ARULMIGHU DHANDAYUDHAPANISWAMY THIRUKOIL vs DIRECTOR GENERAL OF POST OFFICES

THE complainant Arulmighu Dhandayudhapaniswamy Thirukoil, Palani, has deposited large sums of money totaling to Rs. 1,40,64,300/- with the 3rd opposite party Post Master, Palani Post Office from 5.5.1995 to 16.8.1995 all for a period of five years under the Post Office Time Deposit Scheme. While so, a communication dated 1.12.1995 was received from the 3rd opposite party stating that accepting of time deposits had been discontinued from 1.4.1995 and therefore all such deposits should be closed and that it would be so closed without interest. THE opposite parties have paid the total amount deposited but have not paid the interest that had accrued on the said sums of deposit which would come to Rs. 9,03,941/- upto 3.1.1996 i.e., the date of complaint. This act of the opposite parties amounts to deficiency in service and unfair trade practice. On the seal legations the complaint has been filed for directing the opposite parties to pay the said interest amount of Rs. 9,03,941/- with further interest and also for damages and compensation.

THE opposite parties in their written version would contend inter alia that the Government, by a Notification No. G & SR 118(E) 199(E) 120 (E) had discontinued from 1.4.1995 the facility of time deposit for institutions. Unaware of this Notification, the 3rd opposite party Post Master, Palani, had received the time deposits from the complainant temple which is an institution, from 1.4.1995 to 16.8.1995. In view of the said Notification, these time deposits had to be closed and the complainant will not be entitled to receive any interest on the amounts of deposits made irregularly on and from 1.4.1995 and therefore the claim of the complainant for interest is not maintainable. THE complainant is not also entitled to any of the other claims made in the complaint. The points that arise for consideration are : (i) whether there was any deficiency in service on the part of the opposite parties? and (ii) if so, whether the complainant is entitled to any relief?

According to the opposite parties, the Central Government have issued a Notification No. G & SR 118(E) 119(E) 120(E) as per which no Time Deposit shall be made or accepted on and from 1.4.1995. But such deposits have been made by the complainant and accepted by the 3rd opposite party without both of them knowing the said Notification. It is not in dispute about the existence of such a Notification. It is common case that the amounts deposited on and from the said date have been repaid. But however, the interest accrued on those amounts has not been paid. The main claim of the complainant is this interest. Therefore the question is whether the complainant is entitled to the said interest or not. There is no doubt that the deposit made on and from 1.4.1995 is against the said Notification and that amounts to contravention of the rules. In this context, Rule 7 of the Post Office Savings Bank General Rules, 1981 is relevant. This rule reads as follows: "17. Account opened in contravention of rules-Subject to the provisions of Rule 16, where an account is found to have been opened in contravention of any relevant rule for the time being in force and applicable to the account kept in the Post Office Savings Bank the relevant Head Savings Bank may, at any time, cause the account to be closed and the deposits made in the account refunded to the depositor without interest."

[underlining ours] Rule 16 relates to accounts opened incorrectly, which reads as follows: "16. Accounts opened incorrectly-(1) Where an account is found to have been opened incorrectly under a category other than the one applied for by the depositor, it shall be deemed to be an account of the category applied for if he was eligible to open such account on the date of his application and if he was not so eligible the account may, if he so desires, be converted into an account of another category ab initio, if he was eligible to open an account of such category on the date of his application. (2) In cases where the account cannot be so converted, the relevant Head Savings Bank may at any time, cause the account to be closed and die deposits made in the account refunded to the depositor with interest at the rate applicable from time to time to a Savings Bank account of the type for which the depositor is eligible."

