# Zila Ganna Utpadak Sahkari Samiti Ltd v. Union of India & Ors

- **Citation:** (2025) 1 ILRA 705
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-01-20
- **Case number:** Second Appeal No. 400 of 2011
- **Bench:** Rajnish Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/zila-ganna-utpadak-sahkari-samiti-ltd-v-union-of-india-ors-53066
- **Pages:** 14

## Headnote

Civil Law - Code of Civil Procedure, 1908 -
Sections 34 & 80 - General Rules (Civil),
1957
-
Rule
6
-
National
Savings
Certificate ( VIth issue) Rules, 1981 -
Rules 7, 8, 9, 11 - Government Savings
Certificate Act, 1959 - Section 2(a), 12 -
Maturity amount - Appellant invested
amount of Rs.1,50,000/- on 27.09.1984 in
NSC
VIth
issue
and
amount
of
Rs.3,02,250/- was to be paid on maturity
on 19.09.1990, but amount was not paid
on maturity - Appellant filed suit for
recovery of amount , dismissed without
considering
pleadings,
evidence
and
records - Appellant filed civil appeal,
partly allowed and held holder not
entitled for interest - The learned courts
below failed to consider that NSC can be
issued in name of society and appellant
society rightly invested on behalf of its
members in accordance with law. (Para
4)
Held, appellant can't be held guilty of
issuance of NSCs in name of society in
irregular manner and contravention of
rules but respondents are also guilty of it,
as issued without verifying properly as to
whether it was in accordance with law or
not, respondents didn't detect during
whole period of NSCs but thereafter for
long
time
and
detected
after
correspondence
by
appellant
and
thereafter
respondents
no.2
called
consent of appellant for payment of SB
interest on Public Accounts on deposited
amount, consent was not given, invested
amount was not returned and thus
appellant entitled for interest of 6% p.a
applicable on SB Public Accounts from
date of deposit till date payment. (Para
28)

Appeal partly allowed. (E-13)

List of Cases cited:

## Text

_Characters 0–39,960 of 46,533. This is a partial read: ask again with offset=39960 for what follows._

1 All. Zila Ganna Utpadak Sahkari Samiti Ltd. Vs. Union of India & Ors.
705
circular/communication to the
office of this Court as well as all the
District
Judgeships
to
act
as per
directions contained in paragraph No 10
of this order.
----------
(2025) 1 ILRA 705
APPELLATE JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 20.01.2025

BEFORE

THE HON'BLE RAJNISH KUMAR, J.

Second Appeal No. 400 of 2011

Zila Ganna Utpadak Sahkari Samiti Ltd.
 ...Appellant
Versus
Union of India & Ors. ...Respondents

Counsel for the Appellant:
Rajeev Kumar Sinha

Counsel for the Respondents:
Dr. Ravi Kumar Mishra, I H Farooqui, I S
Farooqui

Civil Law - Code of Civil Procedure, 1908 -
Sections 34 & 80 - General Rules (Civil),
1957
-
Rule
6
-
National
Savings
Certificate ( VIth issue) Rules, 1981 -
Rules 7, 8, 9, 11 - Government Savings
Certificate Act, 1959 - Section 2(a), 12 -
Maturity amount - Appellant invested
amount of Rs.1,50,000/- on 27.09.1984 in
NSC
VIth
issue
and
amount
of
Rs.3,02,250/- was to be paid on maturity
on 19.09.1990, but amount was not paid
on maturity - Appellant filed suit for
recovery of amount , dismissed without
considering
pleadings,
evidence
and
records - Appellant filed civil appeal,
partly allowed and held holder not
entitled for interest - The learned courts
below failed to consider that NSC can be
issued in name of society and appellant
society rightly invested on behalf of its
members in accordance with law. (Para
4)
Held, appellant can't be held guilty of
issuance of NSCs in name of society in
irregular manner and contravention of
rules but respondents are also guilty of it,
as issued without verifying properly as to
whether it was in accordance with law or
not, respondents didn't detect during
whole period of NSCs but thereafter for
long
time
and
detected
after
correspondence
by
appellant
and
thereafter
respondents
no.2
called
consent of appellant for payment of SB
interest on Public Accounts on deposited
amount, consent was not given, invested
amount was not returned and thus
appellant entitled for interest of 6% p.a
applicable on SB Public Accounts from
date of deposit till date payment. (Para
28)

