Shri Phalguni Dhar
Upper New Colony
Shillong
…Appellant/Complainant
-Vs-
1. State Bank of India
Shillong Main Branch
Shillong
2. The Deputy General Manager
Zonal office, State Bank of India
Dhankheti
3. The Chief General Manager
State Bank of India
Laitumkhrah Branch
Shillong-793003
…….Respondents/Opposite parties
Date of hearing : 26.10.2013Date of judgment : 16.11.2013
JUDGMENT & ORDER (CAV)
Per Mr. Justice P K Musahary, President
This appeal is directed against the judgment and order dated 10.1.2003 passed in Complaint Case No. 10 of 2001 by the learned District Consumer Disputes Redressal Forum, East Khasi Hills, Shillong (District Forum in short) dismissing the appellant’s complaint petition without cost.
2. The appellant’s case, in short, is that he opened a Public Provident Fund (PPF) account with the Laitumkhrah Branch of the State Bank of India (SBI in short) at Shillong in 1982. At the time he opened the said account, the maximum ceiling for deposit was Rs 15,000/- only which was subsequently raised to Rs 60,000/- per year. He was informed by some staff of the respondent bank that one could deposit more than Rs 60,000/- and so he used to deposit amounts far above Rs 60,000/- in his PPF account. The bank staff also used to accept the excess amounts deposited by him without any objection. It was only on 13.10.2000, the respondent bank informed him that there has been excess deposit and the same would be treated as irregular deposit. He was also informed that the excess/irregular deposits would not qualify for interest, nor would he be eligible for rebate under the Income Tax Act. The respondent bank calculated the excess deposit at Rs. 10, 25, 000/- for the period from 1996-1999 and, on 11.11.2000, refunded the said amount vide a banker’s cheque issued in favour of the appellant. On 24.07.2000 the respondent bank also debited a sum of Rs. 2, 25, 335/- only in the appellant’s account towards interest that had earlier been credited in his account. Further that, although the interest was debited on 24.07.2000, the alleged excess amount was refunded only on 11. 11. 2000 without interest.
3. The stand of the respondents is that the excess amount deposited into the PPF account does not qualify for interest due to the ceiling imposed and for the purpose of refunding the said amount, the account holder has to file an application for the same which was, in fact, not done by the appellant inspite of repeated request of the respondent bank. However, the respondent bank refunded the excess deposit from the Central Government fund. The interest which has been credited in the excess amount was also debited and sent back to the government immediately. The respondent bank is not required to pay interest in as much as, as contended by them, they are merely acting as an agent of the Central Government to implement the public scheme and it is the responsibility of all the customers to know and acquaint themselves with the terms & conditions as well as the rules & regulations pertaining to the scheme and the bank is not cast with duty to explain the scheme in details and the complainant cannot lay the entire blame on the bank for his alleged ignorance of the terms & conditions of the PPF scheme.
4. We heard Mrs. P.D.B Baruah, learned counsel for the appellant and Mrs. T. Yangi, learned counsel for the respondents. We have perused and considered the pleadings of the parties along with the materials and evidence on record. We have also perused and considered the written arguments filed by the learned counsel for the parties. The indisputable position that emerges therefrom is that-
i) The maximum ceiling for deposit in the PPF account at the initial stage was Rs. 15,000/- per year in 1982 and it was raised to Rs. 60,000/- per year in 1988.
ii) The appellant opened the PPF account in question in the year 1982 and deposited amounts more than Rs. 60,000/- in three financial years i.e., 1996-97, 1997-98 and 1998-99.
iii) The total excess amount came to Rs. 10, 25,000/- and the said amount was refunded to the appellant on 11.11.2000 without any interest.
iv) An amount of Rs.2,25,335/- only was debited on 24.07.2000 from the appellant’s account towards interest that had earlier been credited by the Bank.
v) The rate of interest as per the PPF Scheme was 12% upto 14.01.2000 and 11% during the period from 15.01.2000 to 28.02.2001.
