Chandigarh District Commission Holds IDBI Bank Accountable For Failing To Initiate Refund To Bond Buyer's Nominee

Chandigarh District Commission Holds IDBI Bank Accountable For Failing To Initiate Refund To Bond Buyer's Nominee

The District Consumer Disputes Redressal Commission-I, UT Chandigarh bench, headed by Pawanjit Singh (President) and comprising Surjeet Kaur and Suresh Kumar Sardana (Members), Found IDBI Bank accountable for not initiating a refund to the deceased's nominee following the exercise of its call option right concerning a bond purchased by the deceased.

The issue revolved around the acquisition of an IDBI Deep Discount Bond by the complainant's father. Purchased at an issue price of Rs. 5300/-, the bond held a face value of Rs. 2,00,000/-. Its redemption was scheduled for 18.03.2021. Despite the initial residency of the complainant's father in Sector 31-D, Chandigarh, the family later relocated. Tragically, the father passed away on 10.10.2020, well before the bond's maturity date, leaving the complainant as the rightful recipient of the redemption amount.

However, upon seeking the promised sum from IDBI in Chandigarh on the due date, the complainant faced delays and obstacles. Despite numerous attempts to communicate with IDBI, satisfactory responses were not forthcoming. Feeling aggrieved, the complainant took the matter to the District Consumer Disputes Redressal Commission-I, U.T. Chandigarh (District Commission), lodging a consumer complaint against IDBI.

In its defense, IDBI contended that it had invoked its call option right concerning the bond on 1st August 2000, in accordance with the terms and conditions outlined in the offer document and on the bonds themselves. It asserted that individual bondholders were duly informed about the call option through postal correspondence and notices published in prominent newspapers before the specified date. Copies of the call option notice and notices published in various newspapers were presented as evidence.

Furthermore, IDBI argued that reminders regarding the call option were subsequently dispatched to the complainant at their last known address. At the time of exercising the call option, the redemption amount stood at Rs. 10,000 for each bond, against the initial investment of Rs. 5300. IDBI emphasized that the complainant was entitled solely to the redemption amount specified in the call option notice, along with any applicable interest.

The District Commission determined that the maturity period of the bonds spans 25 years from the date of allotment, which was on 18th March 1996. Moreover, it established the presence of an early redemption option, enabling investors to redeem the discount bonds before the full maturity period. Additionally, a call option clause grants IDBI the power to redeem the deep discount bonds on specified dates, with corresponding amounts payable to the investors.

The District Commission observed that IDBI had appropriately exercised the call option right on 1st August 2000, in accordance with the terms and conditions stipulated in the bond agreement. Additionally, information pertaining to the call option has been consistently disseminated in prominent newspapers since the year 2000 and has continued thereafter. It was determined that the onus rested with the complainant to ensure the communication of their correct address to IDBI. Consequently, the District Commission concluded that IDBI cannot be held accountable for any oversight on the part of the complainant.

Concerning the complainant's entitlement under the call option right, the District Commission concluded that it remained unresolved. As a result, the District Commission partially granted the complaint to facilitate the refund.

The District Commission instructed IDBI to reimburse the sum of ₹10,000/- along with interest and to provide an additional amount of ₹5,000/- to the complainant as compensation for the mental distress and harassment experienced, in addition to covering litigation expenses.