It is not in dispute that Rule 17 will apply to the Post Office Time Deposits. It is clear that as per Rule 17 if any Post Office Time Deposit is made in contravention of any rule, the relevant Head Savings Bank may, at any time, cause the account to be closed and the deposits made refunded to the depositors but without interest. In the present case, the deposit account has been caused to be closed and the amounts deposited have been returned to the depositor, but interest was refused to be paid. This refusal of payment of interest would appear to be quite in accordance with Rule 17. In these circumstances, it cannot be held that there was deficiency in service on the part of the opposite parties. In this connection, it may be relevant to note a judgment of the Supreme Court passed in Postmaster, Dargamitta HPO Nellore v. Ms. Raja Prameelamma, [SLP (C) No. 38/95 delivered on 1.5.1995]. In that case, the complainant therein was issued six National Savings Certificate of Rs. 10,000/- each on April 28, 1987 from the Post Office. According to a Notification issued by the Government of India, the rate of interest payable with effect from April 1,1987 was 7%. But due to inadvertence on the part of the clerical staff of the Post Office, the old rate of interest and the maturity value which were printed in the certificate were not corrected. A question arose whether the higher rate of interest printed in the certificate shall be paid or only the rate of interest mentioned in the Notification. The Apex Court laid down that even though the certificate contained the terms of contract between the Government of India and the holder of the National Savings Certificate, the term in the contract was contrary to the Notification, and therefore the terms of the contract being unlawful and void, were not binding on the Government of India and as such the Government refusing to pay interest at the rate mentioned in the certificate is not a case of deficiency in service in terms of law or in terms of any contract as defined under Section 2(l)(d) of the Consumer Protection Act. The above principle laid down by the Supreme Court applies to our case on all fours.

THUS considering the terms of Rule 17 of the Post Office Savings Bank General Rules, 1981 mentioned supra and also the said judgment of the Apex Court, it appears to be beyond doubt that it cannot at all be said that the opposite parties were deficient in service in not paying the interest that accrued on the amount deposited during the relevant time. In this view of the matter, the complaint has to be dismissed. We order accordingly. There will be no order as to costs. However, we would like to observe here that in view of the fact that both the depositor and the 3rd opposite party were ignorant of the Notification and because of this ignorance die amount has been deposited, there is no doubt that die complainant had been prejudiced in not getting interest. We believe that if there is a way out, die Central Government would consider to make good the loss of the complainant. Pulavar V.S. Kandasamy, Member-I am unable to agree with the majority order. In this original petition, the complainant is a renowned temple by name Arulmighu Dhandayudhapaniswamy Thirukoil at Palani, represented by its Joint Commissioner/Executive Officer. There are three opposite parties and the 3rd opposite party is the Post Master, Palani Head Post Office, Palani. 2. The complainant had deposited its funds amounting to Rs. 1,40,64,300 /- in the 5 Years Time Deposit Accounts in the Palani Head Post Office, Palani. The amounts were deposited on various occasions during the period from 5.5.1995 to 16.8.1995. The rate of interest was stated to be 12% p.a. The deposits were made by the opening 5 Years Time Deposit Accounts in the said Head Post Office and Pass Books were issued by the Post Master, Palani Head Post Office, after making entries of the amounts deposited. 3. By a letter dated 1.12.1995, the 3rd opposite party asked the complainant to close its Time Deposit Accounts and take back its deposits stating that the practice of accepting the Time Deposit from the Temple had been discontinued from 1.4.1995. Accordingly, the complainant''s Time Deposit Accounts were closed and deposits were returned on 3.1.1996. However, the 3rd opposite party refused to pay interest amounting to Rs. 9,03,941/- clue on the said deposits. The complainant has contended that having accepted the deposits without any reservation and having promised to pay interest at the rate of 12% p.a. of the time of deposit, denial of interest at a later stage by the opposite parties amounts to deficiency in service and the opposite parties are also guilty of unfair trade practice. 4. A complaint was therefore filed seeking directions to the opposite parties to pay interest at the rate of 12% p.a. on the deposits made during the period from May to August, 1995 till the date of refund of the said deposits on 3.1.1996 and also interest on a part of the deposits remaining unpaid as on that date. The complainant also claimed a sum of Rs. 3,00,000/- as compensation for mental agony and another sum of Rs. 1,00,000/- as damages and costs. 5. The opposite parties have resisted the claim stating that they were not liable under Section 6 of the Indian Post Office Act for any deficiency in service and that the practice of accepting the Time Deposit from the temples was discontinued from 1.4.1995 as per the Ministry of Finance Notification and so the deposits made thereafter would not fetch interest. According to the opposite parties the complainant was neither eligible for interest nor payment of compensation and therefore the complaint may be dismissed with exemplary cost. 6. The points that arise for determination are : (i) Whether there is deficiency in service on the part of opposite parties ? (ii) If so, whether the complainant is entitled for relief as claimed for ?