5. What is abundantly clear from the above admitted factual position is that the excess amounts deposited by the appellant into his PPF account were received by the respondent bank. The total excess amount has been calculated and the said amount has been returned to the appellant without interest. There is no dispute on the calculation of excess amount or on the fact of return of excess amount to the appellant. The said excess amount accrued interest to the tune of Rs.2,25,335/- which was credited to the appellant’s account but it was debited without any notice/information to him simply because, according to the Bank, the excess amount did not qualify for interest and income tax rebate. The real question, therefore, boils down to entitlement of interest on the excess amount deposited in the PPF account. Before dealing with this question it is to be noted that the PPF scheme has been launched by the Government of India and the respondent bank is acting as an agent although there is nothing on record that the bank gets any commission for the services it renders for the Government of India. But there is no difficulty in appreciating the fact that the respondent as a nationalized bank is duty bound to help the Central Government in implementing the public scheme for the benefit of the people without charging any commission.
6. We have thoroughly examined the Public Provident Fund Act, 1968 (the Act) and the related Public Provident Fund Scheme, 1968 (the Scheme) as applicable at the relevant time. Clause 3 of the Scheme provides that an individual may subscribe to the PPF Fund any amount not more than Rs.60,000/- in a year. Clause 8 of the Scheme lays down that - “Interest at the rate, notified by the Central Government in official gazette from time to time, shall be allowed for calendar month on the lowest balance at credit of an account between the close of the fifth day and the end of the month and shall be credited to the account at the end of each year.” However, there is no provision in the Scheme clarifying what is to be done with regard to payment of interest if, for any reason, the lowest balance at credit of an account exceeds the maximum annual subscription prescribed in Clause 3.
7. In this respect Learned Counsel for the Bank has placed before us extracts from a Booklet on Memorandum of Instructions of PPF Scheme issued by the Bank in 1988 which is in Question-Answer form. The relevant part reads as follows:
Question: “In case a subscriber deposits more than Rs.60,000/- in a particular year and later asks for refund of the excess amount, what action the branch has to take/initiate?
Answer: Obtain an application for refund of the excess amount (Amount over Rs.60,000/-) from the subscriber and make the payment by debit to Govt. A/c without any interest. Payment should be made through Banker’s cheque.”
However, this does not help the Bank much as these are internal Bank instructions and cannot be read as being part of the PPF Scheme. Moreover, there is nothing on record that the Bank circulated the said Booklet for information of the general public or that this was earlier made known to the Complainant, and, as such, these cannot be binding on him.
8. In our view the Respondent State Bank of India has been very callous in implementing the PPF Scheme and should have been mindful about accepting deposits exceeding Rs.60,000/- per annum from the Appellant, keeping his interests too in mind. Their defense, (as stated in Para 8 of their written submissions) that during the material period “the accounts were operated manually and inbuilt system of putting maximum cap on credit transactions was not available” does not hold much water as the Appellant made individual deposits ranging from Rs.75,000/- to Rs.3,00,000/- at a time which alone exceeded the maximum annual ceiling and could not have gone unnoticed. Moreover, the Bank Instruction Booklet on the PPF Scheme itself states that all accounts shall be summated at the close of each financial year and, in any event, Bank accounts are audited each year. Not only that, the PPF Scheme clearly provides for issuance of Pass Books to all subscribers and entering of all deposits and withdrawals on a regular basis. Therefore, it is extremely difficult to fathom how the excess deposit was not detected by the Bank’s Auditors or by the Bank itself at the very time of deposit or at least in the following year, but only after a long gap of four years, which undoubtedly caused a loss to the Appellant. We cannot also bring ourselves to appreciate the internal state of affairs of the Bank when they state in their letter dated 13.12.2000 addressed to the Appellant that ‘there is no internal mechanism in place to check for any excess deposits nor is it possible to check the deposits in all cases for the excess amount’. We do not also accept the statement of the Bank as made in Paras 15 and 18 of their Affidavit cum Show cause before the learned District Forum to the effect that ‘there is no bar to the Bank to receive the money deposited by customer and later subsequently refund the same and they cannot by any stretch of imagination be faulted for the same inasmuch as the Bank is as much bound by the terms of the PPF Scheme and the ceiling on annual deposit as the Complainant depositor.
9. However, although there is deficiency in service on the part of the Respondent Bank, in view of the maximum ceiling of Rs.60,000/- per annum laid down in Clause 3 of the Scheme, the manner and extent of relief that can be given to the Appellant does require deep consideration and for which we must turn to settled precedents.
