This revision petition has been filed by Sahkari Ganna Vikas Samiti against the order dated 24.08.2016 of the State Consumer Disputes Redressal commission, Uttar Pradesh, (in short ‘the State Commission’) passed in Appeal No.1890 of 2010.
2. Brief facts of the case are that the petitioner purchased Kisan Vikas Patra and National Saving Certificates for Rs.4,63,500/-. After the maturity of the instruments, it was informed that maturity amount cannot be given to the petitioner/complainant quoting circular No.61/111/95 S.V. dated 9.3.1995 of the Postal department, wherein the purchase of Kisan Vikas Patra by institutions has been banned. The complainant filed a consumer complaint bearing No.219/2007 before the District Consumer Disputes Redressal Forum, Gonda, (in short ‘the District Forum’) and the District Forum vide its order dated 01.09.2010 ordered the opposite party to pay maturity amount. Aggrieved by the order dated 01.09.2010 of the District Forum, the respondents/opposite parties preferred appeal before the State Commission and the State Commission vide its order date 24.8.2016 allowed the appeal and dismissed the complaint.
3. Hence the present revision petition.
4. Heard both the learned counsel for the parties and examined the record. The learned counsel for the petitioner stated that when the amount was deposited, there was no such information given to the petitioner by the employees of the opposite party department. Moreover, even during the currency of these instruments, no intimation was sent to the complainant that they would not be entitled to any interest on these deposits. When the petitioner approached the opposite parties for getting the maturity amount then it was informed that institutions cannot purchase Kisan Vikas Patras and therefore, no interest was liable to be paid.
5. It was argued by the learned counsel for the petitioner that the opposite party is relying on the judgment of the Hon’ble Supreme Court in Civil appeal No.4995 of 2006 titled Arulmighu Dhandayudhapaniswamy Vs. Director General of Post Offices, Department of Post & Ors. III (2011) CPJ 25 (SC), but in that case the amount was returned within six months of deposit and the notice was given to the depositor institution within a period of seven months, whereas in the present case, no notice has been given to the complainant by the opposite party department and the money deposited remained with them till maturity of these instruments. Thus, the case referred to by the opposite party on Arulmighu Dhandayudhapaniswamy Vs. Director General of Post Offices, Department of Post & Ors. (supra) is not applicable in the present case. The learned counsel argued that as the amount remained with the opposite party, the complainant is entitled to get the maturity value of the instruments.
6. To support his arguments learned counsel for the petitioner referred to the case of Superintendent of Post Offices Vs. Town Area Committee, IV (2006) CPJ 25 (NC), wherein following has been observed:-
“Compensation for failure to discharge obligation resembling those created by contract when an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract.”
7. On the other hand learned counsel for the respondent has stated that by notification dated 9.3.1995 all the institutions are debarred from purchasing the Kisan Vikas Patra or National Savings Certificate. In the light of this circular, the petitioner cannot claim any interest on the deposited amount. Learned counsel argued that even the Hon’ble Supreme Court in Arulmighu Dhandayudhapaniswamy Vs. Director General of Post Offices, Department of Post & Ors. (supra), has held the following:-
“Post Office Saving Bank General Rules, 1981- Rules 16, 17- Consumer Protection Act, 1986- Sections 2(1)(g), 14(1)(d),23- Deposits by Temple- ‘Post Office Time Deposit Scheme’- Scheme discontinued and account closed without interest- Alleged deficiency in service- Commissions below dismissed complaint- Hence Special leave to appeal- Contention as per Rule 17 investment by institutions under scheme was not permissible- Accepted- appellant-temple is also an institution-Respondents were justified in declining to pay interest for deposited amount since the same was not permissible- Orders of Commissions upheld- Suggestions made to Post Office dealing with various accounts of deposits.”
8. Learned counsel argued on the basis of the above observations of the Hon’ble Supreme Court that apart from the principal amount nothing is to be paid to the complainant. It was stated by the learned counsel that question of duration is not important but the law is important as laid down by the Hon’ble Supreme Court. Learned counsel further referred to the judgment of this Commission passed in U.P.Jal Nigam Construction Division of Bareilly Vs. Director, Directorate Department of Post & 3 Ors., FA No.144 of 2014, decided on 21.09.2015 (NC) where this Commission has dismissed the appeal filed by the U.P. Jal Nigam, Construction Division of Bareilly on the basis of the judgment of the Hon’ble Supreme Court in Arulmighu Dhandayudhapaniswamy Vs. Director General of Post Offices, Department of Post & Ors. (supra). Thus, on the basis of these authoritative judgments, the learned counsel contended that no interest can be provided on the NSCs and KVPs, which were purchased by the complainant.
