While partly upholding a decision by the district forum and rejecting an order by the state commission, the national consumer disputes redressal commission (NCDRC) directed the postal department to refund the principal amount along with interest on public provident fund (PPF) deposits within the ceiling limits and pay excess money deposited without any interest to the customer.
In an order, the bench of justice Sudip Ahluwalia (presiding member) says, "...while the complainants are not entitled to any interest on the irregular deposits made during the subsistence of their PPF account, in excess of the combined ceiling limit during any given financial year (FY), yet they would be entitled to at least receive back such excessive irregular amounts deposited by them without any interest thereupon, in addition to the refund of their original deposits within the ceiling limit with interest at the prescribed rates during the relevant FYs."
The bench reiterated that, as per the PPF accounts scheme, the concerned subscriber must adhere to the ceiling limit of deposits during any given financial year for all the combined accounts.
The ceiling limit on the amounts that can be deposited in PPF account up to FY01-02 was Rs60,000 which was subsequently enhanced to Rs70,000 per year for the next nine years till FY10-11. After that, the limit was enhanced to Rs1 lakh pa (per annum) for the following two financial years.
"But the bottom line is that for all the three separate accounts in the names of the original subscriber or father of the minors himself, and those of his two minor sons subsequently, the combined subscription during any given financial year could not have been more than the limit specified for that particular year. Any amounts deposited over and above the said ceiling limit were, therefore, clearly liable to be treated as irregular deposits over which no interest would have been payable, especially considering that the objective behind the high rate of interest prescribed for the PPF accounts in comparison to other savings schemes was the opportunity to the subscriber(s) to avail of income tax (I-T) benefits towards such subscription up to only a specified limit as permissible," NCDRC says.
In 1992, Bengaluru-based VS Rajeev opened a PPF account for 15 years in the post-office. After completing the 15 years, he extended the period for five more years. In 1999, he also opened two PPF accounts in the name of his minor children for 15 years. He continued depositing money in all three accounts and updating passbooks for the PPF accounts from an authorised post-office agent.
When Mr Rajeev informed the post-office to enter the name of one of his children as a major person in the PPF account, he was orally told that some deposits in the account of the child were irregular and no interest would be paid to him.
Consequently, the post-office sent a letter to Mr Rajeev informing him that the investments made for his children are not eligible for any interest and the deposits made by them are to be refunded without interest, and the action taken is in order.
Mr Rajeev contended that the post-office and its authorised agent should have informed him about the limit in deposit and, instead of accepting the deposit, they ought to have refused at the beginning itself while opening the accounts.
"Even assuming that after opening the accounts, the limit was informed to Mr Rajeev and his sons, still the deposits were blindly accepted along with entries made of the deposits and interest in the passbook...it was a glaring mistake by post-office and its agent in accepting the deposits regularly for more than 12 years....The investments have been accepted by post-office and its agent from the beginning till maturity without any objection and hence, they are now liable to pay the entire deposits and interest accumulated till the maturity period," he argued.
He then filed a complaint before the Seshadripuram district forum. In its contention, the post-office stated that as per clarification (8) under the PPF scheme 1968, if contributions above Rs70,000 are made during any year, the deposits over Rs70,000 will be treated as irregular subscriptions and will neither carry any interest nor will this excess amount be eligible for deduction under Section 80c of the I-T Act. This extra amount will be refunded to the subscriber without any interest.
Accepting the submission by the postal department, the district forum dismissed the complaint.
Mr Rajeev then filed an appeal before the Karnataka state consumer disputes redressal commission. Placing reliance on the decision of NCDRC in the case of KM Singh vs senior postmaster, Ramesh Nagar IV (2005) CPJ 174 (NC), the state commission allowed the appeal. It asked the post-office to pay Mr Rajeev the maturity amount with accrued interest thereon with interest at 9%pa from the date of maturity till realisation, Rs5,000 as compensation and Rs5,000 as cost of the proceedings.
The postal department then filed a revision petition before the NCDRC.
Justice Ahluwalia perused the order issued by NCDRC in the KM Singh case and found that it was not related to PPF accounts but was to certain other monthly income accounts of which the rules did not exactly tally with PPF rules.
He says, "The district forum was correct in dismissing the complaint as it was clear that the complainant or subscriber, in any given FY, would not have been entitled to interest under the PPF scheme for any deposits made over and above the prescribed ceiling limit as applicable in the given financial year. The state commission, therefore, would appear to have acted with material irregularity in allowing the complaint in favour of Mr Rajeev after setting aside the substantially well-reasoned order of the district forum."
"However, the district forum itself had slightly erred in having dismissed the complaint in toto since even the irregular deposits made on behalf of Mr Rajeev and his sons during the relevant year ought to have been refunded to the account holder(s), albeit without crediting any interest upon such excessive irregular deposits," NCDRC noted.
The bench then directed the post-office to refund, within three months, the principal amount and interest for deposits within the ceiling limit and refund the excessive irregular amount deposited by Mr Rajeev and his sons without any interest.
(Revision Petition No1095 of 2020 Date: 16 May 2023)