Woman expects 12% interest on fixed deposit, puts Rs 9.5 lakh in Karnataka society, fails to recover money after maturity, consumer court orders society to pay Rs 17.63 lakh

A woman who deposited Rs 9.5 lakh in fixed deposits with a Karnataka credit society, expecting annual interest of up to 12%, could not recover her money when she sought repayment. Another customer, a 73-year-old senior citizen, was also waiting for his money, including a Rs 5 lakh fixed deposit that had matured in November 2025.

The two customers had Rs 17.63 lakh stuck across fixed deposits, savings accounts and a recurring deposit. After their repayment demands failed to resolve the matter, they approached the consumer commission. The Gadag District Consumer Disputes Redressal Commission has now directed repayment of the entire principal amount with applicable interest, besides Rs 20,000 compensation and Rs 5,000 litigation costs.

Woman’s Rs 9.5 lakh worth fixed deposits and senior citizen’s savings remained unpaid

The customers had deposited their money with Kittur Rani Chennamma Urban Credit Souhardha Sahakari Ltd.
Their investments included two fixed deposits worth Rs 5 lakh and Rs 4.5 lakh. The larger deposit carried an agreed annual interest rate of 10.80% and matured on November 10, 2025. The other deposit carried an interest rate of 12%.

Apart from these deposits, the customers had money in savings and recurring deposit accounts. One had Rs 2,57,675 in a savings account, while the other had Rs 4,79,099 in a savings account and Rs 76,500 in a recurring deposit.

Despite seeking their money back, the customers did not receive the outstanding amounts. The problem was not restricted to the matured fixed deposit. Their savings and recurring deposit balances were also part of the unpaid claims.
They eventually sent a legal notice to the society on February 4, 2026, demanding repayment.

Society’s defense fails

During the proceedings, the customers submitted their fixed deposit receipts, savings account passbooks and recurring deposit passbook.

They also placed the legal notice and postal records before the commission. These documents supported their claims regarding the deposits and the outstanding account balances.

The society’s representatives denied deficiency in service and raised an objection referring to proceedings under the Karnataka Protection of Interest of Depositors in Financial Establishments Act. They argued that the consumer proceedings should not continue.

The commission rejected this objection, noting that the society had not produced an order or other material establishing that the proceedings under the state law prevented it from deciding the consumer dispute.

Commission orders repayment with interest

The commission found that the society had not produced evidence showing that the fixed deposits had been repaid or that the customers had withdrawn their savings account balances.

It held that accepting deposits created an obligation to return fixed deposit amounts with applicable interest upon maturity and savings balances when demanded. The failure to do so despite repeated demands and a legal notice amounted to deficiency in service.

How much will the two customers get?

The commission directed repayment of Rs 17,63,274, with different interest rates for the respective accounts.

The Rs 5 lakh fixed deposit will carry 10.80% annual interest until its maturity on November 10, 2025, followed by 7.5% interest on the maturity amount until repayment. The Rs 4.5 lakh deposit will carry 12% interest from November 15, 2024, until February 4, 2026, followed by 7.5% interest until realisation.

The savings account balances will carry 2.5% annual interest from February 4, 2026, while the recurring deposit balance will carry 6% interest from that date.

The commission also awarded Rs 20,000 compensation for mental agony and Rs 5,000 towards litigation costs. The order was pronounced on October 22, 2026, by President Shri A. G. Maldar and Member Dr. Manjunath M. Bammanakatti. The payment must be made within eight weeks.