9. I have given a thoughtful consideration to the arguments advanced by the learned counsel for the parties and examined the record.
10. It is true that the respondent/Post Office accepted money from the complainant and issued Kisan Vikas Patra and National Saving Certificates. As no intimation was sent during the currency of these instruments, obviously, the complainant was under the impression that its investments are safe and growing in value. It is seen that the judgment of the Hon’ble Supreme Court in Arulmighu Dhandayudhapaniswamy Vs. Director General of Post Offices, Department of Post & Ors. (supra) referred by the learned counsel for the respondent is clearly distinguishable on the basis of facts from the present case. In the referred case, the amount was deposited on 05.05.1995 and Post-office informed the depositor vide letter dated 01.12.1995 that the scheme was closed w.e.f. 01.04.1995. Clearly, the scheme was closed for the institutions only w.e.f. 01.4.1995, so it was quite possible that the employees of the postal department may not have got the information about the closure of the scheme and the post-office accepted the deposit on 05.05.1995. Moreover, the notice was sent by the post-master within a period of 7 months informing the depositor that the scheme was closed and no interest will be payable on the deposited amount. In contrast, in the present case, the post office wrongly accepted the deposits as by this time, the rule that institutions are not eligible to deposit in these schemes, had become quite old and must have been known to the employees of postal department. Moreover, in the present case, no notice has been sent within the currency of these instruments and the money remained deposited with the postal department for the whole period of maturity. Moreover, the Hon’ble Supreme Court in Arulmighu Dhandayudhapaniswamy Vs. Director General of Post Offices, Department of Post & Ors. (supra) has also given the following directions to the department of posts so that such cases do not recur in future. This would be clear from the following portion of the judgment:-
“ 10. Before parting with this appeal, we intend to make the following suggestions to the Post Offices dealing with various accounts of deposits:
(i) Whether it is metropolitan or rural area, persons dealing with public money or those who are in-charge of accepting deposits to be conversant with all the details relating to types of deposits, period, rate of interest, eligibility criteria, etc. for availing benefits under different schemes.
(ii) It is desirable to exhibit all these details in vernacular language in a conspicuous place to facilitate the persons who intend to invest/deposit money.
(iii) That if the Central Government issues any notification/instructions regarding change in the interest rate or any other aspect with regard to deposits, the decision taken shall be immediately passed on to all the authorities concerned by using latest technology methods i.e. by fax, e-mail or any other form of communication so that they are kept updated of the latest developments.
(iv) If there is any change in different types of schemes, it must be brought to the notice of the subordinate staff of the post offices dealing with deposits in order to ensure that correct procedures are followed and correct information is given to the public.
11. We are constrained to make these observations since in the case on hand because of the lack of knowledge on the part of the Post Master who accepted the deposit and the appellant, one of the ancient temples in Tamil Nadu lost a substantial amount towards interest.”
11. It seems that the directions of the Hon’ble Supreme Court have not been complied with by the department of posts and that is why such cases are still happening and the investors are suffering.
12. Hon’ble Supreme Court in Arulmighu Dhandayudhapaniswamy Vs. Director General of Post Offices, Department of Post & Ors. (supra) has not allowed interest on the Kisan Vikas Patras purchased by the institution in the light of the notification dated 09.03.1995 issued by the postal department. After this judgment, the Hon’ble Supreme Court has again considered this issue in M/s. Bhagwati Vanaspati Traders Vs. Senior Superintendent of Post Offices, Meerut, Civil Appeal No.4854 of 2009, decided on 10.10.2014 and has observed the following:-
“9. We find merit in the second contention advanced at the hands of the learned counsel for the appellant. It is indeed true, that the NSC was purchased in the name of M/s. Bhagwati Vanaspati Traders. It is also equally true, that M/s. Bhagwati Vanaspati Traders is a sole proprietorship concern of B.K. Garg, and as such, the irregularity committed while issuing the NSC in the name of M/s. Bhagwati Vanaspati Traders, could have easily been corrected by substituting the name of M/s. Bhagwati Vanaspati Traders with that of B.K. Garg. For, in a sole proprietorship concern an individual uses a fictional trade name, in place of his own name. The rigidity adopted by the authorities is clearly ununderstandable.