POINT No. 1 : It is not in dispute that the opposite parties accepted the deposits amounting to Rs. 1,40,64,300/- without any reservation on the promise to pay interest payable to 5 Years Time Deposits. The activities relating to acceptance of deposits on the promise to pay interest amount to banking service which comes within the purview of Section 2(1)(o) of the Consumer Protection Act, 1986. Financial service rendered by any institution is one of services specifically mentioned in Section 2(1)(d) of the Consumer Protection Act, 1986. Failure of the opposite parties to pay interest on deposits made by the complainant amounts to gross deficiency in service. In the case of K. Kasi Annapurna & Ors. v. Suit. Vesuni Bharathi & Ors., reported in I (1996) CPJ 43 (NC), the National Commission has held that : "the Fixed Deposit holders are consumers under the Consumer Protection Act vis-a-vis the opposite parties. As the deposits have not been refunded with interest (emphasis supplied) to the complainant, the opposite parties committed deficiency in service with respect to the complainant." Therefore, the failure on the part of the opposite parties to pay interest to the complainant in the instant case is a clear case of gross deficiency in service on the part of the opposite parties. In their version filed, the opposite parties made a feeble attempt to take refuge under Section 6 of the Post Office Act according to which the Postal Department is not liable for any loss, mis-delivery, delay or damage of any postal article in the course of transmission. Prima facie, this section is not at all applicable to the case on hand which relates to the failure to pay interest on the deposits made in 5 Years Time Deposit Accounts. Hence, the arguments advanced by the opposite parties based on Section 6 of the Post Office Act absolutely are devoid of merit.

NEXT argument advanced by the opposite parties for non-payment of interest on the deposits made by the complainant is that as per the Ministry of Finance Notification, dated 8.3.1995, investment by institutions was discontinued with effect from 1.4.1995; the complainant Devasthanam is an institution and therefore the deposits made by the complainant would not fetch any interest. But, the complainant was not informed of this fact when the deposits were made and this is not at all disputed by the opposite parties. In the version filed, the opposite parties have agreed that the customers ought to have been explained the amendment to the rule at the time of opening the Time Deposit Accounts. They have also conceded that they had failed to do so in the instant case as the Post Office Staff at Palani was unaware of the amendment. In this connection, paragraph 5 of the version filed by the opposite parties is reproduced below : "5. The opposite parties submit that there is no provision to communicate any amendment rule to the customers but at the time of opening of Time Deposit Accounts the customers ought to be explained the amendments. The Post Office staff of the Palani unaware of the amendment had not explained the amendment to the petitioner at the time of opening."

(Emphasis supplied)

THE learned Counsel for the complainant has vehemently contended that if the practice of accepting deposits from the temples was discontinued with effect from 1.4.1995, the opposite parties ought not to have accepted the deposits made by the complainant during the period from May, 1995 to August, 1995. THEre is much force in this contention. It is not in dispute that the deposits made by the complainant during the above mentioned period were accepted by opposite parties without any reservation. But, the only contention of the opposite parties is that the 3rd opposite party which had accepted the deposits by opening 5 Years Time Deposit Accounts in the Head Post Office at Palani was unaware of the Ministry of Finance Notification. Being unaware of the Notification could not be an excuse for the acceptance of the deposits on as many as fourteen occasions by the opposite parties. It is also not the case of the opposite parties that the complainant was aware of these instructions when the deposits were made. THErefore, having accepted the deposits on the promise to pay interest, the opposite parties are legally bound to pay interest for the period during which the deposits were held by them and they cannot escape from their legal obligation by citing the Notification at this distance of time. In any case the complainant, a temple, should not be penalised if the opposite parties were not aware of tine said Notification. THE opposite parties being a part of the Department of Central Government must play the role of a model non banking financial institution and it should not descend to the level of refusing to pay interest after having voluntarily accepted the deposits and retained and utilised the same for a considerable period. In this connection, it is pertinent to mention that the deposits received by the 3rd opposite party used to be passed on the higher authorities and such deposits were centralised and invested for gain in various organisations/ institutions/undertakings. Thus, the opposite parties were earning income and/or making gain out of the funds deposited by the complainant. The refusal of the opposite parties to pay interest in turn to the complainant, while they were getting income from the funds deposited by the complainant, would amount to unjust enrichment on the part of the opposite parties.

