Partly allowed

Zila Ganna Utpadak Sahkari Samiti Ltd. Hardoi Theu. Its v. Union of India Thru. Its Secy. Post and Telegraph Deptt. andORS.

Allahabad HC20 Jan 2025SAPL/400/2011

Case brief

AI extract

What is this about?

Co-operative society sued for NSC VIth issue maturity amount after post office refused full payment, holding certificates irregularly issued in the society's name contrary to Rules of 1981. Court held both parties at fault for irregular issuance and awarded principal plus 6% interest from date of deposit to payment.

What did the court decide?

Appellant entitled to deposited amount of Rs.1,50,000 plus interest @6% per annum from date of deposit till payment; lower appellate decree modified; suit partly allowed and decreed.

Zila Ganna Utpadak Sahkari Samiti Ltd… — Contract and Commercial Disputes | Allahabad HC (2025)

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Neutral Citation No. - 2025:AHC-LKO:3425

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Reserved AFR

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Court No. - 4

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Case :- SECOND APPEAL No. - 400 of 2011

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Appellant :- Zila Ganna Utpadak Sahkari Samiti Ltd. Hardoi Theu. Its Respondent :- Union Of India Thru. Its Secy. Post And Telegraph Deptt. And ors. Counsel for Appellant :- Rajeev Kumar Sinha Counsel for Respondent :- Dr. Ravi Kumar Mishra,I H Farooqui,I S Farooqui

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Hon'ble Rajnish Kumar,J.

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Heard, Shri Rajeev Kumar Sinha, learned counsel for the plaintiff-appellant and Dr. Ravi Kumar Mishra, learned counsel for the defendant-respondents.

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This second appeal under Section 100 of Civil Procedure Code (here-in-after referred as CPC) has been filed against the judgment and decree dated 03.09.2011 passed in Civil Appeal No.52 of 2007 (Zila Ganna Utpadadak Sahkari Samiti Ltd. Hardoi Vs. Union of India and Another) by the Additional District Judge, Court No.6, Hardoi and Judgment and decree dated 10.04.1995 passed in Regular Suit No.144 of 1993 (Zila Ganna Utpadadak Sahkari Samiti Ltd. Hardoi Vs. Union of India and Another) by the Civil Judge, (Senior Division), Hardoi and to pay the maturity amount mentioned on the face of National Savings Certificate (here-in-after referred as NSC) i.e. Rs.3,02,250/alongwith 14% interest during pendency of the suit and appeal with cost as claimed by the plaintiff-appellant. The defendant-respondents have also filed a cross objection alongwith C.M. Application No.56905 of 2013 in this second appeal for dismissing the appeal with cost and to set-aside the judgment and decree dated 03.09.2011, so for

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it relates to the payment of interest @ 6% per annum from the date of filing of the suit till the date of actual payment.

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This appeal has been admitted on the following substantial questions of law:-

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"I. Whether the learned lower court committed the substantial error of law, not considering the law propounded in the case of U.P. Forest Corporation Vs. Union of India and other, in Writ Petition No.4393 of 1990 dated 10.9.1996. The said judgment also relates to VI Issue of National Saving Certificate which was issued in the name of Institution ignoring the court below even though the court below is duty bound to follow the judgment dated 10.9.1996, passed in Writ Petition No.4393 of 1990?

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II. Whether the appellant made the specific plea in the plaint and claimed the interest 14% per annum for the entire period of Suit, was pending. The law propounded by the Hon'ble Apex Court in the case of Mahesh Chandra Bansal Vs. Krishna Swaroop Singhal, reported in (1997) 10 SCC 681. The learned court below should have awarded the interest of 14% and also awarded the amount mention in the National Saving Certificate but the court below committed the grave error not awarded the relief as claimed by the appellant ?

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III. Whether the respondents promised to pay the amount mentioned in the National Saving Certificate, invested amount was utilised, respondents entered into the contract and the said mistaken credit account is bound to re-pay or return the amount in view of contract. They would be liable to pay the interest under the Interest Act till the date of filing the Suit and further pay interest till date of realisation under Section 34 C.P.C. The learned court below committed the grave error not following the above principle and partly allowed the appeal ?"