The postal authorities having permitted M/s. Bhagwati Vanaspati Traders to purchase the NSC in the year 1995, could not have legitimately raised a challenge of irregularity after the maturity thereof in the year 2001, specially when the irregularity was curable. Legally, rule 17 of the Post Office Savings Bank General Rules, 1981, would apply only when an applicant is irreregularly allowed something more, than what is contemplated under a scheme. As for instance, if the scheme contemplates an interest of Y% and the certificate issued records the interest of Y+2% as payable on maturity, the certificate holder cannot be deprived of the interest as a whole, on account of the above irregularity.
He can only be deprived of 2%, i.e., the excess amount, beyond the permissible interest, contemplated under the scheme. A certificate holder, would have an absolute right, in the above illustration, to claim interest at Y%, i.e., in consonance with the scheme, despite rule 17. Ordinarily, when the authorities have issued a certificate which they could not have issued, they cannot be allowed to enrich themselves, by retaining the deposit made. This may well be possible if the transaction is a sham or wholly illegal. Not so, if the irregularity is curable. In such circumstances, the postal authorities should devise means to regularize the irregularity, if possible.
“10. It is not possible for us to deny relief to the appellant, based on the judgments rendered by this Court in Raja Prameeelamma case (supra) and Arulmighu Dhandayadhapaniswamy Thirukoil case (supra), in view of the fact that, the matter was never examined in the perspective determined by us hereinabove. In neither of the two judgments, the amendment of the NSC was sought. The instant proposition of law was also not projected on behalf of the certificate holders, in the manner expressed above.”
13. The Hon’ble Supreme Court in M/s. Bhagwati Vanaspati Traders Vs. Senior Superintendent of Post Offices, Meerut, (supra) was totally convinced that if a party has purchased KVP or NSC wrongly and the money has been kept till the maturity period with the department of posts, the purchaser institution cannot be denied interest. In this case, the complainant was a proprietorship concern and the maturity amount was not paid on the ground that the complainant was not an individual or a trust. Hon’ble Supreme Court was so much convinced that the Hon’ble Court ultimately considered the civil appeal favourably in exercise of their jurisdiction under Article 142 of the Constitution of India and ordered payment of maturity amount along with compensation and litigation cost.
14. Even before passing of the judgment of the Hon’ble Supreme Court in Arulmighu Dhandayudhapaniswamy Vs. Director General of Post Offices, Department of Post & Ors. (supra), some Hon’ble High Courts had decided the issue of similar nature. Hon’ble Bombay High Court in Romeo Sam Arambhan Vs. Union of India (UOI) and Ors. AIR 2003 Bom 452, has observed the following and allowed the maturity value of the NSCs which were purchased by a proprietorship concern.
“8A. ……… It is true that by Notification dated 8th March, 1995 effective from 1st April, 1995 the National Savings Certificates, (VIII) Issue Rules, 1989 were amended and the types of Certificates and issuance thereof were modified; thereby providing issuance of Single Holder Type Certificate to (i) an adult for himself or on behalf of a minor to a minor or (ii) a trust. Issuance of Single Holder Type Certificate to a firm with effect from 1st April. 1995 thus was excluded. However, it was for the issuing authority to have verified whether the form No. 1 through which the application was made by the petitioner for purchase of Certificate was proper or not. If the petitioner was at fault in applying in Form No. 1 for purchase of certificates in the name of proprietary firm, the respondent No. 3 or its concerned staff was more or in any case to be equally blamed in not verifying such application properly and not bringing to the notice of the petitioner amended" Rules.”
