SC dismisses plea against post office

 Subject: Post office official takes god and state government for a ride
Backdrop: No matter how knowledgeable a person may be, he cannot know all the laws and rules. Ignorance of law is no excuse. However, there are occasions when one is guided by others who are supposed to have special or better knowledge of the law governing a particular transaction.
Case Study: Arulmigu Dhandayudhapaniswamy Thirukkoil at Palani in Tamil Nadu is an ancient temple. The temple trust is managed by the Hindu Religious and Charitable Endowments Department of the Government of Tamil Nadu. The temple trust had deposited Rs 1.4 crore with the Palani Post Office under the 'Post Office Time Deposit Scheme' for a period of five years from May 5, 1995.
In December 1995, the post master sent a letter to the trust saying that the scheme had been discontinued since April 1, 1995. Hence, the amount deposited would be refunded without interest. The amount was actually refunded on January 3, 1996. 

The trust sent a notice demanding Rs 9,13,951 as interest at 12% per annum. When the postal authorities did not respond, the trust filed a complaint before the Tamil Nadu State Commission, but the complaint was dismissed. The trust appealed to the National Commission, which too dismissed it. The temple trust then approached the Supreme Court.

To ascertain whether there was any deficiency in service, the Supreme Court considered the provisions of the Post Office Savings Bank General Rules, 1981, which are applicable to savings accounts, time deposit accounts and recurring deposit accounts. These are framed under the Government Savings Banks Act, 1873. Rule 17 states that an account that is opened in contravention of rule can be closed at any time and the deposit refunded without interest.

The Supreme Court observed that the notification stipulating that no time deposits shall be made or accepted on behalf of any institution with effect from April 4, 1995, was issued under the rules. The investment by the temple trust was made subsequently. So the apex court held that refusal to pay interest was justified and in accordance with the provisions of Rule 17. Hence, this could not be termed deficiency in service, the court observed.

The apex court also relied on earlier precedents. Where contracts or investments were made in contravention of any notification, it had been held that these were unlawful and void, and hence not binding. In such circumstances, the government would not be liable to pay interest.

The trust wanted the post master to be held liable and compensate for the loss. The court agreed that the trust had lost substantial interest because of the ignorance of the post master about the notification. Yet it refused to hold the post master liable for payment of any compensation as it would be against the rules.

While dismissing the trust's appeal, the Supreme Court suggested guidelines to avoid such incidents.

Officials dealing with public money or those in charge of accepting deposits must be conversant with all the details relating to types of deposits, period, rate of interest, eligibility criteria, etc applicable to the schemes. Details governing various schemes may also be exhibited in vernacular language at a conspicuous location.

When the government issues any notification or instruction, such decision must be immediately communicated to all the authorities concerned by using the latest technology-by fax, email, etc, to keep the officials updated of the latest developments. This information must also be communicated to the subordinate staff so that correct procedures are followed.
Impact: Ignorance of the law is no excuse. But what is unfortunate is that when both, the government servant dealing with the scheme as well as the citizen are ignorant, it is the citizen who is made to suffer.
(The author is a consumer activist and has won the Govt of India's National Youth Award for Consumer Protection. His email is

Source : dtd 22/10/2011

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