1999 (8) TMI 912 - Commission - Companies Law

Appellant entitled to refund for voided savings certificates, emphasizing adherence to financial rules

The appellant purchased National Savings Certificates (VIII Issue) which were later deemed void ab initio due to rule amendments. The post office ... Deficiency in service Issues:1. Validity of National Savings Certificates (VIII Issue) purchased by the complainant.2. Existence of deficiency in service.3. Estoppel against the respondent.4. Relief sought by the complainant.Validity of National Savings Certificates:The complainant purchased National Savings Certificates (VIII Issue) for Rs. 14,500, which were issued by the respondent's post office. The District Forum held that the issue of these certificates was contrary to the scheme, leading to the dismissal of the complainant's claim. However, the appellant argued that there was no prohibition in the rules preventing their purchase. The amended rules prohibited a public company like the appellant from buying such certificates. As the certificates were issued after the amendment, they were deemed void ab initio. Consequently, the complainant could not enforce the certificates as they were not held validly.Existence of Deficiency in Service:The respondent post office benefitted from the complainant's funds for a significant period before requesting the surrender of the certificates. Despite the certificates being void, the post office had the use of the invested amount. The appellant was entitled to interest on the sum as if it had been invested in a fixed deposit with a Nationalised Bank. The delay in realizing the mistake by the post office warranted the payment of interest to the complainant.Estoppel Against the Respondent:The appellant contended that the respondent was estopped by conduct from calling for the surrender of the certificates. However, the issuance of certificates to a public company was explicitly prohibited by the rules. Therefore, estoppel could not be applied against statutory rules, and the complainant could not enforce the certificates based on estoppel.Relief Sought by the Complainant:The appeal was allowed in part, directing the respondent to refund the original investment amount of Rs. 14,500 with interest at 11% per annum from the date of issue until 30-11-1997. This payment was to be made upon surrender of the void certificates. Each party was to bear their respective costs throughout the legal proceedings.This judgment highlights the importance of adherence to statutory rules in financial transactions and the consequences of issuing void certificates. It also underscores the obligation to refund invested amounts with appropriate interest in cases of service deficiencies or errors on the part of financial institutions.