Kerala HC Frowns Upon 'Restrictive Interpretation' Of PPF Scheme By Combing Parent And Child's Account To Calculate Yearly Limit On Deposit

“..it is to be noticed that the Central Government had been promoting the starting of various accounts in the name of minors and that is why such beneficial schemes were being introduced by the Central Government like the PPF Scheme, wherein separate accounts can be opened by a major in the name of his/her minor children. “In such circumstances, the restrictive interpretation being adopted to the application of the limit prescribed with reference to yearly deposits by clubbing the accounts together is incorrect especially when it is admitted that the children have already attained majority at least a decade earlier..”

The third petitioner is the mother of first and second petitioners. She opened a PPF account with the post office in her name, and also created separate savings accounts for her children, as they were minors at the time. Deposits were made into these accounts. Her children reached the age of majority in 2005 and 2007, yet the deposits in those accounts not withdrawn, and the PPF accounts continued to be maintained even after they attained majority.

In 2017, the petitioner received a communication stating that the total deposit from their PPF accounts exceeded the maximum statutory limit limit under the PPF Scheme. Thus, the Post Office forfeited the entire accrued interest exceeding more than 6 lakh rupees from the three PPF accounts.

The petitioner has approached the High Court seeking a direction to post office to re-credit this amount with interest.

The Counsel for Petitioner submitted that as per Rule 3 and 4 of the Public Provident Fund Scheme of 1968, an individual is permitted to operate or start an account on his own name, in representative capacity, as well as in the name of his minor children in his status as a guardian. It was argued that the three accounts must be treated as separate accounts since the children have attained majority and it cannot be treated collectively to apply the limit prescribed under different schemes.

The Counsel for Respondents argued that accounts were opened in the name of his minor children as their guardian and amounts have to be calculated collectively. It was argued that collectively taken together, the deposits have crossed the maximum limit prescribed by the scheme.

The Court stated that petitioner started three PPF accounts, one in her name and two in the name of her children as their guardian under the PPF Act. The Court noted that the children on attaining majority have not withdrawn the amounts or closed the account.

Referring to Post Office Savings Accounts Rules of 1981, the Court noted that separate saving account could be started on behalf of a major as well as on behalf of a minor by guardian.

The Court stated that provisions providing beneficial schemes like PPF cannot have a restrictive interpretation. It thus stated that the respondents must not have clubbed the amounts accrued in the three PPF accounts.

As such, the Court quashed the communication issued by the Post Office and directed the amounts to be recredited to the accounts of the petitioners with interest.

Counsel for Petitioners: Senior Advocate K Anand , Advocates Joseph Sebastian Parackal, Latha Anand, K R Pramoth Kumar, K N Ravindran, S Vishnu Arikkattil

Counsel for Respondents: Central Government Counsel Jaishankar V Nair

Case Number: WP(C) NO. 23639 OF 2017

Case Title: Mrs. Fareeda Sukha Rafiq v Union of India

Citation: 2024 LiveLaw (Ker) 624

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