Failure to pay interest, not deficiency in services where interest to Institutions was prohibited under the scheme

National Consumer Disputes Redressal Commission (NCDRC): “Since prayer of interest under the scheme to institutions was prohibited, failure to pay interest to the Complainant in that case could not be construed as a case of deficiency in service in terms of Section 2(1)(g) of the Consumer Protection Act,” observed NCDRC and allowed an appeal filed by the Superintendent Of Post Offices, Kolhapur, Maharashtra challenging an order of Maharashtra State Consumer Commission vide which the Department of Posts was directed to refund Rs 60.71 lakh, along with Rs 25,000 as costs to Ichalkaranji Municipal Council in Kolhapur district for alleged deficiency in services.

Earlier, Ichalkaranji Municipal Council (IMC), deposited the amount accumulated in Staff Salary Reserve Fund with Head Post Office at Ichalkarnaji, District Kolhapur, under its Time Deposit Scheme for a period of five years, commencing 13.08.2002.  The interest payable was @ 8.5%/7.5% p.a. According to IMC, at the time of accepting the deposits, it was never informed that such accounts could not be opened by the Council. On the amounts deposited, IMC received interim interest, however, Post Master, Head Post Office, Ichalkarnaji, later informed IMC that in light of the Audit objection, the Time Deposits made in an official capacity in contravention of the Rules, were required to be closed immediately without payment of interest and by recovering the interest already paid. The postmaster’s letter to IMC followed an amendment to the Post Office Savings Account Rules of 1981 that came into effect on July 27, 2005. Prior to the amendment, the Department of Posts, New Delhi, had issued a general statutory rule on March 8, 1995, barring opening of time deposit accounts by institutions. Consequently, the Post Office refunded the amount deposited in the Time Deposits after deducting the interest paid thereon. While alleging the said action to be illegal and arbitrary, IMC filed complaint before the State Commission. The State Commission partly allowed the complaint on the ground that there was deficiency in service on the part of authorities of Postal Department as they made IMC to believe that the Scheme was to continue, without bringing to its notice the change of the Rules from 1995 itself.

The National Commission perused the material on record and heard both the parties at length. While relying on the judgment of Supreme Court in Arulmighu Dhandayudhapaniswamy Thirukoil v. Department of Posts, (2011) 13 SCC 220, NCDRC noted, “In view of the statutory prohibition, the complainant (IMC) was not entitled to any interest and, therefore, there was no deficiency in service on the part of the appellant (senior superintendent of post offices, Kolhapur) in deducting the amount of interest, periodically paid to the complainant on the time deposits in questions.” [Superintendent of Post Offices v. Ichalkaranji Municipal Council, 2016 SCC OnLine NCDRC 1466, decided on November 3, 2016]

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