Karnataka High Court
Mr B Ganapathi Hegde vs The Postmaster Hsg-1 on 5 March, 2024
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
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WP No. 17995 of 2023
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 5TH DAY OF MARCH, 2024
BEFORE
THE HON'BLE MR JUSTICE M.NAGAPRASANNA
WRIT PETITION NO. 17995 OF 2023 (GM-RES)
BETWEEN:
MR. B. GANAPATHI HEGDE,
KARTA OF HUF,
AGED ABOUT 61 YEARS,
S/O A.K. LAKSHMAN HEGDE,
R/AT NEAR TALUKA OFFICE,
KARKALA - 574 104.
...PETITIONER
(BY SRI. SHRIDHAR PRABHU, ADVOCATE)
AND:
1. THE POSTMASTER HSG-1,
OFFICE OF POSTMASTER(GRADE-III)
Digitally signed KARKALA HPO - 574 104.
by NAGAVENI
Location: HIGH 2. THE SENIOR SUPERINTENDENT
COURT OF OF POST OFFICES,
KARNATAKA OFFICE OF SENIOR SUPERINTENDENT
OF POST OFFICE,
PUTTUR - 574 201.
3. THE POSTMASTER GENERAL,
SOUTH KARNATAKA REGION,
BENGALURU GPO BUILDING,
BENGALURU - 560 001.
...RESPONDENTS
(BY SMT. SHUBHA S., CGC)
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WP No. 17995 of 2023
THIS WP IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA PRAYING TO A. QUASH THE
IMPUGNED LETTER DATED 22ND JUNE 2023 BEARING NO.
SB/DLGS/23-2024 ISSUED BY THE R1 PRODUCED AT
ANNEXURE-A AND ETC.
THIS PETITION, COMING ON FOR PRELIMINARY HEARING
IN 'B' GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
The petitioner is before this Court calling in question the
letter dated 22.06.2023 passed by respondent No.1, by which
the petitioner is informed that the deposits made by him under
a particular scheme would not yield any interest, as the very
inception of deposit was erroneous.
2. Heard Sri.Shridhar Prabhu, learned counsel
appearing for the petitioner and Smt.Shubha S., learned
Central Government Counsel for the respondents.
3. The petitioner, a resident of Karkala, opens a Public
Provident Fund account under a scheme called the Public
Provident Fund (PPF) Scheme, 1968 (hereinafter referred to as
'the scheme' for short) for the HUF. On opening the account,
the petitioner deposits amounts into the scheme, at the
necessary intervals. For the purpose of such deposit,
respondent No.2 - the Senior Superintendent of Post Offices,
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Puttur, had opened a Savings Bank account in the name of the
petitioner in S.B. Account No.23/2010. The date of maturity of
the deposit under the scheme was to come about on
31.03.2014. The period is extended upto 31.03.2023. The
petitioner from 1998 till 31.03.2023 has deposited amount into
the account so opened in the year 1998. Therefore, the
petitioner has for 25 years deposited amounts into the account.
Just before the date on which the maturity, as extended would
arrive, the second respondent communicates on 22.06.2023
that the deposit would not earn any interest under the scheme,
as the very opening of the account under HUF was itself
erroneous. It is this action that has driven the petitioner to this
Court, in the subject petition.
4. The learned counsel, Sri.Shridhar Prabhu appearing
for the petitioner would submit that the petitioner has
deposited the amount upto 31.03.2018 and continues to
deposit till the impugned communication on 22.06.2023.
5. Now, according to the respondents, the scheme has
come to an end on 13.05.2005 itself. If that be so, the
respondent ought to have communicated to the petitioner and
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not receive the amount for close to 18 years after the alleged
closure of the scheme. The learned counsel would submit that
the issue stands answered in W.P. No.2042/2023.
6. Per contra, Smt.Shubha S., learned CGC would
vehemently refute the submission to contend that the case
which the petitioner seeks to place reliance upon is
distinguishable on the facts. She would submit that the deposit
made therein was at the point in time when the scheme was
not even in existence. In the case at hand, the deposit is made
in the year 1998, the scheme was in existence and ceased to
exist only in the year 2005. She would further submit that the
petitioner would become entitled to interest only upto
31.03.2018, at best and not upto 31.03.2023. She would seek
dismissal of the petition.
