Chandigarh District Commission Holds IDBI Liable For Failure To Initiate Refund To Bond Buyer's Nominee

Brief Facts:

The matter pertained to the purchase of an IDBI Deep Discount Bond by the Complainant's father. The bond was bought at an issue price of Rs. 5300/- with a face value of Rs. 2,00,000/-. It was due for redemption on 18.03.2021. The Complainant's father, who was initially a resident of Sector 31-D, Chandigarh, later shifted to a different address with his family. He passed away on 10.10.2020, well before the maturity date of the bond, leaving the Complainant entitled to receive the redemption amount. However, upon approaching IDBI at Chandigarh on the due date, the Complainant encountered delays and hurdles in receiving the promised amount. The Complainant made several communications with IDBI but didn't receive any satisfactory response. Feeling aggrieved, the Complainant approached the District Consumer Disputes Redressal Commission-I, U.T. Chandigarh (“District Commission”) and filed a consumer complaint against IDBI.

In response, IDBI argued that it exercised its call option right regarding the bond on 1st August 2000, as per the terms and conditions outlined in the offer document and on the bonds themselves. It claimed that individual bondholders were duly notified about the call option through postal correspondence and the publication of notices in leading newspapers before the stipulated date. Copies of the call option notice dated 25.05.2020 and notices published in various newspapers in 2000 were submitted as evidence. Additionally, it argued that subsequent reminders about the call option were sent to the Complainant in 2009 and 2013 at their last known address. At the time of the call option exercise, the redemption amount was Rs.10,000/- for each bond against the initial investment of Rs. 5300/-. It maintained that the Complainant was entitled only to the redemption amount specified in the call option notice along with applicable interest.

Observations by the District Commission:

The District Commission held that the maturity period of the bonds extends for 25 years from the date of allotment, which in this case was 18th March 1996. Furthermore, it held that there exists an early redemption option allowing investors to redeem the discount bonds before the maturity period. Additionally, a call option clause grants IDBI the authority to redeem the deep discount bonds on specific dates with corresponding amounts payable to the investors.

The District Commission noted that IDBI exercised the call option right on 1st August 2000, adhering to the terms and conditions specified in the bond agreement. Moreover, information regarding the call option had been consistently published in leading newspapers since the year 2000 and onwards. It held that the responsibility lay with the Complainant to ensure the communication of his correct address to IDBI. Consequently, it held that IDBI cannot be held liable for any oversight on the part of the Complainant.

Regarding the Complainant's entitlement as per the call option right, the District Commission held that it remained pending. Therefore, the District Commission partially allowed the complaint to allow the refund.

It directed IDBI to refund the amount of ₹10,000/- with interest and pay an additional amount of ₹5000/- to the Complainant as compensation for the mental distress and harassment endured, along with litigation expenses.

Case Title: Dhananjay Yadav vs IDBI

Case Number: CC/308/2022

Advocate for the Petitioner: Brajesh Kumar and Atul Goyal

Advocate for the Respondent: Tajender K. Joshi