SOVINTORG (INDIA) LTD. versus STATE BANK OF INDIA, NEW DELHI

Citation: [1999] SUPP. 1 S.C.R. 337 · Decided: 11-08-1999 · Supreme Court of India · Bench: S. SAGHIR AHMAD, R.P. SETHI · Disposal: Case Partly allowed

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Judgment (excerpt)

SOVINTORG (INDIA) LTD. 
A 
v. 
ST A TE BANK OF INDIA, NEW DELHI 
AUGUST 11, l999 
[S. SAGHIR AHMAD AND R.P. SETHI, JJ.] 
B 
Consumer Protection Act, 1986: 
Section 14-Interest-Award of-Customer deposited Rs. I lakh in 
bank but same not credited to its account for 7 years-State Commission C 
found bank not wrong in retaining amount-Hence, claim for compensation 
and damages, rejected-However, State Commission awarded 12% interest 
which was confirmed by National Commission-Held, in the absence of 
contract between parties for payment of interest on delayed deposit or service, 
interest cannot be claimed under S.34 CPC since this provision has not been D 
specifically made applicable to the proceedings under the Act-However, the 
general provisions of S.34 CPC, being based upon justice, equity and good 
conscience, would authorise the consumer courts to also grant interest 
according to the circumstances of each case-Interest can also be awarded 
in lieu of compensation or damages in appropriate cases-Hence, National 
and State Commissions rightly awarded interest-However, 12% interest E 
being inadequate, raised to 15'Yo--Code of Civil Procedure, 1908-S.34. 
Section 14-/nterest-Award of-May also be awarded on equitable 
grounds. 
The appellant-company had an account with the respondent-Bank and p 
deposited a cheque for Rs. 1 lakh, which was not credited to its account for 
seven years, though the proceeds of the cheque were collected. The appellant 
filed a complaint before the State Consumer Disputes Recfressal Commission 
under the Consumer Protection Act, 1986 claiming compensation for 
business losses, damages and 24% interest per annum. 
G 
The State Commission as well as the National Commission held that 
there existed an undertaking between the parties which authorised the Bank 
to keep the amount as margin money for the guarantee furnished by the 
bank on behalf of the appellant to the Chief Controller of Exports and Imports 
and, therefore, the bank was not wrong in having retained the amount. The 
337 
II 
338 
SUPREME COURT REPORTS [1999] SUPP. 1 S.C.R. 
A appellant could not establish when the contract for guarantee stood terminated. 
However, it was found to be in force as late as in 1987. 
The State Commission rejected the claim for compensation and 
damages but awarded 12% interest from the date of receipt of the amount 
till the date of its payment The National Commission confirmed the aforesaid 
B order. Hence this appeal. 
I) 
On behalf of the appellant it was contended that the appellant was 
entitled to interest at the rate specified under Section 34 of the Code of Civil 
Procedure, 1908. 
Partly allowing the appeal, this Court 
HELD: 1. There was no contract between the parties regarding paymen~ 
of interest on delayed deposit or on account of delay on the part of the 
opposite party to render the services. Interest cannot be claimed under 
Section 34 of the Code of Civil Procedure, 1908 as its provisions have not 
been specifically made applicable to the proceed~ngs under the Consumer 
Protection Act, 1986. However, the general provision of Section 34 CPC, 
being based upon justice, equity and good conscience, would authorise the 
Redressal Forums and Commissions to also grant interest appropriately 
under the circumstance of each case. Interest may also be awarded in lieu 
£ ·or compensation or damages in appropriate cases. Interest can also be awarded 
on equitable grounds. IJ41-A-B-CI 
F 
' SatinderSingh v. Amrao Singh, 1196113 SCR 676 and laxmichandv. 
Indore Improvement Trust, Indore, AIR (1975) SC 1303, relied on. 
Bengal Nagpur Railway Co. ltd. v. Ruttanji Ramji, (1938) LR 65 IA 
66, cited. 
2. The State Commission as well as the National Commission were 
justified in awarding interest to the appellant.· But 12% interest was 
'inadequate and, therefore, the appellant shall be entitled to 15% interest per 
G annum from the date of receipt of the amount till the date of its payment. 
1342-A-B; DI 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 823of1992. 
From the Judgment and Order dated 11.9.91 of the National Consumer 
H Disputes Redressal Commission, New Delhi in F. A. No. 4 of 1991. 
SOVINTORG (INDIA) LTD. v. S.B.I.[SETHJ, J.] 
339 
Ms. Meenakshi Arora for the Appellant. 
A 
S.K. Bisaria for the Respondent. 
The Judgment of the Count was delivered by 
SETHI, J. Not satisfied with the majority view of the National Consumer 
Disputes Redressal Commission (hereinafter called "the Nationa

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