Appeal partly allowed. (E-13)

List of Cases cited:

1. U.P. Forest Corporation Employees' Provident
Fund Trust Vs U.O.I.& ors., Writ Petition
No.4393 of 1990, order dated 10.9.1996

2. Mahesh Chandra Bansal Vs Krishna Swaroop
Singhal & ors., reported in (1997) 10 SCC 681,
(Para 4)

3. Municipal Board, Chandpur Vs U.O.I.& ors.;
2002 SCC OnLine All 323

4. Romeo Sam Arambhan Vs U.O.I.& ors.; 2004
(1) Mh.L.J. 56

5. Tyrreli Leth Lodge Vs U.O.I.; AIR 2004
Gujarat 340, (Para 6)

6. Arulmighu Dhandayudhapaniswamy Thirukoil,
Palani, Tamil Nadu, thr. Its Joint Commissioner
Vs The Director General of Post Offices,
Department of Posts & Ors., Civil Appeal
No.4995 of 2006, order dated July 13, 2011

7. Postmaster, Dargamitta H.P.O., Nellore Vs
Raja Prameeelamma (Ms), 1995 Legal Eagle
(SC) 587 (1998 (9) SCC 706)

8. Superintendent of Post Offices & ors. Vs
Helpline Grahak Mandal & anr.by National
706 INDIAN LAW REPORTS ALLAHABAD SERIES
Consumer Disputes Redressal Commission, New
Delhi, Revision Petition No.12 of 2010, order
dated 16th April, 2010

(Delivered by Hon'ble Rajnish Kumar, J.)

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

2. This second appeal under
Section 100 of Civil Procedure Code (herein-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 plaintiffappellant. 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 it relates to the payment of
interest @ 6% per annum from the date of
filing of the suit till the date of actual payment.

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

"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?
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 ?
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
1 All. Zila Ganna Utpadak Sahkari Samiti Ltd. Vs. Union of India & Ors.
707
the grave error not following the
above principle and partly allowed
the appeal ?"

4. 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, therefore, after notice
under Section 80 CPC the plaintiffappellant filed a suit for recovery of the
said amount but the suit was dismissed
without considering the pleadings, evidence
and
records,
therefore,
the
plaintiffappellant 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 plaintiffappellant 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.

5. 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 Rule6 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.

6. 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 plaintiffappellant but the lower appellate court
erred in law allowing the interest for the
708 INDIAN LAW REPORTS ALLAHABAD SERIES
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.

7. On the basis of above, learned
counsel for the defendant-respondents
submitted that the appeal is liable to be
dismissed with 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.

8.

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

9. 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 plaintiff-appellant
presented it for payment but the defendantrespondents refused to make payment on the
face value of NSCs on the ground that it has
irregularly been issued in the name of the
plaintiff-appellant, therefore, letters were
written for payment and in response to letter
no.755-56 dated 27.11.1991 of the plaintiffappellant,
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 plaintiffappellant 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:-

"(1) क्या वािी राष्ट्रीय बचत पत्र जो
ताब्िका में िशाषये गये है, पर िेय धनराब्श प्राप्त करने
का अब्धकारी है?
(2) क्या िावा वािी पोर्िीय नही है?
(3) क्या िावा वािी धारा 80
सी०पी०सी० से बाब्धत है?
(4) वािी ब्कस अनुतोर् को प्राप्त करने का
अब्धकारी है?
(5) क्या िावा वािी अलपमूलयाुंब्कत है
एवुं प्रििन्याशुलक अपयाषप्त है?"

