Can a Bank seek attachment of PPF Account for pending Loan Amount? NO says HC, Read Judgment

The Gujarat High Court has reiterated the settled legal proposition of law that the amount of Public Provident Fund account shall not be liable to any attachment in respect of any debt or liability incurred by the account holder.

The single-judge bench of Justice A.S. Supehia in this view allowed an application against Bank of Baroda for withdrawing/debiting certain amount from the PPF Account of the petitioner who was who had invested Hindu Undivided Family's money under Centre's Public Provident Fund Scheme.

It was the case of the petitioner that both the accounts do not have any interconnection as the PPF Account is opened with the Central Government through the respondent, while Cash Credit Account is maintained and held with the respondent.

The Counsel for the petitioner submitted that the Government of India vide notification being Public Provident Fund Scheme, 2019 dated 12.12.2019 under Section 15 of the Public Provident Fund Act, 1968 has clarified that the amount standing in the PPF Account shall not be liable to any attachment in respect of any debt or liability incurred by the account holder hence, the PPF account is protected against any kind of recovery, debt etc.

It was further being submitted that the action of the respondent Bank of debiting the aforesaid amount from the PPF Account of the petitioner is illegal and de hors the procedure prescribed in law.

He has placed reliance on Section 60(1) of the Civil Procedure Code, 1908(the CPC), which provides for the properties liable to be attached. He has submitted that Section 60(1) Clause (a top) provides for the properties, which are not liable to be attached and Clause (ka) to the proviso of Section 60 of the CPC states that “all deposits and other sums in or derived from any fund to which the Public Provident Fund Act, 1968 (23 of 1968), for the time being applies, in so far as they are declared by the said Act as not to be liable to attachment.”

Further reliance was placed on Dineshchandra Jamnadas Gandhi Vs. State of Gujarat & ANR, 1989 Latest Caselaw 15 SC.

On the other hand, Counsel for the respondent-bank submitted that the respondent Bank was forced to undertake the necessary action for withdrawal of the amount of PPF Account since the bank, along with the partners of the firm and others in their personal and individual capacity, executed General Form of Guarantee on 03.05.2018 for Rs.24,00,00,000/- and the petitioner, alongwith other guarantors, are liable to pay the entire debt due to the respondent Bank.

The Court was of the view that the action was 'illegal and unjustified' with respect to the settled legal position and accordingly allowed the application.

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