REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4995  OF 2006

Arulmighu Dhandayudhapaniswamy  Thirukoil, Palani, Tamil Nadu, thr.  Its Joint Commissioner                       .... Appellant (s)

Versus

The Director General of Post Offices, Department of Posts & Ors.     .... Respondent(s)

J U D G M E N T  

P. Sathasivam, J.

1) This appeal is filed by the appellant-Temple through  

its  Joint  Commissioner  against  the  final  order  dated  

31.05.2006  passed  by  the  National  Consumer  Disputes  

Redressal  Commission  (in  short  “the  National  

Commission”)  at  New  Delhi  in  First  Appeal  No.  411  of  

1997 whereby the  Commission dismissed their appeal.

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2) Brief facts:

(a) The  appellant  is  a  temple  situated  in  the  State  of  

Tamil  Nadu.   It  is  one  of  the  ancient  temples  of  Lord  

Kartikeya and is considered prime among the six holiest  

shrines of the Lord.  Every year, lakhs of devotees throng  

the  temple  which  is  situated  on  a  hill  to  receive  the  

blessings of the Lord.  The temple is being administered by  

the  Hindu  Religious  and  Charitable  Endowments  

Department  of  the  Government  of  Tamil  Nadu.   The  

devotees make offering in cash and kind to the deity.  The  

cash offerings are collected and invested in various forms.  

The income derived from such investments is utilized for  

charitable  purposes  such  as  prasadams,  hospitals,  

schools and orphanages.   

(b) According to the appellant, it had deposited a huge  

sum of money totaling to Rs.1,40,64,300/- with the Post  

Master, Post Office, Palani from 05.05.1995 to 16.08.1995  

for  a  period  of  five  years  under  the  ‘Post  Office  Time  

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Deposit Scheme’ (in short ‘the Scheme’).  On 01.12.1995,  

the Temple received a letter  from the Post  Master,  Post  

Office,  Palani-3rd Respondent  herein  informing  that  the  

Scheme  had  been  discontinued  for  investment  by  

institutions  from  01.04.1995,  and  therefore,  all  such  

accounts should be closed without interest.  The amount  

deposited by the Temple was refunded only on 03.01.1996  

without interest.   

(c) Aggrieved by the decision of  the Postal  Authorities,  

the appellant,  on 10.01.1996, sent a legal  notice to the  

respondents  calling  upon  them  to  pay  a  sum  of  

Rs.9,13,951/-  within  a  period  of  seven  days,  being  the  

interest @ 12% p.a. on the sum of Rs.1,40,64,300/- from  

the  dates  of  deposit  till  the  dates  of  withdrawal.   As  

nothing  was  forthcoming  from  the  respondents,  the  

appellant  preferred  a  complaint  before  the  State  

Consumer Disputes Redressal Commission (in short “the  

State  Commission”).   Vide  order  dated  08.08.1997,  the  

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State Commission was divided over its opinion in the ratio  

of 2:1.  The majority opinion comprising of the Chairman  

and  Member  II  dismissed  the  complaint  filed  by  the  

appellant.    

(d) Aggrieved by the dismissal  of  the complaint  by the  

State  Commission,  the appellant  preferred an appeal  to  

the  National  Commission  which  was  also  dismissed  on  

31.05.2006.  Challenging the said order, the appellant has  

preferred this appeal by way of special leave before this  

Court.

3) Heard  Mr.  S.  Aravindh,  learned  counsel  for  the  

appellant  and  Mr.  A.S.  Chandhiok,  learned  Additional  

Solicitor General for the respondents.

4) Points  for  consideration in this  appeal  are whether  

there was any deficiency in service on the part of the Post  

Master,  Post  Office,  Palani-3rd Respondent  herein  and  

whether the appellant-complainant is entitled to any relief  

by way of interest?

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Discussion

5) We have already adverted to the factual details.  It is  

the case of the respondents that the Central Government  

had issued a Notification being No. G & SR 118(E) 119(E)  

120(E)  as per  which no Time Deposit  shall  be made or  

accepted  on  behalf  of  any  institution  with  effect  from  

01.04.1995. It is not in dispute that the appellant-Temple  

had  deposited  a  huge  sum  of  money  amounting  to  

Rs.1,40,64,300/- with the Post Master from 05.05.1995 to  

16.08.1995.  The said deposit was for a period of five years  

under  the  Scheme.   Though  the  3rd Respondent  had  

accepted the amount under the said Scheme and issued a  

receipt for the same, later it was found that the deposits  

made  on  and  from  01.04.1995  were  against  the  said  

Notification which amounted to contravention of the Post  

Office  Savings  Bank General  Rules,  1981 (in  short  ‘the  

Rules’).   

