Proof of service is important

Correspondence, if disputed, becomes irrelevant unless it is rebutted

Industrial Development Bank of India had come out with 'IDBI Deep Discount Bond 96', issued on March 18, 1996. Balwani Singh, an army officer, had invested in this scheme by purchasing one bond having a face value of Rs 5,300. The investment was to mature in 2021, after 25 years, with a maturity value of Rs 2 lakh.

The scheme also provided for redemption of bonds on fixed dates prior to the maturity date. The redemption value was fixed at Rs 10,000 on August 1, 2000; Rs 25,000 on December 1, 2006; Rs 50,000 on September 1, 2011; and Rs 1 lakh on June 1, 2016.

Singh received the company's letter in respect of early redemption of the bonds but did not receive the notice intimating that interest would not be payable unless the bond certificate was surrendered. He wrote to the company, pointing out that he was serving in the army and had not received any notice at the station where he was posted, and no newspaper was even available there. He requested the company to pay the applicable redemption value of the bond. Instead, as a special case, the company agreed to pay 3.5 per cent interest, compounded quarterly, but this offer was not acceptable to Singh.

Singh filed a complaint before the district forum. He claimed the redemption value, along with interest, compensation and costs. The company contested the case, claiming it had exercised the call option to redeem the bonds on August 1, 2000, for Rs 10,000. This was communicated through letters sent under postal certificate (UPC) to every bond holder and notices had also been published in newspapers. However, the UPC receipt showed Singh's name and the address as "VPO Pauli".

The forum observed it was necessary to send individual notices to every bond holder. A notice was sent to Singh but the address was incomplete, so it would not have been possible to deliver it to his residence. Holding the absence of service of notice to be a deficiency, the forum allowed the complaint. It directed Singh to surrender the bond, duly discharged. IDBI was ordered to pay the last preceding redemption value of Rs 50,000, along with interest at 10 per cent per annum from September 1, 2011, till payment. Additionally, Singh was awarded Rs 5,000 towards compensation for harassment and mental tension, and litigation expenses of Rs 1,100.

IDBI appealed to the Haryana State Commission, which observed the scheme had been validly terminated and the bond value redeemed. Going by various Supreme Court judgments, the state commission held Singh would be entitled to the redemption value of Rs 10,000 along with interest as offered by IDBI from August 1, 2000, when the redemption took place. The award of Rs 5,000 towards compensation was upheld.

IDBI appealed to the National Commission, which pointed out that the dispute was not with regard to the date of termination of the scheme by payment of the redemption value of the bond but was in respect of non-receipt of the notices, which IDBI was legally required to send to every bond holder. The Commission observed there was no evidence to show that Singh had received the notice, sent to an incomplete address in May 2000. Singh came to know about the redemption in April 2009 when he received the second notice, by which time the second redemption date of December 1, 2006 had been crossed. Hence, the Commission concluded redemption would have to be made on the value at December 1, 2006.

Accordingly, by an order of May 28, 2015, delivered by the bench of D K Jain, Vinay Kumar and M Shreesha, the National Commission directed IDBI to pay Rs 25,000 along with interest applicable to savings bank accounts from December 1, 2006, till payment. The order for compensation of Rs 5,000 was maintained.

Thus, when receipt of correspondence is disputed, proof of service becomes essential.

The author is a consumer activist