F   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.
G
           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
H    had contended that the appellant was entitled to the payment of interest
              SOVINTORG (INDIA) LTD. v. S.B.I.[SETHI, J.]                  341

minimum at the rate of 19.4 per cent per annum. The general submission made        A
in this behalf 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        B
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              C
Satinder Singh and Ors. v. Amrao Singh and Ors., [1961] 3 SCR676. 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   D
        (XXXII of 1839). Section 2 of this Act confers power on the Court to
        allow interest in cases specified therein, but the proviso to the said
        section makes i! 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      E
        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. I. 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. l of the Act the Privy Council observed "this proviso    F
        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    G
        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          H
    342                       SUPREME COURT REPORTS [1999) SUPP. I S.C.R.

A            to them."

    To the same effect is the judgment in Laxmichand v. Indore Improvement
    Trust, Indore and and Ors., AIR (I 975) 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
B   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
C   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
D   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.

    V.S.S.                                                  Appeal Partly allowed.