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Learned counsel for the plaintiff-appellant submitted that the plaintiff-appellant invested an amount of Rs.1,50,000/- on 27.09.1984 in VIth issue of NSCs. According to the maturity amount mentioned on the said NSCs an amount of Rs.3,02,250/- was to be paid on maturity on 19.09.1990, but the said amount was not paid on maturity,

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therefore, after notice under Section 80 CPC the plaintiff-appellant filed a suit for recovery of the said amount but the suit was dismissed without considering the pleadings, evidence and records, therefore, the plaintiff-appellant filed the civil appeal. The civil appeal has been partly allowed and decreed. But the learned courts below have failed to consider that NSC can be issued in the name of society and the plaintiff-appellant society had rightly invested in the same on behalf of its members in accordance with law and there was no illegality or error in it, therefore, the plaintiff-appellant is entitled for the maturity amount as per the terms and conditions of NSC.

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He further submitted that the issue is covered by the judgment and order dated 10.09.1996 passed by a Division Bench of this Court in the case of U.P. Forest Corporation Employees Provident Fund Trust Vs. Union of India and Others (Writ Petition No.4393 of 1990) but the trial court failed to consider the same merely on the ground that the said judgment has been passed in writ proceedings, therefore, it is not applicable in the civil suit and the learned lower appellate court wrongly and illegally distinguished the same on the facts of the present case, which is in violation of Rule-6 of General Rules Civil. Thus, the submission is that the judgment and decree passed by the trial court is liable to be said aside and judgment and decree passed by the lower appellate court is liable to be modified accordingly and the suit is liable to be allowed with cost. He relied on Municipal Board, Chandpur Vs. Union of India and Others; 2002 SCC OnLine All 323, Romeo Sam Arambhan Vs. Union of India and Others; 2004 (1) Mh.L.J. 56, Judgment and order dated 10.09.1996 passed in U.P. Forest Corporation Employees' Provident Fund Trust Vs. Union of India and Others; Writ Petition No.4393 of 1990 and Mahesh Chandra Bansal Vs. Krishna Swaroop Singhal and Others; (1997) 10 SCC 681.

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Learned counsel for the defendant-respondents submitted that the plaintiff-appellant had purchased the NSCs VIth issue in its own name through Secretary, which were irregularly issued as the NSC VIth issue could not have been issued in the name of firm or institution, therefore, on presentation for payment, the holder i.e. the appellant was advised to take the payment at SB Public Accounts interest but the plaintiff-appellant refused to take the same. He further submitted that full maturity value given on the NSCs is not payable as the certificates were issued irregularly in the name of the plaintiffappellant and no interest is payable on irregular NSCs in view of Rules 7 and 11 of the National Savings Certificate ( VIth issue) Rules, 1981 (here-in-after referred as Rules of 1981). The learned trial court has rightly and in accordance with law dismissed the suit filed by the plaintiff-appellant but the lower appellate court erred in law allowing the interest for the period of pendency of the suit, which could not have been allowed as no interest is payable in view of Rule- 11 of the Rules of 1981. The case law relied by the appellant is not applicable on the facts and circumstances of the case. He relied on Tyrreli Leth Lodge Vs. Union of India; AIR 2004 Gujarat 340, Judgment and order dated July 13, 2011 passed in Civil Appeal No.4995 of 2006; Arulmighu Dhandayudhapaniswamy Thirukoli, Palani, Tamil Nadu, through its Joint Commissioner Vs. The Director General of Post Offices, Dapartment of Posts and Others and Postmaster, Dargamitta H.P.O., Nellore Vs. Raja Prameeelamma (Ms); 1995 Legal Eagle (SC) 587 (1998 (9) SCC 706) and Judgment and order dated 16th April, 2010 passed in Revision Petition No.12 of 2010; Superintendent of Post Offices and others Vs. Helpline Grahak Mandal and Another by National Consumer Disputes Redressal Commission, New Delhi.

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On the basis of above, learned counsel for the defendantrespondents submitted that the appeal is liable to be dismissed with

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cost and the cross objection filed by the defendant-respondents is liable to be allowed with cost and the judgment and decree passed by the lower appellate court awarding the interest @ 6% per annum from the date of filing of the suit is liable to be set-aside and the suit filed by the plaintiff-appellant is liable to be dismissed with cost.

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I have considered the submissions of learned counsel for the parties and perused the records.

