Postal department liable for PPF mistake

Arvind Premchand Mehta (Hindu Undivided Family) had a Public Provident Fund (PPF) account at the Girgaon Post Office. The account was opened in 1995 and deposits were made till 2013. In May 2016, a request was made to close the account. The postal authorities issued a cheque for Rs 4.12 lakh, even though the actual amount payable was Rs 6.07 lakh. When the reason for the gap in payment was sought, it was explained that the interest credited to the account had been impounded and forfeited for a period of five years from 2011 to 2016, because of a government notification to close down all PPF accounts of HUFs after 15 years.

Mehta's representation to the postal authorities merely invoked a response that the inconvenience caused was regretted. Feeling aggrieved, he filed a consumer complaint before the South Mumbai District Forum. He pointed out that the notification was never communicated to him, and he had been permitted to continue making deposits. Also, the interest had also been credited to his account and even entered in the passbook till he voluntarily opted for closure of the account.

The postal department stated that it was merely acting as an agent of the Ministry of Finance, and was bound by the circular and directives issued by the Government of India. The scheme provided for opening a PPF account for 15 years, and the main attraction was that the interest is exempted from tax. It accused Mehta of continuing with the account to illegally get tax benefits, which had been overlooked by the staff under a bonafide mistaken belief that the account belongs to an individual and not to an HUF.

Advocate Ami Mandani argued that negligence was evident, as the postal authorities had assumed an HUF account to be an individual account. She argued that the credit entry in the passbook for the interest had been made by the postal department, and not by the Ministry of Finance. So, there was no need to implead the Ministry as a party to the dispute. The forum agreed with Advocate Mandani's submissions and held that the complaint was maintainable and there was no need to implead the Ministry of Finance.

The forum also noted that if there is a government notification, it would be binding on the department, and failure to follow the orders would also constitute negligence. It observed that Mehta was not responsible in any manner for the assumption on the part of the postal officials that it was an individual account when the record clearly showed it to belong to an HUF. So the forum concluded that crediting the account with interest, making an entry in the passbook, but failing to pay the interest would be a deficiency in service.

Accordingly, by its order of March 19, 2019, delivered by M P Kasar for the Bench headed by Sneha Mhatra and D S Paradkar, the forum direct the postal department to pay 6 per cent interest on the amount deposited by the HUF during the period 2011 to 2016. This amount was ordered to be paid within two months, and it would carry 12 per cent interest if payment was delayed. In addition, Rs 5,000 was awarded as compensation and Rs 3,000 as litigation costs.

The writer is a consumer activist

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