10. First we come to the following cases cited by the Appellant.
(a) The first case of Punjab & Sind Bank Vs Manpreet Singh; 1994 (3)CPJ 532, pertains to savings bank account. Undisputedly a savings bank account holder is a consumer under the CP Act because of the fact that the deposit in the savings bank account is not made/ received against any promotional public scheme. The bank utilizes the deposits made in the savings account and pays interest to the holders of savings bank account. The savings bank account holder, unlike the holder of PPF account, is, therefore, a consumer and a dispute between the bank and the savings bank account holder would lie in consumer forum.
(b) In the case of Vimal Chandra Grover Vs Bank of India; 2000 (2) CPJ II (SC): AIR 2000 SC 2181, the respondent Bank, on request of the appellant sanctioned an overdraft limit of Rs. 5,00, 000/- against pledge of shares worth Rs 200/- each. Subsequently the value per share was raised to Rs. 2400/-. At that stage, in order to liquidate the overdraft the appellant requested the respondent bank to sell part of the pledged shares. Agreeing to the said request the respondent bank sold the shares dropping to Rs. 700/- each and resulting in huge loss to the appellant. In the said facts and circumstances it was held that there was deficiency of service on account of negligent conduct of the bank and the bank was directed to pay the amount with interest @11% from the first day of the month immediately following the date of sale with further direction that in case of default the bank would be liable to pay further interest @18% pa. The facts and circumstances as well as the issues involved in the present case are quite different from the ones involved in the above cited case.
(c) In the case of State Bank of India Vs Raveondran Nair; 1992 (2) CPR 400, the appellant refused to encash the demand draft as the signature of one of the two officials of the bank was missing. The State Commission held that the dishonour of draft was due to the fault of the bank and there was deficiency in service by the bank for which the bank was directed to pay compensation of Rs. 19, 500/- on account of inconvenience and mental agony caused to the respondent.
(d) In Sovintorg (India) Ltd Vs State Bank of India; 1999 (2) CPJ (SC), the appellant company, which had an account with the respondent bank, deposited in June 1983 a cheque of Rs. 1,00,000/-. It is alleged that though the proceeds were collected on 17.6.1983, they were not credited to its account for 7 years. The appellant filed a complaint before the State Consumer Commission claiming a total of Rs. 8, 26, 000/- including the principal, normal and panel interest @24% pa, compensation for business losses and general damages. The State Commission awarded interest @12% only for holding of the customer’s money. The National Commission, on appeal by the complainant, confirmed the order of the State Commission. On further appeal the Hon’ble Supreme Court partly allowed the appeal directing the bank to pay interest @15% pa in view of the concurrent finding of the State as well as National Commission that there existed between the parties an understanding which authorized the bank to keep the amount as ‘Margin Money’ for the guarantee furnished by the bank on behalf of the appellant company to the Chief Controller of Exports & Imports and the bank was thus, not wrong in retaining the amount. The decision rendered in a completely different factual situation involving a different issue, as relied upon by the appellant, in our considered view, is not applicable to the present case.
(e) SBI vrs P.S.Krishnan (2004 (2) CPJ 579) which was also a case relating to excess deposit in the PPF Account where the Hon’ble Tamil Nadu State Commission held that the act of the bank in retaining a huge sum for nearly a year and returning it without interest, which the Complainant was legitimately entitled to, was an unjustified act.
(f) At last the learned Counsel for the appellant cited and relied heavily upon the decision of the National Commission in the State Bank of Patiala Vs Gopal Krishna Singla, rendered on 16.8.2011 in RP No 1063 of 2010. During her oral submission, Mrs. Baruah produced a copy of press report as published in ‘The Tribune’ dated September 18, 2011, which she obtained online. We have perused the press report. We have also obtained the full text of the said judgment online and perused the same. The facts of the said case, in brief, are that in May 1996, the respondent first deposited in his PPF account an amount of Rs. 60,000/-. Subsequently he deposited another amount of Rs. 90,000/- in July the same year and again Rs 3, 90, 000/- in August. When his total deposited amount of Rs. 4, 80, 000/- was in the PPF account, the appellant refused to pay the interest which led the respondent to file a complaint in the Consumer Forum. While contesting the case, the appellant bank concluded, inter alia, that as per the rules framed by the Central Government for deposits in the individual PPF accounts, an individual could deposit only a maximum of Rs. 60, 000/- in a financial year in his PPF account; and any amount deposited suo motu in excess of the said limit was not eligible for earning interest and thus, the client was not entitled to any interest on the excess amount of Rs. 4, 80, 000/-. Further it was contended that the appellant bank was only an agent for the government as per as the PPF account was concerned, and it deposited the amount in PPF account with the RBI/Government of India on a daily basis. So the bank never makes use of the money for any commercial purpose, and, therefore, was not liable to pay any interest on the amount.