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The plaintiff-appellant invested Rs.1,50,000/- on 27.09.1984 in the NSC VIth issue for a period of six years as per the terms and conditions of the NSC. The 14% interest was payable and accordingly the double the amount of investment was to be paid on the maturity on 27.09.1990. Upon completion of the period of maturity the plaintiffappellant presented it for payment but the defendant-respondents refused to make payment on the face value of NSCs on the ground that it has irregularly been issued in the name of the plaintiffappellant, therefore, letters were written for payment and in response to letter no.755-56 dated 27.11.1991 of the plaintiff-appellant, the defendant-respondents requested to the plaintiff-appellant through letter dated 04.12.1991 to send it's consent to take payment with interest at the rate of SB Public Accounts but the plaintiff-appellant, instead of giving consent sent a notice under Section 80 of CPC through his advocate. The reply to the same was given but the payment was not made, therefore, the plaintiff-appellant filed Regular Suit No.144 of 1993 before the trial court for recovery of Rs.3,02,250/- with interest @ 14% and litigation cost. The suit was contested by defendant-respondents by filing written statement. After exchange of pleadings, following five issues were framed:-

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"(1) क्या वादी राष्ट्रीय बचत पत्र जो तालि�का में दर्श ा �ये गये है , पर देय धनराशिर्शा प्राप्त करने का अधिधकारी है ?

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(2) क्या दावा वादी पोषणीय नही है ?

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(3) क्या दावा वादी धारा 80 सी०पी०सी० से बाधिधत है ?

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(4) वादी किकस अनुतोष को प्राप्त करने का अधिधकारी है ?

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(5) क्या दावा वादी अल्पमूल्यांकिकत है एवं प्रदत्तन्यार्शाुल्क अपया�प्त है ?"

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After framing of issues, the documentary as well as the oral evidence was adduced by the plaintiff-appellant, in which Shri Surendra Singh Verma was got examined as PW-1. The defendantrespondents had not filed any documentary evidence and in oral evidence Shri S.N. Singh was got examined. Thereafter considering the pleadings of the parties, evidence and material on records, the trial court decided the issue no.1 in negative and accordingly dismissed the suit by means of the judgment and decree dated 10.04.1995. Being aggrieved the appellant filed Civil Appeal No.144 of 1993 before the lower appellate court. On the basis of grounds in the appeal and the submissions of learned counsel for the parties, learned appellate court partly allowed the appeal formulating the following two points for determination:-

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"1. क्या वादी किद० 27-09-84 को क्रय किकये गये धनराशिर्शा राष्ट्रीय बचत पत्र ( छठा किनग�म ) मूल्य रू० 1,50,000/- की परिरपक्वता धनराशिर्शा रू० 3,02,250/- प्राप्त करने का अधिधकारी है ?

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2. क्या वादी उपरोक्त राष्ट्रीय बचनपत्रों की परिरपक्वता पर देय धनराशिर्शा पर 14 प्रधितर्शात वार् ष िक ब्याज प्राप्त करने का अधिधकारी है ?"

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The lower appellate court, after considering the pleadings, evidence and material on records came to the conclusion that the NSCs were issued against the rules, on which no interest was payable but the defendant-respondent no.2 had not informed about it before the date of maturity or even thereafter and after several letters by the appellant, it was informed by means of letter dated 04.12.1991 that the NSCs were issued in irregular manner and the appellant was asked to give it's consent for payment of interest on the SB Pubic Accounts, therefore, for issuance of NSC against the rules, the plaintiff-appellant only can not be held liable and the defendant-respondent no.2 is more guilty and held that the appellant is entitled for refund of the invested amount and interest @ 6% per annum on it from the date of filing of

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the suit till the date of actual payment by means of the judgment and decree dated 03.09.2011. Hence this appeal has been filed, which has been admitted on the aforesaid substantial questions of law.

