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Bank Can't Attach Customer's PPF Account For Settlement Of His Debt/ Liability: Gujarat High Court

27 Jun 2022 11:45 AM GMT
“The Concept Of Equality As Contained In Article 14 Not Merely A Process Of Comparison, Equality Is A Matter Of Details”: Gujarat High Court

The Gujarat High Court recently reiterated the 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.

The Bench comprising Justice AS Supehia was hearing the case of a Petitioner who had invested Hindu Undivided Family's money under Centre's Public Provident Fund Scheme with the Respondent-Bank of Baroda.

The Petitioner was also a partner of Gujarat Steel and Pipes partnership firm and the said firm held a cash credit account with the Respondent-Bank. It was the Petitioner's case that the PPF Account was opened with the Central Government through the Respondent but the same was not connected with the cash credit account.

The Petitioner submitted that vide a notification by the Government of India under Section 15 of the Public Provident Fund Act, it was clarified that any amount standing in the PPF Account shall not be liable to any attachment in respect of any debt incurred by the account holder. Thus, the PPF account was protected against any kind of recovery. Due to the economic conditions prevailing in the pandemic, the Petitioner wanted to withdraw the fund lying in the PPF Account. However, the Respondent Bank 'illegally and without the consent of the Petitioner' debited the amount of Rs. 85,380 from his PPF Account to the cash credit account of his partnership firm.

Reliance was placed on Section 60(1) of the CPC which provides for the properties liable to be attached to contest that the debiting the amount from the PPF Account was de hors the procedure prescribed in law. Reference was made to Dineshchandra Bhailalbhai Gandhi Vs. Tax Recovery Officer, 2014 S.C.C. OnLine Gujarat 15889, where it was held that PPF scheme was launched to provide for a social security and a fund to depend upon in old age; post-retirement. The High Court had further ruled,

"In turn, clause (ka) of the provision to Section 60 (1) of the Code of Civil Procedure provides that all deposits and other sums in or derived from any fund to which the Public Provident Fund Act, 1968 applies in so far as they are declaring by the said Act not to be liable to attachment, shall not be liable for attachment or sale under the Code."

Per contra, the Respondent Bank insisted that the Bank was forced to take this step for withdrawal of the amount since the Bank, along with the partners of the firm and other executed the General Form of Guarantee in 2018 for INR 24 lakhs. Therefore, the Petitioner along with other guarantors was liable to pay the entire debt due to the Respondent Bank.

Justice Supehia noted that it was not in dispute that the amount of Rs. 85,380 was withdrawn from the PPF Account of the Petitioner. However, it was settled law that the PPF Account could not be used towards any liability. Thus, this action of withdrawing the amount was illegal and unjustified.

Clarifying that the observations of the High Court should not be construed adverse to the Bank for any other proceedings for recovery, the Bench directed that the Bank to deposit the said amount within a period of 4 weeks in the name of the Petitioner's saving account.


Case No.: C/SCA/10377/2020

Citation: 2022 LiveLaw (Guj) 246

Click Here To Read/Download Order

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