* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ RSA 124/2014
% 27th May, 2014
STATE BANK OF INDIA ......Appellant
Through: Mr. Anil Kumar Sangal, Adv.
VERSUS
AGRICULTURAL PRODUCE MARKET COMMITTEE
...... Respondent
Through: Ms. Avnish Ahlawat, Ms. Latika Chaudhary and Mr. Nitesh Kumar Singh, Advocates.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA To be referred to the Reporter or not? Yes.
VALMIKI J. MEHTA, J (ORAL)
1. This second appeal is filed under Section 100 CPC, 1908 impugning the concurrent judgments of the courts below; of the trial court dated 24.5.2013 and the first appellate court dated 3.2.2014; decreeing the suit of the respondent-plaintiff for recovery of Rs.2,90,491.94 alongwith interest at 10% per annum.
2. The case of the respondent-plaintiff as per the plaint was that the appellant-defendant vide its undated letter Ex.PW1/4 stated that w.e.f 1.11.1997, the rate of interest for fixed deposits for a period from one year to RSA 124/2014 Page 1 of 8 two years was 10% per annum, and in terms of this representation, the respondent-plaintiff by its letter dated 8.12.1997, Ex.PW1/5 deposited a sum of Rs.5 crores with the appellant-defendant for putting in an FDR at 10% per annum. Respondent-plaintiff contends that the appellant-defendant wrongly and illegally issued the FDR Ex.PW1/D1 for Rs.5 crores on 8.12.1997 giving interest only at 9.5% instead of 10% as asked for in the appellant- defendant's letter Ex.PW1/4. Respondent-plaintiff says that it realized the lower rate of interest of 9.5% when its accounts were being scrutinized in October 1998 and whereafter the appellant-defendant was written a letter dated 26.10.1998 by the respondent/plaintiff to give interest at 10% and not at 9.5%.
3. Appellant-defendant in its written statement took up a stand that no doubt when the letter Ex.PW1/4 was issued in November 1997 the rates of interest w.e.f 1.11.1997 for deposits between one and two years was 10% per annum, however, the rates of interest for a period from one year to two years w.e.f 1.12.1997, became 9.5% per annum and this was in terms of the circular dated 28.11.1997, Ex.DW1/1, issued by the concerned department of the appellant/defendant bank. It was pleaded that the rates of interest changed regularly and rate of interest which can be granted by the appellant/defendant bank is only that rate of interest which prevails on the RSA 124/2014 Page 2 of 8 date of deposit, and since on the date of deposit of the amount of Rs.5 crores by the respondent-plaintiff with the appellant-defendant on 8.12.1997 the rate of interest was 9.5% per annum, deposit was made at this rate of 9.5% per annum and that rate was specifically written in the FDR Ex.PW1/D1. It is the case of the appellant-defendant that grant of interest is a matter of contract and the contractual document being the FDR Ex.PW1/D1 stated the rate of interest as 9.5% per annum as per the prevalent rates of interest given to all other customers, and consequently, the appellant-defendant is not liable to pay 10% per annum interest as claimed by the respondent-plaintiff.
4. The only issue which was urged before the courts below was as to whether the appellant-defendant is bound to pay interest at 10% per annum as stated in Ex. PW1/4 or that the appellant/defendant is liable to pay only 9.5% per annum interest which is the figure which is stated in the FDR receipt Ex. PW1/D1.
5. Both the courts have held that since in the offer document Ex.PW1/4, the rate of interest was written by the appellant/defendant as 10% per annum, the appellant-defendant was bound to give this rate of interest at10% per annum and not the rate of interest at 9.5% per annum because the respondent-plaintiff acted on the representation of the appellant-defendant RSA 124/2014 Page 3 of 8 contained in Ex.PW1/4 of the rate of interest being 10% per annum for a period of deposit from one year to two years.
6. For the disposal of this second appeal, the following substantial question of law is framed:-
"Whether the courts below have committed a gross illegality and perversity in decreeing the suit by giving the respondent-plaintiff interest at 10% per annum although in the contractual document being an FDR Ex.PW1/D1 dated 8.12.1997 the interest was specifically mentioned at 9.5% per annum, and which rate was specified/stated in spite of the fact that in the letter dated 8.12.1997, Ex.PW1/5, the respondent-plaintiff had wanted the FDR interest at 10% per annum?"
