Isabella Mariam

The High Court of Kerala Division Bench of Justice Sushrut Arvind Dharmadhikari and Justice Syam Kumar V.M., on 14 August 2025, held that the postal authorities are entitled to forfeit interest accrued on Public Provident Fund (PPF) contributions made by a guardian in the accounts of minor children where such deposits exceed the limits prescribed under the Public Provident Fund Scheme, 1968. The Court ruled that deposits made in the names of minors by a guardian must be clubbed with the guardian’s own account for the purpose of applying statutory ceilings. By setting aside an earlier judgment of a Single Judge, the Bench upheld the validity of the post office’s action in appropriating the excess interest amount and clarified that such forfeiture was lawful under the governing statutory framework.

The dispute originated with the opening of three Public Provident Fund (PPF) accounts at the Ernakulam Head Post Office. The third respondent, Mrs. Ameena Rafiq, mother of the first two respondents, opened one account in her own name and two separate accounts in the names of her minor daughters, Mrs. Fareeda Sukha Rafiq and Dr. Shabnam Jameela Rafiq. The accounts were opened in 1999, numbered as PPF Account Nos. 821, 822, and 823. Periodical remittances were made in all three accounts.

Also Read: Kerala High Court | Regular Bail Granted to Former MLA and Associate in ₹20 Crore PMLA Case | Continued Detention Held Unwarranted

The first daughter attained majority on 24 December 2005, while the second attained majority on 26 September 2007. Despite their attaining majority, deposits continued to be made in their accounts without any withdrawal. In June 2017, the Senior Post Master, Ernakulam, issued a communication to the mother stating that deposits made across the three accounts exceeded the statutory limit prescribed under the Public Provident Fund Scheme, 1968, particularly for minors. Consequently, an amount of Rs.6,87,021/- towards accrued interest was appropriated.

Aggrieved, the respondents approached the High Court in W.P.(C) No.23639 of 2017. They sought directions to credit the appropriated interest with applicable interest under the PPF Act, contending that the deposits were validly made and that the belated appropriation was unjustified.

The Single Judge, by judgment dated 5 September 2024, quashed the proceedings and directed the re-credit of the appropriated amount with interest, holding that the restrictive interpretation of deposit limits was not applicable after the children had attained majority. The Court observed that the authorities acted belatedly and that the scheme permitted accounts in the names of minors.

The appellants argued that appropriation was lawful since deposits by a guardian in minor accounts are required to be clubbed under Rule 3 of the Scheme, 1968. They contended that the respondents had crossed statutory ceilings and unjustly enriched themselves at the cost of the public exchequer. They further stated that deposits after majority had been duly credited with interest and were not interfered with.

The respondents argued that they were entitled to the amounts, pointing to Rule 2(a) and Section 4 of the Act, 1968, which recognised individual as well as representative accounts. They contended that the authorities acted with undue delay and that the appropriation after ten years was arbitrary.

The Division Bench observed: “Rule 3 of Scheme 1968 provides the limit of deposit of Rs.1 lakh in a year by an individual in his/her self-account and accounts opened by him/her on behalf of minor(s) of whom he/she is the guardian, is combined under Rule 3(1) of the Scheme.”

The Court further stated: “Thus, as per Rule 3, the excess deposits made into these minor accounts, during the period till the minors attained the age of majority, will be taken as the deposits made by the third respondent, which violates the limit prescribed under Rule 3 of the Scheme 1968.”

Citing Sections 3 and 4 of the Act, the Bench noted: “Any individual may, on his own behalf or on behalf of a minor, of whom he is the guardian, subscribe to the Fund in such manner and subject to such maximum and minimum limits as may be specified in the Scheme.”

The Court highlighted tabulated calculations showing deposits and interest credited, recording that the total forfeited amount was Rs.6,87,021/-. It noted: “Thereafter, the accounts continued to be operated, and contributions were made for which interest had already been paid regularly to the respondents by the appellants.”

Also Read: Supreme Court | Scope of Review Under S.114 & Order 47 CPC Restated | High Courts Cannot Re-Appreciate Evidence or Substitute Findings Under Guise of Review

The Bench observed: “Such payment of excess interest would amount to unjust enrichment, and the same would be a burden on the public exchequer.”

It concluded: “The learned Single Judge has not considered the facts that the appellants have appropriated the interest amount only for the period till the first and the second respondents attained majority… Hence, the appellants have rightly appropriated the amount of Rs.6,87,021/- from the accounts concerned.”

The Bench recorded: “As a result, the judgment dated 05.09.2024 in W.P.(C) No.23639/2017 is hereby set aside. The appellants herein are free to recover the excess amount of interest paid, i.e., Rs. 6,87,021/-, from the accounts of the respondents if not already recovered or appropriated.” The writ appeal was accordingly allowed. The court further directed that there would be no order as to costs.

Advocates Representing the Parties

For the Appellants: Shri. Jaishankar V. Nair, Senior Panel Counsel; Ms. Christy Theresa Suresh

For the Respondents: Mr. Siddarth; Smt. Latha Anand; Sri. M.N. Radhakrishna Menon; Sri. S. Vishnu (Arikkattil)

Case Title: Union of India & Ors. v. Fareeda Sukha Rafiq & Ors.

Neutral Citation: 2025: KER:60445

Case Number: WA No. 1636 of 2025

Bench: Justice Sushrut Arvind Dharmadhikari, Justice Syam Kumar V.M.