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The Government Savings Certificate Act, 1959 (here-in-after referred as the Act of 1959) has been enacted in respect of Government Savings Certificates. Section 2(a) of the Act provides the definition of "holder", according to which, "holder" in relation to a savings certificate, means a person who holds the savings certificate issued in accordance with the provisions of this Act and of any rules made thereunder. Section 12 of the Act provides the power of Central Government to make rules to carry out the purposes of the Act including the conditions as to payment of interest or discount relating to any class of savings certificates and recovery of any interest paid on any amount held in excess of the maximum limits in the same manner as an arrears of land revenue or in any other manner and for any other matter which has to be, or may be, prescribed not given in the rule. Under Section 12 of the Act of 1959, Rules of 1981 were made vide notification dated 24.04.1981. Rule-7 of the said rules provides the purchase of certificates on behalf of others, which is extracted here-inbelow:-

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7. Purchase Of Certificates On Behalf of Others :-

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A person or body specified in column I of the Table below may purchase certificate(s) on behalf of persons specified against his or its name in the corresponding entry in column II of the said Table:

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Provided that the persons specified in the said column II are eligible under these rules to purchase certificates.

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I		II
Persons or body who canpurchase	On behalf of
(i) an adult	a minor
(ii) a co-operative society including a co-operative bank or a scheduled bank	its members, contractors wh a deposit or society or bank	clients, employees or ose moneys are held as otherwise with such
(iii) a Gazetted Government Officer, an officer of a Government company or of	person whose deposit or othe	moneys are held as rwise with such officer

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a corporation or of a local authority, or the Reserve Bank or an officer of a corporate body like a marketing committee established under a State Act and authorised by the State Government in this behalf, in his official capacity, or the Reserve Bank of India.

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As per clause-2 in the aforesaid table given in Rule-7, a cooperative society can purchase NSC on behalf of its members, clients, employees or contractors whose moneys are held as deposit or otherwise with such society. Thus, a co-operative society could have purchased NSC VIth issue only on behalf of its members etc. as given under rules. In the present case the NSC VIth issue had been purchased by the appellant society in the name of secretary, Hardoi District Cane Grower co-operative Society Ltd., Hardoi and it does not indicate that it has been purchased on behalf of its members. Shri Surendra Singh Verma, an employee of the appellant society appeared as PW-1 . He. in his evidence, stated that he was Assistant Accountant in the appellant society from 1975-1993 July and on 17.09.1984 Shri B.P. Tripathi, the then Secretary had talked to the Postmaster for purchase of NSC of the money of cane growers and on his advise the NSCs were got issued by the plaintiff-appellant. He also admitted that the NSCs were got made in the name of the Society, however, stated that it was done as the then Postmaster had informed after seeing the rule that it can be got made. In cross-examination PW-1 admitted that Rs.1,50,000/-, the NSC of which were got made, was of cane growers. No meeting was held for it and no proposal was also sent. The decision to purchase the NSC was taken by the Secretary but he has no knowledge as to whether he has taken decision to purchase six years NSC and no correspondence was made with the Postmaster before purchase of NSCs. He also admitted that the NSCs were purchased from the counter after filling the form by the Secretary. However, the payment has not been made as per the face value of the

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NSCs. Thus, admittedly, the NSCs were got purchased in the name of the Secretary of the society. Though it has been stated that the NSCs were purchased from the money of cane growers but it has not been disclosed as to who were the cane growers, on whose behalf the NSC VIth issue were purchased and admittedly their names were not indicated even in the form. It has also not been stated that the said members were elegible to purchase NSC because the co-operative society can also purchase NSC on behalf of persons mentioned in column II of the aforesaid table; if he was elegible to purchase NSC under the said rules. Thus the NSCs VIth issue were purchased in contravention of the aforesaid rule. Rule-11 of the Rules of 1981 is about the irregular holding, which is extracted here-in-below:-

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"11. Irregular holding-(1) Any certificate purchased or acquired in contravention of these rule shall be encashed by the holder as soon as the fact of the holding being in contravention of these rules is discovered and no interest shall be paid on any holding in contravention of these rules.

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(2) If any interest has been paid on any holding which is in contravention of these rules, it shall be forthwith refunded to the Government failing which the Government shall be entitled to recover the amount involved from any money payable by the Government to the investor or as an arrear of land revenue."