“11. The learned Senior counsel appearing for the petitioners relied upon the Division Bench judgment of the Allahabad High Court in Municipal Board. Chandpur v. Union of India, . The facts in the case before the Allahabad High Court were that the Municipal Board, Chandpur purchased 50 "7 Years" National Saving Certificates of Vth Issue from the Post Office, Chandpur. On the date of maturity the said certificates were tendered for encashment to the concerned postal authorities. The request was not honoured as according to the Postal Authorities issuance of certificates to the Board was irregular. The matter was carried to the Allahabad High Court. The Division Bench in paragraphs 8, 9, 10 and 11 noted thus :--
8. A local authority can purchase these certificates. The President of the Board is and debarred to purchase the National Savings Certificates on behalf of the Board. The view of the respondents that it can be purchased only by an Executive Officer of the Board is untenable. Clause 6A of the Rules nowhere provides that the Executive Officer of the Board is the only authority who can purchase the National Savings Certificates.
9. Even assuming that there was some irregularity in depositing the amount through a proper person, the respondents cannot turn to say that as the deposit, originally was irregular, the amount as specified in the National Savings Certificates on maturity shall not be paid to the Board who has invested the amount in purchasing the Certificates. They have to pay the amount on the terms and conditions as mentioned in the National Savings Certificates.
10. It may further be noted that if there was any irregularity in depositing the amount through a proper person, the respondents should have immediately within a reasonable time, refunded the amount but they did not send any letter to the petitioner informing that as the deposit is not through the proper person, they are refunding the amount. It is after the date of maturity, the respondents took an objection.
11. In view of the above, the writ petition is allowed and the respondents are directed to make the payment of the amount of the aforesaid National Savings Certificates within a month from the date of production of a certified copy of this order after calculating the total amount as on the date of the maturity i.e. 26-7-1983 and further 8% interest on such amount from 26-7-1983 with yearly rest till the the elate of payment to the petitioner.
We find ourselves in respectful agreement with the view of the Allahabad High Court. Even if there was some irregularity in issuance of certificates was surely due to fault of respondent No. 3, it was not open to the postal authorities to not to pay to the holder the amount of certificates. The objection of the respondents hardly merits acceptance.”
15. Hon’ble Bombay High Court in another case Nicholas Employees Co-operative Vs. Union of India (UOI), 2008 (1) BOmCR 627, wherein the KVPs were purchased by a Cooperative Society of the employees of a company has again considered this issue and has observed the following:-
“10. The second judgment of the Division Bench was delivered on 9th October 2006 in Mulund Ambe Maiya Cooperative Housing Society Ltd. v. Union of India Writ Petition 3392 of 2004. In that case, a Co-operative Society had reinvested its moneys in Kisan Vikas Patra Certificates. On the date of maturity, payment was refused on the ground that as a result of the amendment to the Kisan Vikas Patra Rules, a certificate could not be issued save and except in favour of a trust, or an individual. The Division Bench noted that this was not brought to the attention of the Petitioner either at the time of purchase or at any subsequent period in time so as to enable the Petitioner to withdraw the amount. The Court observed as follows:
“We are clearly of the opinion that the Respondent cannot enrich itself at the cost of the citizen who invested the monies in their scheme and was not informed on that date or subsequently till the amount matured that amount could not be invested.”
16. Hon’ble High Court has further observed:
13. There is undoubtedly a great element of hardship involved in cases such as the present. The Petitioner is a Co-operative Society formed of the employees of Nicholas Piramal India Ltd. and the proceeds which were invested with the Third Respondent were obviously moneys belonging to the collective body of workmen. There is nothing on the record or in the reply filed by the Respondents before the Court to indicate that the investment was not bona fide or that it was made with a conscious or willful disobedience of the stipulation in regard to eligibility. As noted earlier, the moneys were accepted by the Postal Department and KVP Certificates were Page 2687 issued to the Petitioner. The moneys remained with the Postal Department throughout the term of the deposit and it was only after the deposit had matured that an objection was made to the repayment of the proceeds on the ground that the Petitioner was ineligible to purchase the certificate in the first place. In such case, it is only to be expected that an investment which is made in contravention of the Rules should be expeditiously notified to the depositor and the amount be refunded so as to obviate a situation such as the one which has arisen in the present case. The Postal Department has stated in its affidavit that it is flooded with a heavy volume of work. That cannot be any excuse for the Government of India to treat investments in such a callous manner. If the investor is not eligible to make the investment, this must be pointed out either when the application for deposit is made or at any rate, as expeditiously as possible so as to remedy the situation. Waiting for the entire duration of the deposit to expire before raising an objection does not speak of good governance. Good governance in a civil society must be marked by a sense of despatch and certainty. Though this Court has in the considered exercise of its jurisdiction under Article 226 found itself unable to grant relief in view of the substantive provisions of Sub-rule (1) of Rule 13, we must express our strong disapproval of the manner in which the Postal Department acted in the present case. The Union Government must take steps to issue administrative instructions that would obviate a situation such as this which resulted from a failure of the Postal Department to act with alacrity.
