ORDER
Mr. Justice J.K. Mehra, Member
1. This Revision Petition challenges the order of the State Commission, Maharashtra, whereby five appeals were disposed of by one common order. The controversy involved is that the Petitioner -Jalgaon Janta Sahakari Bank Ltd. had extracted fixed deposits at the rate of interest which was payable from time to time under guidelines of Reserve Bank Of India. It is the common case that the Complainant – Respondents deposited a sizeable amount as fixed deposits with the Petitioner – Bank under Dhanlaxami Ashtchakra Yojana. The rate of interest payable at the time of accepting the deposits was 12.5% for eight terms of 46 days each called chakras. It was term of such deposits that if at the end of each chakra comprising a period of 46 days and in case the depositor did not withdraw the amount with interest, the said fixed deposit plus interest accrued would be reinvested for a further period of 46 days and so on until the eight chakra. In other words, the deposit was to be renewed as fresh deposit comprising principal and the interest accrued thereon at the end of each period of 46 days. The Petitioner – Bank refused to pay interest @ 12.5% after the receipt of Reserve Bank of India directions lowering the rate of interest. The fixed deposit receipt carries a condition reading “change of rates as per directions of RBI” could not be ignored altogether and it had to be construed by applying the rule of `harmonious construction’. The interest will be in otherwords, the duration of each fixed deposit receipt is 46 days and if the amount with principal amount along with interest for a further period of 46 days subject to a maximum of eight chakras of 46 days each. The Complainants at the end of eight chakra could convert the deposits into 13-month deposit scheme. But the bank did not renew such deposits in accordance with the RBI guidelines. One fact which has been over-looked by both the fora is that it is not a fixed deposit for a continuous period of 46 X 8 days but each chakra was to be renewed at the end of 46 days. While the current period of 46 days could not be interfered with by the Bank, it was under an obligation to follow the RBI guidelines on the rate of interest for every succeeding renewal the relevant direction from the from the RBI is reproduced below as under:-
“RESERVE BANK OF INDIA
DS. PRB. DIR.26/13.01.00/96-97 25.6.1997
4 Asadha 1918(S)
INTEREST RATES ON DEPOSITS
2. In exercise of the powers conferred by Sections 21 and 35 A read with Section 58 of the Banking Regulation act, 1949 the RBI, being satisfied that, it is necessary and expedient in the public interest to do, hereby directs that Annexure I of the directive No. UBD/DC/102/V.1/86-87, dated June 25, 1987 as amended from time to time shall be substituted as under, effective June 26, 1997.
ANNEXURE – II
(Percent per annum)
i) Current Accounts Not exceeding 0.5
ii) Savings Accounts 4.5
iii) Term Deposits:
a) 30 days & upto one year Not exceeding Bank
Rate minus 2
percentage points
(i.e. not exceeding
8.0 per cent p.a.)
b) Over 1 year Free
2. All other provisions of the directive No. UBD.DC.V.1./86-87 dated June 25, 1987 as amended from time to time remain unchanged.
Sd/- S.A. Hussain
Executive Director
PRIMARY CO-OP. BANKS
INTEREST RATES ON TERM DEPOSITS
(EXCLUDING NON-RESIDENT DEPOSITS)
(Percent p.a.)
Existing New
Duration Rates Duration Rates
(effective 26.6.97)
30 days and Not exceeding 30 days and Not
upto 1 year Bank Rates minus upto 1 year exceeding
2% points (i.e. Bank rate
not exceeding minus 2%
8.0% p.a. points
(i.e. not
exceeding
8.0% p.a.)
Over 1 year Free Over 1 year Free
N.B. Primary Co.op. Banks may, at their discretion, continue to allow (i) additional interest at a rate not exceeding 1 % p.a. on all savings deposits and (ii) at rate not exceeding 0.5% p.a. on all term deposits of not less than 30 days and upto 1 year.
Banks should continue to obtain the prior approval of their respective boards for the deposit rates they will be offering on respective Boards for the Deposits rates they will be offering on deposits of various maturities. At any point of time individual banks should adopt uniform rates at all their branches and for all customers.
3. All other instructions issued from time to time in this regard shall remain unchanged.
4. An amending directive UBO No. DS.PCB.DIR (sic) dated 25.6.87 is enclosed.
5. Please acknowledge receipt of this circular to the Regional office concerned.
Yours faithfully,
Sd/- O.P. Sharma
General Manager”
In the light of the above and also in the light of what has been laid down by this Commission in the case of Konkan Mercantile Coop. Bank Ltd. Vs.Abdule Sattar Ahmed Bondre reported as 1998 CTJ 321 (CP) (NCDRC), the Bank could not exceed the ceiling on the rate of interest fixed by the RBI. The notification of RBI is prospective which means that every renewal thereafter had to carry maximum rate prescribed by RBI. In that case, after the issuance of the said directions, the bank had inadvertently issued a fixed deposit receipt at a higher rate than (sic) fixed by the bank. This Commission held that it was (sic) done. However, there is no such problem in the present case because the deposit can carry the contracted rate of interest (sic) current charkra until the RBI directions come into (sic) every renewal of term of 46 days subsequent to the (sic). For reason, we feel that the decision of the fora below has to be set aside with the direction that the bank will be liable to pay contractual rate of interest only upto the date of the new RBI directions fixing a ceiling an interest rate lower than the contractual rate. The Revision Petitions are disposed of in the above terms.