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2022 (7) TMI 290 - HC - Income TaxRecovery proceedings - Attachment of PPF account - petitioner was investing HUF s money in the said PPF account and is also a partner of Gujarat Steel Pipes Partnership Firm and the said firm was also holding a Cash Credit Account with the respondent-Bank - bank debited the amount from PPF Account to Cash Credit Account of his partnership firm - HELD THAT - It is not in dispute that the respondent Bank have withdrawn/debited the aforesaid amount of Rs.85,380/- from the PPF Account of the petitioner. It is well settled proposition of law that the amount of Public Provident Fund account shall not be liable to any attachment in respect of any debt or liability incurred by the account holder. Thus, the action of the respondent Bank of withdrawing/debiting the aforesaid amount from the PPF Account of the petitioner is illegal and unjustified. Under the circumstances, the respondent Bank is directed to deposit the amount of Rs.85,380/- within a period of four weeks in the Savings Bank Account in the name of Rajnikant Punjalal Shah HUF with the Bank of Baroda, Law Garden Branch, Ahmedabad. It is clarified that the observations made by this Court may not be construed adverse to the respondent Bank in any other proceedings.
Issues:
Violation of Public Provident Fund Act, 1968 by the respondent Bank. Analysis: The petitioner held a Public Provident Fund (PPF) Account under the Public Provident Fund Scheme, 1968 with the respondent Bank. The petitioner, a partner in a partnership firm, sought to withdraw funds from the PPF Account due to urgent financial needs. However, the respondent Bank debited an amount from the PPF Account to the Cash Credit Account of the partnership firm without the petitioner's consent. The petitioner argued that the amount in the PPF Account is protected against attachment under the Public Provident Fund Act, 1968. The petitioner's advocate cited Section 60(1) of the Civil Procedure Code, emphasizing the protection provided to PPF funds against attachment. The petitioner's advocate referenced a Division Bench judgment that highlighted the benevolent nature of the PPF Act, encouraging long-term savings and controlling withdrawals. The judgment underscored that the Act protects the amount in a subscriber's fund from attachment, promoting social security and financial stability post-retirement. Additionally, references were made to previous cases where courts upheld the immunity of PPF funds from attachment, emphasizing the government's role as a trustee for such funds. The respondent Bank argued that the withdrawal from the PPF Account was justified due to a General Form of Guarantee executed by the partners of the firm, making them liable for a substantial debt owed to the bank. However, the Court found that the action of the respondent Bank in debiting the PPF Account was illegal and unjustified. The Court directed the respondent Bank to refund the debited amount to the petitioner's Savings Bank Account within a specified timeframe. The judgment clarified that its observations should not be construed adversely against the respondent Bank in other proceedings. In conclusion, the High Court ruled in favor of the petitioner, holding the respondent Bank accountable for violating the protection provided under the Public Provident Fund Act, 1968. The judgment emphasized the importance of safeguarding PPF funds from attachment and ensuring compliance with the legal provisions governing such accounts.
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