7. I have given my anxious consideration to the
submissions made by the respective learned counsel and
perused the material on record.
8. In furtherance whereof, the only issue, which falls
for consideration is whether the petitioner would be entitled to
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the interest and the return of the deposit amount made into the
scheme that was in existence at the time when it was opened.
9. The afore-narrated facts are not in dispute and
would not require any reiteration. The opening of the account
of the petitioner in the aforesaid HUF scheme in the post office
was on 23.03.1998. All was well, when the account was opened
under the scheme, as the scheme was in existence. The
scheme ceased to exist with effect from 13.05.2005. If the
respondent Authorities had made the petitioner aware of the
closure of the scheme on 13.05.2005, it would have been
altogether a different circumstance. The respondents did not
inform the petitioner about the closure of the scheme with
effect from 13.05.2005, but went on accepting the deposits
made into the account from time to time under the scheme.
The deposits are made upto 31.03.2023 right from 23.03.1998
for 25 years. Not a whisper about the closure of the scheme is
intimated to the petitioner. These are admitted facts. It is
unfair and unjust for the second respondent for now to contend
that the petitioner would not be entitled to any interest under
the scheme, as the scheme stood closed on 13.05.2005. The
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petitioner to get certain amount at the necessary stage of life
has invested his savings into the PPF account under the
scheme. This Court, would not shut its doors to the petitioner
or the like who are placed in such situation all due to the acts
of the second respondent.
10. This Court, need not further delve deep into the
matter, as the Court has already answered an identical cry of a
citizen in W.P.No.2042/2023, which analysis the entire
spectrum of the scheme. The only difference projected in the
aforesaid case is, the deposit therein was made on 03.09.2009
long after the scheme was over. The deposit in the case at
hand is made in the year 1998, during the subsistence of the
scheme. This would hardly make any difference to the rights of
the petitioner, as they are now crystallized by the acts of the
respondents themselves. Therefore, it is germane to notice the
findings rendered by this Court in W.P.No.2042/2023. The
findings are as follows:
"11. The respondents/authorities have filed
detailed statement of objections justifying the action
of treating the account as irregular and closing the
account without interest. If the dates and link in the
chain of events are noticed what would unmistakably
emerge is that the petitioner is no way responsible for
the fault of the respondents/authorities. At the outset
it was an agent who facilitated opening of the
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account; the account was opened. For 12 long years,
the petitioner had deposited money into the account
under the Scheme as HUF. After receiving the
amounts for 12 years into the said account with eyes
wide open, knowing full well that the Scheme has
been amended and opening of the account itself was
irregular, no fault can be laid at the doors of the
petitioner.
12. If the authorities, who are to be aware of
amendment of the Scheme, as also the fact that no
HUF account could be opened under the Scheme, if
have permitted to open and operate the account for
12 years, the petitioner, a common man cannot be
blamed that too after 12 years of opening of the
account. The 1st and 2nd respondents could not have
permitted opening of the account and further could
not have permitted deposits into the account for 12
long years. Having kept quiet, all along cannot pass
the buck upon the petitioner and make the account
irregular and deny interest for the investment. The
petitioner desirous of accumulating money for his
daughter's marriage opened the account and
continues investment into the account. The action of
the respondents in denying interest on the said
investment comes as a rude shock to the petitioner.
The action of the respondents in denying interest and
directing closure of the account holding it to be
irregular does not behoove its status being a State
under Article 12 of the Constitution of India, as the
impugned action is far from fairness.
13. The Apex Court in somewhat similar
circumstances in the case of BHAGWATI
VANASPATI TRADERS v. SENIOR
SUPERINTENDENT OF POST OFFICES1 has held as
follows:
"11. 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
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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, especially when the irregularity was
curable. Legally, Rule 17 of the Post Office
Savings Bank 1 (2015) 1 SCC 617 General Rules,
1981, would apply only when an applicant is
irregularly 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 regularise the irregularity, if
possible.