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According to the aforesaid Rule-11, if any, certificate has been purchased or acquired in contravention of the rules, the same shall be encashed by the holder as soon as the fact of holding in contravention of the rules is discovered and no interest shall be paid on any holding in contravention of the rules and, if any, interest has been paid on any holding in contravention of the rules, it shall be refunded to the Government forthwith, failing which the Government shall be entitled to recover as the arrears of land revenue. Thus in case any NSC VIth issue has been purchased or acquired in contravention of the rules, the same was required to be surrendered immediately on its discovery and no interest was payable on the same. In the present case, admittedly, it was not discovered during currency of the period of NSCs VIth

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issue purchased by the plaintiff-appellant and it was only after presentation for payment and repeated requests for payment by the appellant, it was intimated by the defendant-respondents that the NSCs have been got issued in an irregular manner in the name of the society.

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As borne out from the pleadings, the NSCs in question matured on 29.09.1990 and it were presented for payment on 09.10.1990 but the payment was not made, therefore, a request was made again through letter dated 30.11.1990. On which the defendant-respondent no.2 asked to present on the counter for necessary action. Thereafter, the same were presented on the counter but the payment was not made, therefore vide letter dated 27.01.1991 and thereafter also request was made for payment and in response to the letter dated 27.11.1991, it was intimated vide letter dated 04.12.1991 that according to the departmental rules, NSC can not be issued in the name of the institution, therefore, the NSCs have been issued in irregular manner and no interest is payable on them. However, if the appellant is agreed to receive the payment with SB interest on Public Accounts, then he may give his consent with photo copy of both sides so that a proposal may be sent to the Director General, Post Offices in this regard. Thus the NSCs were issued in an irregular manner by the defendant-respondents and the mistake was not detected even by the defendant-respondent no.2 during the period of NSCs and even thereafter and after a lapse of more than a year it was intimated that the NSCs have been issued in an irregular manner. Thus, the fault committed by the defendant-respondent no.2 in issuance of the NSCs and non-detection of the same for whole of the period during which the money was kept by the defendant-respondent and acquiring the benefits of the said money by the defendant-respondents can not be denied. It was duty of the defendant-respondent authorities to verify the application for purchase of NSC's on presentation properly in

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accordance with law and rules and only thereafter issue the NSCs. Rule-8 of the Rules of 1981 provides the modes of payment of purchase of certificates and the Rule-9 provides the issue of certificates.

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According to sub-rule (3) of Rule-9, if for any reason certificate can not be issued immediately a provisional receipt shall be issued, which may be later exchanged for a certificate, thus, the rule provides sufficient safeguard for issuance of the certificate after verification of the application and eligibility etc. because it is not necessary that the certificate should be issued immediately and it could have been issued after verification but in the present matter not only the plaintiffappellant is negligent of purchasing the certificate in own name in place of on behalf of its member, if the money of its members was invested, and without disclosing it but the defendant-respondents are more guilty because the defendant-respondent no.2 issued NSC in an irregular manner without verifying properly as to whether the same are in accordance with law or not. Even before the Court's below or before this Court the plaintiff-appellant has failed to prove/show that the NSCs were purchased on behalf of which members, if it was so. Thus both are responsible for it. The court's below upon considering the pleadings, evidence and material on records and the aforesaid rules held that the NSCs have been issued in an irregular manner, therefore, the holder is not entitled for interest.

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The learned trial court, after considering that the option sought by the defendant-respondents for giving consent for SB interest on Public Accounts has not been given by the plaintiff-appellant, held that the appellant is not entitled for any relief and dismissed the suit. However, the lower appellate court, after considering the same and the correspondence made between the parties, recorded a finding that it is established that before the date of maturity or even thereafter no information was given by the defendant-respondent no.2 in regard to

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the issuance of irregular NSCs and even after calling consent for SB interest payable on Public Accounts, no further action was taken by the defendant-respondent no.2 and even the money invested was not refunded, held that not only the plaintiff-appellant can be held guilty for issuance of the irregular NSCs but the defendant-respondent no.2 is more guilty and the defendant-respondent can not deny to make the payment of the invested amount stating the plaintiff-appellant responsible for everything and it was the duty of the defendantrespondent no.2 to refund the invested amount of Rs.1,50,000/immediately on coming to know about the irregular issuance of the NSCs, but it was not done and directed to refund the invested amount and interest @ 6% per annum w.e.f. the date of institution of suit till the date of payment.

