LALCHAND HIRECHAND Vs. UNION OF INDIA

JUDGEMENT

(1.) THE plaintiffs are the trustees of a Public Charitable Trust known as Mrs. Kasturbai Walchand Trust, which is a public trust, registered under the Bombay Public Trusts Act, 1950. In order to promote savings, the defendants the Union of India issued from time to time National Savings Certificates carrying interest as may be specified and encashable after a period as may be specified in the conditions of the said National Savings Certificates. The defendants have inter alia issued 7 Year National Savings Certificates (II Issue), maturing on the expiry of seven years from the date of its purchase. In respect of the said certificates, on the expiry of the maturity period the defendants pay to the holder of the said Certificates at Rs. 141/- for the certificate of the face value of Rs. 100/ -. Each certificate bears on the face of it a promise by the defendants to pay the amount stated therein on the expiry of the maturity period. The said certificates are sold to the public through the agents as also through the Post Offices all over the Country. The plaintiffs were desirous of purchasing 7-Year National Savings Certificates (II Issue) in the name of the said Trust of the value of Rs. 1,00,000/ -. They passed a suitable resolution in this behalf on 22nd February, 1972. Accordingly, they purchased the certificates after applying for the same to the General Post Office, Bombay, on a prescribed application form. The Certificates were of the face value of Rs. 5,000/- each and in all they purchased 20 such certificates. The Certificates matured for payment in 1979 on the expiry of the period of seven years from the date of their purchase. When they approached the Presidency Post Master G. P. O. Bombay, for encashment of those Certificates the Supervisor in the office of the Presidency Post Master made the following endorsement: "rejected Certificates are issued in contravention of S. C. Rules as the Charitable Trust whose donations are free from Income tax cannot purchase certificates. Hence the same will have to be discharged with face value". The Presidency Post Master thus gave to be plaintiffs only a sum of Rs. 1. 00,000/- and refused to pay the interest amount amounting to Rs. 41,000/ -. The plaintiffs pointed out that was contrary to law end contrary to the certified dues and, therefore, demanded the full amount. The defendants would not pay. hence the plaintiffs had to file the present suit for the recovery of the said sum of Rs. 41,000/- together with interest, thereon at the rate of 15 per cent per annum.

(2.) IT appears that these certificates are issued under the powers conferred on the defendants by the Government Saving Certificates Act, 1989 (46 of 1959) (hereinafter referred to as the said Act) and in exercise of the powers conferred by section 12 of the said Act, the defendants have framed rules called. The Post Office Savings Certificates Rules, 1960 (hereinafter referred to as the said Rules ). The defendants have sought to construe these Rules and on the basis of these rules they have denied the payment of the said sum of Rs. 41,000/- to the plaintiffs. The plaintiffs have submitted that they had applied for these Certificates as per the application form prescribed by the defendants and the defendants accepted the said form and issued the certificates and, therefore, as a result of the acceptance of the said application form and issuance of the said certificates, a contract was entered into between the said Trust and the defendants whereby the defendants agreed to pay to the said Trust the amounts mentioned in each of the said certificates stated to be payable on expiry of seven years from the date of the issue of the said certificates. They further submit that retention of the moneys of the plaintiffs without payment of interest is contrary to the very object of the said Act. They also submit that there could be no rule prescribing payment of interest and if there is any such rule that should be considered as ultra virus the Act. They have also taken up various contentions challenging the said Rules.

(3.) THE defendants have filed their written statement. There is no dispute about the application form submitted by the plaintiffs and the issuance of the certificates. Their only contention is that if one has regard for the said Rules, as framed under the said Act, the plaintiffs are not entitled to invest this amount and consequently they are not entitled to receive any amount by way of interest. They, therefore, submit that the suit is liable to be dismissed with costs.