Panipat Commission Holds Axis Bank Liable For Delaying Release Of Fixed Deposit After Maturity Date

The Panipat District Consumer Disputes Redressal Commission bench comprising of Dr. RK Dogra (President) and Dr. Suman Singh (Member) held Axis Bank liable of deficiency of service for not releasing the Fixed Deposit of Rs 1.4 Lacs to the complainant, even after the maturity date.

Brief Facts:

M/s Sidharath Wollen Mills (“Complainant”), a business based in Panipat, ordered Viscose Knitted Fabric from a Chinese company in July 2011. To facilitate the release of these goods in Tuglakabad, New Delhi, the custom department required the complainant to furnish a bank guarantee of Rs. 1,48,930. Axis Bank was the bank involved in this matter. The complainant complied with this request, providing the required bank guarantee on October 1, 2011, which was set to expire on September 30, 2012, and was extendable. As part of this guarantee, Axis Bank took Fixed Deposit Receipt (FDR) with an interest rate of 9.40% per annum, maturing on October 1, 2012.

The bank extended this FDR several times, and when the complainant decided to withdraw the amount, Axis Bank claimed that the FDR was in auto-renewal mode and advised the complainant to leave the money in the FDR. However, the FDR eventually matured in October 2020, but Axis Bank repeatedly postponed its release. Aggrieved, the complainant filed a consumer complaint in the Panipat District Consumer Disputes Redressal Commission (“District Commission”). The complainant requested the release of the FDR amount, along with interest, compensation for the delays experienced, and reimbursement for incurred litigation expenses.

On the other hand, Axis Bank submitted that the bank guarantee was issued as requested by the complainant, and the FDR associated with it had an auto-renewal feature post-maturity. Axis Bank claimed that they had extended the FDR multiple times at the complainant’s request. The bank was prepared to release the FDR but insisted on the complainant providing a discharge letter from the beneficiary of the bank guarantee as a prerequisite. Axis Bank argued that the complaint was not maintainable due to the complainant’s failure to submit the discharge letter and alleged that the complainant had concealed essential information from the Commission.

Observations by the Commission:

The District Commission, after a thorough evaluation of the evidence and the arguments put forth by both parties, rendered its verdict. The District Commission observed that the FDR had indeed been extended in line with the T&C of the original bank guarantee. This evidence clearly indicated that the liability under the guarantee was limited to Rs. 1,48,930/-, and the guarantee remained valid until September 30, 2013. The complainant’s request to withdraw the FDR up to its maturity date was dismissed by Axis Bank’s unilateral extensions, an action deemed beyond their authority. This constituted a deficiency in service, according to the District Commission.

Axis Bank chose not to appear before the Commission to present its case or challenge the evidence presented by the complainant. As a result, the evidence submitted by the complainant remained unchallenged, strengthening their position in the case. Consequently, the District Commission ruled in favour of the complainant, affirming the maintainability of the complaint.

In the final order, the District Commission ordered Axis Bank to release the FDR amount of Rs. 1,48,930/-, along with interest calculated at a rate of 9% per annum, from the date of the FDR’s maturity to the actual realization of the amount. Furthermore, Axis Bank was directed to pay Rs. 5,000 to the complainant as compensation and an additional Rs. 5,500 as litigation expenses within a period of 45 days. Failure to comply with this order would result in the complainant being entitled to seek 12% per annum interest from the date of the award until its realization.

The District Commission also highlighted the consequences of non-compliance, indicating that the complainant could initiate an execution petition under Section 71 of the Consumer Protection Act, 2019. In such an event, Axis Bank might also be liable for prosecution under Section 72 of the same Act.

Case: M/s Siddharth Wollen Mills vs Axis Bank

Case No.: CC/93/2021

Advocate for the Complainant: BS Jaglan

Advocate for the Respondent: Avdesh Jindal

Click Here To Read/Download Order