2014 (10) TMI 1031 - SC - Indian Laws

Principles of estoppel - Payment of maturity amount of National Savings Certificate - purchase of NSC illegally - Rule 17 of the Post Office Savings Bank General Rules, 1981 - HELD THAT - It is not possible for us to accept the applicability of the principle of estoppel in the facts and circumstances of this case. No representation is ever shown to have been made to the Appellant. It was the Appellant's individual decision to purchase the NSC. It is not shown, that a fraudulent representation was made to the Appellant. It is also not shown, that a false statement was negligently made to the Appellant. The rule of estoppel, in the present case, could have only been premised on some conduct of the Respondent, which had willfully induced the Appellant to invest in the NSC. Unfortunately, for the Appellant, no such willful conduct has been brought to our notice. This case would be governed by the proposition evolved in Moorgate Mercantile Company Ltd. v. Twitchings, namely, where two people with the same source of information assert the same truth or agree to assert the same falsehood at the same time, neither can be estoppel against the other. Therefore, whilst it cannot be disputed, that the authorities issuing the NSC were required to ensure, that the same was issued to only such persons who were eligible in law to purchase the same, yet in terms of the mandate of Rule 17 extracted hereinabove, the vires whereof is not subject matter of challenge, it is not possible for us to accept, that the rule of estoppel could be relied upon at the behest of the Appellant, for any fruitful benefit. It is indeed true, that the NSC was purchased in the name of M/s. Bhagwati Vanaspati Traders. It is also equally true, that M/s. Bhagwati Vanaspati Traders is a sole proprietorship concern of B.K. Garg, and as such, the irregularity committed while issuing the NSC in the name of M/s. Bhagwati Vanaspati Traders, could have easily been corrected by substituting the name of M/s. Bhagwati Vanaspati Traders with that of B.K. Garg. For, in a sole proprietorship concern an individual uses a fictional trade name, in place of his own name. The rigidity adopted by the authorities is clearly ununderstandable. The postal authorities having permitted M/s. Bhagwati Vanaspati Traders to purchase the NSC in the year 1995, could not have legitimately raised a challenge of irregularity after the maturity thereof in the year 2001, specially when the irregularity was curable - Legally, Rule 17 of the Post Office Savings Bank General Rules, 1981, would apply only when an applicant is irregularly allowed something more, than what is contemplated under a scheme. There was seriously no difficulty at all in the facts and circumstances of the present case, to regularize the defect pointed out, because M/s. Bhagwati Vanaspati Traders, is admittedly the sole proprietorship concern of B.K. Garg. The postal authorities should have solicited the change of the name in the NSC, through a representation by B.K. Garg himself. On receipt of such a representation, the alleged irregularity would have been cured, and the beneficiary of the deposit, would have legitimately reaped the fruits thereof. Rather than adopting the above simple course, the postal authorities chose to strictly and rigidly interpret the terms of the scheme. This resulted in the denial of the legitimate claims of the sole proprietor of the Appellant concern, i.e., B.K. Garg, of the investment made by him. In the above view of the matter, we consider it just and appropriate, in exercise of our jurisdiction Under Article 142 of the Constitution of India, to direct the Senior Superintendent of Post Offices, Meerut, to correct the NSC issued in the name of M/s. Bhagwati Vanaspati Traders, by substituting the Appellant's name, with that of B.K. Garg - The irregularity having been cured, we hope that B.K. Garg will now be released all the payments due to him, in terms of the order passed by the District Forum. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Validity of National Savings Certificate (NSC) issued in the name of a proprietorship concern.
2. Applicability of Rule 17 of the Post Office Savings Bank General Rules, 1981.
3. Application of the principle of estoppel.
4. Correction of the NSC to reflect the name of the sole proprietor.

Issue-wise Detailed Analysis:

1. Validity of NSC Issued in the Name of a Proprietorship Concern:
The appellant, M/s. Bhagwati Vanaspati Traders, a proprietorship concern, purchased an NSC in 1995. Upon maturity in 2001, the payment was withheld on the grounds that an NSC could only be issued in the name of an individual, not a concern. The District Consumer Disputes Redressal Forum ruled in favor of the appellant, but the State Consumer Disputes Redressal Commission and the National Consumer Disputes Redressal Commission reversed this decision, citing the irregularity in the issuance of the NSC.

2. Applicability of Rule 17 of the Post Office Savings Bank General Rules, 1981:
Rule 17 states that if an account is opened in contravention of the rules, it may be closed, and deposits refunded without interest. The respondent relied on this rule and a precedent case (Post Master, Dargamitta HPO, Nellor v. Raja Prameeelamma) to argue that the NSC issued to the appellant was unlawful and void, thereby justifying the refusal to pay the maturity amount.

3. Application of the Principle of Estoppel:
The appellant argued that the principle of estoppel should apply, as the postal authorities, by issuing the NSC, had induced the appellant to believe in its validity. However, the court found no evidence of fraudulent or negligent misrepresentation by the postal authorities. The principle of estoppel could not be invoked as there was no willful conduct by the respondent that induced the appellant to purchase the NSC.

4. Correction of the NSC to Reflect the Name of the Sole Proprietor:
The court acknowledged that the NSC was issued in the name of M/s. Bhagwati Vanaspati Traders, a sole proprietorship of B.K. Garg. It was argued that the irregularity could be corrected by substituting the trade name with the proprietor's name. The court found merit in this argument, stating that the postal authorities should have allowed the correction, thus regularizing the NSC.

Conclusion:
The court directed the postal authorities to correct the NSC by substituting the name of M/s. Bhagwati Vanaspati Traders with B.K. Garg, thereby curing the irregularity. Consequently, the respondent was ordered to pay the maturity amount with interest, compensation, and litigation costs to B.K. Garg within one month. The appeal was allowed, emphasizing that the authorities should adopt a flexible approach to rectify curable irregularities rather than rigidly interpreting the rules.