In any case, the argument of the opposite parties that the complainant was not eligible for payment of interest as per the Finance Ministry''s Notification dated 8.3.1995 is fallacious because the intent and purpose of that Notification was to discontinue the investment by institutions from 1.4.1995. There is nothing in the said Notification to suggest that no interest would be paid on deposits received from them, for any reason, on or after 1.4.1995. The Notification in question is mandatory and not prohibitive.

EVEN according to the opposite parties the deposits, received after 1.4.1995, contrary to the instructions contained in the Ministry of Finance Notification'', are only irregular and not illegal. An irregularity can be waived or set right by getting expost facto sanction from the higher authorities concerned for the purpose of making payment of interest. It is well known that the source of funds for the complainant temple is from the offerings made by the devotees coming from all walks of life, the majority of whom are labourers, peasants, artisans and petty traders. It would be a travesty of justice if the deposits made out of funds collected from the poor and down-trodden did not yield or generate any income. That apart, the complainant temple is also running a number of educational institutions and orphanages and if interest is denied on the funds deposited by the complainant temple, it would put a great strain on the complainant to carry on the educational and other charitable activities. The National Commission''s Order in the case of Department of Posts & Telegraphs v. Dr. S.C. Saxena, reported in I (1998) CPJ 107 (NC)=1997 (1) TNCR 141. is quite relevant in the context of the facts of the case before us. In that case, the complainant Dr. R.C. Saxena opened "because of ignorance" two accounts under the National Savings Scheme, which was contrary to Rule 4 of the National Savings Scheme Rules, 1987 which reads as under: "A depositor may open not more than one account under the Scheme." Subsequently, when the complainant came to know of the correct position, he applied for the withdrawal of the deposit made by him in the second account. The Post Office concerned refunded only the amount deposited by the complainant but refused to pay interest on the said deposit, stating that the deposit made in the second account was in contravention of the rules. On a complaint filed by Dr. Saxena alleging deficiency in service on the part of the Department of Posts & Telegraphs and seeking directions to the said Department to pay interest on the deposits made in the second Account also, the Himachal Pradesh State Commission allowed the complaint and upheld the contention of the complainant and directed the Department of Posts & Telegraphs to pay interest on the deposits made in the second account opened under the National Savings Scheme. On a revision petition filed by the Department of Posts & Telegraphs against the order of the Himachal Pradesh State Commission, the National Commission, after examining in detail inter alia Rule 17 of the Post Office Savings Bank General Rules, 1981 and taking into account that the amount deposited by the complainant remained with the Department of Posts & Telegraphs during the relevant period, upheld the decision of the State Commission and dismissed the appeal filed by the Department of Posts & Telegraphs. It was also held in that case that opening of a second account under the National Savings Scheme was only an irregularity and not a contravention covered by Rule 17 of the Post Office Savings Dank General Rules, 1981. The National Commission''s decision in the above mentioned case is directly applicable to the case on hand.