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The rule 11(1) of Rules of 1981 provides that any certificate purchased or issued in contravention of the rules shall be encashed by the holder as soon as the fact of the holding being in contravention of this rule is discovered. Sub-rule (2) provides that if any interest has been paid on any holding which is in contravention of the rules, it shall be forthwith refunded to the Government. Thus, once the NSCs were presented for encashment and it was discovered that the same have been issued in contravention of the rules, the same should have been encashed immediately and payment should have been made to the plaintiff-appellant but it was not done by the defendantrespondents. Thus, the plaintiff-appellant only can not be allowed to suffer on account of negligence on the part of both the parties. Even otherwise, the defendant-respondents themselves have offered for a consent for payment of SB interest payable on Public Accounts. The defendant-respondents in the written statement filed before the trial court and in the cross objection filed before this Court have stated that the plaintiff-appellant was requested to send his consent to take payment with interest payable on Savings Bank Accounts, for which

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holder was entitled. However the consent was not given by the plaintiff-appellant, therefore, the defendant-respondent no.2 has not even paid the invested amount.

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This Court, in the case of U.P. Forest Corporation Employees Provident Fund Trust Vs. Union of India and Others (Supra), which is in respect of six years NSC (VIth issue), considered the issue of denial of interest on maturity on the ground of violation of Rule 548(5) and 569 of the Post and Telegraph Manual, Vol.5, Part-2. This Court held that the scope of the rule is very limited as it provides only a ministerial work in the office itself and the petitioner has nothing to do with the said rule and in these circumstances it can not be said that after lapse of so many years that NSC has been issued wrongly in favour of the petitioner and when there is not even any suggestion of any fraud on the part of the petitioner, the interest can not be denied and allowed the petition and direction was issued to make the payment of NSC alongwith interest of the maturity value. However, this Court had observed that rule 13 of the Post Office Savings Certificate Rules, 1960 would show that it applied only to those cases where a certificate has been purchased in excess of prescribed limit or in contravention of the rules and in the case in hand there is no charge either on these two heads against the petitioner and as there was no fraud or misrepresentation on the part of the petitioner. Thus, this Court found that the NSC in the said case were not issued in contravention of the rules, whereas in the present case the NSCs have been issued in contravention of the rules, therefore, it is not applicable on the facts and circumstances of the present case.

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The learned trial court, after considering the relevant rules and the judgment in the case of Tyrreli Leth Lodge Vs. Union of India (Supra), held that it is not justified to give benefit of the judgment passed in the aforesaid writ petition at this stage. However, the same has been considered by the lower appellate court and held that it is not

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applicable on the facts and circumstances of the present case. The Gujarat High Court, in the case of Tyrreli Leth Lodge Vs. Union of India (Supra), has held that to purchase NSC is not a fundamental right vested in the petitioner. It is not function of this Court to widen or enlarge the scope of the scheme under the Rules of 1981 and once the petitioner is not entitled to purchase the aforesaid NSC, though the same have been issued by the Post Office concerned, as per Rule 11 of the Rules of 1981 for such type of irregular holder of the said NSC i.e. the petitioner shall not be entitled to the interest. The relevant paragraph-6 is extracted here-in-below:-

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"6. From Rule 11 of Rules of 1981, it is crys- tal clear that if any certificate is purchased or acquired in contravention of these Rules shall be encashed by the holder as soon as the fact of the holding being in contravention of these Rules is discovered and such holder shall not be paid interest on the prin- cipal amount of the National Savings Certificates and interest earned thereon. The Rules of 1981 are not violation of fundamental rights of the petitioner. To purchase National Savings Certificate is not a fundamental right vested in the petitioner. The said scheme of National Savings Certificates has been floated by the Central Government for the purpose of certain persons. Purchase of National Savings Certificate has been made restrictive by specifying purchasers under Rules 4 and 7 of the Rules of 1981. It is not a function of this Court to widen or enlarge the scope of the scheme under the Rules of 1981. Once the petitioner is not entitled to purchase the aforesaid National Savings Certificate though the same have been is- sued by the Post Office concerned, as per Rule 11 of the Rules of 1981 for such type of irregular holder of the said National Savings Certificate i.e. the petitioner shall not be entitled to the interest on the principal amount of National Savings Certificates. Learned advocate for the petitioner submit- ted that the petitioner has already received principal amount of Rs. 50,000/- of National Savings Certificates purchased by him and mainly this petition has been filed for getting interest on the principal amount."

