Complaint filed on 22.11.2013

                                                                                                 Compliant disposed on 28.01.2015 

BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM ::AT:: KARIMNAGAR, TELANGANA STATE

PRESENT: HON'BLE SRI B.SURESH, B.A., LL.M., Ist ADDL. DIST. & SESSIONS JUDGE AND PRESIDENT (FAC)
AND

SRI G.SREENIVASRAO, M.Sc.,B.Ed.,LL.B., PGADR (NALSAR), MEMBER

WEDNESDAY, THE 28^TH DAY OF JANUARY,TWO THOUSAND FIFTEEN

CONSUMER COMPLAINT NO.179 OF 2013

Between:-

Govind Kumar Loya S/o.Radheshyam Loya, Age 36 years, Occu: Business R/o. H.No.19-7-66, Laxminagar, Godavarikhani, Dist.Karimnagar.

                                                                                                                                                              ... Complainant  

                                                               AND

1. The Sub-Post Master, HSG-II, Department of India Posts, Godavarikhani Post Office, Godavarikhani – 505 209, Karimnagar District.
2. The Superintendent of Post Office, Department of India Posts, Peddapalli Division, Peddapalli – 505 172, Karimnagar District.
3. The Regional Director, National Savings Institute, Kendriya Sadan, 1^st Floor, “F” Wing, Koramangala, Bangalore – 560 034.
4. The Chief Post Master General, A.P.Circle, Hyderabad.

                                                                                                                                                            … Opposite Parties

          This complaint is coming up before us for hearing on 29-10-2014, in the presence of Sri G.Ramulu Advocate, counsel for complainant, Government Pleader, Karimnagar for opposite parties no.1 to 4 and on perusing the material papers on record, and having stood over for consideration till this day, the Forum passed the following:

::O R D E R::

          The complainant filed this complaint under Sec 12 of C.P.Act to direct the opposite parties to refund back the invested amount along with accrued interest from the date of deposit till realisation in respect of National Saving Certificates and also to pay compensation of Rs.1,00,000/- for the mental agony and Rs.5,000/- towards costs.

The brief averments of the complaint:

1.       The complainant has invested an amount of Rs.1,50,000/- for a period of six years in the National Saving Certificates VIII issue on behalf Hindu Undivided Family, as such he obtained 15 certificates having face value of Rs.10,000/- for each certificate with maturity value of Rs.16,010/- each on the date attaining maturity. These certificates were purchased as per the following dates:

On maturity of some of the certificates, the complainant approached the opposite party no.1 to claim the maturity value i.e., Rs.16,010/- on each certificate. Whereas the opposite party refused to pay the matured value in the light of instructions Govt. of India Dt: 13.05.2005 to the postal authorities in respect of certificates purchased on behalf of Hindu Undivided Family were debarred from carrying interest. Whereas the complainant averred that after issuing certificates duly mentioning the maturity value and refusing at a later stage citing some letter from the Govt. of India amounts to deficiency in service and the opposite parties are liable to pay face value along with maturity value.

2.       The opposite party no.2 on behalf of other opposite parties submitted his version admitting that the complainant did purchase 12 National Saving Certificates during the period from 21.12.2005 to 09.10.2006 from opposite party no.1 on behalf of Hindu Undivided Family. He further stated that the investment in the National Saving Certificates by the Hindu Undivided Family has been discontinued by the Govt. of India – Ministry of Finance vide GSRNo.289E Dt: 13.05.2005. As such the National Saving Certificates were issued irregularly in contravention of National Saving Certificate rules. He submits that the opposite party no.1 had advised the complainant to encash the National Saving Certificate for face value only excluding the interest since irregularly invested deposits would not earn any interest. It is also submitted that the opposite party no.1 having noticed irregular issue of National Saving Certificates to the complainant had sent notice vide letter Dt: 09.07.2012 to take the payment of the face value on all the certificates issued in his favour by surrendering them. Adding to it even the opposite party no.2 issued a letter Dt: 13.02.2012 citing the reference of Govt. of India instructions vide letter Dt: 13.05.2005. However, the opposite parties admitted that an error occurred due to rush of work in issuing such certificates but not intentional nor by negligence. The opposite parties also cited the Hon’ble High Court of A.P. judgment in Writ Petition No.20456/2006 in a similar case as upheld the version of the department and so also upheld by the Apex Court in SLP (Civil) No.38/1995. Subsequently the National Commission, New Delhi in RP No.29/2008 has also upheld the version of the department. Therefore, in view of these decisions, the complaint needs to be dismissed as there was no deficiency in service on behalf of opposite parties.

3.       The complainant led the evidence by filing all the 15 National Saving Certificates VIII issue having face value of Rs.10,000/- for each and got them marked as Ex.A1 to A15 and letter of opposite party no.1 as Ex.A16, the opposite party no.2 in his evidence got marked the documents as Ex.B1 to B3.

4.       Now the point for consideration is, How the 6-yr National Saving Certificates VIIII issue irregularly sold to the complainant and whether the opposite party is responsible for the deficiency in service, if so, to what relief?

