NCDRC orders financial firm to pay over Rs 1 crore for failing to repay deposit on maturity

The apex consumer commission Wednesday directed a non-banking financial company (NBFC) to pay over Rs 1 crore along with interest to a cooperative society for failing to repay deposits with interest after maturity.

The National Consumer Disputes Redressal Commission (NCDRC) asked Trustwin Finance Co. Ltd to pay the principal amount of Rs 1,12,00,000 to Starjyot Cooperative Credit Society Ltd along with an interest of 15 per cent on the said amount from July 1, 2001, till the date of institution of the complaint.

"Trustwin Finance Co. Ltd. is directed to pay the principal amount of Rs 1,12,00,000 to the complainant (Starjyot Cooperative Credit Society) along with interest on the aforesaid amount at the rate of 15 per cent per annum with effect from July 1, 2001 till the date on which this complaint was instituted," the commission said.

It also ordered the NBFC to pay a sum of Rs 22,66,750 as interest payable up to June 30, 2001, Rs 20,00,000 as an additional interest with regard to a Memorandum of Understanding formulated between the parties, another interest of 10 per cent on the principal amount from the date of filing of the complaint, and an extra Rs 25,000 as litigation expenses to the firm.

The cooperative society had invested a sum of Rs 1,12,00,000 with the company during the year 1999. The company, however, failed to repay the said deposit with interest when they matured on expiry of their term.

In May 2001 the cooperative society was informed that the Board of Directors of the company had decided to transfer selling rights of 24,622 sq.ft. of flats in a housing project which the company had said to be undertaking, to the cooperative society.

A Memorandum of Understanding is also said to have been executed between them. However, no transferring of the selling rights actually took place, the complaint said.

NCDRC ordered paying of Rs 20 lakh as an additional interest referred in the MOU.

The company had contended that the cooperative society was a commercial establishment and therefore, cannot be considered as a consumer. They also denied having decided to sell 24,622 sq.ft. of flats to the Society by way of collateral security.

However, the company did not deny the deposits taken.

The commission said that considering the by-laws of the complainant society, the cooperative society cannot be said to have hired or availed the services of the company for a commercial purpose.

"The complainant (Society) is not at liberty to deal with its net profits in any manner it desires. The said profits can be dealt with only as per its by-laws from which it is governed. At least 25 per cent of its profits are required to be deposited in a Statutory Reserve Fund as per the provisions of the Maharashtra Cooperative Societies Act.

"After payment of dividend, the balance amount is to be transferred for building funds and other funds. The society is also required to pay educational fund to Maharashtra Cooperative Federation. Therefore, the complainant cannot be said to be a commercial establishment set up solely for the purpose of making profits," the commission said.