WHAT is applicable to the case on hand are the Post Office Time Deposit Rules, 1981. Rule 4 of the Post Office Time Deposit Rules reads as under: 4. P.O. Time Deposit Accounts-Accounts opened wrongly in the names of companies, local authorities, institutions, etc.-(1) Under Rule 5 of the Post Office (TD) Rules, 1970. Time Deposit Accounts can be opened only in the names of individuals. Provident Funds, Superannuation Funds and Gratuity Funds (if these funds are covered by the pattern of investment prescribed by the Central Government) and Charitable endowments. It has come to the notice of this office that number of Time Deposit Accounts in the names of companies, local authorities, trusts, societies, public organisations, etc. have been allowed to be opened at the various Post Offices though these institutions are not eligible to open such accounts. (2) The matter has been considered in consultation with the Ministry of Finance (DBA) and it has been decided that as provided under Rule 15 of Post Office (TD) Rules, 1970, die Time Deposit Accounts which do not conform to the provisions of Post Office (TD) Rules, 1970 should be closed forthwith. In the case of such irregular accounts opened in the names of institutions, simple interest at the rate of 3 per cent per annum of amounts at credit in the accounts from time to time may be paid as a special case; the amounts already paid as interest during the currency of any account being treated as withdrawals of part of the amount deposited. In such cases a notice stating that the account is not in accordance with the provisions of Post Office (TD) Rules, 1970 and requesting the depositor that the amount deposited shall be withdrawn, should be sent under the signature of the Appropriate Authority. (3) While issuing notice to the depositor for withdrawal of the amount deposited in such cases, it must be stated in the notice that the amount should be withdrawn within two months from the date of receipt of the notice by the depositor and that no interest shall be payable beyond the period of two months, in case the amount is not withdrawn within that period. The notice to the depositor should be sent by registered post with acknowledgement due." Even according to this rule, "irregular accounts opened in the names of institutions are entitled to "simple interest at the rate of 3% p.a. on the amounts at credit in the accounts." Hence, the opposite parties'' total denial of interest to the complainant for the amounts deposited during the period from May, 1995 to August, 1995, amounts to gross violation of this rule. Though the Notification of the Ministry of Finance containing instructions to close all the Time Deposit Accounts of temples and to discontinue the receipt of the deposits from temples with effect from 1.4.1995, is dated 8.3.1995, the complainant was informed of the same by the 3rd opposite party''s communication dated 1.12.1995 (Ex. A3), ''it is not clear why the 3rd opposite party was unaware of such Notification for such a long time. It is a sad commentary on the state of affairs in the offices of the opposite parties. Be that as it may, according to Rule 4(3) of the Time Deposit Rules, the so called "irregular deposits" should be withdrawn by depositors within 2 months from the date of receipt of notice and no interest would be payable beyond the said period of 2 months. Therefore, it can be logically presumed that interest would be payable on such deposits up to the period of such notice and also for a further period of two months after the date of notice. But, in the instant case, the opposite parties have totally denied to pay interest for any period. The decision of the Supreme Court in the case of Post Master, Dargamitta Head Post Office, Nellore v Ms. Raja Prameelamma, (SLP (C) No. 38/95) delivered on 1.5.1995 is cited in support of the case of the opposite parties in refusing to pay interest to the complainant. I am of the view that die facts of die case, mentioned above, are not on all fours with the facts of the case on hand and, therefore, the decision rendered in that case cannot be made applicable to the case on hand. That was a case of sale of National Savings Certificate by a clerical staff in Post Office without mentioning the revised rate of interest, as per the Notification of the Government of India and thereby allowing the higher rate of interest to remain on the National Savings Certificate. It was held that the notification issued by the Ministry of Finance, Government of India, the erroneous indication of higher rate of interest on the National Savings Certificate cannot be deemed to be a deficiency in service with reference to the law governing the sale of National Savings Certificates. In this connection, it is significant to note that on the top of every National Savings Certificate, the word Government of India are superscribed and just below the words Government of India, the following is printed as under: "The Government of India promises to pay to (name and address of holder) a sum of Rs. on or after the this certificate is issued pursuant to Government of India, Ministry of Finance, Notification No. C.S.R. 496(E) dated 1.5.1989."