Per contra, the respondent claimant therein contended that the appellant bank was guilty of deficient service as it had failed to advise or inform him that any deposit in excess of Rs. 60, 000/- would not fetch any interest. Without informing the respondent about the same, the bank merrily accepted the excess deposit to the tune of Rs. 4, 80, 000/-. It was further contended that no person of sound mind would lock up such huge amount in his PPF account if he were told or informed that the amount would not fetch any interest and so the bank was at fault in not informing him of the rules governing the individual PPF account and liable to pay interest on the amount for the duration it was in the account. The Hon’ble National Commission, persuaded by their decision rendered in Chief Postmaster Chennai Vs Chuda Milk Products Cooperative Organization Ltd (RP No 2651 of 2007 decided on 23.10.2009), observed that “Though the decision of this Commission relied upon by the State Commission in the impugned order cannot be invoked in this case (because of the Bank’s averment that the moneys deposited in the PPF accounts of all such depositors were not utilized by the Bank for any commercial purpose but remitted to the Government of India at the earliest opportunity), we are of the view that the interest of justice would be well served in this case too if some interest is allowed on the complainant’s excess deposit in his PPF account, in keeping with the ratio of the decision of this Commission cited above.” Accordingly the National Commission directed the bank to pay interest on the excess amount for the period that it was in the PPF account @6% p.a. It was also provided that if the amount was not paid within 4 weeks from the date of order, interest @12% would be payable. It also awarded Rs. 1000/- as costs.
11. On the other hand, Learned Counsel for the Respondent Bank relied upon the following decisions:
(a) Union Bank of India Vs. Surana Bangles (SC & NC CLC (2005-2008) 628) which was a case relating to mistaken credit of amount in the account of the Account Holder where the Hon’ble National Commission held that the Account Holder was bound to repay/return the money to the Bank with interest as he had utilized the money. This decision does not apply to the facts of the instant case and, if at all, only goes against the Bank.
(b) State Bank of India Vs. Chandrakant Muljibhai Shah (AIR 2009 NOC 1793 NCC). The full judgment has not been made available to us but the short notes read as follows:
“Consumer Protection Act (68 of 1986), S.2 (1)(g) – Banking Service- Deficiency alleged by Complainant on ground that, on deposit of Rs.50,00,000/- in PPF Account by him in bank, no interest @ 12% was provided- But as per Cl.8 of PPF Scheme excess amount to Rs. 60,000/- was to be treated as irregular subscription and no interest was payable on such amount - Interest @12% could not be demanded by Complainant on amount above ceiling limit of Rs.60,000/- merely on ground of ignorance of law. No deficiency in service.”
12. We thus find that the decisions of the Hon’ble National Commission in State Bank of India vs. Gopal Krishan Singla (supra) relied on by the Appellant and in State Bank of India Vs. Chandrakant Muljibhai Shah (supra) relied on by the Respondents are the decisions relevant to the facts of the instant Appeal and it is only, these two cases which need our examination. However, we are also aware of the following two decisions which also throw light on the matter:
(a) State Bank of India Vs. B.V. Ramana Murthy ( 2008 (1) CPJ 108 NC) which too was a similar case under the PPF Scheme where the Hon’ble National Commission held in Para 3 as follows:
“Contention advanced by Mr.S.L.Gupta for the petitioner is that in view of the limit of subscription to PPF account of not more than Rs.60,000 in a year, the Respondent is not entitled to interest on the deposits made in excess thereof. The Respondent was supposed to be aware of the provisions of PPF Act and the Scheme framed thereunder by the Government. Further contention advanced is that the petitioner-bank was/is an agent of Reserve Bank of India on whose behalf the deposits were accepted and though the matter was taken up by the petitioner bank with RBI for transfer of the amount from PPF A/c to RESS but the RBI did not permit the transfer. It is admitted case of the parties that the Respondent deposited Rs.2,12,000 on 26.10.1998, Rs.54,500 on 30.10.1998, Rs.1,04,000 again on 30.10.1998 and Rs.7,11,963 on 15.10.1999. Excepting the deposit of Rs.54,500 the remaining three deposits were in far excess of the ceiling of Rs.60,000 which could have been made in a PPF A/c in a year by any subscriber. Bank official receiving the said money in said PPF A/c No. 156 must have been aware of the maximum ceiling of Rs.60,000 in a year still the said deposits were received by him in violation of the Scheme/Act. Not only that, interest on the entire amount credited in the respondent’s account upto 31.03.2001. Further, letter dated 22.06.2001 given by the respondent to the petitioner-bank would show that on knowing that amount of not more than Rs.60,000 cannot be deposited in PPF A/c in a year, the respondent requested the bank to transfer the deposited amount to Retiring Employees Saving Scheme. Reply to the letter dated 21.08.2001 sent by the petitioner-bank to the respondent would indicate that the respondent’s request for transfer of excess deposit to RESS was declined by the bank. It would be unfair on the part of the bank to retain the deposited money and still not paying interest thereon.”