POINT:

5.       This case is pertaining to the irregular sale of six years National Saving Certificates – VIII issue to Hindu Undivided Family. The complainant purchased 15 National Saving Certificates having face value of each certificate Rs.10,000/- and maturity value of Rs.16,010/-. The complainant purchased all those National Saving Certificates during the period from 21.12.2005 to 09.10.2006 and all those certificates shall be matured during the period from December 2011 to October 2012. When the complainant visited the opposite party no.1 on maturing some of the certificates, he was informed by the opposite party no.1 that the interest on these National Saving Certificates for the category Hindu Undivided Family were barred with effect from 13.05.2005, therefore he was told to surrender and obtain only the face value on such certificates. On learning this, the complainant was shocked and questioned the opposite parties for the irregularity in sale of National Saving Certificates to him despite knowing the fact that there is a bar of interest on National Saving Certificates to Hindu Undivided Family by the Govt. of India w.e.f. 13.05.2005. In support of his claim he had submitted all the National Saving Certificates from Ex.A1 to A15 and the letter of opposite party no.1 Dt: 09.07.2012 asking him to surrender the National Saving Certificates in view of the Govt. of India instructions Dt: 13.05.2005. The opposite parties reiterated the same stand taken in their written version that the investments in the National Saving Certificates by the Hindu Undivided Family has been discontinued by the Govt. of India, Ministry of Finance vide GSR No.298 (E) Dt: 13.05.2005 and further submitted that National Saving Certificates were issued irregularly in contravention of National Saving Certificate Rules and his office has advised the complainant to encash the National Saving Certificates for face value only excluding the interest since irregularly invested/deposits would not earn any interest and more over relied upon the decision rendered by the Hon’ble High Court of A.P. in Writ Petition No.20456 of 2006 in Union of India R/by Superintendent of Post Office, Warangal District Vs Bucknell High School, Warangal District and 2 Ors. He also relied on Revision Petition No.29/2008 Dt: 17.04.2012 of National Commission, New Delhi in the case of Sarada Nikethan High School Vs Post Master, Superintendent Post Office. In these two cases the stand taken by the opposite parties have been upheld and the judgments were in their favour and they strongly relied on these decisions and prays this Forum to decide the instant case also on the guidelines of such judgments.

6.       On careful perusal of the material of both the parties, the Notification of Govt. Of India Dt: 13.05.2005 and instructions from Ministry of Finance which clearly says that amendments to various Small Saving Schemes were restricted for the investments to individuals only w.e.f.13.05.2005 and there upon and persons other than individuals (Hindu Undivided Family, Trusts, Provident Fund etc) opened by or issued on or after 13.05.2005 shall be treated as void ab initio. And immediate action should be taken to close such accounts or certificates and to refund deposits without any interest to the depositors and amendments shall not be applicable to the existing accounts or certificates opened or issued in accordance with the rules in operation prior to the amendments Dt: 13.05.2005. So this document is very clear from side of Govt. of India, Ministry of Finance whereas down the channel, the Post Offices have totally ignored the instructions given by the parent body in following the same in true spirit. The opposite party/Post Office should have intimated all its depositors or investors through various modes of indication including News Paper and via other electronic media regarding the amendment made by the Government to help the poor and ignorant investors or depositors. Whereas the Post Offices upto Town level, very carelessly issued certificates to innocent investors even after passing of six years from the amendment. So the irregularity in sale of National Saving certificate to the investors is apparent on the record. The opposite party’s stand that the complainant irregularly purchased certificates has no substance. The investors can be ignorant of the rules and regulations of the Department. It is the duty of the Department to enlighten the customers or the investors in a proper way. Whereas the staff or the employees of the Government cannot express that they are ignorant nor inadvertently issued or due to rush up work and such vague answers in their written version cannot be accepted, here their stand appears to be contrary to Principles of Justice and Equity and Doctrine of Estoppel. So the opposite parties cannot escape from the irregularity committed by them leading to rule of vicarious liability for wrongs done by its servants in the course of employment. The opposite parties relied upon the judgments in which the complainants are “institutions” not pertaining to the any individual or Hindu Undivided Family. As such, they cannot be considered in the instant case. The counsel for the complainant emphasized on the application of Sec 65 of Indian Contract Act, 1872,

“When an agreement is discovered to be void, or when a contract becomes void, any person who has received advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it”.

The scope and application of Sec 65 of Indian Contract was analysed by the Three Judge Bench of Apex Court as far as back in the year 1974 in Kuju Collieries Ltd., Vs. Jharkhand Mines Ltd. And Ors, AIR 1974 (SC) 1892 and the summary of findings of the said judgment are as follows:

Sec 65 of Contract Act, 1872 makes a distinction between an agreement and a contract. Accordingly to Sec 2 of the Contract Act, an agreement which is enforceable by law is a contract and an agreement which is not enforceable by law is said to be void. Therefore, when the earlier part of Sec 65 speaks of an agreement being discovered to be void, it means that the agreement is not enforceable and is, therefore, not a contract. It means that it was void. It may be that the parties or one of the parties to the agreement may not have knowledge, when they entered into the agreement, that the agreement was not enforceable. They might have come to know later that the agreement was not enforceable. The second part of the section refers to a contract becoming void. That refers to a case where an agreement which was originally enforceable and was, therefore, a contract, becomes void due to subsequent happenings. In both these cases any person who has received any advantage, under such agreement or contract is bound to restore such advantage, or to make compensation for it to the person from whom he received it.