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Learned counsel for the plaintiff-appellant had argued that the learned trial court has wrongly and illegally not considered the aforesaid judgment passed by this Court in writ petition, whereas the same has been considered by the trial court and it has been held that no benefit of same can be given by the court at this stage and the learned lower appellate court considered the same and found that it is

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not applicable on the facts and circumstances of the present case because in the present case, the violation of Rule-6 and 11 of Rules of 1981 has been alleged and found. The learned trial court could not deny to follow the ruling of this Court, if it is in force and applicable on the facts and circumstances of the case. Rule-6 of the General Rules (Civil), 1957 provides that all subordinate Courts shall follow the rulings of the High Court which are in force. However, in the facts and circumstances of the present case and as discussed above, it can not be said that the learned trial court has declined to follow and even if it can be said so, the lower appellate court, who has to deal with the case as trial court considered the same.

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This Court, in the case of Municipal Board, Chandpur Vs. Union of India and Others (Supra), which is in regard to the Vth issue of NSC, considered the entitlement of the president of the petitioner board to purchase the NSC and after considering Rule-6(a) of the National Savings Certificates (Vth issue), Rules, 1973 held that a local authority can purchase these certificates and the President of the Board is not debarred to purchase the National Savings Certificates on behalf of the Board and the allegation that it can be purchased only by an Officer of the Board is found untenable. It is not applicable on the facts and circumstances of the present case.

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The Bombay High Court, in the case of Romeo Sam Arambhan Vs. Union of India and Others (Supra), held that it has been repeatedly held by the Supreme Court that estoppel is a rule of equity flowing out a fairness striking on behaviour deficient in good faith, it is invoked and applied to aid the law in administration of justice; but for it great injustice may have been perpetrated and allowed the petition on the ground that the certificates were issued to the petitioner in the name of sole Proprietorship firm not in conformity with the Rules of 1989 as amended vide Notification dated

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8th March, 1995 and as is contended by the respondents, by clerical oversight/ mistake and allowed interest @ 6% per annum.

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The Hon'ble Supreme Court, in the case of Arulmighu Dhandayudhapaniswamy Thirukoli, Palani, Tamil Nadu, through its Joint Commissioner Vs. The Director General of Post Offices, Dapartment of Posts and Others (Supra), has held that though 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 amount had been kept with the 3rd Respondent till 03.01.1996 when the said amount was refunded without interest as no deficiency in service was found on the facts and circumstances of the case. However, the present case is not of deficiency of service.

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The Hon'ble Supreme Court, in the case of Postmaster, Dargamitta H.P.O., Nellore Vs. Raja Prameeelamma (Ms) (Supra), which is in regard to the NSC (VIth), issue held that no doubt the sale of National Savings Certificates with the terms and conditions embodied thereon constitutes a contract between the Government of India as seller and the holders of the National Savings Certificates, but as this contract was contrary to the terms notified by the Government of India and this was due to inadvertence of the staff, it does not become a contract binding on the Government of India being unlawful and void. As such this is not a case of deficiency in service and set-aside the order passed by which it was held that the Government of India was bound to pay the unconnected maturity value as recorded in the order dated 16.04.2010 passed by the National Consumer Dispute Redressal Commission, New Delhi in the case of Superintendent of Post Offices and others Vs. Helpline Grahak Mandal and Others. The savings bank interest has been paid as the

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Finance Ministry had agreed to pay the interest at the rate of 6% in a similar earlier matter.

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The learned lower appellate court found that the trial court has wrongly and illegally dismissed the suit without passing an order for payment of interest during pendency of the suit and thereafter. Section 34 deals with the question of Interest in three stages, first is interest prior to the date of institution of suit, the second stage is interest from the date of institution of suit till the date of decree and the third stage is from the date of decree till the realization of decreetal amount. Thus, the court can award any interest adjudged on the principal sum for any period prior to the institution of the suit and interest at such rate deems reasonable on the principal sum adjudged from the date of institution of suit to the date of decree with further interest as such rate not exceeding six per cent per annum from the date of decree to the date of payment or to such earlier date as the court thinks fit. Thus the interest for the period prior to the date of filing of the suit and during pendency of the suit can be awarded as adjudged by the court but interest from the date of decree till the date of realization of decreetal amount can not exceed 6% per annum. Section 34 C.P.C. is extracted here-in-below:-

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"34. Interest.— (1) Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, [with further interest at such rate not exceeding six per cent. per annum as the Court deems reasonable on such principal sum], from the date of the decree to the date of payment, or to such earlier date as the Court thinks fit:

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[Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent. per annum, but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalized banks in relation to commercial transactions.

