Maharashtra State Commission Holds HP Employees' Co-operative Credit Society Liable For Deficiency In Service For Enforcing Undisclosed Restriction On Premature Withdrawal Of Deposit
The Maharashtra State Consumer Disputes Redressal Commission comprising Presid-ing Member Mukesh V. Sharma and Member Poonam V. Maharshi has held HP Employ-ee's Co-operative Credit Society Ltd liable for deficiency in service and unfair and arbitrary practice for enforcing undisclosed restrictions on premature withdrawal of deposits and withholding admitted dues of a retired employee.
The Commission held that when a financial institution seeks to enforce a restrictive condi-tion such as prohibition on premature withdrawal, the burden lies on it to prove that such condition was clearly disclosed and accepted at the time of deposit. It held that internal cir-culars or undisclosed policies cannot be relied upon to deny withdrawal unless such condi-tions formed part of the deposit documents.
Brief Facts
The complainant, Shruti Sudhir Kirtane, a senior citizen and retired employee of Hindustan Petroleum Corporation Ltd (HPCL), invested Rs. 9,00,000 of her savings in a Monthly In-come Scheme floated by the HP Employee's Co-operative Credit Society Ltd (Opposite Party). The society issued a Fixed Deposit Receipt dated 04.01.2016 with a maturity date of 04.01.2019.
In February 2017, the complainant requested premature withdrawal of the deposit due to financial needs. However, the Opposite Party refused the request relying on its internal circular dated 24.12.2015 which prohibited premature withdrawal under the scheme. The complainant contended that no such restriction was disclosed in the deposit application form or receipt at the time of investment.
The complainant approached the Deputy Registrar of Co-operative Societies and the Re-serve Bank of India but did not obtain relief. She further stated that after her retirement on 30.11.2017, the Opposite Party did not release Rs. 3,52,242 lying to her credit and insisted on completion of further formalities and documentation.
Aggrieved by the refusal to release the deposit and withholding of admitted dues, the com-plainant filed a consumer complaint seeking refund of the amounts with interest, compen-sation, and litigation costs.
Arguments of the Opposite Party
The Opposite Party contended that the complaint was not maintainable under consumer ju-risdiction as the dispute was governed by its by-laws and the complainant had already ap-proached the Deputy Registrar. It submitted that premature withdrawal was not permissible under the scheme and that the restriction had been communicated through its circular.
It further contended that allowing premature withdrawal would affect the society's liquidity and that the amount of Rs. 3,52,242 was subject to completion of required formalities and documentation. It denied any deficiency in service or unfair trade practice.
Observations by the Commission
The Commission held that the complainant qualified as a consumer since she had entrusted her money to the society for financial services in return for agreed consideration. It ob-served that the remedy under the Consumer Protection Act is an additional remedy and is not barred merely because the complainant approached the Deputy Registrar.
On merits, the Commission held that a restriction such as prohibition on premature with-drawal is a material condition which must be clearly disclosed at the time of deposit. It ob-served that the Opposite Party failed to establish that the restrictive condition was disclosed and accepted by the complainant as part of the deposit documents.
The Commission held that when a service provider relies on a restrictive term to deny payment, the burden lies on it to prove clear disclosure and acceptance of such condition. It held that internal circulars or policies not incorporated into the deposit documents cannot be relied upon to refuse withdrawal.
The Commission further held that the Opposite Party could not indefinitely withhold admit-ted amounts by linking release to internal procedural formalities or documentation re-quirements.
Accordingly, the Commission held that the Opposite Party committed deficiency in service and adopted unfair and arbitrary practice by enforcing an undisclosed restrictive condition and withholding admitted dues.
Relief Granted
The Commission partly allowed the complaint and directed the Opposite Party to:
• Pay Rs. 9,00,000 with interest at 10% per annum from 04.01.2016 till realization
• Pay Rs. 3,52,242 with interest at 10% per annum from 01.12.2017 till realization
• Pay Rs. 5,00,000 as compensation
• Pay Rs. 50,000 as litigation costs
The Commission directed the Opposite Party to comply with the order within 60 days, fail-ing which it shall pay interest at 12% per annum on all awarded amounts from the date of the order till realization.
Case Title: Shruti Sudhir Kirtane vs HP Employee's Co-operative Credit Society Ltd.
Case No.: CC No. SC/27/CC/18/26