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6)  In exercise of the powers conferred by Section 15 of  

the  Government  Savings  Banks  Act,  1873,  the  Central  

Government  framed  the  above  mentioned  Rules.   The  

Rules are applicable to the following accounts in the Post  

Office  Savings  Bank,  namely,  a)  Savings  Account  b)  

Cumulative  Time  Deposit  Account  c)  Recurring  Deposit  

Account d) Time Deposit Account and it came into force  

with effect from 01.04.1982.  Among various Rules, we are  

concerned with Rules 16 & 17 which read as under:-     

“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 the deposits made in the accounts  refunded to the depositor with interest at the rate applicable  from time to time to a savings account of the type for which  the depositor is eligible.   17.  Accounts 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 accounts 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.”  

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Since the deposits in the case on hand relate to Post Office  

Time Deposit  Account, Rule 17 of the Rules is squarely  

applicable.  The reading of Rule 17 makes it clear that if  

any  Account  is  found  to  have  been  opened  in  

contravention  of  any  Rule,  the  relevant  Head  Savings  

Bank may, at any time, cause the account to be closed  

and  the  deposits  made  be  refunded  to  the  depositor  

without interest.  Rule 16 speaks that where an account is  

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 a person is eligible to  

open such account and if he is not so eligible, the account  

may be converted into an account of another category ab  

initio,  if  the person so desires  and if  he is  found to be  

eligible.  For any reason, where the account cannot be so  

converted,  the account is  to be closed and the deposits  

made in the accounts be refunded to the depositor with  

interest  at  the  rate  applicable  from  time  to  time  to  a  

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savings  account  of  the  type  for  which  the  depositor  is  

eligible.   

7) Before considering Rule 17, it  is useful to refer the  

communication dated 01.12.1995 of  the Post  Master-3rd  

Respondent herein which reads as under:

                         “DEPARTMENT OF POSTS, INDIA

From Post Master

Palani 624 601     To

The Joint Commissioner/ Executive Officer

A/M. Dhandayuthapani Swamy Thirukoil, Palani

No. DPM/SB/Dlg.                    Dated at Palani 01.12.1995

Sub:  Investment  by Institution in the Post  Office Time Deposits,  K.V.  Patras, NSC VIII Issue-reg.

Sir,  

I am to inform you that with effect from 01.04.1995 investments by  Institution in the P.O. T.D. V.P.+N.S.C. VIII issue is discontinued.  As  Devasthanam is also an Institution,  I  request you to close all  the TD  accounts immediately without interest and also if any kind of above said  patras and certificates purchased by the Devasthanam after 01.04.1995.

The  following  TD  accounts  have  been  opened  at  Palani  H.O.  after  01.04.1995.  Please close the accounts immediately.

1) 5 year TD 2010417 dt. 05.05.1995, (2) 2010418 dt. 20.05.1995, (3)  2010419 dt.  31.05.1995, (4) 2010421 dt.  14.06.1995, (5) 2010422 dt.  21.06.1995, (6) 2010423 dt. 03.07.1995, (7) 2010424 dt. 03.07.1995, (8)  2010425 dt. 11.07.1995 (9) 2010426 dt. 13.07.1995, (10) 2010428 dt.  29.07.1995, (11) 2010429 dt. 01.08.1995, (12) 2010430 dt. 07.08.1995,  (13) 2010431 dt. 07.08.1985 and (14) 2010435 dt. 16.08.1995.

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Yours faithfully

(Sd/-)…………   Post Master

        Palani 624 601”     

It is clear from the above communication that with effect  

from 01.04.1995 i.e. even prior to the deposits made by  

the  appellant-Temple,  investment  by  institutions  under  

the Scheme was not permissible and in fact discontinued  

from that date.  It  is not in dispute that the appellant-  

Temple is also an institution administered and under the  

control  of  the  Hindu  Religious  and  Charitable  

Endowments  Department  of  the  State.   Vide  the  above  

said communication, the Post Master, Palani informed the  

appellant to close all those accounts since the same was  

not  permissible.   The  communication  dated  01.12.1995  

also shows that all such accounts should be closed and  

the  amounts  so  deposited  are  to  be  refunded  without  

interest.   In  our  case,  the  deposit  accounts  have  been  

caused to be closed and the amounts deposited have been  

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returned to the depositors without interest.  Though the  

appellant claimed interest  and insisted for the same on  

the ground of deficiency in service on the part of the Post  

Master,  Palani,  in view of  Rule 17,  the respondents are  

justified  in  declining  to  pay  interest  for  the  deposited  

amount since the same was not permissible.     In the light  

of Rule 17 of the Rules, as rightly concluded by the State  

and the National Commission, it cannot be held that there  

was deficiency in service on the part of the respondents,  

3rd respondent in particular.   