Again in Tarsem Singh Vs Sukhminder Singh’s case, AIR 1998 Supreme Court 1400, the Hon’ble Supreme Court had analysed and explained the application of Sec 65 of Indian Contract Act in clear terms as under:

This Section, which is based on Equitable Doctrine, provides for the restitution of any benefit received under a void agreement of contract and, therefore, mandates that any “person” which obviously would include a party to the government, who has received any advantage under an agreement which is discovered to be void, has to restore such advantage or to pay compensation for it, to the person from whom he received that advantage or benefit.

Had the complainant been informed about the Govt.’s decision of discontinuing payment of interest on NSCs purchased on behalf of HUF, he would have invested in some other scheme where he could get an attractive rate of interest. 

7.       The decision in Kuju Collieries was rendered by a three Judges Bench and it is not over ruled. Therefore, it is a binding & precedent on this District Forum. In the cases cited by the Respondents, probably the decisions which were rendered in forgetfulness of Three-Judges Bench decision of Supreme Court cited supra.

8.       Thus, it is a settled law that a party, who at the time of entering into an agreement does not know that the agreement is not enforceable in law is entitled to restitution of the advantage received from him or to get compensation. In the instant case, the opposite party has received an advantage of reinvesting the amount received from the complainant in a more attractive area/scheme (since the Government cannot keep the money idle). Therefore, the complainant is entitled to compensation of the benefit from the opposite parties.

9.       The counsel also relied on the decision of Andhra Pradesh State Consumer Disputes Redressal Commission, Hyderabad in FA NO.344 of 2013 Dt: 20.02.2014 in which reference is made as follows:

Kuju Collieries Ltd., Vs. Jharkhand Mines Ltd. And Ors, reported in AIR 1974 (SC) 1892, the learned judges of the Supreme Court have taken the view that any person who has received any advantage under an agreement or contract which is void ab initio is bound to restore to such advantage or to make compensation for it to the person from whom he received it. The said view was reiterated by the Supreme Court in another judgment in Tarsem Singh Vs Sukhminder Singh reported in AIR 1998 SC 1400.

10.     The opposite parties without having any knowledge about the issuance of the said notification Dt: 13.05.2005 sold the said certificates in favour of the Hindu Undivided Family.    

11.     In view of the Supreme Court & A.P.State Commission decision discussed supra the opposite parties cannot go scot free from the liability i.e., matured amount vowed to the purchaser of the NSC/Complainant, because of the Govt. of India notification. More over the lethargic functioning of the postal authorities is very clear from the instant case that they have been selling the NSC’s to the investors/depositors till December, 2005, which is a clear cut violation of the instructions of Govt. of India Dt: 13.05.2005; in other words even after six (6) months the postal authorities down the channel are ignorant of their own rules & regulations. So the opposite parties have been selling the NSC’s irregularly to the investors. This also proves deficiency in service on the part of the opposite parties. Thus the point is answered in favour of the complainant and he deserves relief from this Forum. However, the NSC’s maturing in the month of April, 2016 & 2017 must also to be paid along with interest as promised by the Department.

12.     In the result, the complaint is allowed and the opposite parties are jointly and severally directed to pay matured amount i.e., Rs.16,010/- on all the twelve (15) 6-Yr National Saving Certificates VIII issue, purchased during the years from 2005 to 2006 and further directed to pay a compensation of Rs.15,000/- for the deficiency in service and mental agony caused along with costs of Rs.5,000/-. Time for compliance is 30 days.

Dictated to Stenographer and transcribed by her and after correction the orders pronounced by us in the open court this the 28^th     day of January, 2015.

Sd/-                                                                                                                     Sd/-

MEMBER                                                                                                  PRESIDENT(FAC) 

NO ORAL EVIDENCE HAS BEEN ADDUCED ON EITHER SIDE

FOR COMPLAINANT:                       

1. Ex.A1 to A15 are the original 6 Yr National Saving Certificates VIII- Issue issued by the opposite parties in favour of complainant for an amount of Rs.10,000/- each with different dates.
2. Ex.A16 is the photo copy of letter from opposite party no.1 addressed to complainant Dt: 09.07.2012.  

FOR OPPOSITE PARTY:

1. Ex.B1 is the photo copy of letter from opposite party no.2 addressed to opposite party no.1 Dt: 26.03.2012.
2. Ex.B2 is the photo copy of letter from opposite party no.1 addressed to complainant Dt: 09.07.2012.
3. Ex.B3 is contains photo copies of four acknowledgment cards Dt: 10.07.2012.

Sd/-                                                                                                                     Sd/-

MEMBER                                                                                                  PRESIDENT(FAC)