The Supreme Court has held that "As regards the contract, no doubt the sale of National Savings Certificates with the terms and conditions embodied there on constitutes a contract between the Government of India as seller and the holders of National Savings Certificates". However, in the case on hand, there is no such contract between the complainant and the Government of India. Further, in the case of sale of National Savings Certificate, the Notification issued by the Government of India simply sought to amend the rate of interest which is only procedural and not substantive. It did not impose a blanket ban either on the sale of certificate or payment of interest to National Savings Certificate holders. In other words, the right of the holders of the National Savings Certificates to receive the interest was not taken away. Further, it is well known that National Savings Certificate was intended for the purpose of providing relief to the income-tax assesses on the basis of the value of the Certificates purchased and the maximum amount for purchase of National Savings Certificates was also restricted to Rs. 60,000/-. Therefore, in its purpose and nature, the National Savings Certificate is somewhat different from the Post Office Time Deposit Accounts.

IN the instant case, the complainant had opened the 5 Years Term Deposit Accounts with the tacit approval of the 3rd opposite party and the deposits amounting to Rs. 1,40,64,300/- were made not once but as many as fourteen occasions and the deposits were held by the opposite parries in the name of the complainant upto 3.1.1996. IN such a situation, the opposite parties will not be justified if they fail to pay interest on those deposits by taking shelter under the Notification dated 8.3.1995, mentioned above.

IN its issue dated the 28th July, 1997, the INdian Express, Chennai, has reported a case decided by the Kerala State Consumer Disputes Redressal Commission, Thiruvananthapuram, under the caption "Panel''s Directive to British 2filed before the State Consumer Disputes Redressal Commission, Thiruvananthapuram, alleging deficiency in service on the part of the British Bank of the middle east which refused to pay interest to one of its customers who made a premature withdrawal of his fixed deposit. The contention of the Bank was that the customer withdrew the amount two months before the completion of a period of two years and to be eligible for payment of interest as per the directions of the Reserve Bank of INdia, the minimum lock in period was two years about which the Customer was not informed by the Bank. The Kerala State Consumer Disputes Redressal Commission dismissed the argument of the Bank that the Bank was not bound to inform personally the customers regarding the circulars of the Reserve Bank of INdia which are detrimental to their interests. IN its judgment the Hon''ble Commission said : "The failure on the part of the Bank to inform the complainant regarding two types of deposits and to explain the differences between the two would amount to deficiency in service. A customer could not be expected to know the circulars and guidelines issued by the RBI, from time to time, and he certainly got a right to information of the above details from the Bank. "Withholding of necessary information from a customer in such circumstances will also amount to unfair trade practice."

The facts of the case on hand are similar to the case mentioned above and the decision of the Kerala State Consumer Disputes Redressal Commission, cited supra will squarely applies to the facts of this case. Point No. 2-As Point No. 1 is decided in favour of the complainant, the next issue for consideration is whether the complainant is entitled for relief, as claimed. For the reasons stated above, the complainant is entitled for payment of interest at the rate prevailing on the relevant dates on which the deposits were made. The interest should be paid for the period from the dates on which deposits were made till the date of return of those deposits. The complainant would have no doubt suffered financial loss as a result of non-payment of interest, amounting to several lakhs of rupees, in time. Hence, a sum of Rs. 1,00,000/- is allowed, to the complainant as compensation for the financial loss. As the complainant is an institution, there is no justification for granting compensation for mental agony and so its claim in this regard is disallowed.

In the result, in the light of the discussions above, the complaint is allowed. The opposite parties are directed to pay interest to the complainant on a sum of Rs. 1,40,64,300/- at the rate prevailing at the time of making the deposits in the 5 Years Time Deposit Accounts for the period from the date of deposits till 3.1.1996 or the actual date of refund of the deposits. The opposite parties shall also pay a sum of Rs. 1,00,000/- to the complainant as compensation for the financial loss, on account of non-payment of interest in time. The complainant is awarded a sum of Rs. 3,000/- as cost of the present proceedings. Complaint dismissed.