Page 22 - Banking Finance December 2021

LEGAL UPDATE

Section 8 says every person who is reg- ity of funds, the court called for the tal Bank of Commerce, Patparganj
istered and granted a certificate or donor to also state purpose. Branch, in Delhi.
given prior permission under the Act Marwah then noticed that the pro-
and receives any foreign contribution, Bank's vengeful conduct ceeds of the fixed deposits were not
shall utilise such contribution for the computed at 10.5 per cent interest, as
purposes for which the contribution can invite punishment
mentioned on the receipts, but at 8.5
has been received. ML Marwah, a senior citizen, had held per cent interest, resulting in a short
Referring to the section, the bench a savings account with Canara Bank, payment of Rs. 247,457. Desides, in-
said the purpose of the contribution Patparganj Branch, Delhi for over 10 terest wasw computed till September
has to be disclosed and only then years. Both his wife Kiran and he had 6, 2014 even though the moeny had
would inflow of funds be allowed. So- also invested in a number of fixed de- remained with the bank till February 6,
licitor general Tushar Mehta con- posits with the bank. When the depos- 2015.
tended that an NGO can use the fund its matured and the amount was cred- Marwah then approached the District
for activities for which they are regis- ited to the bank account, Marwah Consumer Forum. The bank did not
tered which could be social, cultural, found a shortfall in interest paid.
even care to contest the complaint
religious purposes. He complained to the branch manager even though the Forum’s notice was
But the bench said that even in cases that his wife had received Rs 11,138 served to it. The complaint was de-
where an NGO is registered to carry less on her deposit. Since the grievance cided ex-parte. The bank was held
out various activities, the organisation was not redressed, he approached the guilty of deficient service and unfair
is bound to spend foreign contributions zonal manager, Delhi Circle. This infu- trade practice. The District Consumer
only for the purpose for which money riated SK Bahera, the branch manager, Forum ordered the bank to calculate
was transferred. It said that in such who prematurely closed all the other the proceeds of the fixed deposits at
fixed deposits on September 6, 2014 at
cases an NGO has to maintain sepa- 10.5 per cent without imposing the 2
rate accounts for carrying out different 7.27 pm, and even levied a 2 per cent per cent premature closure penalty. It
activities. penalty for premature closure. also awarded Rs. 45,00 as compensa-
"You are diluting the whole proceed- Since Marwah’s money was blocked by tion and Rs. 5,000 as litigation costs.
ings and intent of the Act. Disclosure the branch and the zonal manager, Since the computation of the fixed
has to be made by the donor at the too, did not resolve his grievance, he deposit proceedss was not extended
outset regarding for what purpose the complained to the bank’s head office from September 6, 2014 to February
at Bangalore, which also failed to take
contribution is being made. Purpose of 6, 2015 even though the amount re-
any action.
the contribution has to be disclosed mained with the bank, Marwah filed
only then inflow should be allowed. It Meanwhile, his money continued to an appeal. The bank to compute the
is another matter that you are not fol- remain blocked. Marwah then ap- amount payable till February 6, 2015.
lowing it. We need a clear stand of the proached the banking ombudsman in However, it set aside the cost of Rs.
government on the issue," the bench New Delhi, who directed the bank to 5,000.
told the solicitor general. either give 30 days’ notice for closing Marwah filed a revision petition
While justifying Centre's decision to the accounts, or pay interest in lieu of against this order, seeking enhance-
the notice.
amend the Act to regulate foreign ment of compensation. The National
contribution to NGOs, Mehta con- Canara Bank took the latter option of Commission observed that the award
tended this was to stop NGOs from paying interest. It paid Rs. of compensation for breach of contract
making chain-transfers of foreign funds 1,943,611.02 as proceeds on all the is governed by Section 73 of the Indian
a business. He said that there are In- deposits. It also paid Rs. 15,936 as in- Contract Act. This provision lays down
telligence Bureau inputs on NGOs mis- terest in lieu of 30 days’ notice. The that a party which suffers due to
using the funds and they cannot claim cheques for these amounts were breach of contract is entitled to com-
to have a fundamental right to receive handed over to Marwah on February pensation for the natural loss, but can-
funds from abroad. However, while the 4, 2015. Marwah deposited the not make a claim for remote of indi-
Centre too sought higher accountabil- cheques in his account with the Orien- rect loss. T

22 | 2021 | DECEMBER | BANKING FINANCE