12. It is not possible for us to deny relief to the
appellant, based on the judgments rendered by this
Court in Prameeelamma case [Deptt. of Posts v.
Prameeelamma, (1998) 9 SCC 706] and Arulmighu
Dhandayudhapani swamy Thirukoil case [Arulmighu
Dhandayudhapaniswamy Thirukoil v. Deptt. of Posts,
(2011) 13 SCC 220: (2012) 3 SCC (Civ) 435] 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
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sought. The instant proposition of law, was also not
projected on behalf of the certificate-holders, in the
manner expressed above.
13. There was seriously no difficulty at all in the
facts and circumstances of the present case, to
regularise the defect pointed out because M/s
Bhagwati Vanaspati Traders is admittedly the sole
proprietorship concern of B.K. Garg. The postal
authorities should have solicited the change of
the name in the NSC, through a representation
by B.K. Garg himself. On receipt of such a
representation, the alleged irregularity would
have been cured, and the beneficiary of the
deposit, would have legitimately reaped the
fruits thereof. Rather than adopting the above
simple course, the postal authorities chose to
strictly and rigidly interpret the terms of the
scheme. This resulted in the denial of the
legitimate claims of the sole proprietor of the
appellant concern i.e. B.K. Garg, of the
investment made by him. In the above view of the
matter, we consider it just and appropriate, in
exercise of our jurisdiction under Article 142 of the
Constitution of India, to direct the Senior
Superintendent of Post Offices, Meerut, to correct the
NSC issued in the name of M/s Bhagwati Vanaspati
Traders, by substituting the appellant's name, with
that of B.K. Garg."
(Emphasis supplied)
The case before the Apex Court was also
opening of an account in the name of a partnership
firm in the Post Office. It was held to be irregular. The
Apex Court holds that unless opening of account was
wholly illegal, the irregularity cannot lead to denial of
interest to the investor, particularly, when the defect
was curable. The judgment of the Apex Court would
become applicable to the facts obtaining in the case at
hand as they are some what identical.
14. In the light of unequivocal facts as narrated
hereinabove and the judgment of the Apex Court in
the case of BHAGWATI VANASPATHI TRADERS
(supra), the petition deserves to succeed, albeit, in
part. The petitioner would be entitled to interest under
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the Scheme, only up to the date on which the
communication comes to the petitioner i.e., 23-09-
2021. On and from 23-09-2021 the account of the
petitioner till its maturity shall carry interest at the
scheduled Banks lending rate and not the rate of
interest under the Scheme.
15. Parting observation in the facts and
circumstances of the case would not be inapt. The 1st
and 2nd respondents should set their house in order.
In this digital age it is necessary that 1st and 2nd
respondents update themselves with regard to such
accounts and not wake up from slumber after several
years and penalize the investors. The investor, as in
the case at hand, is a common man and would not
know the prevailing law. He was only interested in
investment and in return wants to have interest on
such investment. It is for the Authorities to detect
such accounts which are opened irregularly as soon as
they are opened, on intermittent scrutiny of the
accounts and inform such investors immediately,
failing which, the Officers who manage such accounts
should be held responsible and accountable for such
dereliction of duty. It is necessary for the respondents
to issue these instructions to all the Post Offices who
handle such accounts, so that the common man
does not bear the brunt of unnecessary
litigation."
11. This Court, while disposing the petition had
observed that the post office should set its house in order to
handling such accounts so that a common man does not bear
the brunt of unnecessary litigation. The brunt is borne by the
petitioner in the case at hand.
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12. For the aforesaid reasons, I pass the following:
ORDER
(i) Writ Petition is allowed in part;
(ii) The impugned letter dated 22.06.2023 bearing
No.SB/Dlgs/23-2024, stands quashed; and
(iii) The petitioner is held entitled to interest under
the scheme upto 22.06.2023. On and from
22-06-2023, till the payment, he would
become entitled to the interest, at such rates
that the Bank would lend.
Sd/-
JUDGE
SS
CT:SNN
