2021 (11) TMI 547 - HC - Indian Laws

Waiver off of fully cash handling charges collected from the stamp vendors by the Bank / SBI - seeking forbearance on Third Respondent from collecting any cash handling charges forthwith from the Petitioners for purchase of stamp papers - private transaction or not - HELD THAT - The facts and circumstances were elaborately looked into by the Finance Department, as the Government of Tamil Nadu is an account holder in the State Bank of India and Government accounts are operated with privileges considering various factors and baking regulations. The Government has categorically stated that no cash handling charges have been explicitly provided for Government receipts, which shows that collection of cash handling charges for deposit of cash into Government Account through Treasury Challans has not at all been permitted by the State Bank of India itself. It is, therefore, cash handling charges have been collected by mistake or by misinterpretation of the Circular of the Head Office of the State Bank of India and such collection being made by the Respondent Bank herein is without any authority. Collection of cash handling charges from the Stamp Vendors by the Third Respondent /Bank, while depositing money into Government Account through Treasury Challans is impermissible. Perusal of the Master Circulars relied on by the Second and Third Respondents /State Bank of India dated 01.07.2014 and 01.04.2021 reveals that the Second and Third Respondents are unable to establish that there is a direction / instruction / permission granted by the Reserve Bank of India to collect such cash handling charges on Government transactions. In the absence of any such specific direction or instructions from the Reserve Bank of India, the State Bank of India is not entitled to collect any cash handling charges from stamp vendors. Any such collection must be strictly in accordance with the Reserve Bank of India Regulations or in accordance with the Banking Regulations. Such collection of cash handling charges cannot be assumed or collected based on certain inferences. Any such collection must be made only, if there is a specific direction permitting the bank to collect cash handling charges. On the verification of the Master Circulars relied on by the State Bank of India, issued by the Reserve Bank of India on 01.07.2014 and 01.04.2021, it is seen that both circulars are related to agency commission and there is no specific direction or instruction from the Reserve Bank India. Thus, it is not proper on the part of State Bank of India to collect cash handling charges from the stamp vendors. Accordingly, the Second and Third Respondents have failed to establish that they have the authority to collect cash handling charges from the stamp vendors, who all are depositing money through Treasury Challans for purchase of stamps. The Collection of cash handling charges from the stamp vendors/petitioners by the 2nd and 3rd respondents are declared as illegal and without any authority. Accordingly, the respondents 2 and 3 are directed, not to collect any cash handling charges from the stamp vendors, while depositing cash in Government accounts through Treasury Challans in any of the branches of the State Bank of India. Petition allowed.

Issues Involved:
1. Legality of cash handling charges collected from stamp vendors.
2. Interpretation and applicability of Master Circulars issued by the Reserve Bank of India.
3. Authority of the Director/Commissioner of Treasuries and Accounts and the Government of Tamil Nadu over the State Bank of India.
4. Conduct and response of the State Bank of India officials to Government correspondence.
5. Compliance with interim orders and potential refund of collected charges.

Detailed Analysis:

1. Legality of Cash Handling Charges Collected from Stamp Vendors:
The Petitioners, who are licensed stamp vendors, challenged the imposition of cash handling charges by the State Bank of India (SBI). They argued that since the money deposited through Treasury Challans is for Government accounts, the transaction should not incur such charges. The Court found that the collection of cash handling charges from stamp vendors was "illegal and without any authority." The Court directed SBI to cease collecting these charges from stamp vendors depositing cash in Government accounts.

2. Interpretation and Applicability of Master Circulars Issued by the Reserve Bank of India:
SBI defended the charges by citing Master Circulars dated 01.07.2014 and 01.04.2021, which they claimed permitted the collection of cash handling charges. However, the Court found that these Circulars pertained to agency commission and did not explicitly authorize the collection of cash handling charges for Government transactions. The Court emphasized that any such collection must be "strictly in accordance with the Reserve Bank of India Regulations" and found that SBI failed to establish a specific direction from the RBI permitting these charges.

3. Authority of the Director/Commissioner of Treasuries and Accounts and the Government of Tamil Nadu Over the State Bank of India:
The Director/Commissioner of Treasuries and Accounts had previously requested SBI to waive off the cash handling charges, stating that the Government already pays banks separately for such services. The Court noted that while the Commissioner may not have administrative control over SBI, the bank is still expected to respond appropriately to such official communications. The Court criticized SBI's neglect of the Commissioner’s letter and deemed the collection of charges as a result of "misinterpretation of the Circular of the Head Office of the State Bank of India."

4. Conduct and Response of the State Bank of India Officials to Government Correspondence:
The Court found the statement in SBI's counter affidavit, suggesting that Petitioners could use other banks, to be "irresponsible" and indicative of "administrative arrogance." The Court directed SBI to initiate disciplinary proceedings to investigate how such statements were allowed in official documents. The Court also emphasized the need for SBI officials to maintain good conduct and appropriately respond to Government communications.

5. Compliance with Interim Orders and Potential Refund of Collected Charges:
The Court noted that despite interim orders not to collect cash handling charges, such charges were still collected. The Petitioners were given the liberty to provide proof of such collections, and SBI was directed to refund the money if such proof is presented. The Court also directed SBI to communicate the judgment and related instructions to all its branches and upload the information on its official website to inform citizens of their rights.

Conclusion:
The Court declared the collection of cash handling charges from stamp vendors by SBI as illegal and directed the bank to stop such practices. SBI was also instructed to ensure proper communication of this order to all its branches and to maintain a respectful and responsive attitude towards Government communications. The Petitioners were allowed to seek refunds for any charges collected in violation of interim orders. The case was scheduled for a compliance report on 20.12.2021.

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