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2007 Supreme(Bom) 1528
BOMBAYHIGHCOURT
Before:SWATANTER KUMAR, C.J.& DR.D.Y.CHANDRACHUD, J.
Nicholas Employees Co-operative
Credit Society Ltd. ..Petitioner
v.
Union of India and others ..Respondents
Writ Petition No.1005 of 2007,
decided on 23rd October,2007.
Advocate Appeared
Mr. Aditya Chitale for the Petitioner.
Mr. Rui A. Rodrigues with Ms. Rutuja Ambekar for the Respondents.
Headnote:Government Savings Certificates Act, 1959 - Section 1(3)-Kisan Vikas Patra Rules, 1988, Rules 6, 7, 8 and 13-Post Office Savings Certificates Rules, 1960, Rule 13-Interest of K.V.P. on maturity to holder-Not entitled to be issued-Under Act of 1959 and Rules of 1960-Petition filed against-Petition shall stand partly allowed.-Act, 1959, is an Act to make certain provisions relating to Government Savings Certificates. Section 1(3) provides that the Act shall apply to certain classes of savings certificates and among them are Kisan Vikas Patras. In exercise of the rule making power conferred by Section 12 of the Act, the Central Government made and issued the Kisan Vikas Patra Rules in 1988. Rule 6 provides for types of certificates. On 8th March 1995, the Government of India amended the Rules.
As a result of the amendment, on and after 1st April 1995, a single Holder Type Certificate may be issued to an adult for himself or on behalf of a minor or to a minor or to a trust. The provisions contained in the Rules for the issuance of a certificate inter alia to a Cooperative Society came to be deleted. There is no dispute about this position. Rule 7 stipulates that any person or body specified in Rule 6, desiring to purchase a certificate, shall present at a Post Office, an application in Form A or, as the case may be, Form A-1, in person or through an authorised agent. Under Rule 8(1), on payment being made under Rule 7, except where payment is made by a cheque, pay order or demand draft, a certificate shall be issued immediately and the date of such certificate shall be the date of payment. If a certificate is not issued immediately, sub-rule (3) of Rule 8 provides that a provisional receipt shall be given to the purchaser. Under Rule 12(1), the maturity period of a certificate of any denomination is fixed.
Rule 3 of the Kisan Vikas Patra Rules 1988 stipulates that the provisions of the Post Office Savings Certificate Rules, 1960, so far as may be, shall apply in relation to matters for which no provision has been made in the former Rules. Rule 16 of the Kisan Vikas Patra Rules, 1988 contains inter alia, a provision for the rectification of clerical or arithmetical mistakes with respect to a certificate provided that it does not involve a financial loss to the Government. Rule 17 empowers the Central Government in case of undue hardship, for reasons to be recorded in writing, to relax the requirements of any of the provisions contained in the Rules, in a manner not inconsistent with the provisions of the Act, The Post Office Savings Certificates Rules, 1960, contain a specific provision of the Act. The Post Office Savings Certificates Rules, 1960, contain a specific provision-Rule 13-for governing what are described as excess or irregular holdings.
The Kisan Vikas Patra Rules, 1988 do not make any specific provision in respect of irregular holdings. As already noted earlier, there is a provision in Rule 16 only for rectification of clerical or arithmetical mistakes with respect to a certificate and a provision for relaxation in Rule 17 on the ground of undue hardship. Hence, in view of the provisions of Rule 3, Rule 13 of the Post Office Savings Certificates Rules, 1960 would have to be read conjunction with Kisan Vikas Patra Rules, 1988. Rule 13 specifies that a certificate which has been acquired in contravention of the Rules, shall be encashed by the holder as soon as the fact of the holding being in excess of the limit or in contravention of the Rules is discovered and, no interest shall be paid on the holding in contravention of the Rules. The effect of sub-rule (1) of Rule 13 is to prohibit the payment of interest on excess or irregular holding in contravention of the Rules.
The Court in the exercise of its constitutional jurisdiction under Article 226 of the Constitution cannot issue a direction or grant relief which is prohibited by statute or by Rules which have a statutory character. There is no challenge to the statute or to the rules.
(PER DR. D.Y. CHANDRACHUD, J.) :
1. Rule, by consent of Counsel returnable forthwith. Counsel appearing on behalf of the Respondents waives service. By consent of Counsel and at their request taken up for hearing and final disposal.
2. The Petitioner before the Court is a Co-operative Society, registered under the Maharashtra Co-operative Societies' Act, 1960, consisting of the employees of Nicholas Piramal India Ltd. On or about 8th March 1996, the Petitioner invested an amount of Rs.2 lakhs in Kisan Vikas Patra Certificates (“KVPs”) issued by the Department of Posts and Telegraphs and the Superintendent of Post Offices, North East Division, Bhandup (the Second and Third Respondents) under the provisions of the Government Savings Certificates Act, 1959. The certificates stipulated that a sum of Rs.4 lakhs would be paid to the Petitioner on 8th September 2001 upon the expiry of a period of five years and six months from the date of the issuance of the certificates. On 2nd July 1997, a further amount of Rs.6 lakhs was invested by the Petitioner against which KVP Certificates were issued on behalf of the Second and Third Respondents. Upon maturity on 2nd January 2003, an amount of Rs.12 lakhs was to be paid to the Petitioner. Upon the certificates maturing for payment, the Petitioner approached the Second and Third Respondents. The Second and Third Respondents declined to pay the amount represented in the certificates upon maturity, namely, Rs.4 lakhs and Rs.12 lakhs respectively on the ground that the certificates had been irregularly issued. The contention of the Respondents was that after the KVP Rules were amended in 1995, only two categories of certificate holders were contemplated, namely, (i) an adult for himself or on behalf of the minor; and (ii) a trust. The Petitioner was neither.
3. Between 12th September 2001 and 16th May 2006, as many as thirteen representations were addressed by the Petitioner to the Respondents. The contention of the Petitioner was that the amount deposited was accepted without demur and the authorities proceeded to issue KVP certificates in favour of the Petitioner promising to pay a stipulated amount on maturity. Neither was any irregularity pointed out to the Petitioner at the time of the investment, nor for that matter, during the term of the deposit. In substance, therefore, the case of the Petitioner was that it was unjust and arbitrary not to pay the amount represented by the maturity value of the certificates.
4. Initially, the Department of Posts informed the Petitioner on 21st January 2002 that the certificates that were issued to the Petitioner were “irregular” and the proposal for regularization had been sent to the Circle Office. In a subsequent letter dated 1st April 2002, the Petitioner was called upon to discharge the certificate at the original face value together with interest at the Savings Bank rate. On 23rd August 2002, the Third Respondent informed the Petitioner that the Directorate had conveyed the approval of the Ministry of Finance to regularize the certificates issued to the Petitioner subject to the condition that only the invested amount would be repaid without any interest. This was followed by letters dated 10th October 2002, 24th October 2004 and 26th September 2006.
5. It has been averred in the petition that in the year 2002, the Petitioner was constrained to accept an amount of Rs.8 lakhs representing the face value of the investment made in view of the poor financial condition of the Petitioner. 5 6. These proceedings have been initiated under Article 226 of the Constitution of India, in order to seek an appropriate writ, quashing and setting aside the communication issued by the Respondents and for a direction to pay the interest as represented in the certificates issued to the Petitioner. The contention of the Petitioner is that despite the amendment in 1995 to the Rules governing KVP Certificates, the deposits made by the Petitioner were accepted in