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Explanation I.—In this sub-section, “nationalized bank” means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970).

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Explanation II.—For the purposes of this section, a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability.]

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(2) Where such a decree is silent with respect to the payment of further interest [on such principal sum] from the date of the decree to the date of payment or other earlier date, the Court shall be deemed to have refused such interest, and a separate suit therefor shall not lie."

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The Hon'ble Supreme Court, in the case of Mahesh Chandra Bansal Vs. Krishna Swaroop Singhal and Others (Supra), has held as under in paragraph-4:-

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"4. Shri Venkataramani, the learned counsel appearing for the appellant, has urged that the High Court was in error in proceeding on the basis that under Section 34(1) Civil Procedure Code interest pendente lite was to be awarded @ 6% per annum unless the matter is governed by the proviso to Section 34(1) Civil Procedure Code. The submission is that the proviso only refers to that part of sub-section (1) of Section 34 which prescribes that after the passing of the decree interest shall be awarded @ 6% per annum. The submission is that as regards interest pendente lite the main part of sub-section (1) of Section 34 Civil Procedure Code prescribes that interest has to be awarded at a reasonable rate. We find merit in the aforesaid contention of the learned counsel. The main part of sub-section (1) of Section 34 Civil Procedure Code laying down that during the period the suit was pending in Court interest is to be awarded at a reasonable rate and for the period subsequent to passing of the decree interest is to be awarded @ 6% per annum and future interest at a higher rate can be awarded if the proviso is attracted. The only question is what would be the reasonable rate of interest for the period the suit was pending in the Court. Since the appellant, in his plaint, has himself claimed interest @ 12% per annum for the entire period including the period the suit is pending, we are of the view that pendente lite interest should be awarded @ 12% per annum."

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In view of above and considering the overall facts and circumstances of he case, this Court is of view that since only the plaintiff-appellant can not be held guilty of issuance of the NSCs in the name of the appellant in an irregular manner but the defendantrespondents are also guilty of it, which could not be detected by the defendant-respondents also not only during the whole period of NSCs but even thereafter for a long time and it was only after

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correspondence made by the plaintiff-appellant it could be detected and thereafter the defendant-respondents no.2 had called consent of the appellant for payment of the SB interest on Public Accounts on the deposited amount, but the deposited amount was not returned even thereafter and in other matter the same has been paid as Finance Ministry had agreed to pay as recorded in the case of Superintendent of Post Offices and others Vs. Helpline Grahak Mandal and Another (Supra) by National Consumer Disputes Redressal Commission, New Delhi, which has not been disputed by the defendant-respondents while relying the said judgment and order, the plaintiff-appellant is entitled for the interest of 6% per annum applicable on SB Public Accounts from the date of deposit till the date payment.

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The aforesaid substantial question of law nos.1 to 3 are decided accordingly. The plaintiff-appellant is entitled for the deposited amount alongwith interest @ 6% from the date of deposit up to the date of payment. The judgment and decree dated 03.09.2011 passed in Civil Appeal No.52 of 2007 (Zila Ganna Utpadadak Sahkari Samiti Ltd. Hardoi Vs. Union of India and Another) by the Additional District Judge, Court No.6, Hardoi is accordingly modified. The suit filed by the appellant stands partly allowed and decreed accordingly.

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With the aforesaid, this appeal is partly allowed . No order as to costs.

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...................................................................(Rajnish Kumar, J.)

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Order Date :- 20.01.2025 Haseen U.

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Digitally signed by :- HASEENUDDIN High Court of Judicature at Allahabad, Lucknow Bench

Zila Ganna Utpadak Sahkari Samiti Ltd. Hardoi Theu. Its v. Union of India Thru. Its Secy. Post and Telegraph Deptt. andORS.

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Zila Ganna Utpadak Sahkari Samiti Ltd. Hardoi Theu. Its v. Union of India Thru. Its Secy. Post and Telegraph Deptt. andORS.

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