10. After framing of issues, the
documentary as well as the oral evidence
was adduced by the plaintiff-appellant, in
1 All. Zila Ganna Utpadak Sahkari Samiti Ltd. Vs. Union of India & Ors.
709
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:-

"1. क्या वािी ब्ि० 27-09-84 को
क्रय ब्कये गये धनराब्श राष्ट्रीय बचत पत्र (छठा ब्नगषम)
मूलय रू० 1,50,000/- की पररपक्वता धनराब्श
रू०3,02,250/- प्राप्त करने का अब्धकारी है?
2. क्या वािी उपरोक्त राष्ट्रीय बचनपत्रों की
पररपक्वता पर िेय धनराब्श पर 14 प्रब्तशत वाब्र्षक
लयाज प्राप्त करने का अब्धकारी है?"

11. 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 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.

12. 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-in-below:-

7. Purchase Of Certificates
On Behalf of Others :-

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
710 INDIAN LAW REPORTS ALLAHABAD SERIES
name in the corresponding entry in
column II of the said Table:
Provided that the persons
specified in the said column II are
eligible
under
these
rules
to
purchase certificates.

I
II
Persons
or
body
who can purchase
On behalf
of
(i) an adult
a minor
(ii) a co-operative
society including a
co-operative
bank
or a scheduled bank
its
members,
clients,
employees
or
contractors
whose
moneys are
held as a
deposit or
otherwise
with
such
society or
bank
(iii)
a
Gazetted
Government Officer,
an
officer
of
a
Government
company or of a
corporation or of a
local authority, 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.

person
whose
moneys are
held
as
deposit or
otherwise
with
such
officer
or
the
Reserve
Bank
13. As per clause-2 in the aforesaid
table given in Rule-7, a co-operative
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 cooperative 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 NSCs. Thus, admittedly, the
NSCs were got purchased in the name of
1 All. Zila Ganna Utpadak Sahkari Samiti Ltd. Vs. Union of India & Ors.
711
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:-

"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.
(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."

14. 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 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.

15. 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 defendantrespondent 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
712 INDIAN LAW REPORTS ALLAHABAD SERIES
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
defendantrespondents 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 defendantrespondent 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 defendantrespondent
authorities
to
verify
the
application for purchase of NSC's on
presentation properly in 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.

16. 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 plaintiff-appellant 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.

17. 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 the issuance of irregular
NSCs and even after calling consent for SB
interest payable on Public Accounts, no
further action was taken by the defendantrespondent 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 defendant-respondent no.2 to
refund
the
invested
amount
of
1 All. Zila Ganna Utpadak Sahkari Samiti Ltd. Vs. Union of India & Ors.
713
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.

18. 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 defendantrespondents themselves have offered for a
consent for payment of SB interest payable
on
Public Accounts. The
defendantrespondents 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 holder was entitled. However the
consent was not given by the plaintiffappellant,
therefore,
the
defendantrespondent no.2 has not even paid the
invested amount.

19. 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.

20. 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
714 INDIAN LAW REPORTS ALLAHABAD SERIES
court and held that it is not 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:-

"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 get- ting interest on the
principal amount."

21. 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 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
1 All. Zila Ganna Utpadak Sahkari Samiti Ltd. Vs. Union of India & Ors.
715
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.

22. 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.

23. 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 8th
March, 1995 and as is contended by the
respondents, by clerical oversight/ mistake
and allowed interest @ 6% per annum.

24. 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.

25. 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
716 INDIAN LAW REPORTS ALLAHABAD SERIES
Superintendent of Post Offices and others
Vs. Helpline Grahak Mandal and Others.
The savings bank interest has been paid as
the Finance Ministry had agreed to pay the
interest at the rate of 6% in a similar earlier
matter.

26. 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:-

"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:
[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.
Explanation I.-In this subsection, "nationalized bank" means
a corresponding new bank as
defined in the Banking Companies
(Acquisition
and
Transfer
of
Undertakings) Act, 1970 (5 of
1970).
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.]

(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."
1 All. Zila Ganna Utpadak Sahkari Samiti Ltd. Vs. Union of India & Ors.
717
27. 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:-

"4.