“14. The proviso to Rule 13(1) provides some measure of a remedy that can be made available in a case such as the present. The proviso stipulates that where the Central Government is satisfied that the purchase or acquisition of certificate is due to a bona fide error on the part of the holder of the certificates, it may authorise payment of simple interest on the face value of the certificate, at the same rate, as is admissible for the time being in force for the type of saving accounts in the Post Office Savings Bank which such holder is entitled to open under the Post Office Savings Account Rules, 1981. We are of the view that this is a fit and proper case where the benefit of the proviso to Rule 13(1) should be granted to the Petitioner and a direction should be issued to the First Respondent accordingly.
15. In the circumstances, we dispose of this Writ Petition with the following directions:
(i) The Petitioner would, in terms of the provisions contained in the proviso to Rule 13(1) of the Post Office Savings Certificates Rules, 1960 (as made applicable by virtue of Rule 3 of the Kisan Vikas Patra Rules, Page 2688 1988), be entitled to interest at the applicable rate as stipulated therein from the date of the investment until the date of maturity;”
17. From the above judgments, it is clear that before passing of the judgment of the Hon’ble Supreme Court in Arulmighu Dhandayudhapaniswamy Vs. Director General of Post Offices, Department of Post & Ors. (supra), the claims of such institutional purchasers were being allowed in some form or the other. Even after the judgment of the Hon’ble Supreme Court in Arulmighu Dhandayudhapaniswamy Vs. Director General of Post Offices, Department of Post & Ors. (supra), the Hon’ble Supreme Court in M/s. Bhagwati Vanaspati Traders Vs. Senior Superintendent of Post Offices, Meerut, (supra) has allowed the payment of maturity amount to the institutional purchaser though in exercise of jurisdiction under Article 142 of the Constitution of India.
18. It seen from another perspective, Section 65 of the Indian Contract Act, 1872, seems to be applicable in the present case. This Section 65 reads as under:-
“65. Obligation of person who has received advantage under void agreement, or contract that becomes void.- When a
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n agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it.” 19. From the above provision, it is clear that the person who has taken the money under a contract which is held to be void, has to restore the position. It means that he has to return the money. The question is whether by returning the money after 5-6 years, can it be said that the position has been restored. Clearly, the value of Rs.1000/- given after 5-6 years will not be same as value of Rs.1000/- today. Hence, the concept of interest comes in. Hon’ble Supreme Court in Alok Shanker Pandey Vs. Union of India &Ors., II (2007) CPJ 3 (SC) has held that:- “9. It may be mentioned that there is misconception about interest. Interest is not a penalty or punishment at all, but it is the normal accretion on capital. For example if A had to pay B a certain amount, say 10 years ago, but he offers that amount to him today, then he has pocketed the interest on the principal amount. Had A paid that amount to B 10 years ago, B would have invested that amount somewhere and earned interest thereon, but instead of that A has kept that amount with himself and earned interest on it for this period. Hence equity demands that A should not only pay back the principal amount but also the interest thereon to B.” 20. On the basis of above examination, I am convinced that the petitioner deserves some interest on the purchased Kisan Vikas Patra and NSCs. I am also of the view that the petitioner cannot be considered as entitled to receive the full maturity amount because otherwise, there would be no difference between a person who purchases NSC or KVP as per rules and a person who has purchased these securities in violation of the departmental rules, even though the departmental employees may be equally guilty of ignoring the rules. 21. Based on the above discussion, the revision petition No.317 of 2017 is partly allowed and the order dated 24.8.2016 of the State Commission is set aside and the order dated 01.09.2010 of the District Forum is modified to the extent that the opposite parties/respondents shall pay interest @6% p.a. on the deposited amount of NSCs and KVPs for the total maturity period instead of the total maturity amount. The respondents shall also pay a cost of Rs.10,000/- (rupees ten thousand only) to the complainant as cost of litigation. This order be complied with by the respondents within a period of 30 days from the date of receipt of this order.