Court Rules SBI's Cash Handling Charges on Stamp Vendors Illegal

The Court found the collection of cash handling charges from stamp vendors by the State Bank of India (SBI) to be illegal and without authority. SBI was directed to cease collecting these charges from stamp vendors depositing cash in Government accounts. The Court emphasized the need for SBI to strictly adhere to Reserve Bank of India Regulations and maintain respectful and responsive conduct towards Government communications. The Petitioners were granted the liberty to seek refunds for any charges collected in violation of interim orders, with SBI instructed to communicate the judgment to all branches and upload it on their official website. Compliance report due on 20.12.2021.

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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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