(b) Patel Harishbhai Bhanubhai Vs. Chief Post Master (AIR 2002 Guj 21), another similar case under the PPF Scheme where the Hon’ble Gujarat High Court held in Paras 7 & 8 that:
“Moreover, it was with open eyes that the PPF account was opened by the Postal Department in the joint names of the parents of the petitioners. There is no allegation of misrepresentation or concealment of facts by the account holders. As observed by this Court in the judgment dated 3.5.2000 in Special Civil Application No. 3422 of 2000, when the department had accepted the opening of the account and the petitioners or their parents never made any misrepresentation or concealed any fact nor suppressed any fact from the department, in such a situation, the functionaries of the Government (who have to deal with Savings Schemes which are public oriented schemes and to give an incentive to the members of the public at large for depositing the amounts to make the savings for a rainy day and earn interest on the said money as per the scheme) cannot be allowed to act and take such an arbitrary and incomprehensible stand after they themselves had accepted the opening of the account and the same was operated with addition of interest from time to time.
In view of the above finding, the question for giving petitioners interest at any lower rate than the rate of interest available to other subscribers of the PPF account does not arise. The petitioners shall have to be paid interest on the subscriptions made to the PPF account as per the rate of interest available to the other account holders in the PPF Scheme.”
13. The detailed facts of SBI Vs. Chandrakant (supra) cannot be ascertained by us from the Notes on Cases. Inter alia, it states that “But as per Clause 8 of the PPF Scheme excess amount to Rs.60,000/- was to be treated as irregular subscription and no interest was payable on such amount.” However, in the PPF Scheme before us, with utmost respect to the Hon’ble National Commission, we could find no such provision in Clause 8 or anywhere in the PPF Scheme. In any event, it appears that the earlier decision in SBI Vs. B.V. Ramana (supra) was not noticed in SBI Vs. Chandrakant (supra) and, further, the decision in SBP Vs. Gopal (supra) was rendered subsequent to SBI Vs. Chandrakant. We are therefore of the view that it is the decision in State Bank of Patiala Vs. Gopal Krishna Singla that should guide us in deciding as to what relief ought to be given to the Appellant.
14. Having considered the matter in its entirety in the attending facts and circumstances of the case and also the materials and evidence on record, in keeping with the ratio of State Bank of Patiala Vs. Gopal Krishna Singla (supra), we are of the considered view that interests of justice would be well served if some interest is allowed on the Appellant’s excess deposit in his PPF account and a similar order passed, directing the Respondent Bank to pay to the Appellant interest @ 6% p.a. on the excess deposit made in the PPF account by the Appellant.
15. We therefore allow the Appeal partly and set aside the impugned judgment and order dated 10.1.2003 passed by the learned District Forum in C.C. No.10 of 2001. The Respondent Bank is directed to pay interest to the Appellant @ 6% per annum on the excess deposit of Rs.10,25,000/- in the Appellant’s PPF account from the dates on which the respective deposits were made till 11.11.2000, i.e. the date of refund of the amount by the Respondent Bank. Payment now directed shall be made within four weeks from the date of this order, failing which the entire amount shall carry further interest @ 12% per annum from today.
16. The appeal is disposed of with the directions given above. No costs. Return the records along with a copy of this judgment and order.
