Chhattisgarh Consumer Commission Upholds Refund Order Against Cooperative Society for Withholding Retiree’s Money Despite NOC

May 12, 2026 : The Chhattisgarh State Consumer Disputes Redressal Commission has upheld an order directing a cooperative credit society to refund ₹78,415 to a retired employee, holding that the society’s decision to withhold the amount nearly nine years after issuing a No Objection Certificate (NOC) amounted to deficiency in service under consumer law.

The State Commission dismissed an appeal filed by B.M., Chhattisgarh Sahkari Sakh Samiti Maryadit against an order passed by the District Consumer Disputes Redressal Commission, Durg, in favour of Sushma Saranaik, a retired employee of the Bhilai Steel Plant. The State Commission affirmed the findings of the District Commission and refused to interfere with the relief granted to the consumer.

According to the case records, Saranaik had obtained a loan of ₹2 lakh from the cooperative society during her service tenure. The society had issued a No Objection Certificate on April 4, 2011, indicating that the loan account stood settled. After her retirement on April 30, 2020, she sought release of the balance amount lying in her account. However, the society withheld ₹78,415 and claimed that an outstanding loan liability of ₹50,000 and related interest still remained payable.

The retired employee repeatedly approached the society seeking release of her money, but the amount was not paid. Alleging unfair treatment and deficiency in service, she approached the consumer forum seeking redressal. The District Commission accepted her complaint and directed the cooperative society to refund ₹78,415. It also awarded compensation of ₹5,000 for mental agony and ₹5,000 towards litigation expenses. The order further provided for payment of interest at six per cent per annum in case of non-compliance within the stipulated period.

Before the State Commission, the cooperative society argued that the NOC had been issued due to an inadvertent error. It contended that the complainant had repaid only ₹1,51,050 out of the principal loan amount of ₹2 lakh and that a balance remained unpaid. According to the society, after adding accumulated interest and other dues, a substantial amount was still recoverable from the complainant. It maintained that the amount lying in her account was liable to be adjusted against the alleged outstanding dues and that there was no deficiency in service on its part.

The Commission, however, found that the documentary evidence on record clearly showed that the cooperative society had issued an NOC in 2011 after recording closure of the loan account. The Commission observed that the society subsequently attempted to recover alleged dues in 2020 and blocked the complainant’s funds despite having formally acknowledged complete repayment years earlier. The Bench noted that once the loan account had been treated as settled and an NOC had been granted, the society could not lawfully withhold the consumer’s deposited money on the basis of a claim raised after such a long period.

In a significant observation, the State Commission held that “stopping payment of ₹78,415 from the complainant’s account in 2020 for recovery of an alleged loan liability that had already been closed in 2011 is illegal and constitutes deficiency in service.” The Commission further noted that the District Commission had thoroughly examined the evidence and had passed a legally sustainable order requiring no interference in appeal.

The appeal was consequently dismissed, and the order of the District Consumer Commission dated February 21, 2025, was affirmed. The State Commission directed both parties to bear their own costs in the appellate proceedings.

The ruling reinforces the principle that financial institutions and cooperative societies cannot arbitrarily revive settled loan accounts after issuing closure certificates or NOCs. The decision is likely to provide reassurance to consumers, pensioners, and retirees who rely on formal discharge certificates as proof that their financial liabilities have been extinguished. It also highlights the broad scope of the Consumer Protection Act, 2019 in addressing deficiencies in banking and cooperative financial services and protecting consumers from arbitrary withholding of their funds.

Case Reference : Appeal No. SC/22/FA/191/2025 B.M., Chhattisgarh Sahkari Sakh Samiti Maryadit Vs. Sushma Saranaik