The State Consumer Disputes Redressal Commission has directed HP Employees’ Co-operative Credit Society Ltd. to refund Rs 9 lakh along with 10 percent interest from 2016 to a 60-year-old retired HPCL employee. While passing the order, the Commission held that the credit society had unfairly denied her request for premature withdrawal of her invested amount by relying on an undisclosed internal condition.
Society’s Conduct Criticized
“The complainant, being a senior citizen and retired employee, was made to run from pillar to post. The conduct of the credit society in enforcing an undisclosed restriction and in linking the release of admitted amounts to internal formalities cannot be approved. Therefore, directions for refund of the principal amounts with reasonable interest are necessary,” the Commission held.
Complainant’s Background
Advocate Poonam Makhijani appeared on behalf of the complainant. The complainant, Shruti Sudhir Kirtane, a senior citizen residing in Kamothe, Navi Mumbai, retired from Hindustan Petroleum Corporation Limited (HPCL) on November 30, 2017, after more than 36 years of service. In December 2015, while still in service, she invested Rs 9 lakh in the society’s Monthly Income Scheme (MIS) after being assured of attractive returns. A Fixed Deposit Receipt dated January 4, 2016, was issued to her, showing the maturity date as January 4, 2019.
Premature Withdrawal Denied
Kirtane stated that neither the application form nor the deposit receipt mentioned any restriction on premature withdrawal. However, when she requested early release of the deposit in February 2017 due to financial needs, the society refused, citing an internal circular dated December 24, 2015, which prohibited premature withdrawal under the scheme. She contended that she was never informed of such a condition at the time of investment and that the refusal was arbitrary and contrary to fair banking practices. She also alleged that after her retirement, the society withheld an additional Rs 3,52,242 that was lying to her credit, insisting on further formalities and documentation.
RBI Guidelines Cited
Kirtane relied upon the RBI circular dated July 1, 2014, to contend that premature withdrawal policies must be fair; however, this was opposed by the credit society. “For our conclusion on deficiency and unfairness, we do not rest only on the technical applicability of the RBI circular. Even otherwise, the credit society, while providing financial services, is bound to act fairly, transparently and non-arbitrarily. The deficiency here lies in enforcing a restrictive condition not proved to be part of the complainant’s deposit documents and in withholding admitted amounts on unilateral internal grounds,” the order reads.
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Society’s Defense
The credit society argued that it is governed by its by-laws and scheme conditions and that the complainant had voluntarily invested under the MIS to avail higher returns. It claimed that the “no premature withdrawal” clause was an integral part of the scheme and had been communicated to members through email. The society further contended that allowing premature withdrawal would disturb the scheme’s structure and affect its liquidity. It also argued that since the complainant had earlier approached the Deputy Registrar of Co-operative Societies, the consumer complaint was not maintainable.
Consumer Status Affirmed
The Commission rejected these contentions, holding that accepting deposits, issuing fixed deposit receipts, maintaining accounts and paying maturity amounts constitute “services” under the Consumer Protection Act. It observed that the complainant continued to be a consumer as long as the society retained her deposit and was obligated to deal with it. It further clarified that the remedy under the Consumer Protection Act is an additional remedy and is not barred merely because the complainant had approached another authority.
Undisclosed Restriction Unfair
On merits, the Commission held that a restriction such as “no premature withdrawal” is a material and onerous condition that must be clearly disclosed in the deposit documents at the time of accepting the money. It noted that the society failed to prove that the restrictive clause was expressly incorporated in the deposit form or receipt or that the complainant had acknowledged and accepted it. Relying on an internal circular without demonstrating clear disclosure to the depositor, the Commission observed, was unfair and arbitrary.
Compensation and Refund Ordered
Holding the society guilty of deficiency in service and unfair conduct, the Commission directed the credit society to refund Rs 9 lakh with interest at 10 percent per annum from January 4, 2016, till realization. It also ordered the release of the withheld amount of Rs 3,52,242 with interest at 10 percent per annum from December 1, 2017, till realization. In addition, the society has been directed to pay Rs 5 lakh as compensation for harassment and mental agony and Rs 50,000 towards litigation costs.
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