7. Before I pronounce upon the issue in the present matter, there is one aspect which needs to be noted and which is that the rate of interest which was given for deposits over one year and upto two years by the appellant/defendant bank for all its customers in view of the circular Ex.DW1/1 had indeed become 9.5% per annum but this interest of 9.5 % per annum remained only for a short period for about one month or so and thereafter by the middle of January 1998 the rate had again become 10% per annum for deposits between one year to two years. Appellant-defendant therefore in view of the peculiar facts of this case had thus requested the RBI vide appellant/defendant's letter dated 18.12.1998 to grant it permission to RSA 124/2014 Page 4 of 8 pay interest at 10% per annum to the respondent-plaintiff, however, RBI vide its letter dated 25.1.1999 Ex.DW1/4, did not agree and observed that RBI was unable to accede to the request of the appellant-defendant to pay interest to respondent-plaintiff a rate other than the actual rate which was prevalent on the date of acceptance of the FDR. I am stating this because appellant-defendant tried its best to give the higher rate of interest at 10% per annum by pursuing the matter with RBI but it was not successful. Of course the, appellant -defendant did this for having a continuity of contractual relations with the respondent/plaintiff which used to park large amount of funds with the appellant-defendant, however, the appellant/defendant was not successful. With this preface let me turn to the issue at hand.
8. One thing which is clear is that the letter Ex.PW1/4 when it states that the rate of interest for deposits from one year to two years will carry interest at 10% per annum w.e.f 1.11.1997, the same did not state that rate of interest will continue irrespective of whenever the deposit is made by a customer/distributor. It is well known that the rates of interest by banks do vary and in the present case though the respondent-plaintiff is correct in contending on the basis of the RBI circular dated 21.10.1997 (admitted document) whereby a free hand was given by RBI to the banks to fix RSA 124/2014 Page 5 of 8 whatever rates of interest it wanted to fix on term deposit of over 30 days, however, the issue is not the free hand given by RBI, but issue is what was the contractual relationship between the parties as regards the rates of interest. On the one hand, the respondent-plaintiff wanted interest at 10% and which is more than clear from its covering letter Ex.PW1/5 dated 8.12.1997, but, the fixed deposit receipt which was issued, Ex. PW1/D1 dated 8.12.1997, was at 9.5% per annum. It is therefore not that appellant- defendant had in any manner concealed anything at the time of taking fixed deposit. Fixed deposit is a contract. Contract will be governed by contractual terms. Contractual terms are contained in the FDR receipt Ex.PW1/D1. Once contractual terms are contained in the FDR, in this case so far as law and law of contract is concerned, appellant-defendant cannot be fastened with liability of interest at 10% per annum. Really in this case the issue boils down to the respondent-plaintiff not noticing till October 1998 the rate of interest in the FDR being 9.5% and so stated in the FDR receipt Ex.PW1/D1 dated 8.12.1997. The respondent-plaintiff no doubt may have acted honestly and bonafidely thinking that it was getting 10% interest in view of its letter dated 8.12.1997 Ex.PW1/4, but, the respondent-plaintiff committed a lapse in not checking the rate in the FDR dated 8.12.1997 much later till October, 1998. In fact it is because of this delayed noticing of the RSA 124/2014 Page 6 of 8 respondent-plaintiff that the problem arose because if the respondent- plaintiff would have noticed the rate of interest of 9.5% per anum earlier, it can and would surely have withdrawn the fixed deposit from the appellant- defendant bank and placed it at other banks which admittedly were giving interest at 10% per annum. There is therefore no doubt a loss to the respondent-plaintiff, but it cannot be held under the contractual law that the contract was for rate of interest at 10% per annum instead of the rate of interest at 9.5% per annum which is so specifically stated in the FDR receipt Ex.PW1/D1.
9. In view of the above, the substantial question of law needs to be and is answered in favour of the appellant-defendant and against the respondent-plaintiff. It is therefore held that in terms of the contract being the FDR receipt Ex.PW1/D1, the respondent -plaintiff was only entitled to interest at 9.5% per annum and not at 10% per annum as claimed by the respondent-plaintiff. The entire controversy has arisen only because of the respondent-plaintiff not noticing the rate of interest being only 9.5% per annum as stated in the FDR till October 1998. May be the respondent- plaintiff was lulled into the sense of false belief in view of the specific statements in its letter dated 8.12.1997 Ex.PW1/4 seeking deposit at 10% per annum, however, once we have to decide the case only as per law, and law RSA 124/2014 Page 7 of 8 being as per the contractual relationship between the parties, the explicit terms contained in the FDR Ex.PW1/D1 will have to hold sway and equity cannot entitle the respondent/plaintiff to the higher rate of interest of 10% per annum.
10. In view of the above, the appeal is allowed. The impugned judgments of the courts below are set aside. The suit of the respondent- plaintiff for recovery will stand dismissed. Parties are left to bear their costs.
MAY 27, 2014 VALMIKI J. MEHTA, J.
ib
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