8) The State Commission while rejecting the claim of the  

appellant  relied  on a decision of  this  Court  reported in  

Postmaster  Dargamitta,  H.P.O.,  Nellore vs.  Raja  

Prameeelamma (Ms.) (1998) 9 SCC 706.  In that case, the  

complainant  therein  issued  six  National  Savings  

Certificates for Rs. 10,000/- each on 28.04.1987 from the  

Post Office.   According to the Notification issued by the  

Government  of  India,  the  rate  of  interest  payable  with  

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effect  from 01.04.1987  was  11  per  cent.    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  was  printed  on  the  certificates  could  not  be  

corrected.   The  question  that  arose  in  that  case  was  

whether  the  higher  rate  of  interest  printed  in  the  

Certificate  shall  be  paid  or  only  the  rate  of  interest  

mentioned in the Notification is  applicable.   This  Court  

held that even though the Certificates contained the terms  

of  contract  between  the  Government  of  India  and  the  

holders of the National Savings Certificate, the terms in  

the  contract  were  contrary  to  the  Notification  and  

therefore the terms of 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 either in terms of law or in terms of contract as  

defined under Section 2(1)(g) of the Consumer Protection  

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Act, 1986.  The above said decision is squarely applicable  

to the case on hand.  

9) It is true that when the appellant deposited a huge  

amount  with  the  3rd Respondent  from  05.05.1995  to  

16.08.1995 under the Scheme for a period of five years, it  

was but proper on the part  of  the Post  Master  to  have  

taken  a  note  of  the  correct  Scheme  applicable  to  the  

deposit.  It was also possible for the Post Master to have  

ascertained  from  the  records,  could  have  applied  the  

correct Scheme and if the appellant, being an institution,  

was  not  eligible  to  avail  the  Scheme and advised  them  

properly.  Though Mr. S. Aravindh, learned counsel for the  

appellant  requested  this  Court  to  direct  the  3rd  

Respondent to pay some reasonable amount for his lapse,  

inasmuch  as  such  direction  would  go  contrary  to  the  

Rules  and  payment  of  interest  is  prohibited  for  such  

Scheme in terms of Rule 17, we are not inclined to accept  

the same.  We are conscious of the fact that a substantial  

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amount  had  been  kept  with  the  3rd Respondent  till  

03.01.1996 when the said amount was refunded without  

interest.   In the light of the letter dated 01.12.1995 and in  

view of Rule 17 of the Rules, failure to pay interest cannot  

be construed as a case of deficiency in service in terms of  

Section  2(1)(g)  of  the  Consumer  Protection  Act,  1986.  

Both  the  State  and  the  National  Commission  have  

concluded that  the  3rd Respondent  was ignorant  of  any  

Notification and because of this ignorance the appellant  

did not get any interest for the substantial amount.  We  

agree with the factual finding arrived at by the State and  

the National Commission and in view of the circumstances  

discussed above, the respondents cannot be fastened for  

deficiency in service in terms of law or contract and the  

present appeal is liable to be dismissed.                

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10) Before parting with this appeal, we intend to make the  

following  suggestions  to  the  Post  Offices  dealing  with  

various accounts of deposits:

i) Whether it is metropolitan or rural area, persons  

dealing with public money or those who are in-charge  

of  accepting  deposits  to  be  conversant  with  all  the  

details  relating  to  types  of  deposits,  period,  rate  of  

interest,  eligibility  criteria  etc.  for  availing  benefits  

under different schemes.   

ii) It  is  desirable  to  exhibit  all  these  details  in  

vernacular  language  in  a  conspicuous  place  to  

facilitate  the  persons  who  intend  to  invest/deposit  

money.   

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iii) That  if  the  Central  Govt.  issues  any  

notification/instructions  regarding  change  in  the  

interest  rate  or  any  other  aspect  with  regard  to  

deposits,  the  decision  taken  shall  be  immediately  

passed on to all  the authorities concerned by using  

latest technology methods i.e.  by fax, e-mail  or any  

other  form of  communication so that  they are kept  

updated of the latest developments.

iv) If there is any change in different types of schemes, it  

must  be  brought  to  the  notice  of  the  sub-ordinate  

staff of the post offices dealing with deposits in order  

to  ensure  that  correct  procedures are  followed and  

correct information is given to the public.   

11) We are constrained to make these observations since  

in the case on hand because of the lack of knowledge on  

the part of the Post Master who accepted the deposit and  

the appellant, one of the ancient temples in Tamil Nadu  

lost a substantial amount towards interest.   

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12) With the above observations, we dismiss the appeal  

with no order as to costs.     

...…………………………………J.                   (P. SATHASIVAM)  

...…………………………………J.           (A.K. PATNAIK)  

NEW DELHI; JULY 13, 2011.   

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