ORDER
K.K. Balu, Member
1. The depositor in M/s Coimbatore Lakshmi Investment & Finance Company Limited (‘the Company’) has filed this application under Section 45QA(2) of the Reserve Bank of India Act, 1934 (‘the Act’), submitting that the Company has failed to repay the overdue interest of Rs. 1390/- in respect of the Recurring Deposit kept with the Company. The application came up for hearing and disposal before this Bench 27.06.2003 and finally on 01.08.2003.
2. During the hearing, Shri R. Swaminathan, Representative of the Company appeared and filed counter stating that the depositor had opened a Recurring Deposit Account (RD) with the Company on 20.12.1997 for 12 months with a monthly deposit of Rs. 500/- and that maturity value of the deposit as on 21.12.1998 was Rs. 6,538/-. The depositor by a letter dated 08.05.2000 request for repayment of the matured RD amount and the Company by its letter dated 15.05.2000 requested the depositor to surrender the original RD receipt duly discharged for making payment as per the deposit rules governing the Company. Subsequently, the depositor surrendered the original RD receipt on 26.05.2000 and on receiving the same the Company repaid the matured RD amount of Rs. 6,538/- by Cheque No. 192636 dated 31.05.2000. He further submitted that as per Clause D(2) of Deposit Acceptance Rules of the Company, deposits will cease to carry interest from the date of maturity unless they are renewed. Moreover, Clause F(2) provide that the original RD receipt duly discharged must be surrendered to the Company at least fifteen days before maturity for payment. In view of the Rules of the Company, the applicant is not liable for payment of the interest for the period as claimed by him. As the entire principle amount and the interest as per contractual terms have been repaid, Shri R. Swaminathan prayed for dismissal of the application.
3. According to Shri N. Jayaramachandran, the applicant was constrained to hold back the RD receipt for security reasons to avoid the risk of its loss due to the nebulous conditions of the Company’s Office and its evasive attitude in regard to repayment of the RD. The applicant had similar such experience with the Company in the past. The discharged receipt is only an instrument to be surrendered for documentation purpose. The date of physical surrender cannot be of any financial significance on account of the depositor holding back of the receipt. He submitted that Clause (F) of the Deposit Acceptance Rules of the company speaks about repayment of Principal amount and not about interest which is a lacuna designed for possible misuse. He further submitted that the Company holds over the repayment without concurrence of the depositor and the default amount to a breach of contract attracting due legal action. In view of these circumstances, payment of interest from maturity date to the date of actual final settlement is a legal liability devolving on the Company and prayed for directing the Company to pay interest for the period from 22.12.1998 to 31.05.2000.
4. I have considered the pleadings and arguments advanced on behalf of the applicant and the Company. It is on record that the applicant had a Recurring Deposit with the Company for a period of 12 months with monthly contribution of Rs. 500/-, which matured on 21.12.1998, with the maturity value of Rs. 6,538/-. When the depositor by his letter dated 08.05.2000 demanded repayment of the maturity amount of the Recurring Deposit, the Company by its letter dated 15.05.2000 advised the depositor to surrender the deposit receipt duly discharged by her. When the depositor complied with the requirement of the Company on 26.05.2000, the Company repaid on 31.05.2000, the maturity amount of the Recurring Deposit of Rs. 6,538/-. While the applicant claims interest from the date of maturity of the Recurring Deposit, i.e., 22.12.1998 till the date of repayment of the maturity amount i.e., 31.05.2000, the Company contends that in terms of Clause D(2) of Deposit Acceptance Rules of the Company, deposits will cease to carry interest from the date of maturity unless they are renewed. Admittedly, the Recurring Deposit was matured on 21.12.1998. The maturity amount was settled in favour of the applicant on 31.05.2000. Between December 1998 and May 2000, the Company was enjoying the maturity amount of Rs. 6,538/- without any benefit whatsoever to the applicant. There is no record to show that the Company took any initiative advising the applicant either to renew the Recurring Deposit or surrender the duly discharged deposit receipt, since the date of maturity. As the Company had the benefit of the deposit amount belonging to the applicant, equity demands that the Company shall pay reasonable interest for the period between 22.12.1998 till 31.05.2000. Considering the prevalent interest relate structure on the public deposits, I deem it fit that the Company shall pay interest at the rate of nine per cent per annum on the maturity amount of the Recurring Deposit from 22.12.1998 to 31.05.2000, which in my view, will meet the ends of justice. The Company shall pay the interest amount calculated as per this order within 30 days from the date of receipt of this order. The application is disposed of in these terms.
5. No order as to costs.